EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
AMONG
IVIVI TECHNOLOGIES, INC.
(AS THE COMPANY)
IVIVI TECHNOLOGIES, LLC
(AS BUYER)
AND
AJAX CAPITAL LLC
ONLY FOR PURPOSES OF SECTION 10.16
(AS GUARANTOR)
SEPTEMBER 24, 2009
TABLE OF CONTENTS
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PAGE
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ARTICLE I SALE AND PURCHASE AND ASSUMPTION..........................................2
Section 1.1. Sale and Purchase of Acquired Assets......................................2
Section 1.2. Excluded Assets...........................................................3
Section 1.3. Assumed Liabilities.......................................................4
Section 1.4. Excluded Liabilities......................................................4
Section 1.5. Company's Deliverables....................................................5
Section 1.6. Buyer's Deliverables......................................................6
Section 1.7. Nonassignable Assets......................................................6
ARTICLE II PURCHASE PRICE; ALLOCATION OF PURCHASE PRICE..............................7
Section 2.1. Payment of Purchase Price.................................................7
Section 2.2. Allocation of Purchase Price..............................................7
ARTICLE III CLOSING; CLOSING DATE.....................................................7
Section 3.1. Closing; Closing Date.....................................................7
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................8
Section 4.1. Qualification, Organization, etc..........................................8
Section 4.2. Subsidiaries..............................................................8
Section 4.3. Corporate Authority Relative to This Agreement; No Violation..............8
Section 4.4. Opinion of Financial Advisor..............................................9
Section 4.5. Required Vote of the Company Shareholders.................................9
Section 4.6. State Takeover Statutes..................................................10
Section 4.7. Reports and Financial Statements.........................................10
Section 4.8. No Undisclosed Liabilities...............................................10
Section 4.9. Material Contracts.......................................................11
Section 4.10. Compliance with Law......................................................11
Section 4.11. Proxy Statement; Other Information.......................................11
Section 4.12. Intellectual Property....................................................12
Section 4.13. Insurance................................................................12
Section 4.14. Finders or Brokers.......................................................12
Section 4.15. Warrants.................................................................12
Section 4.16. Inventory................................................................12
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE BUYER..............................13
Section 5.1. Qualification; Organization..............................................13
Section 5.2. Corporate Authority Relative to This Agreement; No Violation.............13
Section 5.3. Proxy Statement; Other Information.......................................14
Section 5.4. Financing................................................................14
Section 5.5. Finders or Brokers.......................................................14
Section 5.6. Certain Arrangements.....................................................14
Section 5.7. Investigations; Litigation...............................................15
Section 5.8. Disclaimer...............................................................15
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ARTICLE VI COVENANTS AND AGREEMENTS.................................................15
Section 6.1. Conduct of Business by the Company.......................................15
Section 6.2. Investigation............................................................18
Section 6.3. Solicitation.............................................................18
Section 6.4. Filings; Other Actions...................................................21
Section 6.5. Efforts..................................................................22
Section 6.6. Takeover Statute.........................................................23
Section 6.7. Public Announcements.....................................................24
Section 6.8. Shareholder Litigation...................................................24
Section 6.9. Notification of Certain Matters..........................................24
Section 6.10. Non-Competition and Non-Solicitation.....................................24
Section 6.11. Bulk Sales Law and Waiver................................................26
Section 6.12. Insurance................................................................27
Section 6.13. Use of Name..............................................................27
Section 6.14. Further Assurances.......................................................27
Section 6.15. Additional Covenants of the Buyer........................................27
ARTICLE VII CONDITIONS TO THE TRANSACTION............................................29
Section 7.1. Conditions to Each Party's Obligation to Consummate the Transaction......29
Section 7.2. Conditions to Obligation of the Company to Consummate the Transaction....29
Section 7.3. Conditions to Obligation of the Buyer to Consummate the Transaction......29
ARTICLE VIII TERMINATION..............................................................30
Section 8.1. Termination or Abandonment...............................................30
Section 8.2. Termination Fee..........................................................32
ARTICLE IX INDEMNIFICATION..........................................................32
Section 9.1. Indemnification of the Buyer by the Company..............................32
Section 9.2. Indemnification of the Company by the Buyer..............................32
Section 9.3. Procedure for Indemnification............................................33
ARTICLE X MISCELLANEOUS............................................................34
Section 10.1. Survival of Representations and Warranties...............................34
Section 10.2. Expenses.................................................................34
Section 10.3. Counterparts; Effectiveness..............................................34
Section 10.4. Governing Law............................................................34
Section 10.5. Jurisdiction; Enforcement................................................34
Section 10.6. WAIVER OF JURY TRIAL.....................................................35
Section 10.7. Notices..................................................................35
Section 10.8. Assignment; Binding Effect...............................................37
Section 10.9. Severability.............................................................37
Section 10.10. Entire Agreement; No Third-Party Beneficiaries...........................37
Section 10.11. Amendments; Waivers......................................................37
Section 10.12. Headings.................................................................38
Section 10.13. Interpretation...........................................................38
Section 10.14. No Recourse..............................................................38
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Section 10.15. Determinations by the Company............................................38
Section 10.16. Ajax's Guaranty..........................................................39
Section 10.17. Certain Definitions......................................................39
EXHIBITS
Exhibit A Xxxx of Sale and Assignment
Exhibit B Intellectual Property Assignment
Exhibit C Assumption Agreement
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ASSET PURCHASE AGREEMENT, dated September 24, 2009 (this "AGREEMENT"),
by and among Ivivi Technologies, Inc., a New Jersey corporation (the "COMPANY"),
Ivivi Technologies LLC, a Delaware limited liability company (the "BUYER") and,
only for purposes of SECTION 10.16, Ajax Capital LLC, a Delaware limited
liability company ("AJAX"). Certain other capitalized terms used herein are
defined in SECTION 10.17 and throughout this Agreement.
RECITALS
WHEREAS, the Company is currently engaged in the business of designing,
developing and commercializing certain proprietary early-stage medical
electrotherapeutic technologies and engaged in sponsored research involving
electrotherapeutic technologies (the "BUSINESS");
WHEREAS, the Company wishes to sell, convey, assign and otherwise
transfer to the Buyer, and the Buyer wishes to purchase and obtain the
assignment from the Company, substantially all of the assets of the Company
relating to the Business, and the Buyer wishes to assume certain liabilities of
the Company relating to the Business, in each case as set forth in this
Agreement and on the terms and subject to the conditions of this Agreement (the
"TRANSACTION");
WHEREAS, the Board of Directors of the Company (the "BOARD"), acting
upon the unanimous recommendation of a Special Committee of the Board (the
"SPECIAL COMMITTEE"), has unanimously (with the Chairman of the Board
abstaining) (i) approved the execution, delivery and performance by the Company
of this Agreement and the consummation of the transactions contemplated hereby,
including the Transaction, and (ii) resolved to recommend approval of this
Agreement by the shareholders of the Company;
WHEREAS, concurrently with the execution of this Agreement, as a
condition and inducement to the Buyer's willingness to enter into this
Agreement, the Buyer, the Company and certain shareholders of the Company are
entering into a voting agreement of even date herewith (the "VOTING AGREEMENT"),
pursuant to which such shareholders have agreed, subject to the terms thereof,
to vote their respective shares of common stock, no par value, of the Company
(the "COMPANY COMMON STOCK") in favor of approval of this Agreement and the
transactions contemplated by this Agreement;
WHEREAS, concurrently with the execution of this Agreement, as a
condition and inducement to the Buyer's willingness to enter into this
Agreement, the Company and Emigrant Capital Corp. ("EMIGRANT") are entering into
an Amended and Restated Forbearance Agreement, of even date herewith (the
"FORBEARANCE AGREEMENT"), pursuant to which Emigrant is providing the Company
with an extension to allow for the repayment of the Company's indebtedness owed
to Emigrant concurrently with the Closing; and
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WHEREAS, the Company and the Buyer desire to make certain
representations, warranties, covenants and agreements in connection with the
Transaction and the other transactions contemplated by this Agreement and also
to prescribe certain conditions to the Transaction as specified herein.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained herein, and
intending to be legally bound hereby, the Company and the Buyer hereby agree as
follows:
ARTICLE I
SALE AND PURCHASE AND ASSUMPTION
Section 1.1. SALE AND PURCHASE OF ACQUIRED ASSETS. At the Closing, upon
the terms and subject to the conditions of this Agreement, the Company will
sell, transfer, convey and assign to the Buyer, and the Buyer will purchase and
accept, free and clear of all Liens (except for Liens created by the Buyer), all
of the right, title, benefit and interest of the Company in, to and under all of
the assets relating to the Business, including all of the following assets, but
excluding the Excluded Assets (collectively, the "ACQUIRED ASSETS"):
(a) FIXED ASSETS. Those assets of the Company set forth on
SCHEDULE 1.1(a);
(b) INVENTORY. All inventory of the Company relating to the
Business as of the Closing;
(c) ACCOUNTS RECEIVABLE. All accounts receivable of the Company as
of the Closing;
(d) INTELLECTUAL PROPERTY. All Intellectual Property owned by the
Company that is registered, issued or the subject of a pending application as
set forth on SCHEDULE 1.1(d);
(e) ASSUMED CONTRACTS. All Contracts listed and limited to those
set forth on SCHEDULE 1.1(e) (the "ASSUMED CONTRACTS");
(f) REGULATORY APPROVALS. All Regulatory Approvals, including all
Regulatory Approvals from the United States Food and Drug Administration, of the
Company set forth on SCHEDULE 1.1(f) to the extent such Regulatory Approvals are
assignable under applicable Law;
(g) RIGHTS UNDER THE COMPANY'S INSURANCE POLICIES. All rights,
claims and credits of the Company arising under any of the Company's insurance
policies (whether received prior to or following the Closing) solely in respect
of any asset damaged, lost or condemned after the date hereof and which, if not
so damaged, lost or condemned, would have been an Acquired Asset; and
(h) OTHER ASSETS. All other property and equipment of the Company
relating to the Business as set forth on SCHEDULE 1.1(h).
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At the Closing, the sale, transfer, conveyance, assignment and delivery
of the Acquired Assets will be effected pursuant to the Xxxx of Sale and
Assignment substantially in the form of EXHIBIT A and the Intellectual Property
Assignment substantially in the form of EXHIBIT B and shall be transferred and
conveyed to the Buyer at Closing free and clear of all Liens. Notwithstanding
anything to the contrary contained in this Agreement, the transfer of the
Acquired Assets will not include the assumption of any liability related to the
Acquired Assets unless the Buyer expressly assumes that liability pursuant to
SECTION 1.3 of this Agreement.
Section 1.2. EXCLUDED ASSETS. The Buyer shall not acquire any right,
title, benefit or interest in, to or under the following (the "EXCLUDED
ASSETS"):
(a) CASH AND CASH EQUIVALENTS. All cash and cash equivalents of
the Company as of the Closing;
(b) COMPANY'S ORGANIZATIONAL ASSETS. The Company's amended
certificate of incorporation and by-laws, qualifications to conduct business as
a foreign corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, tax returns, seals,
minute books, stock transfer books and similar documents of the Company relating
to the organization, maintenance and existence of the Company as a corporation;
(c) LEASE AGREEMENT. The lease agreement between the Company and
Xxxx-Xxxx East Lakemont LLC, dated June 18, 2007 (the "LEASE AGREEMENT");
(d) OTHER CREDITS. Any rights to payments or payments (whenever
received) from the surrender of net operating loss carryovers, tax credits, or
similar tax benefits by the Company, including pursuant to the corporation
business tax benefit certificate transfer program established by the New Jersey
Economic Development Authority within the New Jersey Emerging Technology and
Biotechnology Financial Assistance Program (N.J. Rev. Stat. Sec. 34:1B-7.42a);
(e) RIGHTS, CLAIMS AND CREDITS. All rights, claims and credits of
the Company to the extent relating to any other Excluded Asset or any Excluded
Liability (as defined in SECTION 1.4), including any such rights, claims and
credits arising under insurance policies and all guarantees, warranties,
indemnities and similar rights in favor of the Company in respect of any other
Excluded Asset or any Excluded Liability;
(f) INSURANCE POLICIES. All insurance policies to which the
Company is a party (for avoidance of doubt, any rights, claims and credits
arising under any of the Company's insurance policies as contemplated under
SECTION 1.1(g), shall be deemed Acquired Assets); and
(g) OTHER ASSETS. Those assets of the Company set forth on
SCHEDULE 1.2(g).
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Section 1.3. ASSUMED LIABILITIES. Upon the terms and subject to the
conditions of this Agreement, at the Closing, the Buyer will, effective as of
the Closing, and from and after the Closing, assume and agree to pay, perform
and discharge when due, all liabilities, obligations and commitments of the
Company under the Assumed Contracts from and after the Closing in accordance
with their terms (the "ASSUMED LIABILITIES"); PROVIDED, however, that the Buyer
shall not assume or agree to pay, discharge, satisfy and perform any liabilities
arising (i) out of the Company's breach of or default under any of its
obligations in relation to any of the Assumed Contracts occurring prior to the
Closing or (ii) before the Closing. The assumption of the Assumed Liabilities by
the Buyer will be effected pursuant to the Assumption Agreement substantially in
the form of EXHIBIT C.
