Exhibit 2.1
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ASSET PURCHASE AGREEMENT
by and between
CAPRIUS, INC. and CAPRIUS SYSTEMS, INC.
as Sellers,
and
PACIFIC REPUBLIC CAPITAL CORP
as Buyer
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Dated as of
April 27, 1999
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ARTICLE I. DEFINITIONS
Section 1.1. Definitions......................................................1
ARTICLE II. SALE OF ASSETS
Section 2.1. Sale of Assets...................................................8
Section 2.2. Purchase Price...................................................8
Section 2.3. The Closing 8
Section 2.4. Deliveries at the Closing........................................9
Section 2.5. Post Closing Transfers...........................................9
Section 2.6. Proration of Expenses...........................................10
Section 2.7. Assumed Liabilities.............................................11
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Section 3.1. Organization of the Sellers.....................................11
Section 3.2. Authorization of Transaction....................................11
Section 3.3. Noncontravention................................................12
Section 3.4. Brokers' Fees...................................................12
Section 3.5. Title to Assets.................................................12
Section 3.6. CIC.............................................................13
Section 3.7. Financial Statements............................................13
Section 3.8. Absence of Certain Changes......................................14
Section 3.9. Undisclosed Liabilities.........................................14
Section 3.10. Legal Compliance...............................................14
Section 3.11. Real Property..................................................14
Section 3.12. Intellectual Property..........................................15
Section 3.13. Tangible Assets................................................16
Section 3.14. Contracts and Commitments......................................16
Section 3.15. Litigation.....................................................17
Section 3.16. Environment, Health, and Safety................................17
Section 3.17. Taxes..........................................................17
Section 3.18. Inventory......................................................18
Section 3.19. Insurance......................................................18
Section 3.20. Employees......................................................18
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE BUYER
Section 4.1. Organization of the Buyer.......................................19
Section 4.2. Authorization of Transaction....................................19
Section 4.3. Noncontravention................................................20
Section 4.4. Brokers' Fees...................................................20
ARTICLE V. COVENANTS
Section 5.1. Further Assurances..............................................20
Section 5.2. Transition......................................................21
Section 5.3. Bulk Transfer...................................................21
Section 5.4. Covenant Not to Compete.........................................21
Section 5.5. Employee and Employee Plans.....................................22
Section 5.6. Capitalization..................................................22
Section 5.7. Allocation......................................................22
(i)
ARTICLE VI. REMEDIES
Section 6.1. Survival........................................................22
Section 6.2. Indemnification Provisions for Benefit of the Buyer.............23
Section 6.3. Indemnification Provisions for Benefit of the Sellers...........23
Section 6.4. Certain Limitations.............................................23
Section 6.5. Procedure for Indemnification...................................24
ARTICLE VII. MISCELLANEOUS
Section 7.1. No Third Party Beneficiaries....................................25
Section 7.2. Entire Agreement................................................25
Section 7.3. Succession and Assignment.......................................25
Section 7.4. Counterparts....................................................25
Section 7.5. Headings........................................................26
Section 7.6. Notices.........................................................26
Section 7.7. Governing Law...................................................27
Section 7.8. Amendments and Waivers..........................................27
Section 7.9. Severability....................................................27
Section 7.10. Expenses.......................................................27
Section 7.11. Construction...................................................27
Section 7.12. Specific Performance...........................................27
Section 7.13. Submission to Jurisdiction.....................................28
Exhibit A - Form of Legal Opinion of Counsel to Sellers
Exhibit B - Form of Legal Opinion of Counsel to Buyer
Exhibit C - Form of Settlement Statement
(ii)
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of
April 27, 1999, is by and between CAPRIUS, INC., a Delaware corporation
("Caprius"), CAPRIUS SYSTEMS, INC., a Delaware corporation ("Caprius Systems"
and, together with Caprius, the "Sellers") and PACIFIC REPUBLIC CAPITAL CORP, a
California corporation (the "Buyer"). The Sellers and the Buyer are referred to
collectively herein as the "Parties".
WHEREAS, Sellers directly or indirectly own or have rights to
use substantially all of the assets used in the business and operations of the
MRI business (the "Business");
WHEREAS, Buyer desires to purchase from Sellers and Sellers
desire to sell to Buyer, substantially all of the assets owned or rights held by
Sellers for use in the business and operations of the Business, all in
accordance with and subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual representations, warranties, covenants and agreements herein
contained, Buyer and Sellers hereby agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1. Definitions. Any term used in this Agreement and
not defined in this Section 1 shall have the meaning assigned to it therein.
"Acquired Assets" means all right, title, and interest in and to all
of the assets constituting the Business, including all
(a) tangible personal property of Sellers located at the Sellers'
facility in Wilmington, Massachusetts (such as machinery,
equipment, personal computers, copiers, fax machines supplies,
manufactured and purchased parts, goods in process and finished
goods, office furniture, automobiles, and tools), and all other
equipment necessary to operate the Business, except the
furnitures located in the offices of Messrs. Xxxx Xxxxxx and
Xxxxxxx Xxxx and three personal computers to be retained by the
Sellers;
(b) Intellectual Property, goodwill associated therewith, licenses
and sublicenses granted and obtained with respect thereto, and
rights thereunder, remedies against infringements thereof, and
rights to protection of interests therein under the laws of all
jurisdictions,
(c) leases, subleases, and rights thereunder, including (i) the
Indenture of Lease between Xxxx X. Xxxxxxxx and Caprius, dated
May 5, 1991, and letter dated February 20, 1996, inclusive of the
security deposit held by the landlord; (ii) the sublease between
Caprius and Alliance Imaging, Inc. (formerly Medical Diagnostics,
Inc.) dated September 1, 1995 and Amendment No. 1 to the Sublease
dated February 27, 1997; and (iii) the Indenture of Sublease
between Caprius and QC Optics, Inc. dated April 15, 1997,
including the $32,540 deposit money held by Caprius representing
the last two months' rent;
(d) agreements, contracts, indentures, mortgages, instruments,
Security Interests, guaranties, other similar arrangements, and
rights thereunder, including (i) all hospital equipment and
research agreements, (ii) all equipment, installation orders,
agreements or letters of intent and (iii) all supplier contracts,
including deposits held by suppliers;
(e) accounts, notes, and other receivables to the extent they relate
to the Business;
(f) equipment including all medical equipment of Sellers located at
Xxxxx Hospital, Englewood Hospital and University of Arkansas,
inclusive of all accounts receivable, prepaid expenses or other
assets related to the sites, provided that in the event that
$100,000 in funds held in escrow on the Fleet Leases are released
from escrow, such released funds shall be the property of the
Buyer solely upon the release of any applicable guarantee from
the Sellers;
(g) all the shares of capital stock of Caprius Imaging Corp. (the
"Shares") and (solely for purposes of clarification) all assets
and Liabilities of CIC;
(h) claims, deposits, prepayments, refunds, causes of action, chooses
in action, rights of recovery, rights of set off, and rights of
recoupment;
(i) franchises, approvals, permits, licenses, orders, registrations,
certificates, variances, and similar rights obtained from
governments and governmental agencies necessary to operate the
Business; and
(j) books, records, ledgers, files, documents, correspondence, lists,
plats, architectural plans, drawings, and specifications,
creative materials, advertising and promotional materials,
studies, reports, and other printed or written materials relating
to the Business, provided that, upon request by any of the
Sellers, the Buyer will remove from any
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such books and records any information contained thereon that
does not relate to the Business or the Acquired Assets and
destroy or return it promptly to such Seller.
