EXHIBIT 2.1
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ASSET PURCHASE AGREEMENT
BY AND AMONG
ESC MEDICAL SYSTEMS LTD.,
ENERGY SYSTEMS HOLDINGS INC.
AND
COHERENT, INC.
DATED AS OF FEBRUARY 25, 2001
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INDEX OF EXHIBITS AND DISCLOSURE SCHEDULES
Exhibit Description
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Exhibit A Xxxx of Sale
Exhibit B Assignment of Leases
Exhibit C Intellectual Property Assignment
Exhibit D Instrument of Assumption
Exhibit E Form of Note
Exhibit G Supply Agreement
Exhibit H Fiber Supply Agreement
Exhibit I Registration Rights Agreement
Exhibit J Santa Xxxxx Sublease Agreement
Exhibit K Transition Services
Exhibit L Financing Letters
Exhibit N Severance Terms
Disclosure Schedules
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Schedule 1.1(a)(i) Schedule 3.13(b)
Schedule 1.1(a)(iv) Schedule 3.13(c)
Schedule 1.1(a)(vi) Schedule 3.14(c)
Schedule 1.1(a)(ix) Schedule 3.15(a)
Schedule 1.1(c)(vii) Schedule 3.15(e)
Schedule 1.1(c)(xii) Schedule 3.16
Schedule 1.1(c)(xiii) Schedule 3.17
Schedule 1.1(c)(xiv) Schedule 3.18
Schedule 1.1(c)(xvi) Schedule 3.19(a)
Schedule 1.1(r) Schedule 3.19(b)
Schedule 1.2(a)(i) Schedule 3.20(a)
Schedule 1.6(c) Schedule 3.20(b)
Schedule 1.6(d) Schedule 3.20(c)
Schedule 1.7(d) Schedule 4.3(a)
Schedule 2.3(e) Schedule 4.8
Schedule 3.1 Schedule 4.9
Schedule 3.3(a) Schedule 4.10
Schedule 3.3(b) Schedule 4.11
Schedule 3.4 Schedule 5.1
Schedule 3.5 Schedule 5.9
Schedule 3.6 Schedule 5.14(a)
Schedule 3.6(a)(v) Schedule 6.3(d)
Schedule 3.6(c) Schedule 9.7(e)
Schedule 3.7(a)
Schedule 3.7(b)
Schedule 3.8(a)
Schedule 3.8(b)
Schedule 3.8(e)
Schedule 3.9(a)
Schedule 3.9(b)
Schedule 3.10(a)
Schedule 3.10(b)
Schedule 3.11
Schedule 3.11(c)
Schedule 3.12
Schedule 3.13(a)
TABLE OF CONTENTS
PAGE
ARTICLE I TRANSFER OF ASSETS AND LIABILITIES..............................................................1
SECTION 1.1 ASSETS TO BE SOLD; ASSUMPTION OF LIABILITIES; TRANSFER OF NON-U.S. ASSETS..............1
SECTION 1.2 PURCHASE PRICE.........................................................................6
SECTION 1.3 CLOSING................................................................................6
SECTION 1.4 DELIVERIES BY SELLER...................................................................7
SECTION 1.5 DELIVERIES BY BUYER GROUP..............................................................8
SECTION 1.6 PREPARATION OF FINAL STATEMENT.........................................................8
SECTION 1.7 EARN-OUT PAYMENT CALCULATION..........................................................10
SECTION 1.8 POST-CLOSING PURCHASE PRICE ADJUSTMENT................................................12
SECTION 1.9 INTERCOMPANY LIABILITIES..............................................................12
ARTICLE II RELATED MATTERS...............................................................................13
SECTION 2.1 BOOKS AND RECORDS OF SELLER...........................................................13
SECTION 2.2 MAIL HANDLING.........................................................................13
SECTION 2.3 EMPLOYEES AND EMPLOYEE BENEFITS.......................................................13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER.....................................................15
SECTION 3.1 ORGANIZATION..........................................................................15
SECTION 3.2 AUTHORIZATION.........................................................................16
SECTION 3.3 CONSENTS AND APPROVALS; NO VIOLATIONS.................................................16
SECTION 3.4 FINANCIAL STATEMENTS..................................................................16
SECTION 3.5 ABSENCE OF UNDISCLOSED LIABILITIES....................................................17
SECTION 3.6 ABSENCE OF CERTAIN CHANGES............................................................17
SECTION 3.7 INTELLECTUAL PROPERTY.................................................................18
SECTION 3.8 TITLE, OWNERSHIP AND RELATED MATTERS..................................................20
SECTION 3.9 LITIGATION; PRODUCT LIABILITY.........................................................21
SECTION 3.10 COMPLIANCE WITH APPLICABLE LAW........................................................21
SECTION 3.11 CERTAIN CONTRACTS AND ARRANGEMENTS....................................................22
SECTION 3.12 TAXES.................................................................................23
SECTION 3.13 EMPLOYEE BENEFIT PLANS; ERISA; EMPLOYEES..............................................24
SECTION 3.14 ENVIRONMENTAL MATTERS.................................................................25
SECTION 3.15 INSURANCE.............................................................................26
SECTION 3.16 LABOR MATTERS.........................................................................27
SECTION 3.17 SUPPLIERS.............................................................................27
SECTION 3.18 CUSTOMERS.............................................................................27
SECTION 3.19 ASSETS, LICENSES AND PERMITS NECESSARY TO THE BUSINESS; EQUIPMENT.....................28
SECTION 3.20 TRANSACTIONS WITH AFFILIATES..........................................................28
SECTION 3.21 CERTAIN FEES..........................................................................28
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER GROUP.................................................28
SECTION 4.1 ORGANIZATION..........................................................................28
SECTION 4.2 AUTHORIZATION.........................................................................29
SECTION 4.3 CONSENTS AND APPROVALS; NO VIOLATIONS.................................................29
SECTION 4.4 FINANCING.............................................................................29
SECTION 4.5 SEC REPORTS...........................................................................30
SECTION 4.6 ISSUANCE OF PARENT STOCK..............................................................30
SECTION 4.7 CERTAIN FEES..........................................................................30
SECTION 4.8 ABSENCE OF UNDISCLOSED LIABILITIES....................................................31
SECTION 4.9 ABSENCE OF CERTAIN CHANGES............................................................31
SECTION 4.10 LITIGATION............................................................................31
SECTION 4.11 INTELLECTUAL PROPERTY.................................................................31
ARTICLE V COVENANTS......................................................................................32
SECTION 5.1 CONDUCT OF THE BUSINESS...............................................................32
SECTION 5.2 ACCESS TO INFORMATION.................................................................33
SECTION 5.3 CONSENTS AND APPROVALS................................................................34
SECTION 5.4 REASONABLE EFFORTS....................................................................34
SECTION 5.5 PUBLIC ANNOUNCEMENTS..................................................................35
SECTION 5.6 SUPPLEMENTAL DISCLOSURE...............................................................35
SECTION 5.7 TRANSFERS NOT EFFECTED AS OF CLOSING..................................................35
SECTION 5.8 RETENTION.............................................................................35
SECTION 5.9 PROHIBITION ON SOLICITATION AND HIRING................................................36
SECTION 5.10 NO NEGOTIATION........................................................................36
SECTION 5.11 CONFIDENTIALITY.......................................................................36
SECTION 5.12 NON-COMPETITION.......................................................................37
SECTION 5.13 BOARD REPRESENTATION..................................................................38
SECTION 5.14 INTELLECTUAL PROPERTY LICENSES........................................................38
SECTION 5.15 SANTA XXXXX AND OTHER SUBLEASES.......................................................40
SECTION 5.16 INSURANCE CLAIMS......................................................................41
SECTION 5.17 FURTHER ACTIONS.......................................................................41
SECTION 5.18 RESTRICTIONS ON TRANSFER; STANDSTILL..................................................42
SECTION 5.19 ACQUISITION OF THE NOTE AND PARENT STOCK FOR INVESTMENT; ABILITY TO EVALUATE AND
BEAR RISK; RESTRICTIONS ON TRANSFER...................................................43
SECTION 5.20 INTENTIONALLY OMITTED.................................................................44
SECTION 5.21 NON-CONTROLLED AFFILIATES.............................................................44
SECTION 5.22 CONDUCT BY BUYER GROUP................................................................44
SECTION 5.23 COOPERATION IN LITIGATION.............................................................44
SECTION 5.24 COOPERATION IN TRANSITION.............................................................44
SECTION 5.25 NOTIFICATION AND OTHER REQUIREMENTS...................................................45
ARTICLE VI CONDITIONS TO OBLIGATIONS OF THE PARTIES......................................................45
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS................................................45
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SECTION 6.2 CONDITIONS TO OBLIGATIONS OF SELLER...................................................45
SECTION 6.3 CONDITIONS TO OBLIGATIONS OF BUYER GROUP..............................................46
ARTICLE VII SURVIVAL OF REPRESENTATIONS; INDEMNIFICATIONS................................................47
SECTION 7.1 SURVIVAL OF REPRESENTATIONS...........................................................47
SECTION 7.2 SELLER'S AGREEMENT TO INDEMNIFY.......................................................47
SECTION 7.3 BUYER GROUP'S AGREEMENT TO INDEMNIFY..................................................48
SECTION 7.4 THIRD PARTY INDEMNIFICATION...........................................................49
SECTION 7.5 EXCLUSIVE REMEDY; SEPARATE REMEDIES...................................................49
SECTION 7.6 TRANSFER TAXES; ALLOCATION OF PURCHASE PRICE..........................................50
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER...........................................................51
SECTION 8.1 TERMINATION OF AGREEMENT..............................................................51
SECTION 8.2 PROCEDURE FOR AND EFFECT OF TERMINATION...............................................51
SECTION 8.3 AMENDMENT, EXTENSION AND WAIVER.......................................................52
SECTION 8.4 BUYER TERMINATION FEE.................................................................52
ARTICLE IX MISCELLANEOUS.................................................................................52
SECTION 9.1 FEES AND EXPENSES.....................................................................52
SECTION 9.2 FURTHER ASSURANCES; GUARANTEE.........................................................52
SECTION 9.3 NOTICES...............................................................................53
SECTION 9.4 SEVERABILITY..........................................................................54
SECTION 9.5 BINDING EFFECT; ASSIGNMENT............................................................54
SECTION 9.6 NO THIRD PARTY BENEFICIARIES..........................................................54
SECTION 9.7 DEFINITIONS AND INTERPRETATION........................................................54
SECTION 9.8 JURISDICTION AND CONSENT TO SERVICE...................................................55
SECTION 9.9 ENTIRE AGREEMENT......................................................................55
SECTION 9.10 DESCRIPTIVE HEADINGS..................................................................55
SECTION 9.11 GOVERNING LAW.........................................................................56
SECTION 9.12 COUNTERPARTS..........................................................................56
SECTION 9.13 SPECIFIC PERFORMANCE..................................................................56
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EXHIBITS
Exhibit A Xxxx of Sale
Exhibit B Assignment of Leases
Exhibit C Intellectual Property Assignment
Exhibit D Instrument of Assumption
Exhibit E Form of Note
Exhibit G Supply Agreement
Exhibit H Fiber Supply Agreement
Exhibit I Registration Rights Agreement
Exhibit J Santa Xxxxx Sublease Agreement
Exhibit K Transition Services
Exhibit L Financing Letters
Exhibit N Severance Terms
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SCHEDULES
Schedule 1.1(a)(i) Contracts
Schedule 1.1(a)(iv) Transferred Intellectual Property
Schedule 1.1(a)(vi) Leased Real Property
Schedule 1.1(a)(ix) Permits Related to the Business
Schedule 1.1(c)(vii) Excluded Intellectual Property
Schedule 1.1(c)(xii) Permits Related to the Retained Business
Schedule 1.1(c)(xiii) Excluded Assets from Star Agreement
Schedule 1.1(c)(xiv) Retained Causes of Action
Schedule 1.1(c)(xvi) Excluded Assets
Schedule 1.1(r) Excluded Liabilities
Schedule 1.2(a)(i) Bank Accounts
Schedule 1.6(c) Net Tangible Book Value of the Business Definition Exception
Schedule 1.6(d) Final Statement Amount
Schedule 1.7(d) Dispute Resolution Procedure
Schedule 2.3(e) Loans to Certain Employees
Schedule 3.1 United States Subsidiaries of Seller
Schedule 3.3(a) Required Governmental approvals or Consents
Schedule 3.3(b) No Violations
Schedule 3.4 Financial Statements
Schedule 3.5 Absence of Undisclosed Seller Liabilities
Schedule 3.6 Absence of Certain Changes
Schedule 3.6(a)(v) Compensation Increases
Schedule 3.6(c) Other Claims
Schedule 3.7(a) Transferred Intellectual Property
Schedule 3.7(b) Other Items Regarding Transferred Intellectual Property
Schedule 3.8(a) Permitted Encumbrances
Schedule 3.8(b) Exceptions to Leased Real Property
Schedule 3.8(e) Assets Subject to Liens
Schedule 3.9(a) Litigation
Schedule 3.9(b) Product Liability; Non-Uniform Warranties
Schedule 3.10(a) Material Non-Compliance with Laws
Schedule 3.10(b) Missing Governmental Licenses
Schedule 3.11 Certain Contracts and Arrangements
Schedule 3.11(c) Estimate of Costs Upon Termination of Distribution Agreements
Schedule 3.12 Material Tax Elections and Other Tax Items
Schedule 3.13(a) Seller Benefit and Compensation Plans
Schedule 3.13(b) Division Employees and Other Related Information
Schedule 3.13(c) ERISA Information
Schedule 3.14(c) Environmental Documents
Schedule 3.15(a) Insurance Policies
Schedule 3.15(e) Insurance Claims During Last 2 Years
Schedule 3.16 Notification Requirements for Labor Matters
Schedule 3.17 Suppliers
Schedule 3.18 Customers
Schedule 3.19(a) Assets Necessary to Business
Schedule 3.19(b) Permits Necessary to Business
Schedule 3.20(a) Affiliates
Schedule 3.20(b) Transactions
Schedule 3.20(c) Jurisdictions of Incorporation and Business
Schedule 4.3(a) Governmental Approvals and Consents of Buyer
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Schedule 4.8 Absence of Undisclosed Buyer Liabilities
Schedule 4.9 Absence of Certain Buyer Changes
Schedule 4.10 Litigation
Schedule 4.11 Buyer Intellectual Property
Schedule 5.1 Conduct of the Business
Schedule 5.9 Persons not subject to non-hire
Schedule 5.14(a) Licensed Trademarks
Schedule 6.3(d) Seller Consents and Approvals
Schedule 9.7(e) People included in knowledge definition
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INDEX OF DEFINED TERMS
13D GROUP........................................................................40
AFFILIATE........................................................................58
AFFILIATED.......................................................................58
AGREEMENT.........................................................................1
ALLOCATION.......................................................................53
ANCILLARY AGREEMENTS..............................................................8
ASSETS............................................................................1
ASSIGNMENT OF LEASES..............................................................3
ASSUMED LIABILITIES...............................................................5
BALANCE SHEETS...................................................................18
XXXX OF SALE......................................................................3
BOOKS AND RECORDS.................................................................1
BUSINESS.........................................................................57
BUSINESS EMPLOYEES...............................................................19
BUYER.............................................................................1
BUYER CONFIDENTIAL INFORMATION...................................................39
BUYER DAMAGES....................................................................50
BUYER DISCLOSURE SCHEDULES.......................................................31
BUYER GROUP.......................................................................1
BUYER INDEMNITIES................................................................50
BUYER PLANS......................................................................15
BUYER SURVIVAL DATE..............................................................39
CASES............................................................................23
CLAIM............................................................................52
CLOSING...........................................................................7
CLOSING DATE......................................................................7
CODE..............................................................................7
COMPETITIVE BUSINESS.............................................................39
CONDENSA MATTERS..................................................................6
CONTRACTS.........................................................................1
COPYRIGHTS.......................................................................20
DISCLOSURE SCHEDULES.............................................................17
DIVISION EMPLOYEES...............................................................26
DOMAIN NAMES.....................................................................20
DTSC..............................................................................5
EARN-OUT.........................................................................11
EARN-OUT PERIOD..................................................................13
EARN-OUT RESOLUTION PERIOD.......................................................12
EARN-OUT STATEMENT...............................................................11
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END DATE.........................................................................54
ENVIRONMENTAL CLAIMS.............................................................27
ENVIRONMENTAL LAWS...............................................................28
ENVIRONMENTAL PERMITS............................................................27
ERISA AFFILIATE..................................................................26
ESC SAVINGS PLAN.................................................................16
EXCHANGE ACT.....................................................................32
EXCLUDED ASSETS...................................................................3
EXCLUDED INTELLECTUAL PROPERTY....................................................4
EXCLUDED LIABILITIES..............................................................5
EXCLUDED REAL PROPERTY............................................................4
FIBER SUPPLY AGREEMENT............................................................8
FINAL STATEMENT...................................................................9
FINANCIAL STATEMENTS.............................................................18
FINANCING........................................................................32
FINANCING LETTERS................................................................31
FOREIGN CONVEYANCE DOCUMENTS......................................................3
FORM 8-K.........................................................................37
FORMER REAL PROPERTY.............................................................27
FREE PERIOD......................................................................45
GAAP.............................................................................10
GOVERNMENTAL AUTHORITY...........................................................58
HAZARDOUS SUBSTANCES.............................................................28
HSR ACT..........................................................................17
INDEMNITY PERIOD.................................................................50
INDEPENDENT ACCOUNTING FIRM......................................................10
INSTRUMENT OF ASSUMPTION..........................................................4
INTELLECTUAL PROPERTY............................................................20
INTELLECTUAL PROPERTY ASSIGNMENT..................................................3
INTERIM STATEMENTS...............................................................12
KEY SUPPLIERS....................................................................29
KNOWLEDGE........................................................................58
LEASED REAL PROPERTY..............................................................2
LEASES...........................................................................22
LICENSES.........................................................................23
LIENS............................................................................22
MATERIAL ADVERSE EFFECT..........................................................20
MULTIPLE TRANSFERS................................................................3
NET TANGIBLE BOOK VALUE OF THE BUSINESS..........................................10
NON-U.S. AGREEMENTS...............................................................6
NON-U.S. COMPANIES................................................................6
OFFEREE..........................................................................14
OPHTHALMIC EARN-OUT REVENUE......................................................13
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OTHER INSTRUMENTS.................................................................3
PARENT............................................................................1
PARENT BALANCE SHEET.............................................................32
PARENT SEC DOCUMENTS.............................................................32
PARENT SECURITIES................................................................45
PARENT STOCK.....................................................................45
PARENT SUBSIDIARIES...............................................................1
PATENTS..........................................................................20
PERMITS...........................................................................2
PERMITTED ENCUMBRANCES...........................................................22
PERSON...........................................................................58
PLANS............................................................................26
POLICIES.........................................................................28
QUALIFYING CONDITIONS............................................................14
REAL PROPERTY LAWS...............................................................22
RECEIVABLES.......................................................................2
REGISTERED INTELLECTUAL PROPERTY.................................................20
REGISTRATION RIGHTS AGREEMENT.....................................................8
RELEASE..........................................................................28
RESOLUTION PERIOD................................................................10
RETAINED BUSINESS................................................................57
SANTA XXXXX SUBLEASE AGREEMENT...................................................43
SECURITIES ACT...................................................................45
SELLER............................................................................1
SELLER CONFIDENTIAL INFORMATION..................................................39
SELLER DAMAGES...................................................................51
SELLER DIRECTOR..................................................................40
SELLER INDEMNITEES...............................................................51
SELLER SAVINGS PLAN..............................................................16
SELLER SUBSIDIARIES..............................................................17
SELLER SURVIVAL DATE.............................................................39
SOFTWARE.........................................................................20
SOLD OPHTHALMIC BUSINESS.........................................................11
STANDSTILL PERIOD................................................................44
STANFORD INDUSTRIAL PARK MATTER...................................................5
STAR..............................................................................2
STAR AGREEMENT....................................................................2
SUBSIDIARY.......................................................................58
SUPPLY AGREEMENT..................................................................8
TARGET AMOUNT.....................................................................9
TAX RETURN.......................................................................26
TAXES............................................................................26
THE NOTE..........................................................................7
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THRESHOLD AMOUNT.................................................................45
TOTAL PURCHASE PRICE..............................................................7
TRADE SECRETS....................................................................20
TRADEMARKS.......................................................................20
TRANSFER.........................................................................44
TRANSFER TAXES...................................................................53
TRANSFERRED INTELLECTUAL PROPERTY.................................................2
TRANSFERRED REGISTERED INTELLECTUAL PROPERTY.....................................20
URLS.............................................................................20
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This ASSET PURCHASE AGREEMENT, dated as of February 25, 2001 (the
"AGREEMENT"), is by and among ESC Medical Systems Ltd., a corporation organized
under the laws of the State of Israel ("PARENT"), Energy Systems Holdings Inc.,
a Delaware corporation and subsidiary of Parent ("BUYER", and together with
Parent and Parent Subsidiaries (as defined in Section 1.1), "BUYER GROUP") and
Coherent, Inc., a Delaware corporation ("SELLER").
WHEREAS, Seller is currently engaged in the Business (as defined in Section
9.7(a));
WHEREAS, Parent and Buyer, directly or through the Parent Subsidiaries,
desire to purchase and assume from Seller, and Seller desires to sell, assign,
transfer, convey and deliver to Parent, Buyer and Parent Subsidiaries, certain
assets, obligations and liabilities relating to the Business, all in the manner
and subject to the terms and conditions set forth herein;
WHEREAS, Seller desires to retain and continue conducting the Retained
Business (as defined in Section 9.7 (b)); and
WHEREAS, Buyer Group and Seller desire to make certain representations and
warranties and other agreements in connection with the purchase and sale of the
assets, obligations and liabilities set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
TRANSFER OF ASSETS AND LIABILITIES
SECTION 1.1 ASSETS TO BE SOLD; ASSUMPTION OF LIABILITIES; TRANSFER OF
NON-U.S. ASSETS
(a) Subject to the terms and conditions of this Agreement, at the
Closing (as defined in Section 1.3), Seller will sell, convey, assign, transfer
and deliver, or will cause its subsidiaries to sell, convey, assign, transfer
and deliver, to Buyer, Parent or one or more domestic or foreign subsidiaries of
Parent reasonably designated by Parent prior to the Closing ("PARENT
SUBSIDIARIES"), and Parent and Buyer agree to purchase and acquire, or will
cause to be purchased and acquired by Parent Subsidiaries, from Seller, free and
clear of any Liens (as defined in Section 3.8), except for Permitted
Encumbrances (as defined in Section 3.8), all of Seller's and Seller
subsidiaries' right, title and interest in and to the assets, properties and
rights primarily related to the Business, other than Excluded Assets (as defined
in Section 1.1(c)) (collectively, the "ASSETS"). The Assets shall include, among
other things, the following:
(i) subject to Section 5.7, all of Seller's contracts,
agreements, license agreements, including amendments and supplements,
modifications, side letters or agreements primarily related to the Business,
including those identified in Schedule 1.1(a)(i) of the Disclosure Schedules (as
defined in the introductory sentence to Article III) (collectively, the
"CONTRACTS");
(ii) all marketing, sales and promotional literature,
correspondence, memoranda, minute books, books of account, records, files,
documents, financial records, bills, accounting, internal and audit records,
operating manuals, personnel and payroll records, customer and supplier lists
and files, including customer lists, preprinted material, art work and other
similar items in the possession of the Seller to the extent exclusively related
to the Business, (the "BOOKS AND RECORDS") and copies of the portions of all
Books and Records and tax returns that relate in any material respect to the
Business but are not included therein;
(iii) all accounts receivable representing the right to receive
payments in respect of goods or services primarily related to the Business to
the extent delivered or provided by the Division (as defined in Section 9.7(a))
("RECEIVABLES");
(iv) the Intellectual Property of Seller and its subsidiaries
primarily related to the Business, but excluding the Excluded Intellectual
Property ("TRANSFERRED INTELLECTUAL PROPERTY");
(v) all payments, deposits (including security deposits) and
prepaid expenses made by Seller, in each case primarily related to the Business,
and all rights to insurance proceeds in respect of any of the Assets or to the
extent primarily related to the Business;
(vi) the leases of real property set forth on Schedule
1.1(a)(vi) of the Disclosure Schedules together with all leasehold improvements
owned by Seller and located on the real property subject to such leases and all
security or similar deposits made under such leases (collectively, the "LEASED
REAL PROPERTY");
(vii) all furnishings, furniture, office supplies, fixtures,
equipment (including personal property, plant and equipment) and other tangible
personal property primarily related to the Business or the Leased Real Property;
(viii) all rights under warranties, representations and guarantees
made by suppliers, manufacturers or contractors to the extent, but only to the
extent related to the operation of the Business or primarily related to any of
the Assets but not to the extent related to the Retained Business;
(ix) all licenses, permits, authorizations, consents, approvals,
orders, filings or registrations with any court or administrative or
governmental authority held by Seller primarily related to the Business to the
extent transferable to Buyer ("PERMITS"), including, without limitation, those
listed on Schedule 1.1(a)(ix) of the Disclosure Schedules;
(x) except as set forth in section 1.1(c)(xiii), all the rights
under the Agreement and Plan of Reorganization, dated as of December 7, 1998, by
and among Seller, Medical Technologies Acquisition, Inc., Palomar Medical
Technologies, Inc., Star Medical Technologies, Inc. ("STAR"), Xxxxxx X. Xxxxx,
Xxxxx X. Xxxxx and Xxxxx X. Xxxxxxxxx, and the License Agreement referred to
therein (collectively, the "STAR AGREEMENT");
(xi) all claims and causes of action primarily related to the
Business of Seller against other persons or entities (regardless of whether or
not such claims and causes of action have been asserted by Seller);
(xii) all inventory, supplies and any other disposables or
consumables primarily related to the Business and reflected on the Final
Statement;
(xiii) all claims against third parties for past infringement of
the Transferred Intellectual Property; and
(xiv) all rights of indemnity, warranty rights, rights of
contribution, rights to refunds, rights of reimbursement and other rights of
recovery possessed by Seller and primarily related to the Business except for
losses incurred prior to the Closing, if and to the extent reflected in the
Final Statement.
