EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
INVIVO CORPORATION
AND
SENSORMEDICS CORPORATION
DATED AS OF APRIL 3, 2003
Table of Contents
1. Definitions................................................................................ 1
2. Purchase and Sale of Shares................................................................ 6
2.1 Purchase and Sale................................................................. 6
2.2 Purchase Price.................................................................... 6
2.3 Dividends of Cash and Intercompany Receivables.................................... 6
3. Closing.................................................................................... 7
3.1 Location; Date.................................................................... 7
3.2 Deliveries........................................................................ 7
3.3 Closing Date Balance Sheet; Post-Closing Payments................................. 7
3.4 Exclusive Remedy.................................................................. 10
4. Representations and Warranties of the Seller Relating to the Company....................... 10
4.1 Corporate......................................................................... 10
4.2 Authorization..................................................................... 10
4.3 Validity of Contemplated Transactions............................................. 10
4.4 Capitalization and Stock Ownership................................................ 11
4.5 Financial Statements.............................................................. 11
4.6 Accounts Receivable............................................................... 12
4.7 Taxes............................................................................. 12
4.8 Title to Assets and Related Matters............................................... 14
4.9 Real Property..................................................................... 14
4.10 Subsidiaries...................................................................... 15
4.11 Legal Proceedings; Compliance with Law; Governmental Permits...................... 15
4.12 Environmental Matters............................................................. 15
4.13 Contracts and Commitments......................................................... 16
4.14 Employee Relations................................................................ 17
4.15 ERISA............................................................................. 18
4.16 Intellectual Property............................................................. 18
4.17 Absence of Certain Changes........................................................ 19
4.18 Customers and Suppliers........................................................... 20
4.19 Insurance......................................................................... 20
4.20 Product Liability................................................................. 21
4.21 Defibrillator Liability........................................................... 21
4.22 Corporate Records................................................................. 21
4.23 No Finder's Fees.................................................................. 21
4.24 Books and Records................................................................. 22
4.25 Interested Party Transactions..................................................... 22
4.26 Product Development............................................................... 22
5. Representations and Warranties of the Seller Relating to the Seller........................ 22
5.1 Corporate......................................................................... 22
5.2 Authorization..................................................................... 22
5.3 Validity of Contemplated Transactions............................................. 23
6. Representations and Warranties of the Buyer Relating to the Buyer.......................... 23
6.1 Corporate......................................................................... 23
6.2 Authorization..................................................................... 23
6.3 Validity of Contemplated Transactions............................................. 23
6.4 Finder's Fees..................................................................... 24
6.5 Cessation of Defibrillator Product Line........................................... 24
7. Certain Covenants.......................................................................... 24
7.1 Post-Closing Cooperation with respect to Distribution Agreements.................. 24
7.2 Public Announcements.............................................................. 24
7.3 Expenses; Audit Cooperation....................................................... 24
7.4 Further Assurances................................................................ 24
7.5 Continued Installation and Field Warranty Services by VIASYS...................... 25
7.6 Employee Severance and Retention Obligations...................................... 27
8. Indemnification............................................................................ 28
8.1 Indemnification by the Seller..................................................... 28
8.2 Indemnification by the Buyer...................................................... 28
8.3 Procedure for Claims.............................................................. 28
8.4 Expiration Dates.................................................................. 30
8.5 Third Party Claims................................................................ 30
8.6 Procedure for Indemnification Claims.............................................. 31
9. Tax Matters................................................................................ 31
9.1 Liability for Taxes............................................................... 31
9.2 Responsibility for Tax Matters.................................................... 33
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9.3 Cooperation on Tax Matters........................................................ 33
9.4 Section 338(h)(10) Election....................................................... 34
9.5 Allocation of Purchase Price...................................................... 34
9.6 Termination of Tax Allocation Agreements.......................................... 35
9.7 Tax Contest Provisions............................................................ 35
10. General.................................................................................... 36
10.1 Memorandum; Disclaimer of Projections............................................. 36
10.2 Governing Law..................................................................... 36
10.3 Jurisdiction...................................................................... 36
10.4 Binding Effect.................................................................... 37
10.5 Waiver of Conditions.............................................................. 37
10.6 Disclosure Schedule............................................................... 37
10.7 Entire Agreement.................................................................. 37
10.8 Notices........................................................................... 37
10.9 Counterparts...................................................................... 38
10.10 Amendment......................................................................... 38
10.11 Interpretation.................................................................... 39
10.12 No Third-Party Beneficiaries...................................................... 39
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SCHEDULES
---------
Schedule 3.3(1) Pro Forma Balance Sheet
Schedule 3.3(2) Applicable Accounting Principles
Schedule 4.1 Jurisdiction of Incorporation and Other Information
Schedule 4.3 Company Required Consents
Schedule 4.4 Stock Ownership - Encumbrances and Restrictions
Schedule 4.5 Undisclosed Liabilities
Schedule 4.7 Taxes
Schedule 4.7(b) Audited Tax Returns
Schedule 4.7(c) Tax Matters
Schedule 4.7(f) Combined Tax Returns
Schedule 4.7(i) No distributions
Schedule 4.8A Title to Assets
Schedule 4.8B Necessary Assets
Schedule 4.9 Real Property
Schedule 4.11 Legal Proceedings; Compliance with Law; Governmental Permits
Schedule 4.12 Environmental Matters
Schedule 4.13(a) Contracts
Schedule 4.13(b) Defaults
Schedule 4.14A Labor Matters
Schedule 4.14B Employee Agreements
Schedule 4.14C Employee Obligations
Schedule 4.15(a) Benefit Plans
Schedule 4.15(b) Tax-Exempt Benefit Plans
Schedule 4.16 Intellectual Property
Schedule 4.17 Certain Changes
Schedule 4.18 Customers and Suppliers
Schedule 4.19 Insurance
Schedule 4.22 Corporate Records
Schedule 5.3 Seller Consents
Schedule 7.6 Severance Amounts and Retention Bonuses
for which Seller and its Affiliates Are Responsible
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of April 3,
2003 by and between Invivo Corporation, a Delaware corporation (the "Buyer"),
and SensorMedics Corporation, a California corporation (the "Seller").
Background
The Seller owns 100% of the outstanding capital stock of Medical Data
Electronics, Inc., a Delaware corporation (the "Company"). This Agreement sets
forth the terms and conditions under which the Buyer will acquire all of the
outstanding capital stock of the Company from the Seller.
Witnesseth:
In consideration of the mutual promises, representations and
warranties, covenants, payments and actions herein provided, the parties hereto,
each intending to be legally bound hereby, do agree as follows:
Agreement
1. Definitions.
For convenience, certain terms used in more than one Section of this
Agreement are listed in alphabetical order and defined or referred to below
(such terms as well as any other terms defined elsewhere in this Agreement shall
be equally applicable to both singular and plural forms of the terms defined).
"Action" is defined in Section 8.5.
"Affiliates" means, with respect to a particular Party, Persons
controlling, controlled by or under common control with that Party, as well as
any officers, directors and majority-owned entities of that Party and of its
other Affiliates. For the purposes of this Agreement, "control" shall mean the
ownership of a majority of the voting securities of any entity.
"Angel Products" means Angel or Angel MP products of the Company and
any related equipment and accessories.
"Agreement" means this Stock Purchase Agreement and the schedules
hereto.
"Applicable Accounting Principles" is defined in Section 3.3(a).
"Assets" means all of the assets of every kind and description, real
and personal, tangible and intangible, that are owned or possessed by the
Company.
"Audit" is defined in Section 7.3.
"Authority" means any federal, state, local or foreign governmental or
regulatory entity (or any department, agency, authority or political subdivision
thereof) or court or arbitrator.
"Basket" is defined in Section 8.3(b).
"Benefit Plans" means all employee benefit plans of the Company within
the meaning of Section 3(3) of ERISA and any related Contracts, plans, trusts,
programs, policies and arrangements that provide benefits of economic value to
any present or former employee of the Company, or present or former beneficiary,
dependent or assignee of any such employee or former employee of the Company.
"Business" means the entire business and operations of the Company.
"Business Day" means any day on which the New York Stock Exchange is
open for trading.
"Buyer" is defined above in the preamble.
"Claim Notice" is defined in Section 8.3(a).
"Claim Response" is defined in Section 8.3(a).
"Closing" is defined in Section 3.1.
"Closing Date" is defined in Section 3.1.
"Closing Date Balance Sheet" is defined in Section 3.3(a).
"Closing Date Adjusted Working Capital" shall mean an amount equal to
all (i) "current assets" of the Company excepting accounts receivable, minus
(ii) all "current liabilities" of the Company, in each case as such "current
assets" and "current liabilities" are accrued and reflected on the Closing Date
Balance Sheet in accordance with the Applicable Accounting Principles and this
Agreement and consistent with the past practices of the Company, provided that
such past practices are consistent with the Applicable Accounting Principles.
"Closing Payment" is defined in Section 2.2(a).
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Company" is defined above in the background.
"Contract" means any written or oral contract, agreement, lease, note,
security agreement, instrument or other commitment that is binding on any Person
or its property under applicable law.
"Court Order" means any judgment, decree, injunction, order or ruling
of any federal, state, local or foreign or national court or governmental or
regulatory body or
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authority that is binding on any Person or its property under applicable law.
"Default" means (a) a breach, default or violation, or an action or a
failure or omission to take an action that would allow another party or parties
to accelerate the performance of the party in question or (b) the occurrence of
an event, failure or omission that with the passage of time or the giving of
notice, or both, would constitute a breach, default or violation or give rise to
such ability to accelerate.
"Disclosure Schedule" means the disclosure schedule being delivered by
the Company to the Buyer on the date hereof, with respect to the representations
and warranties of the Seller regarding the Company under Section 4 and
otherwise.
"Employee Obligations" is defined in Section 7.6.
"Encumbrance" means any lien, mortgage, security interest, pledge,
restriction on transferability, defect of title or other claim, charge or
encumbrance of any nature whatsoever on any property or property interest.
"Environmental Condition" means any condition or circumstance,
including the presence of Hazardous Substances, created by the Company, at any
property or premises that requires abatement or correction under an
Environmental Law.
"Environmental Law" means all Regulations and Court Orders in effect
as of the date of this Agreement relating to pollution or protection of the
environment under which a Party may be held liable for the release or discharge
of any materials into the environment or relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Substances.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Escrow Agreement" means that certain escrow agreement entered into as
of the Closing Date between the Buyer, the Seller and the Escrow Agent.
"Escrow Agent" means LaSalle Bank, National Association, or such other
escrow agent to which the Parties agree.
"Escrow Funds" is defined in Section 2.2(c).
"Expiration Date" is defined in Section 8.4.
"Financial Statements" is defined in Section 4.5.
"GAAP" means generally accepted accounting principles of the US, each
as applied consistently, as are in effect on the date hereof.
"Guaranty" means that certain guaranty, executed as of the Closing
Date, by and between VIASYS and the Buyer.
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"Hazardous Substances" means (a) any gasoline, fuel oil or any other
petroleum products, or polychlorinated biphenyls, (b) asbestos or
asbestos-containing substances, and (c) any substance, waste, material or
product that is regulated as of the date of this agreement by an Environmental
Law.
"Indemnification Escrow Funds" is defined in Section 2.2(b).
"Intellectual Property" means any copyrights and registrations or
applications for registration of copyrights in any jurisdiction, and any
renewals or extensions thereof, patents, patent applications, patent rights,
trademarks, trade names, service marks, Internet domain names, technology rights
and licenses, trade secrets, franchises, know-how, inventions, discoveries,
formulae, designs, blueprints, specifications, technical drawings (or similar
information in electronic format), and ideas, rights in research and
development, and commercially practiced processes and inventions, whether
patentable or not in any jurisdiction, and all documentation and media
consulting, describing or relating to the foregoing, including manuals,
programmers' note, memoranda and records.
"Intercompany Receivables" is defined in Section 2.3(b).
"Inventory" means all inventory, including raw materials, supplies,
work in process and finished goods of the Company.
"Liability" means any liability (whether known or unknown and whether
absolute, accrued, contingent or otherwise), indebtedness, obligation, expense,
loss, damage, deficiency, guaranty or endorsement of or by any Person.
"Litigation" means any lawsuit, action, arbitration, mediation, claim,
administrative or other proceeding, criminal prosecution or formal governmental
investigation or inquiry.
"Material Adverse Effect," with respect to any Person, means any
change, effect or circumstance that, individually or in the aggregate, is or is
reasonably likely to be materially adverse to the business, assets (including
intangible assets), financial condition or results of operations of such Person;
provided, however, that the following shall not be taken into account in
determining whether there has been or would be a Material Adverse Effect on or
with respect to such Person: (a) any change, effect or circumstance relating to
conditions affecting the economy of any part of the world generally, or any
change, effect or circumstance relating to conditions generally affecting the
industry (or industries) in which such Person participates, and, in either case,
not affecting such Person in a materially disproportionate manner, and (b) any
change, circumstance or effect caused by the announcement or pendency of the
Transactions.
