Exhibit 2.3
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STOCK PURCHASE AGREEMENT
by and between
LUMENIS INC.,
LUMENIS LTD.
and
XXXXX X. XxXXXXX IN HER CAPACITY
AS THE PERSONAL REPRESENTATIVE
of the
ESTATE OF XXXXXXX X. XxXXXXX
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Dated as of November 8, 2001
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TABLE OF CONTENTS
SECTION 1 Defined Terms and Construction 4
1.1 Definitions........................................................4
1.2 Additional Definitions.............................................9
1.3 Construction(a)...................................................10
SECTION 2 Stock Transfers 11
2.1 Purchased Stock...................................................11
2.2 Purchase Price....................................................11
2.3 Inventory.........................................................12
2.4 Payment of Taxes..................................................13
SECTION 3 Closing Transactions 13
3.1 Closing Date......................................................13
3.2 Closing Documents(a)..............................................15
3.3 Section 338(h)(10) Election.......................................18
3.4 Books and Records of the Corporations.............................19
3.5 Further Assurances................................................19
SECTION 4 Representations and Warranties. 20
4.1 As to the Corporations............................................20
4.2 As to Seller......................................................35
4.3 Buyer.............................................................37
SECTION 5 Covenants 39
5.1 Activities Prior to Closing.......................................39
5.2 Third Party Consents..............................................45
5.3 Confidentiality; Press Releases...................................46
SECTION 6 Conditions Precedent 46
6.1 Buyer's Conditions................................................46
6.2 Seller's Conditions...............................................47
SECTION 7 Indemnification, Etc. 48
7.1 Survival of Warranties............................................48
7.2 Seller's Indemnification..........................................49
7.3 Buyer's Indemnification...........................................50
7.4 Defense of Claims.................................................51
7.5 Characterization of Payments......................................52
SECTION 8 Miscellaneous. 52
8.1 Expenses..........................................................52
8.2 Buyer's Remedies..................................................52
8.3 Assignment........................................................52
8.4 Notice............................................................53
8.5 Entire Agreement..................................................54
8.6 Third Parties.....................................................54
8.7 Captions..........................................................55
8.8 Counterparts......................................................55
8.9 Attorneys' Fees. ................................................55
8.10 Continuation of Attorney-Client Privilege.........................55
8.11 Severability......................................................56
8.12 Governing Law.....................................................56
8.13 Unconditional Guaranty of Lumenis Ltd.............................56
Exhibits
Exhibit 2.2(a) - the Escrow Agreement
Schedules
Schedule 1.1
Schedule 3.2(a)(1)
Schedule 3.2(a)(11)
Schedule 3.2(b)(1)
Schedule 3.2(b)(2)
Schedule 4.1(b)
Schedule 4.1(d)
Schedule 4.1(e)
Schedule 4.1(f)
Schedule 4.1(g)
Schedule 4.1(h)
Schedule 4.1(i)
Schedule 4.1(j)
Schedule 4.1(k)
Schedule 4.1(l)
Schedule 4.1(m)
Schedule 4.1(o)
Schedule 4.1(p)
Schedule 4.1(q)
Schedule 4.1(r)
Schedule 4.1(t)
Schedule 4.1(u)
Schedule 4.2(c)
Schedule 4.2(d)
Schedule 5.3
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STOCK PURCHASE AGREEMENT, dated as of November 8, 2001, by and between
LUMENIS INC., a Massachusetts corporation ("Buyer"), LUMENIS LTD., an Israeli
corporation, and Xxxxx X. XxXxxxx, in her capacity as the personal
representative of the ESTATE OF XXXXXXX X. XxXXXXX ("Seller").
W I T N E S S E T H :
In consideration of the mutual representations, warranties, covenants and
agreements herein set forth, Buyer and Seller hereby agree as follows:
SECTION 1
DEFINED TERMS AND CONSTRUCTION
1.1 Definitions. As used herein, the following terms shall have the
following meanings:
"Affiliate" shall mean, as to any Person, any other Person which directly
or indirectly controls, or is under common control with, or is controlled by,
such Person. As used in this definition, "control" (including, with its
correlative meanings, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of the power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).
"Business Day" shall mean any day on which commercial banks are not
authorized or required to close in New York City.
"Closing Accountants" shall mean (a) Deloitte & Touche LLP; or (b) if
Deloitte & Touche LLP is unwilling or unable to serve as Closing Accountants
hereunder, a national firm of certified public accountants mutually acceptable
to the parties.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
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"Corporations" shall mean, collectively, FISMA, Instruments for Medicine,
and Instruments for Surgery. "Corporation" shall mean FISMA, Instruments for
Medicine or Instruments for Surgery, as the context may require.
"Damages" shall mean all claims, damages, deficiencies, losses,
liabilities, obligations, assessments, judgments, costs and expenses of any kind
or nature whatsoever (including without limitation reasonable attorneys' fees
and expenses).
"Environmental Laws" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act, the Resource Conservation and Recovery Act, the
Superfund Amendments and Reauthorization Act, the Toxic Substances Control Act,
the Hazardous Materials Transportation Act, the Clean Air Act, the Clean Water
Act, and other similar federal, state and local laws, all as amended to date,
together with all regulations issued or promulgated thereunder, and all existing
decrees, orders, licenses or permits issued by any federal, state or local
governmental authority relating to particulate emissions, pollution, hazardous
waste and effluent discharges, the protection of the environment or the health
and safety of workers or the general public.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time, and the regulations promulgated
thereunder.
"Estate" shall mean the estate of Xxxxxxx X. XxXxxxx.
"Financial Statements" shall mean (a) the audited combined balance sheet of
FISMA, Instruments for Surgery and Instruments for Medicine, all of which are
under common ownership and management and are collectively known as HGM Medical
Laser Systems, as of December 31, 2000, and the related combined statements of
operations and accumulated deficit and of cash flows for the year then ended,
including the related schedules and notes and report of
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Deloitte & Touche LLP; and (b) the unaudited combined balance sheet of the
Corporations as of September 30, 2001 and the related unaudited combined
statements of operations for the year-to-date period then ended, giving effect
to the elimination of all intercompany items reflected thereon.
"FISMA" shall mean FISMA Corporation, a Utah corporation.
"FISMA Stock" shall mean the 5,100,000 shares of common stock, par value
$0.01 per share, of FISMA owned by Seller.
"Indemnified Party" shall mean a Person seeking indemnification pursuant to
Section 7.
"Indemnifying Party" shall mean the Person from whom an Indemnified Party
is seeking indemnification pursuant to Section 7.
"Instruments for Medicine" shall mean Instruments for Medicine &
Diagnostics, Inc., an Oregon corporation.
"Instruments for Medicine Stock" shall mean the 10,000 shares of common
stock, par value $0.01 per share, of Instruments for Medicine owned by Seller.
"Instruments for Surgery" shall mean Instruments for Surgery, a Wyoming
corporation.
"Instruments for Surgery Stock" shall mean the 50,000 shares of common
stock, par value $0.01 per share, of Instruments for Surgery owned by Seller.
"Intellectual Property" shall mean patents (including all reissues,
divisions, continuations in part and extensions thereof), registrations of
trademarks and other marks, registrations of trade names, labels or other trade
rights, registered user entries, copyrights, copyright registrations and pending
applications for patents, registrations or entries, and trademarks and other
marks, trade names, labels, slogans, promotional material and other trade
rights, whether or not registered.
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"Know-how" shall mean trade secrets, know-how (including, without
limitation, product know-how and use and application know-how), processes,
product designs, specifications, quality control procedures, manufacturing,
engineering and other drawings, computer databases and software, telephone
numbers, facsimile numbers, technology and all other information and
intangibles, including, without limitation, technical information, safety
information (including material safety data sheets), engineering data and design
and engineering specifications, research records, market surveys and all
promotional literature, customer and supplier lists and similar data.
"Leases" shall mean leases and subleases, licenses, easements, grants, and
other appurtenant rights and similar instruments under which any of the
Corporations has the right to use real or personal property or rights of way.
"Material Adverse Effect" shall mean any material adverse effect upon the
business, assets, liabilities, financial condition, results of operations or
business prospects of any of the Corporations.
"Permitted Liens" shall mean: (a) liens, claims or encumbrances imposed by
law, such as carriers', warehousemen's, materialmen's and mechanics' liens, or
liens arising out of judgments or awards against any of the Corporations with
respect to which such Corporation at the time shall currently be prosecuting an
appeal or proceedings for review or the time for doing so has not yet expired;
(b) liens for property taxes not yet subject to penalties for nonpayment and
liens for property taxes the payment of which is being contested in good faith
and by proper proceedings or the time for doing so has not yet expired; and (c)
liens, claims or encumbrances reflected in the Financial Statements.
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"Person" shall mean an individual, a corporation, a partnership, an
unincorporated organization, an association, a limited liability company, a
joint venture, a trust or other similar organization, a government or any
political subdivision thereof, or any other legal entity.
"Plan" shall mean, with respect to any of the Corporations and any Employer
Group of which any of them is or has been a member, any plan, agreement, scheme,
understanding or arrangement pursuant to which any current or former employee,
officer, independent contractor, agent or consultant of such Person has any
right, or has any present or future right, to benefits and includes, without
limitation, any "employee benefit plan" within the meaning of Section 3(3) of
ERISA.
"Purchased Stock" shall mean the FISMA Stock, the Instruments for Medicine
Stock and the Instruments for Surgery Stock to be conveyed by Seller to Buyer
pursuant to Section 2.1.
"Required Consents" shall mean all of the consents, approvals, instruments,
authorizations, and orders of third parties, including, without limitation,
federal, state and local authorities, required for the valid assignment and
transfer to Buyer, as of the Closing, of all right, title and interest in and to
the Purchased Stock and the consummation by Seller of the transactions
contemplated by this Agreement, including, without limitation those consents,
approvals, instruments, authorizations, and orders listed on Schedule 1.1.
"Restricted Payments" shall mean dividends or other distributions by the
Corporations (in cash, capital stock or other securities, property or
obligations) on, or other payments or distributions on account of the purchase,
redemption, retirement or other acquisition of, any Stock of the Corporations.
"Stock of the Corporations" shall mean the authorized capital stock of the
Corporations as more fully described in Section 4.1(b).