Section 1.4. EXCLUDED LIABILITIES. Except for the Assumed Liabilities,
the Buyer will not assume, be bound by or be deemed to have assumed, agreed to
pay, perform, fulfill or discharge, and the Company will remain responsible for,
any other duties, responsibilities, obligations or liabilities of the Company
(whether or not related to the Business), whether known or unknown, fixed or
contingent (the "EXCLUDED LIABILITIES"). For the avoidance of doubt, the
Excluded Liabilities shall include, but shall not be limited to:
(a) all liabilities relating to product liability or similar
claims arising out of (i) the production or manufacture of any products of the
Business prior to the Closing Date and (ii) the sale, marketing or use of such
products assuming that the manufacture of such products occurred prior to the
Closing;
(b) all liabilities relating to the Excluded Assets (whether
arising before, on or after the Closing);
(c) all liabilities relating to any existing or future obligations
of the Company under the Lease Agreement;
(d) all liabilities relating to any of the Company's indebtedness
owed to Emigrant;
(e) all liabilities relating to the Assumed Contracts arising
prior to the Closing;
(f) all liabilities relating to any Hazardous Substance and any
Environmental Law, as applicable to the Company;
(g) all liabilities relating to any Tax and Tax Returns applicable
to the Company (whether arising prior to, on or after the Closing);
(h) all liabilities arising prior to the Closing relating to the
use or ownership of any Intellectual Property included in the Acquired Assets;
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(i) any liabilities or expenses relating to or arising out of any
(i) Company Benefit Plan, whether or not such liabilities arise prior to or
after the Closing or (ii) other liabilities related to the employment or
termination of employment of any Person arising from or related to the operation
of the Business by the Company (whether arising before, on or after the Closing)
or the transactions contemplated by this Agreement (including, without
limitation, liabilities related to the SMG Agreements (as defined in SECTION
6.15) or the Xxxxx Term Sheet (as defined in SECTION 6.15));
(j) any liabilities relating to or arising out of the employment
practices of the Company or Affiliate occurring prior to the Closing;
(k) any liabilities relating to workers' compensation claims and
occupational health claims against the Company for exposure, accidents or
injuries occurring prior to the Closing; and
(l) any liabilities relating to or arising out of the issued and
outstanding Warrants (as defined in SECTION 4.15).
Section 1.5. COMPANY'S DELIVERABLES. At the Closing, in addition to any
other deliverables specified in this Agreement, the Company shall deliver, or
cause to be delivered, to the Buyer:
(a) a Xxxx of Sale and Assignment substantially in the form of
EXHIBIT A duly executed by the Company;
(b) an Intellectual Property Assignment substantially in the form
of EXHIBIT B duly executed by the Company;
(c) an Assumption Agreement substantially in the form of EXHIBIT C
duly executed by the Company;
(d) a duly executed payoff letter with respect to all of the
Company's indebtedness owed to Emigrant (which letter shall include, among
others, the release of all Liens in favor of Emigrant and the termination of all
of the issued and outstanding Warrants held by Emigrant) in form and substance
reasonably satisfactory to the Buyer;
(e) a copy of (i) the Company's amended certificate of
incorporation and by-laws, (ii) all required resolutions of the Company,
authorizing the execution, delivery and performance by the Company of this
Agreement and the transactions contemplated hereby, including the Transaction,
(iii) all required resolutions of the Company removing the obstacles under the
New Jersey Shareholders' Protection Act with respect to the Buyer, and (iv) the
incumbency of each person executing this Agreement and any other agreement,
document or instrument contemplated hereby, in each case, certified by the
Secretary of the Company to be true, correct, complete, unchanged and in full
force and effect as of the Closing Date; and
(f) each other certificate, instruments and documents as the Buyer
may reasonably request in connection with Transaction.
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Section 1.6. BUYER'S DELIVERABLES. At the Closing, in addition to any
other deliverables specified in this Agreement, the Buyer shall deliver, or
cause to be delivered, to the Company:
(a) the Purchase Price in accordance with SECTION 2.1 below;
(b) an Assumption Agreement substantially in the form of EXHIBIT C
duly executed by the Buyer;
(c) a copy of (i) all required resolutions of the Buyer,
authorizing the execution, delivery and performance by the Buyer of this
Agreement and the transactions contemplated hereby, including the Transaction,
and (ii) the incumbency of each person executing this Agreement and any other
agreement, document or instrument contemplated hereby, in each case, certified
by the managing member or proper officer of the Buyer to be true, correct,
complete, unchanged and in full force and effect as of the Closing Date; and
(d) each other certificate, instruments and documents as the
Company may reasonably request in connection with Transaction.
Section 1.7. NONASSIGNABLE ASSETS. Nothing in this Agreement nor the
consummation of the Transaction or the other transactions contemplated hereby
shall be construed as an attempt or agreement to assign or transfer any Acquired
Asset to the Buyer which by its terms or by Law is not assignable or
transferable without a consent or satisfaction of any other condition or is
cancelable by a third party in the event of an assignment or transfer (a
"NONASSIGNABLE ASSET"), unless and until such consent shall have been obtained
or condition satisfied. The Company shall use commercially reasonable efforts to
obtain as expeditiously as possible any consent that may be required and to
satisfy any condition necessary to the assignment or transfer of a Nonassignable
Asset to the Buyer. The cost of obtaining any such consent or satisfying any
such condition shall be borne by the Company. Unless and until any such consent
that may be required is obtained or condition satisfied, to the extent permitted
by applicable Laws and by the terms of the applicable Nonassignable Asset, the
Company and the Buyer will cooperate and use commercially reasonable efforts to
establish an arrangement reasonably satisfactory to the Company and the Buyer
under which the Buyer would obtain the claims, rights and benefits and assume
the corresponding liabilities and obligations (to the extent such obligations
would not constitute Excluded Liabilities) under such Nonassignable Asset
(including by means of any subcontracting, sublicensing or subleasing
arrangement) or under which the Company would enforce for the benefit of the
Buyer, with the Buyer assuming and agreeing to pay the Company's obligations (to
the extent such obligations would not constitute Excluded Liabilities), any and
all claims, rights and benefits of the Company against a third party thereto.
With respect to any Nonassignable Assets for which such an arrangement has been
established, the Company shall promptly pay over to the Buyer the amount of all
payments received by the Company in respect of such Nonassignable Assets.
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ARTICLE II
PURCHASE PRICE; ALLOCATION OF PURCHASE PRICE
Section 2.1. PAYMENT OF PURCHASE PRICE. Subject to that certain Closing
Agreement, of even date herewith, by and among the Company, the Buyer, Xxxxxx X.
Xxxxxxxxxx ("SMG"), Xxxxxxx Xxxxx ("XXXXX"), Emigrant and Emigrant Mortgage
Company, Inc. ("EMC") (the "CLOSING AGREEMENT"), at the Closing, upon the terms
and subject to the conditions of this Agreement, the Buyer shall pay the
Company, by wire transfer of immediately available funds, an aggregate amount
equal to the sum of (i) the amount necessary to pay in full the principal of,
and accrued interest on, the Company's indebtedness owed to Emigrant plus (ii)
$475,000; PROVIDED, HOWEVER, that the sum of the amounts specified in clauses
(i) and (ii) shall in no event exceed THREE MILLION ONE HUNDRED AND FIFTY
THOUSAND DOLLARS ($3,150,000) (the "PURCHASE PRICE").
Section 2.2. ALLOCATION OF PURCHASE PRICE. The Company and the Buyer
agree that the Purchase Price shall be allocated among the Acquired Assets for
all purposes (including Tax and financial accounting purposes) as jointly agreed
in good faith by the Company and the Buyer prior to Closing. The Company and the
Buyer agree (a) to report as required the federal, state, local and foreign
income and other Tax consequences of the Transaction, (b) to jointly prepare
forms, as may be required, in a manner consistent with such allocation, and (c)
without the consent of the other party, not to take any position inconsistent
therewith upon examination of any Tax Return, in any refund claim, in any
litigation, investigation or otherwise. The Company and the Buyer agree that
each will furnish the other a copy of any such required forms that are filed
with any Governmental Entity with respect to Taxes by such party or any
affiliate relating to the Transaction within ten Business Days prior to the
filing of such form.
ARTICLE III
CLOSING; CLOSING DATE
Section 3.1. CLOSING; CLOSING DATE. Upon the terms and subject to the
conditions of this Agreement, the closing of the transactions contemplated by
this Agreement (the "CLOSING") will take place at 10:00 a.m., local time, as
soon as practicable (and, in any event, within three Business Days) following
the receipt by the Company of the Company Shareholder Approval, unless this
Agreement has been terminated pursuant to its terms; PROVIDED, HOWEVER, that the
Closing shall occur simultaneously with the closing of, and funding under, the
Closing Agreement. The Closing shall be held at the offices of Xxxx, Weiss,
Rifkind, Xxxxxxx & Xxxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000-0000, or by facsimile or other exchange of executed documents, or such
other location as the Buyer and the Company may mutually agree. The time and
date upon which the Closing occurs is herein referred to as the "CLOSING DATE."
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the disclosure letter delivered by the Company
to the Buyer immediately prior to the execution of this Agreement (the "COMPANY
DISCLOSURE LETTER," it being agreed that disclosure of any item in any section
of the Company Disclosure Letter shall also be deemed disclosure with respect to
any other section of this Agreement to which the relevance of such item is
reasonably apparent on its face), the Company represents and warrants to the
Buyer that the following statements contained in this ARTICLE IV are true and
correct:
Section 4.1. QUALIFICATION, ORGANIZATION, ETC.
(a) The Company is a legal entity duly organized, validly existing
and in good standing under the Laws of the State of New Jersey. The Company has
all requisite corporate power and authority to own, lease and operate its
properties and assets (including the Acquired Assets) and to carry on its
Business as presently conducted.
(b) The Company is qualified to do business and is in good
standing as a foreign corporation in each jurisdiction where the ownership,
leasing or operation of its assets (including Acquired Assets) or properties or
conduct of its Business requires such qualification, except where the failure to
be so qualified and in good standing would not, individually or in the
aggregate, result in any Company Material Adverse Effect. The organizational
documents of the Company, as previously made available to the Buyer, are in full
force and effect. The Company is not in violation of its organizational
documents.
Section 4.2. SUBSIDIARIES. The Company has no Subsidiaries and does not
own or control, directly or indirectly, any shares of capital stock or other
equity interest of any other corporation or limited liability company or any
interest in any partnership, joint venture or other non-corporate business
enterprise.
Section 4.3. CORPORATE AUTHORITY RELATIVE TO THIS AGREEMENT; NO
VIOLATION.
(a) The Company has the requisite corporate power and authority to
enter into this Agreement and, subject to receipt of the Company Shareholder
Approval (as defined in SECTION 4.5), to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board, acting upon the unanimous recommendation of the Special
Committee, and, except for the Company Shareholder Approval, no other corporate
proceedings on the part of the Company are necessary to authorize the
consummation of the transactions contemplated hereby. As of the date hereof,
each member of the Board (with the Chairman of the Board abstaining) and the
Special Committee of the Board has unanimously resolved to recommend that the
Company's shareholders approve this Agreement and the transactions contemplated
hereby (including the Special Committee's recommendation, the "RECOMMENDATION").
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This Agreement has been duly and validly executed and delivered by the Company
and, assuming this Agreement constitutes the valid and binding agreement of the
Buyer, constitutes the valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and any implied covenant of good faith and fair dealing.
(b) Other than in connection with or in compliance with (i) the
Securities Exchange Act of 1934 (the "EXCHANGE ACT"), (ii) filing to record the
termination of security interest held by Emigrant in the Acquired Assets
required under the Uniform Commercial Code and (iii) the Regulatory Approvals
set forth on SECTION 4.3(b) of the Company Disclosure Letter, no authorization,
consent or approval of, or filing with, any United States or foreign
governmental or regulatory agency, commission, court, body, entity or authority
(each, a "GOVERNMENTAL ENTITY") is necessary, under applicable Law, for the
consummation by the Company of the transactions contemplated hereby.
(c) The execution and delivery by the Company of this Agreement
does not, and the consummation of the transactions contemplated hereby and
compliance with the provisions hereof by the Company will not (i) result in any
violation of, or default (with or without notice or lapse of time, or both)
under, require consent under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to the loss of any benefit
under any material loan, guarantee of indebtedness or credit agreement, note,
bond, mortgage, indenture, lease, agreement, contract, instrument, permit,
Company Permit, concession, franchise, right or license binding upon the Company
or result in the creation of any liens, claims, mortgages, encumbrances,
pledges, security interests, equities or charges of any kind (each, a "LIEN")
upon any of the properties of the Company (including the Acquired Assets), (ii)
conflict with or result in any violation of any provision of the certificate of
incorporation or by-laws, in each case as amended, of the Company or (iii)
assuming that the consents and approvals referred to in SECTION 4.3(b) are duly
obtained, conflict with or violate any applicable Laws, except in the case of
clauses (i) and (iii), for any such violations, defaults or conflicts which
would not be materially adverse to the Company.
Section 4.4. OPINION OF FINANCIAL ADVISOR. The Board and the Special
Committee have received the opinion of Foundation Ventures LLC to the effect
that, as of the date hereof, the Purchase Price is fair to the Company from a
financial point of view.
Section 4.5. REQUIRED VOTE OF THE COMPANY SHAREHOLDERS. The affirmative
vote of the holders of outstanding shares of Company Common Stock, voting
together as a single class, representing a majority of all the votes cast by the
holders of shares of Company Common Stock entitled to vote at a meeting of
shareholders, is the only vote of holders of securities of the Company which is
required to approve this Agreement, the Transaction and the other transactions
contemplated hereby (the "COMPANY SHAREHOLDER APPROVAL").
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Section 4.6. STATE TAKEOVER STATUTES. No state anti-takeover statute or
regulation (including the New Jersey Shareholders' Protection Act), nor any
takeover-related provision in the Company's amended certificate of incorporation
or by-laws, as amended, would (a) prohibit or restrict the ability of the
Company to perform its obligations under this Agreement or any related agreement
or the Company's ability to consummate the Transaction or the other transactions
contemplated hereby and thereby, (b) have the effect of invalidating or voiding
this Agreement or any provision hereof, or (c) subject the Buyer to any
impediment or condition in connection with the exercise of any of its rights
under this Agreement. The Board has taken all necessary actions, including the
approval of the Transaction and the other transactions contemplated by this
Agreement, to remove any obstacle under the New Jersey Shareholders' Protection
Act to consummate the Transaction and the other transactions contemplated by
this Agreement such that the New Jersey Shareholders' Protection Act no longer
applies to the execution, delivery and performance of this Agreement, including
the consummation of the Transaction and the other transactions contemplated by
this Agreement.