(b) Such sale, conveyance, assignment, transfer and delivery of the
Assets will be effected by delivery by Seller to Parent, Buyer and Parent
Subsidiaries at the Closing of
(i) a duly executed xxxx of sale ("XXXX OF SALE") in the form
attached hereto as Exhibit A;
(ii) with respect to any Assets located or to be located in any
jurisdiction other than the United States, one or more bills of sale or similar
conveyance documents as may be required under the law of the applicable
jurisdiction to validly convey, assign and transfer such Assets (the "FOREIGN
CONVEYANCE DOCUMENTS");
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(iii) instruments of assignment with respect to any Leased Real
Property to be transferred to Buyer Group pursuant to Section 1.1(a)(vi) that is
held by Seller, in the form attached hereto as Exhibit B (collectively, the
"ASSIGNMENT OF LEASES"), assigning Seller's interest under such Leased Real
Property;
(iv) an instrument of assignment assigning Seller's interest in
the Registered Transferred Intellectual Property by means of an assignment in
the form attached hereto as Exhibit C (the "INTELLECTUAL PROPERTY ASSIGNMENT");
and
(v) such other good and sufficient instruments of sale,
conveyance, transfer and assignment, as shall be necessary to vest in Parent,
Buyer or Parent Subsidiaries good and valid title to the Assets (collectively,
the "OTHER INSTRUMENTS"), free and clear of any Liens, except for Permitted
Encumbrances (as defined in Section 3.8). To the extent that Parent prior to the
Closing requests Seller to convey, assign, transfer and deliver all or any
portion of the Assets to Parent Subsidiaries ("MULTIPLE TRANSFERS"), Seller will
execute such Bills of Sale, Foreign Conveyance Documents, Assignments of
Licenses, Intellectual Property Assignments, licenses (as described in Section
5.14) and Other Instruments as may be necessary to validly convey, assign and
transfer the Assets; PROVIDED, HOWEVER, that the Buyer Group shall be
responsible for the payment of all fees for applicable recordations and filings
of documents, instruments, declarations, affidavits or other writings necessary
to effect any applicable assignments under this section 1.1(b) to Parent and/or
such designated subsidiaries (other than Transfer Taxes in accordance with
Section 7.6 hereof).
(c) Notwithstanding anything contained in Section 1.1(a) to the
contrary, there are expressly excluded from the assets and properties to be
sold, conveyed, assigned, transferred and delivered any and all assets primarily
related to the Retained Business including, without limitation, Intellectual
Property primarily related to the Retained Business, and the following assets
(collectively, the "EXCLUDED ASSETS"):
(i) the consideration delivered by Buyer Group to Seller
pursuant to this Agreement;
(ii) cash or other cash equivalents, notes receivable (other
than as set forth in Section 1.2(b)) and securities (including, without
limitation, the securities of the direct and indirect subsidiaries of the
Seller, interest in any joint venture of the Seller and any minority interest of
the Seller (equity or otherwise) in any other person);
(iii) all rights of Seller under this Agreement, the Note and the
Ancillary Agreements;
(iv) any of Seller's intercompany receivables, corporate seals,
minute books, and other corporate records;
(v) all records prepared in connection with the sale of the
Business and the Assets;
(vi) all assets of or assets relating to the Plans of the
Seller;
(vii) any Registered Intellectual Property (as defined in Section
3.7(a)) of Seller not set forth on Schedule 3.7(a) of the Disclosure Schedules,
any Intellectual Property listed on Schedule 1.1(c)(vii) of the Disclosure
Schedules and the Licensed Intellectual Property (the "EXCLUDED INTELLECTUAL
PROPERTY");
(viii) all payments, deposits (including security deposits) and
prepaid expenses primarily related to the Retained Business, and all rights to
insurance proceeds (x) in respect of any of the Excluded Assets or (y) to the
extent primarily related to the Retained Business;
(ix) all leasehold interests in real property together with all
leasehold improvements owned by Seller and located thereon and all security or
similar deposits made under such leases other than the Leased Real Property (the
"EXCLUDED REAL PROPERTY");
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(x) all furnishings, furniture, office supplies, fixtures,
equipment and other tangible personal property primarily related to the Excluded
Real Property or the Retained Business;
(xi) all rights under warranties, representations and guarantees
made by suppliers, manufacturers or contractors in connection with the operation
of the Retained Business whether arising prior to, after or on the Closing;
(xii) all licenses, permits, authorizations, consents, approvals,
orders, filings or registrations with any court or administrative or
governmental authority primarily related to the Retained Business, including,
without limitation, those listed on Schedule 1.1(c)(xii) of the Disclosure
Schedules;
(xiii) any rights and causes of action under the Star Agreement
relating to any pending claims for indemnifiable losses, including without
limitation the claim set forth on Schedule 1.1(c)(xiii) of the Disclosure
Schedules;
(xiv) any rights or causes of action against the parties
identified on Schedule 1.1(c)(xiv) of the Disclosure Schedules;
(xv) all claims and causes of action related to the Business
against other persons or entities, (regardless of whether or not such claims and
causes of action have been asserted by Seller) primarily related to the Retained
Business or the Excluded Assets, as regards to any matter arising prior to,
after or on the Closing;
(xvi) the Assets listed on Schedule 1.1(c)(xvi) of the Disclosure
Schedule; and
(xvii) all rights of indemnity, warranty rights, rights of
contribution, rights to refunds, rights of reimbursement and other rights of
recovery possessed by Seller and related to the Business to the extent primarily
related to the Retained Business.
(d) At the Closing, Buyer Group will deliver to Seller an instrument
of assumption substantially in the form of Exhibit D hereto (the "INSTRUMENT OF
ASSUMPTION"), whereby Buyer Group will undertake, assume and agree to perform,
pay and discharge when due, and hold Seller harmless from and indemnify Seller
against any and all debts, liabilities and obligations, absolute or contingent,
of Seller, other than Excluded Liabilities,
(i) under any Contract (to the extent assigned or rights are
otherwise transferred to Buyer Group herein);
(ii) primarily relating to the ownership, use or operation of
the Assets or primarily related to the conduct of the Business (other than
primarily relating to the ownership, use or operation of the Excluded Assets or
primarily relating to the conduct of the Retained Business);
(iii) any liability relating to Buyer Group's ownership, use or
operation of the Assets or conduct of the Business following the Closing;
(iv) for Taxes (as defined in Section 3.12(m)) arising in
respect of taxable periods beginning after the Closing Date or, with respect to
any taxable period that begins before but ends after the Closing Date, that
portion of such taxable year that begins after the Closing Date relating to
Buyer Group's ownership or operation of the Business after the Closing; and
(v) all liabilities, including severance and retention costs
and liabilities and obligations, after the Closing for the Continuing Employees
as defined and in accordance with Section 2.3 hereof (collectively, (i) through
(v), inclusive, are referred to herein as the "ASSUMED LIABILITIES").
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(e) Notwithstanding anything contained in Section 1.1(d) to the
contrary, there are expressly excluded from the Assumed Liabilities any debts,
liabilities and obligations primarily related to either the Excluded Assets or
Retained Business (the "EXCLUDED LIABILITIES"). In addition to the preceding
sentence, Excluded Liabilities shall also include any debts, liabilities and
obligations that
(i) are (x) not specifically assumed by Buyer, (y) are
primarily related to Seller's ownership, use or operation of the Excluded Assets
or primarily related to the conduct of the Retained Business, and (z) are
retained by Seller pursuant to the terms hereof, including, without limitation,
those listed on Schedule 1.1(e) of the Disclosure Schedules;
(ii) any indebtedness for borrowed money owed to third parties,
including interest and penalties in connection therewith;
(iii) are for Taxes arising in respect of the transactions
contemplated in this Agreement or arising in respect of taxable periods ending
on or before the Closing Date or, with respect to taxable periods that begin
before but end after the Closing Date, the Taxes attributable to that portion of
such taxable year that begins before and ends on the Closing Date;
(iv) are intercompany payables or indebtedness;
(v) arising out of or relating to matters addressed in and/or
contamination associated with the (a) Department of Toxic Substances Control
("DTSC") Remedial Action Order No. 88/89-016 issued to Coherent Inc. with
respect to the Hillview Xxxxxx Regional site, (b) DTSC Order No. ISE 90/91-005
with respect to the property located at 0000 Xxxxxx Xxxxx, Xxxx Xxxx, and (c)
the DTSC Order No. HSA 90/91-003, each as amended, with respect to property
located at 0000 Xxxxxxxx Xxx., Xxxx Xxxx, Xxxxxxxxxx, except to the extent, but
only to the extent, that any of the contamination conditions in this subsection
(vi) are caused, contributed to or exacerbated by Buyer, its agents, affiliates
or representatives, assignees or invitees (excluding Seller) (the "STANFORD
INDUSTRIAL PARK MATTER");
(vi) arising out of the presence on or before the Closing Date
of Hazardous Substances (as defined in Section 3.14 hereof) in the soil or
groundwater of property located at 0000 Xxxxxxxx, Xxxxx Xxxxx, Xxxxxxxxxx
(including, without limitation, any location to which such contamination
migrates to at any time) except to the extent, but only to the extent, that such
Hazardous Substances are caused, contributed to, or exacerbated by Buyer, its
agents, representatives, affiliates, assignees or invitees (excluding Seller)
("CONDENSA MATTERS");
(vii) the litigation set forth on Schedule 3.9 of the Disclosure
Schedules (as updated as of the Closing); and
(viii) relate to the employment by Seller of any employee of
Seller or the Seller Subsidiaries prior to the Closing, except as specifically
set forth in Section 2.3.
(f) Promptly following the execution and delivery of this Agreement,
Buyer Group and Seller will cooperate in good faith to prepare and execute
appropriate agreements to convey to Buyer Group the Assets, subject to the
Assumed Liabilities and Permitted Encumbrances, held by subsidiaries of Seller
incorporated under the laws of a country other than the United States or
representative offices of such subsidiaries (the "NON-U.S. COMPANIES"). The
parties will use their best efforts to effect such transfers on the most
efficient basis, including minimizing transfer taxes. Such transfers shall be on
terms (including, but not limited to, conditions to Closing, representations and
warranties and indemnification obligations) consistent with this Agreement,
except, and only to the extent, of modifications required to provide for the
intent of this Agreement under applicable law (and in such case the minimal
modifications required to do so) as may be required by applicable law. Such
agreements are collectively referred to herein as the "NON-U.S. AGREEMENTS." The
purchase prices payable pursuant to the Non-U.S. Agreements shall be paid in
cash.
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SECTION 1.2 PURCHASE PRICE
(a) Subject to the terms and conditions of this Agreement, and in
consideration of the sale, conveyance, assignment, transfer and delivery of the
Assets, Buyer or Parent, as the case may be, will deliver or cause to be
delivered by Parent Subsidiaries, in full payment, together with the Assumed
Liabilities, for the sale, conveyance, assignment, transfer and delivery of the
Assets, the following:
(i) payment by Buyer at the Closing by wire transfer to such
bank account(s) as specified by Seller in Schedule 1.2(a)(i) of the Disclosure
Schedules (or as otherwise provided in writing to Parent), in immediately
available United States funds, of an aggregate amount up to but not exceeding
$100,000,000;
(ii) payment by Parent at the Closing by wire transfer to such
bank account(s) as specified by Seller in Schedule 1.2(a)(i) of the Disclosure
Schedules (or as otherwise provided in writing to Parent), in immediately
available United States funds, of an amount equal to the excess, if any, of
$100,000,000 over the amount paid by Buyer to Seller pursuant to Section
1.2(a)(i) hereof (the sum of any payments made by Buyer and Parent pursuant to
Sections 1.2(a)(i) and 1.2(a)(ii) hereof, the "CLOSING CASH PURCHASE PRICE");
(iii) with respect to the Non-U.S. Agreements, payment by the
appropriate Parent Subsidiaries at the Closing by wire transfer to such bank
account(s) as specified by Seller in Schedule 1.2(a)(i) of the Disclosure
Schedules (or as otherwise provided in writing to Parent), in immediately
available United States funds, of the amount of cash consideration contemplated
by the Non-U.S. Agreements (the "LOCAL JURISDICTION CASH CONSIDERATION") (the
sum of the Closing Cash Purchase Price and the Local Jurisdiction Cash
Consideration, as adjusted pursuant to Section 1.8, the "FINAL CASH PURCHASE
PRICE");
(iv) the issuance and delivery at the Closing by Parent to
Seller of a duly executed note in the principal amount of $12,904,000 (the
"NOTE"), in the form attached hereto as Exhibit E;
(v) the issuance at the Closing by Parent to Seller of one or
more stock certificates registered in the name of Seller or one or more
controlled affiliates of Seller as reasonably designated by Seller prior to the
Closing representing 5,432,099 ordinary shares of Parent, NIS 0.10 par value per
share, subject to adjustment for any stock split, reverse split or stock
dividend or similar transaction occurring after the date hereof and prior to the
Closing (the "PARENT STOCK") (less a number of shares of Parent Stock with a
value as of the Closing equal to the Local Jurisdiction Cash Consideration); and
(vi) payment of the Earn-out (as defined in Section 1.7), if
any, of up to $25,000,000, in accordance with Section 1.7 of this Agreement.
The sum of (i) the Final Cash Purchase Price, the Note, the Parent Stock
and Earn-Out and (ii) the absolute value of the Assumed Liabilities to the
extent reflected on the Final Statement and associated with the operations
transferred in asset transactions, is sometimes referred to herein as the "TOTAL
PURCHASE PRICE." The Total Purchase Price shall include amounts payable under
the Non-U.S. Agreements.
(b) At the Closing, Parent shall issue to Seller, and Seller shall
purchase from Parent, additional shares of Parent Stock with a value as of the
Closing equal to the Local Jurisdiction Cash Consideration for cash in an amount
equal to the Local Jurisdiction Cash Consideration.
SECTION 1.3 CLOSING
The closing of the transactions contemplated by this Agreement (the
"CLOSING") shall take place not later than 10:00 A.M., local time, at the
offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, 000 Xxxx
Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000 on the third business day following the
satisfaction or waiver of all of the conditions
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set forth in Article VI hereof or at such other time or place as to which the
parties shall agree. The effective time of the Closing is sometimes referred to
herein as the "CLOSING DATE." The parties agree to use their respective
commercially reasonable efforts to cause the Closing to occur as promptly as
practicable and, in any event, before April 15, 2001.
SECTION 1.4 DELIVERIES BY SELLER
At the Closing, Seller will deliver or cause to be delivered to Buyer
Group (unless previously delivered) the following:
(a) a duly executed counterpart of the Xxxx of Sale in substantially
the form as set forth in Exhibit A;
(b) a duly executed counterpart of the Assignment of Leases in
substantially the form as set forth in Exhibit B;
(c) the officer's certificate referred to in Section 6.3(c);
(d) a certificate of Seller's non-foreign status that complies with
the requirements of Section 1445 of the Internal Revenue Code of 1986, as
amended (the "CODE"), and the Treasury Regulations promulgated thereunder;
(e) a duly executed counterpart of the Intellectual Property
Assignment for each of the Transferred Registered Intellectual Property
substantially in the form as set forth in Exhibit C;
(f) a duly executed counterpart of the Supply Agreement, in the form
attached hereto as Exhibit G (the "SUPPLY AGREEMENT");
(g) a duly executed copy of the Fiber Supply Agreement in the form
attached hereto as Exhibit H (the "FIBER SUPPLY AGREEMENT");
(h) a duly executed counterpart of the Registration Rights Agreement
related to the Parent Stock (as defined in 5.19), in the form attached hereto as
Exhibit I (the "REGISTRATION RIGHTS AGREEMENT");
(i) a duly executed counterpart of the Santa Xxxxx Sublease Agreement
(as defined in Section 5.15), in the form attached hereto as Exhibit J;
(j) The Supply Agreement, the Fiber Supply Agreement, the Registration
Rights Agreement, the Note, the Non-U.S. Agreements (as defined below), and
other agreements required elsewhere in the Agreement are collectively referred
to as the "ANCILLARY AGREEMENTS";
(k) The Foreign Conveyance Documents; and
(l) all other documents, instruments, declarations, affidavits and
writings as may be necessary to assign, convey, transfer and deliver to Parent,
Buyer or any Parent Subsidiary, as applicable, good and valid title to the
Assets, free of any Liens other than Permitted Encumbrances or as may be
required to be delivered by Seller at or prior to the Closing Date pursuant to
this Agreement and the Non-U.S. Agreements; PROVIDED, that Buyer Group and
Seller shall each file or record or cause to be filed and recorded such
documents, instruments, declarations, affidavits or other writings as may be
necessary in accordance with applicable law; PROVIDED, FURTHER, HOWEVER, that
the Buyer Group shall be responsible for the payment of all fees for applicable
recordations and filings of documents, instruments, declarations, affidavits or
other writings necessary to effect any applicable assignments under this Section
1.4(k) (other than Transfer Taxes in accordance with Section 7.6 hereof).
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SECTION 1.5 DELIVERIES BY BUYER GROUP
At the Closing, Buyer Group will deliver or cause to be delivered to
Seller or, in the case of clause (a), to the affiliates of Seller who are
parties to the Non-U.S. Agreements (unless previously delivered) the following:
(a) the Closing Cash Purchase Price, the Parent Stock and the duly
executed Note referred to in Section 1.2; PROVIDED, that if Seller shall fail to
deliver the certification of non-foreign status required to be delivered by
Seller at the Closing pursuant to Section 1.4(g) hereof, Buyer Group may (but
shall not be required to) withhold from the cash payable at the Closing and pay
over to the appropriate taxing authority an amount equal to ten percent (10%) of
the total "amount realized" (as defined in Internal Revenue Service Treasury
Regulation 1.1445 - 1(g)(5)) by Seller or its subsidiaries for the transfer of
any "U.S. real property interests" (as defined in section 1445 of the Code). A
portion of the Closing Cash Purchase Price shall be paid in accordance with the
terms of the Non-U.S. Agreements, with the remainder paid to Seller;
(b) duly executed counterpart of the Assignment of Leases pursuant to
which a member of the Buyer Group will assume obligations under the Leases
accruing after the Closing Date;
(c) a duly executed Instrument of Assumption;
(d) the officer's certificate referred to in Section 6.2(c);
(e) a duly executed counterpart of the Intellectual Property
Assignment;
(f) a duly executed counterpart of the Supply Agreement;
(g) a duly executed counterpart of the Fiber Supply Agreement;
(h) a duly executed counterpart of the Registration Rights Agreement;
(i) a duly executed counterpart of the Santa Xxxxx Sublease Agreement;
(j) a duly executed counterpart of each of the Ancillary Agreements;
and
(k) all other documents, instruments and writings required to be
delivered by Buyer Group at or prior to the Closing Date pursuant to this
Agreement and the Ancillary Agreements.
SECTION 1.6 PREPARATION OF FINAL STATEMENT
(a) On the tenth (10) business day following the completion and
acceptance by all parties of a statement (the "FINAL STATEMENT") of the Net
Tangible Book Value of the Business (as defined below in Section 1.6(c)) as of
the close of business on the Closing Date, either (i) the Buyer Group shall pay
to Seller (together with interest as described below) the amount by which the
Net Tangible Book Value of the Business as set forth in the Final Statement
exceeds $53,700,000 (the "TARGET AMOUNT") by wire transfer pursuant to Schedule
1.2(a)(i) of the Disclosure Schedules in U.S. funds, or (ii) Seller shall pay to
Buyer Group (together with interest as described below) the amount by which the
Net Tangible Book Value of the Business as set forth in the Final Statement is
less than the Target Amount; PROVIDED, that in no event shall Buyer Group be
required to pay to Seller more than $6,000,000 hereunder; PROVIDED, FURTHER,
HOWEVER, any and all amounts payable by Seller hereunder shall be satisfied
first by reducing the principal amount of the Note and thereafter by Seller in
cash. In the event the Note is reduced in accordance with the preceding
sentence, Seller shall surrender to Parent the Note so Parent may effect such
reduction and reissue a new Note in the correct principal amount. In the event
of a payment pursuant to the preceding sentence, such amount shall bear simple
interest at an annual rate of seven (7) percent, accruing from the Closing Date
to the date of payment.
-8-
(b) The Final Statement shall be prepared by Seller in the following
manner:
(i) within seventy-five (75) days after the Closing Date,
Seller shall deliver to Parent the Final Statement, presenting the Net Tangible
Book Value of the Business at the close of business on the Closing Date,
together with any amendments to the Allocation (as defined below). The Final
Statement shall be accompanied by a report setting forth (i) the Net Tangible
Book Value of the Business, as reflected in the Final Statement, and (ii) the
amount of any adjustment to the Closing Cash Purchase Price to be paid and by
whom pursuant to Section 1.8 and the basis therefore;
(ii) following the Closing, Seller shall give Parent and the
independent auditors of Parent full access at all reasonable times to the
working papers relating to the Final Statement and any amendment to the
Allocation (as defined below), including but not limited to any descriptions of
the methodology, procedures, internal audits and analysis undertaken in
connection with the preparation of the Final Statement. Upon reasonable request
of Parent, Seller will cause its relevant employees and outside accountants to
be available for questions and discussions regarding the preparation of the
Final Statement and during normal business hours upon reasonable notice. Within
forty-five (45) days following the delivery to Parent of the Final Statement and
any amendment to the Allocation (or, if later, 15 days after Buyer files with
the Securities and Exchange Commission its quarterly report on Form 10-Q for the
quarter in which the Closing occurs) (the "DISPUTE PERIOD"), Parent shall notify
Seller of any dispute of any item contained in the Final Statement or any
amendment to the Allocation, which notice shall set forth in reasonable detail
the basis for such dispute. If Parent fails to notify Seller of any such dispute
within such Dispute Period, the Final Statement and any amendment to the
Allocation shall be deemed to be accepted by Parent. In the event that Parent
shall so notify Seller of any dispute, Seller and Parent shall cooperate in good
faith to resolve in writing such dispute as promptly as possible; and
(iii) if Parent and Seller are unable to resolve any such dispute
within fifteen (15) days of Buyer's delivery of such notice (the "RESOLUTION
PERIOD"), then all amounts remaining in dispute shall be submitted to a "big
five" independent accounting firm (the "INDEPENDENT ACCOUNTING FIRM") selected
by Seller and Parent within ten (10) days after the expiration of the Resolution
Period. If Seller and Parent are unable to agree on the Independent Accounting
Firm, then Parent and Seller shall each have the right to request the American
Arbitration Association to appoint the Independent Accounting Firm, which shall
not have had a material relationship with Seller, Parent or any of their
respective affiliates within the past two (2) years. Each party agrees to
execute, if requested by the Independent Accounting Firm, a reasonable
engagement letter. All fees and expenses relating to the work, if any, to be
performed by the Independent Accounting Firm shall be borne equally by Seller
and Parent. The Independent Accounting Firm shall act as an arbitrator to
determine only those issues still in dispute and shall be limited to those
adjustments, if any, that need be made to the Final Statement and any amendment
to the Allocation to the extent the Final Statement was not prepared in
accordance with Section 1.6(c). The Independent Accounting Firm's determination
shall be requested to be made within thirty (30) days of its selection, shall be
set forth in a written statement delivered to Seller and Parent and shall be
final, binding and conclusive. The Final Statement, as modified by resolution of
any disputes by Parent and Seller or by the Independent Accounting Firm, shall
be the "FINAL STATEMENT."
(c) The term "NET TANGIBLE BOOK VALUE OF THE BUSINESS" shall mean the
Assets (excluding goodwill, trademarks, tax assets and other intangible assets
and excluding any purchase accounting adjustments as a result of the
transactions contemplated in this Agreement and the Ancillary Agreements) less
the Assumed Liabilities, as calculated in accordance with United States
generally accepted accounting principles, practices and methods ("GAAP"),
applied consistently with the Balance Sheets (as defined in Section 3.4),
subject to the exceptions set forth on Schedule 3.4 of the Disclosure Schedules;
it being understood and agreed that to the extent any items, classes of items,
line items or accounts existing on September 30, 2000 are reflected in the Final
Statement but are not reflected in the Balance Sheet as of September 30, 2000
set forth in Schedule 3.4 of the Disclosure Schedule (the "CURRENT BALANCE
SHEET"), or vice-versa, then the Target Amount will be adjusted to include and
reflect any such items or accounts not previously reflected as such items,
classes of items, line items or accounts were reflected by Seller on its balance
sheets as of September 30, 2000. For avoidance of doubt, (i) to the extent there
is a liability reflected on the Current Balance Sheet but such liability
-9-
would not have been, and is not, an Assumed Liability and therefore is not
included on the Final Statement, the Target Amount shall be increased by the
carrying value of such liability on Seller's balance sheet as of September 30,
2000, (ii) to the extent there is a liability that was on Seller's balance sheet
as of September 30, 2000 that was not reflected on the Current Balance Sheet but
such liability is an Assumed Liability and therefore is included on the Final
Statement, the Target Amount shall be decreased by the carrying value of such
liability on Seller's balance sheet as of September 30, 2000, (iii) to the
extent there is an asset on the Current Balance Sheet but such asset would not
have been, and is not, an Asset and therefore is not included in the Final
Statement, the Target Amount shall be decreased by the carrying value of such
asset on Seller's balance sheet as of September 30, 2000, and (iv) to the extent
there is an asset that was on Seller's balance sheet as of September 30, 2000
that was not reflected on the Current Balance Sheet but such asset is an Asset
and therefore is included on the Final Statement, the Target Amount shall be
increased by the carrying value of such asset on Seller's balance sheet as of
September 30, 2000. It is further understood and agreed that any assets and
liabilities on the Final Statement shall, to the extent so reflected, be treated
as Assets and Assumed Liabilities, which shall not, in any way, limit the
provisions set forth in Section 1.1(a) and 1.1(d).
