EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
BY AND AMONG
SPACELABS MEDICAL, INC.,
SPACELABS XXXXXXX, INC.,
DATEX-OHMEDA, INC.
AND
XXXXXXX CARDIOLOGY SYSTEMS, INC.
DATED DECEMBER 23, 2002
TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS........................................................... 1
1.1 Definitions.............................................................. 1
1.2 Interpretation........................................................... 5
ARTICLE 2. PURCHASE AND SALE OF SHARES; PURCHASE PRICE; CLOSING.................. 5
2.1 Purchase and Sale of Shares.............................................. 5
2.2 Xxxxxxx Money Deposit.................................................... 5
2.3 Purchase Price........................................................... 5
2.4 Adjustment of Purchase Price............................................. 6
2.5 Closing Date............................................................. 8
2.6 Closing Deliveries....................................................... 8
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF SELLER.............................. 8
3.1 Status................................................................... 8
3.2 Authorization............................................................ 8
3.3 Ownership of Shares...................................................... 9
3.4 No Violation............................................................. 9
3.5 Brokers and Finders...................................................... 9
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF SELLER AND THE COMPANY.............. 9
4.1 Corporate Status......................................................... 9
4.2 Authorization............................................................ 10
4.3 Capitalization........................................................... 10
4.4 Consents and Approvals; No Violation..................................... 10
4.5 Financial Statements; Books and Records.................................. 11
4.6 Material Adverse Change.................................................. 11
4.7 Absence of Undisclosed Liabilities....................................... 11
4.8 Properties and Assets.................................................... 11
4.9 Real Property............................................................ 11
4.10 Tax Matters.............................................................. 12
4.11 Employee Benefit Plans................................................... 12
4.12 Employees................................................................ 14
4.13 Material Contracts....................................................... 14
4.14 Environmental Matters.................................................... 14
4.15 Legal Proceedings........................................................ 15
4.16 Compliance with Laws..................................................... 15
4.17 Intellectual Property.................................................... 15
4.18 Medical Devices.......................................................... 16
4.19 Permits.................................................................. 17
4.20 Labor Relations.......................................................... 17
4.21 Accounts Receivable...................................................... 17
4.22 Inventory................................................................ 18
4.23 Product and Service Warranties........................................... 18
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4.24 Related Party Transactions............................................... 18
4.25 Disclosure............................................................... 18
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF BUYER............................... 19
5.1 Organization, Standing and Authority of Buyer............................ 19
5.2 Authorization............................................................ 19
5.3 Consents and Approvals; No Violation..................................... 19
5.4 Legal Proceedings........................................................ 20
5.5 Brokers and Finders...................................................... 20
5.6 Financial Resources...................................................... 20
ARTICLE 6. COVENANTS............................................................. 20
6.1 Efforts to Close......................................................... 20
6.2 Investigation and Confidentiality........................................ 20
6.3 Press Releases........................................................... 21
6.4 Covenants of the Company................................................. 21
6.5 Employee Matters......................................................... 22
6.6 Cooperation.............................................................. 23
6.7 Further Assurances....................................................... 24
6.8 Financing Efforts........................................................ 24
6.9 Change of Name........................................................... 24
6.10 Intercompany Accounts.................................................... 25
6.11 Tax Refunds.............................................................. 25
6.12 Inventory Count.......................................................... 25
6.13 Commingled Assets........................................................ 25
ARTICLE 7. CONDITIONS PRECEDENT.................................................. 25
7.1 Conditions Precedent - Buyer and Seller.................................. 25
7.2 Conditions Precedent - Seller............................................ 26
7.3 Conditions Precedent - Buyer............................................. 26
ARTICLE 8. TERMINATION, WAIVER AND AMENDMENT..................................... 27
8.1 Termination.............................................................. 27
8.2 Effect of Termination.................................................... 28
8.3 Waiver................................................................... 28
8.4 Amendment or Supplement.................................................. 28
ARTICLE 9. INDEMNIFICATION....................................................... 28
9.1 Survival of Representations, Warranties and Covenants.................... 28
9.2 Indemnification by Seller and Datex...................................... 29
9.3 Indemnification by Buyer................................................. 29
9.4 Certain Tax Indemnification by Seller and Datex.......................... 30
9.5 Indemnification Procedure................................................ 30
9.6 Limitation on Indemnification............................................ 31
9.7 Exclusive Remedy......................................................... 32
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ARTICLE 10. MISCELLANEOUS......................................................... 32
10.1 Expenses................................................................. 32
10.2 Entire Agreement......................................................... 32
10.3 No Assignment............................................................ 32
10.4 Notices.................................................................. 33
10.5 Access to Records after Closing.......................................... 33
10.6 Counterparts............................................................. 33
10.7 Severability............................................................. 34
10.8 Governing Law............................................................ 34
10.9 Disclaimer of Warranties................................................. 34
10.10 Force Majeure............................................................ 34
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT ("AGREEMENT") dated as of December 23,
2002, by and among Spacelabs Medical, Inc., a California corporation having its
principal executive office in Redmond, Washington ("SELLER"), Spacelabs Xxxxxxx,
Inc., a Delaware corporation having its principal executive office in Deerfield,
Wisconsin (the "COMPANY"), Xxxxxxx Cardiology Systems, Inc., a California
corporation having its principal executive office in Bothell, Washington
("BUYER"), and Datex-Ohmeda, Inc., a Delaware corporation having its principal
executive office in Madison, Wisconsin ("DATEX").
RECITALS
WHEREAS, the Company is engaged in the business of developing,
manufacturing, selling and distributing worldwide diagnostic cardiology products
and supplies to primary and acute care providers in the health care industry
(the "BUSINESS"); and
WHEREAS, Seller owns all of the issued and outstanding shares of
capital stock in the Company (the "SHARES"); and
WHEREAS, the parties hereto desire that Seller sell to Buyer and Buyer
purchase from Seller the Shares on the terms and subject to the conditions set
forth in this Agreement (the "TRANSACTION"); and
WHEREAS, Datex is an affiliate of the Company and expects to derive
substantial benefit from the Transaction; and
WHEREAS, the parties hereto desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained and intending to be
legally bound hereby, the parties hereto agree as follows:
AGREEMENT
ARTICLE 1.
DEFINITIONS
1.1 DEFINITIONS. Certain terms are defined in the text of this
Agreement. In addition, in this Agreement, the following terms have the meanings
specified or referred to in this Section 1.1 and shall be equally applicable to
both the singular and plural forms.
"CLOSING BALANCE SHEET" means the unaudited balance sheet of
the Company, to be prepared pursuant to Section 2.4 and to be dated as of the
Closing Date, which shall include, without limitation, a calculation of the Net
Working Capital as of the Closing Date.
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"CLOSING DATE" shall mean the date specified pursuant to
Section 2.4 hereof as the date on which the parties hereto shall close the
transactions contemplated herein.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended.
"COMPANY FINANCIAL STATEMENTS" shall mean the unaudited
financial statements of the Company, consisting of the statements of income for
each of the years ended December 31, 2001 and 2000 and the nine-month period
ended September 30, 2002, consolidated balance sheets as of December 31, 2001
and 2000 and as of September 30, 2002, and the consolidated statements of cash
flows for the year ended December 31, 2001 and the nine-month period ended
September 30, 2002, copies of which are attached as SCHEDULE 4.5(a).
"DISCLOSURE SCHEDULES" shall mean the disclosure schedules
attached to this Agreement.
"ENCUMBRANCE" means any lien, claim, charge, security
interest, mortgage, pledge, easement, conditional sale or other title retention
agreement, defect in title, covenant or other restrictions of any kind.
"ENVIRONMENTAL CLAIM" shall mean any written notice from any
Governmental Entity or third party alleging potential liability (including,
without limitation, potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based on, or resulting from the
presence, or release into the environment, of any Materials of Environmental
Concern.
"ENVIRONMENTAL LAWS" shall mean any federal, state or local
law, statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree, injunction or agreement with any
Governmental Entity relating to (a) the protection, preservation or restoration
of the environment (including, without limitation, air, water vapor, surface
water, groundwater, drinking water supply, surface soil, subsurface soil, plant
and animal life or any other natural resource), and/or (b) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of Materials of Environment Concern.
The term Environmental Law includes without limitation (x) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42
U.S.C. Section 9601, et seq.; the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. Section 6901, et seq.; the Clean Air Act, as amended, 42
U.S.C. Section 7401, et seq.; the Federal Water Pollution Control Act, as
amended, 33 U.S.C. Section 1251, et seq.; the Toxic Substances Control Act, as
amended, 15 U.S.C. Section 9601, et seq.; the Emergency Planning and Community
Right to Know Act, 42 U.S.C. Section 1101, et seq.; the Safe Drinking Water Act,
42 U.S.C. Section 300f, et seq.; and all comparable state and local laws, and
(y) any common law (including, without limitation, common law that may impose
strict liability) that may impose liability or obligations for injuries or
damages due to, or threatened as a result of, the presence of or exposure to any
Materials of Environmental Concern.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
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"ERISA AFFILIATE" shall mean any trade or business, whether or
not incorporated, that together with the Company is treated as a "single
employer" under Section 414 of the Code.
"EXCLUDED LIABILITIES" shall mean (i) any Losses and
liabilities arising from or related to the Company's post-retirement medical
plan (as described on SCHEDULE 4.11 to the Disclosure Schedules) (the "EXCLUDED
PLAN") and (ii) any and all Taxes imposed on the Company (or any predecessor
thereof) with respect to (A) any taxable period ending on or before the Closing
Date and (B) the portion, ending on and including the Closing Date, of any
taxable period commencing prior to the Closing Date and ending after the Closing
Date.
"GAAP" shall mean U.S. generally accepted accounting
principles in compliance with all published rules and guidelines of the U.S.
Securities and Exchange Commission.
"GOVERNMENTAL ENTITY" shall mean any federal or state court,
administrative agency or commission or other governmental authority or
instrumentality.
"KNOWLEDGE" of the Company or Seller shall mean the actual
knowledge of Xxxxx Xxxxxx, Xxxxx Xxxxxxx, Xxxx Xxxxxxx, Xxxxx Xxxxxxx, Xxxxxxx
Xxxxx, Seppo Luode, Xxxxx Xxxxxxx and Xxxxx Xxxxxxx, and "KNOWLEDGE" of Buyer
shall mean the actual knowledge of the executive officers of Buyer.
"MATERIAL ADVERSE EFFECT" shall mean, with respect to any
party, as the case may be, a material adverse effect on the financial condition,
results of operations or business of such party; provided, however, that
Material Adverse Effect shall not be deemed to include (a) the impact of changes
in general economic and/or financial market conditions, (b) relating to or
affecting any of the medical device industry generally, (c) arising from or
relating to the development, discovery or commercialization of any present or
proposed technology, processes or product that is (or that may reasonably be
expected to be) competitive with or superior to any of the technology, processes
or products of such party, (d) expenses incurred in connection with the
transactions contemplated hereby, and (e) actions or omissions of a party (or
any of its subsidiaries) taken with the prior consent of the other party in
contemplation of the transactions contemplated hereby.
"MATERIAL CONTRACT" shall mean any of the following
agreements, contracts or commitments to which the Company is a party: (i) any
contract (other than a customer order entered into in the normal course of
business with terms not materially less favorable than other transactions
entered into in the normal course of business since December 31, 2001) which
involves the material payment of cash or other property, an unperformed
commitment, or goods or services, having a value in excess of $100,000; (ii) any
agreement, contract or commitment containing any covenant limiting the freedom
of the Company to engage in any business activity or compete with any person or
entity; (iii) any agreement, contract or commitment relating to the disposition
or acquisition of assets or for the purchase of services, materials, supplies,
inventory or equipment which expires more than one year from the date hereof or
which involves any liability in an amount in excess of $100,000; (iv) any
collective bargaining agreement; (v) any agreement creating a partnership, joint
venture joint development or other cooperative undertaking; (vi) any agreement
upon which the Business is substantially dependent or the
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expiration, nonrenewal or termination of which would have a Material Adverse
Effect on the Company.