Section 4.7. REPORTS AND FINANCIAL STATEMENTS. The financial statements
(including all related notes and schedules) of the Company (such financial
statements being consolidated to the extent applicable) included in the Company
SEC Documents fairly present in all material respects the financial position of
the Company, as at the respective dates thereof, and the results of its
operations and its cash flows for the respective periods then ended (subject, in
the case of the unaudited statements, to normal year-end audit adjustments and
to any other adjustments described therein, including the notes thereto) in
conformity with GAAP (except, in the case of the unaudited statements, as
permitted by the Securities and Exchange Commission (the "SEC")) applied on a
consistent basis during the periods involved (except as may be indicated therein
or in the notes thereto); PROVIDED, however, that the representations and
warranties contained in this SECTION 4.7 with respect to any unaudited
statements included in the Company SEC Documents shall be qualified by the
Company's Knowledge.
Section 4.8. NO UNDISCLOSED LIABILITIES. Except (i) as reflected or
reserved against in the Company's audited consolidated balance sheet as of
December 31, 2008, (ii) for transactions contemplated by this Agreement, (iii)
for liabilities and obligations incurred in the ordinary course of business
which are similar in nature and amount to the liabilities which arose during the
comparable period of time in the immediately preceding fiscal period and (iv)
for liabilities or obligations which have been discharged or paid in full in the
ordinary course of business (after taking into consideration the current
financial condition of the Company), the Company does not have any liabilities
or obligations of any nature, whether or not accrued, contingent or otherwise,
whether known or unknown and whether due or to become due.
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Section 4.9. MATERIAL CONTRACTS.
(a) Except for this Agreement, the Company Benefit Plans, the
Assumed Contracts or as set forth in SECTION 4.9(a) of the Company Disclosure
Letter, the Company is not a party to or bound by, as of the date hereof, any
Contract (whether written or oral) (i) which is a "material contract" (as such
term is defined in Item 601(b)(10) of Regulation S-K of the SEC) to the Company;
(ii) which constitutes a contract or commitment relating to indebtedness for
borrowed money or the deferred purchase price of property (in either case,
whether incurred, assumed, guaranteed or secured by any asset) in excess of
$10,000; (iii) which contains any provision that prior to or following the
Closing Date would materially restrict or alter the conduct of business of, or
purport to materially restrict or alter the conduct of business of, whether or
not binding on, the Buyer or any Affiliate of the Buyer; or (iv) pursuant to
which any rights in any material Company Intellectual Property are granted to
the Company by a third party or granted to a third party by the Company (all
contracts of the type described in this SECTION 4.9(a) being referred to herein
as "COMPANY MATERIAL CONTRACTS"). To the Company's Knowledge, the Company is not
a party to any Contract (other than any Contracts to which the Buyer or any
Affiliate of the Buyer is a party) that purports to be binding on, or imputes
any obligations on, the Buyer or any Affiliate of the Buyer.
(b) (i) Each Company Material Contract is valid and binding on the
Company and in full force and effect, (ii) the Company has in all material
respects performed all obligations required to be performed by it to date under
each Company Material Contract, and (iii) the Company has not received written
notice of, or to the Company's Knowledge, knows of, the existence of any event
or condition which constitutes, or, after notice or lapse of time or both, will
constitute, a material default on the part of the Company under any such Company
Material Contract.
Section 4.10. COMPLIANCE WITH LAW. The Company is, and since December
31, 2006 has been, in compliance in all material respects with and is not in
material default under or in violation of any Law.
Section 4.11. PROXY STATEMENT; OTHER INFORMATION. The Proxy Statement
will not at the time of the mailing of the Proxy Statement to the shareholders
of the Company, at the time of the Company Meeting, and at the time of any
amendments thereof or supplements thereto, and the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in the
Schedule 13E-3 to be filed with the SEC concurrently with the filing of the
Proxy Statement, will not, at the time of its filing with the SEC, and at the
time of any amendments thereof or supplements thereto, contain any untrue
statement of a material fact or omit 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; provided, that no
representation is made by the Company with respect to information supplied by or
related to the Buyer. The Proxy Statement and the Schedule 13E-3 will comply as
to form in all material respects with the Exchange Act, except that no
representation is made by the Company with respect to information supplied by or
related to the Buyer.
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Section 4.12. INTELLECTUAL PROPERTY. The Company owns, or is licensed
or otherwise possesses adequate rights to use, all material Intellectual
Property used or held for use in its Business as currently conducted
(collectively, the "COMPANY INTELLECTUAL PROPERTY"). SECTION 4.12 of the Company
Disclosure Letter sets forth a true, correct and complete list of all Company
Intellectual Property owned by the Company that is registered, issued or the
subject of a pending application. To the Company's Knowledge, the conduct of the
Business of the Company does not infringe any Intellectual Property of any
person and no claim is pending or threatened in writing alleging any
Intellectual Property infringement by the Company. To the Company's Knowledge,
the Company has not made any claim of a violation or infringement by others of
its rights to or in connection with the Intellectual Property of the Company. To
the Company's Knowledge, no person is infringing any Company Intellectual
Property owned by the Company. To the Company's Knowledge, all software material
to the Business (i) performs in material conformance with its documentation,
(ii) is free from any material software defect, and (iii) does not contain any
virus, software routine or hardware component designed to permit unauthorized
access or to disable or otherwise harm any computer, systems or software, or any
software routine designed to disable a computer program automatically with the
passage of time or under the positive control of a person other than an
authorized licensee or owner of the software.
Section 4.13. INSURANCE. The Company maintains, or is entitled to the
benefits of, insurance covering its properties (including the Acquired Assets),
operations, personnel and Business in the amounts set forth in SECTION 4.13 of
the Company Disclosure Letter. To the Company's Knowledge, the Company has not
received notice from any insurer or agent of such insurer that substantial
capital improvements or other expenditures will have to be made in order to
continue such insurance, and all such insurance is outstanding and duly in
force.
Section 4.14. FINDERS OR BROKERS. Except for Foundation Ventures LLC,
the Company has not engaged any investment banker, broker or finder in
connection with the transactions contemplated by this Agreement who might be
entitled to any fee or any commission in connection with or upon consummation of
the Transaction or the other transactions contemplated hereby.
Section 4.15. WARRANTS. SECTION 4.15 of the Company Disclosure Letter
sets forth a true, complete and correct list of all of the issued and
outstanding warrants to purchase shares of Company Common Stock (each, a
"WARRANT") as of the date hereof, which list shall include the identity of the
warrantholders, the number of shares of Company Common Stock which are subject
to issuance pursuant to each Warrant, the exercise price of each Warrant and the
expiration date of each Warrant. The Company has provided to the Buyer correct
and complete copies of all of the Contracts evidencing all of the issued and
outstanding Warrants.
Section 4.16. INVENTORY. SECTION 4.16 of the Company Disclosure Letter
sets forth a true, complete and correct list of all of the Company's inventory
relating to the Business (including raw materials, work in process and finished
goods) as of the date hereof. All of the inventory of the Company, which
consists of raw materials, work in process and finished goods, is, in all
material respects, merchantable and usable or saleable in the ordinary course of
business.
12
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER
Except as disclosed in the disclosure letter delivered by the
Buyer to the Company immediately prior to the execution of this Agreement (the
"BUYER DISCLOSURE LETTER," it being agreed that disclosure of any item in any
section of the Buyer Disclosure Letter shall also be deemed disclosure with
respect to any other section of this Agreement to which the relevance of such
item is reasonably apparent on its face), the Buyer represents and warrants to
the Company that the following statements contained in this ARTICLE V are true
and correct:
Section 5.1. QUALIFICATION; ORGANIZATION.
(a) The Buyer is a legal entity duly organized, validly existing
and in good standing under the Laws of the State of Delaware. The Buyer has all
requisite limited liability company power and authority to own, lease and
operate its properties and assets and to carry on its business as presently
conducted.
(b) The Buyer is qualified to do business and is in good standing
as a limited liability company in each jurisdiction where the ownership, leasing
or operation of its assets or properties or conduct of its business requires
such qualification, except where the failure to be so qualified and in good
standing would not, individually or in the aggregate, result in any Buyer
Material Adverse Effect. The organizational or governing documents of the Buyer,
as previously made available to the Company, are in full force and effect. The
Buyer is not in violation of its organizational or governing documents.
Section 5.2. CORPORATE AUTHORITY RELATIVE TO THIS AGREEMENT; NO
VIOLATION.
(a) The Buyer has all requisite limited liability company power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the managing member of the Buyer and no other corporate
proceedings on the part of the Buyer are necessary to authorize the consummation
of the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by the Buyer and, assuming this Agreement
constitutes the valid and binding agreement of the Company, this Agreement
constitutes the valid and binding agreement of the Buyer, enforceable against
the Buyer in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and any
implied covenant of good faith and fair dealing.
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(b) Other than in connection with or in compliance with the
Regulatory Approvals set forth on SECTION 5.2(b) of the Buyer Disclosure Letter,
no authorization, consent or approval of, or filing with, any Governmental
Entity is necessary for the consummation by the Buyer of the transactions
contemplated by this Agreement.
(c) The execution and delivery by the Buyer of this Agreement does
not, and the consummation of the transactions contemplated hereby and compliance
with the provisions hereof will not (i) result in any violation of, or default
(with or without notice or lapse of time, or both) under, require consent under,
or give rise to a right of termination, cancellation or acceleration of any
obligation or to the loss of any benefit under any loan, guarantee of
indebtedness or credit agreement, note, bond, mortgage, indenture, lease,
agreement, contract, instrument, permit, concession, franchise, right or license
binding upon the Buyer or any of its Subsidiaries or result in the creation of
any Lien upon any of the properties or assets of the Buyer or any of its
Subsidiaries, (ii) conflict with or result in any violation of any provision of
the certificate of incorporation or by-laws or other equivalent organizational
document, in each case as amended, of the Buyer or any of its Subsidiaries or
(iii) conflict with or violate any applicable Laws.
Section 5.3. PROXY STATEMENT; OTHER INFORMATION. None of the
information supplied or to be supplied by the Buyer in writing for inclusion or
incorporation by reference in the Proxy Statement will at the time of the
mailing of the Proxy Statement to the shareholders of the Company, at the time
of the Company Meeting, and at the time of any amendments thereof or supplements
thereto, and none of the information supplied or to be supplied by the Buyer and
contained in the SCHEDULE 13E-3 to be filed with the SEC concurrently with the
filing of the Proxy Statement, will, at the time of its filing with the SEC, and
at the time of any amendments thereof or supplements thereto, contain any untrue
statement of a material fact or omit 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.
Section 5.4. FINANCING. The Buyer will have sufficient funds to ensure
timely payment in full of the Purchase Price in accordance with the terms of
this Agreement.
Section 5.5. FINDERS OR BROKERS. The Buyer has not engaged any
investment banker, broker or finder in connection with the transactions
contemplated by this Agreement who might be entitled to any fee or any
commission in connection with or upon consummation of the Transaction or the
other transactions contemplated hereby.
Section 5.6. CERTAIN ARRANGEMENTS. Other than the Voting Agreement and
the Contracts filed or incorporated by reference as an Exhibit to a Company SEC
Document filed prior to the date hereof, there are no Contracts between the
Buyer, on the one hand, and any member of the Company's management or directors,
on the other hand, as of the date hereof that relate in any way to the Company
or the transactions contemplated by this Agreement. The Buyer has provided the
Special Committee with true, correct and complete copy of the Voting Agreement.
14
Section 5.7. INVESTIGATIONS; LITIGATION. There are no suits, claims,
actions, proceedings, arbitrations, mediations or investigations pending or, to
the Knowledge of the Buyer, threatened against the Buyer or any of its
Subsidiaries. As of the date hereof, the Buyer is not subject to any order,
writ, judgment, injunction, decree or award.
Section 5.8. DISCLAIMER. The Buyer acknowledges and agrees that it has
not relied on any representation and warranty or other statement of any Person
on behalf of the Company other than the representations and warranties of the
Company expressly set forth in ARTICLE IV. The Buyer acknowledges and agrees
that no Representative of the Company shall have any responsibility or liability
related to or with respect to the representations and warranties set forth in
ARTICLE IV.
ARTICLE VI
COVENANTS AND AGREEMENTS
Section 6.1. CONDUCT OF BUSINESS BY THE COMPANY.
(a) From and after the date hereof and prior to the Closing Date
or the date, if any, on which this Agreement is earlier terminated pursuant to
SECTION 8.1 (the "TERMINATION DATE"), and except (i) as may be required by
applicable Law, (ii) with the prior written consent of the Buyer, or (iii) as
expressly contemplated or permitted by this Agreement, the Company shall (A)
conduct its Business in all material respects in the ordinary course consistent
with past practices (after taking into consideration the current financial
condition of the Company), (B) use commercially reasonable efforts to maintain
and preserve intact its Business, the Acquired Assets and its advantageous
business relationships and (C) use commercially reasonable efforts to obtain any
necessary approvals (including the Regulatory Approvals) of any regulatory
agency or other Governmental Entity required for the transactions contemplated
hereby, performing its covenants and agreements under this Agreement or
consummating the transactions contemplated hereby or otherwise materially delay
or prohibit consummation of the Transaction or other transactions contemplated
hereby; PROVIDED, HOWEVER, that no action by the Company with respect to matters
specifically addressed by any other provision of this SECTION 6.1 shall be
deemed a breach of this sentence unless such action would constitute a breach of
such other provision.