SECTION 1.7 EARN-OUT PAYMENT CALCULATION
(a) On the fifth (5th) business day following the earlier of (i)
acceptance by Seller of a certificate executed by an officer of Buyer setting
forth the Ophthalmic Earn-Out Revenue (as defined in Section 1.7(d) hereof)
and setting forth Buyer Group's calculation of the Earn-Out (the "EARN-OUT
STATEMENT") or (ii) the final, binding and conclusive determination by an
Independent Accounting Firm of the Earn-Out as contemplated by Section
1.7(b), Buyer Group shall pay to Seller the amount of the Earn-Out in cash,
except as expressly set forth herein, delivered by wire transfer to the bank
account set forth in Section 1.2(a), or such other wire instruction
information as may be provided by Seller to Buyer Group or Parent. The
"EARN-OUT" shall equal an amount equal to $215,000 for every $1,000,000 (and
a prorated amount for any amounts less than $1,000,000) of Ophthalmic
Earn-Out Revenue in excess of $450,000,000 during the Earn-Out Period (as
defined in Section 1.7(d)), if any; PROVIDED, HOWEVER, that in no event shall
the total amount of the Earn-Out exceed $25,000,000 (whether paid in one or
more installments). Notwithstanding the foregoing, in the event that Buyer
Group, following the Closing and during the Earn-Out Period, sells or
disposes, in one or a series of transactions, of the business relating to
lasers or laser devices for the ophthalmic market (the "SOLD OPHTHALMIC
BUSINESS"), the Earn-Out shall equal fifty percent (50%) of the fair market
value of the proceeds (net of all documented out-of-pocket expenses in
connection with services provided by third parties with respect to such
transaction up to an aggregate of $5,000,000) received by Buyer Group from
the sale of the Sold Ophthalmic Business in excess of $110,000,000, but in no
event shall the Earn-Out exceed $25,000,000 (whether paid in one or more
installments). If Buyer Group shall have received all or a portion of the
proceeds for the Sold Ophthalmic Business in registered publicly traded
securities (with the remainder in cash), Buyer Group shall be entitled to (x)
retain any cash consideration received so that Buyer Group should receive, to
the maximum extent possible, $110 million in cash and (y) to pay the Earn-Out
in cash and registered publicly traded securities in the same proportion as
the proceeds received by Buyer Group (excluding, for these purposes, any cash
received up to $110 million). If Buyer Group shall have received all or a
portion of the proceeds in property other than cash or registered publicly
traded securities, Buyer Group shall pay the Earn-Out in cash and such other
property in the same proportion as the proceeds received by Buyer Group. In
addition, if all or any portion of the proceeds from the sale of the Sold
Ophthalmic Business is contingent or deferred, such proceeds shall not be
treated as proceeds from the sale of the Sold Ophthalmic Business until
actually received by the Buyer Group. The fair market value of proceeds
received shall be calculated as follows: (i) in the case of cash, the amount
of cash denominated in United States dollars based upon the exchange rate
published in the Financial Times as the mid-point closing United States
dollar exchange on the day preceding the closing of the sale; (ii) in the
case of publicly traded securities, the average of the closing price of the
securities on the principal U.S. or foreign securities exchange upon which
the securities are listed, or if the securities are not traded on any such
exchange, the average of the closing sales prices or the closing bid
quotations of such securities on Nasdaq or any other principal securities
market upon which such securities are listed for the twenty (20) days
immediately preceding the closing of the sale; and (iii) in the case of all
other property other than cash or registered publicly traded securities, as
mutually agreed upon by Buyer Group and Seller, PROVIDED FURTHER if Buyer
Group and Seller cannot agree, the value as determined in writing by a
nationally recognized investment bank mutually agreed by Buyer Group and
Seller, provided, if the Buyer Group and
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Seller cannot agree on a single investment bank, each of the Buyer Group and
Seller shall be entitled to select one nationally recognized investment bank
and each investment bank shall determine the fair market value and deliver
its written valuation to Buyer Group and Seller within thirty (30) days after
selection of an investment bank by each of Seller and Buyer Group. In the
event that the two investment banks do not agree on a fair market value, the
fair market value shall be the average of the two valuations, except that if
the higher of the two valuations is greater than 25% of the lower valuation,
the two investment banks shall select another nationally recognized
investment bank who shall determine the fair market value independently of
the other two investment banks and without knowledge of the valuation of the
other two banks within thirty (30) days of appointment and the determination
of the third investment bank shall be arithmetically averaged with the two
prior valuations and the valuation farther from the average of the three
valuations shall be disregarded and the fair market value shall be the
average of the two remaining valuations. Each of Buyer Group and Seller will
pay (i) the fees and expenses incurred in connection with the valuation by
the investment bank selected by it, and (ii) one half of the fees and
expenses incurred in connection with the valuation by any investment bank
jointly selected in accordance with this Section 1.7.
(b) The Earn-Out Statement shall be prepared by Buyer Group in the
following manner:
(i) For each fiscal year prior to December 31, 2004, Buyer
Group shall cause to be delivered to Seller no later than ninety (90) days
following the end of Buyer's fiscal year, a certificate executed by Buyer's
Chief Financial Officer or President reflecting the net revenue generated by the
ophthalmic segment of the Business in the prior fiscal year (the "INTERIM
STATEMENTS").
(ii) Within ninety (90) days after December 31, 2004, Buyer
Group shall deliver to Seller the Earn-Out Statement;
(iii) Buyer Group shall give Seller and the independent auditors
and authorized representatives of Seller full access at all reasonable times to
the working papers related to the Earn Out Statement, the Interim Statements and
any amendments related to the Allocation including, but not limited to, any
description of the methodology, procedures, audits and analysis undertaken in
connection with the Earn Out Statement, the Interim Statements and any
amendments to the Allocation for purposes of preparing, reviewing and resolving
any disputes concerning the Interim Statements, the Earn-Out Statement and any
amendment to the Allocation. Within forty-five (45) days following the delivery
to Seller of the Earn-Out Statement and any amendment to the Allocation, Seller
shall notify Buyer Group of any dispute of any item contained in the Earn-Out
Statement or any amendment to the Allocation, which notice shall set forth in
reasonable detail the basis for such dispute. If Seller fails to notify Buyer
Group of any such dispute within such forty-five (45)-day period, the Earn-Out
Statement and any amendment to the Allocation shall be deemed to be accepted by
Seller; and
(iv) in the event that Seller shall so notify Buyer Group of any
dispute, Buyer Group and Seller shall cooperate in good faith to resolve such
dispute as promptly as possible. If Buyer Group and Seller are unable to resolve
any such dispute within fifteen (15) days of Seller's delivery of such notice
(the "EARN-OUT RESOLUTION PERIOD"), then all amounts remaining in dispute shall
be submitted to an Independent Accounting Firm selected by Seller and Buyer
Group within ten (10) days after the expiration of the Earn-Out Resolution
Period. If Seller and Buyer Group are unable to agree on the Independent
Accounting Firm, then Buyer Group and Seller shall each have the right to
request the American Arbitration Association to appoint the Independent
Accounting Firm, which shall not have had a material relationship with Seller,
Buyer Group or any of their respective affiliates within the past two (2) years.
Each party agrees to execute, if requested by the Independent Accounting Firm, a
reasonable engagement letter. All fees and expenses relating to the work, if
any, to be performed by the Independent Accounting Firm shall be borne equally
by Seller and Buyer Group. The Independent Accounting Firm shall act as an
arbitrator to determine only those issues still in dispute and shall be limited
to those adjustments, if any, that need be made for the Earn-Out Statement and
any amendment to the Allocation to comply with this Section 1.7). The
Independent Accounting Firm's determination shall be requested to be made within
thirty (30) days of its selection, shall be set forth in a written statement
delivered to Seller and Buyer Group and shall be final, binding and conclusive.
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(c) During the Earn-Out Period, Buyer Group shall not, without the
written consent of Seller, take or cause to be taken any action in connection
with the Business which reduces or otherwise adversely affects, in either
instance in any material respect, the amount of the Earn-Out, unless such action
is (i) undertaken in the ordinary course of business or (ii) in the best
interests of the Buyer Group (including all subsidiaries of Parent) as
determined in good faith by management of the Buyer Group (but excluding for
purposes of such determination the possible benefit of not paying the Earn-Out
pursuant to this Section 1.7) and the primary purpose of such action is a
purpose other than a reduction of the Earn-Out.
(d) The "OPHTHALMIC EARN-OUT REVENUE" shall mean the net revenue
generated by the ophthalmic segment of the Business for the fiscal period
beginning on January 1, 2001 and ending on December 31, 2004 (the "EARN-OUT
PERIOD") as calculated in accordance with GAAP and included in the financial
statements included in Buyer Group's public filings; PROVIDED, that (i) in the
event that Buyer Group, following the Closing, acquires any additional medical
laser (or other light-based devices) and related equipment for the ophthalmic
market, including intellectual property, or acquires a business that has medical
laser (or other light-based devices) and related equipment for the ophthalmic
market, or (ii) Buyer Group shall sell a portion of the Ophthalmic Business,
then there shall be an equitable adjustment to the Earn-Out, as mutually agreed
by the parties, to reflect the impact of such acquisition or sale on the revenue
generated by Buyer Group in its operation of the ophthalmic segment of the
Business. It being understood, however, that without limiting the generality of
the foregoing, among other circumstances, the Earn-Out shall not be adjusted,
(i) if the object of any such acquisition is to acquire additional intellectual
property (rather than ongoing businesses or products) that allows Buyer Group to
modify or enhance the existing ophthalmic products, or (ii) to reflect product
updates, general improvements or other like modifications to products or
equipment for the ophthalmic market in the ordinary course of business (whether
such updates, improvements or modifications are developed solely by Buyer Group
or by accessories, components or technology acquired from third parties). For
purposes of such equitable adjustment, the following criteria, among other
things, shall be taken into account in the event of a sale of part of the
Ophthalmic Business: the past revenue contribution and expected future revenue
contribution of such part of the Ophthalmic Business. In addition, if the
parties are unable to reach agreement as to the terms and amount of an equitable
adjustment to the Earn-Out in any such case, then such differences shall be
resolved in accordance with the dispute resolution mechanism set forth in
Schedule 1.7(d) of the Disclosure Schedules.
SECTION 1.8 POST-CLOSING PURCHASE PRICE ADJUSTMENT
(a) The amounts, if any, referred to in Sections 1.6 and 1.7 shall be
paid by the paying party under Section 1.6 or Section 1.7 by wire transfer in
immediately available United States funds to an account designated by the other
party.
(b) Any amount to be paid by either Seller or Buyer Group pursuant to
Section 1.6 or by Buyer Group pursuant to Section 1.7 shall be treated as an
adjustment to the Total Purchase Price.
SECTION 1.9 INTERCOMPANY LIABILITIES
Immediately prior to the Closing, Seller will cancel, settle or otherwise
repay, and will cause its affiliates to cancel, settle or otherwise repay, all
of its or their liabilities and obligations to the Business arising prior to the
Closing which would have otherwise been required to have been set forth on the
Final Statement. Immediately prior to the Closing, Seller will cause the
Division to cancel, settle or otherwise repay all of its liabilities and
obligations owed to Seller and its affiliates which would have otherwise been
required to be set forth on the Final Statement, and Buyer Group shall not have
any responsibility for those liabilities.
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ARTICLE II
RELATED MATTERS
SECTION 2.1 BOOKS AND RECORDS OF SELLER
Any material Books and Records that are related to the Business that are
not either delivered to Buyer Group hereunder or copies of which are not
delivered to Buyer Group hereunder will be preserved by Seller until at least
the third anniversary of the Closing Date and will be made available (for review
and copying to the extent related to the Business) to Buyer Group and its
authorized representatives upon reasonable notice during normal business hours
to the extent reasonably required by Buyer Group, including, without limitation,
to the extent reasonably required in connection with audit, accounting, tax,
litigation, federal securities disclosure or other similar needs; PROVIDED, that
Seller shall notify Buyer Group prior to destroying any such records. Buyer
Group will preserve and make available (for review and copying) to Seller and
its authorized representatives upon reasonable notice during normal business
hours the records transferred by Seller until at least the third anniversary of
the Closing Date and thereafter in accordance with the document retention policy
of the Business as in effect on the date hereof and, with respect to records
that may be relevant to any actual tax audits or proceedings, such additional
period as is reasonably required by Seller; PROVIDED, that Buyer Group shall
notify Seller prior to destroying any such record during such period.
SECTION 2.2 MAIL HANDLING
Effective as of the Closing Date, Buyer shall have the right to open all
mail and packages addressed to Seller and delivered to Buyer Group relating to
the Business. To the extent Buyer Group receives any mail or packages addressed
to Seller and delivered to Buyer Group not relating to the Business, Buyer Group
shall promptly deliver such mail or packages to Seller. After the Closing Date,
Buyer Group may deliver to Seller any checks or drafts made payable to Seller
received on account of any Receivables or other Assets constituting a right to
receive payment, Seller shall promptly deposit such checks or drafts, and, upon
receipt of funds, reimburse Buyer Group within five (5) business days for the
amounts of all such checks or drafts, or, if so requested by Buyer Group,
endorse such checks or drafts to Buyer Group for collection. To the extent
Seller receives any mail or packages addressed and delivered to Seller but
relating to the Business, Seller agrees that it will promptly transfer or
deliver or cause to be promptly transferred or delivered, to Buyer Group or its
designee any cash or other property received directly or indirectly by it or any
of its affiliates after the Closing in respect of Receivables, including any
amounts paid as interest thereon for periods following the Closing.
SECTION 2.3 EMPLOYEES AND EMPLOYEE BENEFITS
(a) Except for the individuals set forth on Schedule 5.9(a) of the
Disclosure Schedules, at the Closing, all employees of the Business, including,
without limitation, all employees of the Business employed outside the United
States and any employees on an approved leave of absence set forth on Schedule
2.3(a) of the Disclosure Schedules, but excluding employees receiving short-term
disability as of the Closing, (each such person, an "OFFEREE") shall become
employees of Buyer Group effective as of the Closing; provided, however, that
such employees receiving short-term disability as of the Closing shall become
Offerees upon eligibility to return to work and shall become Continuing
Employees if and when they commence employment with Buyer Group. All Offerees
accepting employment with Buyer Group are referred to herein as the "CONTINUING
EMPLOYEES". Such initial employment with Buyer Group shall provide, on an
individual basis (i) at least an equal salary, and (ii) total benefits and other
compensation in the aggregate of substantially equivalent value as was provided
by Seller to such Continuing Employees or Offeree prior to the Closing, and
(iii) substantially similar job responsibilities as the Continuing Employee or
Offeree held prior to the Closing with Seller (collectively "QUALIFYING
CONDITIONS"). If (i) Buyer Group fails to provide an Offeree with employment on
Qualifying Conditions as described in this Section 2.3(a) and such Offeree
declines such employment with the Buyer Group or (ii) a Continuing Employee is
terminated by Buyer Group within twelve (12) months of the Closing Date, then
Buyer Group shall promptly pay severance to such individual under the terms set
forth in Schedule N. If any Continuing
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Employee commences employment with the Buyer Group with employment terms on
Qualifying Conditions, then, in the event that the Buyer Group shall
subsequently request within 90 days of the Closing, as a condition of
employment, that any such Continuing Employee relocate more than 25 miles from
such employee's place of employment as of the Closing (a "Relocation Request")
and such Continuing Employee shall decline such Relocation Request and terminate
employment with Buyer Group, then the Buyer Group shall pay severance with
respect to such employee as set forth on Schedule N. In the event that a
Relocation Request is made of any Continuing Employee employed under Qualifying
Conditions with the Buyer Group more than 90 days but less than 365 days after
the Closing, then, in the event that such Relocation Request is declined and
such Continuing Employee terminates employment, then the Buyer Group shall pay
severance to such Continuing Employee in an amount to be determined; provided
that such amount shall not be less than 50% of the amount otherwise required to
be paid under Schedule N. Any and all severance obligations with respect to
Continuing Employees or Offerees as described above shall be the sole and
absolute responsibility of Buyer Group (provided that any amounts paid under
applicable law, paid previously by Seller or payable by a third party, including
but not limited to an insurance company, shall reduce Buyer Group's payment
obligation hereunder). Individuals receiving severance other than in connection
with a Relocation Request more than 90 days but less than 365 days after the
Closing shall receive the greater of (X) severance pursuant to the terms of the
Severance Terms attached hereto as Exhibit N, and (Y) such severance as is
required by applicable law; provided, however, that this provision shall not
result in duplication of benefits regarding severance with respect to Continuing
Employees as provided in the preceding sentence. Buyer Group shall be
responsible for COBRA obligations with respect to Continuing Employees. No later
than 180 days following the one year anniversary of the Closing Date, Buyer
Group shall deliver to Seller a written schedule of the amount of severance paid
to each Continuing Employee or Offeree during the 12 months following the
Closing Date.
(b) Effective at the Closing, Continuing Employees shall cease
participation in the employee benefit plans of Seller. As of the Closing Date,
Continuing Employees shall become participants in the employee benefit plans of
Buyer Group. Buyer agrees that, for purposes of all employee benefit plans
(including, but not limited to, all employee benefit plans within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), any and all equity-based plans (presently or hereinafter
established) and any and all policies and employee fringe benefit programs
(including vacation and severance policies) of Buyer Group (such plans,
programs, policies and arrangements, (the "BUYER PLANS") in which Continuing
Employees shall participate on and after the Closing under which such employee's
eligibility or benefit depends, in whole or in part, on length of service,
credit will be given to such employees for service previously credited with the
Business prior to the Closing; PROVIDED, that such crediting of service does not
result in duplication of benefits; provided, further, that such crediting of
service shall not be given for benefit accrual purposes under any Buyer Plan
that is a "defined benefit plan" within the meaning of ERISA or similar statutes
applicable in any jurisdiction other than the United States. Continuing
Employees shall also be given credit for any deductible or co-payment amounts
paid (under an analogous Seller employee benefit plan) in respect of the plan
year in which the Closing occurs, to the extent that, following the Closing,
such employees participate in any Buyer Plan for which deductibles or
co-payments are required. Buyer Group shall permit the transfer of Continuing
Employees' election and current account balances from the flexible spending
arrangement plan of Seller to the flexible spending arrangement plan of Buyer
Group, and in the event such a plan is not sponsored by Buyer Group, Buyer Group
shall establish, as soon as practicable following the Closing, such a plan and
permit the plan to plan transfer of such account balances. Buyer Group shall
honor all elections made under Seller's flexible spending arrangement plan.
Buyer Group shall also cause each Buyer Plan to waive to the extent waived under
the applicable plans of the Seller (i) any pre-existing condition or other
restriction under the Buyer Plans or (ii) any waiting period limitation that
would otherwise be applicable to Continuing Employees on or after the Closing
under the Buyer Plans.
(c) As soon as practicable following the Closing Date, (i) Buyer Group
shall provide Seller with such documents and other information as Seller shall
reasonably request to assure itself that the ESC Medical Systems, Inc. Profit
Sharing Plan (the "ESC SAVINGS PLAN") provides for the receipt of eligible
rollover distributions (as such term is defined under Section 402 of the Code)
or shall be amended as soon as practicable following the Closing Date to provide
for the immediate receipt from the Continuing Employees of eligible rollover
distributions; (ii) Buyer Group shall provide Seller with a favorable
determination letter issued by the Internal Revenue Service (as soon as such
favorable
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determination letter becomes available) to the effect that the terms of the ESC
Savings Plan and its related trust qualify under Sections 401(a) and 501(a) of
the Code; and (iii) Seller shall provide Buyer Group with such documents as
Buyer Group shall reasonably request to assure itself that the accounts of the
Continuing Employees under the Coherent Employee Retirement and Investment Plan
(the "SELLER SAVINGS PLAN" would be eligible rollover distributions. Effective
as of the Closing Date, each Continuing Employee who is a participant in a
Seller Savings Plan shall cease to accrue any further benefits under such Seller
Savings Plan. The accounts of each Continuing Employee who is a participant in a
Seller Savings Plan shall be one hundred percent (100%) vested as of the of
Closing Date. Each Continuing Employee who is a participant in a Seller Savings
Plan shall be given the opportunity to "rollover" such account balance by way of
an eligible rollover distribution to the ESC Savings Plan. Notwithstanding
anything in this Agreement to the contrary, each Continuing Employee who is
eligible to participate in a Seller Savings Plan will first become eligible to
participate in the ESC Savings Plan immediately after the Closing Date.
(d) Buyer Group shall assume liability for, and shall indemnify Seller
against, all claims under the applicable Plans for health, accident, sickness,
and disability benefits that are deemed incurred on or after the Closing Date
with respect to Continuing Employees in accordance with the terms of Section
2.3(a) hereof, and Seller shall have no further liability therefore with respect
to such claims. Seller shall retain responsibility for, and shall indemnify
Buyer against, any and all claims under the applicable Plans for health,
accident, sickness, and disability benefits, including any claims for workmen's
compensation (i) that are deemed incurred prior to the Closing Date with respect
to Continuing Employees.
(e) Nothing contained herein, expressed or implied, is intended to
confer upon any Continuing Employee any right to continued employment for any
period by reason of this Agreement. Nothing contained herein is intended to
confer upon any Continuing Employee any particular term or condition of
employment other than with respect to the particular employee benefit plans or
severance plans, policies or arrangements expressly referred to in this
Agreement.
(f) Seller shall retain and Buyer Group shall not assume any
liabilities incurred by Seller prior to the Closing with respect to any
Continuing Employee (unless otherwise expressly provided herein) or any employee
benefit plans including, but not limited to, any defined benefit pension plan as
defined in Section 3(37) of ERISA (including any withdrawal liability (as
provided under 4203 or 4205 of ERISA) with respect thereto); PROVIDED, that
Buyer Group shall assume all loans made by Seller or the Seller Subsidiaries to
Continuing Employees, all of which are listed on Schedule 2.3(f) of the
Disclosure Schedules.
(g) Buyer Group will promptly after Closing establish an employee
retention plan providing, among other things, certain cash or equity-based
incentives for qualifying employees of Buyer Group (including, but not limited
to, Continuing Employees) (the "RETENTION PLAN"). Buyer Group shall provide
Seller with the opportunity to review and comment on the terms of the Retention
Plan prior to its adoption.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer Group as follows, subject
to such exceptions as are disclosed in a disclosure schedule supplied by Seller
to Parent (the "DISCLOSURE SCHEDULES"):
SECTION 3.1 ORGANIZATION
Each of Seller, Star and the Non-U.S. Companies (together with Star, the
"SELLER SUBSIDIARIES") is a corporation duly organized, validly existing and in
good standing under the laws of its state of incorporation. Each of Seller and
the Seller Subsidiaries is duly qualified or licensed to do business in each
jurisdiction in which property relating to the Business is owned, leased or
operated by Seller or the nature of the Business makes such qualification
necessary, except where the failure to be so qualified or licensed would not
have a Material Adverse Effect on the
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Business. Seller and Seller Subsidiaries are all of the entities of Seller and
its Affiliates which are engaged in the Business.
SECTION 3.2 AUTHORIZATION
Each of Seller and the Seller Subsidiaries has the corporate power and
authority to execute and deliver this Agreement and the Ancillary Agreements (to
which it is a party) and consummate or cause to be consummated the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Ancillary Agreements (to which it is a party) by Seller and the Seller
Subsidiaries and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by the Board of Directors of
Seller and the Seller Subsidiaries, as applicable, and no other corporate
proceedings (including, without limitation, a vote of Seller's stockholders) on
the part of Seller and the Seller Subsidiaries is necessary to authorize the
execution, delivery and performance of this Agreement, the Ancillary Agreements
or the consummation of the transactions contemplated hereby and thereby. This
Agreement and the Ancillary Agreements (to which it is a party) have been duly
executed and delivered by Seller and the Seller Subsidiaries and constitute,
and, in the case of Ancillary Agreements not contemplated to be executed
concurrently herewith, will constitute, valid and binding agreements of Seller
and the Seller Subsidiaries, as applicable, enforceable against Seller and the
Seller Subsidiaries, as applicable, in accordance with their respective terms,
except as such enforceability may be limited by principles of public policy and
subject to the laws of general application relating to bankruptcy, insolvency
and the relief of debtors and to rules of law governing specific performance,
injunctive relief and other equitable remedies.
SECTION 3.3 CONSENTS AND APPROVALS; NO VIOLATIONS
(a) Except for applicable requirements of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), or antitrust or
other regulatory laws of jurisdictions other than the United States, there are
no governmental approvals or consents required for the execution, delivery or
performance of this Agreement or the consummation by Seller of the transactions
contemplated hereby or by the Ancillary Agreements.
(b) The execution, delivery and performance of this Agreement and the
Ancillary Agreements and the consummation by Seller or Seller Subsidiaries of
the transactions contemplated hereby and thereby will not (i) conflict with or
result in any breach or violation of any provision of the certificate of
incorporation or by-laws of Seller or any of the Seller Subsidiaries; (ii)
require Seller or any of the Seller Subsidiaries to file or register with, or
give notice to, or obtain the authorization, consent or approval of any person
(other than a governmental entity) whether within or outside the United States;
(iii) violate, conflict with or result in a material default (or any event that,
with notice or lapse of time or both, would constitute a material default)
under, or result in any termination, cancellation or acceleration or give rise
to any such right of termination, cancellation or acceleration under, any of the
terms, conditions or provisions of any Contract to which Seller or any Seller
Subsidiary is a party and constitute Assets or by which Seller, any Seller
Subsidiary is a party or any of their assets are subject or by which any of them
may be bound that would materially impair Seller's ability to consummate the
transactions contemplated hereby and in the Ancillary Agreements; (iv) violate
any order, injunction, decree, statute, rule or regulation applicable to Seller,
any Seller Subsidiary or the Assets or that would materially impair the ability
of Seller or any Seller Subsidiary to consummate the transactions contemplated
hereby and in the Ancillary Agreements; or (v) result in the creation or
imposition of any Lien upon any Asset other than Permitted Encumbrances. As used
in this Section 3.3, references to Seller and its Subsidiaries shall refer only
to Seller and its Subsidiaries in connection with the conduct of the Business.
