EXECUTION COPY
ASSET PURCHASE AGREEMENT
By and Between
TYCO HEALTHCARE GROUP LP
and SHERWOOD SERVICES, AG, as Seller,
And
INTEGRA LIFESCIENCES CORPORATION
and INTEGRA LIFESCIENCES (IRELAND) LIMITED, as Buyer,
Dated as of September 7, 2005
TABLE OF CONTENTS
Page
Article 1. SALE AND PURCHASE OF ASSETS.......................................2
1.1 Purchased Assets...........................................2
1.2 Excluded Assets............................................6
Article 2. PURCHASE PRICE; PURCHASE PRICE ADJUSTMENT.........................9
2.1 Purchase Price.............................................9
2.2 Allocation and Payment of the Initial Purchase Price.......9
2.3 Purchase Price Adjustment.................................11
2.4 Transfer Taxes and Value Added Taxes......................13
2.5 Transfer of Patent Files..................................14
Article 3. ASSUMPTION OF LIABILITIES AND OBLIGATIONS BY PURCHASER...........15
3.1 Assumed Liabilities.......................................15
3.2 Certain Excluded Liabilities..............................15
3.3 Nonassignable Contracts and Authorizations................20
Article 4. REPRESENTATIONS AND WARRANTIES OF SELLER.........................20
4.1 Representations and Warranties of Seller..................20
4.1.1 Organization and Standing........................20
4.1.2 Title to Purchased Assets; Condition of
Purchased Assets.................................21
4.1.3 No Conflict......................................23
4.1.4 Financial Statements and Information.............24
4.1.5 Insurance........................................25
4.1.6 Litigation.......................................25
4.1.7 Licenses and Permits; Compliance with Laws.......26
4.1.8 Taxes. ........................................27
4.1.9 Brokers; Finders.................................28
4.1.10 Absence of Certain Changes.......................29
4.1.11 Real Properties..................................32
4.1.12 Material Contracts...............................34
4.1.13 Intellectual Property Rights.....................37
4.1.14 No Consent Requirements..........................38
4.1.15 Authorization....................................38
4.1.16 Employee Benefit Plans; Employment Agreement.....39
4.1.17 Personal Property................................41
4.1.18 Inventory........................................42
4.1.19 Product Warranty.................................42
4.1.20 Environmental Matters............................43
4.1.21 Powers of Attorney...............................44
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4.1.22 Undisclosed Liabilities..........................44
4.1.23 Labor Matters....................................44
4.1.24 Certain Relationships............................45
4.1.25 Export ........................................46
4.1.26 Certifications; Product Safety...................46
4.1.27 Product Liability Claims.........................47
4.1.28 Transfer of Production...........................48
4.1.29 Selling Affiliate Transfer of Assets.............48
4.1.30 Transitional Supply Agreement Products...........48
4.1.31 Maintenance of Molds, Tools & Dies...............48
4.1.32 No Other Representations and Warranties..........49
Article 5. REPRESENTATIONS AND WARRANTIES OF PURCHASER......................49
5.1 Representations and Warranties............................49
5.1.1 Organization and Standing........................49
5.1.2 Authorization....................................50
5.1.3 No Conflict......................................50
5.1.4 Litigation.......................................51
5.1.5 Brokers; Finders.................................52
5.1.6 Consent Requirements.............................52
5.1.7 Financing........................................52
Article 6. COVENANTS AND AGREEMENTS.........................................52
6.1 Employee Matters..........................................52
6.2 Commercially Reasonable Efforts to Close..................56
6.3 Press Release; Disclosures................................58
6.4 Books and Records and Information.........................59
6.5 Litigation Support........................................61
6.6 Transition................................................62
6.7 Covenant Not to Compete...................................63
6.8 Tax Matters...............................................65
6.9 Seller's Tradename and Trademarks.........................68
6.10 Financial Statements and Information......................69
6.11 Exclusivity...............................................72
6.12 Updated Schedules.........................................72
6.13 Auditor's Consent and Cooperation.........................72
6.14 Intellectual Property of Seller...........................73
6.15 Intellectual Property of Purchaser........................75
6.16 Customer Complaints.......................................75
6.17 Customer Inquiries........................................76
6.18 Assignment of Material Contracts..........................76
6.19 Selling Affiliates Transfer Agreement.....................76
6.20 [Reserved.]...............................................77
6.21 Compatibility.............................................77
6.22 Treatment of Certain Contracts............................77
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6.23 Consent to Assignment of the BPCS License.................78
6.24 Notice of Transfer of Products............................79
6.25 Enforcement of Non-Competition Agreements.................79
6.26 Transfer of Demonstration Units...........................79