"Minor Contracts" is defined in Section 4.13(a).
"Owned Intellectual Property" means any Intellectual Property owned by
the Company.
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"Off-the-Shelf-Software" is defined in Section 4.16.
"Party" means any of the parties hereto.
"Permitted Encumbrances" means (a) statutory liens not yet delinquent,
(b) such imperfections or irregularities of title or liens as do not materially
detract from or interfere with the present use of the Assets subject thereto or
affected thereby, otherwise materially impair present operations of the Business
or materially detract from the value of such Assets, (c) the rights of customers
of the Company with respect to Inventory or work in progress under orders or
Contracts entered into by the Company in the ordinary course of business, (d)
mechanics', carriers', workers', repairmen's, warehousemen's, or other similar
liens arising in the ordinary course of business in respect of obligations not
overdue or that are being contested in good faith, and (e) deposits or pledges
that are statutory obligations to secure workers' compensation, unemployment
insurance, old age benefits or other social security obligations.
"Person" means any natural person, corporation, partnership,
proprietorship, association, trust or other legal entity.
"Purchase Price" is defined in Section 2.2.
"Real Property" is defined in Section 4.9.
"Regulation" means any statute, law, ordinance, regulation, order or
rule of any federal, state, local, foreign or other government, governmental
agency or body or of any other type of regulatory body, including those covering
environmental, energy, safety, health, transportation, bribery, recordkeeping,
zoning, antidiscrimination, antitrust, wage and hour, and price and wage control
matters.
"Required Consents" is defined in Section 4.3.
"Response Period" is defined in Section 8.3(a).
"Seller's knowledge" means the actual knowledge of any of the directors
or officers of VIASYS or the Seller or any officers of the Company that are
responsible for the subject in question as of the date hereof.
"Shares" is defined in Section 4.4.
"Tax Return" means any return or other document required to be made for
any tax authority of income, profits or gains or of any other amounts or
information relevant for the purposes of Tax, including any related accounts,
computations and attachments.
"Taxes" means (i) all taxes, charges, fees, levies or other assessments
properly imposed by any tax authority, including income, gross receipts,
value-added, excise, withholding, personal property, real estate, sales, use, ad
valorem, license, lease, service, severance, transfer, payroll, employment,
customs, duties, alternative, add-on minimum and estimated and franchise taxes
(including any interest, penalties or additions
5
attributable to or imposed on or with respect to any such assessment), and (ii)
any liability for payment of any amounts of the type described in clause (i) as
a result of being a member of an affiliated consolidated, combined or unitary
group.
"Transaction Documents" means this Agreement, the Escrow Agreement, the
Guaranty and any other agreements that are to be executed on the Closing Date as
contemplated thereby.
"Transactions" means the purchase and sale of the Shares and any other
transactions contemplated by the Transaction Documents.
"US" means the United States of America.
"VIASYS" means VIASYS Healthcare Inc., a Delaware corporation that is
the parent of the Seller.
"Working Capital Adjustment Escrow Funds" is defined in Section 2.2(c).
2. Purchase and Sale of Shares.
2.1 Purchase and Sale. Subject to the terms and conditions of this
Agreement, at the Closing, the Buyer shall buy from the Seller, and the Seller
shall sell to the Buyer, free and clear of all Encumbrances, except for
Permitted Encumbrances, all of the Shares.
2.2 Purchase Price. The aggregate purchase price (the "Purchase
Price") for the Shares will be an amount in cash equal to $9,438,709. The Buyer
shall pay the Purchase Price at Closing as follows:
(a) delivery of $8,022,902.65 (the "Closing Payment") to
the Seller by wire transfer of immediately available funds to an account
designated by the Seller;
(b) delivery of $943,870.90 (the "Indemnification Escrow
Funds") to the Escrow Agent by wire transfer of immediately available funds to
an account designated by the Escrow Agent, to be held and disbursed by the
Escrow Agent in accordance with the terms of the Escrow Agreement; and
(c) delivery of $471,935.45 (the "Working Capital
Adjustment Escrow Funds," and together with the Indemnification Escrow Funds,
the "Escrow Funds") to the Escrow Agent by wire transfer of immediately
available funds to an account designated by the Escrow Agent, to be held and
disbursed by the Escrow Agent in accordance with the terms of the Escrow
Agreement.
2.3 Dividends of Cash and Intercompany Receivables.
(a) Prior to the Closing, the Seller will cause the
Company (i) to declare a dividend to be payable to Seller in an amount equal to
all cash and cash equivalents held by the Company as of the time immediately
prior to the Closing and (ii) to pay this dividend to the Seller immediately
prior to the Closing. The Buyer shall
6
cooperate with the Seller to distribute promptly to the Seller any such cash and
cash equivalents that still remain with the Company following the Closing Date,
to the extent the same were held by the Company as of the time immediately prior
to the Closing.
(b) Prior to the Closing, the Seller will cause the
Company to declare a dividend to be payable to the Seller of all receivables of
the Company that are payable to the Company by Seller, VIASYS and any other
Affiliates of the Company (the "Intercompany Receivables"). This dividend of the
Intercompany Receivables shall be paid to the Seller immediately prior to the
Closing. Effective as of the Closing Date, the Buyer and the Company release and
forgive any further liability or obligation arising out of or relating to the
Intercompany Receivables and any other intercompany debt, accounts, receivables
or other similar amounts due to the Company from the Seller, VIASYS or their
Affiliates, and, similarly, the Seller and VIASYS on behalf of themselves and
their Affiliates release and forgive the Company from any liability or
obligations arising out of or relating to any intercompany debt, accounts,
receivables or other similar amounts due to the Seller or its Affiliates from
the Company as of the Closing Date, except for obligations or liabilities
created by the Transaction Documents.
3. Closing.
3.1 Location; Date. The closing for the Transactions (the
"Closing") shall be held at the offices of Fenwick & West LLP, in Mountain View,
California, at 9:00 a.m., local time on April 3, 2003 (the "Closing Date").
3.2 Deliveries. At the Closing,
(a) the Buyer shall pay the Closing Payment to the
Seller;
(b) the Buyer shall deliver the Escrow Funds to the
Escrow Agent to be held and disbursed in accordance with the terms and
conditions of the Escrow Agreement;
(c) the Seller shall deliver to the Buyer certificates
representing the Shares, duly endorsed for transfer to the Buyer or with
separate stock transfer powers or forms (in relation to the Seller) attached
thereto and signed in blank, in each case as appropriate;
(d) the Seller shall cause the Company to deliver to the
Buyer the Required Consents that the Buyer requests and resignations of the
members of the board of directors and the officers of the Company; and
(e) the Parties shall deliver the Transaction Documents
and any other documents required to be delivered at the Closing pursuant to this
Agreement.
3.3 Closing Date Balance Sheet; Post-Closing Payments.
(a) As promptly as practicable, but not later than 30
days after the Closing Date, the Seller will cause to be prepared and delivered
to the Buyer (i) a pro
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forma balance sheet (the "Closing Date Balance Sheet") of the Company as of the
Closing Date prepared in the form of Schedule 3.3(1) hereto and in accordance
with the accounting principles set forth in Schedule 3.3(2) hereto (the
"Applicable Accounting Principles"), giving effect to the payment of the
dividends required by Section 2.3, and (ii) a detailed calculation in such
Closing Date Balance Sheet of the Closing Date Adjusted Working Capital. To
facilitate the Seller's preparation of the Closing Date Balance Sheet and the
Closing Date Adjusted Working Capital, the Buyer shall, and shall cause its
Affiliates and its Affiliates' respective agents and representatives to,
cooperate and assist in the preparation of the Closing Date Balance Sheet and
the calculation of the Closing Date Adjusted Working Capital, including
providing reasonable access during normal business hours to the offices,
employees and records of the Company and its accountants (the "Company
Accountants") and making available to the extent necessary books, records, work
papers, personnel and other materials and sources of the Company Accountants
reasonably requested by the Seller for such purpose.
(b) The Buyer may dispute the "current asset" or "current
liability" amounts reflected on the Closing Date Balance Sheet or in the Closing
Date Adjusted Working Capital calculation on the basis that such amounts were
not presented in accordance with Schedule 3.3(1) or (2) or the Applicable
Accounting Principles or on the basis of computational errors. In the event of
such a dispute, the Buyer shall notify the Seller in writing of each disputed
amount within 90 days of the Closing (such 90-day period is hereinafter referred
to as the "Review Period"). Any such notice of disagreement shall specify the
"current asset" or "current liability" amounts as to which the Buyer disagrees
(and shall include the Buyer's calculation of the Closing Date Adjusted Working
Capital), and the Buyer shall be deemed to have agreed with all other items and
amounts included in the calculation of the Closing Date Adjusted Working Capital
delivered pursuant to Section 3.3(a). To facilitate the Buyer's review of the
Closing Date Balance Sheet and the Closing Date Adjusted Working Capital, the
Seller shall, and shall cause its Affiliates and its Affiliates' respective
agents and representatives to, cooperate and assist in the Buyer's review of the
Closing Date Balance Sheet and the calculation of the Closing Date Adjusted
Working Capital, including providing reasonable access during normal business
hours to the offices, employees and records of the Seller and its accountants
(the "Seller Accountants") and making available to the extent necessary books,
records, work papers, personnel and other materials and sources of the Seller
Accountants reasonably requested by the Buyer for such purpose.
(c) If a notice of disagreement shall be duly delivered
pursuant to Section 3.3(b), the Seller and the Buyer shall, during the 30 days
following receipt of such notice, use their reasonable efforts to reach
agreement on the disputed items or amounts in order to determine the Closing
Date Adjusted Working Capital. If, during such period, the Seller and the Buyer
are unable to reach such agreement, they shall promptly thereafter cause a
nationally recognized firm of independent accountants chosen by and mutually
acceptable to the Seller and the Buyer, or if no such agreement is reached
within five Business Days after the end of such period, the firm of
PriceWaterhouseCoopers LLP (such accounting firm, the "Accounting Referee"), to
review this Agreement and the disputed items or amounts for the purpose of
calculating the Closing Date Adjusted Working Capital. In making such
calculation, the Accounting
8
Referee shall consider for revision only those items or amounts in the Seller's
calculation of the Closing Date Adjusted Working Capital as to which the Buyer
has disagreed. The Accounting Referee shall deliver to the Buyer and the Seller,
as promptly as practicable, but in no event later than 20 Business Days after
retention of the Accounting Referee by the Buyer and the Seller, a report
setting forth such calculation. Such report shall be final and binding upon the
Seller, the Company and the Buyer, and shall constitute an arbitral award on
which a judgment may be entered in any court having jurisdiction thereof. The
cost of such review and report shall be allocated equally between the Buyer, on
the one hand, and the Seller, on the other hand, unless (i) the amount of the
Closing Date Adjusted Working Capital as determined by the Accounting Referee is
less than the amount of the same as shown in Seller's calculation delivered
pursuant to Section 3.3(a) by 15% or more, in which event such cost shall be
borne by Seller, (ii) the amount of the Closing Date Adjusted Working Capital as
determined by the Accounting Referee exceeds the amount of the same as shown in
Seller's calculation delivered pursuant to Section 3.3(a) by 15% or more, in
which event such cost shall be borne by Buyer. The "Final Adjusted Working
Capital" shall mean the Closing Date Adjusted Working Capital (i) as shown in
the Seller's calculation delivered pursuant to Section 3.3(a) if no notice of
disagreement with respect thereto is duly delivered pursuant to Section 3.3(b),
or (ii) if such a notice of disagreement is delivered, as agreed by the Buyer
and the Seller pursuant to this Section 3.3(c) or, in the absence of such
agreement, as shown in the Accounting Referee's calculation delivered pursuant
to this Section 3.3(c).
(d) The Seller will pay its fees, costs and expenses in
respect of its preparation of the Closing Date Balance Sheet and of the
calculation of the Closing Date Adjusted Working Capital pursuant to Section
3.3(a). The Buyer will pay the fees, costs and expenses due to any accountants
or other experts retained by it in connection with the review, negotiation or
arbitration of the Closing Date Balance Sheet and the Closing Date Adjusted
Working Capital.
(e) If the Final Adjusted Working Capital is less than
$4,000,000, then the Purchase Price shall be decreased by the amount of any
difference between $4,000,000 and the amount of the Final Adjusted Working
Capital (such difference, the "Buyer's Adjustment Amount"), and the Parties
shall promptly (but no later than within 10 Business Days) instruct the Escrow
Agent to immediately deliver to (i) the Buyer a portion of the Working Capital
Adjustment Escrow Funds equal to the Buyer's Adjustment Amount by wire transfer
of immediately available funds to an account designated by the Buyer, and (ii)
the Seller the remaining Working Capital Adjustment Escrow Funds by wire
transfer of immediately available funds to an account designated by the Seller.