SECTION 3.4 FINANCIAL STATEMENTS
(a) Attached as Schedule 3.4 of the Disclosure Schedules are (i) the
unaudited balance sheet of the Business as of September 30, 2000 and December
30, 2000 (the "BALANCE SHEETS"), (ii) the unaudited balance sheet of the
Business as of September 30, 1999 and (iii) the related unaudited statements of
income of the Business for the years ended September 30, 1999, September 30,
2000 and for the quarter ended December 30, 2000 (the financial statements
referred
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to in clauses (i), (ii) and (iii) above and the accompanying notes thereto are
referred to herein collectively as the "FINANCIAL STATEMENTS"), which have been
extracted from the books and records of Seller, which books and records are the
basis of the Seller's preparation of financial statements audited by Deloitte &
Touche LLP. Except as disclosed in the Financial Statements or on Schedule 3.4
of the Disclosure Schedules, the Financial Statements have been prepared in
accordance with GAAP, consistently applied and fairly present in all material
respects the financial condition of the Business as of such date and the results
of operations of the Business for such periods (subject, in the case of
unaudited statements, to normal recurring year-end audit adjustments which were
not or are not expected to be material in amount and the omission of financial
statement footnotes that are required by GAAP).
(b) The audited consolidated financial statements of Seller as of
September 30, 2000 and the notes thereto, as attached to the Seller's annual
report on Form 10-K, filed with the Securities and Exchange Commission on
December 14, 2000, as amended, have been prepared in accordance with GAAP
consistently applied and fairly present in all material respects the
consolidated financial position of Seller as of the date thereof and the
consolidated results of operations for such period, except as indicated in the
notes thereto.
SECTION 3.5 ABSENCE OF UNDISCLOSED LIABILITIES
Except for (i) Excluded Liabilities, (ii) liabilities reflected on the
Balance Sheets; (iii) liabilities and obligations incurred in the ordinary
course of business since December 31, 2000, (iv) as otherwise disclosed herein
or on the Disclosure Schedules and (v) such liabilities and obligations as would
not have a Material Adverse Effect (as defined in Section 3.6(c)), the Business
does not have any liabilities or obligations (whether direct, indirect, accrued
or contingent) which would have been required to be disclosed on the Balance
Sheets in accordance with GAAP or in the notes thereto.
SECTION 3.6 ABSENCE OF CERTAIN CHANGES
Except as set forth on Schedule 3.6 of the Disclosure Schedules or as
otherwise contemplated by this Agreement, since December 31, 2000 and through
the date hereof:
(a) Seller and the Seller Subsidiaries have carried on the Business in
the ordinary course and there has not been any Material Adverse Effect; and
(b) Neither Seller nor any of the Seller Subsidiaries, with respect to
the Business, have:
(i) sold, assigned, licensed, transferred, conveyed or
otherwise disposed of any of the assets primarily related to the Business,
except in the ordinary course of business;
(ii) made any loans, advances (other than advances in the
ordinary course of business) or capital contributions to, or investments in, any
other person;
(iii) to the extent it is primarily related to the Business,
purchased any business;
(iv) terminated, modified, transferred or amended any of the
Contracts, except in the ordinary course of business;
(v) Increased in any manner the compensation of any of the
employees who are working primarily for the Business whether in the United
States or otherwise (the "BUSINESS EMPLOYEES"), except for such increases to
Business Employees (other than members of senior management) in the ordinary
course of business (including annual reviews) or in accordance with the terms of
any employment contract or collective bargaining agreement as currently in
effect (except for incentives paid to sales persons in the ordinary course);
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(vi) adopted, granted, extended or increased the rate or terms
of any bonus insurance, pension or other employee benefit plan, payment or
arrangement made to, for or with any such Business Employees, except increases
required by any applicable law, rule or regulation (except for incentives paid
to sales persons in the ordinary course);
(vii) made any change in any of the Business' present accounting
methods and practices, except as required by GAAP;
(viii) licensed (other than in connection with sales of products
by virtue of such sale) any of the Transferred Intellectual Property to any
third party or licensed any of the Licensed Intellectual Property (as defined in
Section 5.14(b)) or Licensed Trademarks (as defined in Section 5.14(a)(ii)) to
any third party for use in the Business, except to the extent it otherwise would
have been permitted under the terms of the license agreements referred to in
Section 5.14 had such agreement been in effect;
(ix) made or authorized any capital expenditures other than in
accordance with the Business' annual plan or other than capital expenditures not
exceeding $100,000 individually or $500,000 in the aggregate;
(x) subjected any of the Assets to any Liens other than
Permitted Encumbrances;
(xi) canceled or compromised any debt or claim or waived or
released any rights of the Business; or
(xii) entered into any agreement to do any of (i) through (xi) of
this Section 3.6(b).
(c) Except as set forth in Schedule 3.6(c) of the Disclosure Schedules
or as set forth on the Balance Sheets and other than claims made in the ordinary
course of business, to Seller's knowledge, there are no claims against Seller or
any of the Seller Subsidiaries with respect to the Business to return products
by reason of alleged over shipments, defective products or otherwise, nor,
except as set forth on Schedule 3.6(c) of the Disclosure Schedules and except
for customary business practices, are there any products in the hands of
customers on a test basis with the understanding that such products would be
returnable.
As used in this Agreement, "MATERIAL ADVERSE EFFECT" shall mean any
change, circumstance or effect which, individually or in the aggregate, has had
or would reasonably be expected to have a material adverse change in, or effect
on the assets, liabilities, financial condition or results of operations of the
Business or on the ability of Seller to consummate the transactions contemplated
hereby or by the Ancillary Agreements; PROVIDED, HOWEVER, "Material Adverse
Effect" shall not include any material adverse change or effect occurring (i) to
the extent that Seller can demonstrate that such change or effect is a result of
the execution and public announcement of this Agreement, the pendency of the
Agreement or the consummation of the transactions contemplated hereby that, in
each case, can be reasonably attributed to the identity of the Buyer or Buyer
Group, as the buyer, (ii) to the extent that Seller or Buyer, as the case may
be, can demonstrate that there has been a similar effect on the other party, or
(iii) occurring as a result of general market or industry conditions PROVIDED
that to the extent such changes affect Seller, the Business or Buyer Group, as
the case may be, disproportionately relative to other entities operating in such
industries, such disproportionate impact may be taken into account in
determining whether a Material Adverse Effect has occurred.
SECTION 3.7 INTELLECTUAL PROPERTY
For the purposes of this Agreement, "INTELLECTUAL PROPERTY" shall mean
all rights in, arising out of, or associated therewith whether individually or
collectively, in mediums that are either currently known or later discovered,
authored, developed, made, perfected, improved, designed or engineered and all
works of authorship, formulas, processes, drawings, routines, subroutines,
techniques, concepts, object code, flow charts, diagrams, coding sheets, source
code, listings and annotations, technical specifications of components,
information, work papers, work product,
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and other materials pertaining to: (i) all United States, international and
foreign patents and applications therefor and all reexaminations, reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof ("PATENTS"); (ii) all inventions (whether
patentable or not), invention disclosures, improvements, trade secrets,
proprietary information, know how, technology, technical data and customer
lists, and all documentation relating to any of the foregoing ("TRADE SECRETS");
(iii) all copyrights, copyrights registrations and applications therefor, and
all other rights corresponding thereto throughout the world, all databases and
data collections and all rights therein throughout the world ("COPYRIGHTS") (iv)
all domain names, uniform resource locators ("URLS") and other names and
locators associated with the Internet (collectively, "DOMAIN NAMES"), (v) all
computer software, including all source code, object code, firmware, development
tools, files, records and data, and all media on which any of the foregoing is
recorded ("SOFTWARE"); and (vi) all trade names, logos, common law trademarks
and service marks, trademark and service xxxx registrations and applications
therefor throughout the world ("TRADEMARKS").
(a) all Patents, Trademarks and Copyrights that are the subject of any
filing, application or registration with the United States Patent and Trademark
Office or the U.S. Copyright Office and any similar or comparable agency or
office in any other jurisdiction ("REGISTERED INTELLECTUAL PROPERTY") and any
application to such Registered Intellectual Property, in each case, that
constitute Transferred Intellectual Property are set forth in Schedule 3.7(a) of
the Disclosure Schedules (the "TRANSFERRED REGISTERED INTELLECTUAL PROPERTY").
In addition, certain common law trademarks of Seller are also set forth in
Schedule 3.7(a) of the Disclosure Schedules.
(b) Except as set forth on Schedule 3.7(b) of the Disclosure
Schedules:
(i) to the knowledge of Seller, each of Seller and its
subsidiaries currently has, and the Buyer Group will have after the Closing,
such ownership of or other rights by license or other agreement to the
Transferred Intellectual Property, Licensed Intellectual Property, and the
Intellectual Property made available through the supply of products covered
under the Supply Agreement, as the case may be, as is necessary to permit the
Business to conduct its operations as currently conducted. Except for the
Licensed Intellectual Property, the Buyer Group will receive at the Closing all
Intellectual Property owned by Seller or Seller Subsidiaries which is primarily
related to, or necessary to the operation of, the Business;
(ii) there are no pending proceedings or litigation before any
court, tribunal (including the United States Patent and Trademarks Office) or
equivalent authority anywhere in the world or any other adverse claims, or, to
the knowledge of Seller, no such proceedings, litigation or any other adverse
claims are threatened, by any person against the use by Seller or any of its
subsidiaries (as it relates to the Business) of any Transferred Intellectual
Property;
(iii) neither Seller nor any of its subsidiaries has received
notice from any person claiming that the operation of the Business as currently
conducted or any act, product, technology or service (including products,
technology or services currently under development) infringes or misappropriates
any Intellectual Property of any person or constitutes unfair competition or
trade practices under the laws of any jurisdiction;
(iv) to the knowledge of Seller, the Transferred Intellectual
Property is free and clear of any material Lien other than Permitted
Encumbrances, fully transferable, alienable and licensable by, or between,
Seller or any of its subsidiaries and Buyer Group without material restriction
and without payment of any kind being due to any third party;
(v) all material and necessary registration, maintenance and
renewal fees in connection with the Transferred Registered Intellectual Property
have been paid and all material and necessary documents and certificates in
connection with such Transferred Registered Intellectual Property have been
filed with the relevant patent, copyright, trademark or other authority in the
United States or international or foreign jurisdictions, as the case may be, for
the purposes of maintaining such Transferred Registered Intellectual Property
except where it has been determined by Seller in the ordinary course of its
business not to maintain such Transferred Registered Intellectual Property;
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(vi) there are no contracts, licenses or agreements between
Seller or any of its subsidiaries and any other person with respect to the
Transferred Intellectual Property under which, to the knowledge of Seller, there
is any material dispute regarding the scope of such agreement or performance
under such agreement including with respect to any payments to be made or
received by Seller or any of its subsidiaries thereunder; and
(vii) in each case in which Seller or any of the Seller
Subsidiaries has acquired ownership or a license of any material Transferred
Intellectual Property from any person, Seller or any of the Seller Subsidiaries,
as the case may be, has obtained a valid and enforceable assignment sufficient
to transfer such rights in such Transferred Intellectual Property to Seller or
any of the Seller Subsidiaries.
(c) To the knowledge of the Seller, the operation of the Business as
it is currently conducted, including but not limited to the design, development,
use, import, branding, advertising, promotion, marketing, manufacture and sale
of the products, technology or services (including products, technology or
services currently under development) of Seller and its subsidiaries does not,
in any material respect, and will not, in any material respect, when conducted
by Buyer Group in substantially the same manner following the Closing, infringe
or misappropriate the Intellectual Property of any other person, violate the
rights of any person (including rights to privacy or publicity), or constitute
unfair competition or trade practices under the laws of any jurisdiction.
(d) Each of Seller and any of its subsidiaries has taken such steps
that are reasonably necessary to protect material confidential information and
trade secrets of the Business.
(e) The instruments of assignment to be delivered by Seller to Buyer
Group (or parties designated by Buyer Group) at the Closing, pursuant to which
Seller will assign, or will cause to be assigned, all Transferred Registered
Intellectual Property (including any registrations and pending applications with
respect thereto) will be duly executed.
(f) Any and all current or prior employees of Seller or Seller
Subsidiaries have signed an agreement with Seller or Seller Subsidiaries
assigning to Seller or Seller Subsidiaries, as the case may be, any and all
rights such employee may have in inventions created by such employee in the
scope of his or her employment by the Business, except as limited by law.
SECTION 3.8 TITLE, OWNERSHIP AND RELATED MATTERS
(a) As used herein, the term "LIENS" shall mean any pledge, mortgage,
charge, claim, title, imperfection, defect or objection, security interest,
conditional or installment sales agreement, encumbrance, easement, encroachment,
third party right or restriction, of any kind, whether incurred or assumed by
Seller or any of the Seller Subsidiaries. As used herein, the term "PERMITTED
ENCUMBRANCES" shall mean (i) Liens for current taxes not yet due or taxes being
contested in good faith, (ii) mechanics', materialmen's, warehousemen's,
contractors', workmens', repairmens', carriers' and similar Liens attaching by
operation of law, incurred in the ordinary course of business and securing
payments not delinquent or payments which are being contested in good faith,
which are not, individually or in the aggregate, material, (iii) the rights, if
any, of third-party suppliers or other vendors having possession of equipment of
the Business, (iv) Liens, imperfections of Title and easements and zoning
restrictions, if any, which do not materially impair the operations of the
Business or materially detract from the value of the property subject thereto
and purposes to which such property is currently employed and (v) those items
listed in Schedule 3.8(a) of the Disclosure Schedules.
(b) Neither Seller nor any of Seller Subsidiaries own or holds any fee
interest in real estate relating to the Business.
(c) Schedule 3.8(c) of the Disclosure Schedules contains a complete
and correct list, as of the date hereof, of the Leased Real Property, setting
forth the address, landlord and tenant for each such lease or sublease (the
"LEASES"). Seller or its subsidiaries hold good and valid leasehold title to the
Leased Real Property, in each case, subject only to the terms, covenants and
conditions of the applicable Lease, the Permitted Encumbrances and those items
listed in
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Schedule 3.8(c) of the Disclosure Schedules. Seller has delivered true, correct
and complete copies of all Leases with respect to the Leased Real Property,
including all amendments, assignments and agreements relating thereto to Buyer
Group. Except as set forth in Schedule 3.8(c) of the Disclosure Schedules, each
Lease grants the tenant thereunder the right to use and occupy the demised
premises and to enjoy peaceful and undisturbed possession with respect to the
Leased Real Property. As of the date hereof, all Leases relating to the Leased
Real Property are in full force and effect and constitute legal, valid and
binding obligations of Seller or its subsidiaries. There exist no material
defaults or conditions which with the giving of notice or the passage of time,
or both, would constitute a material default by Seller, or to the knowledge of
Seller, the other party or parties thereto with respect to the Leases for the
Leased Real Property.
(d) (i) The Leased Real Property constitutes all the leasehold
interests in real estate occupied by the Seller for use by the Business; (ii) to
the knowledge of Seller, the use and operation of the Leased Real Property does
not violate, in any material respect, any agreement affecting the Leased Real
Property to which Seller or any of the Seller Subsidiaries is a party; (iii)
neither Seller nor any of the Seller Subsidiaries has received written notice
that the Leased Real Property is in violation in any material respect of any
instrument of record (iv) there is no violation of any covenant, condition,
restriction, or easement relating to the Leased Real Property, except for such
violations which do not, or would not reasonably be expected to have a Material
Adverse Effect; (v) other than the Stanford Industrial Park Matter and the
Condensa Matter, neither the Seller nor any of the Seller Subsidiaries has
received written notice or, to the knowledge of Seller, is otherwise aware that
the Leased Real Property is not in compliance, in any material respect, with any
applicable building, zoning, subdivision, land use or other similar applicable
laws affecting the Leased Real Property (excluding Environmental Laws, which is
addressed in Section 3.14 hereof) ("REAL PROPERTY LAWS"); and (vi) none of the
Leased Real Property is subject to any pending, or, to the knowledge of the
Seller, threatened suit for condemnation or other taking by any governmental
authority.
(e) Except as set forth in Schedule 3.8(e) of the Disclosure
Schedules, Seller has, and at the Closing Seller will deliver to Buyer Group
good, valid and marketable title to the Assets (other than the Leased Real
Property, which are addressed in subsection (a)), free and clear of all Liens
except for Permitted Encumbrances.
SECTION 3.9 LITIGATION; PRODUCT LIABILITY
(a) Except as set forth on Schedule 3.9(a) of the Disclosure
Schedules, there are no claims, actions, suits, administrative, arbitration or
other inquiries, investigations or proceedings (collectively, "CASES") pending,
or, to Seller's knowledge, threatened, against Seller or any of its subsidiaries
or any of their properties, assets and business operations, as of the date
hereof, by or before any court, governmental or regulatory authority or by any
third party, in each case relating to the Business. Seller is not subject to any
judgments, orders or decrees entered in any lawsuits or proceedings that are
related to the Business.
(b) Except as set forth on Schedule 3.9(b) of the Disclosure
Schedules, as of the date hereof, there are no pending, or, to the knowledge of
Seller, threatened civil, criminal or administrative actions, suits, demands,
claims, notices of violation, investigations, proceedings or demand letters
against Seller or any of its subsidiaries relating to any alleged hazard or
alleged defect in design, manufacture, materials or workmanship, including any
failure to warn or alleged breach of express or implied warranty or
representation, relating to any product manufactured, distributed or sold by or
on behalf of Seller with respect to the Business. Schedule 3.9(b) of the
Disclosure Schedules sets forth, as of the date hereof, a true and complete list
of all written, non-uniform product warranties, indemnifications or guarantees
with respect to any products manufactured by Seller and sold or distributed by
the Business that Seller has extended to any of its customers.
SECTION 3.10 COMPLIANCE WITH APPLICABLE LAW
(a) Except as set forth on Schedule 3.10(a) of the Disclosure
Schedules, to Seller's knowledge, Seller and its subsidiaries have conducted and
conduct the Business in compliance in all material respects with all applicable
laws,
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orders, ordinances, rules and regulations of any federal, state, local or
foreign governmental authority applicable to the Business (other than
Environmental Laws, which are governed by Section 3.14).
(b) Except as disclosed in Schedule 3.10(b) of the Disclosure
Schedules:
(i) Seller and the Seller Subsidiaries hold all governmental
licenses necessary for the operation of the Business (the "LICENSES");
(ii) each License is valid and binding on Seller and in full
force and effect; and
(iii) neither Seller is, nor has it received any notice that it
or any of its subsidiaries is, in material default (or with the giving of notice
or lapse of time or both, would be in material default) under any License.
SECTION 3.11 CERTAIN CONTRACTS AND ARRANGEMENTS
(a) Except as set forth on Schedule 3.11 of the Disclosure Schedules,
as of the date hereof, neither Seller nor any of its subsidiaries is a party to
any of the following Contracts:
(i) collective bargaining agreement;`
(ii) employment agreement with any Business Employee or
consulting agreement with any person in each case providing for total annual
payments in excess of $100,000 not terminable at will;
(iii) partnership, joint venture or other similar agreement or
arrangement requiring the commitment of capital in excess of $100,000;
(iv) license or other similar agreement (other than (i)
governmental permits or licenses used in connection with the operation of the
Business and (ii) off-the-shelf software licenses);
(v) agency, sales representation, distribution or other similar
agreement providing for annual payments in excess of $100,000;
(vi) agreement for the purchase of supplies or materials other
than in the ordinary course of business providing for annual payments in excess
of $175,000;
(vii) agreement for the sale of goods or services other than in
the ordinary course of business providing for annual payments in excess of
$100,000;
(viii) agreement (non-compete or otherwise) or commitment that is
binding upon Seller or any of its subsidiaries or, in each case, any of its
officers, directors or employees which has or may have the effect of prohibiting
or impairing any material business practice, any acquisition of material
property (tangible or intangible) or the conduct of business by Seller, any of
its subsidiaries or any affiliates thereof;
(ix) agreement under which Seller or any of its subsidiaries or,
in each case, its officer, director, or employee is restricted from selling,
licensing or otherwise distributing any of Seller's or any of its subsidiaries'
technology or products to or providing services to, customers or potential
customers or any class of customers, in any geographic area, during any period
of time or in any segment of the market;
(x) any agreement which is not terminable without penalty on
three (3) (or fewer) month notice, providing for payments individually in excess
of $100,000, or in the aggregate in excess of $250,000; and
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(xi) other than this Agreement, any agreement for the
acquisition or disposition of assets related to the Business entered into in the
last three (3) years, other than in the ordinary course of business providing
for payment, individually or in the aggregate, in excess of $50,000.
(b) except as set forth on Schedule 3.11 of the Disclosure Schedules,
all such agreements are valid, binding and enforceable in accordance with their
terms and Seller is not in default under any of the aforesaid agreements and, to
the best knowledge of Seller, no other party is in default under any of the
aforesaid agreements. Seller has provided Buyer with access to true and complete
copies of each agreement, contract and commitment identified on Schedule 3.11 of
the Disclosure Schedules.
(c) Schedule 3.11(c) of the Disclosure Schedules sets forth Seller's
best good faith estimate of any costs that may be incurred upon the termination
of any of Seller's distribution agreements Related to the Business.
SECTION 3.12 TAXES
(a) To the extent that failure to do so adversely affects any member
of Buyer Group, the Assets or the Business, or any member of Buyer Group's use
of the Assets or the Business, Seller and its subsidiaries have duly filed or
will duly file or cause to be duly filed all Tax Returns (as defined in Section
3.12) that are required to be filed and have duly paid or will duly pay or cause
to be duly paid in full or made provision or will provide in accordance with
GAAP (or there has been paid or provision has been made on their behalf) for the
payment of all Taxes (as defined in Section 3.12) for all periods or portions
thereof ending through and including the Closing Date. All such Tax Returns are
correct and complete and accurately reflect or will accurately reflect all
liability for Taxes for the periods covered thereby.
(b) There are no liens for Taxes on the Assets.
(c) Seller has not made any change in accounting methods with respect
to the Business, received a ruling from any taxing authority or signed an
agreement with respect thereto or signed any closing agreement with respect to
any Taxes that are related to the Business for any period ending on or before
the Closing.
(d) To the extent that failure to do so adversely affects any member
of Buyer Group, the Assets or the Business, or any member of Buyer Group's use
of the Assets or the Business, Seller and each of its subsidiaries have complied
or will comply in all respects with all applicable laws, rules and regulations
relating to the payment and withholding of Taxes within the time and the manner
prescribed by law, and have withheld and paid or will withhold and pay over to
the proper taxing authorities all amounts required to be so withheld and paid
over under applicable laws.
(e) No federal, state, local or foreign audits, examinations,
investigations or other administrative proceedings or court proceedings are
presently pending with regard to any Taxes or Tax Returns of Seller or any of
its subsidiaries that are related to the Business.
(f) To the extent that failure to do so adversely affects any member
of Buyer Group, the Assets or the Business, or any member of Buyer Group's use
of the Assets or the Business, all Tax deficiencies that have been claimed,
proposed or asserted against Seller or any of its subsidiaries have been fully
paid or finally settled, and no issue has been raised in any examination by any
taxing authority that, by application of similar principles, could reasonably be
expected to result in the proposal or assertion of such a Tax deficiency related
to the Business for another year not so examined.
(g) There are no outstanding requests, agreements, consents or waivers
to extend the statutory period of limitations applicable to the assessment of
any Taxes or deficiencies related to the Business against Seller or any of its
subsidiaries.
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(h) No power of attorney has been granted or imposed upon the Business
by or with respect to Seller or any of its subsidiaries with respect to any
matter relating to Taxes.
(i) Schedule 3.12 of the Disclosure Schedules sets forth (i) all
material elections with respect to Taxes made by Seller and each of its
subsidiaries with respect to the Business to the extent such election would
affect any member of Buyer Group, the Assets or the Business, or any member of
Buyer Group's use of the Assets or the Business, and (ii) all foreign, state and
local jurisdictions in which Seller and/or any of its subsidiaries is or has
been subject to Taxes and each material type of Tax payable in such jurisdiction
during the previous three (3) taxable periods, in each case, related to the
Business.
(j) Seller and its controlled affiliates do not as of Closing own or
have any present plan or intention to own directly or indirectly voting
securities or rights to acquire voting securities of Parent or any subsidiary
thereof, in an amount which, when added to the Parent Stock delivered to Seller
pursuant to Section 1.2(a)(v) hereof and any other securities then held by
Seller and its affiliates would cause Seller and its affiliates to hold more
than 20% of the outstanding voting stock of the Buyer (taking into account for
this purpose only the stock of Parent then outstanding but including any other
right to acquire stock of Parent then held by Seller or its affiliates).
(k) Neither Seller nor any of the Seller Subsidiaries has received
written notice of any claim made by an authority in a jurisdiction where neither
Seller nor any of the Seller Subsidiaries file Tax Returns, that Seller or any
of the Seller Subsidiaries is or may be subject to taxation by that jurisdiction
in respect of the Assets or the Business.
(l) The Assets represent less than two-thirds (in value) of all the
assets used in trades or businesses carried on by Seller.
(m) "TAXES" shall mean all taxes, levies, charges or fees including,
without limitation, income, corporation, gross receipts, transfer, excise,
property, sales, use, value-added, goods and services, license, payroll,
withholding, social security, stamp, business consumption and franchise or other
governmental taxes or charges, imposed by the United States or any state,
county, local or foreign government, and such term shall include any interest,
penalties or additional tax attributable thereto.
(n) "TAX RETURN" shall mean any report, return (including any
information return) or statement required to be supplied to a taxing authority
in connection with Taxes including, without limitation, any amendments thereto.