6.27 CUSA Production Levels....................................79
6.28 Notice of Transfer of Production..........................80
Article 7. CONDUCT OF BUSINESS PENDING CLOSING..............................80
7.1 Conduct of Business Pending Closing.......................80
7.2 Notice of Developments....................................82
Article 8. CLOSING DATE; CONDITIONS AND TRANSACTIONS........................82
8.1 Closing Date and Place....................................82
8.2 Conditions Precedent to the Obligations of Purchaser......82
8.3 Conditions Precedent to the Obligations of Seller.........86
Article 9 TERMINATION.......................................................88
9.1 Termination of this Agreement.............................88
Article 10 INDEMNIFICATION..................................................89
10.1 Indemnification by Seller.................................89
10.2 Indemnification by Purchaser..............................90
10.3 Survival of Representations and Warranties................91
10.4 Indemnification Procedure.................................92
10.5 Notice and Opportunity to Defend..........................94
10.6 Reduction for Insurance and Other Claims..................96
10.7 Limitations of Remedies...................................97
10.8 Purchase Price Adjustment.................................97
Article 11. MISCELLANEOUS...................................................98
11.1 Expenses..................................................98
11.2 Notices...................................................98
11.3 Counterparts..............................................99
11.4 Entire Agreement.........................................100
11.5 Headings.................................................100
11.6 Assignment and Amendment of Agreement....................100
11.7 Governing Law............................................100
11.8 Failure to Close.........................................101
11.9 Further Assurances.......................................101
11.10 No Third Party Rights....................................101
11.11 Waiver of Bulk Sales Laws................................102
11.12 Non-Waiver...............................................102
11.13 Severability.............................................102
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11.14 Incorporation of Schedules...............................102
11.15 Waiver of Jury Trial.....................................102
Article 12. DEFINED TERMS..................................................103
12.1 Definitions..............................................103
12.2 Other Definitions........................................104
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EXHIBITS AND SCHEDULES
Exhibits
Exhibit A Medical Instruments and Product Lines of Seller
Exhibit B Form of Selling Affiliate Transfer Agreement
Exhibit C Press Release
Exhibit D Form of Letter to Counterparties to Service Agreements
Exhibit E ▇▇▇▇ of Sale
Exhibit F Transition Services Agreement
Exhibit G Transitional Supply Agreement
Exhibit H Term Sheet for International Distribution Agreement
Disclosure Schedules
Schedule 1.1 Seller's Affiliates and International Inventory
Location
Schedule 1.1(e) Personal Property
Schedule 1.2(e) Excluded Contracts
Schedule 1.2(j) Excluded Trademarks and Trade Names
Schedule 1.2(m) Exceptions to Licenses and Permits
Schedule 1.2(o) Excluded Personal Property Leases
Schedule 2.1 2004 Audited Financial Statements
Schedule 2.2(a) Initial Purchase Price Allocation
Schedule 2.3(a) Closing Inventory Accounting Instructions
Schedule 3.1(c) Assumed Employment Agreements
Schedule 4.1.2(b)(i) Current Patents, Trademarks and Applications
Schedule 4.1.2(b)(vii) Material Licenses and Permits
Schedule 4.1.2(b)(viii) Real Property Leases
Schedule 4.1.3 Exceptions to No Conflict
Schedule 4.1.4(a) 2004 Audited Financial Statements
Schedule 4.1.4(b) Financial Information
Schedule 4.1.5 Insurance Policies
Schedule 4.1.5(a) Exceptions to Legal, Valid and Enforceable
Insurance Policies
Schedule 4.1.6 Litigation
Schedule 4.1.7(a)(i) Exceptions to Licenses and Permits
Schedule 4.1.7(b) Non-Compliance with Legal Requirements
Schedule 4.1.10(i) Absence of Certain Changes
Schedule 4.1.10(ii) Certain Expenditures
Schedule 4.1.10(m) Employment Contracts
Schedule 4.1.10(o) Changes to Employee Plans
Schedule 4.1.11(a) Liens on Real Property Leases
Schedule 4.1.11(b) Disclosure Regarding Real Property Leases
Schedule 4.1.12(a) Material Contracts
Schedule 4.1.12(b) Defaults on Material Contracts
Schedule 4.1.12(c) Material Contracts Requiring Authorization, Consent
or Approval to Sell, Assign,
Transfer, Convey and Deliver
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Schedule 4.1.12(d) Material Contracts with International Customers
Schedule 4.1.12(e) Confidentiality Agreements
Schedule 4.1.13(i) Intellectual Property Infringement
Schedule 4.1.13(ii) Abandoned or Expired Patents
Schedule 4.1.13(iii) Expired or Abandoned Trademarks and Pending
Applications for Trademarks
Schedule 4.1.16(a) Material Employee Benefit Plans and Fringe Benefit
Plans
Schedule 4.1.16(h) Foreign Plans
Schedule 4.1.17(i) Exceptions to Good Title to Personal Property
Schedule 4.1.17(ii) Disclosure Regarding Operating Conditions of
Personal Property
Schedule 4.1.18 Addresses At Which Inventory Is Located
Schedule 4.1.20(b) Non-Compliance with Environmental Laws
Schedule 4.1.20(c) Releases of Hazardous Substances
Schedule 4.1.20(d) Environmental Claims
Schedule 4.1.21 Powers of Attorney
Schedule 4.1.23(a) Labor Disputes
