ASSET PURCHASE AGREEMENT
------------------------
ASSET PURCHASE AGREEMENT made as of the 16TH day of January, 2001, by
and among MISONIX, INC., a New York corporation, having an office at 0000 Xxx
Xxxxxxx, Xxxxxxxxxxx, Xxx Xxxx 00000 ("Buyer"), FIBRA-SONICS, INC., an Illinois
corporation, having an office at 0000 X. Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000
("Seller"), and XXXX XXXX XXXXXXXXXXXXX, XXXXX XXXXXXXXXXXXX, and XXXXX XXXXXX
KIRCHSCHLAGER, the three individuals having an address at 000 Xxxxxxxxxx Xxxxx
Xxxx, Xxxxxxxx Xxx, Xxxxxxxxx 00000 (such individuals are hereinafter
collectively called the "Shareholders").
W I T N E S S E T H :
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WHEREAS, Seller is engaged in the business of manufacturing,
distributing, researching and developing ultrasonic surgical instruments in
various medical and cosmetic fields including cosmetic surgery, ophthalmology,
neurosurgery, urology and other medical markets ("Seller's Business"); and
WHEREAS, Buyer desires to purchase from Seller and Seller desires to
sell to Buyer, on the terms and subject to the conditions of this Agreement, all
the business, assets and properties of Seller utilized in Seller's Business,
which may be more fully described in this Agreement, in exchange for the
consideration hereinafter set forth; and
WHEREAS, the Shareholders are the owners of all of the issued and
outstanding shares of common stock of Seller; and
WHEREAS, to induce Buyer to enter into this Agreement, the
Shareholders are making certain representations and warranties, and covenants
and other agreements contained in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants,
representations and warranties herein contained, the parties hereto agree as
follows:
ARTICLE I
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PURCHASE AND SALE OF ASSETS
---------------------------
1.1 SALE OF ASSETS. Subject to the terms and conditions set forth
in this Agreement, Seller agrees to sell, convey, transfer, assign, and deliver
to Buyer, free
and clear of any and all Liens (as such term is defined in Section 2.2),
except as specifically set forth herein, and Buyer agrees to purchase from
Seller, all of the assets of Seller's Business, including, without limitation,
the following:
(a) All confidential information, processes and intellectual
property rights including trade secrets, trademarks, trade names, patents, and
any pending applications for any of the foregoing, as well as all of Seller's
rights in and to the trade names "Fibra-Sonics", Registration No. 1,136,653 and
"Sonurgy", Registration No. 1,082,387, any claims and rights therein of Seller
against third parties (the foregoing being referred to as the "Intellectual
Property");
(b) The lists of all customers and suppliers with respect to
the Seller's Business together with all supplier files, customer files, account
histories and credit information (the "Lists") since January 1, 1997, which are
in the Seller's possession; all of the good will of the Seller's Business (the
"Good Will"); all books and records of Seller since January 1, 1997 relating to
Seller's Business (the "Books and Records"); all cash and cash equivalents as
the same may exist on Closing, investments, debt or equity, of Seller and
customer deposits (each of the foregoing items being collectively called "Cash
and Equivalents") [the Lists, Good Will, Books and Records, and Cash and
Equivalents being hereinafter collectively referred to as the "Property"];
(c) Seller's inventory of all products used in Seller's
Business and work-in-progress, as well as packaging and office supplies,
together with all warehouse receipts, documents of title, and books and records
relating thereto (the "Inventory");
(d) All equipment, machinery, inventory of spare parts, and
other tangible personal property of Seller used and conduct of Seller's Business
(the "Equipment"); and
(e) The accounts receivable of Seller, representing bona fide
obligations incurred by the account debtor and all books and records,
instruments, documents and other materials relating thereto (the "Receivables").
[The Intellectual Property, Property, Inventory, Equipment and Receivables being
hereinafter collectively referred to as the "Assets."].
1.2 CONSIDERATION. As full payment for the Assets, Buyer shall pay
Seller the net sum of $1,500,000, to be allocated as determined by Buyer's Chief
Financial Officer among the following categories (the "Initial Purchase Price"):
(a) the Intellectual Property referred to in Section 1.1(a)
hereof;
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(b) the Property referred to in Section 1.1(b) hereof;
(c) representing the value of the Inventory referred to in
Section 1.1(c) hereof, based upon Seller's "aging schedule" and projection of
future sales use thereof, as of the last business day prior to the Closing (the
"Inventory Price");
(d) equal to one hundred percent (100%) of the total face value
of the Receivables (less adequate reserves for non-collectibility) referred to
in Section 1.1(e) hereof as of the last business day prior to the Closing (the
"Receivables Price"); and
(e) The balance of the Initial Purchase Price, representing
Cash and Equivalents, and Good Will.
1.3 ASSUMPTION OF LIABILITIES. (a) Buyer agrees that on the
Closing hereunder, it shall assume and pay (i) Seller's accounts payable arising
in the ordinary course of business, as the same shall exist at the Closing, it
being understood that such accounts payable as at the date of execution of this
Agreement are as set forth on Seller's financial statements for the period ended
November 30, 2000 ($736,982) as the same may be adjusted by trade accounts
payable incurred in the ordinary course of business through the date of Closing
plus such non-trade payables as may be incurred from and after November 30, 2000
which Buyer may, after full review, elect to assume, (ii) assume and agree to
perform as and when due the contracts of Seller described on Exhibit 1.3(b) (the
"Contracts"), (iii) pay the accrued rent on the Company's plant, and (iv) assume
any other contracts approved in writing by Buyer prior to the Closing. Seller
and the Shareholders, jointly and severally, represent and warrant that there
are no contracts or agreements of Seller of any kind relating to the purchase
and/or sale of items relating to Seller's Business, other than those set forth
on Exhibit 1.3, to which it is a party or by which it is bound.