"MATERIALS OF ENVIRONMENTAL CONCERN" shall mean pollutants,
contaminants, wastes, toxic substances, petroleum and petroleum products and any
other materials regulated under Environmental Laws.
"NET WORKING CAPITAL" shall be as defined on SCHEDULE 2.4.
"PERMITTED LIENS" shall mean any of the following
Encumbrances: (a) liens for taxes, assessments and governmental charges not yet
due and payable or being contested in good faith; (b) zoning laws and ordinances
and similar legal requirements; (c) rights reserved to any Governmental Entity
to regulate the affected property; (d) liens of landlords and liens of carriers,
warehousemen, mechanics and materialmen and other like liens arising in the
ordinary course of business for sums not yet due and payable; and (e) statutory
liens and any easements, rights-of-way, servitudes, permits, restrictions and
imperfections or irregularities in title whether or not reflected in the public
records, which do not individually or in the aggregate interfere with the right
or ability to own, use or operate the property as it is currently being used or
operated in the ordinary course of business.
"PERSON" shall mean any partnership, corporation, business
trust, limited liability company, joint stock company, trust, joint venture or
other entity.
"RELATED PARTY" shall mean any Person that, directly or
indirectly, controls, is controlled by or is under common control with a
specified Person.
"REFERENCE BALANCE SHEET" means the unaudited balance sheet of
the Company, dated as of September 30, 2002, a copy of which is included with
SCHEDULE 2.4.
"RIGHTS" shall mean warrants, options, rights, convertible
securities and other arrangements or commitments which obligate an entity to
issue or dispose of any of its capital stock, and stock appreciation rights,
performance units and other similar stock-based rights whether they obligate the
issuer thereof to issue stock or other securities or to pay cash.
"TAX" or "TAXES" shall mean (i) any federal, state, local or
foreign income, gross receipts, property, sales, use, license, excise,
franchise, employment, payroll, withholding, alternative or add on minimum, ad
valorem, transfer or excise tax, or any other tax, custom, duty, governmental
fee or other like assessment or charge of any kind whatsoever, together with any
interest or penalty, imposed by any Governmental Entity; (ii) any liability for
the payment of any amounts of the type described in clause (i) as a result of
being or ceasing to be a member of an affiliated, consolidated, combined or
unitary group for any period (including any liability under Treasury Regulations
Section 1.1502-6 or any comparable provision of foreign, state or local law);
and (iii) any liability for the payment of any amounts of the type described in
clause (i) or (ii) as a result of any express or implied obligation to indemnify
any other Person or as a result of any obligations under any agreements or
arrangements with any other Person with respect to such amounts and including
any liability for taxes of a predecessor entity.
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"TAX RETURN" means any federal, state, local, foreign and
other applicable return, declaration, report, claim for refund, information
return or similar statement required by filed with a Governmental Entity with
respect to any Tax (including any attached schedules) and including any
amendment thereof.
"TRANSACTION DOCUMENTS" means this Agreement and all other
agreements, instruments and documents being or to be executed and delivered by
any of the Parties under this Agreement or in connection herewith.
1.2 INTERPRETATION. As used in this Agreement, the word
"including" means without limitation, the word "or" is not exclusive and the
words "herein", "hereof", "hereby", "hereto" and "hereunder" refer to this
Agreement as a whole. Captions, titles and headings to Articles and sections
herein are inserted for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this Agreement. The
Schedules and Exhibits referred to herein shall be construed with and as an
integral part of this Agreement to the same extent as if they were set forth
verbatim herein.
ARTICLE 2.
PURCHASE AND SALE OF SHARES; PURCHASE PRICE; CLOSING
2.1 PURCHASE AND SALE OF SHARES. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date, Seller shall sell, transfer,
assign, convey and deliver to Buyer, and Buyer shall purchase from Seller, the
Shares, free and clear of all Encumbrances. Notwithstanding the foregoing or any
other provision of this Agreement, Seller shall retain full responsibility for
all reporting and financial obligations associated with the Excluded Plan.
Notwithstanding the foregoing or any other provision of this Agreement, as among
Seller, Buyer and the Company, Buyer and the Company shall not assume, and
Seller shall retain, full responsibility for the Excluded Plan.
2.2 XXXXXXX MONEY DEPOSIT. On or before December 24, 2002, Buyer
shall deliver to U.S. Bank, National Association, or to such other financial
institution as Seller may determine ("ESCROW AGENT") an amount equal to
$1,325,000 (the "DEPOSIT"), to secure the obligations of Buyer to close under
this Agreement. The Deposit shall be applied pursuant to the terms of a deposit
escrow agreement, substantially in the form attached hereto as EXHIBIT 2.2
("ESCROW AGREEMENT"), to be executed concurrently herewith by Buyer, Seller and
Escrow Agent. Upon the Closing, the amount of the Deposit, together with
interest thereon, less $300,000 (the "AUDIT HOLDBACK"), shall be delivered to
Seller and credited against the Purchase Price. The Audit Holdback shall be
retained by the Escrow Agent pursuant to the Escrow Agreement, and disbursed in
accordance with Section 6.6(e) below. In the event of a termination of this
Agreement, the Deposit shall be paid in accordance with Section 8.2 hereof.
2.3 PURCHASE PRICE. The purchase price for the Shares (the
"PURCHASE PRICE") shall be equal to cash in the amount of $24,000,000, subject
to adjustment in Section 2.4 and Section 6.6(e) below. At Closing Buyer shall
pay to Seller the Purchase Price as follows: (i) by release to Seller of the
Deposit and accrued interest, less the Audit Holdback, in accordance with the
provisions of the Escrow Agreement; and (ii) by wire transfer of the balance of
the Purchase
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Price, less the Receivables Holdback defined in Subsection 2.4(a) below, in
immediately available funds to Seller.
2.4 ADJUSTMENT OF PURCHASE PRICE. The Purchase Price shall be
subject to adjustment after the Closing as specified in this Section 2.4 as
follows:
(a) $1,300,000 of the Purchase Price (the "RECEIVABLES
HOLDBACK") shall be retained by Buyer at the Closing and disbursed to Seller as
set forth in Section 2.4(d).
(b) As promptly as practicable, but in no event later
than 45 days following the Closing Date, Seller shall deliver to Buyer:
(i) the Closing Balance Sheet, which shall be
prepared in accordance with SCHEDULE 2.4;
(ii) calculation of Net Working Capital as of the
Closing Date (the "WORKING CAPITAL STATEMENT"); and
(iii) a calculation of the amount of the
international and acute care receivables (net of allowances) with respect to
sales of the Company's products (the "COMMINGLED RECEIVABLES VALUATION") on the
books of Seller as of the Closing Date. The Company shall assign to Seller all
of its right, title and interest in and to any and all of such receivables (net
of allowances).
(c) Buyer will deliver to Seller, no later than 30 days
after the date of delivery of the Working Capital Statement and the Commingled
Receivables Valuation, notice of its acceptance of the Working Capital Statement
and the Commingled Receviables Valuation (the "ACCEPTANCE NOTICE") or notice of
its dispute of the Working Capital Statement or the Commingled Receivables
Valuation (a "DISPUTE NOTICE"). In the event of such a dispute by Buyer, Buyer
shall promptly notify Seller in writing of each disputed item, specifying the
amount thereof in dispute and setting forth, in reasonable detail, the basis for
such dispute, as promptly as practicable, but in no event later than 30 days,
following delivery of the Closing Balance Sheet to Buyer. If Buyer delivers an
Acceptance Notice or fails to give a Dispute Notice within the prescribed time
period, Buyer will be deemed to have accepted Seller's determination of Net
Working Capital and the Commingled Receivables Valuation as final. In the event
Buyer timely delivers a Dispute Notice, Seller and Buyer shall attempt to
reconcile the parties' differences. If Seller and Buyer are unable to reach a
resolution within 20 days after receipt by Seller of Buyer's Dispute Notice,
Seller and Buyer shall submit the items remaining in dispute for resolution to a
mutually acceptable accounting firm that neither Seller nor Buyer has retained
at any time since December 31, 2000 (such accounting firm being referred to
herein as the "INDEPENDENT ACCOUNTING FIRM"), which firm shall, within 30 days
after such submission, determine and report to Seller and Buyer upon such
remaining disputed items, and such report shall be final, binding and conclusive
on Seller and Buyer. The fees and disbursements of the Independent Accounting
Firm shall be shared equally between Seller and Buyer.
(d) The Working Capital Statement and the Commingled
Receivables Valuation shall be deemed final for purposes of this Section 2.4
upon the earliest of (i) the failure of Buyer to deliver a Dispute Notice within
30 days of Seller's delivery of the Working Capital
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Statement and the Commingled Receivables Valuation, (ii) resolution of all
disputes, pursuant to Section 2.4(c), by Buyer and Seller, or (iii) resolution
of all disputes, pursuant to Section 2.4(c), by the Independent Accounting Firm.
Within 10 days after the Working Capital Statement and the Commingled
Receivables Valuation being deemed final (the "ADJUSTMENT DATE"), a Purchase
Price adjustment shall be made as follows:
(i) in the event that Net Working Capital as of
the Closing Date is less than $8,750,000, then the Purchase Price shall
be reduced by an amount equal to the shortfall, and FURTHER REDUCED by
the amount of the Commingled Receivables Valuation;
(ii) in the event that the Net Working Capital as
of the Closing Date is greater than $10,000,000, then the Purchase
Price shall be increased by an amount equal to the excess thereof, less
the amount of the Commingled Receivables Valuation;
(iii) in the event that the Net Working Capital as
of the Closing Date is an amount (A) equal to or greater than
$8,750,000 and (B) equal to or less than $10,000,000, then there shall
be no Net Working Capital related adjustment to the Purchase Price,
however the Purchase Price shall be reduced by the amount of the
Commingled Receivables Valuation.
The result of the calculations in any of clauses (i), (ii), or (iii) above shall
be referred to as the "ADJUSTED PURCHASE PRICE."
If the Adjusted Purchase Price is greater than the Purchase Price (such amount
being the "EXCESS"), then Buyer shall remit to Seller in immediately available
funds (i) an amount equal to the Excess and (ii) the amount of the Receivables
Holdback.
If the Adjusted Purchase Price is less than the Purchase Price (such amount
being the "SHORTFALL"), then Buyer shall retain the Receivables Holdback, and:
(A) if the Shortfall is equal to or exceeds the Receivables
Holdback, then Seller and Datex, jointly and severally, shall
pay to Buyer in immediately available funds an amount equal to
the difference between (x) the Shortfall and (y) the
Receivables Holdback.
(B) if the Shortfall is less than the Purchase Price by an amount
less than the Receivables Holdback, then Buyer shall pay to
Seller in immediately available funds an amount equal to the
difference between (x) the Shortfall and (y) the Receivables
Holdback.
(e) Solely in connection with the preparation of the
Closing Balance Sheet and calculations of Net Working Capital and the Commingled
Receivables Valuation:
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(i) Buyer shall give Seller and its accountants
reasonable access to the books and records of the Company, and shall
cause employees of Buyer and the Company to cooperate with Seller and
provide Seller with all information reasonably requested, all after
receiving reasonable notice from Seller of its requirements and
reaching agreement as to mutually convenient times for review, it being
understood that the purpose of this subsection is to make it possible
for Seller to fulfill its obligation to deliver the Working Capital
Statement and the Commingled Receivables Valuation within 45 days of
the Closing Date; and
(ii) Seller and Buyer, to the extent within their
respective control, shall give to each other and their agents access to
the work papers and other materials and documents used or produced in
connection with the preparation of the Working Capital Statement and
the Commingled Receivables Valuation.
2.5 CLOSING DATE. The transactions contemplated by this Agreement
shall be consummated at a closing (the "CLOSING") to be held at the executive
offices of Seller or as otherwise mutually agreed by the parties, on the first
business day following satisfaction of the conditions to consummation of the
Transaction set forth in Article 7 hereof (other than such conditions relating
to the receipt of officers' certificates).