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"Stock Transactions" shall mean, collectively, (a) the issuance,
acquisition or disposition (including by way of redemption or repurchase) of
capital stock of a Corporation; (b) the issuance, acquisition or disposition
(including by way of redemption or repurchase) of scrip, warrants, options,
rights, agreements or other instruments (including, without limitation,
convertible debt instruments) pursuant to which any Person has the right to
acquire (from whatever source) any capital stock of a Corporation; and (c) the
execution, delivery or performance of any agreement providing for any of the
activities listed in (a) or (b) above; provided, however, that the execution,
delivery and performance of this Agreement by the parties hereto and the
consummation of the transactions contemplated herein shall not be deemed Stock
Transactions as defined herein.
"Subsidiary" shall mean, with respect to any Person, any corporation or
other entity, whether now existing or hereafter organized or acquired, of which
a majority of the securities or other ownership interests having ordinary voting
power for the election of directors or other persons performing similar
functions (irrespective of whether or not at the time stock of any other class
or classes of such corporation or any other type of ownership interest of such
other entity shall have or might have voting power by reason of the happening of
any contingency) are at the time owned by such Person or one or more
Subsidiaries of such Person.
"Taxes" shall mean all federal, state, county, local, foreign and other
taxes (including, without limitation, income, property, withholding, excise,
sales, use, gross receipts, franchise, employment and payroll related taxes),
whether or not measured in whole or in part by net income, and including related
interest, penalties and additions to tax.
1.2 Additional Definitions. The following terms defined elsewhere in this
Agreement shall have the respective meanings therein defined:
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Term Definition
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Administrative Violation Section 5.1(h)
Closing Section 3.1(a)
Closing Date Section 3.1(a)
Closing Balance Sheet Section 3.2(a)(15)
Elections Section 3.3
Employer Group Section 4.1(n)
Escrow Agent Section 2.2(a)
Escrow Agreement Section 2.2(a)
GAAP Section 1.3(a)
Hazardous Materials Section 4.1(o)
Purchase Price Section 2.2
Release Section 4.1(o)
Will Section 4.2(b)
1.3 Construction. (a) Unless otherwise specified herein, all accounting
terms used herein shall be interpreted, all determinations with respect to
accounting matters hereunder shall be made, and all financial statements and
certificates and reports as to financial matters required to be delivered
hereunder shall be prepared, in conformity with United States generally accepted
accounting principles ("GAAP"), consistently applied.
(b) The definition of terms herein shall apply equally to the singular and
plural of the terms defined. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms. Words such as
"herein," "hereinafter," "hereof," "hereto," and "hereunder," refer to this
Agreement as a whole, unless the context otherwise requires. References to
Sections, Exhibits and Schedules are to Sections of, and Exhibits and Schedules
to, this Agreement, unless the context otherwise requires.
(c) Whenever the phrase "to the best of Seller's knowledge" or words of
similar import appear in a representation, warranty or certification contained
in this Agreement it shall mean that Seller either (1) has actual knowledge of
the matters set forth therein, or (2) has made due inquiry of the officers,
managerial personnel, and those professional advisors of the
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Corporations who have been such at any time since January 1, 2000 with respect
to the matters covered thereby.
(d) Should any provision of this Agreement require interpretation in an
arbitration or judicial proceeding, the parties hereto agree that the
arbitrators or court interpreting or construing the same shall not apply a
presumption that the terms hereof shall be more strictly construed against one
party by reason of the rule of construction that a document is to be more
strictly construed against the party who itself or through its agents prepared
the same, it being agreed that Buyer and Seller and their respective agents have
participated in the preparation of this Agreement.
SECTION 2
STOCK TRANSFERS
2.1 Purchased Stock.
(a) At the Closing, Seller shall sell and deliver to Buyer, and Buyer shall
purchase and obtain from Seller, all on the terms and conditions hereinafter set
forth, all right, title and interest in and to:
(1) the FISMA Stock,
(2) the Instruments for Medicine Stock, and
(3) the Instruments for Surgery Stock.
(b) Seller hereby covenants and agrees that as a result of the transfers of
the Purchased Stock provided for herein, each Corporation immediately following
the Closing shall be wholly-owned by Buyer.
2.2 Purchase Price. The aggregate purchase price (the "Purchase Price") for
the sale of the Purchased Stock to Buyer shall be seven million two hundred
thousand ($7,200,000.00)
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dollars, subject to reduction pursuant to Section 6.1(e). The Purchase Price
shall be paid as follows:
(a) At the Closing, eight hundred thousand and no/100 ($800,000.00) dollars
shall be delivered to a to be mutually agreed upon bank, as escrow agent (the
"Escrow Agent"), to be held in escrow by the Escrow Agent in accordance with an
escrow agreement, substantially in the form of Exhibit 2.2(a) (the "Escrow
Agreement"), among Buyer, Seller and the Escrow Agent.
(b) The amount owed to the Internal Revenue Service in respect of the
Estate's federal income tax return on Form 1041 for the year ended December 31,
2000, together with any interest and penalties thereon, by check payable to the
order of the Internal Revenue Service and delivered by Seller to the Internal
Revenue Service.
(c) The balance of the Purchase Price shall be delivered to Seller at the
Closing by wire transfer pursuant to wire transfer instructions to be provided
to Buyer by Seller no later than two (2) Business Days prior to the Closing
Date.
2.3 Inventory.
Seller shall commence a physical inventory of all raw materials, work in
process and finished goods of each Corporation, sufficiently in advance of the
Closing Date so as to assure that such inventory is completed by the close of
business on the Business Day immediately preceding the Closing Date and a
statement of closing inventory, calculating such inventory consistent with
practices and methodologies used in preparing the Financial Statements and past
practices of the Corporations, is available on the Closing Date. Such inventory
shall be conducted under the auspices of the Closing Accountants and observed by
representatives of Seller and Buyer to determine quantities and valuations. As
soon as
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reasonably possible after the Closing Date, the Closing Accountants shall
prepare a report on the results of such inventory and provide such report to
Seller and Buyer.
2.4 Payment of Taxes. Seller shall pay, at the Closing or, if due
thereafter, promptly when due, all stock transfer taxes, if any, payable in
connection with its transfer of the Purchased Stock and any gains or income
taxes resulting from Seller's receipt of the Purchase Price. The parties hereto
agree that the unaudited and combined balance sheet referred to in Section
3.2(1)(15) shall take into account and reflect any adjustment to the inventory
of the Corporations resulting from such physical inventory taken, and the
statement prepared in respect thereof, pursuant to Section 2.3.
SECTION 3
CLOSING TRANSACTIONS
3.1 Closing Date. (a) The closing of the transactions provided for herein
(the "Closing") shall take place at the offices of Stoel Rives LLP, 000 Xxxxx
Xxxx Xxxxxx, Xxxxx 0000, Xxxx Xxxx Xxxx, Xxxx, at 10:00 A.M. local time on
November 30, 2001, except that:
(1) If all of the conditions set forth in Section 6.1 have not been
satisfied by November 30, 2001, Buyer may, at its option:
(A) postpone the Closing upon notice to Seller until the earlier
of January 7, 2002, or the tenth day following the date on which such
conditions have been satisfied, except to the extent that any such
condition can only be satisfied at the Closing; or
(B) terminate this Agreement upon notice to Seller provided that
Buyer is not then in material default of any of its obligations
hereunder.
(2) If the Closing has been postponed pursuant to clause (1)(A) above,
and if all of the conditions set forth in Section 6.1 have not been
satisfied by January 7, 2002,
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Buyer may terminate this Agreement upon notice to Seller provided that
Buyer is not then in material default of any of its obligations hereunder,
unless:
(A) within five Business Days of the giving of Buyer's notice,
Seller agrees to indemnify and hold harmless Buyer from any Damages
arising as a result of the failure of such conditions to have been
satisfied (such indemnification to be in accordance with the
provisions of Section 7); and
(B) at the Closing, Seller provides adequate security for such
indemnification by either delivering to Buyer a performance bond or
irrevocable standby letter of credit (in either case in form
reasonably satisfactory to Buyer) or increasing that portion of the
Purchase Price payable to the Escrow Agent pursuant to Section 2.2(a)
by a good faith determination of the amount of Damages which could
reasonably be expected to result from the failure of such condition to
be satisfied.
(3) If all of the conditions set forth in Section 6.1 have not been
satisfied by January 7, 2002, and this Agreement has not been terminated
and the Closing has not taken place by such date, then Seller or Buyer may
terminate this Agreement, it being understood that any such termination
shall not serve to limit either party's remedies arising from any breach of
this Agreement at law, in equity or otherwise (except that neither party
shall be entitled to recover lost profits or other special damages
resulting from such breach). If the Closing has not taken place by the date
for Closing determined in accordance with this Section 3.1 (the "Closing
Date"), then either of the parties hereto shall be entitled to terminate
this Agreement upon notice to the other party, provided that the party
giving such notice is not then in material default of any of its
obligations hereunder which default is the basis of the failure of any of
the conditions set
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forth in Section 6 to be satisfied by the Closing Date. The Closing shall
be effective as of the close of business on the Closing Date.
(b) Notwithstanding any other provision of this Agreement to the contrary,
if there shall have occurred (i) any general suspension of, or limitation on
prices for, trading in securities on the New York Stock Exchange or the Nasdaq
National Market for a period in excess of 24 hours (excluding a shortening of
trading hours or any coordinated trading halt triggered solely as a result of a
specified increase or decrease in a market index), (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States or Israel, (iii) any limitation (whether or not mandatory) on the
extension of credit by banks or other lending institutions in the United States
or Israel, (iv) the commencement of a war involving the United States or Israel,
or (v) in the case of any of the foregoing existing at the time of the execution
of this Agreement, a material acceleration or a material worsening thereof,
Buyer may postpone the Closing until a date that is five (5) Business Days after
the end of such event; provided, however, that if such postponement or
postponements last(s) more than fifteen (15) calendar days in the aggregate,
Seller may thereafter terminate this Agreement in accordance with the provisions
of Section 3.1(a)(3).
3.2 Closing Documents. (a) At the Closing, Seller shall deliver the
following documents to Buyer:
(1) Opinions, each dated the Closing Date and addressed to Buyer, from
Stoel Rives LLP, and Xxxxxxx X. Xxxxxxx, P.C., counsel to the Estate,
substantially in the forms of Schedule 3.2(a)(1).