(b) It is understood and agreed that Buyer shall not be liable
for any of the obligations or liabilities of Seller of any kind or nature other
than those specifically assumed by Buyer under this Section and Buyer shall not
be liable for nor assume any other obligations including, but not limited to,
any income, sales, use or other taxes and loans payable to banks and
shareholders, under any existing sales, distribution and development agreements,
or any obligations to employees of Seller. Buyer is not assuming any leases for
real property and only such leases for personal property as it may elect. Seller
is and shall remain solely and absolutely liable for all of its liabilities and
obligations of every kind and nature, including but not limited to those created
by contract. With respect to existing obligations and liabilities of the Seller
under the contracts set forth on Schedule 1.3(b), Purchaser's only obligations
shall be to accept an assignment of such contracts on a prospective basis and
Seller shall reimburse Buyer for Buyer's fully loaded cost for performing
warranties and service contracts for goods sold prior to Closing (which may be
called "Warranty
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Obligation"). For purposes hereof, "fully loaded cost" shall mean: all specific
direct labor and material associated with the particular effort as accumulated
from Buyer's internal accounting system, applicable applied overhead and the
appropriate general and administrative cost allocation.
1.4 PAYMENT OF CONSIDERATION. The Initial Purchase Price shall be
paid at Closing by bank check or wire transfer, subject to the retention of the
Escrow Reserve provided in Section 8.3.
1.5 There shall also be a contingent purchase price (the
"Contingent Purchase Price") of up to, but not exceeding $1,120,000 in the
aggregate based upon sales generated during the twelve month period commencing
on the 1st day of the fourth month following Closing (the "Earnout Period"),
from the following lines of the Seller's Business; such Contingent Purchase
Price shall be paid in cash within 45 days following finalization of the books
and records for the Earnout Period, utilizing the following formula:
(i) In the area of neurosurgery based upon annual sales levels,
the earn-out payment would be:
On sales of $2,250,000 - a payment of $500,000;
On sales of $2,500,000 - a payment of $525,000; and
On sales of $2,750,000 - a payment of $550,000.
(ii) In the area of plastic surgery based upon annual sales
levels, the earn-out payment would be:
On sales of $1,250,000 - a payment of $250,000;
On sales of $1,500,000 - a payment of $275,000; and
On sales of $1,750,000 - a payment of $300,000.
(iii) In the area of urology based upon annual sales levels,
the earn-out payment would be:
On sales of $650,000 - a payment of $200,000;
On sales of $700,000 - a payment of $205,000; and
On sales of $750,000 - a payment of $210,000.
(iv) In the area of ophthalmology based upon annual sales
levels, the earn-out payment would be:
On sales of $250,000 - a payment of $50,000;
On sales of $300,000 - a payment of $55,000; and
On sales of $350,000 - a payment of $60,000.
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(v) Sales shall be computed by final shipped products to third
party customers, less returns, discounts and allowances, as recorded
under generally accepted accounting principles, for the Earnout Period.
(vi) Notwithstanding the formula contained herein above in this
Section 1.5, no payment of any portion of the Contingent Purchase Price
shall be made or due unless total sales from the Seller's Business
during the Earnout Period at least equal a threshold amount of
$3,500,000 in the aggregate; provided, however, that despite a
shortfall in the $3,500,000 threshold, 20% of the payment of the
Contingent Purchase Price otherwise due shall be due and payable for
any area of the Seller's Business where the sales objectives set forth
hereinabove have been met.
(vii) During the Earnout Period, Buyer agrees that it shall
operate Seller's Business in accordance with the exercise of prudent
business judgment, utilize reasonable efforts to attain the sales goals
set forth in Section 1.5 of this Agreement and, within thirty days
following the end of each three month period, provide Seller with
information relative to the lines of Seller's Business for which a
Contingent Purchase Price is calculated. Seller shall maintain a
written record of sales, returns and other relevant items in accordance
with customary and reasonable business practices.
ARTICLE II
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REPRESENTATIONS AND WARRANTIES OF
SELLER AND THE SHAREHOLDERS
---------------------------
Seller and the Shareholders, jointly and severally, represent and
warrant to Buyer that:
2.1 ORGANIZATION, POWER AND AUTHORITY, ETC. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Illinois with full power and authority to own, lease and operate its
assets and to carry on its business as now and as heretofore conducted. Seller
is not required to be qualified as a foreign corporation to do business in any
other jurisdiction. The Shareholders are the owners, beneficially and of record,
of all the issued and outstanding shares of Seller.
2.2 DUE AUTHORITY; NO BREACH. The execution and delivery by Seller
of this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action by Seller and
shareholder action by the Shareholders. This Agreement has been duly executed
and delivered by Seller and the Shareholders, and is the legal, valid and
binding obligation of Seller
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and the Shareholders, enforceable against each of them in accordance with its
terms. Neither the execution and delivery by Seller of this Agreement nor the
consummation by Seller of the transactions contemplated hereby, nor the
compliance by Seller and the Shareholders with or fulfillment by Seller and the
Shareholders of the terms and provisions hereof will (i) conflict with or result
in a breach or violation of any of the terms, conditions or provisions of the
Certificate of Incorporation or By-Laws or other corporate governance documents
of Seller, or (ii) with or without the giving of notice or lapse of time or
both, conflict with or result in a breach or violation of, or default under, or
permit the acceleration of any material obligation under any provision of any
agreement, indenture, mortgage, lien, lease or other instrument or restriction
of any kind to which Seller or the Shareholders is a party or by which Seller or
the Shareholders or any of the Assets is otherwise bound or affected, or (iii)
violate any judgment, order, writ, injunction, decree, law, statute, rule,
regulation, license or permit applicable to Seller or the Shareholders, or (iv)
result in the creation of any Lien (as hereinafter defined) upon any of the
Assets. As used in this Agreement, "Lien" means any lien, encroachment,
easement, encumbrance, mortgage, hypothecation, equity, charge, restriction,
possibility of reversion, or any other conflicting ownership or security
interest in favor of any third party. Notwithstanding the foregoing, the parties
recognize that Cosmopolitan Bank and Trust Company has certain liens on certain
of Seller's assets and, accordingly, that Cosmopolitan Bank and Trust Company
shall provide a consent to the execution and delivery of this Agreement and to
the closing thereof, together therewith a concurrent release of lien at Closing.