SECTION 3.13 EMPLOYEE BENEFIT PLANS; ERISA; EMPLOYEES
(a) Schedule 3.13(a) of the Disclosure Schedules lists all benefit
(including medical and retiree medical or welfare) and compensation plans and
contracts including, but not limited to, "employee benefit plans" within the
meaning of Section 3(3) of ERISA, and deferred compensation, stock option, stock
purchase, stock appreciation rights, stock based, incentive and bonus plans
maintained for the benefit of or contributed to by Seller or any of its
subsidiaries for the benefit of any Business Employee or former employee of the
Business (the "PLANS"). True and complete copies of all Plans, including, but
not limited to, any trust instruments and insurance contracts forming a part of
any Plans, and all amendments thereto have been made available to Buyer Group.
(b) Attached as Schedule 3.13(b) of the Disclosure Schedules is a
complete and accurate list of all of the names of the employees in the Division
(the "DIVISION EMPLOYEES"), each Division Employee's position and the entity
which employees such Division Employee.
(c) Except as set forth on Schedule 3.13(c) of the Disclosure
Schedules, no Title IV Plan is a "multiemployer pension plan," as defined in
section 3(37) of ERISA, nor is any Title IV Plan a plan described in section
4063(a) of ERISA. With respect to any Title IV Plan that is a "multiemployer
pension plan," (i) neither Seller nor any ERISA Affiliate (as defined below) has
made or suffered a "complete withdrawal" or a "partial withdrawal," as such
terms are
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respectively defined in sections 4203 and 4205 of ERISA, and (ii) no event has
occurred that presents a material risk of a partial withdrawal. If any Title IV
Plan is a "multiemployer pension plan," the aggregate withdrawal liability of
Seller and its ERISA Affiliates, computed as if a complete withdrawal by Seller
and the ERISA Affiliates had occurred under each such Plan on the date hereof,
would not exceed $100,000. An "ERISA AFFILIATE" shall be considered to be any
trade or business, whether or not incorporated, that together with Seller would
be deemed a "single employer" within the meaning of section 4001(b) of ERISA.
SECTION 3.14 ENVIRONMENTAL MATTERS
Except (i) as set forth in Schedule 3.14 of the Disclosure Schedule and
(ii) with respect to the Condensa Matter and the Stanford Industrial Park
Matter:
(a) Seller and Seller Subsidiaries hold all material permits, licenses
and other authorizations which are required under applicable Environmental Laws
(as defined in subsection (i)) relating to its Business as it is currently being
conducted ("ENVIRONMENTAL PERMITS") and Seller and its subsidiaries are in
compliance in all material respects with the terms and conditions of the
Environmental Permits. All such Environmental Permits are valid and in full
force and effect and no action is pending to revoke any Environmental Permit. To
the extent required by applicable Environmental Laws, Seller and Seller
Subsidiaries, with respect to the Business, have filed (or will have filed by
the Closing Date) all applications necessary to renew or obtain any necessary
permits, licenses or authorizations in a timely fashion so as to allow Seller
and its subsidiaries to continue to operate their businesses as they are
currently being conducted in compliance with applicable Environmental Laws.
Seller has no knowledge of any circumstance which could cause any Environmental
Permit to be revoked, modified, or rendered non-renewable upon payment of the
permit fee.
(b) Seller and its subsidiaries have been and are in compliance in all
material respects with applicable Environmental Laws with respect to the
operation of the Business.
(c) Seller has made available to Buyer or Buyer's agents or delivered
to Buyer or Buyer's agents true and complete copies of all Phase 1 and Phase 2
environmental assessments that are in Seller or Seller's subsidiaries'
possession that have been written in the last five years relating to the Leased
Real Property or any other property or facility previously owned, operated or
leased by Seller or its subsidiaries with respect to the Business (the "FORMER
REAL PROPERTY"). Seller has listed, on Schedule 3.14(c) of the Disclosure
Schedules, all of the permits, licenses, and other authorizations required by
Environmental Laws that have been issued to Seller and Seller Subsidiaries with
respect to the operation of the Business or the ownership, operation and use of
the Real Property.
(d) Seller and its subsidiaries have not received written notice of
any civil, criminal or administrative action, suit, demand, claim, hearing,
notice of violation, investigation, proceeding, notice or demand letter relating
to the Seller, its subsidiaries, the Business, the Real Property or any other
property or facility previously owned, operated or leased by Seller or its
Subsidiaries with respect to the Business (the "FORMER REAL PROPERTY"), relating
in any way to the Environmental Laws ("ENVIRONMENTAL CLAIMS") and to the
knowledge of Seller and its subsidiaries, no such Environmental Claim is
threatened.
(e) Seller and its subsidiaries are not aware of any facts which could
result in any environmental liability which could reasonably be expected to
result in a Material Adverse Effect on the Business.
(f) Seller and its subsidiaries have not, and to the best of the
Seller's or its subsidiaries' knowledge, no other person has, Released,
discharged, or otherwise disposed, of any Hazardous Substances (as defined in
subsection (i)) on, beneath or adjacent to the Real Property or the former real
property, except for Releases of Hazardous Substances subject to a permit or
authorization pursuant to applicable Environmental Law or for Releases,
discharges or disposals that are not likely to result in a material claim
against Seller, its subsidiaries, Parent, or Buyer.
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(g) No employee of Seller or its subsidiaries in the course of his or
her employment with Seller or its subsidiaries with respect to the Business has
been exposed to any Hazardous Substances during the course of his or her
employment that could reasonably be expected to result in any material liability
to Seller, its subsidiaries, Parent or Buyer.
(h) With respect to the Business, Seller and Seller Subsidiaries have
not entered into any agreement that may require them to pay to, reimburse,
guarantee, pledge, defend, indemnify or hold harmless any person from or against
any liabilities or costs arising out of or related to the generation,
manufacture, use, transportation or disposal of Hazardous Substances, or
otherwise arising in connection with or under Environmental Laws, excluding (1)
credit agreements and (2) leases.
(i) For purposes of this Agreement:
(i) "ENVIRONMENTAL LAWS" shall mean all foreign, federal, state
and local laws, regulations, rules and ordinances relating to pollution or
protection of the environment or human health and safety, including, without
limitation, laws relating to Releases or threatened Releases of Hazardous
Substances into the indoor or outdoor environment (including, without
limitation, ambient air, surface water, groundwater, land, surface and
subsurface strata) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, Release, transport or handling of
Hazardous Substances and all laws and regulations with regard to record keeping,
notification, disclosure and reporting requirements respecting Hazardous
Substances, and all laws relating to endangered or threatened species of fish,
wildlife and plants and the management or use of natural resources, each as
amended to date.
(ii) "HAZARDOUS SUBSTANCES" shall mean (a) any petrochemical or
petroleum products, radioactive materials, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation, transformers or other
equipment that contain dielectric fluid containing polychlorinated biphenyls,
and radon gas; (b) any chemicals, materials or substances defined as or included
in the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "restricted hazardous materials," "extremely hazardous substances,"
"toxic substances," "contaminants" or "pollutants" or words of similar meaning
and regulatory effect; or (c) any other chemical, material or substance,
exposure to which is prohibited, limited, or regulated by any applicable
Environmental Law.
(iii) "RELEASE" shall mean any release, spill, emission,
discharge, leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the indoor or outdoor environment (including, without
limitation, ambient air, surface water, groundwater, and surface or subsurface
strata) or into or out of any property including the movement of Hazardous
Substances through or in the air, soil, surface water, groundwater or property.
SECTION 3.15 INSURANCE
(a) Schedule 3.15(a) of the Disclosure Schedules contains a complete
and correct list and an accurate summary (including the name of the insurer or
if self-insured), whether such policy is an "occurrence" or "claims made"
policy, premiums, coverage, deductibles and expiration dates, broker and
carrier) of all insurance policies related to the Business currently maintained
by Seller or any of its subsidiaries on which Seller or any of its subsidiaries
is a named insured or beneficiary (the "POLICIES"). Seller has made available to
Buyer complete and correct copies of all Policies together with (i) all riders
and amendments thereto and (ii) if completed, the applications for each Policy.
Such Policies, as are current, are in full force and effect, all premiums due
thereon have been paid, and Seller and its subsidiaries have complied in all
material respects with the provisions of such Policies, and all such Policies
either specifically include Seller or one Seller Subsidiaries as a named insured
or include omnibus named insured language which generally includes Seller or one
of its subsidiaries.
(b) Neither Seller nor any of its subsidiaries has received written
notice of revocation, cancellation or limitation with respect to any of the
Policies.
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(c) Neither Seller nor any of its subsidiaries has taken or, to
Seller's knowledge failed to take, any action that would enable the insurers
under any Policy to avoid liability for claims arising out of occurrences prior
to the Closing Date.
(d) To the Seller's knowledge, Seller and the Seller Subsidiaries are
in compliance, in all material respects, with all warranties contained in any of
the Policies.
(e) Schedule 3.15(e) of the Disclosure Schedules lists all claims
related to the Business made during the twenty four months immediately preceding
the date hereof under any of the Policies in excess of $80,000 per claim.
SECTION 3.16 LABOR MATTERS
(a) Except as set forth on Schedule 3.16 of the Disclosure Schedules,
(a) neither Seller nor any of the Seller Subsidiaries is a party to any labor
agreement with any labor organization, group or association with respect to
Business Employees; (b) there is no labor strike, dispute, slowdown, stoppage or
lockout actually pending (for which notice has been provided), or to the
knowledge of Seller, threatened against or affecting the Business; (c) there is
no unfair labor practice charge or complaint against Seller or any of the Seller
Subsidiaries (relating to any Business Employees) pending or, to the knowledge
of Seller, threatened before the National Labor Relations Board or any similar
foreign agency; (d) there is no pending grievance nor any pending arbitration
proceeding arising out of or under any collective bargaining agreements relating
to the Business Employees; (e) no material charges with respect to or relating
to Seller or the Seller Subsidiaries are pending before the Equal Employment
Opportunity Commission or any state, local or foreign agency responsible for the
prevention of unlawful employment practices with respect to any Business
Employees; and (f) neither Seller nor any of the Seller Subsidiaries have
received notice of the intent of any federal, state or foreign governmental
authority responsible for the enforcement of labor or employment laws to conduct
an investigation with respect to or relating to the Business Employees and no
such investigation is in progress.
(b) To the knowledge of Seller, as of the date hereof, no current key
employee of the Business has taken any action or announced he or she will take
any action to terminate his or her employment relationship with Seller.
(c) Since the enactment of Worker Adjustment and Retraining
Notification Act of 1988 (the "WARN Act"), the Seller and its Subsidiaries have
not effectuated a "plant closing," "mass layoff" or "employment loss" (as
defined in the WARN Act).
SECTION 3.17 SUPPLIERS
Schedule 3.17 of the Disclosure Schedules sets forth a list of the
Business' 20 largest suppliers in terms of purchases and, to Seller's knowledge,
suppliers who are the only source for the product or component supplied by them
to the Business during the calendar year 2000 (collectively the "KEY
SUPPLIERS"), showing the approximate total purchases by or behalf of the
Business from each such supplier during such period. No material adverse change
has occurred in the business relationship of Seller with any Key Supplier since
December 31, 2000 and prior to the date hereof and, to Seller's knowledge, no
events have occurred that could reasonably be expected to result in a material
adverse change to such relationship. Since December 31, 2000 and prior to the
date hereof, no Key Supplier has declined to renew any contract with Seller in
connection with the Business.
SECTION 3.18 CUSTOMERS
Schedule 3.18 of the Disclosure Schedules sets forth a true and complete
list of the Business' top 20 customers during the calendar year 2000, showing
the approximate total sales by or on behalf of the Business to each such
customer during such period. No material adverse change has occurred in the
business relationship of Seller with any such customer since December 31, 2000
and prior to the date hereof and, to Seller's knowledge, no events have occurred
that
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could reasonably be expected to result in a material adverse change to such
relationship. Since December 31, 2000 and prior to the date hereof, no customer
has declined to renew any contract with Seller in connection with the Business.
SECTION 3.19 ASSETS, LICENSES AND PERMITS NECESSARY TO THE BUSINESS; EQUIPMENT
(a) Except as set forth on Schedule 3.19(a) of the Disclosure
Schedules, following the Closing, by means of the transfer of the Assets, the
licenses set forth in Section 5.14 hereof, the Supply Agreement and the
transition services to be provided in accordance with Exhibit K, Buyer Group
will own, license or otherwise have the right to use all the assets necessary to
carry on the Business in substantially the same manner as presently conducted.
(b) Schedule 3.19(b) of the Disclosure Schedules lists all material
Permits and Licenses (i) pursuant to which Seller and the Seller Subsidiaries
currently operate the Business and (ii) which are required for the operation of
the Business or the holding of any interest in the Assets. Except as set forth
on Schedule 3.19(b) of the Disclosure Schedules, all Permits and Licenses are in
full force and effect and to the extent currently used in the operation of the
Business are transferable to Buyer Group or may be obtained by Buyer in the
ordinary course.
SECTION 3.20 TRANSACTIONS WITH AFFILIATES
(a) Except as set forth on Schedule 3.20(a) of the Disclosure
Schedules, (i) no affiliate of Seller (other than the Seller Subsidiaries), is
an employee, consultant, competitor, customer, distributor, supplier or vendor
of, or is party to any contractual obligations with Seller relating to the
Business and (ii) no officer or director of Seller is an affiliate of any
competitor, customer, distributor, supplier or vendor of the Business. Except as
set forth on Schedule 3.20(a) of the Disclosure Schedules, none of the Assets
are owned by an affiliate of Seller (excluding any Seller Subsidiary) or subject
to any license or similar arrangement allowing use thereof by an affiliate
(excluding any Seller Subsidiary).
(b) Schedule 3.20(b) of the Disclosure Schedules, the Supply Agreement
and the transition services listed on Exhibit K contain all the material
services provided for, and material products manufactured by or sold to, the
Business by Seller, its divisions and its subsidiaries during the twelve months
immediately prior to the date hereof.
(c) Set forth in Schedule 3.20(c) of the Disclosure Schedules is the
jurisdiction of incorporation of each Non-U.S. Company.
SECTION 3.21 CERTAIN FEES
Except for any broker, finder or investment banker whose fee and
commission is the sole responsibility of Seller, there is no broker, finder or
investment banker entitled to any brokerage, finder's or other fee or
commission, or to the reimbursement of any of its expenses, in connection with
the transactions contemplated hereby based upon arrangements made by Seller or
on Seller's behalf.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER GROUP
Buyer Group hereby represents and warrants, jointly and severally, to
Seller as follows:
SECTION 4.1 ORGANIZATION
Each of Parent and Buyer is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation. Each
of Parent and Buyer is duly qualified or licensed to do business in each
jurisdiction in which it owns, leases or operates its property or where the
nature of the business conducted by such party makes such qualification
necessary.
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SECTION 4.2 AUTHORIZATION
Each of Parent and Buyer has the corporate power and authority to execute
and deliver this Agreement and the Ancillary Agreements (to which it is a
party), and consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Ancillary Agreements (to which
it is a party), the issuance of the Notes and the Parent Stock issuable upon
conversion of the Notes by Parent and Buyer and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by the Boards of Directors of Parent and Buyer, as applicable, and no
other corporate proceedings, including, without limitation, a vote of the
Parent's stockholders, on the part of Parent or Buyer is necessary to authorize
the execution, delivery and performance of this Agreement and the Ancillary
Agreements (to which it is a party) or the consummation of the transactions
contemplated hereby or thereby, including, without limitation, the issuance of
the Notes and the Parent stock issuable upon conversion of the Notes. This
Agreement and the Ancillary Agreements (to which it is a party) have been duly
executed and delivered by each of Parent and Buyer and constitute, and, in the
case of Ancillary Agreements not contemplated to be executed concurrently
herewith, will constitute, valid and binding agreements of Parent and Buyer, as
applicable, enforceable against Parent and Buyer, as applicable, in accordance
with their respective terms, except as such enforceability may be limited by
principles of public policy and subject to the laws of general application
relating to bankruptcy, insolvency and the relief of debtors and to rules of law
governing specific performance, injunctive relief and other equitable remedies.
SECTION 4.3 CONSENTS AND APPROVALS; NO VIOLATIONS
(a) Except for applicable requirements of the HSR Act, or antitrust or
other regulatory laws of jurisdictions other than the United States, and except
as set forth on Schedule 4.3(a) of the disclosure schedules being delivered to
Buyer Group by Seller herewith (the "BUYER DISCLOSURE SCHEDULES"), there are no
governmental approvals or consents required for the execution, delivery or
performance of this Agreement or the consummation by Buyer Group of the
transactions contemplated hereby or by the Ancillary Agreements.
(b) Except as set forth on Schedule 4.3(b) of Buyer Disclosure
Schedules, neither the execution, delivery or performance of this Agreement and
the Ancillary Agreements, the issuance of the Note and the Parent Stock, nor the
consummation by Buyer Group of the transactions contemplated hereby and thereby
will (a) conflict with or result in any breach or violation of any provision of
the articles of association and bylaws of Parent or the certificate of
incorporation or by-laws of Buyer; (b) require any filing or registration with,
or notice or declaration to, or the obtaining of any permit, license,
authorization, consent or approval of, any governmental or regulatory authority
whether within or outside the United States; (c) violate, conflict with or
result in a default (or any event which, with notice or lapse of time or both,
would constitute a default) under, or result in any termination, cancellation or
acceleration, or give rise to any such right of termination, cancellation or
acceleration under, any of the terms, conditions or provisions of any Contract
to which either Parent or Buyer is a party or by which Parent or Buyer or any of
their respective assets is subject or by which any of them may be bound; or that
would materially impair the Parent's or Buyer's ability to consummate the
transactions contemplated hereby and in the Ancillary Agreements; (d) violate
any order, injunction, decree, statute, rule or regulation applicable to Parent
or Buyer or that would materially impair the Parent's or Buyer's ability to
consummate the transactions contemplated hereby and in the Ancillary Agreements;
or (e) result in the creation or imposition of any material Lien upon any
properties, assets or business of Parent or Buyer that would adversely affect
the ability of Buyer Group to consummate the transactions contemplated by this
Agreement and the Ancillary Agreements or have a Material Adverse Effect on
Buyer.
SECTION 4.4 FINANCING
Buyer has received commitment letters, copies of which are attached
hereto as Exhibit L (the "FINANCING LETTERS"), from lenders, pursuant to which
such lenders have agreed (subject to the conditions expressed therein) to
provide to Buyer, at the Closing, sufficient funds to pay the Closing Cash
Purchase Price, any expenses to be incurred by
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Buyer in connection with this Agreement and all other amounts payable by Buyer
at the Closing, to perform its obligations hereunder following the Closing (the
"FINANCING").
SECTION 4.5 SEC REPORTS
(a) Parent has timely filed all required reports, schedules, forms,
statements and other documents (including exhibits and all other information
incorporated therein) with the SEC since January 1, 1999 (the "PARENT SEC
DOCUMENTS"). As of their respective dates, the Parent SEC Documents, including
any Parent SEC Documents filed after the date of this Agreement until the
Closing, complied or will comply in all material respects with the requirements
of the Securities Act and the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT") and the regulations enacted thereunder, as applicable, as the
case may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such Parent SEC Documents, and none of the Parent SEC Documents
when filed contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Except to the extent that information contained in any Parent
SEC Document has been revised or superseded by a later filed Parent SEC
Document, none of the Parent SEC Documents contains any untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) The financial statements of Parent included in the Parent SEC
Documents filed since January 1, 1999 and in any Parent SEC Documents filed
after the date of this Agreement until the Closing (including any related notes)
complied or will comply as to form in all material respects, as of their
respective dates of filing with the rules and regulations of the SEC with
respect thereto and have been or will have been prepared in accordance with GAAP
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present in all material respects the
consolidated financial position of Parent and its consolidated subsidiaries as
of the dates thereof and the consolidated balance sheets, results of their
operations and cash flows for the periods indicated (subject, in the case of
unaudited statements, to normal recurring year end audit adjustments which were
not or are not expected to be material in amount). The balance sheet of Parent
dated September 30, 2000 contained in Parent's quarterly report on Form 10-Q for
the period ended September 30, 2000 is hereinafter referred to as the (the
"PARENT BALANCE SHEET").
(c) Parent has furnished to Seller a complete, and correct copy of any
amendments or modifications, which have not yet been filed with the SEC but
which are required to be filed, to agreements, documents or other instruments
which previously had been filed by Parent with the SEC pursuant to the
Securities Act or the Exchange Act.
SECTION 4.6 ISSUANCE OF PARENT STOCK
The Parent Stock is duly authorized, validly issued and fully paid and
non-assessable, has the rights and privileges set forth in Parent's articles of
association and, except as expressly provided herein, is being issued free and
clear of all Liens, voting trusts, proxies, calls or commitments of any kind.
Assuming the accuracy of the representations and warranties set forth in Section
5.19, the offer, sale and issuance by Parent to Seller of the Note and the
Parent Stock will be exempt from the registration requirement of Section 5 of
the Securities Act and will be registered or qualified (or will be exempt from
registration and qualification) under the registration, permit or qualification
requirements of all applicable state securities laws.
SECTION 4.7 CERTAIN FEES
Except for any broker, finder or investment banker whose fee and
commission is the sole responsibility of Buyer Group, there is no broker, finder
or investment banker entitled to any brokerage, finder's or other fee or
commission, or to the reimbursement of any of its expenses, in connection with
the transactions contemplated hereby based upon arrangements made by Buyer Group
or on Buyer Group's behalf.
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SECTION 4.8 ABSENCE OF UNDISCLOSED LIABILITIES
Except (i) liabilities reflected on the Parent Balance Sheet; (ii)
liabilities or obligations disclosed in Parent SEC Documents filed prior to the
date hereof; (iii) liabilities and obligations incurred in the ordinary course
of business since September 30, 2000; (iv) as otherwise disclosed herein or on
Schedule 4.8 of the Buyer Disclosure Schedules and (v) such liabilities and
obligations as would not have a Material Adverse Effect, Parent does not have
any liabilities or obligations (whether direct, indirect, accrued or
contingent).
SECTION 4.9 ABSENCE OF CERTAIN CHANGES
Except as set forth on Schedule 4.9 of the Buyer Disclosure Schedules or
as otherwise contemplated by this Agreement and except as disclosed in Parent
SEC Documents filed prior to the date hereof, since September 30, 2000:
(a) Parent has carried on the its business and operations in the
ordinary course and there has not been any Material Adverse Effect; and
(b) Neither Buyer nor Parent have:
(i) sold, assigned, licensed, transferred, conveyed or
otherwise disposed of any of material assets, except in the ordinary course of
business;
(ii) made any change in any present accounting methods and
practices, except as required by GAAP;
(iii) licensed any material intellectual property to or from any
third party pursuant to an arrangement other than in the ordinary course of
business;
(iv) canceled or compromised any debt or claim or waived or
released any material rights relating to its business; or
(v) entered into any agreement to do any of the foregoing.
SECTION 4.10 LITIGATION
Except as set forth on Schedule 4.10 of the Buyer Disclosure Schedules or
as disclosed in the Parent SEC Documents filed prior to the date hereof, as of
the date hereof, there are no Cases pending, or, to Buyer's knowledge,
threatened, against Buyer or any of its subsidiaries or any of their properties,
assets and business operations, before any court, governmental or regulatory
authority, except where any such Cases, individually or in the aggregate, do not
have a Material Adverse Effect. Neither Buyer nor any of its subsidiaries is
subject to any unsatisfied judgments, orders or decrees entered in any Cases.
SECTION 4.11 INTELLECTUAL PROPERTY
Except as set forth on Schedules 4.10 or 4.11 of the Buyer Disclosure
Schedules or as otherwise disclosed in any Parent SEC Documents filed prior to
the date hereof:
(a) To the knowledge of Buyer Group, Buyer Group has such ownership
of, or other rights by licenses, as the case may be, in and to such Intellectual
Property as is necessary to permit Buyer Group to operate its business
(including that of its subsidiaries), as currently conducted;
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(b) There are no pending proceedings or litigation before any court,
tribunal (including the United States Patent and Trademarks Office) or
equivalent authority anywhere in the world or any other adverse claims, or, to
the knowledge of Buyer Group, no such proceedings, litigation or any other
adverse claims are threatened, by any person against the use by Buyer Group or
any of its subsidiaries any Intellectual Property of Buyer Group;
(c) Neither Buyer Group nor any of its subsidiaries has received
notice from any person claiming that the operation of Buyer Group's business or
any act, product, technology or service (including products, technology or
services currently under development) of Buyer Group infringes or
misappropriates any Intellectual Property of any person or constitutes unfair
competition or trade practices under the laws of any jurisdiction;
(d) To the knowledge of Buyer Group, the operation of the business of
Buyer Group as it is currently conducted, including but not limited to the
design, development, use, import, branding, advertising, promotion, marketing,
manufacture and sale of the products, technology or services (including
products, technology or services currently under development) of Buyer Group and
its subsidiaries does not, in any material respect, infringe or misappropriate
the Intellectual Property of any other person, violate the rights of any person
(including rights to privacy or publicity), or constitute unfair competition or
trade practices under the laws of any jurisdiction;
(e) Each of Buyer Group and its subsidiaries has taken such steps that
are reasonably necessary to protect material confidential information and trade
secrets of Buyer Group's business.