(b) The Company agrees with the Buyer that between the date hereof
and the Closing Date, except as expressly contemplated or expressly permitted by
this Agreement, the Company shall not, without the prior written consent of the
Buyer:
(i) grant any person any right to acquire any shares of its
capital stock;
(ii) issue any additional shares of capital stock except
pursuant to the exercise of stock options or other awards issued under
the Company Stock Plans or pursuant to any other convertible securities
issued and outstanding as of the date hereof and in accordance with the
terms of such instruments;
15
(iii) purchase, sell, transfer, mortgage, encumber or
otherwise dispose of any of the Acquired Assets;
(iv) make any capital expenditure;
(v) incur, assume, guarantee, or become obligated with
respect to any debt;
(vi) make any investment in excess of $10,000 in the
aggregate;
(vii) (i) create or acquire any Subsidiary, (ii) purchase or
otherwise acquire any shares of capital stock or other equity interest
of any other corporation or limited liability company or any interest
in any partnership, joint venture or other non-corporate business
enterprise or (ii) make any equity or debt investment in any Person;
(viii) (A) amend, in any manner adverse to the Company, the
loan agreement between the Company and Emigrant, dated April 7, 2009,
and any other agreements, notes, security agreements and other
instruments executed and delivered in connection with such loan
agreement; PROVIDED, HOWEVER, that the Company shall be permitted
(without the consent of the Buyer) to enter into any additional
forbearance agreements with Emigrant to extend the forbearance period
under the Forbearance Agreement; PROVIDED, HOWEVER, that any such
additional forbearance agreements shall not obligate the Company to
incur additional costs (whether monetary or otherwise) in connection
thereunder other than such additional costs resulting from the increase
in the interest rate payable on the loan from Emigrant to be the lesser
of (x) 18% per annum and (y) the maximum rate permitted by law, as
contemplated by the Forbearance Agreement (for avoidance of doubt, the
Company shall not be permitted to amend the loan agreement in any other
manner except as contemplated in the immediately preceding sentence),
and (B) except in the ordinary course of business consistent with past
practice, enter into, renew, extend, materially amend or terminate (x)
any Company Material Contract or Contract which if entered into prior
to the date hereof would be a Company Material Contract (other than
terminating the Lease Agreement effective on or after the Closing), or
(y) any Contracts not in the ordinary course, involving the commitment
or transfer of value in excess of $10,000 in the aggregate; PROVIDED,
HOWEVER, that notwithstanding any of the foregoing, the Company shall
be permitted (after receipt of the Buyer's consent, which consent shall
not be unreasonably withheld, delayed or conditioned) to terminate or
reduce the salary of any employee of the Company;
16
(ix) waive, release, assign, settle or compromise any claim,
action or proceeding, other than waivers, releases, assignments,
settlements or compromises that involve only the payment of monetary
damages not in excess of $10,000 in the aggregate (excluding amounts to
be paid under existing insurance policies) or otherwise pay, discharge
or satisfy any claims, liabilities or obligations in excess of such
amount, in each case, other than in the ordinary course consistent with
past practice;
(x) amend or waive any provision of its certificate of
incorporation or its by-laws, partnership agreement, operating
agreement or other equivalent organizational documents or, in the case
of the Company, enter into any agreement with any of its shareholders
in their capacity as such (other than the Voting Agreement);
(xi) take or omit to take any action that is intended or
would reasonably be expected to, individually or in the aggregate,
result in any of the conditions to the Transaction set forth in ARTICLE
VII not being satisfied or satisfaction of those conditions being
materially delayed in violation of any provision of this Agreement;
(xii) enter into any "non-compete" or similar agreement that
following the Closing would in any way restrict the businesses of the
Buyer or its Affiliates or take any action that may impose new or
additional material regulatory requirements on any Affiliate;
(xiii) implement or adopt any material change in its Tax or
financial accounting principles, practices or methods, other than as
required by GAAP, applicable Law or regulatory guidelines;
(xiv) enter into any closing agreement with respect to
material Taxes, settle or compromise any material liability for Taxes,
make, revoke or change any material Tax election, agree to any
adjustment of any material Tax attribute, file or surrender any claim
for a material refund of Taxes, execute or consent to any waivers
extending the statutory period of limitations with respect to the
collection or assessment of material Taxes, file any material amended
Tax Return or obtain any material Tax ruling;
(xv) except in connection with this Agreement, take any
material action with respect to any Affiliate of the Company that is
outside the ordinary course of business consistent with past practices
(after taking into consideration the current financial condition of the
Company); PROVIDED, HOWEVER, that notwithstanding any of the foregoing,
the Company shall be permitted (after receipt of the Buyer's consent,
which consent shall not be unreasonably withheld, delayed or
conditioned) to terminate or reduce the salary of any employee of the
Company;
17
(xvi) notwithstanding anything in this Agreement to the
contrary, pay any bonuses to any of the Company's employees or
consultants pursuant to any Company Benefit Plan, any employment
agreement or any consulting agreement; or
(xvii) agree to take, make any commitment to take, or adopt
any resolutions of its Board of Directors in support of, any of the
actions prohibited by this SECTION 6.1(b).
Section 6.2. INVESTIGATION. From the date hereof until the Closing Date
and subject to the requirements of applicable Laws, the Company shall (i)
provide to the Buyer, its counsel, auditors and other authorized representatives
reasonable access during normal business hours to the offices, properties, books
and records of the Company, (ii) furnish to the Buyer, its counsel, auditors and
other authorized representatives such financial and operating data and other
information as such persons may reasonably request (including, to the extent
possible, furnishing to the Buyer the financial results of the Company in
advance of any filing by the Company with the SEC containing such financial
results), and (iii) instruct the employees, counsel, financial advisors,
auditors and other authorized representatives (other than directors who are not
employees) of the Company to cooperate reasonably with the Buyer in its
investigation of the Company, except that nothing herein shall require the
Company to disclose any information that would cause a violation of any
agreement to which the Company is a party or would cause a risk of a loss of
privilege to the Company. Any investigation pursuant to this SECTION 6.2 shall
be conducted in such manner as not to interfere unreasonably with the conduct of
the Business of the Company. No information or knowledge obtained by the Buyer
in any investigation pursuant to this SECTION 6.2 shall affect or be deemed to
modify any representation or warranty made by the Company in ARTICLE IV.
Section 6.3. SOLICITATION.
(a) Notwithstanding anything in this Agreement to the contrary,
prior to the Company Shareholder Approval, the Company and its officers,
directors, employees, agents and representatives, including any investment
banker, attorney or accountant retained by it or any of its Subsidiaries
("REPRESENTATIVES") have the right, directly or indirectly, to (i) initiate,
solicit, knowingly encourage (including by providing information) or facilitate
any inquiries, proposals or offers with respect to, or the making or completion
of, an Alternative Proposal, (ii) engage or participate in any negotiations
concerning, or provide or cause to be provided any non-public information or
data relating to the Company (provided, that the Company shall promptly (and in
any event within 24 hours) provide or make available to the Buyer any material
non-public information concerning the Company that is provided to the person
making or proposing an Alternative Proposal which was not previously provided or
made available to the Buyer or its Affiliates) in connection with, or have any
discussions with any person relating to, an actual or proposed Alternative
Proposal, or otherwise knowingly encourage or facilitate any effort or attempt
to make or implement an Alternative Proposal, and (iii) resolve to propose or
agree to do any of the foregoing.
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(b) Neither the Board nor any committee thereof shall (i) withdraw
or modify in a manner adverse to the Buyer, or publicly propose to withdraw or
modify in a manner adverse to the Buyer, the Recommendation, (ii) enter into or
approve any definitive agreement, letter of intent, agreement in principle,
asset purchase agreement, acquisition agreement or similar agreement relating to
any Alternative Proposal or (iii) approve or recommend, or publicly propose to
approve, endorse or recommend, any Alternative Proposal. Notwithstanding
anything to the contrary set forth in this Agreement, the Company, the Board or
the Special Committee may, prior to the receipt of the Company Shareholder
Approval, (A) withdraw or modify the Recommendation, or (B) in response to a
written Alternative Proposal made after the date of this Agreement that the
Board or the Special Committee determines in good faith, after consultation with
the Company's outside counsel and financial advisor, constitutes a Superior
Proposal, (x) approve or recommend, or publicly propose to approve or recommend,
such Superior Proposal, or (y) enter into, concurrently with or after
terminating this Agreement in accordance with SECTION 8.1(c)(ii), a binding
written agreement concerning such Superior Proposal, in any such case of clause
(A) or (B) only if the Board or the Special Committee determines in good faith,
after consulting with the Company's outside counsel, that failure to do so would
be inconsistent with its fiduciary obligations under applicable Law; PROVIDED,
however, that neither the Company, the Board nor the Special Committee shall
take any action referred to in clause (A) or (B) of this SECTION 6.3(b) or
terminate this Agreement pursuant to SECTION 8.1(c)(ii), unless:
(i) the Company promptly notifies the Buyer, in writing (a
"TERMINATION NOTICE") at least three (3) Business Days before taking
that action (the "NEGOTIATION PERIOD"), of its intention to do so, and,
in the case of an action described in clause (B) of this SECTION
6.3(b), (1) attaches to the Termination Notice the most current version
of the proposed agreement under which the Superior Proposal is proposed
to be consummated, and (2) sets forth in such Termination Notice the
identity of the third party making the Alternative Proposal; PROVIDED,
HOWEVER, that any material amendment or modification to any such
Superior Proposal shall require a new written Termination Notice by the
Company and a new three (3) Business Day Negotiation Period; and
(ii) the Company shall have offered to negotiate in good
faith with (and, if accepted, negotiated in good faith with), and shall
have instructed its financial and legal advisors to offer to negotiate
in good faith with (and, if accepted, negotiated in good faith with),
the Buyer to attempt to make such adjustments in the terms and
conditions of this Agreement as will enable the Company to proceed with
this Agreement; and
(iii) the Board (or the Special Committee) shall have
determined in good faith, after consultation with the Company's outside
legal counsel and financial advisor and, after considering the results
of such negotiations and the revised proposal made by the Buyer, if
any, that either: (x) the Superior Proposal giving rise to the
Company's Termination Notice (including any subsequent amendments or
modifications) continues to be a Superior Proposal, in the case of an
action described in clause (B) of this SECTION 6.3(b); or (y) it would
continue to be inconsistent with its fiduciary obligations under
applicable Law to recommend in favor of the Transaction and this
Agreement on the revised terms, if any, proposed by the Buyer.
19
(c) The Company promptly (and in any event within 24 hours) shall
advise the Buyer orally and in writing of (i) any Alternative Proposal or
indication or inquiry with respect to or that would reasonably be expected to
lead to any Alternative Proposal, (ii) any request for non-public information
relating to the Company, and (iii) any inquiry or request for discussion or
negotiation regarding an Alternative Proposal, including in each case the
identity of the person making any such Alternative Proposal or indication or
inquiry and the material terms of any such Alternative Proposal or indication or
inquiry (including copies of any material document or correspondence evidencing
such Alternative Proposal or inquiry). The Company shall keep the Buyer
reasonably informed on a reasonably current basis of the status (including any
material change to the terms thereof) of any such Alternative Proposal or
indication or inquiry.
(d) Notwithstanding the foregoing, the Company shall not waive the
application of the New Jersey Shareholders' Protection Act with respect to any
Person other than the Buyer, its interestholders and their respective
Affiliates; PROVIDED, HOWEVER, that the Company may waive the application of the
New Jersey Shareholders' Protection Act in connection with the entering into a
definitive agreement providing for the implementation of a Superior Proposal in
accordance with the terms of this Agreement.
(e) Nothing contained in this Agreement shall prohibit the Company
or its Board (or the Special Committee) from disclosing to its shareholders a
position contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange
Act.
(f) As used in this Agreement, "ALTERNATIVE PROPOSAL" shall mean
(i) any inquiry, proposal or offer from any Person or group of Persons other
than the Buyer or one of its Subsidiaries for a merger, reorganization,
consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the Company or (ii)
any proposal or offer to acquire in any manner, directly or indirectly, over 20%
of the equity securities or assets of the Company, in each case other than the
Transaction.
(g) As used in this Agreement, "SUPERIOR PROPOSAL" shall mean any
Alternative Proposal (i) on terms which the Board (or the Special Committee)
determines in good faith, after consultation with the Company's outside legal
counsel and financial advisor, to be more favorable from a financial point of
view to the holders of Company Common Stock than the Transaction, taking into
account all the terms and conditions of such proposal, and this Agreement
(including any proposal or offer by the Buyer to amend the terms of this
Agreement and the Transaction during the Negotiation Period) and (ii) that the
Board (or Special Committee) believes is reasonably capable of being completed,
taking into account all financial, regulatory, legal and other aspects of such
proposal; provided that for purposes of the definition of "Superior Proposal",
the references to "20%" in the definition of Alternative Proposal shall be
deemed to be references to "50%."
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Section 6.4. FILINGS; OTHER ACTIONS.
(a) As promptly as reasonably practicable following the date of
this Agreement, the Company shall prepare the Proxy Statement, and the Company
and the Buyer shall prepare the SCHEDULE 13E-3. The Buyer and the Company shall
cooperate with each other in connection with the preparation of the foregoing
documents. The Company will use its commercially reasonable efforts to have the
Proxy Statement, and the Buyer and the Company will use their commercially
reasonable efforts to have the SCHEDULE 13E-3, cleared by the SEC as promptly as
practicable after such filing. The Company will use its commercially reasonable
efforts to cause the Proxy Statement to be mailed to the Company's shareholders
as promptly as practicable after the Proxy Statement is cleared by the SEC. The
Company shall as promptly as practicable notify the Buyer of the receipt of any
oral or written comments from the SEC relating to the Proxy Statement. The
Company shall cooperate and provide the Buyer with a reasonable opportunity to
review and comment on the draft of the Proxy Statement (including each amendment
or supplement thereto), and the Buyer and the Company shall cooperate and
provide each other with a reasonable opportunity to review and comment on the
draft SCHEDULE 13E-3 (including each amendment or supplement thereto) and all
responses to requests for additional information by and replies to comments of
the SEC, prior to filing such with or sending such to the SEC, and the Buyer and
the Company will provide each other with copies of all such filings made and
correspondence with the SEC with respect thereto. If at any time prior to the
Closing Date, any information should be discovered by any party hereto which
should be set forth in an amendment or supplement to the Proxy Statement or the
SCHEDULE 13E-3 so that the Proxy Statement or the SCHEDULE 13E-3 would not
include any misstatement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, the
party which discovers such information shall promptly notify the other parties
hereto and, to the extent required by applicable Law, an appropriate amendment
or supplement describing such information shall be promptly filed by the Company
with the SEC and disseminated by the Company to the shareholders of the Company.