Schedule 4.1.23(b) Non-Compliance with Employment Laws
Schedule 4.1.26 Notifications Regarding Product Safety
Schedule 4.1.27 Product Liability Claims
Schedule 5.1.3 Exceptions to Purchaser's No Conflict
Schedule 5.1.4 Purchaser Litigation
Schedule 5.1.6 Required Consents
Schedule 6.1.1(i) Business Employees
Schedule 6.1.1(ii) List of Employees Terminated from ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ Facility
Schedule 6.1.2 Accrued Employee Paid Time Off
Schedule 6.1.4 Certain Severance Benefits
Schedule 6.1.6 Annual Bonuses of Transferred Employees
Schedule 6.14 Product Design Changes
Schedule 6.15 Patents Not Subject to Infringement Suits by
Purchaser
Schedule 6.22.2 Customer Contracts
Schedule 8.2.6(c)(i) Acknowledgement of Patent Assignment
Schedule 8.2.6(c)(ii) Acknowledgement of Patent Assignment
Schedule 8.2.6(c)(iii) Acknowledgement of Trademark Assignment
Schedule 8.2.6(d) Information Delivered to Purchaser at Closing
Schedule 8.2.6(e) Estoppel Certificate and Consent to Assignment of
Lease
Schedule 8.2.6(f) Agreements to be Amended
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of September
7, 2005, by and between Tyco Healthcare Group LP, a Delaware limited partnership
("Tyco Healthcare"), Sherwood Services, AG, a company organized under the laws
of Switzerland (Tyco Healthcare and Sherwood Services AG are collectively
referred to herein as "Seller"), and Integra LifeSciences Corporation, a
Delaware corporation, and Integra LifeSciences (Ireland) Limited, a company
organized under the laws of Ireland (Integra LifeSciences Corporation and
Integra LifeSciences (Ireland) Limited are collectively referred to herein as
"Purchaser").
W I T N E S S E T H:
WHEREAS, Seller is engaged in the design, manufacture, marketing and
distribution of the medical instruments and product lines set forth in Exhibit A
attached hereto (the "Business") (such medical instruments and product lines,
the "Products");
WHEREAS, Seller wishes to sell and transfer to Purchaser the assets,
properties and business of the Business, including, but not limited to,
inventories of Products and certain other assets held by certain of its
international Affiliates, pursuant to and in accordance with the terms and
conditions of this Agreement; and
WHEREAS, Purchaser wishes to acquire the assets, properties and
business of the Business, and to assume certain liabilities of Seller relating
to the Business, pursuant to and in accordance with the terms and conditions of
this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein setforth, the parties hereto hereby agree as
follows:
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ARTICLE 1. SALE AND PURCHASE OF ASSETS
1.1 Purchased Assets.
Subject to the terms, conditions and exclusions set forth in this Agreement,
Seller will, or will cause those Affiliates set forth on Schedule 1.1, attached
hereto and made a part hereof (the "Selling Affiliates"), to, sell, assign,
transfer, convey and deliver to Purchaser free and clear of all Liens (other
than Permitted Liens), and Purchaser will purchase, acquire and accept from
Seller and the Selling Affiliates, all of the following assets, properties,
rights and business used in and relating to the Business, free and clear of all
Liens as of the Closing Date (other than Permitted Liens) (collectively, the
"Purchased Assets"):
(a) all United States and foreign patents, patent applications, licenses,
trademarks (whether registered or unregistered), service marks, trade names,
service names, brand names, Internet domain names and all related content
(except for any intellectual property not transferred to the Purchaser) and
telephone numbers, to the extent collectively set forth on Schedule 4.1.2(b)(i)
and Schedule 4.1.12(a), attached hereto and made a part hereof, and logos,
product drawings, trade dress, copyrights and any applications and registrations
therefor, and any other intangible property rights, including, without
limitation, proprietary know-how, inventions, discoveries and improvements, shop
rights, formulae, trade secrets, product drawings, specifications, designs and
other proprietary and/or confidential information owned by Seller and used in
the Business and all of the goodwill associated with the foregoing, provided,
however, that any such intangible property rights that are not solely used in
the Business shall be conveyed to Purchaser by Seller through a non-exclusive
irrevocable worldwide license only (collectively, "Seller's Intellectual
Property Rights");
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(b) all of Seller's and the Selling Affiliates' inventories relating to and
used in the Business, including, without limitation, finished goods (including
packaging material and promotional materials such as samples, demos, loaners and
prototypes), work-in-progress, raw materials, supplies, manufactured and
purchased parts and other materials to the extent reflected on the 2004 Audited
Financial Statements (the "Audited Inventory"), plus any inventories relating to
the Business acquired by Seller or the Selling Affiliates in the ordinary course
of business after September 30, 2004, less any inventories relating to the
Business sold or otherwise disposed of by the Seller or the Selling Affiliates
in the ordinary course of business after September 30, 2004 and less the
inventory related to the Business located at the Seller's Boulder, Colorado and
Tijuana, Mexico facilities on the Closing Date (collectively, but in each case,
wherever located and however recorded, the "Inventory");
(c) all business records (including records related to quality assurance,