ARTICLE V
COVENANTS
SECTION 5.1 CONDUCT OF THE BUSINESS
Seller agrees that during the period from the date of this Agreement to
the Closing Date, except (i) as otherwise contemplated by this Agreement or the
transactions contemplated hereby, (ii) for those matters set forth in Schedule
5.1 of the Disclosure Schedules, or (iii) as consented to by Buyer or Parent, it
shall, and shall cause the Seller Subsidiaries to:
(a) conduct the Business in the ordinary course and, to the extent
consistent therewith, use commercially reasonable efforts to preserve intact the
Assets, use commercially reasonable efforts to keep available the services of
the Business Employees and preserve relationships with those persons having
business dealings with the Business as of the date hereof; and
(b) not, with respect to the Business,
(i) sell, assign, sublease, license, transfer, convey or
otherwise dispose of any of the assets primarily related to the Business, except
in the ordinary course of business;
(ii) terminate, modify, transfer or amend any of the Contracts,
except in the ordinary course of business;
(iii) to the extent it is primarily related to the Business,
purchase any business;
(iv) enter into any new agreement related solely to the Business
other than renewals of existing agreements or otherwise in the ordinary course
of business consistent with past practice;
(v) Except to the extent specifically provided in Schedule
3.6(a)(v) of the Disclosure Schedule, increase in any manner the compensation of
any of the Business Employees, except for such increases to Business
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Employees whether in the United States or otherwise (other than members of
senior management) in the ordinary course of business (including annual reviews)
or in accordance with the terms of any employment contract or collective
bargaining agreement as currently in effect (other than incentives to sales
persons in the ordinary course);
(vi) adopt, grant, extend or increase the rate or terms of any
bonus (other than incentives to sales persons in the ordinary course),
insurance, pension or other employee benefit plan, payment or arrangement made
to, for or with any of the Business Employees, except increases required by any
applicable law, rule or regulation;
(vii) make any change in any of the Business' present accounting
methods and practices, except as required by GAAP;
(viii) license (other than in connection with the sale of products
by virtue of such sale) any of the Transferred Intellectual Property to any
third party or license any of the Licensed Intellectual Property or Licensed
Trademarks to any third party for use in the Business, except to the extent it
otherwise would have been permitted under the terms of the license agreements
referred to in Section 5.14 had such agreement been in effect;
(ix) make or authorize any capital expenditures other than in
accordance with the Business' annual plan or other than capital expenditures not
exceeding $100,000 individually or $500,000 in the aggregate;
(x) make any loans, advances (other than advances in the
ordinary course of business) or capital contributions to, or investment in, any
other person other than pursuant to preexisting commitments;
(xi) subject any of the Assets to any Lien other than Permitted
Encumbrances;
(xii) cancel or compromise any debt or claim or waive or release
any rights of the Business, other than debts, claims and rights which are not
Assets or which are primarily related to the Retained Business;
(xiii) modify practices with respect to the collection of
Receivables or the maintenance of inventory levels; or
(xiv) enter into any agreement to do any of (i) through (xiii).
SECTION 5.2 ACCESS TO INFORMATION
(a) Between the date of this Agreement and the Closing Date, Seller
shall, subject to any restrictions as to confidentiality applicable to Seller
whether by law, agreement or contract, (i) give Buyer Group and its authorized
representatives reasonable access to all books, records, work papers, personnel,
offices and other facilities and properties of the Business and its accountants;
(ii) permit Buyer Group and its authorized representatives to make such copies
and inspections thereof (to the extent related to the Business) as any of them
may reasonably request; (iii) subject to the required consents of any property
owners, if any, permit Buyer Group and its authorized representatives to conduct
a reasonable environmental investigation of the Business and the Real Property,
including, at the discretion of the Buyer Group, to collect reasonable samples
of soil, groundwater, surface water, other environmental media and suspect
asbestos-containing building materials; provided that Seller shall have the
right to review and comment on any scope of work for such investigation, shall
be given copies of all draft and final reports and test results and shall have
the right to take split samples of any samples taken; and (iv) cause the
officers of Seller to furnish Buyer Group and its authorized representatives
with such financial and operating data and other information related to the
Business and properties of the Business, excluding, however, such data and other
information related primarily to the Retained Business, as any of them may from
time to time reasonably request; PROVIDED, HOWEVER, that any such access shall
be upon reasonable notice and conducted during normal business hours under the
supervision of Seller's personnel and in such a manner as to maintain the
confidentiality of this Agreement and the transactions contemplated hereby and
not interfere unreasonably with the normal operations of the Business, except as
otherwise contemplated by this Agreement.
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(b) Both Buyer Group and Seller agree that authorized representatives
of each shall meet at the request of either Buyer Group or Seller in order to
discuss any material changes in the information set forth in the Disclosure
Schedules or the Buyer Disclosure Schedules.
(c) Except to the extent that the Closing shall have occurred (and
subject to Section 5.11 hereof), Buyer Group shall keep confidential and shall
cause its and their partners, management, officers, directors, employees and
advisors to keep confidential all nonpublic information related to the Business
and Seller, except as required by order of a court having competent
jurisdiction, in which case Buyer Group shall notify Seller to allow Seller a
reasonable amount of time to prepare appropriate motions or to otherwise
intervene with such court to block such disclosure, and except for information
that becomes public other than as a result of a breach of this Section 5.2.
Seller shall use its reasonable efforts to enforce any confidentiality
agreements relating to the Business on Buyer's behalf at Buyer's request and
cost.
SECTION 5.3 CONSENTS AND APPROVALS
(a) Except as otherwise provided herein, each of the parties shall use
its commercially reasonable efforts to make all necessary filings with
governmental authorities required to consummate the transactions contemplated
hereby prior to the Closing.
(b) (i) Each of Seller and Buyer (or each of their ultimate parent
entities as defined in the rules promulgated under the HSR Act) has filed or
caused to be filed or will file or cause to be filed, with the Federal Trade
Commission and the Antitrust Division of the United States Department of
Justice, the notification and documentary material required under the HSR Act in
connection with the consummation of the transactions contemplated by this
Agreement. In addition, each of Seller and Buyer Group shall promptly take all
action necessary to make any filings required under any other state or foreign
antitrust law; and
(ii) Seller and Buyer Group shall promptly file any additional
information requested under the HSR Act as soon as practicable after receipt of
any request for additional information. Buyer Group and Seller shall use their
commercially reasonable efforts to obtain early termination of the applicable
waiting period, to the extent required, with the applicable regulatory
authorities, including under the HSR Act. The parties hereto will coordinate and
cooperate with one another in exchanging such information and providing such
reasonable assistance as may be requested in connection with such filings.
(c) Buyer Group shall promptly file and use all commercially
reasonable efforts to obtain the approvals of the Investment Center and the
Chief Scientist in the Israeli Industry and Trade Ministry. Seller agrees to use
all commercially reasonable efforts to assist Buyer Group if and to the extent
reasonably required to obtain such approvals.
SECTION 5.4 REASONABLE EFFORTS
(a) Each of Seller, Buyer and Parent shall cooperate, and use its
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate the transactions contemplated by
this Agreement.
(b) As soon as practicable after the date hereof, but in no event
later than 52 days following Closing, Seller shall prepare or cause to be
prepared, with Parent's assistance and cooperation, the financial information
related to the Assets (other than pro forma financial information) required to
be filed by Parent following the Closing as part of a Current Report on Form 8-K
(the "FORM 8-K") or in connection with the filing of a registration statement
under the Securities Act (including the preparation of audited financial
statements related to the Assets) and will assist Parent in the preparation of
the pro forma financial information related to the Assets with respect to the
transactions contemplated by this Agreement. In addition, Seller's obligation to
provide audited financial information pursuant to this subsection (b) shall be
conditioned upon Parent signing any customary management representation letter
requested by Seller's auditors.
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SECTION 5.5 PUBLIC ANNOUNCEMENTS
Except as otherwise agreed to by both Parent and Seller, no party shall
issue any report, statement or press release or otherwise make any public
statements with respect to this Agreement and the transactions contemplated
hereby, except (i) following the Closing to the extent reasonably required by
Parent in connection with the operation of the Business and in a manner
consistent with prior public releases by Parent and Seller in accordance with
the provisions of this Section 5.5 or (ii) as in the reasonable judgment of such
party may be required by law or in connection with the obligations of the
Exchange Act or the NASDAQ Stock Market, in which case Seller and Parent will
use their commercially reasonable efforts to reach mutual agreement as to the
language of any such report, statement or press release prior to the issuance
thereof.
SECTION 5.6 SUPPLEMENTAL DISCLOSURE
(a) Seller shall give prompt notice to Parent of any representation or
warranty made by it contained in this Agreement becoming untrue or inaccurate,
or any failure of the Seller to comply with or satisfy in any material respect
any covenant, condition or agreement to be complied with or satisfied by it
under this Agreement, in such case, such that the conditions set forth in
Section 6.3(a) or Section 6.3(b) would not be satisfied.
(b) Parent shall give prompt notice to the Company of any
representation or warranty made by it or Buyer contained in this Agreement
becoming untrue or inaccurate, or any failure of Parent or Buyer to comply with
or satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement, in each case, such that
the conditions set forth in Section 6.2(a) or Section 6.2(b) would not be
satisfied.
SECTION 5.7 TRANSFERS NOT EFFECTED AS OF CLOSING
Nothing herein shall be deemed to require the conveyance, assignment or
transfer of any Asset that by its terms or by operation of Law cannot be freely
conveyed, assigned, transferred or assumed. To the extent the parties hereto
have been unable to obtain any governmental or any third party consents or
approvals required for the transfer of any Asset and to the extent not otherwise
prohibited by the terms of any Asset, Seller shall continue to be bound by the
terms of such applicable Asset and Buyer Group shall pay, perform and discharge
fully all of the obligations of Seller or any of its affiliates thereunder from
and after the Closing. Seller shall, without consideration therefor, pay, assign
and remit to Buyer Group promptly all monies, rights and other consideration
received in respect of such performance. Seller shall exercise or exploit its
rights in respect of such Assets only as reasonably directed by Buyer Group and
at Buyer Group's expense. Subject to and in accordance with Section 5.3, for not
more than a hundred and eighty (180) days following the Closing Date, the
parties hereto shall continue to use their commercially reasonable efforts to
obtain all such unobtained consents or approvals at the earliest practicable
date. If and when any such consents or approvals shall be obtained, then Seller
shall promptly assign its rights and obligations thereunder to Buyer without
payment of consideration and Buyer shall, without the payment of any
consideration therefor, assume such rights and obligations. The parties shall
execute such good and sufficient instruments as may be necessary to evidence
such assignment and assumption.
SECTION 5.8 RETENTION
Seller shall permit, and shall cause their representatives to permit, the
representatives of Buyer to meet with the Business Employees along with
representatives of Seller, at Seller's discretion, and to distribute to such
individuals such forms and other documents relating to their retention as Buyer
may reasonably determine with the prior approval of such documents by Seller,
which shall not be unreasonably withheld; PROVIDED, HOWEVER, that any such
access shall be conducted in such a manner as not to interfere unreasonably with
the normal operations of the Business, as reasonably determined by Seller.
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SECTION 5.9 PROHIBITION ON SOLICITATION AND HIRING
(a) To the fullest extent permitted by applicable law, during the
period prior to the Closing, Seller shall not, and it shall not permit any of
its subsidiaries to, hire or retain as an employee or consultant, or offer to
hire or retain as an employee or consultant, or solicit the services of the
Business Employees for any position unrelated to the Business except for the
persons set forth on Schedule 5.9 of the Disclosure Schedules.
(b) To the fullest extent permitted by law, during the 12-month period
immediately following the Closing Date, Seller shall not, and Seller shall
ensure that its subsidiaries do not hire or retain as an employee or consultant,
or offer to hire or retain as an employee or consultant, or solicit the services
of any Buyer Employee who is employed by the Business on the date hereof (other
than employees whose employment has been terminated by Buyer Group after the
Closing); PROVIDED, HOWEVER, that nothing in this Section 5.9 shall prevent
Seller or any of its subsidiaries after the Closing Date from publishing any
general advertisement or similar notice in any newspaper or other publication of
general circulation.
(c) To the fullest extent permitted by applicable law, during the
period prior to the Closing, the Buyer Group shall not, and it shall not permit
any of its subsidiaries to, hire or retain as an employee or consultant, or
offer to hire or retain as an employee or consultant, or solicit the services of
any individual who is an employee or consultant of Seller, aside from the
Business Employees pursuant to the terms of this Agreement.
(d) To the fullest extent permitted by law, during the 12-month period
immediately following the Closing Date, the Buyer Group shall not, and the Buyer
Group shall ensure that its subsidiaries do not hire or retain as an employee or
consultant, or offer to hire or retain as an employee or consultant, or solicit
the services of any individual who is an employee or consultant of Seller
immediately following the Closing Date; PROVIDED, HOWEVER, that nothing in this
Section 5.9 shall prevent the Buyer Group or any of its Subsidiaries after the
Closing Date from publishing any general advertisement or similar notice in any
newspaper or other publication of general circulation.
SECTION 5.10 NO NEGOTIATION
Seller shall ensure that, during the period prior to the Closing, neither
Seller nor any of its representatives, directly or indirectly: (i) solicits or
encourages the initiation of any inquiry, proposal or offer from any person
(other than Buyer or Parent) relating to any Acquisition Transaction (as defined
below); (ii) participates in any discussions or negotiations with, or provides
any non-public information to, any person (other than Buyer or Parent) relating
to any proposed Acquisition Transaction. For purposes of this Section 5.10,
"Acquisition Transaction" shall mean any transaction involving the sale or other
disposition of all or a substantial portion of the Business or Assets (other
than as permitted pursuant to Section 5.1); provided, however, that nothing in
this Section 5.10 shall prohibit any transaction, discussions, negotiations or
sharing of information (including with respect to the Assets or the Business)
regarding (x) (A) the acquisition of ownership or control of all or any portion
of the capital stock or other securities of Seller, (B) the acquisition of all
or substantially all of the assets of Seller, (C) any merger, consolidation,
business combination, share exchange, reorganization or similar transaction
involving Seller as long as in connection with any such transaction the buyer or
acquiring person agrees in writing to (in the case of an asset transaction), or
agrees in writing to cause Seller so acquired to, comply with its obligations
hereunder or (y) the sale of products or services of the Business.
SECTION 5.11 CONFIDENTIALITY
(a) From and after the Closing Date and continuing until the Seller
Survival Date (as hereinafter defined), Seller agrees, to hold and treat all
Buyer Confidential Information (as hereinafter defined) with at least the same
degree of skill and care that it would exercise in similar circumstances with
respect to its own confidential information of similar nature in carrying out
its own business, to prevent the unauthorized disclosure to, or access by, third
parties of the Buyer Confidential Information and agree not to reveal, report,
publish, disclose or transfer any Buyer Confidential Information to any person
or entity (other than Buyer and Parent) except in the ordinary course of
Seller's business
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consistent with past practice or as permitted hereunder. For the purposes of
this Agreement, "BUYER CONFIDENTIAL INFORMATION" means any material non-public
information relating to or in connection with Buyer or the Division, including
but not limited to, the Transferred Intellectual Property that is a trade secret
or otherwise proprietary by virtue of its confidential nature PROVIDED, HOWEVER,
that Buyer Confidential Information shall not be deemed to include (i)
information that was already publicly known and in the public domain prior to
the time of its initial disclosure to Seller or any of its Subsidiaries or (ii)
information that is or becomes available to Seller or any of its Subsidiaries on
a non-confidential basis from a non-confidential source; provided, further,
Seller and its Subsidiaries may reveal, report, publish, disclose or transfer
any Buyer Confidential Information pursuant to a subpoena or order issued by a
court of competent jurisdiction or by a judicial or administrative or
legislative body or committee. For purposes of this Agreement, the "SELLER
SURVIVAL DATE" means four (4) years following the Closing Date in respect of all
Buyer Confidential Information.
(b) From and after the Closing Date and continuing until the Buyer
Survival Date (as hereinafter defined), Buyer Group agrees, to hold and treat
all Seller Confidential Information (as hereinafter defined) with at least the
same degree of skill and care that it would exercise in similar circumstances
with respect to its own confidential information of similar nature in carrying
out its own business, to prevent the unauthorized disclosure to, or access by,
third parties of the Seller Confidential Information and agree not to reveal,
report, publish, disclose or transfer any Seller Confidential Information to any
person or entity (other than Seller or the Seller's Subsidiaries) except in the
ordinary course of Buyer's business consistent with past practice or as
permitted hereunder. For the purposes of this Agreement, "SELLER CONFIDENTIAL
INFORMATION" means any material non-public information relating to or in
connection with Seller, the Retained Business and the Excluded Assets, including
but not limited to, the Retained Intellectual Property hereto that is a trade
secret or otherwise proprietary by virtue of it confidential nature; PROVIDED,
HOWEVER, that Seller Confidential Information shall not be deemed to include (i)
information that was already publicly known and in the public domain prior to
the time of its initial disclosure to Buyer or any of its Subsidiaries or (ii)
information that is or becomes available to Buyer or any of its Subsidiaries on
a non-confidential basis from a non-confidential source; provided, further,
Buyer and its Subsidiaries may reveal, report, publish, disclose or transfer any
Seller Confidential Information pursuant to a subpoena or order issued by a
court of competent jurisdiction or by a judicial or administrative or
legislative body or committee. For purposes of this Agreement, the "BUYER
SURVIVAL DATE " means four (4) years following the Closing Date in respect of
all Seller Confidential Information.
SECTION 5.12 NON-COMPETITION
(a) For a period of six (6) years from the Closing, Seller shall not,
and shall cause each of its subsidiaries not to, directly or indirectly, operate
or own any interest in (other than (i) a passive interest of less than five (5)
percent of a company, (ii) Seller's interest in Parent, and (iii) Seller's
ownership interest in Lambda Physik, AG), engage in, or assist any other entity
to engage in (other than in a manner consistent with a supplier of components to
such other entity) a Competitive Business in any location anywhere in the world.
A "Competitive Business" shall mean the development, manufacturing, marketing,
selling, support, enhancement and/or provision of maintenance and/or other
services for medical laser systems and light based medical systems used for
ophthalmic, aesthetic, dental, surgical, veterinary, ENT, gynecology,
orthopedic, pediatric, urology, photo dynamic therapy (PDT), dermatology or
plastic surgery, applications and any other applications addressed (whether by
products sold or under development as of the Closing) by the Division (the
foregoing, subject to the following provisos, collectively the "Field");
provided, however, that nothing in this Section 5.12 shall limit Seller, its
subsidiaries or related entities from developing, manufacturing, supporting,
selling, licensing, enhancing or providing maintenance and other services for or
with respect to components or subsystems (including laser and optical subsystems
or components), which are contained in or otherwise support such laser based
medical system and light based medical system products, including, without
limitation, those products and services which are the subject of the Supply
Agreement, the Retained Business, or which Seller supplies or has supplied to
any original equipment manufacturers or other customers of Seller but not to
customers of Buyer or sales representatives of Buyer for such laser based
medical system and light based medical system products. In addition, Seller
agrees (i) for a period of six years from the Closing Date, not to sell,
transfer or supply to any person or entity any optical fibers made by the
Division for the Division as of the Closing, or a direct substitute thereof, and
(ii) for a period of three years from
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the Closing Date, not to sell, transfer or supply to any third party laser diode
stacks for use in hair removal or acne treatment applications.
SECTION 5.13 BOARD REPRESENTATION
(a) From the Closing Date and so long as Seller continues to be the
beneficial owner of at least ten (10) percent of the issued and outstanding
Parent Securities, Parent shall take all necessary actions so that Parent shall
nominate one individual selected by Seller pursuant to subsection (b) below (the
"SELLER DIRECTOR") and Parent shall recommend to its stockholders in writing and
include such recommendation in all stockholder proxy materials or other
communications relating to the election of directors, and shall use all
commercially reasonable efforts to ensure, that the Seller Director be elected
to Parent's board of directors at any and all meetings of or pursuant to any and
all written actions by Parent's stockholders. Parent's obligations hereunder
shall terminate to the extent that Seller makes, or in any way participates,
directly or indirectly, either individually or as a member of a 13D Group, in
any "solicitation" or "proxies" (as such terms are defined in Regulation 14A
promulgated under the Securities Exchange Act of 1934) in opposition to the
Board of Directors of Parent. Furthermore, upon the occurrence of any such
event, Seller shall cause its designee to resign from the board of directors of
Parent. For purposes of this Section 5.13, "13D GROUP" shall mean any group of
persons formed for the purpose of acquiring, holding, voting or disposing of
Parent Securities which would be required under Section 13(d) of the Exchange
Act, and the rules and regulations promulgated thereunder, to file a statement
on Schedule 13D pursuant to Rule 13d-1(a) of the rules and regulations
promulgated under the Exchange Act or a Schedule 13G of the rules and
regulations promulgated under the Exchange Act pursuant to Rule 13d-1(c) of the
rules and regulations promulgated under the Exchange Act with the SEC as a
"person" within the meaning of Section 13(d)(3) of the Exchange Act if such
group beneficially owned Parent Securities representing more than 5% of any
class of Parent Securities then outstanding.
(b) The Seller Director shall be determined by Seller and shall be an
individual who is either (i) an officer or member of the board of directors of
Seller or its subsidiaries, or (ii) reasonably acceptable to Parent.
(c) Notwithstanding any provision of this Section 5.13, any violation
of the provisions of this Section 5.13 by Buyer shall suspend during the period
of any such violation the limitations and restrictions on Seller set forth in
Section 5.18(c).
SECTION 5.14 INTELLECTUAL PROPERTY LICENSES
(a) Seller License.
(i) Effective as of Closing, Seller shall grant Buyer Group a
perpetual, irrevocable, worldwide, royalty-free, non-exclusive license under the
Licensed Intellectual Property (as defined below) including Seller's rights
therein, to use such Intellectual Property in developing, manufacturing, have
manufactured for Buyer Group, marketing and selling the product and types of
products manufactured by the Business. Such use shall be limited to the fields
of business in which the Business is engaged as of the Closing, has previously
been engaged, or is reasonably likely to be engaged following the Closing. The
foregoing notwithstanding: (A) for a period of six (6) years following the
Closing, Seller may not license any Patents included in the Licensed
Intellectual Property to any party for use in the Field, except in connection
with a license or transfer by Seller of all or substantially all of its Patent
portfolio to such third party and (B) any transfer by Seller of each Patents
shall impose the same restrictions as set forth in "(A)" on the transferee of
such Patents.
(ii) "LICENSED INTELLECTUAL PROPERTY" means that Intellectual
Property owned by Seller that is not included in the Assets but which is
currently used in, or that would be necessary to the operation of the Business
following the Closing, excluding any Intellectual Property in the form of
components covered by the Supply Agreement or the rights in such Components;
provided, however, that the Licensed Intellectual Property shall include only
such
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Patents of the Seller as are set forth on such Schedule 5.14(a)(ii) of the
Disclosure Schedules as such Schedule may be amended as set forth in Section
5.14(e).
(b) Buyer License. Effective as of Closing, Buyer Group shall grant to
Seller, under all rights acquired hereunder by Buyer Group in the Transferred
Intellectual Property, a perpetual, irrevocable, worldwide, royalty-free,
non-exclusive license, to use and exploit such Intellectual Property in all
fields (including in developing, making, marketing, using and selling the
products and components manufactured by Seller or any of its subsidiaries for,
or on behalf of, the Retained Business) other than in the Field.
(c) Trademark License. Subject to Section 5.14(c)(iv) below, Seller
hereby grants to Buyer, effective as of the Closing, a non-transferable,
non-exclusive, royalty free transitional right and license, in each jurisdiction
where Seller has such rights, to use the Coherent name and logo (the "Licensed
Trademarks") in connection with the Business solely as follows:
(i) for a period of 180 days following the Closing, to xxxx
Licensed Products (as defined below) with the Licensed Trademarks using the
tooling acquired from Buyer hereunder in the same manner that such products were
marked by Seller with the Licensed Trademarks using such tooling;
(ii) for a period of 365 days following the Closing, to sell and
distribute Licensed Products marked with the Licensed Trademarks in accordance
with Section 5.14(c)(i) above; and
(iii) for a period of 730 days following the Closing, to use the
Licensed Trademarks on marketing and related materials associated with the
Licensed Products.
(iv) The trademark licenses granted to Buyer pursuant to
subsection (c) above shall be subject to the following:
(1) Within thirty (30) days of the Closing, Buyer shall
include on all Licensed Products and materials on which it includes a Licensed
Trademark, Buyer's own Trademarks to identify the relationship between Buyer and
Seller in a manner at least as prominent as the Licensed Trademarks are used on
such Licensed Product or material.
(2) Buyer shall use the Licensed Trademarks only on
products of Buyer that are Licensed Products. For the purposes this Section
5.14(c), a "Licensed Product" means a product made by Buyer that is
substantially the same as a product previously sold by Seller or which is
otherwise based on a product design acquired by Buyer from Seller hereunder.
(3) All goodwill associated with or that arises from
Buyer's use of the Licensed Trademarks shall inure to the sole benefit of
Seller.
(4) Buyer shall not use Licensed Trademarks in a manner
that is disparaging to, or that otherwise would harm the goodwill associated
with, the Licensed Trademarks.
(5) The quality of the goods and services with which
Buyer uses the Licensed Trademarks shall be at least as high as the quality of
the good and services with which the Seller or its licensees has used the
Licensed Trademarks.
(d) Inventory. Buyer shall be permitted to market, sell, transfer or
otherwise use within 365 days following the Closing any inventory on hand or on
order prior to Closing.
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(e) Changes to Licensed Intellectual Property. (i) Seller agrees that
if at any time prior to the sixth (6th) anniversary of the Closing, it is
reasonably determined that a Patent, issued to Seller which has, or which is
entitled to, a filing date in the United States prior to the Closing, would have
been infringed by a laser based medical system or a light based medical system,
sold by or under development by the Division as of the Closing and such Patent
is not infringed by any component of such laser based medical system or a light
based medical system, then such Patent shall be added to Schedule 5.14(a)(ii) of
the Disclosure Schedules and considered "Licensed Intellectual Property."
Without limiting the foregoing, Seller shall not to xxx Buyer for patent
infringement under a Patent that should have been included under the Licensed
Intellectual Property in accordance with the foregoing but which was not
actually included on such Schedule in accordance herewith if the inclusion of
such Patent on such schedule would have licensed Buyer to engage in the activity
claimed by Seller to infringe such Patent.