(b) Subject to the other provisions of this Agreement, the Company
shall (i) take all action necessary in accordance with the New Jersey
Shareholders' Protection Act (including, not less than 20 days prior to the
Company Meeting, notifying each shareholder of record entitled to vote at such
meeting that appraisal rights are available under the New Jersey Shareholders'
Protection Act) and its amended certificate of incorporation and by-laws to duly
call, give notice of, convene and hold a meeting of its shareholders as promptly
as reasonably practicable following the mailing of the Proxy Statement for the
purpose of obtaining the Company Shareholder Approval (such meeting or any
adjournment or postponement thereof, the "COMPANY MEETING"), and (ii) subject to
the Board's or the Special Committee's withdrawal or modification of its
Recommendation in accordance with SECTION 6.3, use commercially reasonable
efforts to solicit from its shareholders proxies in favor of the approval of
21
this Agreement, the Transaction and the other transactions contemplated hereby.
Notwithstanding anything in this Agreement to the contrary, unless this
Agreement is terminated in accordance with SECTION 8.1, the Company, regardless
of whether the Board (whether or not acting through the Special Committee, if
then in existence) has approved, endorsed or recommended an Alternative Proposal
or has withdrawn, modified or amended the Recommendation, will submit this
Agreement for adoption by the shareholders of the Company at the Company
Meeting.
Section 6.5. EFFORTS.
(a) Subject to the terms and conditions set forth in this
Agreement, each of the parties hereto shall use its commercially reasonable
efforts (subject to, and in accordance with, applicable Law) to take promptly,
or to cause to be taken, all actions, and to do promptly, or to cause to be
done, and to assist and to cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate the Transaction and the other
transactions contemplated hereby, including (i) the obtaining of all necessary
actions or nonactions, waivers, consents and approvals, including the Regulatory
Approvals, from Governmental Entities and the making of all necessary
registrations and filings and the taking of all steps as may be necessary to
obtain an approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of the transactions contemplated hereby and (iv) the execution
and delivery of any additional instruments reasonably necessary to consummate
the transactions contemplated hereby.
(b) Subject to the terms and conditions herein provided and
without limiting the foregoing, the Company and the Buyer shall (i) use
commercially reasonable efforts to cooperate with each other in (x) determining
whether any filings are required to be made with, or consents, permits,
authorizations, waivers or approvals are required to be obtained from, any third
parties or other Governmental Entities in connection with the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby and (y) timely making all such filings and timely seeking all such
consents, permits, authorizations or approvals, including but not limited to
approvals from the Food and Drug Administration (the "REGULATORY APPROVALS"),
(ii) use commercially reasonable efforts to take, or to cause to be taken, all
other actions and to do, or to cause to be done, all other things necessary,
proper or advisable to consummate the Transaction and the other transactions
contemplated hereby, including taking all such further action as reasonably may
be necessary to resolve such objections, if any, by any Governmental Entity in
connection with the Regulatory Approvals, or other state or federal regulatory
authorities of any other nation or other jurisdiction or any other person may
assert under Regulatory Law with respect to the Transaction and the other
transactions contemplated hereby so as to enable the Closing to occur as soon as
reasonably possible (and in any event no later than the End Date), (iii) subject
to applicable legal limitations and the instructions of any Governmental Entity,
keep each other reasonably apprised of the status of matters relating to the
completion of the transactions contemplated by this Agreement, including to the
extent permitted by Law promptly furnishing the other with true and complete
22
copies of notices or other communications sent or received by the Company or the
Buyer, as the case may be, to or from any third party and/or any Governmental
Entity with respect thereto, and permit the other to review in advance any
proposed communication by such party to any supervisory or Governmental Entity
and (iv) give the other reasonable notice of, and, to the extent permitted by
such Governmental Entity, allow the other to attend and participate at any
meeting with any Governmental Entity in respect of any filings, investigation or
other inquiry or proceeding relating thereto. The Company and the Buyer shall
permit counsel for the other party reasonable opportunity to review in advance,
and consider in good faith the views of the other party in connection with, any
proposed written communication to any Governmental Entity.
(c) Subject to the rights of the Buyer in SECTION 6.8, and in
furtherance and not in limitation of the covenants of the parties contained in
this SECTION 6.5, if any administrative or judicial action or proceeding,
including any proceeding by a private party, is instituted (or threatened to be
instituted) challenging the Transaction or any other transaction contemplated by
this Agreement, each of the Company and the Buyer shall cooperate in all
respects with each other and shall use their respective commercially reasonable
efforts to contest and resist any such action or proceeding and to have vacated,
lifted, reversed or overturned any decree, judgment, injunction or other order,
whether temporary, preliminary or permanent, that is in effect and that
prohibits, prevents or restricts consummation of the Transaction or any other
transactions contemplated hereby. Notwithstanding the foregoing or any other
provision of this Agreement, nothing in this SECTION 6.5 shall limit a party's
right to terminate this Agreement pursuant to SECTION 8.1(b)(i) or (ii) so long
as such party has, prior to such termination, complied with its obligations
under this SECTION 6.5.
(d) For purposes of this Agreement, "REGULATORY LAW" means any and
all state, federal and foreign statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines and other Laws requiring notice to,
filings with, or the consent or approval of, any Governmental Entity, or that
otherwise may cause any restriction, in connection with the Transaction and the
transactions contemplated thereby, including (i) any Law governing the direct or
indirect ownership or control of any of the operations or assets (including the
Acquired Assets) of the Company or (ii) any Law with the purpose of protecting
the national security or the national economy of any nation.
Section 6.6. TAKEOVER STATUTE. If any "fair price," "moratorium,"
"control share acquisition" or other form of anti-takeover statute or regulation
shall become applicable to the Transaction, the Voting Agreement or the other
transactions contemplated by this Agreement after the date of this Agreement,
each of the Company and the Buyer shall grant such approvals and take such
actions as are reasonably necessary so that the Transaction, the Voting
Agreement and the other transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated herein and otherwise act to
eliminate or minimize the effects of such statute or regulation on the
Transaction, the Voting Agreement and the other transactions contemplated
hereby.
23
Section 6.7. PUBLIC ANNOUNCEMENTS. The Company and the Buyer will
consult with and provide each other the reasonable opportunity to review and
comment upon any press release or other public statement or comment prior to the
issuance of such press release or other public statement or comment relating to
this Agreement or the transactions contemplated herein and shall not issue any
such press release or other public statement or comment prior to such
consultation except as may be required by applicable Law or by obligations
pursuant to any listing agreement with any national securities exchange.
Section 6.8. SHAREHOLDER LITIGATION. The Company shall give the Buyer
the opportunity to participate, subject to a customary joint defense agreement,
in, but not control, the defense or settlement of any shareholder litigation
against the Company or its directors or officers relating to the Transaction or
any other transactions contemplated hereby; PROVIDED, HOWEVER, that no such
settlement shall be agreed to without the Buyer's consent.
Section 6.9. NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to the Buyer, and the Buyer shall give prompt notice to the
Company, of (i) any notice or other communication received by such party from
any Governmental Entity in connection with the Transaction or the other
transactions contemplated hereby or from any person alleging that the consent of
such person is or may be required in connection with the Transaction or the
other transactions contemplated hereby, if the subject matter of such
communication or the failure of such party to obtain such consent could be
material to the Company or the Buyer, (ii) any actions, suits, claims,
investigations or proceedings commenced or, to such party's Knowledge,
threatened against, relating to or involving or otherwise affecting such party
which relate to the Transaction or the other transactions contemplated hereby,
(iii) the discovery of any fact or circumstance that, or the occurrence or
non-occurrence of any event the occurrence or non-occurrence of which, would
cause or result in any of the Conditions to the Transaction set forth in ARTICLE
VIII not being satisfied or satisfaction of those conditions being materially
delayed in violation of any provision of this Agreement; PROVIDED, HOWEVER, that
the delivery of any notice pursuant to this SECTION 6.9 shall not (x) cure any
breach of, or non-compliance with, any other provision of this Agreement or (y)
limit the remedies available to the party receiving such notice. The Company
shall notify the Buyer, on a reasonably current basis, of any events or changes
with respect to any criminal or material regulatory investigation or action
involving the Company or any of its Affiliates (but, excluding traffic
violations or similar misdemeanors), and shall reasonably cooperate with the
Buyer or its Affiliates in efforts to mitigate any adverse consequences to the
Buyer or its Affiliates which may arise (including by coordinating and providing
assistance in meeting with regulators).
Section 6.10. NON-COMPETITION AND NON-SOLICITATION.
(a) COVENANTS AGAINST COMPETITION. The Company acknowledges that
(i) the Business of the Company is conducted primarily in the United States;
(ii) the Company has intimate and valuable knowledge of the Business, as well as
technical, financial, customer, supplier and other confidential information
related to the Business, which, if exploited by the Company in contravention of
24
the terms of this Agreement, would seriously, adversely and irreparably affect
the ability of the Buyer to continue to conduct the Business previously
conducted by the Company; (iii) the agreements and covenants contained in this
SECTION 6.10, as they relate to the Business and otherwise, have been determined
by the Buyer to be essential to protect the Business; and (iv) the Buyer would
not consummate the transactions contemplated by this Agreement but for such
agreements and covenants, including under this SECTION 6.10. Accordingly, the
Company covenants and agrees as follows:
(i) NON-COMPETE. For a period of five (5) years following the
Closing (the "RESTRICTED PERIOD"), the Company shall not, within the
United States, directly or indirectly, (A) engage in the Business; (B)
except as agreed to in writing by the Buyer, render any services to any
Person principally engaged in business similar in nature to the
Business; or (C) become interested in any Person principally engaged in
business similar in nature to the Business in any capacity, including
as a partner, shareholder, principal, lender, agent, trustee or
consultant.
(ii) NON-SOLICITATION OF EMPLOYEES. During the Restricted
Period, the Company shall not, either directly or indirectly, hire,
solicit or encourage any employee to leave the employment of the Buyer
or any Affiliate thereof (each, a "PROTECTED PARTY" and collectively,
the "PROTECTED PARTIES").
(iii) DISCONTINUATION OF BUSINESS RELATIONSHIPS. During the
Restricted Period, the Company shall not, directly or indirectly, seek
to induce or otherwise cause any customer, supplier, licensee or any
other Person with whom any of the Protected Parties has a material
business relationship, whether by contract or otherwise, to discontinue
or alter in a manner adverse to any Protected Party, such business
relationship.
(iv) CONFIDENTIAL INFORMATION; PERSONAL RELATIONSHIPS. During
the Restricted Period, the Company shall keep confidential and shall
not, without the prior express written consent of the Buyer, use,
disclose or provide access to, any confidential information relating to
the Business of any Protected Party, including customer lists and other
information, except: (A) any information required to be disclosed by
law or court order and (B) any information that is otherwise available
to the public or in the public domain, other than as a result of a
disclosure by the Company, in violation of confidentiality obligations
under any agreement with a Protected Party.
(b) RIGHTS AND REMEDIES UPON BREACH. If the Company breaches, or
threatens to commit a breach of, any of the provisions of SECTION 6.10(a) (the
"RESTRICTIVE COVENANTS"), the Protected Parties shall have the following rights
and remedies, each of which rights and remedies shall be independent of the
others and severally enforceable, and each of which is in addition to, and not
in lieu of, any other rights and remedies available to the Protected Parties
under law or in equity: (i) the right and remedy to have the Restrictive
25
Covenants specifically enforced by any court of competent jurisdiction, it being
agreed that any breach or threatened breach of the Restrictive Covenants would
cause irreparable injury to the Protected Parties and that money damages would
not provide an adequate remedy to the Protected Parties; and (ii) the right and
remedy to require the Company to pay to the Protected Parties all damages,
losses, costs or expenses incurred by any Protected Party as the result of any
action constituting a breach of the Restrictive Covenants. The Company shall be
obligated to pay the costs of enforcement of the provisions of this SECTION 6.10
by any Protected Party in connection with either such remedy, including, but not
limited to, reasonable attorneys fees and court costs.
(c) SEVERABILITY OF COVENANTS. The Company acknowledges and agrees
that the Restrictive Covenants are reasonable and valid in geographical and
temporal scope and in all other respects. If any court determines that any of
the Restrictive Covenants, or any part thereof, is invalid or unenforceable as
to the Company, the remainder of the Restrictive Covenants shall not thereby be
affected and shall be given full effect as to the Company, without regard to the
invalid portions.
(d) BLUE-PENCILING. It is expressly understood and agreed that
although the Company considers the Restrictive Covenants to be reasonable, if a
judicial determination is made by a court of competent jurisdiction that the
time or territory or any other restriction contained in this SECTION 6.10 is an
unenforceable restriction against the Company, the provisions of this SECTION
6.10 shall not be rendered void but shall be deemed amended to apply as to such
maximum time and territory and to such maximum extent as such court may
judicially determine or indicate to be enforceable. Alternatively, if any court
of competent jurisdiction finds that any restriction contained in this SECTION
6.10 is unenforceable, and such restriction cannot be amended so as to make it
enforceable, such finding shall not affect the enforceability of any of the
other restrictions contained in this Agreement.