(If the Escrow Funds are not sufficient, the Seller shall deliver to the Buyer
cash in an amount equal to such remaining Buyer's Adjustment Amount within 10
Business Days.) For calculation purposes, if the Final Adjusted Working Capital
is a negative number, then the Adjustment Amount shall be the sum of $4,000,000
and the dollar amount of the Final Adjusted Working Capital stated as a positive
number. If the Final Adjusted Working Capital is more than $4,200,000 (such
difference, the "Seller's Adjustment Amount"), then (I) the parties shall
promptly (but no later than 10 Business Days) instruct the Escrow Agent to
immediately deliver to the Seller all of the Working Capital Adjustment Escrow
Funds by wire transfer of immediately available funds to an
9
account designated by the Seller, (II) the Purchase Price shall be increased by
the amount of the Seller's Adjustment Amount, and (III) the Buyer shall promptly
(but no later than 10 Business Days) deliver to Seller cash in an amount equal
to the Seller's Adjustment Amount by wire transfer of immediately available
funds to an account designated by the Seller.
(f) If at the conclusion of the Review Period any portion
of the Adjustment Amount is not in dispute, such amount shall be paid to the
applicable party within 10 Business Days after the conclusion of the Review
Period; provided that, if such payment depends on actions to be taken by the
Escrow Agent, the Parties shall instruct the Escrow Agent to make such payment
within such period. The amount of any payment to be made pursuant to Section 3.3
shall bear interest from and including the Closing Date to (but excluding) the
date of payment at a rate per annum equal to the rate of interest paid with
respect to the Working Capital Adjustment Escrow Funds during the period from
the Closing Date to the date of payment. Such interest shall be payable at the
same time as the payment to which it relates and shall be calculated daily on
the basis of a year of 365 days and the actual number of days elapsed.
3.4 Exclusive Remedy. To the extent that there is an adjustment
pursuant to Section 3.3 or a reduction in the Purchase Price on account of
outstanding debt, the fact or circumstance underlying such adjustment or
reduction, as the case may be, shall not provide a separate basis for a claim of
indemnification under Section 8 or otherwise, unless it causes a Liability in
excess of such amount so adjusted; nor shall any failure to pay under Section
3.3 be subject to the limitations of Section 8.
4. Representations and Warranties of the Seller Relating to the Company.
The Seller represents and warrants to the Buyer, as to the Company, as
follows:
4.1 Corporate. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
The Company is qualified to do business as a foreign corporation in any
jurisdiction where it is required to be so qualified. The certificate of
incorporation and bylaws of the Company that have been delivered to the Buyer
have been duly adopted and are current, correct and complete. The Company has
all necessary power and authority to own, lease and operate its properties and
other assets and to carry on the Business as it is now being conducted. Schedule
4.1 lists the Company's jurisdiction of incorporation, officers and directors
and the states, if any, in which it is qualified to do business as a foreign
corporation.
4.2 Authorization. The Company has the requisite power and
authority to perform the transactions to be performed by it pursuant to Section
2.3.
4.3 Validity of Contemplated Transactions. Except with respect to
the contracts specified in Schedule 4.3 (the "Required Consents"), the
Transactions will not require any filing, consent or approval under, conflict
with, or result in or constitute a Default under (a) any Regulation or Court
Order to which the Company is subject, (b) any provision of the certificate of
incorporation or bylaws of the Company, or (c) any
10
Contract other than a Minor Contract to which the Company is a party or by which
any of its Assets may be bound.
4.4 Capitalization and Stock Ownership. The total authorized
capital stock of the Company consists of 3,000 shares of common stock, par value
$0.01 per share, of which 1,000 shares are issued and outstanding as of the date
hereof (the "Shares"). There are no existing options, warrants, calls,
commitments, conversion privileges or preemptive or other rights of any
character or agreements outstanding to purchase or otherwise acquire any shares
of the Company's capital stock or obligating the Company to grant, extend or
enter into any such option, warrant, call, commitment, conversion privilege or
preemptive or other right or agreement. The Shares are all duly and validly
authorized and issued, fully paid and non-assessable. Except as set forth on
Schedule 4.4, the Seller is the record and beneficial owner of the Shares, free
and clear of all Encumbrances. Except as set forth on Schedule 4.4, there are no
voting agreements, registration rights, rights of first refusal, preemptive
rights, co-sale rights or other restrictions applicable to the Shares. The
Company is not under any obligation to register any of the Shares under the
Securities Act of 1933, as amended. There are no restrictions upon the voting or
transfer of the Shares pursuant to the Company's certificate of incorporation or
bylaws or any Contract to which the Seller, or any of its Affiliates, or the
Company is a party. Assuming Buyer has the requisite power and authority to be
the lawful owner of the Shares, upon delivery of and payment for the Shares at
the Closing as herein provided, good and valid title to the Shares will pass to
Buyer, free and clear of all Encumbrances except for any Encumbrances arising
from acts of Buyer and restrictions imposed under applicable securities laws.
4.5 Financial Statements.
(a) The unaudited financial statements of the Company for
the annual periods ended, and as of, December 28, 2002, December 29, 2001 and
December 30, 2000 (the "Financial Statements") have been prepared in accordance
with the books and records of the Company in all material respects and fairly
present in all material respects and in accordance with GAAP the financial
position of the Company, as at the respective dates thereof, and the results of
its operations for the periods covered thereby. As of the date hereof, the
Company has no Liability that is not reflected in the Balance Sheet dated
December 28, 2002 included in the Financial Statements (the "Balance Sheet") and
that would be required to be included in a balance sheet prepared in accordance
with GAAP as of the Closing Date or to be referred to as a Liability in
footnotes to financial statements prepared in accordance with GAAP as of and for
the period ending on the Closing Date, other than (w) Liabilities arising since
December 28, 2002 in the ordinary course of business in amounts that are not
material to the Company, (x) current liabilities that will be reflected in the
Closing Balance Sheet, (y) Liabilities that are specified on Schedule 4.5, or
(z) Liabilities represented by Contracts, other than any Liability arising from
the breach of any Contract, to the extent that such Contracts are disclosed
specifically on the cover sheet or face of any Disclosure Schedule hereto (or
not required to be disclosed because of the term or amount involved) that were
not required under GAAP to have been specifically disclosed or reserved for on
such balance sheet.
11
(b) During the three months ended March 29, 2003, the
Company received orders for Company products (referred to herein as "bookings")
with an aggregate sales price of not less than $4,100,000. To the Seller's
knowledge: (i) these bookings represent bona fide orders from customers, (ii)
relate to products requested by the customer to be shipped prior to September
30, 2003, provided the customers continue to desire delivery at that time, and
(iii) provide for gross margins, calculated in a manner consistent with the past
practices of the Company, that are consistent in the aggregate with the gross
margins realized by the Company on the sales of products (excluding sales of
Angel Products) in 2002 within a +/- 4% range. For clarification, the
representation contained in the previous sentence of this Section 4.5(b) is a
statement based on the Seller's actual current knowledge and does not represent
a guarantee that such bookings will not be withdrawn, will actually be shipped
on time or will actually result in such gross margins, in each case as time
passes, intervening acts and omissions occur and facts and circumstances change.
(c) At March 29, 2003, the Company had aggregate orders
for product not yet shipped of not less than $2,250,000. To the Seller's
knowledge: these orders (i) represent bona fide orders from customers, (ii)
relate to products requested by the customer to be shipped prior to September
30, 2003, provided the customers continue to desire delivery at that time, and
(iii) provide for gross margins, calculated in a manner consistent with the past
practices of the Company, that are consistent in the aggregate with the gross
margins realized by the Company on the sales of products (excluding sales of
Angel Products) in 2002 within a +/- 4% range. For clarification, the
representation contained in the previous sentence of this Section 4.5(c) is a
statement based on the Seller's actual current knowledge and does not represent
a guarantee that such bookings will not be withdrawn, will actually be shipped
on time or will actually result in such gross margins, in each case as time
passes, intervening acts and omissions occur and facts and circumstances change.
4.6 Accounts Receivable. The accounts receivable of the Company
that are included in the Assets are bona fide accounts receivable created in the
ordinary course of business. To the Seller's knowledge, such accounts receivable
are collectable in the ordinary course of business in the amount reflected on
the Closing Date Balance Sheet.
4.7 Taxes. Except as set forth on Schedule 4.7:
(a) The Company has (i) timely filed all material Tax
Returns of the Company required to be filed , (ii) timely paid all Taxes
required to be paid whether or not shown on such Tax Returns, and (iii) paid all
other Taxes for which a notice of assessment or demand for payment has been
received. All Tax Returns are true, correct and complete in all material
respects, have been prepared in all material respects in accordance with all
applicable laws and requirements and accurately reflect in all material respects
the taxable income (or other measure of Tax) of the Company. The accruals for
Taxes contained in the Financial Statements for the period ending and as of
December 28, 2002 are adequate to cover all liabilities for Taxes of the Company
for all periods ending on or before such date, and include adequate provision
for all deferred Taxes, and nothing has occurred subsequent to that date to make
any of such accruals
12
inadequate. All Taxes of the Company for periods after the date of the Financial
Statements have been paid or are adequately reserved against on the books of the
Company. The Company has timely filed all information returns or reports,
including forms 1099, that are required to be filed, and has accurately reported
in all material respects all information required to be included on such returns
or reports;
(b) To the knowledge of the Seller, there are (i) no
proposed assessments of Taxes against the Company, (ii) no proposed adjustments
to any Tax Return pending against the Company, and (iii) no proposed adjustments
to the manner in which any Tax of the Company is determined. No notification of
an intention to examine has been received from any tax Authority with respect to
any material Tax Return for which the statute of limitations has not yet
expired. Schedule 4.7(b) lists each material Tax Return of the Company that to
the Seller's knowledge has been audited by the relevant Authorities (and all
deficiencies or proposed deficiencies resulting from such audits have been paid
or are adequately provided for in the Financial Statements for the period ending
and as of December 28, 2002), and no such Tax Return is under examination by any
tax Authority. To the Seller's knowledge, no claim has been made by an Authority
in a jurisdiction where the Company does not file Tax Returns that the Company
is or may be subject to taxation by that jurisdiction;
(c) Except as disclosed in Schedule 4.7(c), the Company
has not (i) filed any consent agreement under Section 341(f) of the Code, (ii)
waived any statute of limitations in respect of Taxes or agreed to any extension
of time with respect to a Tax assessment or deficiency, (iii) been the subject
of a Tax ruling that has continuing effect, (iv) been the subject of a closing
agreement with any tax Authority that has continuing effect, or (v) granted a
power of attorney with respect to any Tax matters that has continuing effect;
(d) The Company has withheld and paid all Taxes required
to have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third party;
(e) There are no Encumbrances for Taxes upon the Company
or the assets of the Company, except Permitted Encumbrances;
(f) Schedule 4.7(f) lists all combined, consolidated or
unitary groups of which the Company has been a member and which has filed a
combined, consolidated or unitary return for federal, state, local or foreign
tax purposes, other than the group of which VIASYS is the common parent (the
"Affiliated Group");
(g) The Company is not a party to any joint venture,
partnership or other agreement or arrangement which is treated as a partnership
for federal income tax purposes and does not own a single member limited
liability company which is treated as a disregarded entity;
13
(h) The Company has complied with all reporting and
recordkeeping requirements under Section 6038A of the Code with respect to
certain foreign-owned companies and transactions with certain related parties;
(i) Except as disclosed in Schedule 4.7(i), during the
two fiscal years prior to the Closing Date, the Company has neither (i) been
distributed in a transaction qualifying under Section 355 of the Code nor (ii)
distributed any corporation in a transaction qualifying under Section 355 of the
Code; and
(j) The Company does not and has not had a permanent
establishment in any foreign country, as defined in the applicable Tax treaty or
convention between the United States of America and such foreign country.
(k) Except as provided in Schedule 4.7(k), the Company is
not a party to a tax-sharing agreement or similar agreement.
(l) The Company has not made or become obligated to make
or will, as a result of any event in connection with the Transactions, make or
become obligated to make any "excess parachute payment" as defined in Section
280G of the Code (without regard to subsection (b)(4) thereof).
4.8 Title to Assets and Related Matters. Except (a) as specified
in Schedule 4.8A, (b) as described in any notes to the Financial Statements, and
(c) for Permitted Encumbrances, the Company has good title to all of the
tangible Assets, free of all Encumbrances. All tangible Assets of the Company
are in good condition and repair and are free from material defect, subject to
normal wear and tear. Except as set forth on Schedule 4.8B, the Company owns or
has the right to use under valid leases or licenses currently in effect to all
assets necessary to conduct the Business in all material respects consistent
with past practices.