(2) Copies of all of the Required Consents.
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(3) An employment agreement, dated the Closing Date, duly executed by
Xxxxx X. Xxxxxxx, substantially in the form of the draft employment
agreement initialed by Xxxxx X. Xxxxxxx and an officer of Buyer
concurrently with the execution and delivery of this Agreement.
(4) The Certificate or Articles of Incorporation of each Corporation
and all amendments thereto, each certified by the Secretary of State or
other appropriate governmental body of their respective jurisdiction of
incorporation.
(5) The By-laws of each Corporation, as amended through the Closing
Date, certified by the Secretary or any Assistant Secretary thereof.
(6) Good standing certificates with respect to each Corporation, each
dated no earlier than thirty Business Days prior to the Closing, issued by
the Secretary of State or other appropriate governmental body of their
respective jurisdiction of incorporation.
(7) The minute books, stock books and stock transfer ledgers of each
Corporation.
(8) The resignations of all the officers and directors of each
Corporation.
(9) Such additional corporate records of each Corporation as Buyer may
reasonably request.
(10) Stock certificates representing all the Purchased Stock to be
conveyed to Buyer pursuant to Section 2.1(a), together with stock powers
therefor duly endorsed for transfer.
(11) A certificate substantially in the form of Schedule 3.2(a)(11).
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(12) Copies of the first page of Seller's federal estate tax returns
and evidence in the form of cancelled checks of the payment of all taxes
shown to be due thereon.
(13) A copy of the federal estate tax closing letter for or with
respect to the Estate or, in the absence thereof, a release of lien under
Section 6324 of the Code in all the Purchased Stock executed by the
Internal Revenue Service.
(14) A copy of an order from the local probate court satisfactory to
Buyer evidencing the authority of Xxxxx X. XxXxxxx to execute and deliver
this Agreement, and to consummate the transactions contemplated herein, in
her capacity as the personal representative of the Estate.
(15) An unaudited combined balance sheet of the Corporations as of the
Closing Date, together with supporting schedules and footnotes including
but not limited to schedules showing all amounts due from and/or to Seller,
and its and the Corporations other Affiliates, and reflecting the statement
with respect to the physical inventory taken pursuant to Section 2.3 (the
"Closing Balance Sheet").
(16) An agreement between the parties hereto whereby and wherein (A)
the parties agree to the allocation of the Purchase Price for purposes of
the Elections and (B) Buyer agrees that it shall pay Seller a specific and
agreed to amount in fulfillment of Buyer's indemnification obligation, if
any, provided in Section 7.3(d).
(b) At the Closing, Buyer shall deliver the following documents to Seller:
(1) A certificate substantially in the form of Schedule 3.2(b)(1).
(2) An opinion, dated the Closing Date and addressed to Seller, from
RubinBaum LLP, counsel to Buyer, substantially in the form of Schedule
3.2(b)(2).
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(3) A good standing certificate with respect to Buyer, dated no
earlier than thirty Business Days prior to the Closing, issued by the
Secretary of State of the State of Delaware.
(4) An agreement between the parties hereto whereby and wherein (A)
the parties agree to the allocation of the Purchase Price for purposes of
the Elections and (B) Buyer agrees that it shall pay Seller a specific and
agreed to amount in fulfillment of Buyer's indemnification obligation, if
any, provided in Section 7.3(d).
3.3 Section 338(h)(10) Election. Buyer and Seller shall timely make a joint
election pursuant to Section 338(h)(10) of the Code, and Treasury Regulations
Section 1.338(h)(10)-1, and any comparable election under state or local tax law
(collectively, the "Elections") with respect to the sale of all the Purchased
Stock pursuant to this Agreement. Seller will include any income, gain, loss,
deduction, or other tax item resulting from the Elections on its Tax returns to
the extent required by law. As promptly as reasonably practicable after the
Closing Date and in all events within 150 days after the Closing Date, with
respect to the federal Election, Buyer, the Corporations and Seller shall
mutually prepare a Form 8023 (with all attachments) for each Corporation, and
Buyer, the Corporations and Seller shall execute such Forms 8023. In addition,
Buyer, the Corporations and Seller shall, as promptly as practicable following
the Closing Date, cooperate with each other to take all actions necessary and
appropriate (including filing such additional forms, returns, elections,
schedules and other documents as may be required) to effect and preserve timely
Elections in accordance with the provisions of Code Section 338(h)(10) and
Treasury Regulations Section 1.338(h)(10)-1 and any comparable provisions of
state or local law. Buyer, the Corporations and Seller shall report the sale
consistent with the Elections and this Agreement and none of Buyer, the
Corporations or Seller shall take any position inconsistent
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therewith in any Tax return, any proceeding before any taxing authority or
otherwise. In the event the allocation is disputed by any Taxing authority, the
party receiving notice of such dispute shall promptly notify and consult with
the other parties concerning resolution of such dispute, and shall keep the
other parties apprised of the status of such dispute and shall not resolve such
dispute without the consent of the other parties, which consent shall not be
unreasonably withheld, conditioned or delayed.
3.4 Books and Records of the Corporations. Seller agrees to cause the
Corporations to deliver to Buyer at, or as soon as practicable after, the
Closing all books and records of the Corporations, including, but not limited
to, correspondence, memoranda, books of account, schedule of intercompany
accounts among the Corporations, personnel and payroll records, information
relating to Taxes and Tax returns and the like; provided, however, that, except
as set forth in Sections 3.2(a)(12) and (13), neither Buyer nor any of its
Affiliates shall have the right to receive or obtain any information relating to
Taxes or Tax returns of Seller. Without limitation upon the generality of the
foregoing, from the date of this Agreement through the Closing Date, Seller
agrees to cause the Corporations and their accountants to make all such books
and records promptly available to Buyer and its accountants as reasonably
requested by Buyer during normal business hours to facilitate Buyer's
determination of all amounts due (1) to any of the Corporations from Seller or
any of its Affiliates, and (2) to Seller or any of its Affiliates from the
Corporations.
3.5 Further Assurances. Subject to the terms and conditions of this
Agreement, each of the parties hereto shall use all reasonable efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the sale of the Purchased Stock and the other
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transactions contemplated by this Agreement. From time to time after the Closing
Date, without further consideration, Seller shall, at its expense, execute and
deliver or cause to be executed and delivered such documents to Buyer as Buyer
may reasonably request in order more effectively (a) to vest in Buyer good title
to the Purchased Stock pursuant to this Agreement; and (b) to vest in each
Corporation title to its properties and assets.
SECTION 4
REPRESENTATIONS AND WARRANTIES.
4.1 As to the Corporations. Seller hereby makes the following
representations and warranties to Buyer as of the date of this Agreement and as
of the Closing Date:
(a) Each Corporation is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation. Each
Corporation:
(1) has all requisite corporate power and governmental licenses,
authorizations, consents and approvals necessary to own its assets and
carry on its business as now being conducted; and
(2) is qualified to do business in all jurisdictions in which the
nature of the business conducted by it makes such qualification necessary
and where failure to do so would have a Material Adverse Effect.
(b) The authorized capital stock of each Corporation is as set forth on
Schedule 4.1(b). The Purchased Stock to be conveyed to Buyer pursuant to Section
2.1(a) hereof constitutes all of the issued and outstanding capital stock of the
Corporations and is owned of record and beneficially by Seller. Since December
31, 2000, none of the Corporations has engaged in any Stock Transactions. All
the Purchased Stock to be conveyed to Buyer pursuant to Section 2.1(a) shall be
conveyed to Buyer free and clear of all liens, claims and encumbrances of any
kind or nature whatsoever.
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(c) The Corporations have no Subsidiaries.
(d) Except as set forth on Schedule 4.1(d), neither the execution and
delivery of this Agreement by Seller nor the consummation of the transactions
contemplated herein by Seller will (1) violate any law, rule, regulation, or
order to which any of the Corporations or any of their respective properties or
assets is subject; (2) conflict with or result in a breach of, or constitute a
default under, the Certificate or Articles of Incorporation or By-laws of any of
the Corporations, (3) constitute or result in (with notice, lapse of time or
both) a breach by any of the Corporations or any other Person of any term,
condition or provision of, or constitute a default by any of the Corporations or
any other Person under, or result in the creation of any lien, charge or
encumbrance upon any property or assets of any of the Corporations or Seller
pursuant to any agreement or other instrument to which any of the Corporations
or Seller is a party or by which any of their respective property or assets is
bound, (4) not result in the loss of any license, certificate, legal privilege
or legal right which is enjoyed or possessed by any of the Corporations, (5) not
give any party to any agreement to which any of the Corporations is a party the
right of termination or amendment thereof or (6) not give any lender or
noteholder, or any trustee for any lender or noteholder, any right to accelerate
the maturity of any indebtedness for money borrowed as to which any of the
Corporations is the direct or indirect obligor, or to claim any default or
breach with respect thereto.
(e) Except as otherwise described on Schedule 4.1(e), there are no lawsuits
or other proceedings pending with respect to which any of the Corporations has
received service or, to the best of Seller's knowledge, otherwise pending or
threatened against any of the Corporations or any of their respective properties
or assets, before any court or arbitrator or by or before any governmental
commission, bureau or other regulatory authority. To the best of
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Seller's knowledge, except as otherwise described on Schedule 4.1(e), none of
the Corporations is in default under or in violation of any law, rule,
regulation, order, writ, injunction or decree of any court, arbitrator,
governmental commission, bureau or other regulatory authority. Except as set
forth on Schedule 4.1(e), to the best of Seller's knowledge, there are no claims
against any of the Corporations not covered by insurance (subject to deductibles
or co-payments provided for in the insurance policies referred to on Schedule
4.1(p)), alleging that any product sold by such Corporation (other than products
which are the subject of recalls described on Schedule 4.1(e)) was not sold free
from defects in materials and workmanship. To the best of Seller's knowledge,
the finished goods included in the inventory of each Corporation on the Closing
Date will be free of defects in materials and workmanship.