2.6 CLOSING DELIVERIES. At Closing, Buyer shall deliver to Seller
the Purchase Price, and Seller shall deliver to Buyer original certificates
representing the Shares, duly endorsed for transfer to Buyer or with separate
stock transfer powers attached thereto and signed in blank. In addition, the
Parties shall deliver the other documents and agreements set forth in Article 7
to be signed and delivered at Closing.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller and Datex, jointly and severally, represent and warrant to Buyer
that the statements contained in this Article 3 are complete and correct, except
as set forth in the Disclosure Schedules.
3.1 STATUS. Seller is a corporation duly organized, validly
existing and in good standing under the laws of California. Datex is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware.
3.2 AUTHORIZATION. Each of Seller and Datex has all requisite
corporate power and authority to execute and deliver the Transaction Documents
to which each is or will at the Closing become a party and to consummate the
transactions contemplated hereby and thereby. Such execution, delivery and
consummation have respectively been duly authorized by all necessary corporate
action in respect thereof on the part of Seller and Datex. This Agreement and
any other Transaction Document executed and delivered by Seller and Datex as of
the date hereof have been duly executed and delivered by Seller and Datex and
constitute valid and binding obligations of Seller and Datex, enforceable
against such party in accordance with their respective terms, subject as to
enforceability, to bankruptcy, insolvency and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles. Each
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Transaction Document to be executed and delivered by Seller and Datex after the
date hereof, when executed and delivered, will have been duly executed and
delivered by Seller and Datex and will constitute a valid and binding obligation
of Seller and Datex, enforceable against such party in accordance with its
terms, subject as to enforceability, to bankruptcy, insolvency and other laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
3.3 OWNERSHIP OF SHARES. Seller is the beneficial and record owner
of the Shares, free and clear of all Encumbrances (other than Encumbrances
created by this Agreement) and is not subject to any restriction with respect to
their transferability (other than restrictions on transfer under applicable
federal and state securities laws).
3.4 NO VIOLATION. Except as contemplated by this Agreement, or as
may be required under foreign laws, no consent, approval or authorization of, or
declaration, notice, filing or registration with, any Governmental Entity, is
required to be made or obtained by Seller or Datex on or prior to the Closing
Date in connection with the execution and delivery of this Agreement, or the
consummation of the transactions contemplated by this Agreement, other than
consents, approvals, authorizations, declarations, notices, filings or
registrations that if not obtained or made would not have a Material Adverse
Effect.
3.5 BROKERS AND FINDERS. Neither Seller, Datex, the Company nor
any of their officers, directors or employees, has employed any broker, finder
or financial advisor or incurred any liability for any fees or commissions of
any broker, finder or financial advisor in connection with the transactions
contemplated herein, except for the retention of Xxxxxx Xxxxxx Xxxxxxxx & Co.,
Inc. Seller shall be solely liable for the fees of Xxxxxx Xxxxxx Xxxxxxxx & Co.,
Inc. in connection with the transactions contemplated herein.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF SELLER AND THE COMPANY
Seller and the Company jointly and severally represent and warrant to
Buyer that the statements contained in this Article 4 are complete and correct,
except as set forth in the Disclosure Schedules. The Disclosure Schedules
attached hereto is arranged in paragraphs corresponding to the numbered and
lettered paragraphs contained in this Article 4; however, any information
disclosed in the Disclosure Schedules under any paragraph of this Article 4,
shall be deemed to be disclosed for all purposes hereunder. The inclusion of any
matter in the Disclosure Schedules shall not be deemed an admission or otherwise
to imply that any such matter is material for purposes of this Agreement.
4.1 CORPORATE STATUS. The Company is a corporation duly organized,
validly existing and in good standing under the laws of Delaware. The Company
has full corporate power and authority to carry on the Business as now
conducted, and is duly licensed or qualified to do business in the states of the
United States where its ownership or leasing of property or the conduct of its
Business requires such qualification, except where the failure to be so licensed
or qualified would not have a Material Adverse Effect on the Company. The
Company has delivered to Buyer true and complete copies of its certificate of
incorporation and bylaws, with all amendments through the date hereof, and stock
ledgers and minute books.
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4.2 AUTHORIZATION. The Company has all requisite corporate power
and authority to execute and deliver the Transaction Documents to which it is or
will at the Closing become a party and to consummate the transactions
contemplated hereby and thereby. Such execution, delivery and consummation have
respectively been duly authorized by all necessary corporate action in respect
thereof on the part of the Company. This Agreement and any other Transaction
Document executed and delivered by the Company as of the date hereof has been
duly executed and delivered by the Company and constitute a valid and binding
obligation of the Company, enforceable against it in accordance with their
respective terms, subject as to enforceability, to bankruptcy, insolvency and
other laws of general applicability relating to or affecting creditors' rights
and to general equity principles. Each Transaction Document to be executed and
delivered by the Company after the date hereof, when executed and delivered,
will have been duly executed and delivered by the Company and will constitute a
valid and binding obligation of the Company, enforceable against it in
accordance with its terms, subject as to enforceability, to bankruptcy,
insolvency and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
4.3 CAPITALIZATION. The Company's authorized capital stock
consists of 3,000 shares of common stock, $0.01 par value per share, of which as
of the date of this Agreement 100 shares are issued and outstanding and held of
record by Seller. The Shares were validly issued and duly authorized, and are
fully paid and nonassessable. Other than the Company's joint venture interest in
Shanghai Xxxxxxx Medical Instrument Co., Ltd., the Company does not own,
directly or indirectly, any equity or other ownership interest in any
corporation, partnership, association or other entity. The Company does not have
and is not bound by any Rights, which are authorized, issued or outstanding with
respect to any of its capital stock.
4.4 CONSENTS AND APPROVALS; NO VIOLATION.
(a) Neither the execution and delivery of this Agreement,
nor consummation of the transactions contemplated hereby, nor compliance by the
Company with any of the provisions hereof shall: (i) conflict with or result in
a breach of any provision of the certificate of incorporation or bylaws of the
Company; (ii) constitute or result in a breach of any term, condition or
provision of, or constitute a default under, or give rise to any right of
termination, cancellation or acceleration with respect to, or result in the
creation of any Encumbrance upon any property or asset of the Company pursuant
to, any agreement, mortgage, indenture, license, or other instrument or
obligation to which the Company is a party; or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company,
except (in the case of clauses (ii) and (iii) above) for such violations,
rights, conflicts, breaches, creations or defaults which, either individually or
in the aggregate, will not have a Material Adverse Effect on the Company.
(b) Except as contemplated by this Agreement, or as may
be required under foreign laws, no consent, approval or authorization of, or
declaration, notice, filing or registration with, any Governmental Entity or any
other Person (including General Electric Company or its Related Parties) is
required to be made or obtained by the Company on or prior to the Closing Date
in connection with the execution, delivery and consummation of the transactions
contemplated by this Agreement, other than consents, approvals, authorizations,
declarations,
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notices, filings or registrations that if not obtained or made would not have a
Material Adverse Effect on the Company.
4.5 FINANCIAL STATEMENTS; BOOKS AND RECORDS.
(a) Except as set forth in SCHEDULE 4.5(a), the Company
Financial Statements were prepared in accordance with GAAP and fairly present in
all material respects the financial position of the Company as of the dates
indicated and the consolidated results of operations, and cash flows of the
Company for the periods then ended, using the assumptions disclosed therein and
in SCHEDULE 4.5(a) applied on a consistent basis.
(b) The Company has maintained and will, until the
Closing Date, continue to maintain complete and accurate customer lists,
supplier lists, sales files, price lists, pricing schedules, sales literature,
technical literature and all other books and records relating to the Business
maintained in the ordinary course of business consistent with past practice. The
minute books of the Company contain records which are accurate in all material
respects of all corporate actions of its shareholders and board of directors
(including committees of its board of directors).
4.6 MATERIAL ADVERSE CHANGE. Since September 30, 2002, (a) the
Company has conducted its Business in the ordinary and usual course consistent
with past practice, and (b) no event has occurred or circumstance arisen that,
individually or in the aggregate, has had or, as far as could reasonably be
foreseen, would have a Material Adverse Effect on the Company.
4.7 ABSENCE OF UNDISCLOSED LIABILITIES. The Company has no
liability (contingent or otherwise), excluding contractually assumed
contingencies, that is material to the Company, other than those disclosed in
the Company Financial Statements, and other than those liabilities and
obligations incurred in the ordinary course of the Business.
4.8 PROPERTIES AND ASSETS. All personal property owned by the
Company or presently used by it in its Business is in reasonably good condition
(ordinary wear and tear excepted). At Closing, the Company will have good and
marketable title free and clear of all Encumbrances to all of its the personal
properties and assets which, individually or in the aggregate, are material to
its Business taken as a whole, except for Permitted Liens. All personal property
that is material to the Business as currently conducted and that is leased or
licensed by the Company is held pursuant to leases or licenses which are valid
and enforceable in accordance with their respective terms and such leases or
licenses will not terminate or lapse by their terms prior to the Closing Date.
4.9 REAL PROPERTY.
(a) The Company does not own any real property. SCHEDULE
4.9 contains a list of all real property leases or subleases to which the
Company is a party ("REAL PROPERTY LEASES"). The Real Property Leases are in
full force and effect, all rents due to date on each such lease have been paid,
such leases will not terminate or lapse by their terms prior to the Closing
Date, and in each case, to the Knowledge of the Company, the Company is not in
default thereunder.
(b) To the Knowledge of the Company, there is no pending,
threatened or proposed governmental action or proceeding to modify the zoning
classification of, or to
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condemn or take by the power of eminent domain (or to purchase in lieu thereof),
or to classify as a landmark, or to impose special assessments on, or otherwise
to take or restrict in any way the right to use, develop or alter, all or any
part of the real property that is subject to any Real Property Lease.
4.10 TAX MATTERS.
(a) The Company has filed (or there have been filed on
its behalf) all Tax Returns required to have been filed by it under applicable
law. All such filed Tax Returns are complete and accurate in all material
respects. All Taxes shown to be due on such filed Tax Returns have been timely
paid or adequate reserves have been established for the payment of such Taxes.
(b) The Company has withheld or collected and paid over
to the appropriate governmental authorities (or is properly holding for such
payment) all Taxes required by law to be withheld or collected in connection
with the Business.
(c) There are no ongoing audits, examinations or other
administrative or court proceedings relating to any Tax Returns of the Company,
and the Company has not received written notification from any taxing authority
that any such audit, examination or proceeding is contemplated, pending or
threatened. The Company is not delinquent in the payment of any material Taxes,
and has not requested any extension of time within which to file any Tax Returns
which have not since been filed. No material deficiencies for any Taxes have
been proposed, asserted or assessed in writing against the Company that have not
been settled and paid. There are currently no agreements in effect with respect
to the Company to extend the period of limitations for the assessment or
collection of any Tax.
(d) The Company has not distributed stock of another
Person or has had its stock distributed by another Person in a transaction that
was purported or intended to be governed in whole or in part by Section 355 of
the Code.
(e) The Company will not be required to include any item
or income in, or exclude any item of deduction from, taxable income for any
taxable period (or portion thereof) ending after the Closing Date as a result of
any (i) change in method of accounting for a taxable period ending on or prior
to the Closing Date, (ii) "closing agreement" as described in Section 7121 of
the Code (or any comparable provision of foreign, state or local law) executed
on or prior to the Closing Date, (iii) intercompany transactions or any excess
loss account described in Treasury Regulations under Section 1502 of the Code
(or any comparable provision of foreign, state or local law), (iv) installment
sale or open transaction disposition made on or prior to the Closing Date, or
(v) prepaid amount received on or prior to the Closing Date.