provided, however, that the Acquired Assets shall not include (i) the corporate
charter, qualifications to conduct business as a foreign corporation,
arrangements with registered agents relating to foreign qualifications, taxpayer
and other identification numbers, seals, minute books, stock transfer books,
blank stock certificates, and other documents relating to the organization,
maintenance, and existence of each Seller as a corporation or its internal
corporate matters and financial relationships with its lenders and Affiliates;
(ii) any of the rights of the Sellers under this Agreement; (iii) all books and
records that the Sellers are required by law to retain, and all records of the
Sellers relating to the disposition of the Acquired Assets; (iv) any assets and
properties of the Sellers or CIC that are disposed of prior to April 1, 1999;
(v) all tax returns and supporting materials and all original financial
statements and supporting materials; (vi) any interest in and to any refunds of
Taxes for periods prior to April 1, 1999; (vii) the Great Plains Accounting
Software Financials (and related License); (viii) any insurance policies,
amounts due to the Sellers or CIC from employees, bonds, letters of credit,
certificates of deposit, or other similar items, and any cash surrender value in
regard thereto; (ix) any pension, profit-sharing, or employee benefit plans; (x)
the Sellers' interest in any item of Confidential Information that is not used
in the conduct of the Business; (xi) any claim or cause of action by the Sellers
or CIC relating to the period prior to April 1, 1999; (xii) any commercial sign
of the Sellers; and (xiii) any Cash of the Sellers on or prior to the Closing
Date.
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Assumed Liabilities" means:
(a) all accounts payable of the Sellers associated with the Business
that are listed in Section 1.1 of Sellers' Disclosure Schedule,
all accounts payable and all employee related expenses for
Transferred Employees allocable to the period commencing April 1,
1999, including without limitation (i) one-half of the amount of
legal fees billed by Fish & Xxxxxxxxxx ($9,130);
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(ii) ISG Technologies software license fee in the amount of
$35,000 and (iii) Magnex Scientific magnets costs in the amount
of $155,000;
(b) all accrued vacation for the Transferred Employees (excluding
Sellers' Chief Financial Officer and Vice President of Sales),
and fifty percent (50%) of the costs of one week of vacation,
including payroll taxes and fringe benefits, for those employees
required to receive vacation pay and/or take a vacation prior to
their transfer to the Buyer, for which the Sellers shall receive
a credit pursuant to Section 2.6(a) hereof;
(c) all payroll and related fringe benefit costs incurred by Sellers
with respect to all Transferred Employees from and after April 1,
1999;
(d) all obligations and Liabilities of Sellers under the Leases; and
(e) all obligations for which the Buyer will have received a credit
under Section 2.6 hereof;
"Audited Financial Statements" has the meaning set forth in Section
3.7 hereof.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
"Business" shall have the meaning set forth in the preamble hereto.
"Buyer" has the meaning set forth in the preamble hereto.
"Buyer Disclosure Schedule" has the meaning set forth in Article IV
hereof.
"Buyer Material Adverse Effect" has the meaning set forth in Section
4.1 hereof.
"Caprius" means Caprius, Inc., a Delaware corporation.
"Caprius Systems" means Caprius Systems, Inc., a Delaware corporation.
"Cash" means cash and cash equivalents (including checking accounts,
bank accounts, marketable securities and short term investments).
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"Cash Purchase Price" has the meaning set forth in Section 2.2 hereof.
"CIC" means Caprius Imaging Corp., a Massachusetts corporation.
"Closing" has the meaning set forth in Section 2.3 below.
"Closing Date" has the meaning set forth in Section 2.3 below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the
businesses and affairs of the Sellers and CIC that is not already generally
available to the public.
"Copelco" means Copelco Capital, Inc.
"Copelco Leases" means (i) the Loan and Security Agreement between
Caprius and Copelco dated as of May 29, 1998, relating to a $300,000.00 loan
made by Copelco to Caprius, and (ii) the Loan and Security Agreement between
Caprius and Copelco relating to a $380,000.00 loan made by Copelco to Caprius,
and all agreements related thereto.
"Deductible Amount" has the meaning set forth in Section 6.4 hereof.
"Englewood Hospital" means the Englewood Hospital and Medical Center
in Englewood, New Jersey.
"Environmental, Health, and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws of any federal, state
or local governments (and all agencies thereof) concerning pollution or
protection of the environment, public health and safety, or employee health and
safety, including laws relating to emissions, discharges, releases of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials
or wastes into ambient air, surface water, ground water, or lands or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials or wastes.
"Financial Statements" has the meaning set forth in Section 3.7 below.
"Fleet" means Fleet Healthcare Finance (formerly Sanwa Healthcare
Finance Capital Corporation).
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"Fleet Leases" means (i) the Master Lease No. 644 dated as of January
1, 1998 between Caprius and Fleet, and (ii) the Master Loan Agreement No. 661
dated as of February 1, 1998 between ANMR Imaging Corp. and Fleet, and all
agreements related thereto.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Guarantee Obligation" has the meaning set forth in Section 5.2
hereof.
"Hazardous Materials" means all substances defined as hazardous
substances in the Comprehensive Environmental Response, Compensation and
Liability Act.
"Indemnified Party" has the meaning set forth in Section 6.5(a) below.
"Indemnifying Party" has the meaning set forth in Section 6.5(a)
below.
"Insurance Policies" has the meaning set forth in Section 3.19 hereof.
"Intellectual Property" means (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, and patent applications, including all patents related
to the Business together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof, (b)
all trademarks, service marks, trade dress, logos, trade names, and corporate
names, including trademarks and trade names related to the Business, inclusive
of the Logo design, together with all translations, adaptations, derivations,
and combinations thereof and including all goodwill associated therewith and all
applications, registrations, and renewals in connection therewith, excluding the
trade name CAPRIUS and pending trademark applications for CAPRIUS, INC. and
CAPRIUS ENHANCING BREAST IMAGING, which items the Sellers agree to refrain from
using in connection with the Business (c) all copyrightable works, all
copyrights, and all applications, registrations, and renewals in connection
therewith, (d) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing and cost
information, and business and marketing plans and proposals), (e) all computer
software (including data and related documentation), (f) all copies and tangible
embodiments thereof (in whatever form or medium), and (g) all other licenses,
permits, applications, registrations, and consents used to operate the Business.