quality system procedures, device master records, policies, orders, complaints
and related records), books, ledgers, lists (including lists of suppliers,
vendors, current and past customers, and any list of prospective customers),
studies, reports, models, tracings, price sheets, films, slides, art work and
printing plates, advertising and promotional materials and other creative
materials, tool drawings, plans, designs, blueprints or architectural plans,
schematic drawings, engineering data, computer software (object code and, to the
extent transferable, source code) data and the like in the possession of Seller
or the Selling Affiliates, relating to and used by the Business, including,
without limitation: all regulatory filings and submissions to, all clearances
and approvals from and all correspondence with the Food and Drug Administration
("FDA"), the Center for Medicare Services, the Office of the Inspector General
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of the Department of Health and Human Services and the Justice Department and
all comparable foreign bodies with regulatory authority (if and insofar as the
same may be transferred to Purchaser in accordance with applicable law),
customer files (including past, present and prospective customers),
correspondence with customers and account histories, complaint files, sales
literature and promotional or other material pertaining to products, services or
techniques designed, manufactured or sold by or for the Business, material
relating to the purchase of materials, supplies and services, research and
commercial data, records relating to the Transferred Employees of the Business
(to the extent permitted by law), consultants and contractors, credit
information, catalogs, brochures and training and other manuals, copyright
application files, invention disclosures, laboratory notebooks, confidentiality
agreements, patent opinion letters from counsel regarding the patent rights of
other parties, trademark opinion letters from counsel regarding the trademark
rights of other parties, patent search reports and opinions and trademark search
reports and opinions (collectively, the "Books and Records");
(d) all of Seller's rights and interests under all contracts and
commitments, other than Excluded Contracts, entered into, accepted, made or
submitted by or on behalf of the Business for the benefit of the Business
(whether entered into by Seller before or after the date of this Agreement),
including, without limitation, contracts for the sale of goods or services and
any unfilled purchase orders issued by or on behalf of the Business
(collectively, the "Assumed Contracts");
(e) all of the tangible personal property used in the conduct of the
Business and set forth in Schedule 1.1(e) attached hereto and made a part
hereof, which schedule also identifies the physical location of such assets as
of the date of this Agreement (collectively, the "Personal Property");
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(f) all of Seller's rights and interests under all leases or subleases or
other contracts and other agreements under which Seller is a lessee of, or holds
or operates, any Personal Property owned by a third party and relating to or
used in the conduct of the Business (collectively, the "Personal Property
Leases");
(g) only to the extent that the same may be transferred to Purchaser in
accordance with applicable law, all franchises, approvals, permits, licenses,
orders, qualifications, registrations, certificates (other than certifications
of manufacturing operations held by Tyco Healthcare or its Affiliates and
directly associated with its manufacture of products at its Boulder, Colorado or
Tijuana, Mexico facilities) variances and similar licenses and license
applications, permits and other governmental authorizations and approvals
(international, federal, state and local) relating to and used in the Business
(including, without limitation, any licenses, certifications or permits issued
by any agency of any government necessary to sell the products of the Business
in any jurisdiction where such products have been sold during the past three
years) (collectively, the "Licenses and Permits");
(h) all rights and interests of Seller in and to certain real property
leases and subleases and all improvements, fixtures and filings thereon, and
easements and rights-of-way, and other appurtenants thereto relating to and used
in the Business, and applicable to occupancy and use of the premises located,
respectively, at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇-▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇,
▇.▇.▇. (the "Real Property Leases");
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(i) all of Seller's causes of action, choses in actions, rights of
recovery, rights of setoff and rights of recoupment, vendor, supplier and
similar claims, deposits, prepayments, refunds, judgments, claims and demands of
whatever nature to the extent relating to the Purchased Assets, the Assumed
Liabilities or the Business, including any claims for past infringement or
misappropriation of Seller's Intellectual Property Rights (collectively,
"Seller's Claims"); (j) all of Seller's rights and interest under all
confidentiality agreements entered into by Seller in connection with the sale of
the Business; and
(k) other than Excluded Assets, all of Seller's rights and interests in and
to all prepaid items and deferred items or credits and deposits with respect to
the Purchased Assets described in clauses (a) through (j) above (collectively
"Seller's Credits").