4.11 EMPLOYEE BENEFIT PLANS.
(a) SCHEDULE 4.11(a) sets forth a complete and correct
list of all pension or profit-sharing plans that are intended to be
tax-qualified, all deferred compensation, incentive, bonus or group insurance
contracts and all other employee benefit plans, programs, policies or
agreements, which are or have been maintained, funded or contributed to by the
Company or Seller for the benefit of employees or former employees of the
Company (the "BENEFIT PLANS"), and will make available to Buyer (i) the most
recent actuarial and financial reports prepared with
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respect to the Benefit Plans; (ii) the most recent annual reports filed with any
Government Entity with respect to the Benefit Plans; (iii) the most recent
determination letter, if any, for each Benefit Plan that is intended to be
tax-qualified; (iv) all documents embodying each Benefit Plan, including,
without limitation, all amendments thereto and all related trust documents,
administrative service agreements, group annuity contracts, group insurance
contracts, and policies pertaining to fiduciary liability insurance covering the
fiduciaries for each Benefit Plan; (v) the most recent summary plan description
together with the summaries of material modifications thereto, if any, required
under ERISA with respect to each Benefit Plan; and (vi) all correspondence to or
from any governmental agency relating to any Benefit Plan.. None of the Benefit
Plans is a "multiemployer plan" (as defined in Section 3(37) or 4001(a)(3) of
ERISA).
(b) No liability under Title IV of ERISA has been
incurred by the Company or by any ERISA Affiliate that has not been satisfied in
full, and no condition exists that presents a risk to the Company or any ERISA
Affiliate of incurring a liability under such Title other than liability for the
payment of PBGC premiums, which have been or will be paid when due, other than
such liabilities as would not have a Material Adverse Effect on the Company.
(c) With respect to each Benefit Plan: (i) all payments
due from the Company to date have been made and all amounts properly accrued to
date as liabilities of the Company which have not been paid have been properly
recorded on the books of the Company and are reflected in the Company Financial
Statements; (ii) each of the Benefit Plans has been operated and administered in
accordance with its terms and applicable laws, including, but not limited to,
ERISA and the Code, except to the extent that any failure to do so would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company; (iii) each Benefit Plan which is intended to
qualify under Section 401 of the Code has received a favorable determination
letter from the Internal Revenue Service with respect to such qualification, its
related trust has been determined to be exempt from taxation under Section
501(a) of the Code, and nothing has occurred since the date of such letter that
has or is reasonably expected to adversely affect such qualification or
exemption;(iv) there are no actions, suits, audits, investigations or claims
pending (other than routine claims for benefits) or threatened with respect to
any Benefit Plan or against the assets of any Benefit Plan; and (vii) the
Company has not incurred, and there exists no condition or set of circumstances
in connection with which the Company, any ERISA Affiliate or the Buyer could
incur, directly or indirectly, any liability or expense (except for routine
contributions and benefit payments) under ERISA, the Code or any other
applicable law, or pursuant to any indemnification or similar agreement, other
than such liabilities and expenses as would not have a Material Adverse Effect
on the Company.
(d) No prohibited transaction (which shall mean any
transaction prohibited by Section 406 of ERISA and not exempt under Section 408
of ERISA) has occurred with respect to any Benefit Plan which could result in
the imposition, directly or indirectly, of an excise tax under Section 4975 of
the Code that would have, individually or in the aggregate, a Material Adverse
Effect on the Company.
(e) No Benefit Plan provides benefits, including, without
limitation, death or medical benefits (whether or not insured), with respect to
current or former employees of the
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Company after retirement or other termination of service, other than (i)
coverage mandated by applicable law, (ii) death benefits or retirement benefits
under any "employee pension plan," as that term is defined in Section 3(2) of
ERISA, (iii) deferred compensation benefits accrued as liabilities on the books
of the Company or the ERISA Affiliates, or (iv) benefits, the full cost of which
is borne by the current or former employee (or such employee's beneficiary).
(f) The execution of this Agreement and the consummation
of the transactions contemplated hereby will not constitute an event under any
Benefit Plan, employment agreement, trust or loan that will or may result in any
payment (whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any current or former employee of the Company that
would have, individually or in the aggregate, a Material Adverse Effect on the
Company.
4.12 EMPLOYEES. None of the Company's employees is subject to an
employment agreement or other written arrangements regarding employment, and all
of the Company's employees are employed "at will" and subject to termination at
any time with or without cause. Each employee of the Company who is qualified as
an exempt employee under the Fair Labor Standards Act, 29 U.S.C. Section 201 et
seq., has executed, or prior to the Closing Date will have executed, a
confidentiality, nondisclosure and inventions agreement with the Company, and
such employees and the dates of such agreements are identified in Schedule 4.12.
4.13 MATERIAL CONTRACTS. SCHEDULE 4.13 sets forth a true and
complete list of each Material Contract. Each of the Material Contracts is in
full force and effect, and there is no existing default by the Company, and no
default by any other person which would have a Material Adverse Effect on the
Company.
4.14 ENVIRONMENTAL MATTERS.
(a) The Company is in compliance with all Environmental
Laws, except for any violations of any Environmental Law that would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
The Company has no reasonable basis to expect and has not received, any claim,
order, notice, or other communication from: (i) any Governmental Entity, or (ii)
the current or prior owner of any real property leased by the Company, of any
violation or failure by the Company to comply with any Environmental Law.
(b) None of the properties owned, leased or operated by
the Company is in violation of or liable under any Environmental Law, except any
violations or liabilities which would not, individually or in the aggregate,
have a Material Adverse Effect on the Company.
(c) To the Company's Knowledge, there are no past or
present actions, activities, circumstances, conditions, events or incidents that
could reasonably form the basis of any Environmental Claim or other claim or
action or governmental investigation that could result in the imposition of any
liability arising under any Environmental Law against the Company or against any
person or entity whose liability for any Environmental Claim the Company has or
may have retained or assumed either contractually or by operation of law, except
such which would not, individually or in the aggregate, have a Material Adverse
Effect on the Company.
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(d) SCHEDULE 4.14(d) contains a true and complete list of
all reports, studies, analyses, tests, or monitoring possessed or initiated by
the Company concerning compliance by the Company with Environmental Laws.
(e) The Company has obtained all permits, licenses and
other authorizations from Governmental Entities which are required for the
leasing of any of its properties or assets or the conduct of its Business under
Environmental Laws, except where the failure to have any such permit, license or
authorization would not, individually or in the aggregate, have a Material
Adverse Effect on the Company.
4.15 LEGAL PROCEEDINGS. Except as set forth in SCHEDULE 4.15, there
are (a) no actions, suits or proceedings instituted, pending or, to the
Company's Knowledge, threatened against the Company with respect to the
Business, and (b) no governmental investigations or inquiries pending or, to the
Knowledge of the Company, threatened against the Company with respect to the
Business. Except as set forth in SCHEDULE 4.15, to the Company's Knowledge,
there are no actual or threatened actions, suits or proceedings which present a
claim to restrain or prohibit the transactions contemplated herein.
4.16 COMPLIANCE WITH LAWS. The Company is in compliance in all
material respects with all statutes and regulations applicable to the conduct of
its Business as currently conducted, and the Company has not received written
notification from any Governmental Entity, (a) asserting a material violation of
any such statute or regulation, (b) threatening to revoke any license,
franchise, permit or government authorization, or (c) restricting or in any way
limiting its operations, except for such noncompliance, violations, revocations
and restrictions which would not, individually or in the aggregate, have a
Material Adverse Effect on the Company.
4.17 INTELLECTUAL PROPERTY.
(a) The Company owns or has the right to use, and after
consummation of the transactions contemplated in this Agreement will continue to
own or have the right to use, all trademarks, service marks (whether registered
or unregistered), trademark applications, service xxxx applications, trade
names, copyrights, and other proprietary rights necessary to own and operate its
properties and assets and to carry on its Business as currently conducted. Set
forth in SCHEDULE 4.17 is (i) a list of the Company's registered trademarks,
patents and copyrights, and (ii) a list of specified technology
(software/algorithm and circuitry) that is incorporated into the Company
products identified on SCHEDULE 4.17 and in which the Company owns or has the
right to use copyright or trade secret rights.
(b) The Company is not, and will not be, as a result of
the execution, delivery or consummation of the transactions contemplated by this
Agreement, in violation of any known third-party intellectual property rights.
(c) No claims are currently pending with respect to (i)
any trademarks, trade names, service marks, copyrights (and applications
therefor), and tangible and intangible proprietary information or materials that
are owned by the Company or that are owned by an affiliate of the Company and
licensed to and used by the Company ("COMPANY INTELLECTUAL PROPERTY RIGHTS") or
(ii) to the Company's Knowledge, any third-party intellectual property
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rights that are used by the Company in connection with its Business, and, to the
Company's Knowledge, no such claims have been threatened against the Company.
(d) The Company has not received written claims (i) to
the effect that the making, using, selling, offering for sale or licensing of
any product or services now made, used, sold, offered for sale or licensed by
the Company, infringes on any copyrights, patent, trademark, service xxxx or
trade secret of any third party, (ii) challenging the use by the Company of any
trademarks, trade names, trade secrets, copyrights, or computer software
programs and applications used in the Business as currently conducted, (iii)
challenging the ownership or validity of any of the Company Intellectual
Property Rights, or (iv) challenging any license to the Company of the right use
any third-party intellectual property rights.
4.18 MEDICAL DEVICES.
(a) Set forth on SCHEDULE 4.18(a) is a list of the
Company's 510(k) notifications and pre-market approval applications ("PMAs").
All such 510(k)s, PMAs and related documentation are in substantial compliance
with applicable FDA requirements. All of the Company's products, where required
by applicable law, are being marketed under a valid 510(k) notification or PMA.
All of the Company's products in commercial distribution which are not marketed
under a valid 510(k) or PMA are listed on SCHEDULE 4.18(a), together with a
statement describing the reasons why such products are being marketed without
such approvals. The Company has obtained and maintains all necessary regulatory
approvals from applicable foreign regulatory agencies relating to all products
distributed and sold by the Company. All products sold or marketed by the
Company are listed with the FDA in accordance with 21 CFR Part 807. The Company
has filed with the FDA all required medical device reports for deaths, serious
injuries and reportable malfunctions. SCHEDULE 4.18(a) identifies all internal
audit reports (as required by 21 CFR Section 820.20) conducted by the Company
since December 31, 1999.
(b) SCHEDULE 4.18(b) contains a true, correct and
complete list of: (i) to the Knowledge of the Company, all products which have
been recalled by the Company in the United States and outside the United States
(whether voluntarily or otherwise) at any time since December 31, 1999; (ii) to
the Knowledge of the Company, all proceedings in the United States and outside
of the United States at any time since December 31, 1999 against the Company,
the outcome of which dictated the withdrawal, detention, suspension, cessation
of marketing, recall or seizure of any product or, the outcome of which dictated
criminal or civil penalties or injunctive relief relating to any product; (iii)
to the Knowledge of the Company, all proceedings at any time since December 31,
1999, the outcome of which dictated the closure or suspension of operations of
any of the Company's facilities (or portions thereof) or, the outcome of which
dictated criminal or civil penalties or injunctive relief relating to any of
Company's facilities; and (iv) to the Knowledge of the Company, all FDA Forms
483 and all FDA warnings or FDA regulatory letters and notices of adverse
findings since December 31, 1999 addressed to the Company relating to any
product manufactured, sold or distributed by the Company. Except as set forth on
SCHEDULE 4.18(b), all manufacturing facilities operated by the Company are
registered with the FDA in accordance with 21 CFR Part 807.
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(c) SCHEDULE 4.18(C) sets forth a list of all written
documents from Governmental Entities or industry groups received since December
31, 1999 by the Company that relate to the Company's non-compliance with
reporting, registration, labeling, good manufacturing practices, advertising and
other requirements under the Federal Food, Drug and Cosmetic Act, as amended
(the "FDC ACT"). Except as so disclosed, the Company is operating in compliance
with all applicable FDA rules, regulations and policies the non-compliance with
which could have a Material Adverse Effect on the Company.
(d) Except as set forth on SCHEDULE 4.18(d), to the
Knowledge of the Company, there are no facts which are reasonably likely to
cause or require: (i) the denial, withdrawal, recall or suspension of any
product sold by the Company; (ii) a change in the marketing classification or
labeling of any such products; or (iii) a termination or suspension of marketing
of any such products.