(ii) If a Patent is issued to Seller prior to the sixth (6th)
anniversary of the Closing and a claim of such Patent is infringed by a laser
based medical system or a light based medical system of Buyer in the Field and
such claim is not directly infringed by any component of such laser based
medical system or a light based medical system, then such claim shall be added
to Schedule 5.14(a)(ii) and licensed to Buyer accordingly. For the purposes of
clarification, the foregoing is not intended to include any claim that covers,
and the license granted to Buyer as a result of the foregoing shall not extend
to, the making, using, selling or importing of any component of a laser based
medical system or a light based medical system. Nothing in this Section
5.14(e)(ii) shall modify or limit Seller's obligations under Section 5.12.
(f) Website Link. Seller agrees that upon the request of Buyer, Seller
shall include on Seller's Internet site a link to Buyer's home page in a
prominent location. Seller and Buyer shall cooperate in good faith to determine
the appropriate location and form of such link. Seller shall include such link
for a period of two (2) years from the Closing.
(g) It is understood and agreed by the parties that the portion of the
purchase price, if any, allocable to the intellectual property licenses
described in this Section 5.14 will be paid free and clear of, and without
reduction for, any applicable withholding or similar taxes.
(h) All rights of Buyer Group under this Section 5.14 shall be
transferable and assignable to any affiliate of Buyer Group, Parent or Buyer and
any person that acquires all or substantially all of the assets or any segment
of the business of Buyer Group, Buyer, Parent or any of Parent's Subsidiaries to
which this Section 5.14 relates.
(i) It is understood and agreed by the parties hereto that,
notwithstanding anything to the contrary set forth herein, except as may be
limited by Section 5.12, nothing set forth in this Agreement or any other
agreement between the parties entered into pursuant hereto, shall prohibit, and
Buyer Group has acquired no exclusive rights hereunder or thereunder that would
prohibit, Seller from making laser or light-based components, including diode
stacks and fibers, for any applications, including medical applications.
SECTION 5.15 SANTA XXXXX AND OTHER SUBLEASES
(a) At the Closing, Buyer and Seller shall enter into a sublease,
substantially in the form of Exhibit I, pursuant to which the Seller shall lease
to the Buyer certain of the Santa Xxxxx facilities as set forth in Exhibit I, on
the terms and conditions, including rental payments, as set forth therein (the
"SANTA XXXXX SUBLEASE AGREEMENT").
(b) At the Closing, Seller shall assign to Parent, Buyer or any
subsidiaries of Parent designated by Parent, the leases for the facilities
located in the following countries (unless an assignment is not permitted in
which case Seller shall sublease such facility to such person): (i) Japan (for
the Nagoya, Fukuoka and Sendai facilities and for the Star Medical facility in
Tokyo); (ii) Hong Kong (for the property located in Kowloon); (iii) China (for
the properties located in Beijing, Guangzhou, Shanghai and Sichuan); (iv) the
Austrian, Swedish and Mexican facilities; and (v) the Pleasanton facilities, on
the terms set forth in the Form of Lease Assignment and Assumption Agreement
attached hereto as EXHIBIT B (or on such other form as may be appropriate in the
applicable jurisdiction), or, in the case of a sublease, on terms mutually
satisfactory to Seller and Buyer; provided, however, that Seller is able to
obtain consent (to the extent required)
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from the relevant landlord after commercially reasonable efforts and provided
that such consents may be obtained at no cost to Seller and Parent. It is the
intent that any subleases entered into pursuant to this subsection (b) be
entered into on terms and conditions (including financial terms) consistent with
the existing lease. Seller shall make commercially reasonable efforts, at no
cost to Seller, to ensure that Buyer, Parent, and any subsidiaries of Parent
designated by Parent have the benefit of each assignment/sublease listed in this
subsection above for its complete term.
(c) At the Closing, Seller shall enter into subleases for (or at
Seller's discretion, separate direct leases with landlord for) the portions of
the following facilities used for the Business: (i) Tokyo (excluding the Star
Medical facility addressed in subsection (a) above), (ii) Osaka, and (iii) as
set forth in subsection (e) below, Germany; provided, however, that Seller is
able to obtain consent (to the extent required) from the relevant landlord after
commercially reasonable efforts and provided that such consents and be obtained
at no cost to Seller and Buyer. It is the intent that any subleases entered into
pursuant to this subsection (c) be entered into on terms and conditions
(including financial terms) consistent with the existing lease.
(d) Seller agrees and shall make commercially reasonable efforts, at
no cost to Seller, to ensure that any Business Employees working at such
facilities as of the Closing Date are entitled to remain at the facilities
located in the following countries for a period of up to 90 days following the
Closing (at no cost to Buyer for base rent or operating expenses): (i) the
United Kingdom - for the property in Xxx; and (ii) France-Orsay Cedex.
(e) Parent shall have the right to, at its sole discretion, but
subject to the consent of the relevant landlord, either enter into a sublease
agreement either directly or through a Parent Subsidiary with the current tenant
related to the portion of the facilities located at Xxxxxxxxxxxxx 0x, X-00000
Xxxxxxx, Xxxxxxx, currently occupied by the Division or vacate such portion of
the facilities; provided that Parent shall notify Seller at least fifteen days
prior to the Closing of its decision; provided, further, however, that to the
extent Parent shall determine it will vacate this facility, then Seller agrees
and shall make commercially reasonable efforts to ensure that any Business
Employees are entitled to remain at the facility until the earlier of (x) such
date on which Seller's lease of such facility expires, or (y) such date which is
90 days from the Closing, at the same cost to Buyer Group as Seller was paying
immediately prior to Closing. Seller shall use its commercially reasonable
efforts, at no cost to Seller, to assist Parent in implementing any of the
arrangements mentioned in the preceding sentence.
(f) On or prior to the Closing, Seller shall make commercially
reasonable efforts, at no cost to Seller, to negotiate an extension of the lease
relating to Suites 115 and 120 at 0000 Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxxx, on
terms reasonably satisfactory to Buyer; so long as the applicable landlord
releases Seller and its subsidiaries from any and all liabilities arising from
the date of the Closing.
SECTION 5.16 INSURANCE CLAIMS
Following the Closing, Seller will take commercially reasonable actions
to pursue claims under the Policies at the request and expense of Buyer with
respect to matters relating to the ownership, use or operation of the Assets or
the Business prior to the Closing and will remit any amounts recovered to Buyer
with respect to such claims. In addition, in the event that any property
employed in the Business is condemned by a governmental authority prior to
Closing, Seller (effective as of the Closing) shall appoint Buyer, as its agent,
to pursue any claims it may have against such governmental authority with
respect to such property.
SECTION 5.17 FURTHER ACTIONS
(a) From and after the Closing Date, Seller shall cooperate with Buyer
Group and Buyer Group's affiliates and representatives, and shall execute and
deliver such documents and take such other actions as Buyer Group may reasonably
request, for the purpose of evidencing the transactions contemplated by this
Agreement and the Ancillary Agreements and putting Buyer in possession and
control of all of the Assets. From and after the Closing Date, Seller shall
promptly remit to Buyer any actual funds that are received by Seller and that
are included in, or that represent
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payment of Receivables included in, the Assets, promptly following such actual
funds being cleared by Seller's banking institution.
(b) From and after the Closing Date, Buyer Group shall cooperate with
Seller and Seller's affiliates and representatives, and shall execute and
deliver such documents and take such other actions as Seller may reasonably
request, for the purposes of evidencing the transactions contemplated by this
Agreement and having Buyer Group assume the Assumed Liabilities.
(c) Notwithstanding the foregoing, Buyer shall be responsible for and
shall bear all costs associated with the filing and recording any assignment of
any Transferred Intellectual Property.
SECTION 5.18 RESTRICTIONS ON TRANSFER; STANDSTILL
(a) Seller shall not and shall cause its controlled affiliates not to,
knowingly, directly or indirectly, offer, sell, transfer, assign or otherwise
dispose of (or make any exchange, gift, assignment or pledge of) (collectively,
"TRANSFER") more than 2,700,000 shares of Parent Stock (as such number shall be
adjusted to reflect stock dividends, stock splits or similar transactions) to
any single person or group of affiliates; PROVIDED, that Seller may transfer
Parent Stock in an open market transaction through a "broker" or directly with a
"market maker" (as such are defined in the Securities Act) in which the identity
of the buyer is not disclosed without regard to the foregoing limitation on the
amount of Parent Stock that may be sold.
(b) Seller agrees that for the period commencing with the Closing and
ending on the sixth anniversary of the Closing (the "STANDSTILL PERIOD"),
neither it nor any of its controlled affiliates shall, without the prior written
consent of Parent: acquire, offer to acquire, or agree to acquire, directly or
indirectly, by purchase or otherwise become the beneficial owner (as such term
is defined under the Rule 13d-3 of the Securities Exchange Act of 1934, as
amended) of (A) any voting securities or direct or indirect rights to acquire
any voting securities of Parent or any subsidiary thereof, or of any successor
to or person in control of Parent in an amount which, when added to any other
voting securities then held by Seller and its controlled affiliates (including,
without limitation, the Parent Stock), would cause the total amount of voting
securities held by Seller and its controlled affiliates to exceed twenty-three
percent (23%) of the outstanding voting stock of Parent (the "THRESHOLD
AMOUNT"), or (B) all or a significant portion of assets of Parent or of any such
successor or controlling person; PROVIDED, HOWEVER, that nothing contained in
this subsection (b) shall prohibit Seller from presenting and discussing with
Parent's board of directors a proposal to acquire all or substantially all of
the assets of Parent or a controlling equity interest in Parent. The foregoing
notwithstanding, the limitations set forth in this subsection (b) shall not
apply if and for so long as (i) an event of default on the Note has occurred and
is continuing, (ii) a bona fide tender or exchange offer for voting stock of
Parent has been commenced but not withdrawn, (iii) a blockage of payment
obligations of Parent under the Note, in accordance with its terms, is in
effect, (iv) a material breach by Parent of the Registration Rights Agreement
has occurred and not been cured or (v) Parent has publicly announced a proposed
transaction with a third party that would have, if consummated, the effect of a
change of control of Parent (but, in the case of clause (v), only to the extent
necessary to permit Seller to submit a proposal for a competing transaction or
to purchase Ordinary Shares pursuant to an offer made available to all
shareholders) (any such time during which the Standstill Period be suspended is
hereinafter referred to as "FREE PERIOD"). To the extent Seller shall have
acquired any additional stock or other securities convertible into stock of
Parent during a Free Period, the percentage of stock held by Seller immediately
after the end of such Free Period has ended, if greater than 23% of the then
outstanding stock of Parent, shall become the Threshold Amount.
(c) To the fullest extent permitted under applicable law, Seller
agrees that for a period commencing with the Closing and ending on the eighth
anniversary of the Closing, Seller will cause all of Parent Stock held by Seller
or its controlled affiliates to be voted at any meeting of shareholders of the
Parent or at any adjournment thereof or in any other circumstances upon which
the vote of the shareholders of Parent is sought and to be voted in the same
manner and proportion as the remaining outstanding voting shares of Parent Stock
are voted in each such instance; PROVIDED,
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HOWEVER, that Seller may, or may cause its affiliates to, vote the Parent Stock
held by them in accordance with Parent's board of directors' recommendation. The
provisions of this subsection (c) shall not apply during any Free Period.
(d) During the Standstill Period, Parent shall not adopt any
stockholders' rights plan ("poison pill") or similar device which would restrict
Seller from holding less than twenty-three percent (23%) of the outstanding
voting stock of Parent or such greater percentage as may be established pursuant
to the last sentence of subsection (c) above.
SECTION 5.19 ACQUISITION OF THE NOTE AND PARENT STOCK FOR INVESTMENT;
ABILITY TO EVALUATE AND BEAR RISK; RESTRICTIONS ON TRANSFER
(a) Each of Seller and its controlled affiliates hereby represents and
warrants that it is acquiring the Note and the Parent Stock (together, the
"PARENT SECURITIES"), not with a view toward, or for sale in connection with,
any distribution in violation of the Securities Act of 1933, as amended
("SECURITIES ACT"). Seller acknowledges and agrees that the Parent Securities
may not be sold, transferred, offered for sale, pledged, hypothecated or
otherwise disposed of without registration under the Securities Act and any
applicable state securities laws, except pursuant to an exemption from such
registration under the Securities Act and such laws. Accordingly, Seller will
refrain from transferring or otherwise disposing of any of the Parent
Securities, or any interest therein, without registration under the Securities
Act and any applicable state securities laws, except pursuant to an exemption
from such registration under the Securities Act and such laws.
(b) Each of Seller and its controlled affiliates acknowledges that, it
(i) will be able to bear the economic risk of holding the Parent Securities for
an indefinite period, (ii) can afford to suffer the complete loss of its
investment in the Parent Securities, and (iii) has knowledge and experience in
financial and business matters such that it is capable of evaluating the risks
of the investment in the Parent Securities. Seller acknowledges that it is an
"accredited investor" as defined in Rule 501 of Regulation D under the
Securities Act.
(c) The Note and certificates representing shares of Parent Stock
deliverable to Seller, its controlled affiliates or any transferee of Seller,
and any certificates subsequently issued with respect thereto or in substitution
therefor (including any shares issued or issuable in respect of any such shares
upon any stock split, stock dividend, recapitalization or similar event) shall
bear the following legend:
THE SECURITIES EVIDENCED HEREBY WERE ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND APPLICABLE STATE
LAW, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM
(IN EACH CASE BASED UPON AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER THAT REGISTRATION UNDER THE SECURITIES
ACT IS NOT REQUIRED OR A "NO-ACTION" OR INTERPRETATIVE LETTER FROM
THE SECURITIES AND EXCHANGE COMMISSION TO THE SAME EFFECT).
(d) The certificates representing shares of Parent Stock held by the
Seller or any of Seller's affiliates, including any shares issued to the Seller
with respect thereto upon any stock split, stock dividend, recapitalization or
similar event shall bear the following legend, provided, however, that such
legend shall not be placed on certificates issued to transferees of the Seller's
shares pursuant to this Agreement.
THIS CERTIFICATE IS SUBJECT TO, AND IS TRANSFERABLE ONLY UPON
COMPLIANCE WITH, THE PROVISIONS OF AN AGREEMENT DATED AS OF
FEBRUARY 25, 2001. A COPY OF THE ABOVE REFERENCED AGREEMENT IS ON
FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.
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(e) Such certificates shall also bear any legend required by any
federal, state, local or foreign law governing such securities. If, and to the
extent Parent Securities held by Seller will no longer be subject to the
restrictions described in the legend set forth above, upon the request of
Seller, Parent shall promptly cause its transfer agent to remove the legend set
forth above from the certificates evidencing the Parent Securities or issue to
Seller new certificates therefor free of such legend.
SECTION 5.20 INTENTIONALLY OMITTED
SECTION 5.21 NON-CONTROLLED AFFILIATES
Seller shall use its reasonable best efforts, consistent with applicable
law, (including, if permitted under applicable law, voting its shares of stock)
to cause Lambda Physik AG to (i) comply with the covenants applicable to
Seller's subsidiaries and affiliates in this Agreement, including, but not
limited to, Section 5.11, Section 5.12 and Section 5.18 and (ii) not to take any
action or omit to take any action that will result in or will be reasonably
likely to result in a breach of any such covenants.
SECTION 5.22 CONDUCT BY BUYER GROUP
Buyer Group agrees that from the date of this Agreement to the Closing
Date it shall, except as otherwise permitted by the written consent of Seller,
(i) conduct its business in the ordinary course, and to the extent consistent
therewith, use commercially reasonable efforts to preserve intact its business,
use commercially reasonable efforts to preserve relationships with those persons
having business dealings with it as of the date hereof; (ii) use its reasonable
best efforts to obtain the funding from the lenders set forth in the Commitment
Letters (the "Lenders") and the other financial commitments set forth in the
Commitment Letters (including satisfying the conditions necessary to such
funding), (iii) provide Seller copies of all information delivered to the
Lenders in connection with the transactions contemplated by the Commitment
Letters, and (iv) not take any action without the prior written consent of
Seller, which is intended to cause Buyer Group not to satisfy the conditions set
forth in the Commitment Letters. Notwithstanding anything contained herein to
the contrary, Buyer Group may take any action deemed, in the good faith judgment
of management of the Buyer Group to be in the best interest of Buyer Group, the
primary purpose of which is to prepare Buyer Group for the consummation of the
transactions contemplated herein and in the Ancillary Agreements and the
integration of the Assets and the Business in to Buyer Group's operations.
SECTION 5.23 COOPERATION IN LITIGATION
After the Closing, Buyer Group will provide reasonable access to Seller,
its advisors, consultants and employees, at Seller's expense (other than with
respect to Buyer Group's in-house assistance) to any Assets (including any
documents, records and files), which Seller may reasonably request in order to
pursue, defend or engage in the litigation listed on Schedule 3.9(a) of the
Disclosure Schedules. Buyer shall also provide reasonable cooperation in making
available employees of the Business.
SECTION 5.24 COOPERATION IN TRANSITION
Seller shall and shall cause its subsidiaries to use its reasonable best
efforts to assist Buyer Group following the Closing to facilitate an orderly
transition of the Business at Buyer Group's expense (except with respect to
Seller's in-house assistance) by, among other things, providing the services
that may be reasonably requested by Buyer Group, including, without limitation,
by providing the services listed on Exhibit K hereto on the terms set forth on
Exhibit K; it being understood and agreed that with respect to the services set
forth in Schedule 3.20(b), the parties will negotiate in good faith the terms
under which such services will be provided.
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SECTION 5.25 NOTIFICATION AND OTHER REQUIREMENTS
Seller shall and shall cause its subsidiaries to use their reasonable
best efforts to timely provide, file, execute or submit any document required to
be provided, filed, executed or submitted by Seller to or with any applicable
labor or employment governmental authority (whether in the United States or
otherwise) for any notification or similar requirement in connection with the
transactions contemplated in this Agreement and the Ancillary Agreements,
including but not limited to, worker council notifications, where applicable.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE PARTIES
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS
The respective obligation of each party to consummate the transactions
contemplated herein is subject to the satisfaction at or prior to the Closing of
the following conditions precedent:
(a) No statute, rule or regulation shall have been enacted, entered,
promulgated or enforced by any court or governmental authority that prohibits or
restricts the consummation of the transactions contemplated hereby, other than
suits, actions or proceedings that are unlikely to have a reasonable chance of
prevailing;
(b) There shall not be in effect any judgment, order, injunction or
decree of any court of competent jurisdiction enjoining the consummation of the
transactions contemplated hereby;
(c) There shall not be any suit, action, or other proceeding pending
by any governmental authority or administrative agency or commission that seeks
to enjoin or otherwise prevent consummation of the transactions contemplated
hereby other than suits, actions or proceedings that are unlikely to prevail;
(d) Any waiting periods, including any extension thereof, applicable
to the transactions contemplated by this Agreement under applicable antitrust or
trade regulation laws and regulations, including, without limitation, under the
HSR Act, shall have expired or been terminated and all other material
governmental authorizations or approvals required in connection with the
transactions contemplated by this Agreement, including but not limited to, the
approvals set forth in Section 5.3(c) hereof, shall have been obtained or given;
(e) Buyer shall have received the Financing under the Financing
Letters, upon the terms set forth in the Financing Letters on the date hereof or
under such other terms as may be reasonably satisfactory to Buyer; and
(f) The transactions contemplated by each of the Ancillary Agreements
relating to the transfer of the Assets by Non-U.S. Companies shall be or have
been consummated simultaneously with or immediately prior to the Closing.
SECTION 6.2 CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller to consummate the transactions contemplated
hereby are further subject to the satisfaction (or waiver) at or prior to the
Closing of the following conditions:
(a) The representations and warranties of Buyer Group contained herein
shall be true in all respects on and as of the Closing Date with the same force
and effect as though made on and as of such date, except where the failure to be
true and correct would have a Material Adverse Effect on Buyer Group (it being
understood that, for purposes of determining the accuracy of such
representations and warranties all qualifications based on the word "material"
or similar phrases contained in such representations and warranties shall be
disregarded);
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(b) Buyer and Parent shall have performed and complied with in all
material respects their agreements, obligations and covenants under this
Agreement required to be performed or complied with by them at or prior to the
Closing pursuant to the terms hereof;
(c) Buyer and Parent shall have delivered to Seller a certificate as
to the satisfaction of the conditions set forth in subsections (a) and (b)
above, dated as of the Closing and executed by an officer of each entity;
(d) Each of the documents referred to in Section 1.5 shall have
executed by Buyer Group or its affiliates, as applicable, and delivered to the
Seller;
(e) No event shall have occurred and no condition or circumstance
shall exist that would reasonably be expected to give rise to any Material
Adverse Effect on Buyer Group; and
(f) Buyer shall have obtained all consents and approvals set forth on
Schedule 4.3(a) of Buyer Disclosure Schedules.
SECTION 6.3 CONDITIONS TO OBLIGATIONS OF BUYER GROUP
The obligations of Buyer and Parent to consummate the transactions
contemplated hereby are further subject to the satisfaction (or waiver) at or
prior to the Closing of the following conditions:
(a) The representations and warranties of Seller contained herein
shall be true in all respects on and as of the Closing Date with the same force
and effect as though made on and as of such date, except where the failure to be
true and correct would have a Material Adverse Effect on the Business (it being
understood that, for purposes of determining the accuracy of such
representations and warranties all qualifications based on the word "material"
or similar phrases contained in such representations and warranties shall be
disregarded);
(b) Seller shall have performed and complied with in all material
respects its agreements, obligations and covenants under this Agreement required
to be performed or complied with by it at or prior to the Closing pursuant to
the terms hereof;
(c) Seller shall have delivered to Buyer Group a certificate as to the
satisfaction of the conditions contained in subsections (a) and (b) above, dated
as of the Closing and executed by an officer of Seller;
(d) Seller shall have obtained all consents and approvals set forth on
Schedule 6.3(d) of the Disclosure Schedules, as well as any other consents and
approvals (including the transfer of environmental permits) the failure of which
to obtain, either individually or in the aggregate, is reasonably likely to have
a Material Adverse Effect on the Business;
(e) Each of the documents referred to in Section 1.4 shall have been
executed by Seller or its affiliates, as applicable, and delivered to Buyer;
(f) Seller shall have delivered a consent from the landlord of each
Lease listed on Schedule 6.3(f) of the Disclosure Schedules to the assignment
of, or sublease with respect to, such Lease to Buyer Group as contemplated by
Section 5.15; and
(g) No event shall have occurred and no condition or circumstance
shall exist that would reasonably be expected to give rise to any Material
Adverse Effect on the Business.
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ARTICLE VII
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATIONS
SECTION 7.1 SURVIVAL OF REPRESENTATIONS
All representations and warranties made in this Agreement shall survive
the Closing for a period of twelve (12) months or if later, until May 31, 2002,
but, except as provided in Section 8.2, shall not survive any termination of
this Agreement; PROVIDED, HOWEVER, that notwithstanding the foregoing, (i) the
representations and warranties contained in Section 3.8 shall survive
indefinitely, (ii) the representation and warranties contained in Section 3.14
shall survive for a period of thirty-six (36) months, (iii) the representations
and warranties contained in Section 3.19(a) and (b) shall survive for a period
of 24 months and (iv) the representations and warranties contained in Section
3.12 shall survive until six months after the expiration of the applicable
statute of limitations (as the same may be extended) (each, an "INDEMNITY
PERIOD"). This Section 7.1 shall not limit any covenant or agreement of the
parties that contemplates performance after the Closing.
SECTION 7.2 SELLER'S AGREEMENT TO INDEMNIFY
(a) Subject to the terms and conditions set forth herein, from and
after the Closing, Seller shall indemnify and hold harmless Buyer and Parent and
their respective directors, officers, employees, affiliates, controlling
persons, agents, representatives and their successors and assigns (collectively,
"BUYER INDEMNITIES") from and against all liability, demands, claims, actions or
causes of action, assessments, losses, damages, costs and expenses (including,
without limitation, reasonable attorneys' and accountants' fees and expenses)
(collectively, "BUYER DAMAGES") asserted against or incurred by any Buyer
Indemnities as a result of or arising out of (i) a breach of any representation
or warranty contained in Article III of this Agreement, (ii) Excluded
Liabilities, or (iii) a breach of any agreement or covenant of Seller or any of
the Seller Subsidiaries in this Agreement or in any of the Non-U.S. Agreements.
In the event of any breach of any representation or warranty for which
indemnification is owed hereunder, the determination of the amount of any Buyer
Damages resulting therefrom shall take into account all Buyer Damages resulting
from the items giving rise to the breach without regard to any materiality
qualification contained in the breached representation or warranty, to the
extent the materiality qualification would otherwise apply to items giving rise
to the breach.
(b) Seller's obligations to indemnify Buyer Indemnities pursuant to
subsection (a) above contained in this Agreement are subject to the following
limitations:
(i) No indemnification shall be made by Seller with respect to
any claim for breach of any representation or warranty contained in Article III
of this Agreement unless and until the aggregate amount of Buyer Damages under
all claims for breach of any representation or warranty contained in Article III
of this Agreement exceeds an amount equal to $250,000 and, in such event,
indemnification shall be made by Seller for the full amount of Buyer Damages;
(ii) No indemnification shall be made by Seller for any breach
of any representation or warranty contained in Article III or a breach of any
agreement or covenant of Seller in this Agreement in excess of $70,000,000 in
the aggregate;
(iii) Any claims for indemnification relating to a breach of a
representation or warranty contained in Article III shall be satisfied first by
reducing the principal amount of the Note then held by Seller, if any, and
thereafter, through a cash payment by Seller. In the event the Note is reduced
in accordance herewith, Seller shall surrender to Buyer the Note so Buyer may
effect such reduction and promptly, but in no event more than five (5) business
days, reissue a new Note in the correct principal amount. In addition, with
respect to a claim for a breach of a representation or warranty giving rise to
Buyer Damages contemplating payments (cash or otherwise) by Buyer Group, Seller
shall be obligated to indemnify Buyer Group only if and when such payment is
actually made by Buyer Group;
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(iv) The amount of any Buyer Damages shall be reduced by any
amount actually received by a Buyer Indemnities with respect thereto under any
insurance coverage (other than self insurance or retrospective or other similar
insurance) or from any other party alleged to be responsible therefor. Buyer
Indemnitees shall use commercially reasonable efforts to collect any amounts
available under such insurance coverage and from such other party alleged to
have responsibility, PROVIDED, HOWEVER, that in no event shall the indemnity
obligations hereunder be conditioned upon such efforts to collect insurance or
the success thereof. If a Buyer Indemnitee receives an amount under insurance
coverage or from such other party with respect to Buyer Damages at any time
subsequent to any indemnification provided by Seller pursuant to this Section
7.2, then such Buyer Indemnitee shall promptly reimburse Seller, for any payment
made or expense incurred by Seller in connection with providing such
indemnification up to such amount received by Buyer Indemnitee, but net of any
expenses incurred by such Buyer Indemnitee in collecting such amount; and
(c) Seller shall be obligated to indemnify Buyer Indemnitees only for
those claims giving rise to Buyer Damages as to which Buyer Indemnitees have
given Seller written notice thereof prior to the end of the Indemnity Period in
the event that the Indemnity Period applies to such Buyer Damages.