1.2 Excluded Assets.
Notwithstanding anything herein to the contrary, the Purchased Assets
transferred, conveyed, set over, assigned and delivered to Purchaser shall
exclude the assets relating to or used in the Business set forth below in this
Section 1.2 (the "Excluded Assets"):
(a) All casualty, liability and individual life insurance policies owned or
obtained by Seller on behalf of the Business;
(b) the corporate minute books and stock registers of Seller;
(c) the income tax records covering transactions of Seller occurring prior
to the Closing Date and any Tax refunds of Seller other than Tax refunds
attributable to or relating to Purchaser's ownership of the Purchased Assets
after the Closing Date;
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(d) the personnel records (including, without limitation, all human
resources and other records) of Seller relating to all employees of Seller other
than Transferred Employees and personnel records of Transferred Employees that
are not Purchased Assets because such personnel records are prohibited by law
from being transferred;
(e) all of Seller's rights and interests in and to the contracts and
commitments specified in Schedule 1.2(e) attached hereto and made a part hereof
(collectively, the "Excluded Contracts");
(f) all cash, cash equivalents (including restricted cash) and other short
term investments of Seller and any person or entity directly or indirectly
controlling, controlled by, or under common control (any such person or entity,
an "Affiliate") with the Seller;
(g) claims, counterclaims, offsets, defenses or causes of action arising
prior to the Closing Date, other than to the extent relating to or arising from
the Purchased Assets, the Assumed Liabilities or the Business;
(h) all rights and interests of the Seller and its Affiliates in and to all
properties, assets and rights not being transferred pursuant to Section 1.1
hereof;
(i) all of Seller's rights and interests in and to all correspondence and
documents in connection with the sale of the Business (other than the
confidentiality agreements being assumed by Purchaser pursuant to Section 1.1
(j) and other correspondence related to the intellectual property business
records of paragraph 1.1(c), in particular, but not limited to, correspondence
related to applying for and obtaining patents, trademarks and copyrights and
opinion letters of counsel related to intellectual property);
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(j) any and all rights with respect to those of Seller's trademarks and
trade names used in the Business and listed in Schedule 1.2(j) attached hereto
and made a part hereof;
(k) all of Seller's rights and interests in all information, files,
records, data, plans, contracts and recorded knowledge related to or used in
connection with the Business to the extent that any of the foregoing (i) relate
solely to the Excluded Assets; or (ii) relate to the Excluded Assets and can be
easily separated from the Purchased Assets and are privileged or are otherwise
subject to third party privacy rights, including materials that are protected by
the attorney-client privilege or attorney work product doctrine, but only to the
extent such do not relate to the Purchased Assets; or (iii) are solely written
materials that Seller is required by law to retain and of which Seller shall
have provided a copy to Purchaser (collectively, "Excluded Records"); and
(l) all of Seller's accounts receivable and notes receivable, including,
without limitation, accounts receivable and notes receivable from any Affiliate
of Seller arising under the Assumed Contracts outstanding on the Closing Date
(the "Accounts Receivable");
(m) all Licenses and Permits issued by any governmental authority outside
of the United States, to the extent that such Licenses and Permits are not
solely related to the Business, Products or Purchased Assets, and only to the
extent set forth on Schedule 1.2(m) attached hereto and made a part hereof;
(n) all Licenses and Permits issued by any governmental authority within
the United States, which relate to manufacture of the Products by Tyco
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Healthcare at locations other than the Burlington, Massachusetts facility and
are not used primarily in, or necessary to operate, the Business; and
(o) Personal Property Leases to the extent set forth on Schedule 1.2(o).
ARTICLE 2. PURCHASE PRICE; PURCHASE PRICE ADJUSTMENT.
2.1 Purchase Price.
The total purchase price for the Purchased Assets (the "Purchase Price") shall
be equal to the Initial Purchase Price as adjusted by the cumulative value of
the adjustments set forth in Section 2.3(e) (the "Post-Closing Adjustment
Amount"). The sum of eighty million dollars ($80,000,000) less (i) the
estimates (based on the month end immediately preceding the Closing) of the
provision for sales returns and allowances, including rebates and product
returns, the provision for product warranty claims, and the amount of deferred
revenues, each as of the Closing Date, which estimates shall be provided by Tyco
Healthcare to Purchaser fifteen (15) days prior to Closing and which shall be
calculated in the same manner as such provisions and amounts were calculated in
the 2004 Audited Financial Statements, as set forth on Schedule 2.1, less
(ii) $2,128,279, which represents the value of the inventory of the Business
located in Tijuana, Mexico and Boulder, Colorado (the "Supply Inventory"), as
reflected in the 2004 Audited Financial Statements (the "Estimated Supply
Inventory"), less (iii) $1,200,000 (the "Initial Purchase Price") shall be
delivered at the Closing.
2.2 Allocation and Payment of the Initial Purchase Price.
(a) The Initial Purchase Price shall be allocated to the Purchased Assets
as follows: (i) to inventory and other tangible property based on their net book
values as of the Closing Date and (ii) to intangible assets, including, but not
limited to, intellectual property and goodwill, as determined by the parties
prior to the Closing Date. If the parties are unable to reach a mutual
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agreement as to the Initial Purchase Price allocation, then Seller and Purchaser
shall jointly select a qualified partner (with fifteen (15) or more years of
accounting experience) of either Ernst & Young or KPMG LLP (the "Accounting
Expert"), who, acting as an expert and not as an arbitrator, shall, prior to the
Closing Date, resolve those matters still in dispute with respect to the
allocation of the Initial Purchase Price among the asset categories. The fees
and expenses of the Accounting Expert will be borne equally by Purchaser and
Seller. The Initial Purchase Price allocation determined pursuant to this
Section 2.2(a) shall be set forth by the parties in Schedule 2.2(a) at Closing
and shall be revised after the Closing Date to reflect the values of the
Inventory and Closing Supply Inventory and any other subsequent adjustments to
the Purchase Price.