(f) Each Corporation has good and indefeasible title to its properties and
assets, free and clear of all liens, claims, charges and encumbrances of any
kind or nature whatsoever other than Permitted Liens or liens, claims, charges
or encumbrances on Schedule 4.1(f), and such properties and assets constitute
all of the properties and assets used in the conduct of the business of such
Corporation. To the best of Seller's knowledge, Schedule 4.1(f) is a list of all
liens, claims, charges and encumbrances of any kind or nature whatsoever (other
than Permitted Liens of the sort described in clause (b) of the definition of
"Permitted Liens" set forth in Section 1.1) on the assets and properties of such
Corporation outstanding as of the date of this Agreement.
(g) (1) Set forth on Schedule 4.1(g) is a list of all jurisdictions in
which income or franchise tax returns or reports were, or, to the best of
Seller's knowledge, were required to be, filed by each Corporation or in which
any of the Corporations was, or, to the best of Seller's knowledge, was required
to be, included in consolidated, combined or unitary income
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or franchise tax returns or reports for all completed taxable years since its
organization. Except as set forth on Schedule 4.1(g), each Corporation has (1)
timely filed all tax and information returns and (2) paid all Taxes, except such
Taxes, if any, as are not yet due and payable or which are being contested in
good faith and by proper proceedings and as to which adequate reserves have been
established.
(2) Except as otherwise described on Schedule 4.1(g), there are no
lawsuits, investigations, reviews, audits or other proceedings pending or,
to the best of Seller's knowledge, threatened against any of the
Corporations by or before the Internal Revenue Service or any state or
local Tax authority.
(3) None of the Corporations is a party to any Tax allocation or
sharing agreement. None of the Corporations (A) has been a member of an
affiliated group (within the meaning of Section 1504(a) of the Code) that
has filed a consolidated federal income tax return (other than a group the
common parent of which was one of the Corporations) or (B) has any
liability for the Taxes of any Person (other than such Corporation) under
Section 1.1502-6 of the Treasury Regulations adopted under the Code (or any
similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(4) Except as set forth on Schedule 4.1(g), none of the Corporations
has filed any elections or entered into any agreements (of any kind
whatsoever) with any governmental authority which could have an effect on
such Corporation's Tax status or, to Seller's best knowledge, on the Tax
consequences of any sale of the Purchased Stock by Buyer after the Closing
Date.
(5) None of the Corporations has ever made or been required to make an
election under Section 338 of the Code (except as required by this
Agreement). None of the
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Corporations has ever been included in a consolidated, combined or unitary
Tax return. The Corporations are not and have never been a party to any Tax
sharing or Tax allocation agreement, arrangement or understanding. Except
as set forth in Schedule 4.1(g), no taxing authority has ever asserted that
the Corporations should file a Tax return in a jurisdiction where it does
not file. The Corporations do not have outstanding any power of attorney,
closing agreement or other instruments authorizing another person to act on
their behalf in connection with any Tax, Tax return, proceeding relating to
any Tax or Tax return or any other Tax matter.
(6) None of the Corporations will be liable for any Tax under Code
Section 1374 in connection with the deemed sale of Seller's assets
(including the assets of any qualified subchapter S subsidiary) caused by
the Section 338(h)(10) Election.
(7) None of the Corporations is required to have paid any Tax under
Code Section 1375 in connection with excess net passive income.
(h) Schedule 4.1(h) hereto contains a list of each Lease, consent, permit,
license, instrument and agreement to which any of the Corporations is a party
(other than purchase or sale orders issued or accepted in the ordinary course
and agreements requiring an annual individual expenditure of less than $50,000).
True, correct and complete copies of the Certificate or Articles of
Incorporation and the By-Laws (each as amended to date) of each Corporation, and
each Lease, consent, permit, license, instrument and agreement listed on
Schedule 4.1(h) have heretofore been delivered to Buyer and to the best of
Seller's knowledge all of the foregoing are in full force and effect. None of
the Corporations has received a notice to the effect that, and, to the best of
Seller's knowledge, none of the Corporations is in default in the payment or
performance or observance of any contract, agreement or other instrument to
which it is a party or by which it or any of its respective assets is bound,
which individually or
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together with all other such defaults could have a Material Adverse Effect.
Except to the extent indicated on Schedule 4.1(h), none of the Corporations is a
party to, nor are any of the Corporations bound by, any non-competition
agreement or arrangement or any other agreement or arrangement restricting or
prohibiting in any material respect the way in which their respective businesses
are operated. Except as set forth on Schedule 4.1(g), none of the Corporations
has granted any powers of attorney or similar authorizations to act on its
behalf to any third party.
(i) Concurrently with the execution and delivery of this Agreement, Seller
has delivered to Buyer a list of the employees of each Corporation whose current
annual rate of compensation exceeds $50,000, indicating the positions which they
now hold and their current rates of compensation. Except as set forth on
Schedule 4.1(i), none of the Corporations is, as of the date hereof, nor have
any of them ever been, involved in any discussion with any unit or group seeking
to become the bargaining unit for any of such Corporation's employees nor to the
best of Seller's knowledge has there been any threat of such discussions. Except
as set forth on Schedule 4.1(i), none of the Corporations has engaged in any
unfair labor practice or discrimination on the basis of race, age, sex or
otherwise in such Corporation's employment conditions or practices with respect
to employees or former employees for which Buyer or the Corporations will have
any liability following the Closing.
(j) Except for production equipment used in the production of ion laser
heads, which equipment is owned by XxXxxxx Properties, Inc., an Oregon
corporation, the properties and assets of each Corporation constitute all of the
rights and property necessary for the operation of their respective businesses
as currently conducted. Except as set forth on Schedule 4.1(j), the plant and
equipment included in such properties and assets have been properly maintained
and are in good working condition, reasonable wear and tear excepted.
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(k) True, correct and complete copies of the Financial Statements have
heretofore been delivered to Buyer. Other than as set forth on Schedule 4.1(k),
each of the Financial Statements has been prepared in conformity with GAAP and
fairly presents, in all material respects, (1) the financial position, and
results of operations and, with respect to the December 31, 2000 audited
financial statements only, cash flows, of the subject Corporation at the
respective dates thereof and for the respective periods thereof and (2) the
combined financial position, results of operations and, with respect to the
December 31, 2000 audited financial statements only, cash flows of the
Corporations at the respective dates thereof and for the respective periods.
None of the Corporations has any material liabilities or obligations of any kind
whatsoever (whether or not accrued, contingent or absolute, asserted or
unasserted, and whether or not such liabilities or obligations would be required
to be reflected on a balance sheet prepared in conformity with GAAP) other than
(1) liabilities and obligations set forth on Schedule 4.1(k), (2) liabilities
and obligations reserved against in full on the most recent balance sheet of
such Corporation included in the Financial Statements and (3) liabilities
incurred in the ordinary course of business consistent with past practice since
the date of such balance sheet, none of which with respect to this clause (3)
could have a Material Adverse Effect. Except as set forth on Schedule 4.1(k),
since December 31, 2000, there has not been any event which has had, or could
have, a Material Adverse Effect and, since December 31, 2000, except as set
forth on Schedule 4.1(k), none of the Corporations has:
(1) mortgaged or pledged any of their respective properties and
assets, tangible or intangible, or subjected any of them to any lien,
charge or any other encumbrance, other than Permitted Liens;
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(2) sold, assigned, transferred or leased any of the tangible assets
included in their respective properties and assets, except in the ordinary
course of business and, unless such assets were obsolete or unnecessary and
the proceeds of such sale, assignment or transfer of such obsolete or
unnecessary properties or assets were used to acquire assets of like use
and substantially the same value, or cancel any debts or claims incurred in
the ordinary course of business of such Corporation;
(3) waived any substantial rights included in their respective
properties and assets, whether or not in the ordinary course of business;
(4) made any changes in employee compensation except in the ordinary
course of business and consistent with past practices;
(5) guaranteed the indebtedness or obligations of any other Person; or
(6) engaged in any Stock Transactions or made any Restricted Payments.
(l) None of the Corporations has used any Intellectual Property other than
that listed on Schedule 4.1(l). Except as set forth on Schedule 4.1(l), to the
best of Seller's knowledge, each Corporation has the right to use, without
payment of any royalties, or validly owns, beneficially and of record, and holds
in each jurisdiction in which such Corporation's products are currently, or have
been, sold or in which sales are currently being solicited, sufficient right,
title and interest (although the same may not be exclusive) in and to such
Intellectual Property and Know-how, free and clear of any lien, claim, charge or
encumbrance. The operation of the business of each Corporation after the Closing
in the manner currently conducted by such Corporation will not infringe any
Intellectual Property or any other rights of any nature whatsoever of others.
Except as set forth on Schedule 4.1(l), no action, suit,
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arbitration, or legal, administrative or other proceeding, or governmental
investigation is pending with respect to which any of the Corporations has
received service or, to the best of Seller's knowledge, otherwise pending or
threatened, nor to the best of Seller's knowledge has any claim been asserted or
threatened (by or against any of the Corporations or any third party), which
involves any Intellectual Property or Know-how of or used by any of the
Corporations nor, to the best of Seller's knowledge, does any state of facts
exist under which any such action, suit, arbitration, proceeding or
investigation might be based. Except as set forth on Schedule 4.1(l), none of
the Corporations is subject to any judgment, order, writ, injunction or decree
of any court or any federal, state, local or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, or
any arbitrator, nor has any of the Corporations entered into, nor is any of them
a party to, any agreement or other instrument, which restricts or impairs the
use of any of its Intellectual Property or Know-how.
(m) Each Corporation has filed all reports, applications, documents,
instruments and information required to be filed by it pursuant to applicable
rules and regulations or requests of every regulatory body having jurisdiction
over such Corporation's respective assets and properties except where the
failure to so file would not have a Material Adverse Effect.
(n) (1) Except as set forth on Schedule 4.1(n), none of the Corporations or
any entity which is under common control with any of the Corporations within the
meaning of Section 4001 of ERISA or which is part of a group which includes any
of the Corporations, and which is treated as a "single employer" under Section
414 of the Code (each an "Employer Group"), maintains, contributes to or is
required to maintain or contribute to (or has ever maintained, contributed to or
been required to maintain or contribute to) any Plan.