2.3 FINANCIAL STATEMENTS. Attached hereto as exhibit 2.3 are true
and correct copies of seller's compiled financial statements for the year ended
December 31, 1999, and for the eleven month period ending November 30, 2000
(collectively called the "Financial Statements"). The Financial Statements
present fairly in all material respects the financial position of seller at the
dates stated and the results of operations for the periods then ended in
conformity with generally accepted accounting principles, applied on a
consistent basis. Since November 30, 2000, there has been no material change in
the assets, liabilities or financial position of Seller.
2.4 LIABILITIES. As of Closing, Seller had no Liabilities (as
hereinafter defined), which are required by generally accepted accounting
principles to be reflected in financial statements, that were not so reflected
or reserved against in the balance sheet of Seller as of the Closing Date,
included in the Financial Statements, or specifically disclosed or provided for
in the notes thereto, other than Liabilities that, individually or in the
aggregate, are not material in amount. Since November 30, 2000, Seller has not
incurred any Liabilities except Liabilities (i) that were incurred in the usual
and ordinary course of business consistent with past practice and (ii) that,
individually or in the aggregate, are not material in amount. As used in this
Agreement, "Liabilities" means any debt, obligation or liability whatsoever
whether
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known or unknown, absolute, accrued, contingent or otherwise and whether
due or to become due.
2.5 OWNERSHIP AND CONDITION OF ASSETS. Seller is the sole
legal and beneficial owner of the Assets and has, and will transfer to Buyer,
good and marketable title to all of the Assets, free and clear of any Lien.
2.6 LITIGATION; DISPUTES. There is no judicial, administrative
or arbitral action, suit, or proceeding at law or in equity pending against
Seller, the Assets or the Contracts in which Seller has received service of
process, and to the best of Seller's and the Shareholders' knowledge, threatened
against or relating to Seller, or the assets and the contracts; there are no
unsatisfied or outstanding judgments, orders, decrees or stipulations against
Seller; and there are no claims against Seller pending (as to which Seller has
received service of process or other notice) which, if valid, would constitute
or result in a breach of any representation, warranty or agreement set forth
herein; and neither Seller nor the Shareholders have taken any action which, to
the best of their respective knowledge, would constitute the basis for any such
action or of any governmental investigation against Seller.
2.7 GOVERNMENTAL APPROVAL. No consent, approval, waiver, order
or authorization of, or registration, declaration or filing with, any Authority
(as hereinafter defined) or any other person is required in connection with the
execution and delivery of this Agreement or any other agreement or instrument to
be delivered in connection herewith by seller and the shareholders or the
consummation by Seller and the Shareholders of the transactions contemplated
hereby or thereby. As used herein, "authority" means any foreign, domestic,
national, federal, state or local governmental, judicial or regulatory agency or
authority.
2.8 CONTRACTS AND AGREEMENTS. (a) All contracts being
transferred to buyer as set forth in section 1.3 Are in full force and effect.
Seller has made available to buyer copies of all such contracts, including all
amendments and modifications thereto. Seller is not, and to the best knowledge
of seller and the shareholders, no other party is, in default, and no notice of
alleged default has been received by seller, under any such contract. There has
been no cancellation, or written threat to cancel any such contract by any other
party thereto.
(b) Except for the Contracts and except for the contracts and
agreements listed in Exhibit 2.9 annexed hereto, Seller is neither a party nor
subject to: (i) any license agreement relating to the operation of Seller's
Business; (ii) any contract containing covenants limiting the freedom of Seller
to compete in any aspect of Seller's Business or ultrasonics or with any person
in such field; or (iii) any contract or arrangement with any supplier, customer,
sales agency, broker, distributor, or any similar contractors involving the
purchase, sale, supply or distribution of ultrasonic products.
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2.9 INTELLECTUAL PROPERTY. All intellectual property, including
patents, patents pending, trademarks, trade names, service marks, copyrights
(including applications for, rights to acquire and other rights with respect to
any of the foregoing), trade secrets, inventions, licenses, blueprints,
drawings, product formulations and library, marketing and management know-how,
manufacturing technology and know-how, computer software and similar items
primarily related to the operation of the Seller's Business as it is currently
being operated is being transferred or licensed on a royalty-free basis to Buyer
with full right in Seller to utilize such intellectual property as it has
heretofore been utilized by Seller, and to transfer the same to Buyer. In
furtherance of the foregoing, attached is an opinion of Seller's special
counsel, Welsh & Xxxx, Ltd., which evidences Seller's rights to utilize and
license the product known as the Aesculap neurosurgical aspirator without
liability for patent infringement or otherwise.
2.10 LICENSES AND PERMITS.
(a) Exhibit 2.10 is a correct and current list of all of
Seller's permits, regulatory approvals and licenses (collectively, "Approvals").