(b) At the Closing, Purchaser shall pay the Initial Purchase Price as
follows: (i) to Tyco Healthcare in an amount equal to the net book value of the
fixed assets and inventory sold by Tyco Healthcare; (ii) to each Selling
Affiliate in an amount equal to the net book value of the inventory sold by such
Selling Affiliate; and (iii) the remainder to Sherwood Services AG and to Tyco
Healthcare for intangible property, such amount to be paid to Sherwood Services
AG and to Tyco Healthcare in proportion to the value of the rights owned by (A)
Sherwood Services AG with respect to non-U.S. intangible property or non-U.S.
rights to intangible property, and (B) Tyco Healthcare with respect to U.S.
intangible property or U.S. rights to intangible property. For purposes of
clause (iii), the parties anticipate that the proportionate values of such
intangible property rights shall be approximately 45% Sherwood Services AG and
55% Tyco Healthcare.
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2.3 Purchase Price Adjustment.
(a) As soon as practicable following the Closing Date, but in no event
later than thirty (30) Business Days following the Closing Date (the "Valuation
Period"), a physical inventory and accounting of the Inventory and the Supply
Inventory as of the Closing Date (the "Closing Supply Inventory") shall be made
jointly by Purchaser and Seller, in accordance with the instructions set forth
on Schedule 2.3(a) and GAAP. The valuation of the Closing Supply Inventory shall
be calculated in the same manner as the value of the Supply Inventory was
calculated in the 2004 Audited Financial Statements.
(b) If at the end of the Valuation Period Seller and Purchaser shall
disagree as to the valuation of the Inventory or the Closing Supply Inventory,
the Seller and Purchaser shall each prepare and provide the other with a written
notice (the "Valuation Objection Notice") of such good faith objections to the
valuation of the Inventory or the Closing Supply Inventory, as applicable, which
objection shall be set forth with reasonable detail in such Valuation Objection
Notice.
(c) Following receipt of any Valuation Objection Notice, Seller and
Purchaser shall discuss in good faith the applicable objections set forth
therein for a period of ten (10) business days thereafter and shall, during such
period, attempt in good faith to resolve the matter or matters in dispute by
mutual written agreement. If the parties reach such an agreement, such agreement
shall be confirmed in writing and the Inventory or the Closing Supply Inventory,
as applicable, shall be revised to reflect such agreement.
(d) If the parties are unable to reach a mutual agreement in accordance
with Section 2.3(c) hereof during the ten (10) business day period referred to
therein, then Seller and Purchaser shall jointly select an Accounting Expert,
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who, acting as an expert and not as an arbitrator, shall resolve those matters
still in dispute with respect to the valuation of the Inventory or the Closing
Supply Inventory. Seller and Purchaser shall each provide the Accounting Expert
with their respective Valuation Objection Notices and shall each cooperate with
the Accounting Expert in all commercially reasonable respects. The Accounting
Expert will not make any adjustment or changes to items or amounts that are not
included in the Valuation Objection Notice.
(e) If it is determined, pursuant to clauses (c) or (d) above, that (i) the
value of the Inventory is less than the value of the Audited Inventory less the
Estimated Supply Inventory, as defined in Section 2.1, then Seller shall pay to
Purchaser the amount by which the values differ; (ii) the value of the Inventory
is greater than the value of the Audited Inventory less the Estimated Supply
Inventory, then Purchaser shall pay to Seller the amount by which the values
differ; (iii) the value of the Closing Supply Inventory is less than the value
of the Estimated Supply Inventory, then Purchaser shall pay to Seller the amount
by which the value of the Closing Supply Inventory is less than the Estimated
Supply Inventory; or (iv) the value of the Closing Supply Inventory is greater
than the value of the Estimated Supply Inventory, then Seller shall pay to
Purchaser the amount by which the value of the Closing Supply Inventory is
greater than the Estimated Supply Inventory. Any Post-Closing Adjustment Amount
shall be paid by wire transfer of immediately available funds and shall be paid
promptly, but in no event later than five (5) Business Days following the final
and binding determination of such Post-Closing Adjustment Amount.
(f) All fees and expenses of Purchaser relating to the matters described in
Section 2.2(a) or this Section 2.3, including the preparation and delivery of
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the Inventory valuation shall be borne by Purchaser, and all fees and expenses
of Seller relating to the matters described in Section 2.2(a) or this Section
2.3 shall be borne by Seller. Notwithstanding the foregoing, in the event an
Accounting Expert is retained, as provided in Section 2.2(a) or Section 2.3(d)
hereof, the fees and expenses of the Accounting Expert shall be borne equally by
Seller and Purchaser.