"Inventory" has the meaning set forth in Section 3.18 hereof.
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"Leases" means the Copelco Leases and the Fleet Leases.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due).
"Xxxxx Hospital" means the Xxxxx Women's Hospital located in
Pittsburgh, Pennsylvania.
"Material Contracts" has the meaning set forth in Section 3.14(b)
hereof.
"Ordinary Course of Business" means the ordinary course of business
consistent with reasonable past custom and practice.
"Parties" has the meaning set forth in the preamble hereto.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Post Closing Assents" has the meaning set forth in Section 2.5
hereof.
"Release" shall have the meaning set forth in the Comprehensive
Environmental Response, Compensation and Liability Act.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, and (b) liens for Taxes not yet due and payable or for Taxes
that the taxpayer is contesting in good faith through appropriate proceedings.
"Sellers" has the meaning set forth in the preamble hereto.
"Sellers' Disclosure Schedule" has the meaning set forth in Article 3
below.
"Sellers' Material Adverse Effect" shall have the meaning set forth in
Section 3.1 hereof.
"Settlement Statement" has the meaning set forth in Section 2.6(b)
hereof.
"Shares" means all the shares of capital stock of Caprius Imaging
Corp.
"Tax" shall mean any U.S. Federal, state, local or foreign and other
taxes, assessments, duties and similar charges of any kind imposed by any taxing
authority, including interest, penalties and additions thereto.
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"Tax Return" means any return, report, information return or other
document (including any related or supporting information) with respect to
Taxes.
"Third Party Claim" has the meaning set forth in Section 6.5(a) below.
"Transferred Employees" means all employees of the Sellers who are
hired by the Buyer.
"Unaudited Financial Statements" has the meaning set forth in Section
3.7 below.
"University of Arkansas" means the University of Arkansas for Medical
Sciences in Little Rock, Arkansas.
ARTICLE II.
SALE OF ASSETS
Section 2.1. Transfer of Assets. Subject to the terms and conditions
herein set forth, the Sellers hereby sell, convey, transfer, assign and deliver
to the Buyer, and the Buyer hereby purchases and accepts from the Sellers, on
the Closing Date, all right, title and interest of the Sellers in and to all of
the Acquired Assets.
Section 2.2. Purchase Price. Upon the terms and subject to the
conditions set forth in this Agreement, in reliance on the representations,
warranties, covenants and agreements of the parties contained herein, the
purchase price for the sale and transfer of the Acquired Assets to be delivered
at Closing by the Buyer to the Sellers shall consist of (i) one million dollars
($1,000,000) in cash (the "Cash Purchase Price") and (ii) the assumption by the
Buyer of the Assumed Liabilities.
Section 2.3. The Closing. The Closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Xxxxxxx
Xxxx & Xxxxxxxxx, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, contemporaneously with
the execution of this Agreement (the "Closing Date").
Section 2.4. Deliveries at the Closing.
(a) At the Closing, Sellers shall deliver the following to Buyer:
(i) such deeds, bills of sale, endorsements, assignments and
other instruments of transfer and conveyance satisfactory in form and
substance to counsel for Buyer;
(ii) Stock certificate(s) with appropriate transfer stamps, if
any, affixed thereto, representing
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the Shares with appropriate stock powers duly endorsed in blank or
accompanied by other duly executed instruments of transfer;
(iii) The resignations of such members of the board of directors
and officers of CIC as Buyer shall have requested prior to the Closing
Date;
(iv) Any payment required to be made by Sellers pursuant to
Section 2.6 hereof;
(v) An opinion of counsel substantially in the form of Exhibit A
attached hereto; and
(vi) Such additional documents, information and materials as
Buyer shall reasonably request;
(b) At the Closing, Buyer shall deliver to Sellers:
(i) The Cash Purchase Price;
(ii) such instrument of assumption of liabilities satisfactory in
form and substance to counsel for the Sellers;
(iii) Any payment required to be made by Buyer pursuant to
Section 2.6;
(iv) An opinion of counsel substantially in the form of Exhibit B
attached hereto; and
(v) Such additional documents, information and materials as
Sellers shall reasonably request.
(c) Any payment to be made pursuant to Sections 2.4 and 2.6 of this
Agreement shall be made by wire transfer of immediately available funds to such
bank account or bank accounts designated by the Party receiving such payment.
Section 2.5. Post Closing Transfers. At the Closing the Parties shall
list the Acquired Assets that cannot be assigned at the Closing by reason of the
need for government approvals or third party consents ("Post Closing Assents").
Sellers shall use its diligent best efforts to cause all Post Closing Assents to
be transferred to Buyer as soon as possible after the Closing, provided,
however, that no contract shall be assigned contrary to law or the terms of such
contract and, with respect to the contracts that cannot be assigned to the Buyer
at Closing, the performance obligations thereunder of the Sellers or CIC, as the
case may be, shall, unless not permitted by such contract, be deemed to be
subleased or subcontracted to the Buyer until such contract has been assigned.
Section 2.6. Proration of Expenses.
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(a) Except as otherwise provided in this Agreement, all expenses,
obligations and liabilities arising from the operation of the Business,
including business and license fees, utility charges, personal property taxes
and assessments levied against the Acquired Assets, property and equipment
rentals, applicable license or other fees, sales and service charges, and
similar prepaid and deferred items, shall be prorated between the Sellers and
the Buyer in accordance with the principle that the Sellers shall be responsible
for all expenses, costs, liabilities, and obligations allocable to the
operations of the Business for the period prior to April 1, 1999, and the Buyer
shall be responsible for all expenses, costs, liabilities, and obligations
allocable to the operations of the Business for the period after April 1, 1999.
To effectuate the proration of expenses, the Sellers shall receive a credit
equal to the amount of any expenses, costs, liabilities, or obligations that are
paid or incurred by the Sellers and are allocable to the operations of the
Business for the period after April 1, 1999 and the Buyer shall receive a credit
equal to the amount of any expenses, costs, liabilities, or obligations that are
paid or incurred by the Buyer and are allocable to the operations of the
Business for the period before April 1, 1999. Any determination whether any
expense, cost, liability, or obligation is allocable to or relates to the period
before or after April 1, 1999 shall be based on the extent to which all facts
and circumstances necessary for the accrual of such expense, cost, liability, or
obligation in accordance with generally accepted accounting principles have been
satisfied as of April 1, 1999.