4.9 Real Property. Schedule 4.9 lists all real estate owned or
leased by the Company and used in the operation of the Business as well as any
other real estate that is in the possession of or leased by the Company (as
tenant or landlord) (collectively, the "Real Property"). The Company has made
available to Buyer a copy of its only current lease for Real Property (the "Real
Property Lease"). Except as set forth in Schedule 4.9, the Company has good
title to any owned Real Property listed therein, free and clear of any
Encumbrances other than Permitted Encumbrances. The Company is not in default
under the Real Property Lease. The Company is not in violation in any material
respects of any zoning, building or safety ordinance, Regulation or requirement
or other law or regulation applicable to the operation of owned or leased
properties, nor has it received within the past two years any notice or other
communication (in writing or otherwise) of any such violation of law in any
material respect with which it has not complied.
4.10 Subsidiaries. The Company does not own, directly or
indirectly, any interest or investment (whether equity or debt) in any
corporation, partnership, business, trust, joint venture or other legal entity.
The Company is not obligated to make nor is it
14
bound by any agreement or obligation to make any investment in or capital
contribution in or on behalf of any other entity.
4.11 Legal Proceedings; Compliance with Law; Governmental Permits.
(a) Except as disclosed in Schedule 4.11, there is no
Litigation that is pending or, to the Seller's knowledge, threatened against the
Company or any officer, director or employee of the Company in his or her
capacity as such. There has been no Default with respect to any Court Order
applicable to the Company. The Company is, and at all times since January 1,
2000 has been, in compliance with all applicable Regulations in all material
respects. Since November 15, 2001 and to the Seller's knowledge prior to such
time, the Company has not received written notice from any Authority of any
actual, alleged, possible or potential violation of any Regulation in any
material respect by the Company, other than in respect of any such actual,
alleged, possible or potential violation that has been cured, waived or
otherwise resolved. This Section 4.11(a) does not apply to any Environmental
Law, which is addressed by Section 4.12, or employee relations or ERISA issues,
which are addressed by Sections 4.14 and 4.15, respectively.
(b) The Company has obtained and holds, and is in
compliance in all material respects with, all governmental permits, licenses,
registrations, certificates of occupancy, approvals and other authorizations
that are required for the present operation of the Business.
4.12 Environmental Matters.
(a) Except as described on Schedule 4.12, the Company is,
and at all times has been, in compliance in all material respects with all
Environmental Laws applicable to the Company. Without limiting the foregoing, as
of the date of this Agreement, there is no Environmental Condition (i) at the
premises at which the Company currently conducts the Business or (ii) at any
other property that the Company currently owns, leases or operates, nor was
there an Environmental Condition at any premises previously owned, leased or
operated by the Company at any time that any such premises was owned, leased or
operated by the Company. The Company is in possession of all permits and other
governmental authorizations required under applicable Environmental Laws and is
in compliance in all material respects with the terms and conditions thereof.
The Company has not received any notice or other written communication, whether
from an Authority, court, citizens group, employee or otherwise, of any
Environmental Condition or that alleges that the Company is not in compliance
with any Environmental Law. To the Seller's knowledge, no current or prior owner
of any property currently or previously leased or possessed by the Company has
received any notice or other written communication, whether from an Authority,
court, citizens group, employee or otherwise, of any Environmental Condition or
that alleges that the Company or such current or prior owner, or any other
Person, is or was not in compliance with any Environmental Law in respect of the
ownership or use of the such property.
15
(b) There are no written reports, studies or assessments
that were prepared by any environmental consulting firm or similar organization
for the Company with respect to any Environmental Condition at any of such
premises or property referred to in Section 4.12(a), except for any such
reports, studies or assessments that have been made available to the Buyer.
4.13 Contracts and Commitments.
(a) Schedule 4.13(a) lists each Contract of the following
types to which the Company is a party, or by which it is bound, except for any
Contract that may be terminated by the Company on not more than 30 days' notice
without any material Liability and any Contract under which the executory
obligation of the Company involves an amount of less than the dollar amounts set
forth below for the indicated classes of Contracts (such excepted Contracts,
collectively, "Minor Contracts"):
(i) Contracts with any present or former
stockholder, director, officer, employee, partner, consultant or Affiliate of
the Company;
(ii) Contracts for the future purchase of, or
payment for, supplies or products, or for the lease of any Asset from, or the
performance of services by, a third party in excess of $25,000 in any individual
case, or any Contracts for the purchase of Inventory or products or performance
of services that involve an amount in excess of $25,000 with respect to any one
supplier or other party;
(iii) Contracts to sell or supply products or to
perform services that involve an amount in excess of $25,000 in any individual
case;
(iv) Contracts to lease to or to operate for any
other party any Asset that involve an amount in excess of $25,000 in any
individual case;
(v) Any notes, debentures, bonds, conditional
sale agreements, equipment trust agreements, letter of credit agreements,
reimbursement agreements, loan agreements or other Contracts for the borrowing
or lending of money (including loans to or from any officer, director, partner,
stockholder or Affiliate of the Company or any member of their immediate
families), agreements or arrangements for a line of credit or for a guarantee
of, or other undertaking in connection with, the indebtedness of any other
Person;
(vi) Any Contracts under which any lien,
mortgage, security interest, pledge or other encumbrance (other than Permitted
Encumbrances) exists with respect to any asset of the Company with a value of
$25,000 or more;
(vii) Contracts with any dealer, distributor,
sales representative or original equipment manufacturer to or through which the
Company made sales in the amount of $100,000 or more in 2002;
16
(viii) Any Contract that restricts the Company from
(A) participating or competing in any business or market, (B) freely setting
prices or terms for sales of the Company's products or services, or (C) engaging
in any business or market in any geographic area;
(ix) Any joint venture or partnership Contract
that has involved or is reasonably likely to involve a sharing of profits or
losses with any third party, other than any such Contract entered into in the
ordinary course of business;
(x) Any Contract by which the Company has
granted a power of attorney to any other party;
(xi) Any Contract containing a written warranty,
guaranty or other similar undertaking by the Company with respect to any
contractual obligation of any other Person, other than product and service
warranties provided in the ordinary course of business; and
(xii) Any other Contract under which the aggregate
consideration to be paid by the Company exceeds $100,000.
(b) Except as described in Schedule 4.13(b): (i) the
Company is not in Default under any Contract set forth on Schedule 4.13(a), and
(ii) the Company has not received any written communication, or to the Seller's
knowledge oral communication, from, or given any communication to, any other
party alleging that the Company or such other party, as the case may be, is in
Default under any such Contract, where (in case of each of (i) and (ii)) such
Default would result in damage to the Company in excess of $25,000.
4.14 Employee Relations. Except as described in Schedule 4.14A, the
Company is not (a) a party to, involved in or, to the Seller's knowledge,
threatened by, any employment related litigation or claim or labor or employee
dispute or unfair labor practice charge or (b) currently negotiating any
collective bargaining agreement, and the Company has not experienced any work
stoppage by reason of employee action during the last three years. The Company
is not a party to or bound by any collective bargaining agreement or other union
contract nor, to the Seller's knowledge, is any attempt currently being made to
organize any of the employees of the Company. Schedule 4.14B contains a list of
all written employment or consulting agreements to which the Company is
currently a party. The Company has made available to the Buyer a complete and
correct list of the names and salaries, bonus and other cash compensation of all
employees (including officers) whose total cash compensation for 2002 exceeded,
or whose total compensation for 2003 is expected to exceed, $10,000. Schedule
4.14C contains a list of all Employee Obligations, except for the obligations
identified on Schedule 7.6. The Company is in compliance in all material
respects with Regulations relating to employment, employment practices,
immigration, wages, hours, and terms and conditions of employment, and, to
Seller's knowledge, has correctly classified employees as exempt employees and
nonexempt employees under the Fair Labor Standards Act. The Company has taken
reasonable steps to ensure that all of the employees of the Company
17
are legally permitted to be employed by the Company in the US in their current
job capacities.
4.15 ERISA.
(a) Schedule 4.15(a) contains a complete list of all
Benefit Plans. The Company has made available to the Buyer (i) accurate and
complete copies of all Benefit Plan documents and all other material documents
relating thereto, including all summary plan descriptions, summary annual
reports and insurance contracts, and (ii) accurate summaries of all unwritten
Benefit Plans.
(b) Except as is set forth in Schedule 4.15(b), any
Benefit Plan that is intended to be qualified under Section 401(a) of the Code
and exempt from tax under Section 501(a) of the Code has been determined by the
Internal Revenue Service to be so qualified, and such determination remains in
effect and has not been revoked. Nothing has occurred since the date of any such
determination that is reasonably likely to affect adversely such qualification
or exemption.
(c) Neither the Company nor any entity under common
control with the Company maintains any defined benefit plan subject to Title IV
of ERISA or has any current or contingent obligation to contribute to any
multiemployer plan (as defined in Section 3(37) of ERISA). The Company has no
material Liability with respect to any Benefit Plan that is not reflected or
disclosed in or accrued for in the Financial Statements.
(d) Neither the Company nor any of its employees has any
administrative or fiduciary responsibility with respect to any Benefit Plan. The
Company is not a sponsor of any Benefit Plan.
(e) The Company has not ever been a participant in any
"prohibited transaction" within the meaning of Section 406 of ERISA with respect
to any employee pension benefit plan (as defined in Section 3(2) of ERISA) that
the Company sponsors as employer or in which the Company participates as an
employer which was not otherwise exempt pursuant to Section 408 of ERISA
(including any individual exemption granted under Section 408(a) of ERISA) or
that could result in an excise tax under the Code.
4.16 Intellectual Property. Schedule 4.16 contains a complete and
accurate list and summary description of all (i) registered patents, trademarks,
and copyrights owned by the Company, (ii) patent, trademark, and copyright
applications owned or filed by the Company, and (iii) Contracts relating
primarily to Intellectual Property (including licenses, sublicenses and similar
agreements) to which the Company is a party or by which the Company is bound,
except for any license implied by the sale of a product and perpetual, paid-up,
royalty-free and transferable license rights for "off-the-shelf" third-party
application software that the Company licenses, in any individual case, under a
license with a maximum payment obligation of less than $10,000 (the
"Off-the-Shelf-Software"). Except as set forth in Schedule 4.16, to the Seller's
knowledge, all Owned Intellectual Property and such Contracts are, and after
taking into account the
18
Transactions will continue to be valid and enforceable. The Company is not in
Default under any such Contracts, and, to the Seller's knowledge and except as
set forth on Schedule 4.16, there exists no event (including the consummation of
the Transactions) that has resulted in or could be reasonably expected to result
in a Default by the Company thereunder upon the giving of notice, the passage of
time or both. There are no disputes that are outstanding in writing that have
been received by the Company or, to the Seller's knowledge, threatened with
respect to any Owned Intellectual Property or Contract. Neither the manufacture,
marketing, license, sale or use as currently contemplated of any product
currently licensed or sold by the Company violates any Contract between the
Company and any third party nor, to the Seller's knowledge, does the Owned
Intellectual Property or any other Intellectual Property used by the Company
infringe any rights of any third party; and there is no pending or, to the
Seller's knowledge, threatened claim or Litigation contesting the validity,
ownership or right to use, sell, license or dispose of any Intellectual Property
of the Company, nor has the Company received any written notice, or to the
Seller's knowledge, oral notice, asserting that any Intellectual Property of the
Company or the proposed use, sale, license or disposition thereof conflicts or
will conflict with the rights of any third party, nor, to the Seller's
knowledge, is there any basis for any such assertion.
4.17 Absence of Certain Changes. Except as described in Schedule
4.17 or except as contemplated by or set forth in the Transaction Documents,
since December 28, 2002, the Company has not (y) suffered any Material Adverse
Effect, or (z) undertaken any of the actions set forth below, whether or not any
such action could reasonably be expected to have a Material Adverse Effect:
(a) purchased or redeemed any shares of capital stock of
the Company or authorized, declared or paid any dividend or other distribution
relating thereto;
(b) incurred any capital expenditures or indebtedness for
borrowed money relating to the Business, in each case in excess of $50,000 (in
the aggregate);
(c) made any sale, assignment or transfer of assets, or
any additions to or transactions involving any assets, other than those made in
the ordinary course of business, consistent with past practices;
(d) except for Permitted Encumbrances, mortgaged, pledged
or subjected to a lien, mortgage, security interest or pledge any of the Assets;
(e) entered into or materially amended any employment,
retention, severance, change in control or similar agreement or arrangement with
any current director, officer or stockholder of the Business;
(f) (i) established or materially amended any
profit-sharing, bonus, savings, deferred compensation, retirement, or other
employee compensation or Benefit Plan or practice maintained for the benefit of,
or (ii) materially increased the compensation payable to, or to become payable
to, or paid or accrued any bonus or deferred compensation for, or in respect of,
any current or former director, officer,
19
stockholder or employee of the Company, other than those increases normally made
in the ordinary course of business;
(g) disposed or agreed to dispose of any of the Assets
except sales of inventory or sales of any other Asset for an aggregate
consideration of $25,000 or more, in either case in the ordinary course of
business, consistent with past practices;
(h) canceled or forgiven any debts or claims except in
the ordinary course of business, consistent with past practices;
(i) materially modified or amended any Contract listed in
Schedule 4.13(a);
(j) made any material change in its tax practices,
principles or policies;
(k) made any payments to its Affiliates, intercompany
loans or transfers among such entities, other than payments and distributions
made in the ordinary course of business, consistent with past practices; or
(l) taken any action or omitted to take any action (or
committed to take any action or omit to take any action) that would result in
the occurrence of any of the foregoing.