2.4 Transfer Taxes and Value Added Taxes.
(a) Purchaser shall be solely responsible for all sales, transfer, use,
registration, documentary, stamp, real estate, recording and similar taxes
(including penalties and interest) assessed or payable in connection with the
transfer of the Purchased Assets to Purchaser or in connection with this
Agreement or any transaction contemplated hereby (collectively, but excluding
any value added Taxes, the "Transfer Taxes") up to a maximum of $25,000, and
Seller shall be solely responsible for any Transfer Taxes over $25,000.
Purchaser shall, at its own expense, properly file on a timely basis all
necessary Tax Returns, reports, forms, and other documentation with respect to
any Transfer Tax and promptly provide to Seller evidence of payment of all
Transfer Taxes that are paid by Purchaser. Seller, each Selling Affiliate and
Purchaser shall cooperate in preparing and timely filing all such Tax Returns
and Purchaser shall provide Seller with a copy of all such filed Tax Returns.
(b) All amounts payable under this Agreement shall be exclusive of value
added taxes or analogous taxes (if any) (collectively, "VAT") which Purchaser
shall pay, if and to the extent payable under any applicable VAT law, to the
Seller or a Selling Affiliate at the rate applicable thereto from time to time.
Such VAT will be paid by Purchaser on or before the later of the Closing Date or
thirty (30) days after Purchaser has received from Seller a VAT invoice in form
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and substance reasonably satisfactory to Purchaser. Seller and each Selling
Affiliate shall cooperate with Purchaser and produce all necessary or useful
documentation, make all necessary or useful declarations or omit any avoidable
action reasonably requested by Purchaser for Purchaser to (i) qualify for an
exemption from VAT or to comply with any other provision to legally avoid the
payment of VAT and, to the extent VAT remains payable, (ii) claim input VAT for
any VAT paid by Purchaser. Where applicable, Seller and each Selling Affiliate
shall provide Purchaser with a VAT invoice in accordance with the VAT Law
applicable to the transaction. If applicable, Purchaser shall pay Seller and
each Selling Affiliate any interest, penalty or surcharge incurred by Seller and
each Selling Affiliate arising from any nonpayment of applicable VAT payable by
the Purchaser. Seller, each Selling Affiliate and Purchaser will cooperate to
ensure so far as possible that the proposed VAT treatment is accepted by the
relevant tax authority, and will produce all necessary invoices, records and
other documentation for this purpose.
2.5 Transfer of Patent Files.
Seller shall deliver to Purchaser on the Closing Date all patent and trademark
files in Seller's custody or control relating to those patents and trademarks
listed on Schedule 4.1.13(ii). Within ninety (90) days after the Closing,
Purchaser shall notify any agents used by Seller for handling such files of the
change of ownership and correspondence address. Purchaser shall further execute
new or, at Seller's option, revoke existing powers of attorney relating to such
files as Seller deems necessary.
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ARTICLE 3. ASSUMPTION OF LIABILITIES AND OBLIGATIONS BY PURCHASER
3.1 Assumed Liabilities.
Except as otherwise provided for herein, and except as set forth in
Section 3.2 hereof, Purchaser, in addition to the consideration to be paid
pursuant to Section 2 hereof, shall assume at the Closing and shall subsequently
pay, honor and discharge when due and payable in accordance with and subject to
the terms and conditions of the relevant governing agreements, commitments and
instruments, the following liabilities (collectively, the "Assumed
Liabilities"):
(a) all liabilities and obligations of Seller at the Closing Date to the
extent (i) pertaining to the Assumed Contracts, Personal Property Leases,
Licenses and Permits and Real Property Leases and (ii) not yet due as of the
Closing Date;
(b) liabilities arising under and related to the Worker Adjustment and
Retraining Notification Act of 1988, as amended (the "WARN Act"), related to the
employment of Transferred Employees pursuant to Section 6.1 hereof, provided
that Purchaser shall have received an updated Schedule 6.1.1(ii) as of the
Closing Date;
(c) all liabilities and obligations of Seller at the Closing Date to the
extent pertaining to the employment agreements set forth on Schedule 3.1(c),
attached hereto and made a part hereof; and
(d) all other liabilities and obligations arising out of or resulting from
the conduct of the Business, except Excluded Liabilities, whether occurring
before, after, or on the Closing Date.