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(2) Seller has delivered to Buyer true and complete copies of: (A) all
documents, if any, embodying each Plan, including all amendments thereto
and written interpretations thereof; (B) the two most recent annual reports
filed (Form 5500 Series with applicable schedules) with respect to each
Plan required under ERISA; (C) the most recent summary plan description, if
any, with respect to each Plan required under ERISA; (D) the most recent
favorable determination letter from the Internal Revenue Service, if
applicable, with respect to each Plan; and (E) all material communications,
if any, to any current or former employee, officer, independent contractor,
agent or consultant of any of the Corporations relating to each Plan.
(3) Each Plan that is intended to be qualified under the Code has
received a determination letter from the Internal Revenue Service to the
effect that such Plan and related trust are so qualified and are exempt
from federal income taxes under Sections 401(a) and 501(a) of the Code, and
no such determination letter has been revoked, nor to the best of Seller's
knowledge, has revocation been threatened. To the best of Seller's
knowledge, nothing has occurred or is expected to occur that would
adversely affect the qualified status of any Plan or related trust
subsequent to the issuance of such determination letter.
(4) Each of the Corporations, and any Employer Group of which any of
them is or has been a member, has performed in all material respects all
obligations required to be performed by it under each Plan, and each Plan
has been established and maintained in all material respects in accordance
with its terms and in compliance with all applicable laws, statutes,
orders, rules and regulations, including but not limited to ERISA and the
Code. No Plan is a defined benefit plan within the meaning of Section 3(35)
of ERISA; and none of the Corporations has any liability with respect to
any such Plan as a result of having been treated as
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part of a "single employer" within the meaning of Section 414(b), (c), (m),
(n) and (o) of the Code, nor to the best of Seller's knowledge is there any
basis for such liability being imposed. There are no investigations,
claims, suits, or proceedings pending, or, to the best of Seller's
knowledge, threatened or anticipated (other than routine claims for
benefits) against any Plan or the assets of any Plan, and to the best of
Seller's knowledge, there are no facts that could give rise to any material
liability in the event of any such investigation, claim, suit or
proceeding. Except as required by collective bargaining agreements listed
on Schedule 4.1(i) and the laws, rules and regulations applicable thereto,
each Plan can be amended, terminated, or otherwise discontinued after the
Closing in accordance with its terms, without liability to Buyer, any of
the Corporations or any of their Affiliates. All premiums required by any
Plan have been paid thereunder; all outstanding indebtedness for services
performed or accrued vacation, holiday pay, earned commissions, accrued
bonuses or other benefits owed to any current or former employee, officer,
independent contractor, agent or consultant of any of the Corporations have
been paid when due or accrued on the books of such Person; all
contributions due to, and payments from, the Plans that may have been
required to be made have been made. No "prohibited transaction" within the
meaning of Section 4975 of the Code or Section 406 of ERISA has occurred
with respect to any Plan; no action or failure to act with respect to any
Plan could subject Buyer, any of the Corporations or any of their
respective Affiliates or any Plan to any material tax, penalty or other
liability, for breach of fiduciary duty or otherwise, under ERISA or any
other applicable law, whether by way of indemnity or otherwise.
(5) Each "group health plan" within the meaning of Section 4980B(g)(2)
of the Code maintained by any of the Corporations or any entity with which
any of them is considered a "single employer" within the meaning of Section
414(b), (c), (m), (n) and
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(o) of the Code, has been administered in good faith in compliance with the
continuation coverage requirements contained in the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, as set forth at Section
4980B of the Code and any regulations promulgated or proposed thereunder
(if such proposed regulations constitute substantial authority within the
meaning of Section 6662 of the Code and any regulations promulgated
thereunder).
(6) Except as specifically set forth on Schedule 4.1(n), (A) the
execution and delivery of, and performance of the transactions contemplated
by, this Agreement will not (either alone or upon the occurrence of any
additional or subsequent events) constitute an event under any trust or
individual agreement that will or may result in any payment (whether of
severance pay or otherwise), acceleration, vesting, distribution or
increase in or obligation to fund benefits with respect to any employee of
any of the Corporations; and (B) no payment or benefit which will or may be
made by any of the Corporations or any of their respective Affiliates with
respect to any employee will be characterized as an "excess parachute
payment," within the meaning of Section 280G(b)(1) of the Code. No material
promises or commitments have been made with respect to any Plan other than
in accordance with a reasonable interpretation of the terms of such Plan.
There is no plan or commitment, whether legally binding or not, to
establish or enter into any new Plan or to modify (other than by way of
termination) any Plan (except to the extent required by law); nor has any
intention or commitment to do any of the foregoing been communicated to any
employee of any of the Corporations.
(7) None of (A) the Corporations or (B) any of their respective
Affiliates maintains or contributes to any Plan which provides, or has any
liability to provide, life insurance, medical or other welfare plan
benefits (within the meaning of Section 3(1) of ERISA)
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to any employee upon his or her retirement or termination of employment,
except as may be required by law.
(8) At no time has any of the Corporations or any Employer Group of
which any of them is or has been a member been required to contribute to,
or incurred any withdrawal liability (within the meaning of Section 4201 of
ERISA) to, any multiemployer plan as defined in Section 3(37) of ERISA.
(o) To the best of Seller's knowledge:
(1) Other than as set forth on Schedule 4.1(o), none of the
Corporations is in violation of any Environmental Laws which would,
individually or in the aggregate, have a Material Adverse Effect,
including, without limitation, Environmental Laws relating to: (A)
treatment, storage and disposal of pollutants or contaminants, oil, toxic
or hazardous substances, or hazardous waste regulated under Environmental
Laws ("Hazardous Materials"); (B) air, water and noise pollution; (C) the
release, spill, emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, uncontrolled loss, filtration, leaching or migration
of any Hazardous Materials in violation of Environmental Laws into the
indoor or outdoor environment, including, without limitation, the movement
of Hazardous Materials in violation of Environmental Laws through or in the
air, soil, surface water, ground water or any property (each a "Release");
(D) underground storage tanks; (E) health and safety of employees; and (F)
otherwise relating to the manufacture, processing or use of Hazardous
Materials.
(2) All written notices and written complaints which any of the
Corporations (and, to the extent known by Seller, their respective
predecessors-in-interest) have received in the last five (5) years of any
violation of Environmental Laws which would, individually or in the
aggregate, have a Material Adverse Effect are set forth on Schedule 4.1(o).
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Except as disclosed on Schedule 4.1(o), each Corporation has obtained and
continues to possess all permits, licenses, approvals or other
authorizations under the Environmental Laws relating to the operation of
the business of each of such Corporation as now conducted the failure of
which to obtain or continue to possess would, individually or in the
aggregate, have a Material Adverse Effect.
(3) Except as set forth on Schedule 4.1(o), there are no past or
present events, conditions, circumstances, activities, practices,
incidents, actions or plans (A) which may prevent continued compliance by
any of the Corporations with the Environmental Laws or which may give rise
to any criminal or civil liability relating to the respective businesses of
any such Corporation as now conducted under the Environmental Laws, and (B)
which would, individually or in the aggregate, have a Material Adverse
Effect.
(4) Except as set forth on Schedule 4.1(o), none of (A) the
Corporations, or (B) any present or former owner or operator of leased
premises included in the assets of any of the Corporations has been
identified as a potentially responsible party for cleanup liability with
respect to the emission, discharge, or Release of any Hazardous Materials.
(5) Except as set forth on Schedule 4.1(o), none of (A) the
Corporations or (B) any predecessor in interest of any of them owns or has
owned, leases or has leased, or conducts or has conducted any operations,
including, but not limited to, producing, manufacturing, or warehousing
products made by any of the Corporations or any such predecessor, or
storing raw materials used in connection therewith, at any location with
respect to which location any of the Corporations has or potentially may
have any liability under any Environmental Laws (other than liabilities the
existence of which would not have a Material Adverse Effect), other than
those locations set forth on Schedule 4.1(o).
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(p) Schedule 4.1(p) contains a true and complete list of all policies of
insurance and fidelity or surety bonds currently in force covering the
properties and assets of the Corporations. Such properties and assets are
insured by reputable insurance companies against loss or damage by fire and
other risks to the extent and in the manner customary for companies engaged in
similar businesses and no other insurance is in Seller's reasonable business
judgment necessary to the conduct of the businesses of the Corporations as
presently conducted. Each Corporation is in compliance with the terms of all
policies and instruments listed on Schedule 4.1(p), except where failure to so
comply would not impair the availability of coverage thereunder, and coverage
thereunder will not be affected by the transactions contemplated hereby. Also
included on Schedule 4.1(p) is a list of all claims, if any, either currently
pending or which since December 31, 2000 have been settled under any of the
policies set forth on Schedule 4.1(p).
(q) The inventory of each Corporation consists of raw materials and
supplies, manufactured and purchased parts, work in process, and finished goods,
all of which, except as set forth on Schedule 4.1(q), is merchantable and fit
for the purpose for which it was procured or manufactured. Except as set forth
on Schedule 4.1(q), none of the inventory of each Corporation is obsolete,
damaged, or defective, subject to the reserves for inventory writedown set forth
on the most recent balance sheet (rather than in any notes thereto) included in
the Financial Statements.
(r) Seller has heretofore delivered to Buyer a summary aging schedule of
accounts receivable of the businesses of the Corporations as of October 31,
2001. Each Corporation has collected its accounts receivable only in the
ordinary course of business consistent with past practices. Except as indicated
on Schedule 4.1(r) or Schedule 4.1(t), all of
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the Corporations' accounts receivable (1) arose from valid sales and bona fide
transactions in the ordinary course of business and (2) are subject to no
defense, offset, allowance or credit, and no disputes with regard to any of such
accounts exist. Except as set forth on Schedule 4.1(r), the allowances for
collection losses set forth on the Financial Statements have been determined in
conformity with GAAP consistent with past practice.
(s) Neither Seller nor anyone acting on behalf of Seller has retained any
broker, finder or agent or agreed to pay any brokerage fee, finder's fee or
commission with respect to the transactions contemplated by this Agreement.
(t) Except as set forth on Schedule 4.1(t), none of the Corporations is a
party to any transactions with any of their respective Affiliates.
(u) Schedule 4.1(u) lists all bank, money market, savings and similar
accounts and safe deposit boxes of each Corporation specifying the account
numbers and the authorized signatories of Persons having access to them.