4.19 PERMITS. The Company has all licenses, permits, orders or
approvals of, and has made all required registrations, filings or reports with,
any governmental or public body or authority that are necessary or appropriate
to the conduct of the Business of the Company as presently conducted
(collectively, "PERMITS"), except where the failure to have any such license,
permit or authorization would not, individually or in the aggregate, have a
Material Adverse Effect on the Company. All Permits are in full force and
effect; and no proceeding is pending or, to the Knowledge of the Company,
threatened to revoke or limit any Permit.
4.20 LABOR RELATIONS. The Company is in compliance with all
applicable laws relating to employment, employment practices, terms and
conditions of employment and wages and hours, and the Company is not engaged in
any unfair labor or unlawful employment practice, except for any noncompliance
or practice which would not have a Material Adverse Effect on the Company. There
is no, and since December 31, 1999, there has not been any: (a) unfair labor
practice complaint, administrative charges or court complaints pending or, to
the Knowledge of the Company, threatened against the Company before the National
Labor Relations Board, the Equal Employment Opportunity Commission or any other
Governmental Entity, or any unlawful employment practice charge pending before
any Governmental Entity, including any discrimination charge, and no grievance
or arbitration proceeding arising out of or under any collective bargaining
agreement pending or, to the Knowledge of the Company, threatened; or (b)
strike, labor dispute, slowdown, stoppage, requests for representation or
secondary boycotts pending or, to the Knowledge of the Company, threatened
against the Company. The Company is not a party to any collective bargaining
agreement.
4.21 ACCOUNTS RECEIVABLE. All accounts receivable of the Company
that are reflected on the Company Financial Statements or on the accounting
records of the Company as of the Closing Date (collectively, the "ACCOUNTS
RECEIVABLE") represent or will represent valid obligations arising from sales
actually made or services actually performed in the ordinary course of business,
with respect to which the Company has no further obligation to bring about a
resale of such product by the buyer thereof or to accept any such product for
credit or return. Unless paid prior to the Closing Date, the Accounts Receivable
are or will be as of the Closing Date current and collectible, net of the
respective reserves shown on the Company Financial Statements or on the
accounting records of the Company as of the Closing Date (which reserves are
adequate and calculated consistent with past practice). There is no contest,
claim, or right of
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set-off, other than returns in the ordinary course of business, under any
Contract with any obligor of an Accounts Receivable relating to the amount or
validity of such Accounts Receivable.
4.22 INVENTORY. All inventories of the Company, whether or not
reflected on the Company Financial Statements, consist of components, materials
and supplies of a quality and quantity usable in the ordinary course of business
and finished goods of a quality and quantity that are saleable in the ordinary
course of business. The carrying value of all such inventories is recorded at
the lower of cost or market in accordance with GAAP, including the establishment
of reserves for obsolete, damaged, slow-moving, defective or excessive
inventories.
4.23 PRODUCT AND SERVICE WARRANTIES. Attached to SCHEDULE 4.23 are
copies of the standard forms of warranty offered by the Company to third parties
with respect to each of the products marketed by the Company that have been
issued by the Company at any time since December 31, 1999. The Company has no
service or warranty liabilities to customers or other persons that are not
adequately reserved against or reflected on the Company Financial Statements,
which liabilities do not constitute a Material Adverse Effect on the Company.
4.24 RELATED PARTY TRANSACTIONS. Except as described on SCHEDULE
4.24, none of (i) Seller, (ii) any Related Party of Seller, or (iii) any Person
in which Seller or any Related Party of Seller owns, or has owned, of record or
as a beneficial owner, a greater than 5% equity interest or has any other
material financial or profit interest:
(a) has had, since December 31, 2001, substantial
business dealings or a material financial interest in any transaction with the
Company; or
(b) has engaged, since December 31, 2001, in competition
with the Company in any market currently served by the Company with respect to
the Company's core business (consisting solely of ECG carts, stress ECG, ECG
management and xxxxxx monitors).
4.25 DISCLOSURE.
(a) No representation, warranty or statement made by
Seller or the Company in this Agreement, the Disclosure Schedules or the
Transaction Documents contains any untrue statement of a material fact or omits
to state a material fact necessary to make the statements herein and therein, in
light of the circumstances in which they were made, not false or misleading.
(b) To the Knowledge of Seller and the Company, there is
no fact or circumstance, which has not been set forth in this Agreement or the
Disclosure Schedules, that has specific application to the Company and that
would have a Material Adverse Effect on the Company.
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ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Company that the statements
contained in this Article 5 are true and correct.
5.1 ORGANIZATION, STANDING AND AUTHORITY OF BUYER. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of California, with full corporate power and authority to carry on its business
as now conducted and is duly licensed or qualified to do business in the states
of the United States where its ownership or leasing of property or the conduct
of its business requires such qualification, except where the failure to be so
licensed or qualified would not have a Material Adverse Effect on Buyer.
5.2 AUTHORIZATION. Buyer has all requisite corporate power and
authority to execute and deliver the Transaction Documents to which it is or
will at the Closing become a party and to consummate the transactions
contemplated hereby and thereby. Such execution, delivery and consummation have
respectively been duly authorized by all necessary corporate action in respect
thereof on the part of Buyer. This Agreement and any other Transaction Document
executed and delivered by Buyer as of the date hereof have been duly executed
and delivered by Buyer and constitute valid and binding obligations of Buyer,
enforceable against it in accordance with their respective terms, subject as to
enforceability, to bankruptcy, insolvency and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles. Each Transaction Document to be executed and delivered by Buyer
after the date hereof, when executed and delivered, will have been duly executed
and delivered by Buyer and will constitute a valid and binding obligation of
Buyer, enforceable against it in accordance with its, subject as to
enforceability, to bankruptcy, insolvency and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
5.3 CONSENTS AND APPROVALS; NO VIOLATION.
(a) Neither the execution and delivery of this Agreement,
nor the consummation of the transactions contemplated hereby or thereby, nor
compliance by Buyer with any of the provisions hereof or thereof shall: (i)
conflict with or result in a breach of any provision of the articles or
certificate of incorporation, charter or bylaws of Buyer; (ii) constitute or
result in a breach of any term, condition or provision of, or constitute a
default under, or give rise to any right of termination, cancellation or
acceleration with respect to, or result in the creation of any Encumbrance upon
any property or asset of Buyer pursuant to any agreement, mortgage, indenture,
license, or other instrument or obligation; or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Buyer, except (in
the case of clauses (ii) and (iii) above) for such violations, rights,
conflicts, breaches, creations or defaults which, either individually or in the
aggregate, will not have a Material Adverse Effect on Buyer.
(b) Except as contemplated by this Agreement or as may be
required under foreign laws, no consent, approval or authorization of, or
declaration, notice, filing or registration with, any governmental or regulatory
authority, or any other person, is required to be made or obtained by Buyer on
or prior to the Closing Date in connection with the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby.
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5.4 LEGAL PROCEEDINGS. There are no actions, suits or proceedings
instituted, pending or, to the Knowledge of Buyer, threatened against Buyer or
any subsidiary of Buyer which present a claim to restrain or prohibit the
transactions contemplated hereby.
5.5 BROKERS AND FINDERS. Neither Buyer nor any subsidiary of
Buyer, nor any of their respective officers, directors or employees, has
employed any broker, finder or financial advisor or incurred any liability for
any fees or commissions of any broker, finder or financial advisor in connection
with the transactions contemplated herein.
5.6 FINANCIAL RESOURCES. Buyer has cash reserves in an amount of
twenty million dollars ($20,000,000) which shall be applied on the Closing Date
as partial payment of the Purchase Price. The remainder of the Purchase Price
(the "REMAINDER") is intended to be funded through an asset-based credit
facility as evidenced by the bank commitment letter dated December 20, 2002, a
copy of which is attached as SCHEDULE 5.6 (the "COMMITMENT").
ARTICLE 6.
COVENANTS
6.1 EFFORTS TO CLOSE. Buyer, Seller and the Company shall each use
commercially reasonable efforts in good faith to take or cause to be taken all
action necessary or desirable on its part so as to permit consummation of the
transactions contemplated herein at the earliest possible date, including,
without limitation, obtaining all necessary waivers, consents and approvals from
any Governmental Entity and any third-party. In no event shall Seller or the
Company be required to pay more than de minimis fees in connection with
obtaining any such necessary waivers, consents or approvals, and neither Seller
nor the Company shall have any obligation to undertake litigation to secure the
same. No party hereto shall take or fail to take, or cause or permit its
subsidiaries to take or fail to take, or to the best of its ability permit to be
taken or omitted to be taken by any third persons, any action that would
substantially impair the prospects of completing the transactions contemplated
herein pursuant to this Agreement, that would materially delay such completion.
6.2 INVESTIGATION AND CONFIDENTIALITY. The parties will each keep
the other advised of all material developments relevant to the business and
operations of the Company or Buyer, as appropriate, and to consummation of the
transactions contemplated herein. The parties may make or cause to be made such
investigation of the financial and legal condition of Buyer or the Company, as
appropriate, as such party reasonably deems necessary or advisable in connection
with the transactions contemplated herein; provided, however, that such
investigation shall be reasonably related to such transactions and shall not
interfere unnecessarily with normal operations. The parties agree to furnish the
other and the other's advisors with such financial data and other information
with respect to the business and properties of Buyer or the Company, as
appropriate, as such other party shall from time to time reasonably request. No
investigation pursuant to this Section 6.2 shall affect or be deemed to modify
any representation or warranty made by, or the conditions to the obligations to
consummate the Transaction of, any party hereto. For a period of five years
after the date hereof, each party hereto shall hold all information furnished by
the other party or any of such party's subsidiaries or representatives pursuant
to this Section 6.2 in confidence and will not use or disclose any such
information, and will not disclose this Agreement or its Exhibits, Schedules or
subject matter without the disclosing party's prior
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consent, except as may be required by applicable laws or as permitted by this
Agreement, and except that a party may make disclosure to its Related Parties
(provided such Related Parties are bound by a duty of non-disclosure) or in
connection with the sale of such party's business or divisions thereof provided
that any disclosures are made pursuant to appropriate confidentiality
obligations.
6.3 PRESS RELEASES. Seller and Buyer shall agree with each other
as to the form and substance of any press release related to this Agreement or
the transactions contemplated hereby, and shall consult each other as to the
form and substance of other public disclosures related thereto; provided,
however, that nothing contained herein shall prohibit any party, following
notification to the other parties, from making any disclosure which is required
by applicable law.
6.4 COVENANTS OF THE COMPANY.
(a) Prior to the Closing Date, and, except as otherwise
provided for by this Agreement, or consented to or approved by Buyer, the
Company shall use its commercially reasonable efforts to preserve its
properties, business and relationships with its customers, employees and other
persons. In addition, until the Closing Date the Company shall maintain in its
existing form its insurance coverage affecting any of its properties or the
Business.
(b) Seller will cause any tax sharing agreement or
similar arrangement with respect to Taxes involving the Company to be terminated
as of the Closing Date, to the extent such agreement or arrangement relates to
the Company, and no additional amounts shall be due from the Company after the
Closing Date.