(b) For purposes of finally determining and settling the prorations
required by Section 2.6(a), at Closing, the Parties will take the following
actions:
(i) Sellers shall deliver to Buyer at Closing a settlement
statement in the form of Exhibit C hereof which shall set forth
Sellers' good faith estimate of the prorations under Section 2.6(a)
("Settlement Statement"). The Settlement Statement (A) shall contain
all information reasonably necessary to determine the credits to each
party, taking into account all prorations under Section 2.6(a), to the
extent such prorations can be determined or estimated as of the date
hereof, and (B) shall be based upon expenses as of the date of the
most recent Unaudited Financial Statements of Sellers or later if
practicable. The Settlement Statement shall be final and binding upon
the Parties.
(ii) The Sellers shall pay or cause to be paid to or for the
account of the Buyer at Closing the amount, if any, by which the
credits to the Buyer pursuant to Section 2.6(a) exceed the credits to
the Sellers pursuant to Section 2.6(a), each as estimated in the
Settlement Statement pursuant to Section 2.6(b)(i), in
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accordance with the payment method set forth in Section 2.4(c).
(iii) The Buyer shall pay or cause to be paid to or for the
account of the Sellers at Closing the amount, if any, by which the
credits to the Buyer pursuant to Section 2.6(a) exceed the credits to
the Sellers pursuant to Section 2.6(a), each as estimated in the
Settlement Statement pursuant to Section 2.6(b)(i), in accordance with
the payment method set forth in Section 2.4(c).
Section 2.7. Assumed Liabilities. As additional consideration for the
Acquired Assets, from and after the Closing, the Buyer shall assume and the
Buyer hereby agrees to pay, perform and discharge when due all the Assumed
Liabilities but regardless of whether any consent to the assignment of any
contract has been obtained. Anything in this Agreement to the contrary
notwithstanding, the Sellers shall be responsible for all of the liabilities and
obligations not hereby expressly assumed by Buyer and Buyer shall not assume, or
in any way be liable or responsible for, any liabilities or obligations of the
Sellers not included within the definition of Assumed Liabilities.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers, jointly and severally, represent and warrant to the Buyer
that the statements contained in this Article III are correct and complete as of
the date of this Agreement and as of the Closing Date, except as set forth in
the disclosure schedule accompanying this Agreement ("Sellers' Disclosure
Schedule"). Sellers' Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this
Agreement.
Section 3.1. Organization of the Sellers. Each of the Sellers is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation and each other state in which it
is required to qualify to do business except where the failure to be so
organized, existing and in good standing will not either (i) have a material
adverse effect on the business, operations, assets or financial condition or
results of operations of the Business, taken as a whole or (ii) materially
impair the ability of the Sellers to perform any of their obligations under this
Agreement (either of such effects, a "Sellers' Material Adverse Effect").
Section 3.2. Authorization of Transaction. Each of the Sellers has
full power and authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its obligations hereunder. The
board of
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directors of each Seller has duly authorized the execution, delivery, and
performance of this Agreement by such Seller. This Agreement constitutes the
valid and legally binding obligation of the Sellers, enforceable in accordance
with its terms and conditions, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally, including the
effect of statutory and other laws regarding fraudulent conveyances and
preferential transfers and subject to the limitations imposed by general
equitable principles (regardless whether such enforceability is considered in a
proceeding at law or in equity).
Section 3.3. Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which any of the Sellers or CIC is subject or
any provision of the charter or bylaws of any of the Sellers or CIC , except
such violations which, in the aggregate, will not have a Sellers' Material
Adverse Effect or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of any agreement, contract, lease,
license, instrument, or other arrangement relating to the Business to which any
of the Sellers or CIC is a party or by which it is bound or to which any of its
assets is subject, except such conflicts, breaches, defaults or accelerations
which, individually or in the aggregate, will not have a Sellers' Material
Adverse Effect. None of the Sellers or CIC needs to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any government
or governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement, except as set forth in Section 3.3 of Sellers'
Disclosure Schedule or such notices, filings, authorizations, consents or
approvals which, if not obtained or made, will not, in the aggregate, have a
Sellers' Material Adverse Effect.
Section 3.4. Brokers' Fees. None of the Sellers or CIC have any
Liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement for which
the Buyer could become liable or obligated.
Section 3.5. Title to Assets. Except as disclosed in Section 3.5 of
Sellers' Disclosure Schedule, the Sellers and CIC have good and valid title to,
or a valid leasehold interest in, the material Acquired Assets and will transfer
all the Acquired Assets to Buyer free and clear of all Security Interests except
those which, in the aggregate, are not reasonably likely to impair, in any
material respect, the continued use of the Acquired Assets.
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Section 3.6. CIC. Section 3.6 of Sellers' Disclosure Schedule sets
forth for CIC (i) its name and jurisdiction of incorporation, (ii) the number of
shares of authorized capital stock of each class of its capital stock, (iii) the
number of issued and outstanding shares of each class of its capital stock, and
(iv) all accounts payables of CIC. CIC is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation except where the failure to be so organized, existing and in good
standing will not have a Sellers' Material Adverse Effect. CIC is duly
authorized to conduct business and is in good standing under the laws of each
jurisdiction where such qualification is required except where the failure to be
so authorized and in good standing will not have a Sellers' Material Adverse
Effect. CIC has full corporate power and authority and all licenses, permits,
and authorizations necessary to carry on the businesses in which it is engaged
and in which it presently proposes to engage and to own and use the properties
owned and used by it except where the failure to have such licenses, permits or
authorizations will not have a Sellers' Material Adverse Effect. The Sellers
have delivered to the Buyer correct and complete copies of the charter and
bylaws of CIC (as amended to date). All of the issued and outstanding shares of
capital stock of CIC have been duly authorized and are validly issued, fully
paid, and nonassessable, and are held by Caprius. There are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require
Caprius to sell, transfer, or otherwise dispose of any capital stock of CIC or
that could require CIC to issue, sell, or otherwise cause to become outstanding
any of its own capital stock (other than this Agreement).
Section 3.7. Financial Statements. Sellers have delivered to Buyer the
following financial statements (collectively the "Financial Statements"): (i)
audited consolidated balance sheets and statements of income, changes in control
account, and cash flow as of and for the fiscal years ended September 30, 1996,
September 30, 1997, and September 30, 1998 (the "Audited Financial Statements")
of Caprius; and (ii) unaudited consolidated and consolidating balance sheets and
statements of income, changes in control account, and cash flow (the "Unaudited
Financial Statements") as of and for the three (3) months ended December 31,
1998 of Caprius. The Financial Statements (including the notes thereto) have
been prepared in accordance with GAAP applied on a consistent basis throughout
the periods covered thereby, present fairly in all material respects the
financial condition of the Sellers and CIC as of such dates and the results of
operations of the Sellers and CIC for such periods, are correct and complete,
and are consistent with the books and records of the Sellers and CIC; provided,
however, that the Unaudited Financial Statements are subject to normal year-end
adjustments and lack footnotes and other presentation items.