(e) ENFORCEABILITY IN JURISDICTIONS. The Buyer and the Company
intend to and hereby confer jurisdiction to enforce the Restrictive Covenants
upon the courts of any jurisdiction within the geographical scope of the
Restrictive Covenants. If the courts of any one or more of such jurisdictions
hold the Restrictive Covenants unenforceable by reason of the breadth of such
scope or otherwise, it is the intention of the Buyer and the Company that such
determination not bar or in any way affect the Buyer's right to the relief
provided above in the courts of any other jurisdiction within the geographical
scope of the Restrictive Covenants, as to breaches of the Restrictive Covenants
in such other respective jurisdictions, the Restrictive Covenants as they relate
to each jurisdiction being, for this purpose, severable into diverse and
independent covenants.
Section 6.11. BULK SALES LAW AND WAIVER. The Buyer hereby waives
compliance by the Company with any applicable bulk transfer provisions of the
Uniform Commercial Code or of any other applicable bulk transfer tax.
26
Section 6.12. INSURANCE. The Company agrees to take such actions as are
reasonably necessary to cause all insurance policies of the Company that are in
effect immediately prior to the date of this Agreement (including insurance
polices with respect to the Business, the Acquired Assets, product liability and
directors' and officers liability insurance) to continue to provide such
coverage from the date of this Agreement up to and including the Closing Date
(including, without limitation, the replacement or renewal of such insurance
policies, at the Company's sole cost and expense, with new insurance policies
which provide comparable coverage).
Section 6.13. USE OF NAME. The Company agrees to take all necessary
actions to change its name at the time of Closing, and conditional on, the
Closing, including obtaining the Board's approval and the Company's shareholders
approval to the adoption of an amendment to the certificate of incorporation
setting forth the change of the Company name. The Company further agrees that
from and after the Closing it or any of its Affiliates will cease to make any
use of (i) the name "Ivivi Technologies," (ii) any similar names indicating
affiliation with the Buyer, any of its Affiliates, the Business or the business
or activity engaged in by the Buyer or any of its Affiliates, (iii) any
identifying symbols, logos, emblems, signs or insignia related to the name
"Ivivi Technologies" or containing or comprising the foregoing, or (iv) any name
or xxxx confusingly similar thereto.
Section 6.14. FURTHER ASSURANCES. From the date hereof through the
Closing, the Company agrees to, upon the Buyer's reasonable request and at the
Buyer's sole cost and expense, assist, and cooperate in good faith with, the
Buyer in establishing its own payroll systems, accounting systems, billing
systems, credit and collection services as may be reasonably requested by the
Buyer in order to enable the Buyer to carry on its business immediately
following the Closing in a similar manner as to which the Company carried on its
Business prior to the Closing.
Section 6.15. ADDITIONAL COVENANTS OF THE BUYER. The Buyer covenants
and agrees as follows:
(a) Concurrently with the Closing, the Buyer shall deliver an
agreement executed by SMG, in a form reasonably acceptable to the Company and
SMG (the "SMG TERMINATION AGREEMENT"), (i) terminating his employment with the
Company and the Employment Agreement dated as of December 31, 2008 and amended
on April 2, 2009 between the Company and SMG (the "SMG EMPLOYMENT AGREEMENT")
pursuant to Section 4.01(F) thereof, (ii) providing that on the Closing Date all
restricted shares of Company Common Stock outstanding immediately prior to the
Closing Date (as specified in the SMG Termination Agreement) that were awarded
to SMG pursuant to the Restricted Stock Award Agreement dated as of March 31,
2009 between the Company and SMG (the "SMG RESTRICTED STOCK AWARD AGREEMENT" and
together with the SMG Employment Agreement, the "SMG AGREEMENTS") will become
fully and immediately vested and all restrictions and conditions applicable
thereto will lapse, pursuant to Section 1(f) of Exhibit A to the Restricted
Stock Award Agreement and acknowledging that SMG shall have no right to any
additional restricted shares of the Company Common Stock pursuant to the SMG
Restricted Stock Award Agreement (other than such restricted shares of the
Company Common Stock pursuant to the SMG Restricted Stock Award Agreement that
are outstanding immediately prior to the Closing Date), and (iii) providing for
an irrevocable waiver and general release by SMG (on his own behalf and on
27
behalf of each of his descendants, dependents, heirs, executors, administrators,
assigns and successors, if applicable) of any and all claims that SMG may have
against the Company and/or any of its shareholders, officers, directors,
employees, agents and related parties (in both their individual and
representative capacities), including, without limitation, (A) claims arising
out of the SMG Agreements or the termination thereof and SMG's employment with
the Company or separation therefrom, and (B) claims for salary, bonus, benefits
or other compensation earned pursuant to the SMG Employment Agreement prior to
September 15, 2009, but excluding any claims (a) for unpaid salary, benefits or
other compensation (other than bonuses) earned pursuant to the SMG Employment
Agreement during the period beginning on September 15, 2009 and ending on the
Closing Date; PROVIDED, HOWEVER, it is understood and agreed that, as of
September 15, 2009, SMG shall continue to earn salary at the rate of $100,000 on
an annualized basis or such lesser amount as is consistent with an across the
board salary reduction applicable to executive level Company personnel between
the date hereof and the Closing Date, (b) to enforce the SMG Agreements, subject
to this SECTION 6.15(a) or the SMG Termination Agreement, (c) that arise after
execution of the SMG Termination Agreement, (d) challenging the validity of the
SMG Termination Agreement under the Age Discrimination in Employment Act of 1967
("ADEA"), or (e) any other claims that may not be released under the SMG
Termination Agreement in accordance with applicable law.
(b) Concurrently with the Closing, the Buyer shall deliver an
agreement executed by Xxxxx, in a form reasonably acceptable to the Company and
Xxxxx (the "XXXXX TERMINATION AGREEMENT"), (i) terminating her employment with
the Company under the terms of the term sheet effective as of August 1, 2009
(the "XXXXX TERM SHEET") and (ii) providing for an irrevocable waiver and
general release by Xxxxx (on her own behalf and on behalf of each of her
descendents, dependents, heirs, executors, administrators, assigns and
successors, if applicable) of any and all claims that Xxxxx may have against the
Company and/or any of its shareholders, officers, directors, employees, agents
and related parties (in both their individual and representative capacities),
including, without limitation, (A) claims arising out of the Xxxxx Term Sheet or
the termination thereof and Xxxxx'x employment with the Company or separation
therefrom, and (B) claims for salary, bonus, benefits, or other compensation
earned pursuant to the Xxxxx Term Sheet prior to September 15, 2009, but
excluding any claims (a) for unpaid salary, benefits or other compensation
(other than bonuses) earned pursuant to the Xxxxx Term Sheet during the period
beginning on September 15, 2009 and ending on the Closing Date; provided,
HOWEVER, it is understood and agreed that, as of September 15, 2009, Xxxxx shall
continue to earn salary at the rate of $100,000 on an annualized basis or such
lesser amount as is consistent with an across the board salary reduction
applicable to executive level Company personnel between the date hereof and the
Closing Date, (b) to enforce the Xxxxx Term Sheet, subject to this SECTION
6.15(b), or the Xxxxx Termination Agreement, (c) that arise after execution of
the Xxxxx Termination Agreement, (d) challenging the validity of the Xxxxx
Termination Agreement under the ADEA, or (e) any other claims that may not be
released under the Xxxxx Termination Agreement in accordance with applicable
law.
28
ARTICLE VII
CONDITIONS TO THE TRANSACTION
Section 7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO CONSUMMATE THE
TRANSACTION. The respective obligations of each party to consummate the
Transaction shall be subject to the fulfillment (or waiver by all parties) at or
prior to the Closing Date of the following conditions:
(a) The Company Shareholder Approval shall have been obtained.
(b) No restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Transaction and/or
the other transactions contemplated by this Agreement shall be in effect.
Section 7.2. CONDITIONS TO OBLIGATION OF THE COMPANY TO CONSUMMATE THE
TRANSACTION. The obligation of the Company to consummate the Transaction is
further subject to the fulfillment or waiver of the following conditions:
(a) The Buyer shall have in all material respects performed all
obligations and complied with all covenants required by this Agreement to be
performed or complied with by it prior to the Closing.
(b) The Buyer shall have delivered to the Company a certificate,
dated as of the Closing Date and signed by the managing member or a senior
executive officer, certifying to the effect that the condition set forth in
SECTION 7.2(a) has been satisfied.
(c) The Company shall have received all agreements, instruments
and other documentation to be delivered by the Buyer pursuant to SECTION 1.6.
Section 7.3. CONDITIONS TO OBLIGATION OF THE BUYER TO CONSUMMATE THE
TRANSACTION. The obligation of the Buyer to consummate the Transaction is
further subject to the fulfillment or waiver of the following conditions:
(a) The Company shall have in all material respects performed all
obligations and complied with all covenants required by this Agreement to be
performed or complied with by it prior to the Closing.
(b) The Company shall have delivered to the Buyer a certificate,
dated as of the Closing Date and signed by a senior executive officer,
certifying to the effect that the condition set forth in SECTION 7.3(a) has been
satisfied.
(c) The Buyer shall have received all agreements, instruments and
other documentation to be delivered by the Company pursuant to SECTION 1.5.
29
ARTICLE VIII
TERMINATION
Section 8.1. TERMINATION OR ABANDONMENT. Notwithstanding anything
contained in this Agreement to the contrary, this Agreement may be terminated
and abandoned at any time prior to the Closing, whether before or after any
approval of the matters presented in connection with the Transaction by the
shareholders of the Company:
(a) by the mutual written consent of the Company and the Buyer;
(b) by either the Company or the Buyer, if:
(i) the Closing shall not have occurred on or before March
15, 2010 (the "END DATE"), and the party seeking to terminate this
Agreement pursuant to this SECTION 8.1(b)(i) shall not have breached
its obligations under this Agreement in any manner that shall have
proximately caused the failure to consummate the Transaction on or
before the End Date;
(ii) an injunction, other legal restraint or order shall have
been entered permanently restraining, enjoining or otherwise
prohibiting the consummation of the Transaction and such injunction,
other legal restraint or order shall have become final and
non-appealable, provided that the party seeking to terminate this
Agreement pursuant to this SECTION 8.1(b)(ii) shall have used its
commercially reasonable efforts to remove such injunction, other legal
restraint or order in accordance with SECTION 6.5; or
(iii) the Company Meeting (including any adjournments
thereof) shall have concluded and the Company Shareholder Approval
contemplated by this Agreement shall not have been obtained;
(c) by the Company, if:
(i) the Buyer shall have breached or failed to perform any of
covenants or other agreements (other than its representations and
warranties) contained in this Agreement, which breach or failure to
perform (i) would result in a failure of a condition set forth in
SECTION 7.1 or SECTION 7.2 and (ii) cannot be cured by the End Date,
provided that the Company shall have given the Buyer written notice,
delivered at least thirty (30) days prior to such termination, stating
the Company's intention to terminate this Agreement pursuant to this
SECTION 8.1(c)(i) and the basis for such termination;
30
(ii) prior to the receipt of the Company Shareholder
Approval, (A) the Board (or the Special Committee) has received a
Superior Proposal, (B) in light of such Superior Proposal a majority of
the disinterested directors of the Company (or the Special Committee)
shall have determined in good faith, after consultation with the
Company's outside counsel, that the failure to withdraw or modify its
Recommendation or enter into an agreement with respect to the Superior
Proposal would be inconsistent with the Board's (or the Special
Committee's) exercise of its fiduciary duty under applicable Law, (C)
the Company has provided the Buyer with a Termination Notice (in
accordance with SECTION 6.3(b)(i), (D) following the Negotiation Period
(in accordance with SECTION 6.3(b)(ii)), the Board shall have
determined in good faith, after consultation with the Company's outside
legal counsel and financial advisor and, after considering the results
of such negotiations and the revised proposal made by the Buyer, if
any, that either: (x) the Superior Proposal giving rise to the
Company's Termination Notice (including any subsequent amendments or
modifications) continues to be a Superior Proposal; or (y) it would
continue to be inconsistent with Board's (or the Special Committee's)
fiduciary obligations under applicable Law to recommend in favor of the
Transaction and this Agreement on the revised terms, if any, proposed
by the Buyer, and (E) the Board has approved, and the Company
concurrently enters into, a definitive agreement providing for the
implementation of such Superior Proposal; PROVIDED, HOWEVER,
notwithstanding anything contained in this Agreement to the contrary,
it is understood and agreed that concurrently with, and as a condition
to, the termination of this Agreement pursuant to this Section
8.1(c)(ii), the Company shall pay (or cause to be paid) to the Buyer a
termination fee of $90,000 in cash (the "TERMINATION FEE").
(d) by the Buyer, if:
(i) the Company shall have breached or failed to perform any
of its covenants or other agreements (other than its representations
and warranties) contained in this Agreement, which breach or failure to
perform (i) would result in a failure of a condition set forth in
SECTION 7.1 or SECTION 7.3 and (ii) cannot be cured by the End Date,
provided that the Buyer shall have given the Company written notice,
delivered at least thirty (30) days prior to such termination, stating
the Buyer's intention to terminate this Agreement pursuant to this
SECTION 8.1(d)(i) and the basis for such termination;
(ii) the Board or the Special Committee withdraws, modifies
or qualifies in a manner adverse to the Buyer, or publicly proposes to
withdraw, modify or qualify, in a manner adverse to the Buyer, its
Recommendation, fails to recommend to the Company's shareholders that
they give the Company Shareholder Approval or approves, endorses or
recommends, or publicly proposes to approve, endorse or recommend, any
Alternative Proposal; or
(iii) the Company gives the Buyer the Termination Notice
contemplated by SECTION 8.1(c)(ii)(c).
31
In the event of termination of this Agreement pursuant to this SECTION
8.1, this Agreement shall terminate (except for the provisions of SECTION 8.2,
SECTION 10.16 and ARTICLE IX), and there shall be no other liability on the part
of the Company or any of its shareholders, directors, officers or agents, as the
case may be, or the Buyer to the other except liability arising out of any
willful breach of any of the representations, warranties or covenants in this
Agreement by the Company, in which case the aggrieved party shall be entitled to
all rights and remedies available at law or in equity.