None of the Approvals have been revoked, suspended, or voluntarily surrendered
since their issuance.
(b) To the best of the knowledge of Seller and Shareholders,
after due inquiry, Seller has all Approvals material to the conduct of Seller's
Business, all such Approvals are valid and in full force and effect, and no
proceeding is pending or, to the best of Seller's knowledge, threatened to
modify, suspend, revoke or otherwise limit any of such Approvals and no
administrative or governmental actions have been taken in connection with the
expiration or renewal of any of such Approvals. In addition, Seller shall
deliver, promptly following the date of execution of this Agreement, records
disclosing its complete repair history and warranty liabilities respecting
products of Seller's Business, as well as costed bills of materials evidencing
true margins at their respective transfer prices.
2.11 CONDUCT OF BUSINESS. Since November 30, 2000, Seller has
conducted the Seller's Business only in the ordinary course, and Seller has not:
(i) sold, assigned, transferred, mortgaged, pledged, leased or otherwise
disposed of or subjected to any Lien any Asset; (ii) amended, waived, released,
disposed of or permitted to lapse any material right relating to the Seller's
Business; (iii) transferred or granted any material rights under any
concessions, leases, licenses, agreements or Intellectual Property; (iv) made
any change, financial or otherwise, in the Assets or conduct of the Seller's
Business; or (v) agreed, whether in writing or not, to do any of the foregoing.
2.12 INVENTORY. The Inventory consists entirely of items saleable in
the ordinary course. No items included in the Inventory have been pledged as
collateral
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except to Cosmopolitan Bank and Trust Company or are held by Seller on
consignment from others.
2.13 TAXES. Seller has filed all federal, state and local tax
returns for all prior periods on or before the due dates for such returns, as
extended by any valid extensions of time, and has paid all taxes due for such
periods. There is no deficiency assessment or proposed adjustment or examination
by the Internal Revenue Service or any other taxing authority of any tax related
to Seller pending which would have a material adverse effect on the business or
financial condition of Seller. There is no material liability for any tax to be
imposed on the properties or assets of Seller for any period prior to the
Closing except taxes accrued but not yet due and payable, and taxes being
contested in good faith by appropriate proceedings (as to which reserves have
been adequately provided on the financial statements of Seller). All tax
liabilities of Seller, whether or not disputed, are adequately provided for on
the books of Seller. In this Agreement, the term "tax" or "taxes" shall mean all
taxes, charges, fees, levies or other assessments, including, without
limitation, income, franchise, excise, employment, property, sales, use, gross
receipt and personal property taxes, imposed by the federal government or any
state, county, local or foreign government or subdivision or agency thereof,
together with any interest, penalties or additions attributable to such
assessments.
2.14 ACCOUNTS RECEIVABLE. The Receivables purchased by Buyer
shall represent bona fide obligations incurred by the account debtors for goods
sold and delivered in the ordinary course of business and shall be free from any
Lien and collectible at their full amounts.
2.15 COMPLIANCE WITH LAWS; DEFAULTS. To the best of the knowledge of
Seller and Shareholders, after due inquiry: (a) Seller has complied with, in all
material respects, and is not in violation of, applicable Federal, state, or
local statutes, laws, rules and regulations affecting the Assets or
the operation of the Seller's Business, except for failures to comply or
violations which, in the aggregate, would not have a material adverse effect on
the conduct of, or the ability to conduct operations of, or the financial or
other condition of, the Seller's Business; and (b) Seller has performed all
material obligations required by it to date and is not in default, in any
material respect, under any contracts, agreements, leases, documents,
commitments or other arrangements to which Seller is a party or by which it is
otherwise bound.
2.16 EMPLOYEE LIABILITIES. Seller has satisfied and shall
satisfy any and all liabilities, obligations and claims with respect to
employees of Seller, whether arising prior to or after the Closing of the
transactions contemplated by this Agreement. Buyer and Edelman shall enter into
a mutually agreeable consulting agreement and Seller shall cooperate with Buyer
in assisting Buyer in retaining such other former employees of Seller as
consultants to Buyer, as Buyer may select.
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2.17 ENVIRONMENTAL MATTERS. To the best of the knowledge of
Seller and Shareholders, after due inquiry, Seller is and has been in compliance
with all environmental and/or hazardous waste laws and regulations and has not
received any claims or has reason to believe there will be asserted against
Seller any claims arising out of environmental or hazardous waste or similar
regulations or laws.
2.18 NO OMISSIONS OR MISSTATEMENTS. None of the information
included in this Agreement and the Exhibits hereto or other documents furnished
in connection herewith contains any untrue statement of a material fact or is
misleading in any material respect or omits to state any material fact necessary
in order to make any of the statements herein or therein not misleading in light
of the circumstances in which they were made, except to the extent that such
misstatement or omission would not have a material adverse impact on the
Seller's Business. Copies of all documents referred to in any Exhibit hereto
have been delivered or made available to Buyer and constitute true, correct and
complete copies thereof and include all amendments, exhibits, schedules,
appendices, supplements or modifications thereto or waivers thereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
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Buyer represents and warrants to Seller as follows:
3.1 ORGANIZATION, POWER AND AUTHORITY. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New York. Buyer has full power and authority to execute and deliver
this Agreement and to perform the transactions contemplated hereby.