4.18 Customers and Suppliers. The Company has reasonable working
relationships with all of its customers and suppliers. Schedule 4.18 specifies
the names of the customers of the Company that were the top 10 dollar-volume
customers of the Company for the year ended December 28, 2002. Except as
specified in Schedule 4.18, none of such top 10 customers has given the Company
any written notice, or to the Seller's knowledge oral notice, terminating,
canceling or threatening to terminate or cancel its customer relationship with
the Company. Schedule 4.18 specifies the names of the suppliers of the Company
that were the top 10 dollar-volume suppliers of the Company for the year ending
December 28, 2002. Except as specified in Schedule 4.18, none of such top 10
suppliers has given the Company any written notice, or to the Seller's knowledge
oral notice, terminating, canceling, or threatening to terminate or cancel its
supply relationship with the Company. To the Seller's knowledge, no supplier of
materials or services that are not currently available from another source has
provided notice that it intends to terminate its supplier relationship with the
Company.
4.19 Insurance. Schedule 4.19 sets forth a complete and accurate
list of all policies or other insurance arrangements relating to the Company.
Such policies include all policies that are required in connection with the
operation of the Business, by applicable laws or regulations or by the terms of
any Contract. The policies or binders concerning such insurance are in full
force and effect and no written notice, or to the Seller's knowledge oral
notice, of cancellation or termination has been received by the Company with
respect to any such policy or binder. There are no outstanding unsettled claims
relating to the Company under any such policy or binder that individually, or in
the aggregate, exceed the coverage of any such policy or binder. The proceeds
from
20
these policies benefit VIASYS or its Affiliates, not the Company, and the Buyer
shall have no claim to any such proceeds.
4.20 Product Liability. The Company does not have, and will not
have, any Liability (and there is no basis for any present or future action,
suit, proceeding, hearing, investigation, charge, complaint, claim or demand
against the Company giving rise to Liability) arising out of any injury to
individuals or property as a result of the ownership, possession or use of any
product or prototype of any product manufactured or delivered by the Company
other than a defibrillator prior to the Closing Date, except for Liability in an
aggregate amount that does not exceed the reserve for product liability
contained on the Balance Sheet.
4.21 Defibrillator Liability. The Company does not have, and will
not have, any Liability (and there is no basis for any present or future action,
suit, proceeding, hearing, investigation, charge, complaint, claim or demand
against the Company giving rise to Liability) arising out of any injury to
individuals or property as a result of the ownership, possession or use of any
defibrillator manufactured or delivered by the Company prior to the Closing
Date, except for Liability in an aggregate amount that does not exceed the
reserve for product liability contained on the Balance Sheet.
4.22 Corporate Records. Except as set forth in Schedule 4.22: the
minute books of the Company contain copies of its certificate of incorporation,
bylaws and minutes of meetings, resolutions and other proceedings of its Board
of Directors and stockholder, all of which are accurate and complete. The stock
record books of the Company are also accurate and complete. The Company has
devised and maintains a system of internal accounting controls sufficient to
provide reasonable assurances that (a) transactions are executed in accordance
with management's general or specific authorization; (b) transactions are
recorded as necessary (i) to permit preparation of financial statements in
conformity with generally accepted accounting principles or any other criteria
applicable to such statements, and (ii) to maintain accountability for assets,
and (c) the amount recorded for assets on the books and records of the Company
is compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
4.23 No Finder's Fees. Except for The Nassau Group, Inc., no Person
retained by the Company, the Seller or any Affiliate of the Seller is or will be
entitled to any commission or finder's or similar fee in connection with the
Transactions.
4.24 Books and Records. The books, records and accounts of the
Company that have been maintained since November 15, 2001 (a) are in all
material respects true, complete and correct, (b) have been maintained in
accordance with reasonable commercial practices, and (c) are stated in
reasonable detail and accurately and fairly reflect the transactions and
dispositions of the assets of the Company in all material respects.
4.25 Interested Party Transactions. To the Seller's knowledge, no
officer or director of the Company or the Seller or any Affiliate of the Seller
has, either directory or
21
indirectly, an interest in (i) any Person that purchases from or sells, licenses
or furnishes to the Company any goods, property, technology or intellectual or
other property rights or services, or (ii) any Contract other than a Minor
Contract with the Company.
4.26 Product Development. The Company has substantially completed
its internal development phase with respect to the Angel Products, and the
Company currently expects to begin accepting orders for the Angel Products in
April of 2003. The Company has developed its manufacturing plan for the
production of the Angel Products in commercial volumes consistent with the level
of orders for the Angel Products projected to be received by the Company during
the three months ending June 30, 2003, and the Company currently believes that
it has the capacity to produce the Angel Products in such volumes. No
representation or warranty is made in this Section 4.26 as to: (a) the actual
level of orders for the Angel Products that will be received, (b) the Company's
ability to produce the Angel Products at levels above the Company's internal
level of projected sales for the three months ending June 30, 2003, or (c) the
actual shipment dates for the Angel Products. Furthermore, the preceding
representation and warranty as to the Company's production capacity assumes that
the Company will, after the Closing, continue to operate its production
processes in the ordinary course consistent with past practices. Furthermore, no
assurances are being made as to the foregoing matters to the extent that the
actions or omissions of the Buyer, the Company or third parties, intervening
events, or typical development phase issues may or may not occur between the
date hereof and a later date and may affect the outcome of such matters.
Notwithstanding anything to the contrary contained in this Agreement, the Seller
makes no representation or warranty in this Section 4.26 or otherwise that the
Angel Products are free of bugs, defects or other errors.
5. Representations and Warranties of the Seller Relating to the Seller.
The Seller represents and warrants to the Buyer, as to itself only, as
follows:
5.1 Corporate. The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the state in which it was
incorporated.
5.2 Authorization. The Seller has the requisite power and
authority to execute and deliver the Transaction Documents to which it is a
party and to perform the Transactions to be performed by it. Such execution,
delivery and performance by the Seller has been duly authorized by all necessary
corporate action. The respective Transaction Documents to which the Seller is or
will be a party constitute or will constitute valid and binding obligations of
the Seller, enforceable in accordance with their terms, except to the extent
that (a) enforcement may be limited by or subject to any bankruptcy, insolvency,
reorganization, moratorium, or similar law as is now or hereinafter in effect
relating to creditors' rights generally, and (b) the remedy of specific
performance and injunctive and other forms of equitable relief are subject to
certain equitable defenses and to the discretion of the court or other Authority
or Person before which any proceeding therefor may be brought.
22
5.3 Validity of Contemplated Transactions. Except for the consents
specified in Schedule 5.3, neither the Transactions nor the execution and
delivery by the Seller of the respective Transaction Documents to which the
Seller is or will be a party will require any filing, consent or approval under,
conflict with, or result in or constitute a Default under (a) any Regulation or
Court Order to which the Seller is subject, (b) any provision of the certificate
of incorporation or bylaws of the Seller, or (c) any material Contract to which
Seller is a party or by which its assets may be bound.
6. Representations and Warranties of the Buyer Relating to the Buyer.
The Buyer represents and warrants to the Seller, as to itself only, as
follows:
6.1 Corporate. The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the state in which it was
incorporated.
6.2 Authorization. The Buyer has the requisite power and authority
to execute and deliver the Transaction Documents to which it is a party and to
perform the Transactions to be performed by it. Such execution, delivery and
performance by the Buyer have been duly authorized by all necessary corporate
action. The respective Transaction Documents to which the Buyer is or will be a
party constitute, or will constitute upon their execution and delivery, valid
and binding obligations of the Buyer, enforceable in accordance with their
terms, except to the extent that (a) enforcement may be limited by or subject to
any bankruptcy, insolvency, reorganization, moratorium, or similar law as is now
or hereinafter in effect relating to creditors' rights generally, and (b) the
remedy of specific performance and injunctive and other forms of equitable
relief are subject to certain equitable defenses and to the discretion of the
court or other Authority or Person before which any proceeding therefor may be
brought.
6.3 Validity of Contemplated Transactions. Neither the
Transactions nor the execution and delivery by the Buyer of the Transaction
Documents to which it is or will be a party will require any filing, consent or
approval under, conflict with, or result in or constitute a Default under (a)
any Regulation or Court Order to which the Buyer is subject, (b) any provision
of the certificate of incorporation or bylaws of the Buyer, or (c) any material
Contract to which the Buyer is a party or by which any of its assets may be
bound. Neither the Buyer's entering into the Transaction Documents to which it
is a party nor its performance of the Transactions will give rise to, or trigger
the application of, any rights of any third party that would come into effect
upon the performance of the Transactions.
6.4 Finder's Fees. No Person retained by the Buyer is or will be
entitled to any commission or finder's or similar fee in connection with the
Transactions.
6.5 Cessation of Defibrillator Product Line. The Buyer currently
intends to cause the Company to cease the manufacture and sales of any
defibrillator products.
23
7. Certain Covenants.
7.1 Post-Closing Cooperation with respect to Distribution
Agreements. Following the Closing, the Seller shall, and the Buyer shall and
shall cause the Company to, cooperate in undertaking the removal of the Company
as a party to agreements where the Company is a party along with VIASYS or one
or more of VIASYS' Affiliates, as soon as practicable after the Closing. The
Seller, on one hand, and the Buyer or the Company as caused by the Buyer, on the
other hand, shall seek to provide notice to the affected distributors and
otherwise complete such removal in a manner that does not breach the affected
distribution agreement. To the extent that the Company remains a party to any
such distribution agreement during a limited period following the Closing while
notice is provided to the distributor, or the distributor's consent to the
removal is otherwise being sought or obtained, the Seller and the Buyer shall
undertake to remit promptly to the other any payment that either (and, in
addition, in the case of the Buyer, the Company) may receive under such
distribution agreement for services rendered or products provided by the
Company, on the one hand, or VIASYS or its Affiliates, on the other hand, after
the Closing.
7.2 Public Announcements. Each Party shall consult with the other
before issuing any press release or making any public statement with respect to
this Agreement and the Transactions and, except as may be required by applicable
law or stock exchange regulations, will not issue any such press release or make
any such public statement prior to such consultation. Each Party shall comply
with all reasonable requests of the other Party made pursuant to the
consultation required by this Section.
7.3 Expenses; Audit Cooperation. If the Transactions are
consummated, the Seller shall reimburse the Buyer for 50% of the audit fees
actually charged by Ernst & Young LLP or such other auditor for the Buyer's
initial audit of the Company (the "Audit"), up to an amount equal to the
quotation of Ernst & Young LLP that was previously communicated to the Seller.
Excepting only the foregoing reimbursement obligation, and whether or not the
Closing occurs, each Party shall pay its own fees and expenses incident to
preparing for, entering into and carrying out this Agreement and the
Transactions. The Seller and its Affiliates will cause their management to
cooperate in delivering a customary management representation letter to Ernst &
Young, or such other auditor of the Company, in connection with the Audit
concerning the period to which the Audit relates and during which the Seller
owned the Company.
7.4 Further Assurances. The Seller and the Buyer agree that,
subsequent to the Closing Date, at the request of the other Party, they will
execute and deliver, or cause to be executed and delivered, to the other Party
such further instruments and take such other action as may be necessary to carry
out the Transactions.
7.5 Continued Installation and Field Service by VIASYS.
(a) Transition Services. The Seller or its Affiliates
will continue to provide installation and field service to the Company for the
Company products (the "Transition Services"), consistent with past practices,
for a period beginning on the
24
Closing Date and ending on the sooner of (i) the date that is 12 months
following the Closing Date and (ii) the date that the Buyer notifies the Seller
that it would like to terminate the provision of the Transition Services;
provided that the Buyer shall provide at least 30 days' notice of termination
unless otherwise agreed to by the Buyer and the Seller.
(b) Payment. The Seller will charge the Buyer for the
Transition Services at the applicable rates that the Seller charged the Company
prior to the Closing Date. The Seller shall invoice the Buyer monthly for such
services, and the Buyer shall pay the Seller promptly (but no later than 45 days
following its receipt of such invoice). Interest at the rate of the lesser of
12% per annum or the highest rate permitted by law shall accrue on any late
payments.