(v) None of Seller's representations and warranties contained in this
Agreement, any of the Schedules hereto or any certificate or other statement
made or furnished by Seller to Buyer in connection with this Agreement, or the
transactions contemplated hereby, contains or will contain any untrue statement
of material fact, or omits or will omit to state a material fact necessary in
order to make the statements contained herein or therein not misleading.
4.2 As to Seller. Seller hereby makes the following representations and
warranties to Buyer as of the date of this Agreement and as of the Closing Date:
(a) Xxxxx X. XxXxxxx is the duly qualified and acting personal
representative of the Estate and as such, acting alone and signing singly, has
the power to
-35-
execute and deliver this Agreement as Seller and to consummate the transactions
contemplated herein on Seller's behalf.
(b) The making and performance by Seller of this Agreement have been duly
authorized by all necessary action (including, without limitation, obtaining any
consents or approvals of judicial authorities required by law and any consent of
the heirs or beneficiaries of Seller required by law or the last will and
testament of Xxxxxxx X. XxXxxxx ("Will") and do not and will not (1) violate any
law, rules, regulations, or orders to which properties or assets of the Estate
are subject; (2) conflict with or result in a breach of, or constitute a default
under, the Will or any indenture or other agreement or instrument by which the
Estate or any of its properties or assets may be bound or affected; or (3)
result in or require the creation or imposition of any lien, charge or
encumbrance upon or with respect to any of the properties or assets of the
Estate.
(c) Except as set forth on Schedule 4.2(c), the Estate has timely filed all
tax and information returns and has paid all Taxes required to be filed or paid
by the Estate.
(d) Except as set forth on Schedule 4.2(d), there are no lawsuits or other
proceedings pending or, to the best of Seller's knowledge, threatened against
the Estate, or any of its properties or assets, before any court or arbitrator
or by or before any governmental commission, bureau or other regulatory
authority which could limit or impair the Estate's ability to perform its
obligations hereunder or to consummate the transactions provided for herein.
(e) The Estate has good and indefeasible title to the Purchased Stock to be
conveyed by it to Buyer pursuant to Section 2.1(a) hereof, free and clear of all
liens, claims and encumbrances of any kind or nature whatsoever other than a
special estate tax lien under Section 6324 of the Code.
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(f) On the Closing Date, subject only to the Corporations making such
payments, if any, as may be required by Section 6.2(e), all amounts owed by the
Corporations to Seller or its other Affiliates, net of all amounts owed by
Seller or its other Affiliates to the Corporations shall have been satisfied,
contributed to the capital of the Corporations or otherwise cancelled, without
the expenditure of any funds by the Corporations other than as contemplated by
Section 6.2(e), all to the reasonable satisfaction of Buyer and Seller.
(g) This Agreement constitutes, and the agreements, instruments and other
documents, to which Seller is a party, executed and delivered pursuant to this
Agreement will constitute, the legal, valid and binding obligation of Seller,
each enforceable against Seller in accordance with its terms, except insofar as
the enforceability hereof or thereof may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity.
4.3 Buyer. Buyer hereby makes the following representations and warranties
to Seller as of the date of this Agreement and as of the Closing Date:
(a) Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Massachusetts. Buyer has the requisite
corporate power and corporate authority and any necessary governmental
authority, franchise, license, certificate or permit to own, operate or lease
the properties that it purports to own, operate or lease and to carry on its
business as it is now being conducted, and is duly qualified to do business, and
is in good standing, in each jurisdiction where the character of its properties
owned, operated or leased or the nature of its activities makes such
qualification necessary, and the failure to be so qualified and in good standing
would have a material adverse effect on Buyer.
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(b) The making and performance by Buyer of this Agreement have been duly
authorized by all necessary corporate action and do not and will not violate any
material provision of law, rules, regulations or orders; or result in a breach
of, or constitute a default under, Buyer's Certificate of Incorporation or
By-laws or any indenture or other agreement or instrument by which Buyer, any of
its Affiliates, or any of their respective properties may be bound or affected;
or result in, or require, the creation or imposition of any lien upon or with
respect to any of Buyer's properties.
(c) This Agreement constitutes the legal, valid and binding obligation of
Buyer enforceable in accordance with its terms, except insofar as the
enforceability hereof may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity.
(d) Neither Buyer nor anyone acting on its or their behalf has retained any
broker, finder or agent or agreed to pay any brokerage fee, finder's fee or
commission with respect to the transactions contemplated by this Agreement.
(e) No consent by any governmental authority is required by or with respect
to Buyer in connection with the execution and delivery of this Agreement by
Buyer or of the transactions contemplated by this Agreement.
(f) Buyer has, or will have prior to the Closing, sufficient funds
available (through existing credit arrangements or otherwise) to deliver the
Purchase Price to Seller at the Closing in accordance with the provisions of
this Agreement.
(g) Buyer (1) understands that the Purchased Stock to be sold and
transferred pursuant to this Agreement by Seller to Buyer is not registered
under the Securities Act of 1933, as amended (the "Securities Act"), or under
any state securities laws, and is being sold in
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reliance upon federal and state exemptions for transactions not involving any
public offering, (2) is acquiring the Purchased Stock solely for its own account
for investment purposes, and not with a view to the distribution thereof, (3) is
a sophisticated investor with knowledge and experience in business and financial
matters, (4) has received detailed information with respect to the business of
the Corporations, including, without limitation, a copy of the Financial
Statements and related information, which Buyer has reviewed, (5) is able to
bear the economic risk inherent in holding the Purchased Stock, and (6) has had
the opportunity to conduct and has conducted due diligence with respect to the
business and operations and the assets of the Corporations.
(h) None of Buyer's representations and warranties contained in this
Agreement, any of the Schedules hereto or any certificate or other statement
made or furnished by Buyer to Seller in connection with this Agreement, or the
transactions contemplated hereby, contains or will contain any untrue statement
of material fact, or omits or will omit to state a material fact necessary in
order to make the statements contained herein or therein not misleading.
SECTION 5
COVENANTS
5.1 Activities Prior to Closing. Seller covenants and agrees that from and
after the execution and delivery of this Agreement to and including the Closing
Date:
(a) Subject to the outstanding agreements between Buyer and Seller with
respect to the nondisclosure of confidential information, Seller shall cause the
Corporations to:
(1) afford to the officers, employees, attorneys, accountants and
other authorized representatives of Buyer reasonable access, during normal
business hours, to the offices, plants, properties, books and records of
the Corporations in order that Buyer may have full opportunity to make such
engineering, legal, financial, accounting, and other reviews or
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investigations thereof as Buyer shall reasonably desire to make (including
such environmental investigations as Buyer or its representatives
reasonably deem necessary to adequately assess the environmental situation
relating to the assets, businesses and properties of the Corporations;
(2) permit, and cause its independent public accountants to permit,
Buyer and its independent public accountants to inspect the work papers of
the accountants for the Corporations (other than those work papers which
are proprietary to the accountants) and other records; and
(3) furnish, and cause the officers and employees of the Corporations
to furnish, to Buyer and its authorized representatives such additional
financial and operating data and other information regarding their
respective assets, properties, contracts, goodwill and business, as Buyer
shall from time to time reasonably request including, without limitation,
all interim financial and operating reports prepared by or for Seller,
officers of any of the Corporations or any of their respective Affiliates.
(b) The business of each Corporation shall be conducted in the ordinary
course consistent with current and past practices and in compliance with all
applicable laws, rules and regulations, subject to the restrictions contained in
this Agreement; decisions with respect to the management of the business of each
Corporation (other than day-to-day decisions in the ordinary course) shall be
made after consultation with Buyer.
(c) Except in accordance with existing employment agreements or existing
employment practices or pursuant to Buyer's prior written consent, which consent
shall not be unreasonably withheld, conditioned or delayed, and other than
annual review and wage adjustments made on a monthly basis: (1) no increase
shall be made in the compensation, bonuses or commissions payable or to become
payable by any of the Corporations to any of their
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respective officers, employees or agents; (2) no arrangement shall be made for
any new, additional or increased bonuses, profit sharing plan, pension or
retirement plan, or any similar plan relating to employees or agents; and (3) no
material change shall be effected in management, personnel policies or employee
benefits.
(d) Other than purchase or sale orders in the ordinary course of business,
no contract or commitment for which any of the Corporations shall have a
liability following the Closing Date in excess of $25,000 as to any single
contract or commitment or $100,000 in the aggregate shall be entered into by or
on behalf of such Corporation without the prior written consent of Buyer, which
consent shall not be unreasonably withheld, conditioned or delayed. None of the
Corporations shall enter into any barter or trade agreements under which any of
them will have any liability following the Closing Date.
(e) Other than sales of inventory and finished goods in the ordinary course
of business, none of the properties and assets of the Corporations shall be
sold, transferred, conveyed, leased, mortgaged, hypothecated or otherwise
disposed of or encumbered except by Permitted Liens or with the prior written
consent of Buyer, which consent shall not be unreasonably withheld, conditioned
or delayed, unless in the case of tangible personal property such property
through normal usage becomes unusable or substantially unusable. The
Corporations shall maintain their respective inventory levels in accordance with
past practice, except for changes in inventory levels resulting from or due to
changes by the Corporations in product service policies or procedures.
(f) Seller shall use its reasonable best efforts to cause each Corporation
to use reasonable efforts to preserve intact their respective businesses, to
keep available the services of
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their present employee workforce and to preserve the goodwill of their customers
and others having business relations with them.
(g) Seller shall use its reasonable best efforts to obtain the Required
Consents prior to the Closing Date.
(h) If any of the Corporations receives any findings, orders, complaints,
citations or notices prior to Closing which states that any aspect of its
operations violates in any material respect any rule or regulation of any
governmental authority (each an "Administrative Violation"), Seller shall
promptly notify Buyer of the Administrative Violation, and Seller shall cause
such Corporation to use its reasonable efforts to remove or correct the
Administrative Violation, and such Corporation to be responsible for the payment
of (or cause the current liabilities of the Corporation, as of the Closing Date,
to reflect a reasonable reserve for) all costs associated therewith, including,
any attorneys' fees, fines or back pay that may be assessed.