3.2 DUE AUTHORITY; NO BREACH. The execution and delivery by
Buyer of this Agreement, and the consummation by Buyer of the transactions
contemplated hereby, have been duly authorized by all necessary corporate action
of Buyer. This Agreement is duly executed and delivered by Buyer and is the
legal, valid and binding obligation of buyer, enforceable against buyer in
accordance with its terms. Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby, nor the compliance
with or fulfillment of the terms and provisions hereof will (i) conflict with or
result in a breach or violation of any of the terms, conditions or provisions of
the Certificate of Incorporation or Bylaws of Buyer, or (ii) with or without the
giving of notice or lapse of time or both, conflict with or result in a breach
or violation of, or default under, or permit the acceleration of any obligation
under, any provision of any agreement, indenture, mortgage, lien, lease or other
instrument or restriction of any kind to which buyer is a party or by
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which Buyer is otherwise bound or affected, or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to buyer.
3.3 GOVERNMENTAL APPROVAL. No consent, approval, waiver, order
or authorization of, or registration, declaration or filing with, any Authority
is required in connection with the execution and delivery of this Agreement by
Buyer or the consummation by Buyer of the transactions contemplated hereby.
ARTICLE IV
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COVENANTS AND AGREEMENTS OF THE PARTIES
---------------------------------------
4.1 ACCESS. Prior to the Closing, at the request of Buyer,
Seller shall give the officers, attorneys, accountants and other authorized
representatives of Buyer reasonable access, during normal business hours and
upon reasonable notice, to all of Seller's offices, facilities, properties and
personnel relating to the Seller's Business.
4.2 CONDUCT OF BUSINESS. Except as otherwise permitted or
expressly contemplated by this Agreement or with the prior written consent of
Buyer, prior to the Closing Date, Seller shall (i) use its best efforts to
conduct the Seller's Business in the ordinary and usual course; (ii) not modify,
terminate, amend, renew, renegotiate or expand in any respect, or waive any of
its rights under, any contract, agreement or other arrangement; (iii) perform
all obligations under all contracts, agreements and commitments included in the
Assets or affecting Seller's Business; (iv) not sell or dispose of any of the
Assets, except sales of the Inventory, collections of Receivables and
consumption of supplies, all of the foregoing done in the ordinary course of
business; (v) not enter into any material contract, agreement, obligation,
lease, license or commitment involving Seller's Business; and (vi) obtain the
consent of the other parties to the assumption by Buyer (and extension of the
term where reasonably requested by Buyer) of the contracts and agreements
described on Exhibit 1.3 hereof.
4.3 AUDIT. The parties agree that there shall be an audit of the
results of Seller's operations for its fiscal year ending December 31, 2000,
which shall be undertaken by an independent firm of certified public accountants
reasonable acceptable to Buyer and Seller. Seller shall bear the cost of such
audit by deduction from the Initial Purchase Price to be paid by Buyer. The
scope of such audit shall be either (a) of Seller's Inventory, Cash and Cash
Equivalents, accounts receivable, accrued rental for real property, accounts
payable and customer deposits, or (b) if a full audit is required by Regulation
S-X of the Securities and Exchange Commission's Rules and Regulations, as
applicable to acquisitions by Buyer, primarily if Seller's loss equals or
exceeds $8000,000, such a full audit will be
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undertaken, and in either event such audit shall be completed on or before the
scheduled date for closing.
4.4 BULK SALES. Seller has represented that the transactions
set forth in this Agreement are not subject to the bulk sales law statutes of
the State of Illinois (Uniform Commercial Code - Bulk Transfers, Section 6-101
et. seq.). Notwithstanding the foregoing, if it should be determined that said
statute is applicable, notice pursuant to such statute is hereby waived, and
Seller and the Shareholders, jointly and severally, hereby agree (a) to
indemnify and hold Buyer harmless from and against any and all claims, demands,
and other liabilities arising from or as a result of such determination, and (b)
to take all reasonable actions available to it or them that are necessary to
prevent (i) a rescission or voiding of this transaction, this Agreement or the
transfer of the Assets, (ii) any seizure or attachment of the Assets
transferred, or (iii) any assertion of liability on the part of Buyer, limited
or unlimited, to any creditor or alleged creditor of Seller existing on the date
of such transfer by any party, except creditors whose debts have been
specifically assumed by Buyer under this Agreement.
4.5 EXCLUSIVITY. In order to induce Buyer to incur the effort
and expense of due diligence examinations and analysis, each of the Shareholders
and the Seller hereby, jointly and severally, agree that, for a period
commencing on the date this Agreement is delivered, fully executed, to Buyer and
ending January 31, 2001 (the "Blackout Period"), none of them will elicit,
discuss, explore, entertain or consider any possible sale of all or any part of
the Seller's securities or assets or any other change in control of the Seller
or its assets with any other person, or provide any information to any other
person, other than such information as is traditionally provided to third
parties in the ordinary course of such business operations in circumstances
where none of them has any reason to believe that such information may be used
to evaluate a possible purchase or sale of some or all of the Seller's assets or
securities.