Section 8.2. TERMINATION FEE. Each of the parties hereto acknowledges
that the Termination Fee contained in SECTION 8.1(c)(ii) is an integral part of
the transactions contemplated by this Agreement and that the Termination Fee is
not a penalty, but rather is liquidated damages in a reasonable amount that will
compensate the Buyer for the efforts and resources expended and opportunities
foregone while negotiating this Agreement and in reliance on this Agreement and
on the expectation of the consummation of the transactions contemplated hereby,
which amount would otherwise be impossible to calculate with precision.
ARTICLE IX
INDEMNIFICATION
Section 9.1. INDEMNIFICATION OF THE BUYER BY THE COMPANY.
(a) The Company agrees to indemnify and hold harmless the Buyer,
all Affiliates of the Buyer and their respective members, stockholders,
directors, officers, employees and agents (the "BUYER INDEMNITEES") and will
reimburse such persons from and against and with respect to Losses resulting or
arising from:
(i) any non-fulfillment of any covenant or agreement on the
part of the Company under this Agreement;
(ii) any liabilities of the Company other than the Assumed
Liabilities;
(iii) fraud, intentional misrepresentation or willful breach
by the Company; or
(iv) SECTION 6.11 (Bulk Sales Law and Waiver) and any and all
Losses arising out of the failure of the Company to comply with any
bulk sales or transfer Law.
(b) The indemnification obligations of the Company hereunder
relate to indemnification for all Losses of a Buyer Indemnitee, regardless of
whether such Loss arises from a third-party claim against such Buyer Indemnitee
or otherwise.
Section 9.2. INDEMNIFICATION OF THE COMPANY BY THE BUYER.
(a) The Buyer hereby agrees to indemnify and hold harmless the
Company, all Affiliates of the Company and their shareholders, directors,
officers, employees and agents (the "COMPANY INDEMNITEES") against and with
respect to any and all Losses directly or indirectly resulting or arising from:
32
(i) any non-fulfillment of any covenant or agreement on the
part of the Buyer under this Agreement;
(ii) the Assumed Liabilities;
(iii) the ownership and use of the Acquired Assets following
the Closing; and
(iv) fraud, intentional misrepresentation or willful breach
by the Buyer.
(b) The indemnification obligations of the Buyer hereunder relate
to indemnification for all Losses of a Company Indemnitee, regardless of whether
such Loss arises from a third-party claim against such Company Indemnitee or
otherwise.
Section 9.3. PROCEDURE FOR INDEMNIFICATION.
(a) If a third-party claim is made against a Company Indemnitee or
a Buyer Indemnitee (an "INDEMNITEE"), and if such Indemnitee believes that such
claim could give rise to a right of indemnification, then such Indemnitee shall
give prompt written notice to the party obligated to provide indemnification
hereunder (an "INDEMNIFYING PARTY") of such claim after such Indemnitee has
received notice thereof (provided that failure to give timely notice shall not
limit the indemnification obligations of the Indemnifying Party hereunder except
to the extent that the delay in giving, or failure to give, such notice has
materially prejudiced the ability of the Indemnifying Party to defend the
claim). The Indemnifying Party shall have the right to defend such claim and
direct such defense, at the Indemnifying Party's sole option and expense and
with counsel selected by the Indemnifying Party and reasonably satisfactory to
such Indemnitee, provided that an Indemnitee shall at all times also have the
right to fully participate in the defense at its own expense (and may retain its
own counsel at the expense of the Indemnifying Party if it shall reasonably
determine that representation of it and the Indemnifying Party by the same
counsel would present an ethical conflict of interest; provided that the
Indemnifying Party will only be responsible under such circumstances for the
expenses of a single additional counsel for all Indemnitees). If the
Indemnifying Party shall fail to defend such claim within thirty (30) days after
notice thereof shall have been given by an Indemnitee to the Indemnifying Party,
such Indemnitee shall have the right, but not the obligation, to undertake the
defense of the claim on behalf, for the account, and at the risk and expense
(including the payment of the reasonable attorneys' fees of such Indemnitee
regardless of whether the Indemnitee prevails against the third party claim) of
the Indemnifying Party. If the Indemnifying Party assumes the defense of such
claim, the obligation of the Indemnifying Party hereunder as to such claim shall
include taking all steps necessary in the defense or settlement of such claim.
33
(b) The Indemnifying Party shall not consent to the entry of any
judgment or settle or compromise any third-party demands, claims, actions, suits
or proceedings for which an Indemnitee has sought indemnification from the
Indemnifying Party unless it shall have given such Indemnitee not less than 15
days prior written notice of the proposed consent, settlement or compromise, and
afforded such Indemnitee an opportunity to consult with the Indemnifying Party
regarding the proposed consent, settlement or compromise, and shall not consent
to the entry of any judgment or enter into any settlement or compromise without
the prior written approval of such Indemnitee. An Indemnitee shall not
unreasonably withhold or delay its approval of a proposed consent, settlement or
compromise. In determining whether to give its approval, an Indemnitee may
consider whether the proposed consent, settlement or compromise includes as an
unconditional term thereof the giving by the claimant to such Indemnitee of a
release from all liabilities in respect of such claim except the liabilities
satisfied by the Indemnifying Party.
ARTICLE X
MISCELLANEOUS
Section 10.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement shall survive the date of this
Agreement. The covenants of the parties requiring performance following the
Closing shall survive in accordance with their terms.
Section 10.2. EXPENSES. Whether or not the Transaction is consummated,
all costs and expenses incurred in connection with the Transaction, this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring or required to incur such expenses, except expenses incurred in
connection with the printing, filing and mailing of the Proxy Statement
(including applicable SEC filing fees) shall be borne one-half by the Company
and one-half by Buyer.
Section 10.3. COUNTERPARTS; EFFECTIVENESS. This Agreement may be
executed in two or more consecutive counterparts (including by facsimile), each
of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument, and shall become effective when one or
more counterparts have been signed by each of the parties and delivered (by
telecopy or otherwise) to the other parties.
Section 10.4. GOVERNING LAW. This Agreement, and all claims or causes
of action (whether at law, in contract or in tort) that may be based upon, arise
out of or relate to this Agreement or the negotiation, execution or performance
hereof, shall be governed by and construed in accordance with the laws of the
State of New York, without giving effect to any choice or conflict of law
provision or rule (whether of the State of New York or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of New York.
Section 10.5. JURISDICTION; ENFORCEMENT. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that prior to the termination of
this Agreement in accordance with ARTICLE VIII the parties shall be entitled to
an injunction or injunctions to prevent breaches of this Agreement and to
34
enforce specifically the terms and provisions of this Agreement non-exclusively
in any federal or state court located in the State of New Jersey, this being in
addition to any other remedy which they are entitled at law or in equity. In
addition, each of the parties hereto irrevocably agrees that any legal action or
proceeding with respect to this Agreement and the rights and obligations arising
hereunder, or for recognition and enforcement of any judgment in respect of this
Agreement and the rights and obligations arising hereunder brought by the other
party hereto or its successors or assigns, shall be brought and determined
exclusively in any federal or state court located in the State of New Jersey.
Each of the parties hereto hereby irrevocably submits with regard to any such
action or proceeding for itself and in respect of its property, generally and
unconditionally, to the personal jurisdiction of the aforesaid courts and agrees
that it will not bring any action relating to this Agreement or any of the
transactions contemplated hereby in any court other than the aforesaid courts.
Each of the parties hereto hereby irrevocably waives, and agrees not to assert,
by way of motion, as a defense, counterclaim or otherwise, in any action or
proceeding with respect to this Agreement, (a) any claim that it is not
personally subject to the jurisdiction of the above named courts for any reason
other than the failure to serve in accordance with this SECTION 10.5, (B) any
claim that it or its property is exempt or immune from jurisdiction of any such
court or from any legal process commenced in such courts (whether through
service of notice, attachment prior to judgment, attachment in aid of execution
of judgment, execution of judgment or otherwise) and (c) to the fullest extent
permitted by the applicable law, any claim that (i) the suit, action or
proceeding in such court is brought in an inconvenient forum, (ii) the venue of
such suit, action or proceeding is improper or (iii) this Agreement, or the
subject mater hereof, may not be enforced in or by such courts.
Section 10.6. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
BETWEEN THE PARTIES HERETO ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
Section 10.7. NOTICES. Any notice required to be given hereunder shall
be sufficient if in writing, and sent by facsimile transmission (provided that
any notice received by facsimile transmission or otherwise at the addressee's
location on any Business Day after 5:00 p.m. (addressee's local time) shall be
deemed to have been received at 9:00 a.m. (addressee's local time) on the next
Business Day), by reliable overnight delivery service (with proof of service),
hand delivery or certified or registered mail (return receipt requested and
first-class postage prepaid), addressed as follows:
35
To the Buyer:
Ivivi Technologies, LLC
c/o Ajax Capital LLC
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxxx
or
Xxxxxxx Xxxxx
Telephone: (000) 000-0000
(000) 000-0000
Facsimile: (000) 000-0000
with copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx
Xxxxxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To the Company:
Ivivi Technologies, Inc.
000 Xxxxxxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Andre' X. XxXxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
36
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed. Any party to this Agreement
may notify any other party of any changes to the address or any of the other
details specified in this paragraph; PROVIDED, HOWEVER, that such notification
shall only be effective on the date specified in such notice or five (5)
Business Days after the notice is given, whichever is later. Rejection or other
refusal to accept or the inability to deliver because of changed address of
which no notice was given shall be deemed to be receipt of the notice as of the
date of such rejection, refusal or inability to deliver.
Section 10.8. ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by the
Company or the Buyer (whether by operation of law or otherwise) without the
prior written consent of the other party. Notwithstanding the foregoing, the
Buyer may assign, in its sole discretion, any of or all of its rights, interest
and obligations under this agreement to any Affiliate of the Buyer, but no such
assignment shall relieve the Buyer of its obligations hereunder. Subject to the
preceding sentence, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns. The
Buyer shall cause any assignee thereof, to perform its obligations under this
Agreement.
Section 10.9. SEVERABILITY. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
Section 10.10. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement (including the Exhibits and letters hereto) and the Voting Agreement
constitute the entire agreement, and supersede all other prior agreements and
understandings, both written and oral, between the parties, or any of them, with
respect to the subject matter hereof and thereof and are not intended to and
shall not confer upon any person other than the parties hereto any rights or
remedies hereunder.
Section 10.11. AMENDMENTS; WAIVERS. At any time prior to the Closing,
any provision of this Agreement may be amended or waived if, and only if, such
amendment or waiver is in writing and signed, in the case of an amendment, by
the Company (approved by the Special Committee), the Buyer, or in the case of a
waiver, by the party against whom the waiver is to be effective (and, in the
case of the Company, as approved by the Special Committee); PROVIDED, HOWEVER,
that after receipt of Company Shareholder Approval, if any such amendment or
waiver shall by applicable Law require further approval of the shareholders of
the Company, the effectiveness of such amendment or waiver shall be subject to
the approval of the shareholders of the Company. Notwithstanding the foregoing,
no failure or delay by the Company or the Buyer in exercising any right
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise of any other right
hereunder.
37
Section 10.12. HEADINGS. Headings of the Articles and Sections of this
Agreement are for convenience of the parties only and shall be given no
substantive or interpretive effect whatsoever. The table of contents to this
Agreement is for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 10.13. INTERPRETATION. When a reference is made in this
Agreement to an Article or Section, such reference shall be to an Article or
Section of this Agreement unless otherwise indicated. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." The words "hereof,"
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. The word "or" shall be deemed to mean "and/or." All terms
defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant thereto unless
otherwise defined therein. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such term. Any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein. Each
of the parties has participated in the drafting and negotiation of this
Agreement. If an ambiguity or question of intent or interpretation arises, this
Agreement must be construed as if it is drafted by all the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of authorship of any of the provisions of this Agreement.
Section 10.14. NO RECOURSE. This Agreement may only be enforced
against, and any claims or causes of action that may be based upon, arise out of
or relate to this Agreement, or the negotiation, execution or performance of
this Agreement may only be made against the entities that are expressly
identified as parties hereto and no past, present or future Affiliate, director,
officer, employee, incorporator, member, manager, partner, shareholder, agent,
attorney or representative of any party hereto shall have any liability for any
obligations or liabilities of the parties to this Agreement or for any claim
based on, in respect of, or by reason of, the transactions contemplated hereby.
Section 10.15. DETERMINATIONS BY THE COMPANY. Whenever a determination,
decision or approval by the Company is called for in this Agreement, such
determination, decision or approval must be authorized by the Special Committee
or, if the Special Committee is not then in existence, the Company's Board.
38
Section 10.16. AJAX'S GUARANTY.
(a) Ajax hereby unconditionally and irrevocably guarantees to the
Company, as primary obligor and not merely as surety, the performance of, and
compliance with, the payment obligations of the Buyer pursuant to, and under,
SECTION 2.1 (Purchase Price) contained in this Agreement (the "GUARANTY"). Ajax
hereby waives promptness, diligence, demand, protest and notice as to the
obligations guaranteed hereby and acceptance of this Guaranty, the right to
require the Company to exhaust remedies against any other person and waives any
other circumstance which might otherwise constitute a defense available to, or a
discharge of, Ajax as a guarantor. Ajax hereby waives all claims of waiver,
release, surrender, abstraction or compromise and all set-offs, counterclaims,
cross-claims, recoupments or other defenses that it may have against the
Company.