(i) Until the earlier of the Closing or the termination of this Agreement
in accordance with Section 3.1 hereof, none of (A) Seller, (B) the Corporations
or (C) any of their respective administrators, personal representatives,
officers, employees, agents or representatives shall, directly or indirectly,
through brokers or otherwise, initiate or solicit any offers, bids or
indications of interest, or negotiate with any Person other than Buyer or its
Affiliates with respect to (1) the sale of any of the Purchased Stock, any other
Stock of the Corporations or the properties and assets of the Corporations
(other than sales or other dispositions of inventory and finished goods in the
ordinary course of business) or (2) any other business combination involving any
of the Corporations, nor shall any of them furnish to any Person, or authorize
any Person to furnish, any information concerning the business of any of the
Corporations with a view to soliciting or negotiating any transactions of the
sort described in clause (1) or (2) above.
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If any Person should seek to initiate discussions or negotiations relative to a
transaction of the sort described in clause (1) or (2) above, Seller shall
notify Buyer within two Business Days of Seller's becoming aware thereof.
(j) Seller shall use its best efforts to cause each of the Corporations to:
(1) collect its accounts receivable in the ordinary course of its
business and consistent with past practice, and (except for discounts for
prompt payment thereof granted in the ordinary course) not accelerate the
collection of, settle, compromise or waive any material right with respect
to any of its accounts receivable without the prior written consent of
Buyer, which consent shall not be unreasonably withheld, conditioned or
delayed;
(2) pay its trade accounts payable in the ordinary course of its
business and consistent with past practice and not default in any material
respect under, or breach any term or provision of, or fail in any material
respects to perform, or suffer or permit to exist any condition or event
which, after notice or lapse of time, or both, would constitute a default
under, any Lease, agreement, permit, license, consent or insurance policy,
if any such default, breach, failure to perform, or condition, or the
exercise of any rights or remedies as a result thereof could have a
Material Adverse Effect; and
(3) refrain from engaging in any Stock Transactions or making any
Restricted Payments.
(k) Seller shall promptly notify Buyer of any material adverse change in
the assets or liabilities, businesses or conditions, financial or otherwise, the
results of operations or prospects of the Corporations of which Seller has
knowledge, whether as a result of any legislative or regulatory change,
revocation of any license or rights to do business, fire,
-43-
explosion, accident, casualty, labor trouble, flood, drought, civil disorder,
riot, war or other hostility or terrorist act, storm, condemnation, act of God
or other public force, or otherwise.
(l) Seller will not (and will not allow any of the Corporations to) take
any action or engage in any transaction which would render any representation
and warranty of Seller inaccurate in any material respect as of the date hereof
or as of the Closing Date.
(m) None of the Corporations shall make any payments to, or enter into any
transactions with, any of their respective Affiliates or Seller (other than
employment arrangements currently in effect and transactions listed on Schedule
4.1(t)), except to the extent (1) the same are reflected on the Closing Balance
Sheet as accrued current liabilities of such Corporation, or (2) the payment or
transaction is required to settle a balance with Affiliates or Seller as of the
Closing Date.
(n) Without Buyer's prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed, none of the Corporations shall
enter into any agreement or understanding with any governmental authority which
would subject any of them to injunctive or other equitable relief or give rise
to any financial obligation.
(o) Seller will not revoke the election of any of the Corporations to be
taxed as an S corporation within the meaning of Code Sections 1361 and 1362.
Seller and the Corporations will not take or allow any action (other than the
sale of the Purchased Stock pursuant to this Agreement) that would result in the
termination of the status as any of the Corporations as a validly electing S
corporation within the meaning of Code Sections 1361 and 1362.
(p) Seller shall prepare or cause to be prepared and file or cause to be
filed all Tax returns for each of the Corporations for all periods ending on or
prior to the Closing Date
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which are to be filed after the Closing Date. Seller shall permit Buyer 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 Buyer. To the extent permitted by applicable law, Seller
shall include any income, gain, loss, deduction or other tax items for such
periods on its Tax returns in a manner consistent with the Schedule K-1s
furnished by the Corporations to Seller for such periods. From and after the
Closing, Buyer shall permit Seller and Seller's professional advisors access to
the books and records of the Corporations to the extent reasonably necessary or
helpful for Seller to prepare Tax returns for each of the Corporations for all
periods ending on or prior to the Closing Date which are to be filed after the
Closing Date. Buyer shall cooperate fully, and shall cause the Corporations to
cooperate fully, as and to the extent reasonably requested by Seller, in
connection with the preparation by Seller of such Tax returns to be prepared by
Seller. Such cooperation shall include, but not be limited to, the retention of
records and information reasonably relevant to the preparation, filing and
submission of such Tax returns by Seller.
5.2 Third Party Consents.
(a) The parties shall cooperate fully with one another in obtaining any
necessary consents and approvals required for the consummation of the
transactions contemplated hereby. Except as otherwise expressly provided for
herein, each party shall bear and be responsible for any administrative filing
fees or costs imposed on such party by governmental authorities in connection
with obtaining such consents or approvals.
(b) Neither party hereto shall take any intentional action or steps which
would prejudice or jeopardize the obtaining of any necessary consent to the
transactions contemplated by this Agreement.
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5.3 Confidentiality; Press Releases.
(a) The provisions of the Confidentiality Agreement, made as of the 20th
day of August, 2001, by and among FISMA, Instruments for Surgery, Instruments
for Medicine and Buyer, a copy of which is annexed hereto as Schedule 5.3, are
hereby incorporated herein by reference. In addition, any confidential
information made available to Seller with respect to Buyer, its parents,
Subsidiaries and Affiliates (and, after the Closing any confidential information
with respect to the Corporations and their respective Subsidiaries) shall be
held in confidence by Seller and shall be subject to the nondisclosure
obligations set forth in such Confidentiality Agreement, adjusted mutatis
mutandis in order to effect the intent of this sentence.
(b) Prior to the Closing, the parties shall consult with each other before
issuing any press releases or otherwise making any public statements with
respect to this Agreement and the transactions contemplated hereby, and none of
(A) the parties hereto or (B) the Corporations shall issue any such press
release nor make any such public statement without the prior written consent of
Buyer and Seller, except as may be required by law or the valid order of a court
of competent jurisdiction.
SECTION 6
CONDITIONS PRECEDENT
6.1 Buyer's Conditions. The obligation of Buyer to perform, fulfill or
carry out its agreements, undertakings and obligations herein made or expressed
to be performed, fulfilled or carried out on or after the Closing Date is and
shall be subject to fulfillment of or compliance with, on the Closing Date, the
following conditions precedent, any of which may be waived by Buyer:
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(a) All representations and warranties of Seller set forth in this
Agreement shall be true and correct in all material respects as of the Closing
Date as though made at and as of the Closing Date. Seller shall have performed
and complied in all material respects with all agreements, covenants and
conditions required by this Agreement to be performed or complied with by it at
or prior to the Closing Date.
(b) Neither party hereto shall be under an injunction or other legal
restriction which, in the opinion of counsel for Buyer, makes impossible or
unlawful the closing of the transactions contemplated hereby.
(c) Seller shall have caused to be delivered to Buyer the documents
referred to in Section 3.2(a).
(d) Lumenis Holdings Inc., as buyer, under that certain contract of sale
dated the date hereof between it and XxXxxxx Properties, Inc., shall have
acquired the Premises, as such term is defined in said contract.
(e) The Corporations shall have paid, or otherwise satisfied, all amounts
due to Seller and its Affiliates on or prior to the Closing Date such that no
amounts are due to Seller or any of its Affiliates from the Corporations
immediately following the Closing. To the extent the Corporations have not paid,
or otherwise satisfied, all such amounts, the Purchase Price shall be reduced by
the amounts the Corporations then owe Seller and its Affiliates.
6.2 Seller's Conditions. The obligation of Seller to perform, fulfill or
carry out its agreements, undertakings and obligations herein made or expressed
to be performed, fulfilled or carried out on or after the Closing Date is and
shall be subject to fulfillment of or compliance with, on the Closing Date, the
following conditions precedent, any of which may be waived by Seller:
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(a) All representations and warranties of Buyer set forth in this Agreement
shall be true and correct in all material respects as of the Closing Date as
though made at and as of the Closing Date. Buyer shall have performed and
complied with all covenants and agreements contained in this Agreement required
to be performed and complied with by Buyer at or prior to the Closing Date.
(b) Neither party hereto shall be under an injunction or other legal
restriction which, in the opinion of counsel for Seller, makes impossible or
unlawful the closing of the transactions contemplated hereby.
(c) Buyer shall have, concurrently with the delivery of the documents
referred to in Section 3.2(a), made payment of the Purchase Price and shall have
caused the documents referred to in Section 3.2(b) to be delivered to Seller.
(d) If and to the extent of any reduction in the Purchase Price pursuant to
Section 6.1(e), Buyer shall have contributed to the capital of the Corporations
the amount of such reduction and caused the Corporations to use such
contribution to repay all outstanding loans and other amounts due to Seller and
its Affiliates at the Closing.
SECTION 7
INDEMNIFICATION, ETC.
7.1 Survival of Warranties. Each party hereto covenants and agrees that its
representations and warranties contained in this Agreement shall survive the
Closing Date hereunder and such representations and warranties contained herein
(other than (a) Seller's representations and warranties with respect to Taxes
and title to the Purchased Stock; and (b) the respective representations of the
parties set forth in Sections 4.1(s) and 4.3(d), all of which shall continue
until three months after the expiration of the statute of limitations applicable
thereto)
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shall be of no further force and effect after the first anniversary of the
Closing Date, except as to claims theretofore made.
7.2 Seller's Indemnification. Seller shall indemnify, defend and hold
harmless Buyer and its Affiliates from and against and in respect of Damages,
arising out of or in any manner incident, relating or attributable to:
(a) Any inaccuracy in any representation or breach of any warranty of
Seller contained in this Agreement.
(b) Any failure by Seller to perform or observe, or to have performed or
observed, in full, any covenant, agreement or condition to be performed or
observed by it under this Agreement.
(c) Any claim for taxes arising out of the matters described on Schedule
4.1(g), Schedule 4.2(c) and Schedule 4.2(d).
(d) Brokerage fees relating to the transactions contemplated herein or the
consummation thereof, based in any way on agreements, arrangements or
understandings claimed to have been made by Seller with any third party.