(c) The Company shall not, except with the prior written
consent of Buyer (which shall not be unreasonably withheld or delayed) and
except as expressly contemplated or permitted by this Agreement:
(i) carry on its business other than in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted;
(ii) declare, set aside, make or pay any dividend
or other distribution in respect of its capital stock;
(iii) issue any shares of its capital stock or
permit any treasury shares to become outstanding, or issue, grant or authorize
any Rights or effect any recapitalization, reclassification, stock dividend,
stock split or like change in capitalization, or redeem, repurchase or otherwise
acquire any shares of its capital stock;
(iv) incur any debt obligation or other
obligation for borrowed money other than obligations incurred in the ordinary
course of business consistent with past practice;
(v) amend its certificate of incorporation or
bylaws;
(vi) merge with any other corporation or permit
any other corporation to merge into it or consolidate with any other
corporation;
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(vii) acquire control over any other corporation
or organization or create any subsidiary;
(viii) liquidate or sell or dispose of any
material assets or acquire any material assets;
(ix) enter into any pension, retirement, stock
option, stock purchase, stock appreciation right, savings, profit sharing,
deferred compensation, consulting, bonus, group insurance or other employee
benefit, incentive or welfare contract, plan or arrangement, or any trust
agreement related thereto, in respect of any of its directors, officers,
employees or consultant;
(x) authorize or permit any of its officers,
directors, employees or agents to directly or indirectly solicit, initiate or
encourage any inquiries relating to, or the making of any proposal with any
party (other than Buyer) concerning any merger, tender or exchange offer, share
exchange, consolidation or other business combination, sale of a substantial
equity interest in or a substantial portion of assets of, or similar transaction
involving the Company (each, an "ACQUISITION TRANSACTION"), or, except to the
extent legally required for the discharge of the fiduciary duties of its board
of directors, recommend or endorse any acquisition transaction, or participate
in any discussions or negotiations, or provide third parties with any nonpublic
information, relating to any such acquisition transaction. The Company will take
all actions necessary or advisable to inform the appropriate individuals or
entities referred to in the first sentence hereof of the obligations undertaken
herein; or
(xi) agree to do any of the foregoing.
6.5 EMPLOYEE MATTERS.
(a) Buyer agrees that each person who is an employee of
the Company as of the Closing Date (each, a "CONTINUING EMPLOYEE") shall be an
employee of the Company, Buyer or an affiliate of Buyer (for the purposes of
this Section 6.5, such hiring party shall be referred to as "BUYER") immediately
following the Closing Date. Immediately after the Closing Date each Continuing
Employee shall be employed on terms and conditions (including base salary or
base hourly wage) not substantially less favorable in the aggregate than those
of similarly situated employees of Buyer's Related Parties.
(b) Commencing immediately following the Closing Date,
Buyer shall cause the Continuing Employees, while employed by Buyer, to be
eligible to participate in employee benefit plans as reasonably determined by
Buyer to be appropriate.
(c) For each Continuing Employee, Buyer shall, to the
extent allowable within the plans or regulations that govern them and to the
extent reasonably practical, give past service credit for eligibility and
vesting (not benefit accrual) all crediting purposes for the benefit plans under
which such Continuing Employees are covered after the Closing Date. For each
such Continuing Employee, Buyer shall honor in full all vacation accrued but not
taken by each such Continuing Employee as of the Closing Date, provided that the
related liability shall have been accrued on the Company's balance sheet as of
the Closing Date. After the Closing Date, each
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Continuing Employee shall begin to accrue vacation benefits in accordance with
the vacation policy of Buyer.
(d) If a Continuing Employee's employment is terminated
by Buyer on or prior to the first anniversary of the Closing Date, such
Continuing Employee shall be entitled to reasonable severance benefits from
Buyer, as determined appropriate by Buyer and at Buyer's sole cost.
6.6 COOPERATION.
(a) Seller shall in accordance with the past practice
prepare and file all Tax Returns with the appropriate federal, state, local and
foreign governmental agencies required to be filed by, or relating to, the
Company for Tax periods ending on or before the Closing Date and shall pay the
Taxes shown to be due thereon.
(b) Buyer shall prepare and file, or cause to be prepared
and filed, all Tax Returns required to be filed by the Company for Tax periods
commencing prior to the Closing Date and ending after the Closing Date (each a
"STRADDLE PERIOD") and shall cause the Company to pay the Taxes shown to be due
thereon. Not later than five days before the due date for payment of Taxes with
respect to any such Tax Return, Seller shall pay to Buyer an amount equal to the
amount of Taxes shown to be due on such Tax Return which are properly allocated
to the portion of the Straddle Period ending on and including the Closing Date.
Buyer shall allow the Seller to review, comment upon and reasonably approve any
such Tax Returns no later than 45 days prior to the filing of such Tax Return.
Buyer and Seller agree that all Tax Returns of the Company for any Straddle
Period shall be filed on the basis that the relevant taxable period ended as of
the close of business on the Closing Date; provided, however, in the case of any
Tax imposed upon the ownership or holding of real or personal property, such
Taxes shall be pro rated based on the percentage of the actual period to which
such Taxes relate that precedes the Closing Date.
(c) Buyer and Seller shall cooperate in preparing and
filing all Tax Returns (including amended returns), handling any Tax audits and
making any claims for Tax refunds, in each case relating to the Business,
including maintaining and making available to each other all records necessary
in connection with such Taxes, and in resolving all disputes with respect to Tax
periods ending on or before the Closing Date or any Straddle Periods.
(d) Seller will promptly, without undue delay, provide
all information and access to books and records of the Company as requested by
Buyer and its representatives, in connection with the audit by KPMG, LLP,
Buyer's independent accounting firm, which audit shall be at Buyer's sole
expense, of the Company's financial statements for periods in the three years
ended December 31, 2002, 2001 and 2000 (the "AUDIT") as required for inclusion
in Buyer's required filings with the U.S. Securities and Exchange Commission in
connection with the Transaction, including signing representation letters
customary in an audit conducted in accordance with generally accepted auditing
standards under prevailing regulations. Each party shall prepare and implement a
plan, each which plan may be developed in each such party's sole and absolute
discretion, to provide incentives to such party's respective employees to
accomplish the Audit. Buyer shall use its best efforts, and shall cause its
employees, the employees of its
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Related Parties, and its independent accounting firm to use their respective
best efforts, to cooperate with and assist Seller in connection with the Audit,
including preparation and delivery of the Company's auditable financial
statements, execution and delivery of the independent accounting firm's report
with respect to the Audit and timely making Buyer's required filings with the
U.S. Securities and Exchange Commission ("SEC").
(e) To secure Seller's obligations under Section 6.6(d),
the Audit Holdback shall be retained by the Escrow Agent. The Escrow Agent shall
disburse the Audit Holdback, and accrued interest, to Seller upon Buyer's filing
with the SEC, on or before the 75th day after the Closing Date, of the Company's
financial statements covered by the Audit in compliance with applicable SEC
requirements (the "SELLER RELEASE CONDITION"). In the event that the Seller
Release Condition is not satisfied, the Escrow Agent shall deliver the Audit
Holdback, and accrued interest, to Buyer as full liquidated damages suffered by
Buyer for breach by Seller of Section 6.6(d) or as a result of the failure of
the Seller Release Condition (which amount does not constitute a penalty), and
which shall be the exclusive remedy of Buyer for breach by Seller of Section
6.6(d) or as a result of the failure of the Seller Release Condition.
6.7 FURTHER ASSURANCES. From time to time after the Closing Date,
each of Buyer and Seller, at the reasonable request of the other, will promptly
execute and deliver, or cause to be executed and delivered, to the other all
such documents and instruments, in addition to those otherwise required by this
Agreement, in form and substance reasonably satisfactory to the other, and take
such other actions and give such assurances as may be reasonably required in
order to carry out or evidence the terms of this Agreement.
6.8 FINANCING EFFORTS. Buyer shall use its best efforts to obtain
financing for the Remainder, whether pursuant to the Commitment or otherwise.
Notwithstanding the foregoing, if Buyer is unable to obtain such financing on
the Closing Date, Seller shall finance the Remainder, which financing shall be
evidenced by a promissory note executed by Buyer in favor of Seller (in
substantially the form attached hereto as EXHIBIT 6.8.1), which note shall have
a term of six months and shall bear interest at an annual rate of 6% over LIBOR
(as published in the Wall Street Journal on the business day immediately
preceding the Closing Date) for the first three months of the term and at an
annual rate of 9% over LIBOR (as published in the Wall Street Journal on the
business day immediately preceding the Closing Date) for the last three months
of the term. Such note shall be secured by a first priority security interest in
all of the accounts receivable of Buyer's subsidiaries, including Xxxxxxx, Inc.
and the Company pursuant to a security agreement in substantially the form
attached hereto as EXHIBIT 6.8.2, and Buyer shall cause its subsidiaries to
execute such financing statements and other documents reasonably requested by
Seller to evidence such security interest.
6.9 CHANGE OF NAME. As soon as practicable following the Closing
Date, Buyer shall cause the name of the Company to be changed to remove all
references to "Spacelabs," including filing an amendment to the Company's
Certificate of Incorporation with the Delaware Secretary of State, and filings
with any other Governmental Entity as may be reasonable or necessary to give
effect to the name change Buyer shall provide to Seller evidence of the name
change.
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6.10 INTERCOMPANY ACCOUNTS. At Closing, all intercompany account
balances between Seller and its Related Parties and the Company will be
converted to equity, and no amounts shall be due to Seller or any Related Party
of Seller with respect thereto.
6.11 TAX REFUNDS. Following Closing, Buyer shall without undue
delay remit and pay to Seller all Tax refunds received by Buyer or the Company
for any Tax filings made by Seller or the Company prior to the Closing Date in
connection with the Business; provided, however, that this Section 6.11 shall in
no way limit Buyer's or the Company's right, with respect to any taxable period
ending after the Closing Date, under applicable federal, state, local or foreign
law to waive or relinquish, with respect to any tax attributes attributable to
the Company, the portion of any carryback period for which such Tax filings were
made.
6.12 INVENTORY COUNT.. In connection with preparation of the
Closing Balance Sheet and the Audit, a physical count of the Company's inventory
shall be conducted on or about January 2, 2003, at locations mutually agreed by
the parties and their representatives. In locations in which inventory is not
physically counted, a mutually acceptable alternative method for validating
inventory quantities will be utilized.
6.13 COMMINGLED ASSETS.. On or prior to the Closing Date, and other
than the Commingled Receivables, Seller shall (a) transfer to the Company any
assets owned by the Company which are reflected on the books of Seller for its
cardiology business, including the Company's cash and inventories, and (b)
disclaim any ownership interest in any such assets. No later than 60 days after
the Closing, Seller shall deliver to the Company in Deerfield, Wisconsin or
other mutually acceptable location(s) all of the Company's inventories in
Seller's possession or under Seller's control, except that the car stock
inventory held by Seller's U.S. customer service representatives shall be
delivered to the Company in accordance with the terms of the Transition Services
Agreement.
ARTICLE 7.
CONDITIONS PRECEDENT
7.1 CONDITIONS PRECEDENT - BUYER AND SELLER. The respective
obligations of the parties to effect the Transaction shall be subject to
satisfaction or waiver of the following conditions at or prior to the Closing
Date:
(a) The parties hereto shall have received all regulatory
approvals required or mutually deemed necessary in connection with the
transactions contemplated by this Agreement, and all notice periods and waiting
periods required after the granting of any such approvals shall have passed, and
all conditions contained in any such approval required to have been satisfied
prior to consummation of such transactions shall have been satisfied;
(b) To the extent that any agreement, lease, license,
instrument, or other contract to which the Company or Seller is a party requires
the consent of or waiver from the other party thereto as a result of the
transactions contemplated by this Agreement (as set forth in SCHEDULE 4.4), such
consent or waiver shall have been obtained; and
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(c) No action, suit, proceeding or investigation shall be
pending before or by any court or governmental body or agency (i) challenging
the transactions contemplated by this Agreement or otherwise seeking damages or
(ii) seeking to restrain or prevent the carrying out of the transactions
contemplated by this Agreement;
(d) Since the date of this Agreement, there shall have
been no event, occurrence, development, or state of circumstances that
individually, or in the aggregate, and when aggregated with all positive
developments, has had or would reasonably be expected to have a Material Adverse
Effect on the Company;
(e) Buyer, Seller and the Escrow Agent shall have entered
into the Escrow Agreement; and
(f) Buyer, the Company, Datex and Seller, as applicable,
shall have entered into the following agreements and such other agreements
agreed by the parties: (i) Technology Cross-License Agreement, substantially in
the form attached hereto as EXHIBIT A; (ii) ABPM Private Label Distribution
Agreement, substantially in the form attached hereto as EXHIBIT B; (iii) Sales
and Marketing Cooperation Agreement, substantially in the form attached hereto
as EXHIBIT C; (iv) Transition Services Agreement, substantially in the form
attached hereto as EXHIBIT D; (v) a non-competition agreement, substantially in
the form attached hereto as EXHIBIT E; and (vi) a non-disclosure /
non-solicitation agreement, substantially in the form attached hereto as EXHIBIT
F.