(c) Personnel. The Transition Services shall be provided
through such of the personnel of the Seller or its Affiliates as the Seller may
elect from time to time; provided that Seller shall have the right, upon the
prior consent of the Buyer, not to be unreasonably withheld, conditioned or
delayed, to contract with unaffiliated third parties to perform any or all of
the Transition Services.
(d) Termination of Transition Services by the Seller. The
Seller may terminate its obligation to provide the Transition Services at any
time by written notice to the Buyer (i) following any criminal or negligent act,
or other gross negligence or willful misconduct by the Buyer or the Company or
any of their respective officers, directors, subsidiaries, affiliates,
employees, consultants, contractors, subcontractors or agents in connection with
the provision of services pursuant to this Section 7.5 (that Seller believes in
good faith would result in a Material Adverse Effect on the Seller), (ii)
following any material breach by the Buyer of its obligations under this Section
7.5 which is not cured within 30 days after written notification thereof to the
Buyer, (iii) if the Buyer or the Company becomes insolvent, makes any assignment
for the benefit of its creditors, or is placed in receivership, liquidation or
bankruptcy, (iv) upon the dissolution of the Buyer or the Company and the
winding up of its affairs, or (v) upon sale by the Buyer or the Company of all
or substantially all of its assets or upon a change of control of the Buyer or
the Company (whether by merger, by sale of a majority of the equity interests in
the Buyer or the Company or otherwise). If the Seller's obligation to provide
the Transition Services under this Section 7.5 is terminated for any reason, the
Buyer shall pay to the Seller all amounts that have accrued under this Section
7.5 herein arising out of the services provided to the Company by the Seller on
or prior to such termination.
(e) Non-Solicitation of Employees. The Buyer agrees not
to, and agrees to cause the Company not to, directly or indirectly, solicit the
employment of the employees of the Seller or its Affiliates that provide the
Transition Services, or otherwise induce or incentivise any of such employees to
leave the employment of the Seller or its Affiliates, unless prior to any such
solicitation of employment such employee (i) was discharged by the Seller or its
Affiliates or (ii) voluntarily terminated his or her relationship with the
Seller or such Affiliate; provided, however, this Section 7.5(e) shall not apply
to any general solicitation of employment; and provided, further, that Buyer
25
shall not be restricted in hiring any such person who responds to any such
general solicitation.
(f) Indemnification of the Seller. The Buyer shall
defend, indemnify and hold harmless the Seller and its Affiliates, and their
respective officers, directors, employees, consultants, contractors or agents,
and their respective permitted successors and assigns (collectively, the "Seller
Group"), for, from and against any Liabilities that any member of the Seller
Group may sustain or incur arising out of or based on the performance or
nonperformance of Seller's obligations pursuant to Section 7.5 of this
Agreement; except for, in any case, any Liabilities arising from or out of the
gross negligence or willful misconduct of any member of the Seller Group.
(g) Disclaimer; Limitations.
(i) SELLER SHALL NOT BE LIABLE TO THE BUYER OR
ANY OTHER PARTY WITH RESPECT TO THE TRANSITION SERVICES FOR ANY INDIRECT,
SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES SUSTAINED OR INCURRED BY
SUCH OTHER PARTY, INCLUDING DAMAGES FOR LOST PROFITS, EVEN IF SUCH PARTY IS
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND EVEN IF SUCH PARTY IS ACTING WITH
NEGLIGENCE.
(ii) EXCEPT AS TO RESPONSE TIME AS SET FORTH
ABOVE IN SECTION 7.5(a), SELLER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS
OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, OR NON-INFRINGEMENT WITH RESPECT TO THE TRANSITION SERVICES. FURTHER,
THE SELLER MAKES NO REPRESENTATIONS OR WARRANTIES REGARDING THE NECESSITY,
APPROPRIATENESS, SUFFICIENCY OR QUALITY OF ANY OF THE SERVICES BEING PROVIDED
HEREUNDER OR OTHERWISE. TRANSITION SERVICES PROVIDED UNDER THIS AGREEMENT ARE
BEING PROVIDED ON AN "AS IS, WHERE IS" BASIS. NEITHER THE SELLER NOR ANY OF ITS
SUBSIDIARIES OR AFFILIATES, NOR ANY OF THEIR RESPECTIVE EMPLOYEES, OFFICERS,
PARTNERS, DIRECTORS, CONTRACTORS, SUBCONTRACTORS OR AGENTS WARRANT THAT THE
TRANSITION SERVICES WILL BE UNINTERRUPTED OR ERROR FREE, NOR DO ANY OF THESE
PARTIES WARRANT THAT CERTAIN RESULTS MAY OR WILL BE OBTAINED BY THE BUYER IN
CONNECTION WITH THE SERVICES RENDERED HEREUNDER OR THAT SUCH SERVICES ARE
NECESSARY, APPROPRIATE, SUFFICIENT OR OF A PARTICULAR QUALITY LEVEL.
(h) THE BUYER'S SOLE REMEDY FOR BREACH OF THIS
SECTION 7.5 SHALL BE TO XXX THE SELLER FOR BREACH OF CONTRACT, AND, IN SUCH
EVENT (UNLESS THE SELLER FAILS TO PERFORM THE TRANSITION SERVICES), THE SELLER'S
LIABILITY SHALL BE LIMITED TO THE AMOUNT THE SELLER WAS PAID FOR THE TRANSITION
SERVICES. IF THE SELLER FAILS TO PERFORM THE TRANSITION SERVICES AFTER
26
REASONABLE NOTICE FROM THE BUYER, THE BUYER'S DAMAGES SHALL BE THE AMOUNT
REASONABLY INVOICED FOR THE SAME BY A THIRD PARTY OR THE COST OF SUCH SERVICES
IF PROVIDED BY THE COMPANY OR THE BUYER. THE INDEMNIFICATION PROVISIONS
CONTAINED IN SECTIONS 8.1 AND 8.2 OF THIS AGREEMENT SHALL NOT APPLY TO A BREACH
BY THE SELLER OF THIS SECTION 7.5.
(i) Force Majeure. The Seller shall have no liability
with respect to the Transition Services as a result of any failure of Seller to
perform any of its obligations hereunder if such failure is due to any
circumstance beyond its control (an "Event of Force Majeure"), including any
requisition by any Authority, act of war or terrorism, strike, boycott, lockout,
picketing, riot, sabotage, civil commotion, insurrection, epidemic, disease, act
of God, fire, flood, accident, explosion, earthquake, storm, failure of public
utilities or common carriers, mechanical failure, embargo, or prohibition
imposed by any governmental body or agency having authority over the party;
provided that at such time as an Event of Force Majeure no longer exists, the
obligations of the Seller hereto shall be reinstated, and this Agreement shall
continue in full force and effect. Following an Event of Force Majeure, the
Seller shall give prompt notice thereof to the Buyer, and the Seller shall use
commercially reasonable efforts to minimize the duration and consequences of,
and to eliminate, any such Event of Force Majeure.
(j) Independent Contractors. In all matters relating to
this Section 7.5, (a) each party shall be solely responsible for the acts of its
employees, and employees of one party shall not be considered employees of the
other party, and (b) no party shall have any right, power or authority to create
any obligation, express or implied, on behalf of the other party. Nothing in
this Section 7.5 is intended to create or constitute a joint venture or
partnership between the parties hereto or persons referred to herein.
(k) Warranty and Other Contractual Services. Following
the Closing Date, the Buyer will cause the Company to perform warranty and field
service and such other similar services that it is contractually required to
provide for products sold by the Company prior to the Closing Date (the "Product
Warranty Services"). To the extent that the costs incurred by the Company in
connection with the performance of the Product Warranty Services after the
Closing Date exceed $150,000, such costs shall be borne by the Seller. For
purposes of this Section 7.4(k), the Company's "costs" shall constitute the sum
of any amounts paid by the Buyer to the Seller pursuant to Section 7.4 and the
actual internal costs of the Company or Buyer in providing the Product Warranty
Services, as evidenced by a reasonable record of time spent by employees and
agents, and out-of-pocket expenses incurred by the Company or Buyer.
7.6 Employee Severance and Retention Obligations. The Seller or
one of its Affiliates will be responsible for paying the retention bonuses and
severance amounts due to employees of the Company that are identified in
Schedule 7.6. Following the Closing Date, the Company shall retain and assume,
and the Company and the Buyer shall defend, indemnify and hold harmless Seller,
VIASYS and their Affiliates from and against, any further stay bonuses or
severance obligations to employees of the Company that are identified as such on
Schedule 4.14C (the "Employee Obligations").
27
8. Indemnification.
8.1 Indemnification by the Seller. From and after the Closing
Date, the Seller shall indemnify and hold harmless the Buyer in accordance with
this Section 8.1 from and against any Damages that the Buyer suffers as a result
of any breach of any representation, warranty, covenant or agreement of the
Seller contained in this Agreement. For purposes of this Section 8.1, the term
"Damages" means any Liabilities (after taking into account related insurance
recoveries and tax benefits net of the taxes imposed on indemnification
payments), including related reasonable attorneys', consultants' and other
professional fees and disbursements incurred by the Buyer, but excluding any
Liability included or accrued for in the Financial Statements or the Closing
Date Balance Sheet, to the extent so included or accrued. The right to
indemnification under this Section 8.1 will not be affected by any investigation
conducted, or knowledge acquired by, the Buyer regarding the Sellers'
representations and warranties.
8.2 Indemnification by the Buyer. From and after the Closing Date,
the Buyer shall indemnify and hold harmless the Seller in accordance with this
Section 8.2 from and against any Damages that the Seller suffers as a result of
any breach of any representation, warranty, covenant or agreement of the Buyer
contained in this Agreement. For purposes of this Section 8.2, the term
"Damages" means any Liabilities (after taking into account related insurance
recoveries and tax benefits net of the taxes imposed on indemnification
payments), including related reasonable attorneys', consultants' and other
professional fees and disbursements incurred by the Seller. The right to
indemnification under this Section 8.2 will not be affected by any investigation
conducted, or knowledge acquired by, the Seller regarding the Buyer's
representations and warranties.
8.3 Procedure for Claims.
(a) If an indemnified party desires to seek
indemnification under Section 8.1 or 8.2 (such party, the "Indemnified Party"),
the Indemnified Party shall give notice to the indemnifying party (the
"Indemnifying Party") by sending such party a claim notice (a "Claim Notice")
prior to the applicable Expiration Date specified below, which notice shall
describe in reasonable detail the nature of the claim and the amount of the
Damages incurred by the Indemnified Party. If (i) the Claim Notice is being sent
under Section 8.1 and (ii) the Indemnification Escrow Funds have not been
released in full pursuant to the Escrow Agreement, the Indemnified Party shall
also send a copy of the Claim Notice to the Escrow Agent, and such notice shall
state that the claim is being made against the Indemnification Escrow Funds only
(i.e., not against the Working Capital Adjustment Escrow Funds). The
Indemnifying Party shall respond to any Claim Notice (a "Claim Response") within
30 Business Days (the "Response Period") after the date that the Claim Notice is
received by the Indemnifying Party. Any Claim Notice or Claim Response shall be
given in accordance with the notice requirements set forth in Section 10.8, and
any Claim Response shall specify whether or not the claim described in the
related Claim Notice is disputed. If the Buyer shall be the Indemnified Party
with respect to a claim under Section 8.1, it shall first request payment of the
related Damages from the Indemnification Escrow Funds under the Escrow
Agreement, but only to the
28
extent that the Indemnification Escrow Funds are then being held by the Escrow
Agent and are not subject to other claims for indemnification in excess of the
amount of such funds, and thereafter the Buyer shall be entitled to payment
directly from the Seller. If the Indemnifying Party fails to give a Claim
Response within the Response Period or does not dispute the claim described in a
Claim Notice, then the Indemnified Party may pursue whatever legal remedies may
be available to recover the Damages as to which the Indemnified Party is seeking
indemnification.