(e) All reasonable costs and expenses (including reasonable attorneys' fees
and expenses, and expenses of investigation) incurred by Buyer in connection
with any action, suit, proceeding, demand, assessment or judgment incident to
any of the matters Buyer is indemnified against by Seller in this Agreement.
Provided, however, in no event shall Seller be required to make
indemnification payments in excess of the Purchase Price, and provided further
that, notwithstanding anything to the contrary in this Agreement, the parties
hereto expressly acknowledge and agree that the indemnification right of Buyer
provided for in this Section 7.2 shall be the sole and exclusive
-49-
right and remedy of or available to Buyer for or with respect to any and all
claims for Damages suffered or incurred by Buyer or to which Buyer may be
entitled to, or at any time shall or may assert against Seller or the
Corporations under or pursuant to this Agreement and any other documents entered
into by the parties hereto as contemplated by this Agreement. Therefore, the
parties hereto expressly acknowledge and agree that, except for nonpayment of
the amount, if any, due Buyer under this Section 7.2, in no event shall Buyer be
entitled to seek or to obtain any recovery or judgment against Seller, the
Corporations, or any of their Affiliates as a result of or on the basis of this
Agreement or any other documents entered into by the parties hereto as
contemplated by this Agreement, and in no event shall Buyer be entitled to seek
or obtain other damages of any kind, including, without limitation,
consequential, indirect or punitive damages.
7.3 Buyer's Indemnification. Buyer shall indemnify, defend and hold
harmless Seller from and against and in respect of Damages arising out of or in
any manner incident, relating or attributable to:
(a) Any inaccuracy in any representation or breach of warranty of Buyer
contained in this Agreement.
(b) Any failure by Buyer to perform or observe, or to have performed or
observed, in full, any covenant, agreement or condition to be performed or
observed by it under this Agreement.
(c) Liabilities or obligations of, or claims against, Seller (whether
absolute, accrued, contingent or otherwise) relating to, or arising out of, the
operation of the businesses of the Corporations subsequent to the Closing Date.
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(d) Any and all increases in Taxes incurred by Seller or the Estate
(including Taxes on Taxes) resulting from or caused by the Elections, over the
Taxes Seller and the Estate would have otherwise paid had no Elections been
made.
(e) Brokerage fees relating to the transactions contemplated herein or the
consummation thereof, based in any way on agreements, arrangements or
understandings claimed to have been made by Buyer with any third party.
(f) All reasonable costs and expenses (including reasonable attorneys' fees
and expenses and expenses of investigation) incurred by Seller in connection
with any action, suit, proceeding, demand, assessment or judgment incident to
any of the matters Seller is indemnified against by Buyer in this Agreement.
7.4 Defense of Claims. The Indemnified Party shall give prompt notice to
the Indemnifying Party of any claim against the Indemnified Party which might
give rise to a claim based upon any indemnity contained herein. The notice shall
set forth in reasonable detail the nature and basis of the claim and the actual
or estimated amount thereof, if known to the Indemnified Party. In the event any
action, suit or proceeding is brought against the Indemnified Party with respect
to any such claim, the Indemnifying Party shall have the right, at its sole cost
and expense, to defend, in the name and on behalf of the Indemnified Party, any
such action, suit or proceeding with counsel of the Indemnifying Party's choice.
The parties hereto agree to render to each other such assistance as may
reasonably be required in order to ensure the proper and adequate defense of any
such action, suit or proceeding. The Indemnified Party shall have the right to
participate, at its own expense and with counsel of its choosing, in the defense
of any claim against which it is indemnified hereunder and it shall be kept
fully informed with respect thereto. Without the prior written consent of the
Indemnified Party, which consent shall not be
-51-
unreasonably withheld, conditioned or delayed, the Indemnifying Party shall not
make any settlement of any claim if as a result thereof the Indemnified Party
would become subject to injunctive or other equitable relief or the Tax status,
business or financial condition of the Indemnified Party would be adversely
affected. Without the prior written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld, conditioned or delayed, the
Indemnified Party shall not make any settlement of any claim which might give
rise to liability of the Indemnifying Party under any indemnity contained
herein.
7.5 Characterization of Payments. All amounts paid pursuant to this
Agreement by the Indemnifying Party to the Indemnified Party in respect of an
indemnity obligation hereunder shall be treated by the parties as an adjustment
to the Purchase Price.
SECTION 8
MISCELLANEOUS.
8.1 Expenses. Except as otherwise specified herein, Seller and Buyer shall
each pay its own expenses in connection with the preparation of this Agreement
and the consummation of the transactions contemplated hereby.
8.2 Buyer's Remedies. Buyer shall have the right and remedy to have the
provisions of this Agreement specifically enforced by any court having
jurisdiction, it being acknowledged and agreed that Buyer will not have an
adequate remedy at law if Seller fails to consummate the transactions
contemplated hereby. Such right and remedy shall be in addition to, and not in
lieu of, any other rights and remedies available to Buyer at law or in equity.
8.3 Assignment. No party hereto may assign or transfer its rights or
obligations arising under this Agreement, without the written consent of the
other party hereto, which consent may be withheld in the sole and absolute
discretion of the party asked to consent; provided, however, that Buyer may
assign its rights hereunder in whole or in part to any
-52-
Affiliate, or any partnership in which any of its Affiliates is a general
partner (it being understood that no such assignment shall serve to relieve the
assignor of its obligations hereunder) so long as such assignment shall not
serve to delay the Closing.
8.4 Notice. All notices and other communications provided for herein shall
be in writing and telecopied, mailed or delivered by overnight courier or by
hand to the intended recipient at the telephone number or "Address for Notices"
specified below or, as to either party, at such other telephone number or
address as shall be designated by such party in a notice to each other party
given as follows:
(a) If to Buyer, to
Lumenis Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxx Xxxxx,
Executive Vice President
with a copy, which shall not constitute notice, to:
RubinBaum LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxx Xxxxxxxxx, Esq.
(b) If to Seller, to
Xxxxx X. XxXxxxx
c/o Stoel Rives LLP
Suite 1100, One Utah Center
000 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000-0000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx, XX, Esq.
with copies, which shall not constitute notice, to
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Xxxxx X. Xxxxxxx, President
HGM Medical Laser Systems
0000 Xxxx 0000 Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Telecopier No.: (801) ___ - ____
Stoel Rives LLP
Suite 1100, One Utah Center
000 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000-0000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx, XX, Esq.
All notices and other communications hereunder shall be deemed to have been duly
given when transmitted by telecopier or delivered to an overnight courier
service, in each case addressed as aforesaid or personally delivered or, in the
case of a mailed notice, when actually received by the intended recipient.
8.5 Entire Agreement. This Agreement, together with the Schedules hereto,
contains the entire understanding between the parties hereto concerning the
subject matter hereof and supersedes any and all prior representations,
warranties, undertakings, covenants and agreements between the parties and their
respective Affiliates as concerns the subject matter of this Agreement. This
Agreement may not be changed, modified, amended, altered or terminated except by
an agreement in writing executed by the parties hereto. Any waiver by any party
of any of its rights under this Agreement shall not constitute a waiver of any
other rights or of any other future breach.
8.6 Third Parties. Except as expressly set forth herein, nothing herein
expressed or implied is intended or shall be construed to confer upon or give to
any person or entity other than the parties hereto and their successors or
permitted assigns any rights or remedies under or by reason of this Agreement.
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8.7 Captions. Captions and descriptive headings are for convenience of
reference only and shall not control or affect the meaning or construction of
any provisions of this Agreement.
8.8 Counterparts. This Agreement may be executed in any number of
counterpart copies, each of which shall be deemed an original, but which
together shall constitute a single instrument. Any such counterpart may be
executed and delivered by telecopier or other facsimile transmission all with
the same force and effect as if the same was a manually executed and delivered
original counterpart.
8.9 Attorneys' Fees. Should either of the parties to this Agreement resort
to litigation or arbitration to enforce its rights under this Agreement, the
nonprevailing party in such litigation or arbitration shall pay all costs and
expenses, including reasonable attorneys' fees, of the prevailing party incurred
in connection with such litigation or arbitration.
8.10 Continuation of Attorney-Client Privilege. The Corporations and Seller
have been represented by counsel in connection with the transactions
contemplated by this Agreement and representatives of the Corporations and
Seller have had and through the Closing will have communications with such
counsel concerning or relating to the transactions contemplated by this
Agreement, the reasons for the transactions contemplated by this Agreement,
alternatives available to the Corporations and Seller and other similar or
related matters that are entitled to be treated as confidential attorney-client
communications under the Utah Rules of Professional Conduct and Utah law
(collectively, the "Transaction Communications"). Subsequent to the consummation
of the transactions contemplated by this Agreement, the confidential nature of
the Transaction Communications shall be preserved and, therefore, the
Transaction Communications shall be treated as confidential by Buyer and shall
not be directly or indirectly disclosed or
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disclosable to, made available to or used by Buyer or any representative of
Buyer or the Corporations, notwithstanding that the Corporations are owned by
Buyer and neither Buyer nor any of its Affiliates shall take any actions or
assert any position contrary to the continued existence and validity of the
privileged nature of the Transaction Communications.
8.11 Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms or provisions of this
Agreement (unless a failure of consideration would result thereby) or affecting
the validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction.
8.12 Governing Law. The laws of the State of Delaware, without reference to
Delaware choice of law or conflicts of law provisions, shall govern all other
issues arising under this Agreement.
8.13 Unconditional Guaranty of Lumenis Ltd. To induce Seller to enter into
this Agreement, the undersigned Lumenis Ltd., waiving any and all defenses other
than defenses available to Buyer, hereby absolutely and unconditionally
guarantees the prompt payment and performance and agrees to be jointly and
severally responsible with Buyer for any and all obligations of Buyer, under
this Agreement.
[balance of page intentionally left blank; signature page follows]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the day and year first above written.
LUMENIS INC.
By: /s/ Xxxx Xxxxxx
-----------------------------------
Name:
Title:
LUMENIS LTD.
By: /s/ Xxxx Xxxxxx
-----------------------------------
Name:
Title:
/s/ Xxxxx X. XxXxxxx
----------------------------------------
XXXXX X. XxXXXXX,
IN HER CAPACITY AS THE PERSONAL
REPRESENTATIVE OF THE
ESTATE OF XXXXXXX X. XxXXXXX
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