ARTICLE V
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CONDITIONS TO THE OBLIGATIONS OF THE PARTIES
--------------------------------------------
5.1 CONDITIONS TO THE OBLIGATIONS OF BUYER. The obligations of
Buyer to consummate the transactions contemplated by this Agreement are subject
to the fulfillment, at or before the Closing, of all of the following conditions
(subject to the right of Buyer to waive any such condition in writing):
(a) The representations and warranties of Seller and the
Shareholders contained in this Agreement and in any Exhibit or other document
delivered by Seller
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and the Shareholders pursuant hereto or in connection with the transactions
contemplated hereby shall have been true and correct as of the date of this
Agreement and shall be true and correct at and as of the Closing Date (as
defined in Section 6.1) as if made on and as of the Closing Date;
(b) Following the date hereof, no action, suit or proceeding shall
have been instituted or threatened which (i) seeks to restrain, prohibit or
declare illegal, or to obtain a material amount of damages arising from, the
transactions contemplated by this Agreement or (ii) could, if adversely
determined, materially impair the value of the Assets or the Business and no
temporary restraining order or injunction shall have been issued by any court or
governmental body restraining or prohibiting, and no other laws, statutes,
ordinances, orders, rules or regulations ("Legal Requirements") shall have come
into effect making illegal, performance of this Agreement or the consummation of
any of the transactions contemplated hereby;
(c) All consents, approvals, permits and authorizations required to
be obtained from, and all filings required to be made with any, agency, entity
or person in connection with the consummation of the transactions contemplated
hereby shall have been obtained or made;
(d) All instruments incident to and all proceedings to be taken in
connection with the transactions contemplated hereby shall be reasonably
satisfactory in form and substance to Buyer and its counsel;
(e) Seller shall have delivered to Buyer, an opinion of Seller's
legal counsel, reasonably acceptable in form and substance, to the effect of the
matters contained in Sections 2.1, 2.2, 2.5, 2.6, 2.7, the first sentence of
2.8, 2.10(b), 2.15 and, to the best of the knowledge of Seller's counsel after
due inquiry, Sections 2.16 and 2.17;
(f) Consents to assignment and renewal of existing customer,
distributor and development agreements relating to Seller's Business shall have
been obtained and Buyer shall have received reasonable assurance from the
parties to the aforesaid as to their intention to continue to transact business
with Buyer, as successor to Seller;
(g) Confirmation of the asset value of the Property, Inventory and
Equipment at a minimum of $580,000 shall have been effectuated; and
(h) The audit of the results of Seller's Business for the fiscal
year ending December 31, 2000 as provided in Section 4.3 shall have been
completed to the reasonable satisfaction of Buyer, and any other covenants and
obligations of Seller
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and/or the Shareholders contained in this Agreement shall have been performed
and adhered to.
5.2 CONDITIONS TO THE OBLIGATIONS OF SELLER. The obligation of
Seller to consummate the transactions contemplated by this Agreement is subject
to the fulfillment, at or before the Closing, of the following conditions
(subject to the right of seller to waive any such condition in writing):
(a) The representations and warranties of Buyer contained in
this Agreement and in any Exhibit or other document delivered by Buyer pursuant
hereto or in connection with the transactions contemplated hereby shall have
been true and correct as of the date of this Agreement and shall be true and
correct at and as of the Closing Date as if made on and as of the Closing Date;
(b) No temporary restraining order or injunction shall have
been issued by any court or governmental body restraining or prohibiting, and no
other Legal Requirement shall have come into effect making illegal, performance
of this Agreement or the consummation of any of the transactions contemplated
hereby; and
(c) Buyer shall have delivered to Seller an opinion of Buyer's
counsel, in form and substance reasonably satisfactory to Seller, to the effect
of Sections 3.1, 3.2 and 3.3 of this Agreement.
ARTICLE VI
----------
CLOSING
-------
6.1 TIME AND PLACE. The closing hereunder (the "Closing") shall
take place on January 20, 2001, or such other date as Seller and Buyer may
mutually agree upon in writing (the "Closing Date"). The time and place of
Closing shall be 12 Noon, New York time, by exchange of documents or at such
other time and place as Seller and Buyer may mutually agree upon in writing.
6.2 TERMINATION. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing as follows, and
in no other manner:
(a) By mutual written consent of Seller and Buyer;
(b) By Seller, if any of the conditions set forth in Section
5.2 shall not have been satisfied as of the Closing unless Seller shall waive
such failure, in which
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event the Closing shall proceed as though such condition had been performed or
satisfied;
(c) By Buyer, if any of the conditions set forth in Section
5.1 shall not have been satisfied as of the Closing unless Buyer shall waive
such failure, in which event the Closing shall proceed as though such condition
had been performed or satisfied; or
(d) By Buyer in the event the parties are unable to obtain the
Consents to Assignment of any contracts described in Section 1.3(a)(ii) hereof.
6.3 EFFECT OF TERMINATION. If this Agreement is terminated and
the transactions contemplated hereby are not consummated as provided above, this
Agreement shall become void and of no further force and effect, except for any
liability for any breach causing or permitting such termination.
ARTICLE VII
------------
OBLIGATIONS AFTER CLOSING;
EFFECT OF CLOSING
--------------------------
7.1 NAME CHANGE. The Shareholders agrees to cause Seller to
file an amendment to its Certificate of Incorporation (the "Amendment") changing
Seller's corporate name so that it does not include the words "Fibra Sonics" or
any variation thereof not later than ten (10) days after the Closing. Seller
shall provide Buyer with a copy of the Amendment file stamped by the Secretary
of State of the State of Illinois indicating acceptance thereof.
7.2 ADDITIONAL ACTIONS. Seller and Shareholders shall, at any time
and from time to time after the Closing, without further consideration, take
whatever action Buyer may deem reasonably necessary or desirable to carry out
the intent and purposes of the transactions contemplated hereby.
7.3 NON-COMPETITION. Seller and each of the Shareholders shall
enter into non-competition agreements with Buyer, for a three year period from
and after the Closing, in the form provided on Exhibit 7.3 hereto.
7.4 SELLER'S COOPERATION WITH BUYER AFTER CLOSING. Seller shall
cooperate with the Buyer for a six month period from and after the Closing, to
advise the Buyer for the purpose of enabling Buyer to become fully familiar with
the ongoing operations of Seller's Business.