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Section 3.8. Absence of Certain Changes. Since December 31, 1998, the
Sellers taken as a whole have not (a) suffered any change in the Business,
except such changes which, in the aggregate, are not reasonably likely to have a
Sellers' Material Adverse Effect, (b) suffered any material loss, damage,
destruction or other casualty to the Acquired Assets, or (c) conducted the
Business in any material respect not in the Ordinary Course of Business.
Section 3.9. Undisclosed Liabilities. None of the Sellers or CIC has
any material Liability that will affect the Business or the Buyer's receipt or
operation of the Acquired Assets (and to Sellers' knowledge there is no Basis
for any present or future action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand against any of them giving rise to any
Liability), except for (i) Liabilities set forth in the Financial Statements and
(ii) Liabilities which have arisen in the Ordinary Course of Business since the
date of the balance sheet included in the Unaudited Financial Statements.
Section 3.10. Legal Compliance. To Sellers' knowledge, none of the
Sellers or CIC are in default or violation of any laws applicable to the
Business (including rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of federal, state, and local
governments (and all agencies thereof), and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any such default or violation.
Section 3.11. Real Property. Section 3.11 of Sellers' Disclosure
Schedule lists all leases and subleases to be assigned under this Agreement.
With respect to each lease and sublease listed in Section 3.11 of Sellers'
Disclosure Schedule:
(a) the lease is legal, valid, binding, enforceable against the
landlord, and, to Sellers' knowledge, the sublease is legal, valid, binding,
enforceable against the tenant, and is in full force and effect;
(b) Except for the need to obtain any consents which may be
applicable, the lease or sublease will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby; and
(c) None of the Sellers or CIC, nor, to Sellers' knowledge, any party
to the lease or sublease is in breach or default, and no event has occurred
which, with notice or lapse of time, would constitute a breach or default or
permit termination or acceleration thereunder except such defaults which, in the
aggregate, will not have a Sellers' Material Adverse Effect.
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Section 3.12. Intellectual Property.
(a) The Sellers and CIC own or have the right to use pursuant to
license, sublicense, agreement, or permission all Intellectual Property which is
material for the operation of the Business as presently conducted and as
presently proposed to be conducted.
(b) To Sellers' knowledge, the use of the Intellectual Property by the
Sellers or CIC does not interfere with, infringe upon, misappropriate, or
otherwise come into conflict with any intellectual property rights of third
parties, and as of the date of this Agreement, the Sellers have not received any
charge, complaint, claim, demand, or notice alleging any such interference,
infringement, misappropriation, or violation. To Sellers' knowledge, no third
party is interfering with, infringing upon, misappropriating, or otherwise
coming into conflict with any Intellectual Property rights of any of the Sellers
or CIC.
(c) Section 3.12(c) of Sellers' Disclosure Schedule identifies each
patent or registration which has been issued to the Sellers and CIC with respect
to Intellectual Property, identifies each pending patent application or
application for registration which any of the Sellers or CIC has made with
respect to Intellectual Property, and identifies each material license,
agreement, or other permission which any of the Sellers or CIC has granted to
any third party with respect to any of its Intellectual Property used in the
Business. The Sellers have delivered to the Buyer correct and complete copies of
all such patents, registrations, pending applications, licenses, agreements, and
permissions (as amended to date) and have made available to the Buyer correct
and complete copies of all other written documentation evidencing ownership and
prosecution (if applicable) of each such item. Section 3.12(c) of Sellers'
Disclosure Schedule also identifies material trade names, trademarks or
unregistered trademarks used by the Sellers and CIC in connection with the
Business. With respect to each material item identified in Section 3.12(c) of
Sellers' Disclosure Schedule (other than licenses, agreements or other
permissions granted to any third party) and except as set forth therein:
(i) the Sellers' or CIC possess all right, title, and interest in
and to the item, free and clear of any Security Interest, license, or
other material restriction;
(ii) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge; and
(iii) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to Sellers'
knowledge, is threatened which
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challenges the legality, validity, enforceability, use, or ownership
of the item;
(d) Section 3.12(d) of Sellers' Disclosure Schedule identifies each
item of Intellectual Property that any third party owns and that any of the
Sellers or CIC uses in connection with the Business pursuant to license,
sublicense, agreement, or permission. The Sellers have delivered to the Buyer
correct and complete copies of all such licenses, sublicenses, agreements, and
permissions (as amended to date). With respect to each item identified in
Section 3.12(d) of Sellers' Disclosure Schedule:
(i) To Sellers' knowledge, the license, sublicense, agreement, or
permission covering the item is legal, valid, binding, enforceable,
and in full force and effect;
(ii) Except for the need to obtain any consent which may be
applicable, to Sellers' knowledge, the license, sublicense, agreement,
or permission will continue to be legal, valid, binding, enforceable,
and in full force and effect following the consummation of the
transactions contemplated hereby;
(iii) None of the Sellers or CIC, nor, to Sellers' knowledge, any
party to the license, sublicense, agreement, or permission is in
breach or default, and no event has occurred which with notice or
lapse of time would constitute a breach or default or permit
termination, modification, or acceleration thereunder except such
defaults which, in the aggregate, will not have a Sellers' Material
Adverse Effect; and
(iv) Except as set forth in Section 3.12(d) of Sellers'
Disclosure Schedule, none of the Sellers or CIC has granted any
sublicense or similar right with respect to the license, sublicense,
agreement, or permission.
Section 3.13. Tangible Assets. The Sellers and CIC own or lease all
buildings, machinery, equipment, and other tangible assets used in the conduct
of the Business as presently conducted and as presently proposed to be
conducted. Each such tangible asset is in good operating condition and repair
(subject to normal wear and tear) and is suitable for the purposes for which it
presently is used and presently is proposed to be used.
Section 3.14. Contracts and Commitments. (a) Section 3.14 of Sellers'
Disclosure Schedule lists all contracts and commitments of any nature, whether
oral or written, requiring annual payments by or to Sellers in excess of five
thousand dollars ($5,000) relating to the Business to which any of the Sellers
or CIC is a party or by which it is bound. The Sellers
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have delivered to the Buyer a correct and complete copy of each written
agreement listed in Section 3.14 of Sellers' Disclosure Schedule.