7.2 CONDITIONS PRECEDENT - SELLER. The obligations of Seller to
effect the Transaction shall be subject to satisfaction of the following
additional conditions at or prior to the Closing Date unless waived by Seller in
writing:
(a) The representations and warranties of Buyer set forth
in Article 5 hereof shall be true and correct as of the date of this Agreement
and as of the Closing Date as though made on and as of the Closing Date (or on
the date when made in the case of any representation and warranty which
specifically relates to an earlier date), except as otherwise contemplated by
this Agreement or consented to in writing by Seller;
(b) Buyer shall have performed all obligations and
complied with all covenants required by this Agreement; and
(c) Buyer shall have delivered to Seller a certificate,
dated the Closing Date and signed by its Chief Financial Officer to the effect
that the conditions set forth in paragraphs (a) and (b) of this Section have
been satisfied.
7.3 CONDITIONS PRECEDENT - BUYER. The obligations of Buyer to
effect the Transaction shall be subject to satisfaction of the following
additional conditions at or prior to the Closing Date unless waived by Buyer in
writing:
(a) The representations and warranties of Seller set
forth in Article 3 and the representations and warranties of the Company set
forth in Article 4 hereof shall be true and correct as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing
Date (or on the date when made in the case of any representation and warranty
which
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specifically relates to an earlier date), except as otherwise contemplated by
this Agreement or consented to in writing by Buyer;
(b) Seller and the Company shall have performed all
obligations and complied with all covenants required by this Agreement;
(c) Seller shall have delivered to Buyer a certificate,
dated the Closing Date and signed by its President or any Executive Vice
President, to the effect that the conditions set forth in paragraphs (a) and (b)
of this Section have been satisfied;
(d) The officers and directors of the Company shall have
resigned from all of their respective officer and/or director positions with the
Company; and
(e) Seller shall purchase, at its expense, "tail" product
liability insurance coverage with respect to the Company and the Business solely
with respect to any occurrences that occurred prior to the Closing Date but for
which a claim is made post-Closing, which insurance coverage shall have limits
and deductibles similar to those in effect under Seller's existing coverages,
naming the Company and Buyer as additional insureds.
ARTICLE 8.
TERMINATION, WAIVER AND AMENDMENT
8.1 TERMINATION. This Agreement may be terminated:
(a) At any time on or prior to the Closing Date, by the
mutual consent in writing of Buyer and Seller;
(b) At any time on or prior to the Closing Date, by Buyer
in writing, if Seller or the Company has, or by Seller in writing, if Buyer has
breached (i) in any material respect, any covenant or agreement contained
herein, or (ii) any representation or warranty contained herein, and in either
case if such breach has not been cured by the earlier of 30 days after the date
on which written notice of such breach is given to the party committing such
breach or the Closing Date;
(c) At any time by Buyer or Seller in writing, if any
Governmental Entity of competent jurisdiction shall have issued a final
nonappealable order enjoining or otherwise prohibiting the Transaction;
(d) by either party if a condition in its favor is not
satisfied or waived by the applicable deadline or Closing Date;
(e) By Buyer or Seller in writing, if the Closing Date
has not occurred by the close of business on January 31, 2003, unless the
failure of the Closing to occur by such date shall be due to the failure of the
party seeking to terminate this Agreement to perform or observe the covenants
and agreements set forth herein.
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8.2 EFFECT OF TERMINATION.
(a) In the event this Agreement is terminated pursuant to
Section 8.1 hereof, this Agreement shall become void and have no effect, except
that the provisions relating to confidentiality and expenses set forth in
Sections 6.2 and 10.1 hereof, respectively, shall survive any such termination.
(b) In the event of a termination of this Agreement
pursuant to Section 8.1(a), 8.1(c) or 8.1(d), or by Buyer pursuant to Section
8.1(b), Buyer shall be entitled to the return of the Deposit and all interest
accrued thereon, each party shall pay the costs and expenses incurred by it in
connection with this Agreement, and no party (or any of its officers, directors,
partners, employees, agents, representatives or stockholders) shall be liable to
any other party for any cost, expense, damage or loss of anticipated profits
hereunder.
(c) In the event of a termination of this Agreement by
Seller pursuant to Section 8.1(b) hereof as a result of a breach of this
Agreement by Buyer, Seller shall be entitled to receive the Deposit and all
interest accrued thereon as full liquidated damages suffered by Seller as a
consequence of Buyer's breach (which amount the parties agree is a reasonable
estimate of the damages that will be suffered by Seller and does not constitute
a penalty, and is the exclusive remedy of Seller, provided however, that such
liquidated damages will not be the exclusive remedy of Seller for any breach of
Section 5.6 or 6.8).
8.3 WAIVER. Except with respect to any required regulatory
approval, Buyer and Seller, respectively, by written instrument signed by an
executive officer of such party, may at any time extend the time for the
performance of any of the obligations or other acts of Seller and the Company,
on the one hand, or Buyer, on the other hand, and may waive (a) any inaccuracies
of such parties in the representations or warranties contained in this
Agreement, or any document delivered pursuant hereto or thereto, (b) compliance
with any of the covenants, undertakings or agreements of such parties, or
satisfaction of any of the conditions precedent to its obligations, contained
herein, or (c) the performance by such parties of any of its obligations set out
herein or therein.
8.4 AMENDMENT OR SUPPLEMENT. This Agreement may be amended or
supplemented at any time by mutual agreement of Buyer, Seller and the Company.
Any such amendment or supplement must be in writing and approved by their
respective boards of directors and/or officers authorized thereby.
ARTICLE 9.
INDEMNIFICATION
9.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All of
the representations and warranties of Seller and the Company in this Agreement
shall survive the Closing Date and continue in full force and effect for a
period of 12 months thereafter; provided, however, that the representations
contained in Sections 3.2, 3.3 and 4.2 shall survive indefinitely (subject to
any applicable statute of limitations); and provided, further, that the
representations contained in Sections 4.10 (Tax Matters) and 4.14 (Environmental
Matters) shall survive for 6 years following the Closing Date. All of the
representations and warranties of Buyer in this
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Agreement shall survive the Closing Date and continue in full force and effect
for a period of 12 months thereafter; provided, however, that the
representations contained in Section 4.2 shall survive indefinitely (subject to
any applicable statute of limitations). All covenants of Seller, the Company,
Datex and Buyer in this Agreement shall expire on, and be terminated and
extinguished at, the Closing Date, other than covenants that by their terms are
to survive or be performed after the Closing Date.
9.2 INDEMNIFICATION BY SELLER AND DATEX. Seller and Datex, jointly
and severally, shall defend, indemnify and hold harmless Buyer, and its
affiliates, successors, assigns, officers, directors, employees, agents and
representatives, against and with respect to any and all damages, losses,
liabilities, deficiencies, claims, obligations, costs, fees and expenses
(including reasonable attorneys' fees and expenses) (collectively, "LOSSES") due
to the following:
(a) any untrue representation, breach of warranty or
nonfulfillment of any covenant by the Company or Seller contained herein
(provided Buyer makes a written claim for indemnification pursuant to Section
9.4 below within the applicable survival period);
(b) the third-party litigation matters disclosed on
SCHEDULE 4.15 to the Disclosure Schedules;
(c) the Excluded Liabilities (except with respect to
those Excluded Liabilities described in clause (ii) of the definition of
"Excluded Liabilities" that are the subject of Section 9.4); and
(d) any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including, without
limitation, reasonable legal fees and expenses, incident to any of the foregoing
or incurred in investigating or attempting to avoid the same or to oppose the
imposition thereof, or in enforcing this indemnity.
9.3 INDEMNIFICATION BY BUYER. Buyer shall defend, indemnify and
hold harmless Seller, and its affiliates, successors, assigns, officers,
directors, employees, agents and representatives, against and with respect to
any and all Losses arising from or incident or related to any of the following:
(a) any untrue representation, breach of warranty or
nonfulfillment of any covenant by Buyer contained herein (provided Seller makes
a written claim for indemnification pursuant to Section 9.4 below within the
applicable survival period);
(b) the ownership, business and operations of the Buyer
and the Company, including the Business and any other activities of the Company,
after the close of business on the Closing Date and any claims with respect to
the Business that are covered by the Company's insurance;
(c) Seller's obligations pursuant to the Company's office
lease agreement with Xxxx Xxxxxxxxxx LLC dated April 6, 1998, the related
Guaranty dated April 7, 1998, and the related Subordination Attornment and
Non-Disturbance Agreement dated May 20, 1998; and
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(d) any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including, without
limitation, reasonable legal fees and expenses, incident to any of the foregoing
or incurred in investigating or attempting to avoid the same or to oppose the
imposition thereof, or in enforcing this indemnity.
9.4 CERTAIN TAX INDEMNIFICATION BY SELLER AND DATEX. Seller and
Datex, jointly and severally, shall defend, indemnify and hold harmless Buyer,
and its affiliates, successors, assigns, officers, directors, employees, agents
and representatives, including Buyer's Related Parties, against and with respect
to any and all Losses incurred by the Company (or Buyer or its Related Parties
as a result of the Company having been a member of Seller's consolidated group)
under Treasury Regulations Section 1.1502-6, or any comparable provision under
state or local law.
9.5 INDEMNIFICATION PROCEDURE.
(a) The party claiming indemnification (the "CLAIMANT")
shall promptly give notice to the party from whom indemnification is claimed
(the "INDEMNIFYING PARTY") of any claim, whether between the parties or brought
by a third party (each, a "CLAIM"), specifying (a) the factual basis for such
Claim and (b) the estimated amount of the Claim. If the Claim relates to an
action, suit or proceeding filed by a third party against Claimant, such notice
shall be given by Claimant within five business days after written notice of
such action, suit or proceeding was given to Claimant; provided that failure to
give such notice within such five business day period shall not bar or otherwise
prejudice Claimant's rights to indemnification with respect to such third-party
action, suit or proceeding unless any defense, claim, counterclaim or
cross-claim of the Indemnifying Party is prejudiced thereby. If the Claim
relates to any Tax matters, Buyer shall use its reasonable efforts to give any
such notice to the attention of Seller's Tax Department at the address for
notices set forth in Section 10.4 below; provided that failure to give such
notice to the Tax Department shall not bar or otherwise prejudice Claimant's
rights to indemnification for such Tax matters.
(b) Following receipt of notice from the Claimant of a
Claim, the Indemnifying Party shall have 30 days to make such investigation of
the Claim as the Indemnifying Party deems necessary or desirable. For the
purposes of such investigation, the Claimant agrees to make available to the
Indemnifying Party and/or its authorized representative(s) the information
relied upon by the Claimant to substantiate the Claim. If the Claimant and the
Indemnifying Party agree at or prior to the expiration of the 30-day period (or
any mutually agreed upon extension thereof) to the validity and amount of such
Claim, the Indemnifying Party shall immediately pay to the Claimant the full
amount of the Claim subject to the terms and limitations and in accordance with
the procedures set forth herein. If the Claimant and the Indemnifying Party do
not agree within the 30-day period (or any mutually agreed upon extension
thereof), the Claimant may seek appropriate legal remedy.
(c) With respect to any Claim by a third party as to
which the Claimant is entitled to indemnification hereunder, the Indemnifying
Party shall have the right to assume, control and thereafter conduct the
defense, compromise or settlement of the third-party Claim with counsel of its
choice, and the Claimant shall cooperate in all reasonable respects with the
Indemnifying Party. If the Indemnifying Party elects to assume control of the
defense of any
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third-party Claim, the Claimant shall have the right to participate in (but not
control) the defense, compromise or settlement of such Claim at its own expense.