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ARTICLE VIII
------------
INDEMNIFICATION
---------------
8.1 SELLER'S AND SHAREHOLDERS'INDEMNITY. Seller and the
Shareholders (the "Indemnifying Parties") do hereby, jointly and severally,
indemnify, defend and hold Buyer, its directors, shareholders, officers,
employees, agents, counsel, accountants and representatives harmless from and
against any and all Losses (as hereinafter defined) based upon, arising out of
or otherwise in respect of (i) any inaccuracy or any breach of any
representation or warranty of Seller and/or the Shareholders contained in this
Agreement, (ii) any breach of any covenant or agreement of Seller and/or the
Shareholders contained in this Agreement (including, but not limited to, this
Section 8.1), (iii) any debt, obligations or liabilities whatsoever whether
known or unknown, absolute, accrued, contingent or otherwise and whether due or
to become due (including taxes) ("Liabilities") arising out of or in connection
with or related to the conduct of the Seller's Business prior to the Closing or
(iv) any liability of seller not expressly assumed by buyer. As used herein,
"Loss" means any loss, claim, demand, damage award, liability, suits, penalties,
forfeitures, cost or expense of every kind, nature and description (including,
without limitation, whether or not suit be brought, all costs, expenses and fees
of legal counsel).
8.2 NOTICE AND OPPORTUNITY TO DEFEND. Promptly after receipt by
Buyer of notice of the assertion of any claim by a person not a party to this
Agreement with respect to which Buyer expects to make a request for
indemnification hereunder, Buyer shall give the indemnifying parties written
notice describing such claim in reasonable detail. The Indemnifying Parties
shall have the right, at their option, to compromise or defend, at their own
expense and by their own counsel, any such matter involving the asserted
liability of Buyer as to which the Indemnifying Parties shall have acknowledged
their obligation to indemnify Buyer; provided, however, that such counsel shall
be satisfactory to Buyer in the exercise of its reasonable judgment; and
provided, further, however that if any such claim relates to taxes, and the
resolution of such claim may have a material adverse effect on Buyer for which
indemnity may not be sought hereunder, then such participation in compromise or
defense shall be joint. If the Indemnifying Parties shall undertake to
compromise or defend any such asserted liability, they shall promptly notify
Buyer of their intention to do so, and Buyer agrees to cooperate fully with the
Indemnifying Parties and their counsel in the compromise of, or defense against,
any such asserted liability and so long as the Indemnifying Parties are
defending in good faith any such claim, Buyer shall not compromise or settle
such claim, without the written consent of the Indemnifying Parties.
Notwithstanding an election to assume the defense of such action or proceeding,
Buyer shall have the right to employ separate counsel and to participate in the
defense of such action or proceeding, and the Indemnifying Parties shall bear
the reasonable fees, costs and expenses of such separate counsel (and shall pay
such fees, costs and expenses at least quarterly), if (i) the use of counsel
chosen
- 16 -
by the Indemnifying Parties to represent Buyer would present such counsel
with a conflict of interest; (ii) the defendants in, or targets of, any such
action or proceeding include both Buyer and the Indemnifying Parties and Buyer
shall have reasonably concluded that there may be legal defenses available to it
which are different from or additional to those available to the Indemnifying
Parties (in which case the Indemnifying Parties shall not have the right to
direct the defense of such action or proceeding on behalf of Buyer); (iii) the
Indemnifying Parties shall not have employed counsel satisfactory to Buyer in
the exercise of Buyer's reasonable judgment to represent Buyer within a
reasonable time after notice of the institution of such action or proceeding; or
(iv) the Indemnifying Parties shall authorize Buyer to employ separate counsel
at the Indemnifying Parties' expense. All costs and expenses incurred in
connection with Buyer's cooperation shall be borne by the Indemnifying Parties.
In any event, Buyer shall have the right at its own expense to participate in
the defense of such asserted liability. No settlement of any such claim or
proceeding shall be made without obtaining Buyer's written consent, such consent
not to be unreasonably withheld. While any claim for which Buyer may seek
indemnification hereunder is pending, Buyer may withhold payment of a portion of
the Contingent Purchase Price otherwise payable, although that shall not be
deemed to constitute a limitation of any other rights or remedies of Buyer.
8.3 ESCROW RESERVES. For the purpose of acting as a
non-exclusive fund to cover potential indemnification for liability of Seller
and its Shareholders hereunder (including Warranty Obligation described in
Section 1.3(b), the sum of $150,000 shall be subtracted from the Initial
Purchase Price and deposited in the escrow provided in Exhibit 8.3 hereof.
ARTICLE IX
----------
MISCELLANEOUS
-------------
9.1 SURVIVAL. All representations, warranties, covenants,
agreements and indemnities of Seller, the Shareholders and Buyer made in this
Agreement or in any certificate or other writing provided for in it, shall
survive the execution and delivery hereof and the closing of the transactions
contemplated by this Agreement.
9.2 NOTICES. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally
(including by courier), or sent by certified, registered mail, postage prepaid,
or Federal Express. Any such notice shall be deemed given when so delivered
personally or by Federal Express, or if mailed, forty-eight (48) hours after the
date of deposit in the United States mail, as follows or similar receipted
overnight courier service:
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(i) if to Seller and the Shareholders, to:
Fibra Sonics, Inc.
0000 X. Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxx, CEO with
copies to:
Xxxxxx X. Xxxxxxxx, Esq. and Xxxxx Xxxxxxxxxxxxxx
Xxxxxxxx & Brosk, P.C. 000 Xxxxxxxxxx Xxxxx Xxxx
00 Xxxxxx Xxxxxxxxx, Xxxxxxxx Xxx, XX 00000
Xxxxx 000
Xxxxxxxxxx, XX 00000
(ii) if to Buyer to:
MISONIX, INC.
0000 Xxx Xxxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. XxXxxxx, Xx., President
with a copy to:
Xxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Any party may, by notice given in accordance with this Section 9.2 to the other
party, designate another address or person for receipt of notices hereunder.