(b) With respect to each agreement listed in Section 3.14 of Sellers'
Disclosure Schedule which requires annual payments in excess of ten thousand
dollars ($10,000) ("Material Contracts"): (i) the Material Contract is legal,
valid, binding, enforceable, and in full force and effect; (ii) except for the
need to obtain any consents which may be applicable, the Material Contract will
continue to be legal, valid, binding, enforceable, and in full force and effect
following the consummation of the transactions contemplated hereby; and (iii)
none of the Sellers or CIC, nor, to Sellers' knowledge, any party is in breach
or default, and no event has occurred which with notice or lapse of time would
constitute a breach or default, or permit termination, modification, or
acceleration, under the agreement except such defaults which, in the aggregate,
will not have a Sellers' Material Adverse Effect.
Section 3.15. Litigation. None of the Sellers or CIC (i) is subject to
any outstanding injunction, judgment, order, decree, ruling, or charge or (ii)
is a party or, to Sellers' knowledge, is threatened to be made a party to any
action, suit, proceeding, hearing, or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator for which Buyer shall be liable or
that may result in claims against the Acquired Assets.
Section 3.16. Environment, Health, and Safety. Each of the Sellers and
CIC (i) is presently in compliance with, all Environmental, Health, and Safety
Laws applicable to the Business, except where the failure to so comply will not
have a Sellers' Material Adverse Effect; (ii) has not Released from its
products, properties and facilities any Hazardous Materials, and has no
knowledge of the Release or threat of Release of any Hazardous Materials from
its products, properties and facilities; and (iii) has not (a) entered into or
been subject to any consent decree, compliance order, or administrative order
with respect to any environmental or health and safety matter relating to the
Business, (b) received notice under the citizen suit provision of any
Environmental Law in connection with the Business, (c) received any request for
information, notice, demand letter, administrative inquiry, or formal or
informal complaint or claim with respect to any material environmental or health
and safety matter relating to the Business, or (d) been subject to or, to
Sellers' knowledge, threatened with any governmental or citizen enforcement
action with respect to any environmental or health or safety matter relating to
the Business and has no reason to believe that any matters described above will
be forthcoming.
Section 3.17. Taxes. (a) The Sellers have, within the time and manner
prescribed by law, for all tax periods ending
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on or prior to April 1, 1999, (i) filed with the appropriate taxing authorities
(or joined in the filing of) all Tax Returns required to be filed by it in
respect of any Taxes other than those Tax Returns the failure of which to file
would not have a Sellers' Material Adverse Effect, and each such Tax Return was
complete and accurate in all material respects and (ii) paid in full all
material Taxes shown to be due and payable thereon.
(b) (i) No deficiencies for any Taxes have been asserted in writing
or, to the knowledge of any of the Sellers, verbally proposed or assessed
against the Sellers which remain unpaid and which in the aggregate would have a
Sellers' Material Adverse Effect, or which are not being contested in good faith
by appropriate proceedings; and (ii) the Sellers have adequately reserved for
all material Taxes payable by the Sellers for which no Tax Return has yet been
filed.
Section 3.18. Inventory. Section 3.18 of Sellers' Disclosure Schedule
sets forth, as of the date of this Agreement, a list of all the finished goods,
raw materials, work in progress and inventoriable supplies owned by Sellers for
use in the Business with a individual value in excess of $10,000 ("Inventory").
Each item of Inventory is merchantable and reasonably fit for the purpose
intended. No item of Inventory has been damaged or presents a defect, except
such damages or defects which, individually or in the aggregate, will not have a
Sellers' Material Adverse Effect.
Section 3.19. Insurance Section 3.19 of the Disclosure Schedule sets
forth, as of the date of this Agreement, the list of policies of fire and
casualty, liability and other forms of insurance covering the Business
maintained by Sellers. Sellers maintain such policies, in such amounts, with
such deductibles and against such risks and losses as are reasonable for their
business, assets and properties. All material insurance policies (the "Insurance
Policies") with respect to the property, assets, operations and business of the
Sellers are in full force and effect and all premiums due and payable thereon
have been paid in full, and no notice of cancellation or termination has been
received with respect to any such policy which has not been replaced on
substantially similar terms prior to the date of such cancellation. As of the
date of this Agreement, there are no pending material claims under the Insurance
Policies by the Sellers as to which the insurers have denied liability. Sellers
make no representation or warranty that such insurance will be continued or is
continuable after the Closing.
Section 3.20. Employees. Section 3.20 of Sellers' Disclosure Schedule
sets forth a list of all individuals who are employees of the Business as of the
date hereof. None of the Sellers is a party to any collective bargaining or
other labor union contract applicable to persons employed by them, no collective
bargaining agreement is being negotiated by the
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Sellers, and Sellers do not know of any activities or proceedings of any labor
union to organize any of its employees. As of the date hereof, (i) the Sellers
are in compliance in all material respects with all applicable laws relating to
employment and employment practices, wages, hours, and terms and conditions of
employment, (ii) there are no material charges with respect to or relating to
the Sellers pending before the Equal Employment Opportunity Commission or any
state, local or foreign agency responsible for the prevention of unlawful
employment practices, and (iii) there is no labor dispute, strike or work
stoppage against the Sellers, pending or, to Sellers' knowledge, threatened
which may interfere with the Business, except where such non-compliance, charge,
dispute, strike or work stoppage would not have a Sellers' Material Adverse
Effect. As of the date hereof, to the knowledge of Sellers, none of the Sellers
or their respective representatives or employees has committed any unfair labor
practices in connection with the operation of the Business, and there is no
charge or complaint against any of the Sellers, by the National Labor Relations
Board or any comparable state agency pending or threatened in writing, except
where such unfair labor practice, charge or complaint would not have a Sellers'
Material Adverse Effect.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Sellers that the statements
contained in this Article IV are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date, except as set
forth in Buyer Disclosure Schedule. Buyer Disclosure Schedule will be arranged
in paragraphs corresponding to the lettered and numbered paragraphs contained in
this Agreement.
Section 4.1. Organization of the Buyer. The Buyer is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of California and each other state in which it is required to qualify to
do business, except where the failure to be so organized, existing and in good
standing will not either (i) have a material adverse effect on the business,
operations, assets or financial condition or results of operations of Buyer or
(ii) materially impair the ability of the Buyer to perform any of its
obligations under this Agreement (either of such effects, a "Buyer Material
Adverse Effect").
Section 4.2. Authorization of Transaction. The Buyer has full power
and authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. The Board of
Directors of the Buyer has duly authorized the execution, delivery, and
performance of this Agreement by the Buyer. This Agreement constitutes the valid
and legally binding obligation of the Buyer, enforceable in
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accordance with its terms and conditions, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally,
including the effect of statutory and other laws regarding fraudulent
conveyances and preferential transfers and subject to the limitations imposed by
general equitable principles (regardless whether such enforceability is
considered in a proceeding at law or in equity).