(b) Notwithstanding any other part of this Section 8, (i)
the Buyer shall be entitled to indemnification under Section 8.1 only when the
aggregate of all Damages to the Buyer from all items as to which it would
otherwise be entitled to indemnification under Section 8.1 exceeds $100,000 (the
"Basket"), and then after the Basket has been exceeded Seller shall be
responsible for all Damages based thereon from the first dollar, without regard
to the Basket; (ii) the Seller shall not be liable, in the aggregate, under
Section 8.1 or otherwise to Buyer for an amount in excess of sixty percent (60%)
of the Purchase Price for claims for which a Claim Notice is duly given to
Seller in accordance with Section 10.8 on or before December 31, 2003, or forty
percent (40%) of the Purchase Price for claims for which a Claim Notice is duly
given to Seller in accordance with Section 10.8 after December 31, 2003
(excluding any claims made under Section 3.3, which are subject to the
procedures outlined in such Section, and not this Section 8); and (iii) the
Buyer shall not be entitled to seek indemnification under Section 9.1 from the
Seller for any breach of a representation or warranty, or breaches of a
representation or warranty that arise from the same related facts, that involves
Damages of less than $7,500 per breach or group of related breaches. However,
notwithstanding anything to the company contained in this Section 8.3(b), (I)
the Seller shall be liable to the full extent of any Damages suffered by Buyer
based on a breach of Sections 4.4 (regarding Capitalization and Stock
Ownership), 4.7 (regarding Taxes), 4.12 (regarding Environmental Matters) and
4.21 (regarding Defibrillator Liability); and (II) as a consequence, the claims
made pursuant to such Sections 4.4, 4.7, 4.12 and 4.21 shall not be counted or
aggregated for purposes of determining whether the Basket has been exceeded.
(c) Except for any injunctive relief to which a Party may
be entitled, the indemnification remedies provided in this Section 8 shall
constitute the exclusive remedy of the Parties after the Closing for any claim
in connection with this Agreement or any other Transaction Documents, including
any claim for any Damages resulting from a breach by the Buyer, on one hand, or
the Seller, on the other hand, of any representation, warranty, covenant or
agreement contained in this Agreement, and neither any Party, any Affiliate of
any Party, nor any other Person shall be entitled to make any claim or otherwise
recover Damages from the other Party except as expressly provided under this
Section 8, provided that the limitations of this Section 8.3(c) shall not apply
to claims based on fraud.
(d) The Indemnification Escrow Funds shall only be
available to satisfy claims against Seller under Section 8.1 of this Agreement
(but not claims against Seller under Section 3.3 of this Agreement). The Working
Capital Adjustment Escrow Funds shall only be available to satisfy claims
against Seller under Section 3.3 of this
29
Agreement and shall be disbursed in full following the final resolution of the
Working Capital Adjustment in accordance with Section 3.3. The Escrow Agreement
shall contain a statement to this effect.
8.4 Expiration Dates. Any claim for indemnification under Section
8.1 or 8.2 shall be made by giving a Claim Notice under Section 8.3 on or before
the applicable Expiration Date specified below in this Section 8.4, or the claim
under Section 8.1 or 8.2 shall be invalid. The following claims shall have the
following respective "Expiration Dates": (a) the third anniversary of the
Closing Date, with respect to any claim for indemnification with respect to a
breach of the representations and warranties in Section 4.7 (regarding Taxes),
(b) until the statute of limitations has run and relieved Liability from the
Seller for indemnification under Sections 4.4 (regarding Capitalization and
Stock Ownership), 4.12 (regarding Environmental Matters) and 4.21 (regarding
Defibrillator Liability), and (c) the date that is 18 months after the Closing
Date, with respect to any other claim for indemnification under Section 8.1 or
8.2.
8.5 Third Party Claims. If an Indemnified Party desires to seek
indemnification under Section 9.1 or 9.2 with respect to any actions, suits or
other administrative or judicial proceedings (each, an "Action") that may be
instituted by a third party, the Indemnified Party shall give the Indemnifying
Party prompt notice of a third party's institution of such Action (but within no
later than 20 days), provided, however, that the failure to notify the
Indemnifying Party will not relieve the Indemnifying Party of any liability that
it may have to any Indemnified Party, except to the extent that the Indemnifying
Party demonstrates that the defense of such action is prejudiced by the
Indemnified Party's failure to give such notice. Without limiting the foregoing,
the Indemnified Party shall notify the Indemnifying Party of such Action in
writing specifically referring to this Section 8.5 and in reasonable detail and
shall include with such notice copies of the notices and documents (including
court papers) served on or received by such party from such third party. Upon
receipt of such notice, the Indemnifying Party shall be entitled to participate
in such Action, to assume the defense thereof with counsel reasonably
satisfactory to the Indemnified Party, and to settle or compromise such Action,
provided that such settlement or compromise shall not be effected without the
consent of the Indemnified Party unless (a) there is no finding or admission of
any violation by the Indemnified Party, or any of its Affiliates, of any
Regulation or of any rights of any Person and no effect on any other claims that
may be made against the Indemnified Party or its Affiliates, and (b) the sole
relief provided is monetary damages that are to be paid in full by the
Indemnifying Party. After notice to the Indemnified Party of the Indemnifying
Party's election to assume the defense of such Action, the Indemnifying Party
shall not be liable to the Indemnified Party under Section 8.1 or 8.2 for any
legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof, for so long as it diligently conducts such
defense. If the Indemnifying Party does not elect to assume the defense of such
Action within 15 Business Days of the Indemnified Party's delivery of notice of
such Action, the Indemnified Party shall be entitled to assume the defense
thereof. If the Indemnifying Party assumes such defense, the Indemnified Party
shall have the right to participate in the defense thereof and to employ counsel
(not reasonably objected to by the Indemnifying Party), at its own expense,
separate from the counsel employed by the
30
Indemnifying Party, it being understood that the Indemnifying Party shall
control such defense. The Indemnifying Party shall be liable under this Section
8.5 for the fees and expenses of counsel employed by the Indemnified Party only
for any period during which the Indemnifying Party has failed to assume the
defense thereof. Unless it has been conclusively determined through a final,
non-appealable order of a court of competent jurisdiction (or settlement
tantamount thereto) that the Indemnifying Party is not liable to the Indemnified
Party under this Section 8.5, the Indemnified Party shall act reasonably and in
accordance with its good faith business judgment with respect to such defense,
and the Indemnified Party shall not settle or compromise any such Action without
the consent of the Indemnifying Party, which consent shall not be unreasonably
withheld or delayed. The Indemnifying Party and the Indemnified Party shall
render to each other such assistance as may reasonably be requested in order to
ensure the proper and adequate defense of any such Action, including making
employees available on a mutually convenient basis to provide additional
information and explanation of any relevant materials or to testify at any
proceedings relating to such Action. Notwithstanding the foregoing, if an Action
involves a claim for an injunction or other equitable relief that the
Indemnified Party determines in good faith could, if granted against it or an
Affiliate, reasonably be expected to materially adversely affect the Indemnified
Party (including, if the Indemnified Party is the Buyer, the Buyer's ability to
conduct the Business), the Indemnified Party may, by notice to the Indemnifying
Party, assume the exclusive right to defend, compromise, or settle such Action,
but the Indemnifying Party will not be bound by any determination of an Action
so defended or any compromise or settlement effected without its consent (which
may not be unreasonably withheld).
8.6 Procedure for Indemnification Claims. The indemnification
required by Section 8.1 or 8.2 shall be made only if (a) the Indemnifying Party
admits, including by settling a claim, that an indemnification obligation is
owing hereunder, or (b) a dispute about such indemnification is resolved in
accordance with Section 8.3; and then only as and when bills are received or
Damages are actually incurred or paid by the Indemnified Party.
9. Tax Matters.
9.1 Liability for Taxes.
(a) All transfer, documentary, sales, use, stamp,
registration and other similar Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement on the transfer of Shares
(including, if applicable, any transfer tax imposed in any state or subdivision)
("Transaction Taxes"), shall be paid by apportioned between and paid equally by
the Buyer and the Seller when due, and the Party responsible for making any
required filing under applicable law will, at its own expense, file all
necessary Tax Returns and other documentation with respect to all such
Transaction Taxes and, if required by applicable law, the other Party will join
in the execution of any such Tax Returns and other documentation.
(b) The Seller shall be liable for and indemnify the
Buyer or the Company, as the case may be, for all Taxes imposed on the Company,
or for which the
31
Company may otherwise be liable (including liabilities pursuant to Treasury
Regulation Section 1.1502-6(a) or any similar provision of any state, local or
foreign law), for any taxable year or period of the Company that ends on or
before the Closing Date (such periods referred to as "Pre-Closing Tax Periods"
and Taxes for such periods referred to as "Pre-Closing Taxes"), and, with
respect to any portion of a taxable year or period beginning before and ending
after the Closing Date (such periods referred to as "Straddle Periods" and Taxes
for such periods referred to as "Straddle Taxes"), for Taxes attributable to the
portion of such Straddle Period ending on and including the Closing Date;
provided, however, that Seller shall have no obligation to make any payment
pursuant to this Section 9.1, until the amounts that would otherwise be payable
pursuant to this Section 9.1 (apart from this proviso) exceed the reserve for
Taxes on the Financial Statements, and provided further that any payment
pursuant to this Section 9.1 shall be net of tax benefits available to the party
to whom such payment is made.
(c) Buyer shall be liable for, and Buyer shall indemnify
Seller and its affiliates for, all Taxes imposed on Seller or any of its
affiliates with respect to the Company for any taxable year or period that
begins after the Closing Date (such periods referred to as "Post-Closing Tax
Periods" and such taxes referred to as "Post-Closing Taxes") and, with respect
to Taxes for a Straddle Period, the portion of Taxes for such Straddle Period
beginning after the Closing Date.
(d) For purposes of this Section 9.1, whenever it is
necessary to determine the liability for income taxes of the Company for a
portion of a Straddle Period, the determination of the income taxes for the
portion of the Straddle Period ending on, and the portion of the Straddle Period
beginning after, the Closing Date, shall be determined by assuming that Company
had a taxable year or period that ended on the Closing Date. To the extent
permitted by applicable law, the Parties agree to elect to treat the Closing
Date as the last day of the taxable year. In the case of any Taxes that are
imposed on a periodic basis and are payable for a taxable period that includes
(but does not end on) the Closing Date, the portion of such Tax that relates to
the Pre- Closing Tax Period shall (i) in the case of any Taxes other than Taxes
based upon or related to income or receipts, be deemed to be the amount of such
Tax for the entire taxable period multiplied by a fraction, the numerator of
which is the number of days in Pre-Closing Tax Period and the denominator of
which is the number of days in the entire taxable period, and (ii) in the case
of any Tax based upon or related to income or receipts, be deemed equal to the
amount that would be payable if the relevant taxable period ended on the Closing
Date. All determinations necessary to give effect to the foregoing allocations
shall be made in a manner consistent with prior practice of the Company.
(e) Seller shall be responsible for and shall pay any
income, franchise or similar Taxes arising as a result of any Code Section
338(h)(10) election or any comparable or resulting election under state law
filed by Buyer or Seller.
(f) Any Tax refunds that are received by the Company or
Buyer and any amounts credited against Taxes to which Buyer or the Company
become entitled that relate to Taxes for Pre-Closing Tax Periods shall be for
the account of Seller unless such refund is a result of a carryback of an item
that arose in a Post-Closing Tax Period, and
32
Buyer shall pay over to Seller any such refund or the amount of any such credit
within 15 days after receipt or entitlement thereto.
9.2 Responsibility for Tax Matters. The following provisions shall
govern the allocation of responsibility as between the Buyer and the Seller for
certain Tax matters following the Closing Date:
(a) Responsibility for Filing Tax Returns for Periods
through Closing Date. The Seller shall include the income or loss of the Company
(including any deferred items triggered into income by Treas. Reg. Section
1.1502-13 and any excess loss account taken into income under Treas. Reg.
Section 1.1502-19) on the consolidated federal income Tax Returns (and any
combined reports or equivalent state or local Tax Returns) of the Affiliated
Group for all periods through the Closing Date and shall pay any income Taxes
attributable to such income. For all taxable periods ending on or before the
Closing Date, Seller shall cause the Company to join in the Affiliated Group's
consolidated federal income Tax Return (and any combined reports or equivalent
state or local Tax Returns) and, in jurisdictions requiring separate reporting
from such Affiliated Group, to file separate company state and local income tax
returns. All such Tax Returns shall be prepared and filed in a manner consistent
with prior practice, except as required by a change in applicable law. The Buyer
shall cause the Company to furnish information to the Seller as reasonably
requested by the Seller to allow the Seller to satisfy its obligations under
this Section in accordance with past custom and practice. The Company and Buyer
shall consult and cooperate with the Seller as to any elections to be made on
returns of the Company for periods ending on or before the Closing Date. The
Buyer shall cause the Company to file income Tax Returns for all periods, other
than periods ending on or before the Closing Date, and to pay all Taxes, subject
to Sections 9.1 and 9.2(b), due under such Tax Returns.
(b) Tax Returns for Periods Beginning Before and Ending
After the Closing Date. The Buyer shall prepare or cause to be prepared and file
or cause to be filed any Tax Returns of the Company for the Straddle Period. The
Buyer shall permit Seller to review and comment on each such Tax Return
described in the preceding sentence prior to filing and shall make such
revisions to such Tax Returns as are reasonably requested by Seller. The Seller
shall pay to the Buyer, within 15 days after the date on which Taxes are paid
for the Company with respect to such periods, an amount equal to the portion of
such Taxes that relates to the portion of such taxable period ending on the
Closing Date, to the extent such Taxes are not reflected in the reserve for
Taxes (rather than any reserve for deferred Taxes established by such entity to
reflect timing differences between book and Tax income) shown on the face of the
Closing Date Balance Sheet, or otherwise adjusted for in the post-closing
purchase price adjustment pursuant to Section 3.3.