9.3 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding between the parties with respect to the transfer of
the Assets to Buyer and the assumption by Buyer of the Contracts and supersedes
all prior discussions, agreements and undertakings, written or oral, of any and
every nature with respect thereto.
9.4 WAIVERS AND AMENDMENTS; PRESERVATION OF REMEDIES. This
Agreement may be amended, canceled or extended, and the terms hereof may be
waived, only by a written instrument signed by authorized representatives of the
parties or, in the case of a waiver, by an authorized representative of the
party waiving compliance. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any party of any such right, power or privilege, or
any single or partial exercise of any
- 18 -
Such right, power or privilege, preclude any further exercise thereof or the
exercise of any other such right, power or privilege.
9.5 GOVERNING LAW. This Agreement shall be governed in all
respects, including validity, construction, interpretation and effect, by the
laws of the State of New York, without regard to principles of conflicts of law.
9.6 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement is not assignable without the prior written
consent of each of the parties hereto, provided, however, that Buyer shall be
entitled to transfer its rights under this Agreement to any wholly-owned
subsidiary of Buyer now existing or formed after the date of execution hereof so
long as Buyer remains liable for performance of all the obligations of such
transferee under this Agreement, including, without limitation, payment of the
Initial Purchase Price and Contingent Purchase Price provided for in Section 1
hereof.
9.7 COUNTERPARTS. This Agreement may be executed by the parties
hereto in separate counterparts which together shall constitute one and the same
instrument.
9.8 SEVERABILITY OF PROVISIONS. If any provision or any portion
of any provision of this Agreement or the application of any such provision or
any portion thereof to any Person or circumstance, shall be held invalid or
unenforceable, the remaining portion of such provision and the remaining
provisions of this Agreement, or the application of such provision or portion of
such provision as is held invalid or unenforceable to Persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby and such provision or portion of any provision as shall have
been held invalid or unenforceable shall be deemed limited or modified to the
extent necessary to make it valid and enforceable; in no event shall this
Agreement be rendered void or unenforceable.
9.9 CAPTIONS. All Section titles or captions contained in this
Agreement or in any Exhibit annexed hereto or referred to herein are for
convenience only, shall not be deemed a part of this Agreement and shall not
affect the meaning or interpretation of this Agreement.
9.10 EXPENSES. Each party hereto shall pay its own expenses
incidental to the preparation of this Agreement, the carrying out of the
provisions hereof and the consummation of the transactions contemplated
including, but not limited to, fees and expenses of legal counsel, accountants
and other representatives or consultants.
9.11 BROKER. Each of the parties represents and warrants to the
other party that it has not dealt with any broker or finder in connection with
any of the
- 19 -
transactions contemplated by this Agreement, and, insofar as each knows, no
finder's fee and/or business brokerage commission is payable to any person, firm
or corporation by virtue of the execution and delivery of this Agreement and the
consummation of the transactions provided for herein except for The Xxxxxx
Group, Inc., whose fees shall be paid by Seller. Each of the parties agrees to
indemnify and hold harmless the other from and against any and all costs,
liabilities and/or expenses (including reasonable attorneys' fees) incurred by
such party by reason of any claim for a finder's fee or business broker's fees
arising out of the transactions contemplated by this Agreement based upon the
action or alleged action of the indemnifying party.
9.11 NO THIRD PARTY RIGHTS. Nothing in this Agreement, expressed or
implied, is intended to confer on any person not a party hereto any rights or
remedies by reason of this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date and year first written above.
MISONIX, INC. FIBRA SONICS, INC.
By: /s/ Xxxxxxx X. XxXxxxx
---------------------- By: /s/ Xxxxxxx Xxxxxxx
------------------------------
Xxxxxxx X. XxXxxxx, Xx. Xxxxxxx Xxxxxxx - Chief
President Executive Officer
SHAREHOLDERS:
/s/ Xxxx Xxxx Xxxxxxxxxxxxx
------------------------------
Xxxx Xxxx Xxxxxxxxxxxxx
/s/ Xxxxx Xxxxxxxxxxxxx
------------------------------
Xxxxx Xxxxxxxxxxxxx
/s/ Xxxxx Xxxxxx Kirchschlager
------------------------------
Xxxxx Xxxxxx Kirchschlager
- 20 -
LIST OF EXHIBITS
----------------
Exhibit Description
------- -----------
1.3 Schedule of Contracts for Purchase and Sale
2.3 Financial Statements
2.10 Any required Approvals to conduct of Seller's Business
2.9 Intellectual Property
7.3 Form of Non-competition Agreement of Seller and the Shareholders
8.3 Escrow Agreement Covering Potential Indemnification of Initial
Purchase Price
- 22 -
EXHIBIT 1.3
SCHEDULE OF CONTRACTS FOR PURCHASE AND SALE
1. Term Sheet between Seller and Xxxxxxx Xxxx GmbH dated January 24,
2000 and January 31, 2000.
2. Purchase Agreement entered into in January 1997 between Seller and
Circon ACMI, a division of Circon Corporation.
3. Distributor Agreement dated November 1999 between Seller and
AESCULAP, Inc.
4. Distributor Agreement dated as of June 1, 1998 between Seller and
GENZYME Surgical Products Corporation.
5.
6.
7.
- 23 -
EXHIBIT 7.3
NON-COMPETITION AGREEMENTS OF
SELLER AND THE SHAREHOLDERS
- 24 -
EXHIBIT 8.3
ESCROW AGREEMENT COVERING POTENTIAL
INDEMNIFICATION OF INITIAL PURCHASE PRICE
- 25 -