SECTION 7.3 BUYER GROUP'S AGREEMENT TO INDEMNIFY
(a) Subject to the terms and conditions set forth herein, from and
after the Closing, Parent and Buyer, jointly and severally, shall indemnify and
hold harmless Seller and its directors, officers, employees, affiliates,
controlling persons, agents, representatives and their successors and assigns
(collectively, the "SELLER INDEMNITEES") from and against all liability,
demands, claims, actions or causes of action, assessments, losses, damages,
costs and expenses (including, without limitation, reasonable attorneys' fees
and expenses) (collectively, "SELLER DAMAGES") asserted against or incurred by
any Seller Indemnitee as a result of or arising out of (i) the Assumed
Liabilities, (ii) a breach of any representation or warranty contained in
Article IV of this Agreement or (iii) a breach of any agreement or covenant of
Buyer or Parent in this Agreement or any of the Ancillary Agreements. In the
event of any breach of any representation or warranty for which indemnification
is owed hereunder, the determination of the amount of any Seller Damages
resulting therefrom shall take into account all Seller Damages resulting from
the items giving rise to the breach without regard to any materiality
qualification contained in the breached representation or warranty, to the
extent the materiality qualification would otherwise apply to items giving rise
to the breach.
(b) Buyer Group's obligations to indemnify Seller Indemnitees pursuant
to clause (ii) of subsection (a) above are subject to the following limitations:
(i) No indemnification for breach of any representation or
warranty contained in Article IV of this Agreement shall be made by Buyer Group
with respect to any claim unless the aggregate amount of Seller Damages under
all claims for breaches of representations and warranties contained in Article
IV of this Agreement exceeds an amount equal to $250,000 and, in such event,
indemnification shall be made by Buyer Group for the full amount of Seller
Damages;
(ii) No indemnification shall be made by Buyer or Parent for any
breach of any representation and warranty contained in Article IV or a breach of
any agreement or covenant of Buyer or Parent in this Agreement in excess of
$52,500,000 in the aggregate;
(iii) The amount of any Seller Damages shall be reduced by any
amount actually received by a Seller Indemnitee with respect thereto under any
insurance coverage (other than self insurance or retrospective or other such
insurance) or from any other party alleged to be responsible therefor. Seller
Indemnitees shall use commercially reasonable efforts to collect any amounts
available under such insurance coverage and from such other party alleged to
have responsibility, PROVIDED, HOWEVER, that in no event shall the indemnity
obligations hereunder be conditioned upon such efforts to collect insurance or
the success thereof. If a Seller Indemnitee receives an amount under insurance
coverage or from such other party with respect to Seller Damages at any time
subsequent to any indemnification
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provided by Buyer Group pursuant to this Section 7.3, then such Seller
Indemnitee shall promptly reimburse Buyer Group for any payment made or expense
incurred by Buyer Group in connection with providing such indemnification up to
such amount received by the Seller Indemnitee, but net of any expenses incurred
by such Seller Indemnitee in collecting such amount; and
(iv) Buyer Group shall be obligated to indemnify the Seller
Indemnitees only for those claims giving rise to Seller Damages and to which the
Seller Indemnitees have given Buyer Group written notice thereof prior to the
end of the Indemnity Period in the event that the Indemnity Period applies to
such Seller Damages.
SECTION 7.4 THIRD PARTY INDEMNIFICATION
The obligations of any indemnifying party to indemnify any indemnified
party under this Article VII with respect to Buyer Damages or Seller Damages, as
the case may be, resulting from the assertion of liability by third parties (a
"CLAIM"), will be subject to the following terms and conditions:
(a) Any party against whom any Claim is asserted will give the party
required to provide indemnity hereunder written notice of any such Claim
promptly after learning of such Claim, and the indemnifying party may at its
option and at its sole cost and expense undertake the defense thereof by
representatives of its own choosing. Failure to give prompt notice of a Claim
hereunder shall not affect the indemnifying party's obligations under this
Section 7.4, except to the extent that the indemnifying party is materially
prejudiced by such failure to give prompt notice (whether as a result of failure
of substantive defenses or otherwise). If the indemnifying party, within thirty
(30) days after notice of any such Claim, fails to assume the defense of such
Claim, the indemnified party against whom such claim has been made will (upon
further notice to the indemnifying party) have the right to undertake the
defense, compromise or settlement of such claim on behalf of and for the account
and risk, and at the expense, of the indemnifying party, subject to the right of
the indemnifying party to assume the defense of such Claim at any time prior to
settlement, compromise or final determination thereof. Notwithstanding the
foregoing, if the indemnifying party undertakes defense of such claim, the
indemnified party shall be entitled to participate in (but not control) the
defense of the claim with counsel of its own choosing at its own expense.
(b) Notwithstanding anything in this Section 7.4 to the contrary, (i)
the indemnified party shall not settle a claim for which it is indemnified
without the prior written consent of the indemnifying party, which consent shall
not be unreasonably withheld, and (ii) the indemnifying party shall not enter
into any settlement or compromise of any action, suit or proceeding or consent
to the entry of any judgment for other than monetary damages to be borne by the
indemnifying party without the prior written consent of the indemnified party,
which consent shall not be unreasonably withheld.
SECTION 7.5 EXCLUSIVE REMEDY; SEPARATE REMEDIES
This indemnification provided for in this Article VII shall be the
exclusive remedy for breaches of representations and warranties contained in
this Agreement provided that no party hereto shall be deemed to have waived any
right of recourse (whether a claim under this Article VII or otherwise) arising
from fraud or intentional misconduct of any other party hereto. Any claims,
disputes or complaints arising from or in connection with the supply of products
pursuant to the Supply Agreement shall be brought by the parties thereto under
and in accordance therewith. Any claims, disputes and complaints arising from or
in connection with the Registration Rights Agreement shall be brought by the
parties thereto thereunder and in accordance therewith. In no event shall any
party hereto or thereto have or be deemed to have the right to assert any such
claims, disputes or complaints in connection with the transactions contemplated
by the Supply Agreement or the Registration Rights Agreement under the
indemnification provisions of this Agreement.
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SECTION 7.6 TRANSFER TAXES; ALLOCATION OF PURCHASE PRICE
(a) Seller shall be responsible for and shall pay, or cause its
subsidiaries to pay, all sales, use, transfer, stamp duty, recording, value
added, business consumption and other similar taxes and fees, including, without
limitation, all bulk sales taxes, in each case including interest, penalties or
additions attributable thereto ("TRANSFER TAXES"), arising out of or in
connection with the transactions contemplated by this Agreement and the Non-U.S.
Agreements; PROVIDED, HOWEVER, that to the extent that any member of the Buyer
Group can obtain a refund, credit or other offset or benefit with respect to
such Transfer Taxes, Buyer Group shall diligently and in good faith pursue such
refund, credit or other offset of the Transfer Tax so paid with the appropriate
taxing authority and shall pay over to Seller the amount of any Transfer Tax so
refunded, credited or otherwise offset within ten (10) business days of
receiving such refund, credit or offset. The party that has the primary
responsibility under applicable law for the payment of any particular Transfer
Tax shall prepare and file the relevant Tax Return, pay the Transfer Taxes shown
on such Tax Return, notify the other party in writing of the Transfer Taxes
shown on such Tax Return and how such Transfer Taxes were calculated and provide
a copy of such Tax Return and proof of payment, and if the filing party is a
member of Buyer Group, Seller shall reimburse such member of Buyer Group for the
amount of such Transfer Taxes paid by Buyer in immediately available funds
within 10 days of receipt of such notice. The parties shall cooperate with each
other to the extent reasonably requested and legally permitted to minimize any
Transfer Taxes. Buyer Group shall disclose to Seller the status of any claim for
refund, credit or other offset, and Seller shall have the right, to the extent
permitted by law, to fully participate in the procedure with respect to any such
claim.
(b) Seller and Buyer shall cooperate in good faith to allocate the
Closing Cash Purchase Price and the value of the Parent Stock, the Note and
Assumed Liabilities, each to the extent properly taken into account under
Section 1060 of the Code and the regulations promulgated thereunder, among the
Assets being sold hereunder (the "ALLOCATION") within fifteen days of execution
of this Agreement. In the event that Seller and Buyer are unable to agree upon
the Allocation, they shall hire an Independent Accounting Firm, mutually
acceptable to each, to perform such Allocation, whose findings shall be binding
upon each of Seller and Buyer. The costs of such Independent Accounting Firm
shall be shared equally by Seller and Buyer.
(c) Promptly after the Final Statement shall be agreed and accepted
among the parties hereto, Buyer and Seller shall allocate any adjustment to the
Cash Purchase Price or the principal amount of the Note made pursuant to Section
1.8 hereof among the Assets, and such adjustment shall be deemed to amend the
Allocation for all purposes. Buyer and Seller shall further allocate any
additional amounts paid pursuant to the Earn-Out among the Assets, and any such
further allocation shall be deemed to amend the Allocation for all purposes. Any
further adjustments made pursuant to this Section 7.6(c) shall be made in
accordance with Section 1060 of the Code and the regulations promulgated
thereunder.
(d) Seller and Buyer Group (i) shall be bound by the Allocation, and
any amendments thereto, (ii) shall prepare and file all Tax Returns (including,
without limitation, Federal Form 8594) and financial statements in a manner
consistent with the Allocation, and any amendments thereto, and (iii) shall take
no position, and shall cause its affiliates to take no position, inconsistent
with the Allocation, or any amendment thereto, on any Tax Return, in any
proceeding before any taxing authority or otherwise. In the event that the
Allocation, or any amendment thereto, is disputed by any taxing authority, the
party receiving notice of such dispute shall promptly notify and consult with
the other party concerning resolution of such dispute.
(e) No later than thirty (30) days prior to the filing of their
respective Federal Forms 8594 relating to the transactions contemplated by this
Agreement, each party shall deliver to the other party a copy of its Federal
Form 8594.
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 TERMINATION OF AGREEMENT
This Agreement may be terminated and the transactions contemplated hereby
may be abandoned at any time prior to the Closing Date:
(a) by mutual written consent of Seller and Parent;
(b) by Parent, upon written notice to Seller, if there has been a
violation or breach by Seller of any of the agreements, representations or
warranties contained in this Agreement which if not cured would cause the
conditions set forth in Section 6.3(a) or (b) to not be satisfied; which breach
or violation cannot be or has not been cured by the date thirty (30) days after
receipt by Seller of notice specifying in reasonable detail the nature of such
breach, (it being understood that Parent may not terminate this Agreement
pursuant to this subsection (b) if it or Buyer shall have breached any of their
respective representations, warranties or covenants hereunder in any material
respect);
(c) by Seller, upon written notice to Parent, if there has been a
violation or breach by Parent or Buyer of any of the agreements, representations
or warranties contained in this Agreement which if not cured would cause the
conditions set forth in Section 6.2(a) or (b) to not be satisfied; which breach
or violation cannot be or has not been cured by the date thirty (30) days after
receipt by Parent of notice from Seller specifying in reasonable detail the
nature of such breach, (it being understood that Seller may not terminate this
Agreement pursuant to this subsection (c) if it shall have breached any of its
representations, warranties or covenants hereunder in any material respect);
(d) by either Parent or Seller if the Closing shall not have occurred
on or before May 15, 2001 (which date shall be extended to July 15, 2001, if the
Closing shall not have occurred as of the result of a failure to satisfy the
conditions set forth in Section 6.1(d) (the "END DATE")); PROVIDED, HOWEVER,
that the right to terminate this Agreement pursuant to this subsection (d) shall
not be available to (i) Seller, if Seller has breached any of its
representations, warranties or covenants hereunder in any material respect and
such breach has been the cause or resulted in the failure of the Closing to
occur on or before the End Date or (ii) Buyer Group, if Buyer or Parent has
breached their respective representations, warranties or covenants hereunder in
any material respect and such breach has been the cause of or resulted in the
failure of the Closing to occur on or before the End Date;
(e) by Seller or Parent if any court of competent jurisdiction or
other competent governmental authority shall have issued a statute, rule,
regulation, order, decree or injunction or taken any other action permanently
restraining, enjoining or otherwise prohibit the transactions contemplated by
this Agreement and such statute, rule, regulation, order, decree or injunction
or other action shall have become final and non-appealable.
SECTION 8.2 PROCEDURE FOR AND EFFECT OF TERMINATION
(a) In the event of termination of this Agreement and abandonment of
the transactions contemplated hereby by the parties hereto pursuant to Section
8.1 hereof, written notice thereof shall be given by a party so terminating to
the other party and this Agreement shall forthwith terminate and be of no
further effect, and the transactions contemplated hereby shall be abandoned
without further action by Seller or Buyer Group.
(b) Notwithstanding the foregoing, termination of this Agreement and
abandonment of the transactions contemplated hereby by the parties pursuant to
Section 8.1(b) or (c) shall not in any way limit or restrict the rights and
remedies of any party hereto against any other party hereto with respect to any
willful violation or breach of the representations, warranties, agreements or
other provisions of this Agreement prior to termination hereof and Section 5.5,
Section 5.10 and Section 5.12 shall survive termination of this Agreement. In
the event of termination of this
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Agreement by Parent, Buyer or Seller as provided above in Section 8.1(a), this
Agreement shall forthwith become void and there shall be no liability on the
part of Buyer Group or Seller (or their respective officers or directors),
except based upon obligations set forth in Section 9.1 hereof and in the
immediately preceding sentence, and except that Buyer Group shall thereupon
promptly return or destroy (and cause its agents and representatives to return
or destroy) to Seller all documents (and copies thereof) furnished to Buyer
Group by Seller, and Buyer and Parent shall continue to adhere to the
Confidentiality Agreement.
SECTION 8.3 AMENDMENT, EXTENSION AND WAIVER
At any time prior to the Closing Date, the parties hereto may (a) amend
this Agreement, (b) extend the time for the performance of any of the
obligations or other acts of the parties hereto, (c) waive any inaccuracies in
the representations and warranties contained herein or in any document delivered
pursuant hereto and (d) waive compliance with any of the agreements or
conditions contained herein. Except as provided in Section 5.6 or Seller's
amendment to Schedule 3.9 of the Disclosure Schedule, this Agreement may not be
amended except by an instrument in writing signed on behalf of all of the
parties hereto. Any agreement on the part of a party hereto to any extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
SECTION 8.4 BUYER TERMINATION FEE
If the Closing shall not have occurred on or before the End Date to the
extent that each and all conditions of Seller and Buyer Group to consummate the
transaction contemplated hereby set forth in either Sections 6.1 and 6.3, other
than Section 6.1(e), have been satisfied or waived and the condition set forth
in Section 6.1(e) is not satisfied for any reason and, as a result thereof, the
Agreement is terminated by either Parent or Seller, then Buyer Group shall
promptly pay to Seller by wire transfer to such bank account(s) specified by
Seller in Section 1.2(a)(i) or such other bank account as specified by Seller,
in immediately available United States funds, U.S. $750,000.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 FEES AND EXPENSES
Whether or not the transactions contemplated herein are consummated
pursuant hereto, except as otherwise provided herein, each of Seller, on the one
hand, and Buyer Group, on the other hand, shall pay all fees and expenses
incurred by, or on behalf of, such party in connection with, or in anticipation
of, this Agreement and the consummation of the transactions contemplated hereby.
Each of Seller, on the one hand, and Buyer Group, on the other hand, shall
indemnify and hold harmless the other party from and against any and all claims
or liabilities for financial advisory and finders' fees incurred by reason of
any action taken by such party or otherwise arising out of the transactions
contemplated by this Agreement by any person claiming to have been engaged by
such party.
SECTION 9.2 FURTHER ASSURANCES; GUARANTEE
(a) From time to time after the Closing Date, at the request of either
party hereto and at the expense of the party so requesting, each of the parties
hereto shall execute and deliver to such requesting party such documents and
take such other action as such requesting party may reasonably request in order
to consummate more effectively the transactions contemplated hereby.
(b) Each of Seller and Parent hereby guarantees the timely performance
by any subsidiary or affiliate of Seller and Parent, respectively, of all
obligations of Seller and Buyer Group hereunder, respectively, including without
limitation, the execution and performance of their respective obligations under
this Agreement and the Ancillary Agreements.
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SECTION 9.3 NOTICES
All notices, requests, demands, waivers and other communications required
or permitted to be given under this Agreement shall be in writing and may be
given by any of the following methods: (a) personal delivery; (b) facsimile
transmission; (c) registered or certified mail, postage prepaid, return receipt
requested; or (d) internationally recognized overnight delivery service. Notices
shall be sent to the appropriate party at its address or facsimile number given
below (or at such other address or facsimile number for such party as shall be
specified by notice given hereunder):
(a) If to Buyer Group to:
ESC Medical Systems Ltd.
X.X. Xxx 000
Xxxxxxx, Xxxxxx 00000
Fax: x000-0-000-0000
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx
(b) If to Seller to:
Coherent, Inc.
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: General Counsel
with copies to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxx
Xxxxxx Xxxxxxxx
All such notices, requests, demands, waivers and communications shall be
deemed received (i) in the case of personal delivery, upon actual receipt
thereof by the addressee, (ii) in the case of overnight delivery, on the day
following delivery to the nationally-recognized overnight delivery service,
(iii) in the case of mail, upon receipt of the return receipt, or (iv) in the
case of a facsimile transmission, upon transmission thereof by the sender and
issuance by the transmitting machine of a confirmation slip that the number of
pages constituting the notice have been transmitted without error. In the case
of notices sent by facsimile transmission, the sender shall contemporaneously
mail a copy of the notice to the addressee at the address provided for above.
However, such mailing shall in no way alter the time at which the facsimile
notice is deemed received.
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SECTION 9.4 SEVERABILITY
Should any provision of this Agreement for any reason be declared invalid
or unenforceable, such decision shall not affect the validity or enforceability
of any of the other provisions of this Agreement, which remaining provisions
shall remain in full force and effect and the application of such invalid or
unenforceable provision to persons or circumstances other than those as to which
it is held invalid or unenforceable shall be valid and enforced to the fullest
extent permitted by law.
SECTION 9.5 BINDING EFFECT; ASSIGNMENT
This Agreement and all of the provisions hereof shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned, directly or indirectly, including,
without limitation, by operation of law, by any party hereto without the prior
written consent of the other parties hereto, provided, however, that Buyer Group
may (a) assign any or all of its rights and interests hereunder and under the
Ancillary Agreements to one or more of its lenders as collateral security, and
(b) designate one or more of its affiliates to perform its obligations
hereunder.
SECTION 9.6 NO THIRD PARTY BENEFICIARIES
This Agreement is solely for the benefit of Seller, and its successors
and permitted assigns, with respect to the obligations of Buyer and Parent under
this Agreement, and for the benefit of Buyer and Parent, and their respective
successors and permitted assigns, with respect to the obligations of Seller
under this Agreement, and this Agreement shall not be deemed to confer upon or
give to any other third party any remedy, claim liability, reimbursement, cause
of action or other right.
SECTION 9.7 DEFINITIONS AND INTERPRETATION
(a) As used in this Agreement, "BUSINESS" means the business conducted
by Seller's Medical Group (the "Division"), including, without limitation, (i)
Seller's medical laser systems and medical light-based systems business as
conducted by the Division, (ii) the design, development, manufacture, marketing,
selling, maintenance and support of components, accessories and subsystems
therefor which are manufactured by the Division, and (iii) the assembly,
marketing, selling, maintenance and support (but not the manufacture) of
components, accessories and subsystems therefor purchased by the Division from
Seller's other divisions or from third parties. In any case, the Business shall
not include the Retained Business.
(b) As used in this Agreement, "RETAINED BUSINESS" means the business
conducted by Seller's other divisions, including, without limitation, (i) the
design, development, manufacture, marketing, selling, maintenance and support of
any components, accessories and subsystems supplied to the Division by any other
division of Seller or to be supplied to Buyer under the Supply Agreement (other
than the assembly, marketing, resale, maintenance and support by the Division of
components, accessories and subsystems purchased by the Division from Seller's
other divisions), (ii) the design, development, manufacture, assembly,
marketing, selling, maintenance and support of fibers and diode stacks
manufactured by other divisions of Seller, (iii) the marketing, resale,
maintenance and support of fibers manufactured by the Division for other
divisions of Seller, and (iv) manufacturing processes performed by other
divisions of the Seller even if performed on components provided by the
Division.
(c) The article and section headings contained in this Agreement are
solely for the purpose of reference, are not part of the agreement of the
parties and shall not in any way affect the meaning or interpretation of this
Agreement.
(d) As used in this Agreement, an "AFFILIATE" of, or a person
"AFFILIATED" with, a specified person, is a person directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with,
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the person specified; provided that, without prejudice to Section 5.21, with
respect to Seller, Lambda Physik AG shall not be deemed included in the term
"affiliate" or "affiliated."
(e) As used in this Agreement, a "GOVERNMENTAL AUTHORITY" shall mean
any governmental or regulatory authority, domestic or foreign.
(f) As used in this Agreement, the term "PERSON" shall mean and
include an individual, a partnership, a joint venture, a corporation, a trust,
an unincorporated organization and a government or any department or agency
thereof.
(g) As used in this Agreement, the term "KNOWLEDGE" shall mean with
respect to a corporation, the actual knowledge of the persons listed on Schedule
9.7(e) of the Disclosure Schedule(1).
(h) As used in this Agreement, the term "SUBSIDIARY" shall mean with
respect to the referenced entity, any other entity (i) of which fifty (50)
percent or more of either the equity interests in, or the voting control of,
such entity is, directly or indirectly, beneficially owned by the referenced
entity, (ii) of which the referenced entity has the ability to (A) elect fifty
(50) percent or more of the directors or members of the governing board of such
entity or (B) appoint either the general partner of a general partnership or
limited partnership or the managing member of a limited liability company or
(iii) that the referenced entity otherwise controls; PROVIDED, HOWEVER, that
with respect to Seller, "subsidiary" shall refer only to those entities that are
primarily related to the Business; and provided, further, however, that, without
prejudice to Section 5.21, with respect to Seller, Lambda Physik AG shall not be
deemed included in the term "subsidiary."
SECTION 9.8 JURISDICTION AND CONSENT TO SERVICE
Each of Seller, Buyer and Parent (a) agrees that any suit, action or
proceeding arising out of or relating to this Agreement shall be brought in the
state or federal courts of California or New York; (b) consents to the
non-exclusive (as between the courts in California and New York) jurisdiction of
each such court in any suit, action or proceeding relating to or arising out of
this Agreement; (c) waives any objection that it may have to the laying of venue
in any such suit, action or proceeding in any such court; and (d) agrees that
service of any court paper may be made in such manner as may be provided under
applicable laws or court rules governing service of process.
SECTION 9.9 ENTIRE AGREEMENT
This Agreement, the Confidentiality Agreement, the Disclosure Schedules,
the Buyer Disclosure Schedules and the Ancillary Agreements and the exhibits and
other writings referred to herein or therein or delivered pursuant hereto or
thereto that form a part hereof or thereof constitute the entire agreement among
the parties with respect to their subject matter and supersede all other prior
agreements and understandings, both written and oral, between the parties or any
of them with respect to their subject matter (including the memorandum of
understanding); PROVIDED, HOWEVER, that if there shall be any inconsistency
between this Agreement and any of the Non-U.S. Agreements, this Agreement shall
govern.
SECTION 9.10 DESCRIPTIVE HEADINGS
The descriptive headings herein are inserted for convenience of reference
only and shall in no way be construed to define, limit, describe, explain,
modify, amplify, or add to the interpretation, construction or meaning of any
provision of, or scope or intent of, this Agreement nor in any way affect this
Agreement.
________________________________
(1) Subject to review of list by Buyer Group.
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SECTION 9.11 GOVERNING LAW
This Agreement will be governed by, and construed and enforced in
accordance with, the laws of the State of New York (regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof)
as to all matters, including but not limited to matters of validity,
construction, effect, performance and remedies.
SECTION 9.12 COUNTERPARTS
This Agreement may be executed simultaneously in counterparts, each of
which will be deemed an original but all of which together will constitute one
and the same instrument.
SECTION 9.13 SPECIFIC PERFORMANCE
The parties hereto agree that if the provisions contained in Section 5.9,
Section 5.10, Section 5.11, Section 5.12, Section 5.13 and Section 5.18 were not
performed in accordance with their specific terms or were otherwise breached,
irreparable damage would occur, no adequate remedy at law would exist and
damages would be difficult to determine, and that the parties shall be entitled
to specific performance of the terms thereof and immediate injunctive relief,
without the necessity of proving the inadequacy of money damages as a remedy and
without the necessity of posting any bond or other security, in addition to any
other remedy at law or equity.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
ESC MEDICAL SYSTEMS LTD.
By:___________________________________
Name:
Title:
ENERGY SYSTEMS HOLDINGS INC.
By:___________________________________
Name:
Title:
COHERENT, INC.
By: __________________________________
Name:
Title:
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