Section 4.3. Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Buyer is subject or any provision of
its charter or bylaws, except such violations which, in the aggregate, will not
have a Buyer Material Adverse Effect, or (ii) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which the Buyer is a party or by which it is bound or to which
any of its assets is subject. The Buyer does not need to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement except for such notices, filings,
authorizations, consents or approvals which, if not obtained or made, will not,
in the aggregate, have a Buyer Material Adverse Effect.
Section 4.4. Brokers' Fees. The Buyer has no Liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which any of the Sellers or
CIC could become liable or obligated.
ARTICLE V.
COVENANTS
The Parties agree as follows:
Section 5.1. Further Assurances. In case at any time after the Closing
any further action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as the other
Party reasonably may request. The Sellers acknowledge and agree that, to the
extent required for any reasonable business purpose and upon reasonable advance
notice to the Sellers, from and after the Closing the Buyer will be entitled to
obtain and copy all
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documents, books, records (including, Tax records), agreements, and financial
data of any sort of the Sellers and CIC relating to the Business but not
included in the Acquired Assets.
Section 5.2. Transition.
(a) Neither party will take any action that is designed or intended to
have the effect of discouraging any lessor, licensor, customer, supplier, or
other business associate of any of the Sellers or CIC from maintaining the same
business relationships with the Sellers, the Buyer or CIC after the Closing as
it maintained with the Sellers or CIC prior to the Closing. Each party will
refer all customer inquiries relating to the businesses of the other party to
such other party from and after the Closing.
(b) The Buyer agrees to pay any accounts payable, expenses or other
Liabilities for which it shall have received a credit under Section 2.6(a)
within thirty days after the Closing.
(c) Until such time as the Sellers shall have received reasonable
evidence that they are released from any obligation they may have to guarantee
the performance of any obligation under the Leases (a "Guarantee Obligation"),
the Buyer will not take any action that could reasonably be calculated to result
in making any of the Sellers liable to perform any obligation under the Leases
pursuant to any Guarantee Obligation.
Section 5.3. Bulk Transfer. The Buyer hereby waives compliance by the
Sellers with any applicable laws relating to bulk transfers in connection with
the transactions contemplated hereby. The Sellers shall indemnify the Buyer with
respect to any failure to comply with such bulk transfer laws.
Section 5.4. Covenant Not to Compete. For a period of two (2) years
from and after the Closing Date, the Sellers will not engage directly or
indirectly in the business of developing or commercializing breast imaging
systems in the United States; provided, however, that no owner of less than 5%
of the outstanding stock of any publicly traded corporation shall be deemed to
engage solely by reason thereof in any of its businesses. If the final judgment
of a court of competent jurisdiction declares that any term or provision of this
Section 5.4 is invalid or unenforceable, the Parties agree that the court making
the determination of invalidity or unenforceability shall have the power to
reduce the scope, duration, or area of the term or provision, to delete specific
words or phrases, or to replace any invalid or unenforceable term or provision
with a term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
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Section 5.5. Employee and Employee Plans. The Buyer shall offer to
hire, effective as of the Closing Date, each Listed Employee who continues to be
actively employed by any of the Sellers on the Closing Date. The employees who
accept such offers of employment shall become employees of the Buyer as of the
Closing Date. Effective as of the Closing Date, each Transferred Employee's
active participation in any employee benefit plans, programs, policies,
contracts and arrangements maintained by the Sellers or CIC, and the accrual of
all benefits thereunder, shall cease.
Section 5.6. Capitalization. Commencing 90 days after the Closing and
until such time as the Sellers shall have received reasonable evidence that they
are released from any obligation they may have to guarantee the performance of
any obligation under the Leases, the Buyer shall maintain total paid-up capital
and long-term debt in an amount of at least $3,000,000 and cause any person to
which it shall assign or delegate any of its obligations under any of the Leases
to have total paid-up capital and long-term debt in an amount of at least
$3,000,000.
Section 5.7. Allocation. Buyer and Seller agree that they shall
negotiate in good faith to enter into an agreement on or after the Closing Date
concerning the allocation of the Purchase Price and the Assumed Liabilities
among the Purchased Assets. Within 30 days after the Closing Date, Buyer and
Seller shall prepare and file those statements or forms (including Form 8594)
required by Section 1060 of the Code and the regulations thereunder and shall
file such statements or forms with their respective federal income Tax Returns.
The parties shall prepare such statements or forms consistently with any agreed
allocation of all or a portion of the Purchase Price to the assets. Each party
shall provide the other party with a copy of such statements or forms as filed.
ARTICLE VI.
REMEDIES
Section 6.1. Survival.
(a) All the representations and warranties of the Parties contained in
this Agreement shall survive the Closing and continue in full force and effect
for a period of three (3) years thereafter, except that the representations and
warranties of the Sellers contained in Section 3.5 and Section 3.15 hereof shall
survive the Closing and continue in full force and effect forever thereafter
(subject to any applicable statutes of limitations).
(b) All covenants and agreements contained herein are to be performed
in whole or in part subsequent to the Closing and shall survive the Closing in
accordance with their terms.
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(c) The sole and exclusive remedy for any breach of any
representation, warranty, covenant or agreement shall be pursuant to Article VI
hereof. Under no circumstances shall Sellers or Buyer be liable for
consequential, incidental or punitive damages.
Section 6.2. Indemnification Provisions for Benefit of the Buyer.
(a) In the event any of the Sellers breaches any of its
representations, warranties, and covenants contained in this Agreement, and, if
there is an applicable survival period pursuant to Section 6.1 hereof, provided
that the Buyer makes a written claim for indemnification pursuant to Section 6.1
hereof against the Sellers within such survival period, then the Sellers agree
to indemnify the Buyer from and against any Adverse Consequences the Buyer may
suffer through the date of the claim for indemnification resulting from, arising
out of, relating to, in the nature of, or caused by such breach.
(b) The Sellers agree to indemnify the Buyer from and against any
Adverse Consequences the Buyer may suffer resulting from or arising out of any
Liability of the Sellers which is not an Assumed Liability.
Section 6.3. Indemnification Provisions for Benefit of the Sellers.
(a) In the event the Buyer breaches any of its representations,
warranties, and covenants contained in this Agreement, and, if there is an
applicable survival period pursuant to Section 6.1 above, provided that any
Seller makes a written claim for indemnification against the Buyer pursuant to
Section 6.4 hereof within such survival period, then the Buyer agrees to
indemnify the Sellers from and against any Adverse Consequences the Sellers may
suffer through the date of the claim for indemnification resulting from or
arising out of such breach.