9.3 Cooperation on Tax Matters.
(a) The Buyer and the Company, on one hand, and the
Seller, on the other hand, shall cooperate, as and to the extent reasonably
requested by any of the other Parties, in connection with the filing of Tax
Returns pursuant to this Section 9 and any
33
audit, litigation or other proceeding with respect to Taxes. Such cooperation
shall include the retention and (upon another party's request) the provision of
records and information that is reasonably relevant to filing of Tax Returns and
any such audit, litigation or other proceeding and making employees available on
a mutually convenient basis to provide additional information and explanation of
any material provided hereunder. The Buyer and the Seller agree (i) to retain
all books and records with respect to Tax matters pertinent to the Company
relating to any taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified by the
Buyer or the Seller, any extensions thereof) of the respective taxable periods,
and to abide by all record retention agreements entered into with any tax
Authority, and (ii) to give the other parties reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if
another party so requests, the Company or the Seller, as the case may be, shall
allow the other party to take possession of such books and records.
(b) The Buyer and the Seller further agree, upon request,
to use their commercially reasonable efforts to obtain any certificate or other
document from any Authority or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including with respect to the
transactions contemplated hereby).
(c) The Buyer and the Seller further agree, upon request,
to provide the requesting party with all information that either party may be
required to report pursuant to Section 6043 of the Code and all Treasury
Department Regulations promulgated thereunder.
9.4 Section 338(h)(10) Election. The Buyer will join the Seller in
making an election under Section 338(h)(10) of the Code (and any corresponding
elections available under state, local, or foreign law) with respect to the
purchase and sale of the Shares pursuant to the Transactions and take all such
action as is required in order to give effect to the election for state, local,
and foreign tax purposes to the greatest extent permitted by law.
9.5 Allocation of Purchase Price. The Parties agree that the
Purchase Price and any liabilities of the Company (plus other relevant items)
will be allocated to the assets of the Company for all purposes (including Tax
and financial accounting purposes) in a manner consistent with Sections 338 and
1060 of the Code and the regulations thereunder. Buyer, the Company, and Seller
shall file all Tax Returns (including amended returns and claims for refund) and
information reports in a manner consistent with such allocation. At least 120
days prior to the date for the filing (the "Filing Date") of any Section 338
forms (including IRS Form 8023, any similar form under state or local law and
any schedules or attachments thereto (collectively, "Section 338 Forms")), Buyer
shall prepare and submit to Seller for its review and approval a draft of such
Section 338 Form setting forth the allocation of the Purchase Price among the
assets of the Company. If the Parties cannot agree on such allocation at least
60 days prior to the Filing Date, unless the Parties otherwise agree, the
disputed items shall be submitted to the
34
Accounting Referee for its decision pursuant to the procedures set forth in
Section 3.3(c) with respect to the disputed items, which decision shall be
binding on the Parties.
9.6 Termination of Tax Allocation Agreements. Any and all tax
allocation or tax sharing agreements or arrangements (other than this
Agreement), whether or not written, that may have been entered into by and
between the Seller and its Affiliates, on the one hand, and Company on the other
hand, shall be (and hereby are) terminated as to Company as of the Closing Date,
and no payments that are owed by or to Company pursuant thereto shall be made
thereunder.
9.7 Tax Contest Provisions.
(a) Notice Requirements. Whenever the Buyer receives a
notice of any pending or threatened tax audit or assessment for any Pre-Closing
Tax Period or Straddle Period, the Buyer shall promptly inform the Seller in
writing. Whenever the Seller receives a notice of any pending or threatened tax
audit or assessment of Company for any Pre-Closing Tax Period, any Straddle
Period, or any Post-Closing Tax Period, the Seller shall promptly inform the
Buyer in writing.
(b) Contests Pertaining to Pre-Closing Taxes. The Seller
shall have the right to control, at its own cost, any proceedings relating to
any pending or threatened tax audit or assessment for any Pre-Closing Taxes of
the Company (including any taxes for which the Company may be liable, including
any tax liability pursuant to Treasury Regulation Section 1.1502-6(a) or any
similar provision of any state, local, or foreign law) and to determine whether
and when to settle any such claim, assessment or dispute. Notwithstanding the
foregoing, Seller shall not be entitled to settle, either administratively or
after the commencement of litigation, any claim for Taxes that would materially
adversely affect the liability for Taxes of Buyer or the Company for any
Post-Closing Tax Period or the post-closing portion of the Straddle Period
without the prior written consent of the Buyer, provided that such consent shall
not be unreasonably withheld.
(c) Contests Pertaining to Post-Closing Taxes and
Straddle Period Taxes. The Buyer shall have the right to control, at its cost,
any proceedings relating to any pending or threatened tax audit or assessment
relating to any Post-Closing Taxes or Straddle Period Taxes of the Company and
to determine whether and when to settle any such claim, assessment or dispute.
Notwithstanding the foregoing, the Buyer shall not be entitled to settle, either
administratively or after the commencement of litigation, any claim for Taxes
that would materially adversely affect the liability for Taxes of Seller without
the prior written consent of Seller, provided that such consent shall not be
unreasonably withheld.
(d) Contests Pertaining to Both Pre-Closing and
Post-Closing Taxes. With respect to any threatened tax audit or assessment that
covers both one or more Pre-Closing Tax Periods (or Straddle Periods) and one or
more Post-Closing Tax Periods, the parties shall use reasonable efforts to cause
such proceedings to be bifurcated between the Pre-Closing Tax Periods and
Post-Closing Tax Periods. To the extent that the parties
35
are able to cause such bifurcation, Sections 9.7(b) and (c) hereof shall govern
the control of such proceedings. To the extent that the Parties are unable to
cause such bifurcation, (i) the Seller and the Buyer shall jointly control such
proceedings, (ii) the Seller shall be entitled to determine whether and when to
settle any claim, assessment, or dispute to the extent it relates to any
Pre-Closing Taxes of the Company (including any Taxes for which the Company may
be liable including any tax liability pursuant to Treasury Regulation Section
1.1502-6(a) or any similar provision of any state, local, or foreign law), and
(iii) the Buyer shall be entitled to determine whether and when to settle any
claim, assessment, or dispute to the extent it relates to any Post-Closing Taxes
or Straddle Period of the Company. Notwithstanding the foregoing, neither the
Buyer nor the Seller shall be entitled to settle, either administratively or
after the commencement of litigation, any claim for Taxes that would materially
adversely affect the liability for Taxes of the other Party without the prior
written consent of the other Party, provided that such consent shall not be
unreasonably withheld.
10. General.
10.1 Memorandum; Disclaimer of Projections. Neither the Company,
nor the Seller, nor their respective officers, directors, employees,
stockholders, Affiliates or representatives has made or makes any representation
or warranty to the Buyer with respect to (a) the information set forth in the
Confidential Information Memorandum distributed by The Nassau Group, Inc. in
connection with the Transactions, (b) any financial projection or forecast
relating to the Company, or (c) any information provided by the Company and the
Seller other than as part of this Agreement. With respect to any such projection
or forecast delivered by or on behalf of the Seller or the Company to the Buyer,
the Buyer acknowledges that (i) there are uncertainties inherent in attempting
to make such projections and forecasts, (ii) it is familiar with such
uncertainties, (iii) it is taking full responsibility for making its own
evaluation of the adequacy and accuracy of all such projections and forecasts so
furnished to it, and (iv) it shall have no claim against the Seller or the
Company, or any of their respective officers, directors, employees,
stockholders, Affiliates or representatives with respect thereto.
10.2 Governing Law. This Agreement shall be construed and enforced
in accordance with the laws of the State of California without regard for its
provisions with respect to conflict of laws.
10.3 Jurisdiction. Each Party hereby irrevocably submits itself to
the jurisdiction of the state courts of the State of California in Los Angeles
County and to the jurisdiction of the United States District Court, California
Central for the purposes of any suit, action or other proceeding arising out of
or based upon this Agreement, any other Transaction Document or the subject
matter hereof or thereof brought by the Buyer or any of its permitted successors
or assigns. Each Party, to the extent permitted by applicable law, hereby (a)
waives and agrees not to assert, by way of motion, as a defense or otherwise, in
any such suit, action or proceeding, any claim that (i) it is not subject
personally to the jurisdiction of the above-named courts, (ii) its property is
exempt or
36
immune from attachment or execution, (iii) the suit, action or proceeding is
brought in an inconvenient forum, (iv) the venue of the suit, action or
proceeding is improper, or (v) this Agreement or the subject matter hereof may
not be enforced in or by such court, and (b) waives the right to assert in any
such suit, action or proceeding any offset or counterclaim, except counterclaims
that are compulsory. Each Party hereby consents to the service of process by
mail at its notice address set forth in Section 10.8, as amended from time to
time in accordance with such Section. Final judgment against any of Party in any
such suit, action or proceeding shall be conclusive and may be enforced in any
other jurisdiction (y) by suit, action or proceeding on the judgment, a
certified or true copy of which shall be conclusive evidence of the fact and of
liability of such party, or (z) in any other manner provided by or pursuant to
the laws of such other jurisdiction.
10.4 Binding Effect. This Agreement shall be binding upon the
Parties hereto and their respective successors and assigns; provided, however,
that this Agreement and all rights hereunder may not be assigned or held in
trust for a third party by any Party hereto without the written consent of the
other Party. If after the Closing Date any Party or any of its successors or
assigns (a) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger, or (b) transfers all or substantially all of its properties, assets or
stock to any Person, then and in each such case, proper provision shall be made
so that the successors and assigns of such Party (or their successors and
assigns) shall assume the obligations of such Party in this Agreement.
10.5 Waiver of Conditions. Any Party hereto may waive any delivery
or condition provided in this Agreement for its benefit.
10.6 Disclosure Schedule. Disclosure of any matter in the
Disclosure Schedules to this Agreement shall not constitute an expression of a
view that such matter is material. Any items listed or described in one part of
the Disclosure Schedules shall be deemed to be also listed or described on each
part of the Disclosure Schedules as to which it is reasonably apparent given the
context in which such disclosure was made that such items also related to such
other parts of the Disclosure Schedules.
10.7 Entire Agreement. This Agreement and the other Transaction
Documents contain the entire agreement among the parties hereto and there are no
agreements, representations or warranties that are not set forth herein and
therein. All prior negotiations, agreements and understandings are superseded
hereby and thereby.
10.8 Notices. Any notice, authorization, request or demand required
or permitted to be given hereunder shall be in writing and shall be deemed to
have been duly given on the earlier of (a) the date when received by facsimile;
(b) the date that is one Business Day after the date sent by overnight courier;
or (c) the seventh day after the date when sent by registered, certified or
first class mail to, the respective addresses specified for the parties below.
37
TO THE BUYER:
Invivo Corporation
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx
Facsimile: 925.468.7610
With a copy to:
Fenwick & West LLP
Silicon Valley Center
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Facsimile: 650.938.5200
TO THE SELLER:
SensorMedics Corporation
c/o VIASYS Healthcare Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxx X. XxXxxxx
Facsimile: 610.862.0836
With a copy to:
Xxxxxx, Xxxxx & Xxxxxxx LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esquire
Facsimile: 877.432.9652
10.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be binding as of the date first written above.
Each such copy shall be deemed an original, and it shall not be necessary in
making proof of this Agreement to produce or account for more than one such
counterpart.
10.10 Amendment. This Agreement may be amended at any time prior to
the Closing pursuant to a written instrument signed by the Parties and VIASYS.
10.11 Interpretation. Unless the context of this Agreement clearly
requires otherwise, (a) references to the plural include the singular, the
singular the plural, the part the whole, (b) references to any gender include
all genders, (c) "including" has the inclusive meaning frequently identified
with the phrase "but not limited to," and (d)
38
references to "hereunder" or "herein" relate to this Agreement. The section and
other headings contained in this Agreement are for reference purposes only and
shall not control or affect the construction of this Agreement or the
interpretation thereof in any respect. Section, subsection and Schedule
references are to this Agreement unless otherwise specified.
10.12 No Third-Party Beneficiaries. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective heirs,
legal representatives, successors and permitted assigns of the Parties. Nothing
in this Agreement shall confer any rights upon any Person other than the Parties
and their respective heirs, legal representatives, permitted successors and
assigns, except as expressly provided in Sections 8.1 and 8.2.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
39
IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as of
the date first above written.
INVIVO CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President/CEO
SENSORMEDICS CORPORATION
By: /s/ Xxxxx X. XxXxxxx
------------------------------
Name: Xxxxx X. XxXxxxx
Title: Vice President