The Indemnifying Party may not consent to the entry of any judgment or enter
into any settlement with respect to the third-party Claim without the prior
written consent of the Claimant (not to be withheld unreasonably) unless the
judgment or proposed settlement (i) involves only the payment of money damages
and (ii) does not impose an injunction or other equitable relief upon the
Claimant. If the Indemnifying Party shall fail to respond within 30 days after
receipt of any third-party Claim, or shall notify the Claimant that it does not
intend to defend against such third-party Claim, the Claimant may conduct a
defense against such third-party Claim in any manner it reasonably may deem
appropriate at the sole cost and expense of the Indemnifying Party. Nothing in
this Section 9.5 shall prevent the Claimant from taking such action, at the sole
cost and expense of the Indemnifying Party, as may be necessary to prevent a
default judgment from being entered. If the Indemnifying Party does not elect to
assume control or otherwise participate in the defense of any third party Claim,
it shall be bound by the results obtained by the Claimant with respect to such
Claim, and the Indemnifying Party shall be responsible and shall promptly
reimburse Claimant for all associated costs, fees and expenses; provided,
however, in no event will the Claimant consent to the entry of any judgment or
enter into any settlement with respect to the third party Claim without the
prior written consent of the Indemnifying Party (not to be withheld
unreasonably). Notwithstanding the foregoing, neither Buyer or Seller shall
enter into any compromise or agree to settle any claim pursuant to any Tax audit
or proceeding which would adversely affect the other party without the prior
written consent of the other party, which consent may not be unreasonably
withheld.
(d) If any Claim, whether between the parties or by a
third party, requires immediate action, the parties will make every effort to
reach a decision with respect thereto as expeditiously as possible.
9.6 LIMITATION ON INDEMNIFICATION.
(a) Except with respect to those Excluded Liabilities
described in clause (ii) of the definition of "Excluded Liabilities" that are
the subject of Section 9.4, Seller shall have no liability under Section 9.2
unless Buyer's aggregate claims for indemnification exceed $500,000 (the
"THRESHOLD"), provided that once the Threshold is exceeded, Seller's liability
shall under Section 9.2 shall include amounts constituting the Threshold;
provided, further, that the minimum amount of any individual claim for
indemnification shall be at least $5,000. In no event shall any adjustment to
the Purchase Price pursuant to Section 2.4 count towards the Threshold. In any
event, Seller's maximum aggregate liability under Section 9.2 shall be limited
to $5,000,000 (the "CAP").
(b) With respect to any Losses claimed under Section 9.4,
Seller's maximum aggregate liability shall be limited to $12,000,000. In no
event shall Claims for Losses under Section 9.4 apply to the Threshold or the
Cap.
(c) The amount payable by Seller to Buyer with respect to
Section 9.2 or 9.4 shall be reduced by the amount of any insurance proceeds
received or expected to be received by Buyer with respect to losses, liabilities
or damages, and each of the parties hereby agrees to use reasonable efforts to
collect any and all insurance proceeds to which it may be entitled in respect
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to any such losses, liabilities or damages. Such amount payable shall be further
reduced by the amount of any tax benefit actually realized (including by refund
or by reduction or offset against taxes otherwise payable had the losses,
liabilities or damages not been sustained) by Buyer (or the affiliated or
combined group of which it is a member) by reason of the payment or incurrence
by Buyer of the losses, liabilities or damages or which indemnity is sought or
the occurrence of the event giving rise to such losses, liabilities or damages.
To the extent that insurance proceeds are received and/or a tax benefit is
realized after payment has been made by Seller to Buyer, Buyer shall promptly
pay an amount equal to such proceeds or benefit to Seller.
(d) Notwithstanding anything to the contrary in this
Section 9.6, Losses incurred by Buyer or the Company arising out of the Excluded
Plan are not subject to the Threshold or Cap.
9.7 EXCLUSIVE REMEDY. After the Closing Date, the sole and
exclusive remedy of any party for any misrepresentation or any breach of a
warranty or covenant set forth in or made pursuant to this Agreement shall be a
claim for indemnification under and pursuant to this Article 9.
ARTICLE 10.
MISCELLANEOUS
10.1 EXPENSES. Each party hereto shall bear and pay all costs and
expenses incurred by it in connection with the transactions contemplated in this
Agreement, including fees and expenses of its own financial consultants,
accountants and counsel. Without limiting the foregoing, Seller alone and not
the Company shall bear all costs and expenses related to the Transaction
incurred by the Company prior to the Closing. Seller shall bear and pay all
sales taxes, transfer taxes or other taxes related to the transaction. Each
party shall bear and pay its own respective state and federal income taxes
arising out of or subsequent to consummation of the Transaction.
10.2 ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with respect thereto,
written or oral, other than documents referred to herein and the Confidentiality
Agreement. The terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the parties hereto and thereto and their respective
successors. Except as specifically set forth herein, nothing in this Agreement,
expressed or implied, is intended to confer upon any party, other than the
parties hereto, and their respective successors, any rights, remedies,
obligations or liabilities.
10.3 NO ASSIGNMENT. No party hereto may assign any of its rights or
obligations under this Agreement to any other person; provided, however, that
Buyer may assign its rights (but not its obligations) to Xxxxxxx Inc. or to any
other subsidiary of Buyer and further provided that no such assignment shall
relieve Buyer of any of its obligations hereunder (including pursuant to
Articles 2 and 9). This Agreement shall be binding on the Parties' successors
and permitted assigns.
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10.4 NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
personally or sent by facsimile transmission or overnight express or by
registered or certified mail, postage prepaid, addressed as follows:
If to Seller:
Spacelabs Medical, Inc AFTER JANUARY 1, 2003:
00000 X.X. 00xx Xxxxxx
P.O. Box 97013 0000 000xx Xxxxxx X.X.
Xxxxxxx, XX 00000-0000 Xxxxxxxx, XX 00000
Attention: Legal Department Attention: Legal Department
Fax No.: (000) 000-0000 Phone: (000) 000-0000
With a required copy to (which shall not constitute notice):
Cairncross & Hempelmann, P.S.
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
If to Buyer:
Xxxxxxx Cardiology Systems, Inc.
0000 Xxxxx Xxxxx Xxxxxxx
Xxxxxxx, XX 00000-0000
Tele. No.: (000) 000-0000
Fax No.: (000) 000-0000
Attention: Chief Financial Officer
10.5 ACCESS TO RECORDS AFTER CLOSING. For a period of six years
after the Closing Date, Seller and its representatives shall have reasonable
access to all of the books and records of the Company transferred to Buyer
hereunder to the extent that such access may reasonably be required by Seller or
its affiliates in connection with matters relating to or affected by the
operations of the Company or the Business on or prior to the Closing Date. Such
access shall be afforded by Buyer upon receipt of reasonable advance notice and
during normal business hours. Seller shall be solely responsible for any costs
or expenses incurred by it pursuant to this Section 10.5. If Buyer shall desire
to dispose of any of such books and records prior to the expiration of such
six-year period, Buyer shall, prior to such disposition, give Seller a
reasonable opportunity, at Seller's expense, to segregate and remove such books
and records as Seller may select.
10.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
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10.7 SEVERABILITY. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provision to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
10.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Washington applicable to
agreements made and entirely to be performed within such jurisdiction. The
parties hereto irrevocably submit in any suit, action or proceeding arising out
of or related to this Agreement or any of the transactions contemplated hereby
to the jurisdiction of the federal and state courts sitting in King County,
Washington and waive any and all objections to jurisdiction and forum non
conveniens.
10.9 DISCLAIMER OF WARRANTIES. EXCEPT AS TO THOSE MATTERS EXPRESSLY
COVERED BY THE REPRESENTATIONS AND WARRANTIES IN THIS AGREEMENT, EACH PARTY
HERETO DISCLAIMS ALL OTHER WARRANTIES, REPRESENTATIONS AND GUARANTIES WHETHER
EXPRESS OR IMPLIED. The representations and warranties are included in this
Agreement as a matter of risk allocation only and the inaccuracy or breach of
any representation and warranty in no event shall be used as evidence of or be
deemed to constitute bad faith, misconduct, misrepresentation or fraud even if
it is shown that the party making such representation or warranty knew or should
have known that it was incorrect when made. Each party acknowledges that no
other party nor any of its representatives or any other person has made any
representation or warranty, express or implied, as to the accuracy or
completeness of any memoranda, charts or summaries heretofore made available by
one party or its representatives to any other party or any other information
which is not included in this Agreement or the documents referred to herein, and
no party nor any of its representatives or any other person will have or be
subject to any liability to another party or any other person resulting from the
distribution of any such information to, or use of any such information. No
party makes any representations or warranties with respect to any estimates,
projections, forecasts or forward-looking information provided to another party.
There is no assurance that any estimated, projected or forecasted results will
be achieved. It is understood that any cost estimates, forecasts, projections or
other predictions contained or referred to in any materials that have been or
shall hereafter be provided to a party are not and shall not be deemed to be
representations or warranties by the party providing such information. Each
party acknowledges that (i) there are uncertainties inherent in attempting to
make such estimates, projections and other predictions, (ii) it is familiar with
such uncertainties, (iii) it is taking full responsibility for making its own
evaluation of the adequacy and accuracy of all estimates, projections and other
predictions so furnished to it, and (iv) it shall have no claim against any
other party or any of its officers, directors, or agents with respect thereto.
10.10 FORCE MAJEURE. Neither party shall be liable to the other
party for any delays or failure to perform any covenants contained in this
Agreement caused by fires, floods, earthquakes, tornados, other acts of God, or
similar occurrences; riots, acts of war or terrorism, insurrection or other
hostilities. Any delays, interruptions or failure to perform caused by such
occurrences shall not be deemed to be a breach or failure to perform under this
Agreement. Each party shall promptly notify the other upon learning of the
occurrence of such event of a force majeure. In any such event, the parties'
obligations hereunder shall be postponed for such time as its performance is
suspended or delayed on account thereof. Notwithstanding the foregoing,
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during the occurrence of any force majeure, the parties shall use their
reasonable best efforts to perform their obligations under this Agreement. Upon
the cessation of the force majeure event, the parties shall resume performance
of their obligations under this Agreement as promptly as practicable.
[REMAINDER OF PAGE INTENTIONALLY BLANK; SIGNATURE PAGE FOLLOWS]
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EXECUTED as of the day and year first above written by duly authorized
officers of the parties hereto, intending to be legally bound hereby.
SELLER: SPACELABS MEDICAL, INC.
By: ____________________________
Name: ____________________________
Title:____________________________
COMPANY: SPACELABS XXXXXXX, INC.
By: ____________________________
Name: ____________________________
Title:____________________________
DATEX: DATEX-OHMEDA, INC.
By: ____________________________
Name: ____________________________
Title:____________________________
BUYER XXXXXXX CARDIOLOGY SYSTEMS, INC.
By: ____________________________
Name: ____________________________
Title:____________________________
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EXHIBITS AND SCHEDULES OMITTED FROM
STOCK PURCHASE AGREEMENT
EXHIBITS
--------
Exhibit 2.2 Escrow Agreement
Exhibit D Transition Services Agreement
Exhibit E Noncompetition Agreement
Exhibit F Non-Solicitation and Non-Disclosure Agreement
Exhibit 6.8.1 Promissory Note
Exhibit 6.8.2 Security Agreement
SCHEDULES
---------
Schedule 2.4 Working Capital
Schedule 4.4 Consents and Approvals; No Violations
Schedule 4.5(a) Financial Statements; Books and Records
Schedule 4.6 Material Adverse Change
Schedule 4.7 Absence of Undisclosed Liabilities
Schedule 4.8 Properties and Assets
Schedule 4.9 Real Property
Schedule 4.10 Tax Matters
Schedule 4.11(a) Employee Benefit Plans
Schedule 4.12 Employees
Schedule 4.13 Material Contracts
Schedule 4.14(d) Environmental Matters
Schedule 4.15 Legal Proceedings
Schedule 4.16 Compliance with Laws
Schedule 4.17 Intellectual Property
Schedule 4.18 Medical Devices
Schedule 4.20 Labor Relations
Schedule 4.21 Accounts Receivable
Schedule 4.23 Product and Service Warranties
Schedule 4.24 Related Party Transactions
Schedule 4.25 Disclosure
Schedule 5.6 Financial Resources
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