(b) The Buyer agrees to indemnify the Sellers from and against any
Adverse Consequences the Sellers may suffer resulting from or arising out of any
Assumed Liability or the operation of the Business after the Closing.
Section 6.4. Certain Limitations.
(a) Notwithstanding anything herein to the contrary, no
indemnification shall be available under section 6.2 hereof to the Buyer or
under Section 6.3 hereof to the Sellers unless and until the aggregate amount of
Adverse Consequences that would otherwise be subject to indemnification, exceeds
$25,000 (in each case, the "Deductible Amount"), it being understood that once
the Deductible Amount is exceeded, the aggregate of all such Adverse
Consequences shall be payable by the Sellers. In addition, in calculating the
Deductible Amount of Adverse Consequences
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hereunder, all Adverse Consequences which individually total less than $10,000
shall be excluded in their entirety and the Sellers and the Buyer in any event
shall have no liability to each other hereunder for such Adverse Consequences.
(b) Notwithstanding anything herein to the contrary, the maximum
aggregate liability of the Sellers to the Buyer under Section 6.2 hereof shall
not exceed $500,000.
(c) Indemnification of Adverse Consequences under this Agreement shall
be net of insurance proceeds actually paid to the Indemnified Party (as defined
below) with respect to the event giving rise to such Adverse Consequence, and
reduced to take account of any net Tax benefit realized by the Indemnified Party
arising from the deductibility of any such Adverse Consequences or Tax.
Section 6.5. Procedure for Indemnification.
(a) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give rise
to a claim for indemnification against the other Party (the "Indemnifying
Party") under this Section 6.5, then the Indemnified Party shall promptly notify
the Indemnifying Party thereof in writing; provided, however, that no delay on
the part of the Indemnified Party in notifying the Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is prejudiced.
(b) The Indemnifying Party will have the right to assume the defense
of the Indemnified Party against the Third Party Claim with counsel of its
choice reasonably satisfactory to the Indemnified Party so long as (A) the
Indemnifying Party notifies the Indemnified Party in writing within 30 days
after the Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party acknowledges its potential liability to the Indemnified Party
under this Agreement, and (B) the Indemnifying Party conducts the defense of the
Third Party Claim actively and diligently.
(c) Whenever the Indemnifying Party is conducting the defense of the
Third Party Claim in accordance with Section 6.5(b) above, (A) the Indemnified
Party may retain separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim, (B) the Indemnified Party
shall cooperate fully with the Indemnifying Party, (C) the Indemnified Party
will not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably), and (D) the Indemnifying
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld
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unreasonably), provided, however, that the immediately preceding clause shall
not apply in the case of relief consisting solely of money damages at least 80%
of which shall be borne by the Indemnifying Party after taking into account any
limitation thereon.
(d) In the event any of the conditions in Section 6.5(b) above is or
becomes unsatisfied, however, (A) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with respect
to, the Third Party Claim in any manner it reasonably may deem appropriate (and
the Indemnified Party need not consult with, or obtain any consent from, the
Indemnifying Party in connection therewith), and (B) the Indemnifying Party will
reimburse the Indemnified Party promptly and periodically for actual
out-of-pocket expenses incurred by the Indemnified Party in defending against
the Third Party Claim (including reasonable attorneys' fees and expenses).
ARTICLE VII.
MISCELLANEOUS
Section 7.1. No Third Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
Section 7.2. Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, to the extent they have related in any way
to the subject matter hereof.
Section 7.3. Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign either this
Agreement or any of its rights, interests, or obligations hereunder without the
prior written approval of the other Party; provided however, that the Buyer may
(i) assign any or all of its rights and interests hereunder to one or more of
its Affiliates and (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases the Buyer nonetheless shall
remain responsible for the performance of all of its obligations hereunder).
Section 7.4. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
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Section 7.5. Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 7.6. Notices. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to the Sellers:
Xxxx Xxxxxx
Caprius, Inc.
Xxx Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxx, XX 00000-0000
Fax: (000) 000-0000
Copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
If to the Buyer:
Xxxxxx X. Xxxxx
Pacific Republic Capital Corp.
00 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Fax: (000) 000-0000
With a Copy to:
A. Xxxxx Xxxxxx, Esq.
One Oxford Centre
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, XX 00000-0000
Fax: (000) 000-0000
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices, requests, demands,
claims, and other communications
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hereunder are to be delivered by giving the other Party notice in the manner
herein set forth.
Section 7.7. Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of New York without
giving effect to any choice or conflict of law provision or ruling (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 7.8. Amendments and Waivers. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
the Buyer and the Sellers. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
Section 7.9. Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
Section 7.10. Expenses. Each Party hereto will bear its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
Section 7.11. Construction. The Parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance.
Section 7.12. Specific Performance. Each of the Parties acknowledges
and agrees that the other Party would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Party shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce specifically
this Agreement and
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the terms and provisions hereof in any action instituted in any court of the
United States or any state thereof having jurisdiction over the Parties and the
matter (subject to the provisions set forth in Section 7.13 below), in addition
to any other remedy to which it may be entitled, at law or in equity.
Section 7.13. Submission to Jurisdiction. Each of the Parties submits
to the jurisdiction of any state or federal court sitting in New York, New York
in any action or proceeding arising out of or relating to this Agreement and
agrees that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each Party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
of the Parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other Party with respect thereto. Any
Party may make service on the other Party by sending or delivering a copy of the
process to the Party to be served at the address and in the manner provided for
the giving of notices in Section 7.6 hereof. Each Party agrees that a final
judgment in any action or proceeding so brought shall be conclusive and may be
enforced by suit on the judgment or in any other manner provided by law or in
equity.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first above written.
SELLERS:
CAPRIUS, INC.
By: /s/ Xxxx Xxxxxx
------------------------------
Name: Xxxx Xxxxxx
Title: Chief Executive Officer
CAPRIUS SYSTEMS, INC.
By: /s/ Xxxx Xxxxxx
------------------------------
Name: Xxxx Xxxxxx
Title: Chief Executive Officer
BUYER:
PACIFIC REPUBLIC CAPITAL CORP.
By: /s/ Xxxxxx X. Xxxxx
------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
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SCHEDULES
Schedule 1.1. Accounts Payable as of April 1, 1999
Schedule 3.3. Noncontravention
Schedule 3.5. Title to Assets
Schedule 3.6. CIC
Schedule 3.11. Real Property
Schedule 3.12(c). Intellectual Property
Schedule 3.14. Contracts and Commitments
Schedule 3.15. Litigation
Schedule 3.18. Inventory
Schedule 3.19. Insurance
Schedule 3.20. Employees
Exhibit A. Form of Legal Opinion of Counsel to Sellers
Exhibit B. Form of Legal Opinion of Counsel to Buyer
Exhibit C. Form of Settlement Statement
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