(b) The obligations of Ajax hereunder are unconditional and
irrevocable and will not be discharged by: (i) any modification of, or amendment
or supplement to, this Agreement; (ii) any furnishing or acceptance of security
or any exchange or release of any security; (iii) any waiver, consent or other
action or inaction or any exercise or non-exercise of any right, remedy or power
with respect to the Buyer; (iv) any insolvency, bankruptcy, reorganization,
arrangement, composition, liquidation, dissolution, or similar proceedings with
respect to the Buyer; or (f) any other occurrence whatsoever, except performance
in full of all payment obligations of the Buyer pursuant to, and under, SECTION
2.1, in accordance with the terms and conditions of this Agreement.
(c) This Guaranty shall: (a) be binding upon Ajax, its successors
and assigns; (b) inure to the benefit of, and be enforceable by, the Company and
its successors and assigns; and (c) remain in full force and effect until the
earlier of (i) the performance in full of all payment obligations of the Buyer
or (ii) the termination of this Agreement.
Section 10.17. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms will have the following meanings when used herein:
(a) "AFFILIATES" shall mean, as to any person, any other person
which, directly or indirectly, controls, or is controlled by, or is under common
control with, such person. As used in this definition, "CONTROL" (including,
with its correlative meanings, "controlled by" and "under common control with")
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of management or policies of a person, whether through the
ownership of securities or partnership or other ownership interests, by contract
or otherwise.
(b) "BUSINESS DAY" shall mean any day other than a Saturday,
Sunday or a day on which the banks in New York are authorized by law or
executive order to be closed.
(c) "BUYER MATERIAL ADVERSE EFFECT" means any fact, circumstance,
event, change, effect or occurrence that, individually or in the aggregate with
all other facts, circumstances, events, changes, effects or occurrences, would
prevent or materially delay or materially impair the ability of the Buyer to
perform its obligations hereunder or to consummate the Transaction, other than
an effect resulting from any one or more of the following: (i) any change in the
United States or foreign economies or securities or financial markets in
39
general; (ii) any change arising in connection with earthquakes, hostilities,
acts of war, sabotage or terrorism or military actions or any escalation or
material worsening of any such hostilities, acts of war, sabotage or terrorism
or military actions existing or underway as of the date hereof; (iii) any action
taken by the Company or its Affiliates with respect to the transactions
contemplated hereby; (iv) any changes in applicable Laws or accounting rules;
(v) the public announcement of this Agreement, compliance with terms of this
Agreement or the consummation of the transactions contemplated by this
Agreement.
(d) "COMPANY BENEFIT PLANS" means all pension, profit-sharing,
savings, retirement, employment, consulting, severance pay, termination,
executive compensation, incentive compensation, deferred compensation, bonus,
stock purchase, stock option, phantom stock or other equity-based compensation,
change-in-control, retention, salary continuation, vacation, sick leave,
disability, death benefit, group insurance, hospitalization, medical, dental,
life (including all individual life insurance policies as to which the Company
is the owner, the beneficiary or both), Internal Revenue Code of 1986, as
amended, Section 125 "cafeteria" or "flexible" benefit, employee loan,
educational assistance or fringe benefit plan, program, policy, practice,
agreement or arrangement, whether written or oral, formal or informal, including
each "employee benefit plan" (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), and each other
material employee benefit plan, program, agreement or arrangement, whether or
not subject to ERISA, that (i) the Company maintains, sponsors or contributes
to, or for which the Company has any obligation to maintain, sponsor or
contribute, or (ii) with respect to which the Company has any direct or indirect
liability, whether contingent or otherwise.
(e) "COMPANY MATERIAL ADVERSE EFFECT" means any fact,
circumstance, event, change, effect or occurrence that, individually or in the
aggregate with all other facts, circumstances, events, changes, effects or
occurrences, has a material adverse effect on the Acquired Assets, the Business
or the condition (financial or otherwise) or results of operation of the
Company, or that would prevent or materially delay or materially impair the
ability of the Company to perform its obligations hereunder or to consummate the
Transaction, other than an effect resulting from an Excluded Matter; provided
that so long as an occurrence of any such event specified in clauses (i), (ii),
(iii) and (v) below does not have a disproportionate effect on the Acquired
Assets, the Business or the industries in which the Business is operated, in
which case, such event specified in any of the clauses above, shall cease to be
an Excluded Matter. "EXCLUDED MATTER" means any one or more of the following:
(i) the effect of any change in the United States or foreign economies or
securities or financial markets in general; (ii) the effect of any change that
generally affects any industry in which the Company operates; (iii) the effect
of any change arising in connection with earthquakes, hostilities, acts of war,
sabotage or terrorism or military actions or any escalation or material
worsening of any such hostilities, acts of war, sabotage or terrorism or
military actions existing or underway as of the date hereof; (iv) the effect of
any action taken by the Buyer or its Affiliates with respect to the transactions
contemplated hereby or with respect to the Company; (v) the effect of any
changes in applicable Laws or accounting rules; (vi) the failure of the Company
to meet any of its internal projections or (vii) any effect resulting from the
public announcement of this Agreement, compliance with terms of this Agreement
or the consummation of the transactions contemplated by this Agreement.
40
(f) "COMPANY SEC DOCUMENTS" means all forms, documents, statements
and reports required to be filed prior to the date hereof by the Company with
the SEC since January 1, 2007 and those filed with the SEC subsequent to the
date of this Agreement, if any, including any amendments thereto.
(g) "COMPANY PERMITS" means all franchises, tariffs, grants,
authorizations, licenses, permits, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Entity necessary for the
Company to own, lease and operate its properties and assets (including the
Acquired Assets) or to carry on its Business as it is now being conducted.
(h) "CONTRACTS" means any contracts, agreements, licenses, notes,
bonds, mortgages, indentures, commitments, leases or other instruments or
obligations, whether written or oral, to which the Company is a party.
(i) "ENVIRONMENTAL LAW" means any Law relating to (i) the
protection, preservation or restoration of the environment (including air,
surface water, groundwater, drinking water supply, surface land, subsurface
land, plant and animal life or any other natural resource), or (ii) the exposure
to, or the use, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of Hazardous
Substances, in each case as in effect at the date hereof.
(j) "GAAP" means United States generally accepted accounting
principles.
(k) "HAZARDOUS SUBSTANCE" means any substance listed, defined,
designated, classified or regulated as hazardous, toxic, radioactive or
dangerous under any Environmental Law. Hazardous Substance includes any
substance to which exposure is regulated by any Governmental Entity or any
Environmental Law as a toxic waste, pollutant, contaminant, hazardous substance,
toxic substance, hazardous waste, special waste or petroleum or any derivative
or byproduct thereof, radon, radioactive material, asbestos or asbestos
containing material, urea formaldehyde, foam insulation or polychlorinated
biphenyls.
(l) "INTELLECTUAL PROPERTY" means any of the following, as they
exist anywhere in the world, whether registered, unregistered, issued or the
subject of a pending application: (a) patents, patentable inventions and other
patent rights (including any divisions, continuations, continuations-in-part,
reissues, reexaminations and interferences thereof); (b) trademarks, service
marks, trade dress, trade names, taglines, brand names, logos and corporate
names and all goodwill related thereto; (c) copyrights, mask works and designs;
(d) trade secrets, know-how, inventions, processes, procedures, databases,
confidential business information and other proprietary information and rights;
(e) computer software programs, including all source code, object code,
specifications, designs and documentation related thereto; and (f) domain names,
Internet addresses and other computer identifiers.
41
(m) "KNOWLEDGE" means (i) with respect to the Buyer, the knowledge
of Xxxxxx X. Xxxxxxxxxx or Xxxxxxx Xxxxx after reasonable inquiry and (ii) with
respect to the Company, the knowledge of Andre' X. XxXxxx, Xxxxx Xxxxxx or
Xxxxxx X. Xxxxxx after reasonable inquiry.
(n) "LAW" or "LAWS" means any applicable federal, state, local or
foreign or provincial law, statute, ordinance, rule, regulation, judgment,
order, injunction, decree or agency requirement of or undertaking to or
agreement with any Governmental Entity, including common law.
(o) "LOSSES" means any and all losses, injuries, damages,
deficiencies, claims, liabilities (other than Assumed Liabilities), costs
(including reasonable legal and other costs), penalties, interest, expenses and
obligations (other than Assumed Liabilities); PROVIDED, HOWEVER, that Losses
shall not include punitive, exemplary, remote or speculative damages, except to
the extent paid by an Indemnitee to a third party.
(p) "ORDERS" or "ORDERS" means any orders, judgments, injunctions,
awards, decrees or writs handed down, adopted or imposed by, including any
consent decree, settlement agreement or similar written agreement with, any
Governmental Entity.
(q) "PERSON" or "PERSON" shall mean an individual, a corporation,
a partnership, a limited liability company, an association, a trust or any other
entity, group (as such term is used in Section 13 of the Exchange Act) or
organization, including, without limitation, a Governmental Entity, and any
permitted successors and assigns of such person.
(r) "PROXY STATEMENT" means, collectively, the letter to
shareholders, notice of meeting, proxy statement and forms of proxy to be
distributed to shareholders in connection with the Transaction to be filed with
the SEC in connection with seeking the adoption and approval of this Agreement.
(s) "SCHEDULE 13E-3" means the Rule 13E-3 Transaction Statement on
Schedule 13E-3 to be filed with the SEC in connection with seeking the adoption
and approval of this Agreement.
(t) "SUBSIDIARIES" of any party shall mean any corporation,
partnership, association, trust or other form of legal entity of which (i) more
than 50% of the outstanding voting securities are on the date hereof directly or
indirectly owned by such party, or (ii) such party or any Subsidiary of such
party is a general partner (excluding partnerships in which such party or any
Subsidiary of such party does not have a majority of the voting interests in
such partnership).
42
(u) "TAX" or "TAXES" means (i) any and all federal, state, local
or foreign or provincial taxes, charges, fees, imposts, levies or other
assessments, including all net income, gross receipts, capital, sales, use, ad
valorem, value added, transfer, franchise, profits, inventory, capital stock,
license, withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation, property and estimated taxes, customs
duties, fees, assessments and charges of any kind whatsoever, including any and
all interest, penalties, fines, additions to tax or additional amounts imposed
by any Governmental Entity in connection with respect thereto, and (ii) any
liability in respect of any items described in clause (i) payable by reason of
contract, assumption, transferee liability, operation of Law, Treasury
Regulation Section 1.1502-6(a) (or any predecessor or successor thereof of any
analogous or similar provision of Law) or otherwise.
(v) "TAX RETURN" means any return, report or similar filing
(including any attached schedules, supplements and additional or supporting
material) filed or required to be filed with respect to Taxes, including any
information return, claim for refund, amended return or declaration of estimated
Taxes (and including any amendments with respect thereto).
(w) Each of the following terms is defined in the section set
forth opposite such term:
TERM SECTION
---- -------
Acquired Assets........................................ 1.1
ADEA................................................... 6.15(a)
Agreement.............................................. Preamble
Ajax................................................... Preamble
Alternative Proposal................................... 6.3(f)
Assumed Contracts...................................... 1.1(e)
Assumed Liabilities.................................... 1.3
Board.................................................. Recitals
Business............................................... Recitals
Buyer.................................................. Preamble
Buyer Disclosure Letter................................ V
Buyer Indemnitees...................................... 9.1(a)
Closing................................................ 3.1
Closing Agreement ..................................... 2.1
Closing Date........................................... 3.1
Xxxxx ................................................. 2.1
Xxxxx Term Sheet....................................... 6.15(b)
Xxxxx Termination Agreement............................ 6.15(b)
Company................................................ Preamble
Company Common Stock................................... Recitals
Company Disclosure Letter.............................. IV
Company Indemnitees.................................... 9.2(a)
Company Intellectual Property.......................... 4.12
Company Material Contracts............................. 4.9(a)
43
TERM SECTION
---- -------
Company Meeting........................................ 6.4(b)
Company Shareholder Approval........................... 4.5
EMC.................................................... 2.1
Emigrant............................................... Recitals
End Date............................................... 8.1(b)(i)
ERISA.................................................. 10.17(d)
Exchange Act........................................... 4.3(b)
Excluded Assets........................................ 1.2
Excluded Liabilities................................... 1.4
Forbearance Agreement.................................. Recitals
Governmental Entity.................................... 4.3(b)
Guaranty............................................... 10.16(a)
Indemnifying Party..................................... 9.3(a)
Indemnitee............................................. 9.3(a)
Lease Agreement........................................ 1.2(c)
Lien................................................... 4.3(c)
Negotiation Period..................................... 6.3(b)(i)
Nonassignable Asset.................................... 1.7
Person................................................. 10.17(q)
Protected Parties...................................... 6.10(a)(ii)
Protected Party........................................ 6.10(a)(ii)
Purchase Price......................................... 2.1
Recommendation......................................... 4.3(a)
Regulatory Approvals................................... 6.5(b)
Regulatory Law......................................... 6.5(d)
Representatives........................................ 6.3(a)
Restricted Period...................................... 6.10(a)(i)
Restrictive Covenants.................................. 6.10(b)
SEC.................................................... 4.7
SMG.................................................... 2.1
SMG Agreements......................................... 6.15(a)
SMG Employment Agreement............................... 6.15(a)
SMG Restricted Stock Award Agreement................... 6.15(a)
SMG Termination Agreement.............................. 6.15(a)
Special Committee...................................... Recitals
Subsidiaries........................................... 10.17(t)
Superior Proposal...................................... 6.3(g)
Termination Date....................................... 6.1(a)
Termination Fee........................................ 8.1(c)(ii)
Termination Notice..................................... 6.3(b)(i)
Transaction............................................ Recitals
Voting Agreement....................................... Recitals
Warrant................................................ 4.15
44
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the date first above written.
IVIVI TECHNOLOGIES, INC.
By: /s/ Andre' XxXxxx
---------------------------------------
Name: Andre' XxXxxx
Title: Executive Vice President
IVIVI TECHNOLOGIES, LLC
By: /s/ Xxxxxx X. Xxxxxxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Managing Member
AJAX CAPITAL LLC
By: /s/ Xxxxxx X. Xxxxxxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Managing Member
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]
45