3.2 Certain Excluded Liabilities.
Purchaser shall not assume, pay, perform, discharge or in any way be liable or
responsible for any of the following debts, liabilities or obligations
("Excluded Liabilities"):
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(a) any liability or obligation of Seller or its Affiliates under this
Agreement or on account of any of the transactions contemplated hereby,
including, without limitation, any liability or obligation of Seller to
attorneys, accountants, brokers, financial advisers or others for services
rendered or expenses incurred by or on behalf of Seller, and all other expenses
associated with the transfer of the Purchased Assets;
(b) any liability of Seller or its Affiliates to an Affiliate of Seller;
(c) except as otherwise provided in Section 6.1, any wages, salary,
severance, bonuses, commissions, vacation or holiday pay, post retirement
medical benefits, fringe benefits, long-term disability benefits, life insurance
benefits, any duties, obligations or liabilities arising under any employee
benefit plan, policy or practice, whether defined by Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended and in effect
("ERISA") or otherwise, or any employment, retention, or ----- termination
agreement (including any obligation to indemnify or reimburse an officer,
employee or agent of Seller), relating to the employees of the Business,
wherever located, any employee benefit plan or otherwise, or other amounts due
to any employees or former employees of the Business which accrue on or prior to
the Closing Date;
(d) any liabilities arising under the WARN Act in connection with those
employees of Seller that are not Transferred Employees and any other liabilities
related to the Business Employees that are not Transferred Employees;
(e) except as otherwise provided in Section 6.1, any of the following
liabilities to or in respect of any employees or former employees of Seller or
its Affiliates: (i) any liability arising under any Employment Agreement,
whether or not written, between Seller and any person, except for any Employment
Agreement included on Schedule 3.1(c), (ii) any liability under any Employee
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Benefit Plan at any time maintained, contributed to or required to be
contributed to, by or with respect to Seller or any Selling Affiliates or under
which Seller or any Selling Affiliates may incur liability, or any
contributions, benefits or liabilities therefor, or any liability with respect
to Seller's, or its Affiliates', withdrawal or partial withdrawal from or
termination of any Employee Benefit Plan, and, (iii) if and to the extent
arising out of or relating to an occurrence or event before the Closing Date,
(x) any other liability to or in respect of any employees or former employees of
Seller, including, but not limited to, any claim of an unfair labor practice or
under an employee grievance (including any claims of age, race of sex based
discrimination), if and insofar as the same is the subject of a complaint filed
with a state, federal or other court or government agency of competent
jurisdiction against Purchaser or Seller (or any of their Affiliates) within one
(1) year following the Closing Date, (y) any liability with respect to a claim
arising under a worker safety, wage or severance payment, immigration, or other
law governing the terms and conditions of employment, if and insofar as the same
is the subject of a complaint filed with a state, federal or other court or
government agency of competent jurisdiction against Purchaser or Seller (or any
of their Affiliates) within one (1) year following the Closing Date and (z) any
claim under any state unemployment compensation or worker's compensation law or
regulation or under any federal or state employment discrimination law or
regulation, if and insofar as the same is the subject of a complaint filed with
a state, federal or other court or government agency of competent jurisdiction
against Purchaser or Seller (or any of their Affiliates) within one (1) year
following the Closing Date;
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(f) any liabilities and obligations of Seller or any of its Affiliates for
any Taxes;
(g) except as otherwise provided in Section 2.4 hereof, any Tax imposed
upon or incurred by Seller or any of its Affiliates arising out of or in
connection with the negotiation and preparation of this Agreement and the
consummation and performance of the transactions contemplated hereby;
(h) except as related to the Purchased Assets or the Burlington,
Massachusetts facility, any liabilities and obligations of Seller or its
Affiliates for Environmental Claims, violations of Environmental Law, or
Environmental Conditions;
(i) any liability arising out of any administrative, regulatory or judicial
action, suit, order, lien, governmental investigation, proceeding, written
notice of violation from a governmental authority or written demand, claim or
threat of litigation against Seller or its Affiliates (each an "Action")
commenced on or pending on or before the Closing Date, including, without
limitation pending or threatened litigation involving ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇;
(j) any liability or obligation to the extent accruing or arising out of
(i) personal injury, death or damage suffered by a third party caused by a
defect in the materials or workmanship of a Product manufactured, shipped and
sold prior to the Closing Date, but only if and to the extent such liability is
the subject of a complaint filed with a state, federal or other court of
competent jurisdiction against Purchaser or Seller (or any of their Affiliates)
within one (1) year following the Closing Date, and except to the extent such
liability or obligation arises out of or relates solely to ordinary course
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warranty claims for product repair, replacement or service; (ii) any rebates not
reflected on the 2004 Audited Financial Statements or not incurred in the
ordinary course of business since the date of the 2004 Audited Financial
Statements; and (iii) intellectual property infringement claims to the extent
relating to sales of Products before the Closing Date insofar as such claims are
the subject of a complaint filed with a state, federal or other court or
governmental agency against Purchaser or Seller (or any of their Affiliates)
within one (1) year following the Closing Date;
(k) Notwithstanding the provisions of the preceding subsection 3.2(j), any
intellectual property claim to the extent the same is based upon an allegation
that any Product set forth on Exhibit A or method made, used, offered for sale,
sold, or imported into the United States by Seller on or prior to the Closing
Date infringes United States Patent No. 5,987,960;
(l) any liabilities to third parties under an Assumed Contract if and to
the extent such liabilities arise out of or relate to a breach by Seller or its
Affiliates of the Assumed Contract;
(m) any liability or obligation if and to the extent relating to Excluded
Assets;
(n) any accounts payable related to the Business if and to the extent the
same accrue for services or goods rendered to or received by Seller or its
Affiliates prior to the Closing Date;
(o) any liability or obligation of Tyco Healthcare or its Affiliates
arising from or relating to (i) any investigation by the Securities and Exchange
Commission, or any other governmental authority of competent jurisdiction, or
(ii) Tyco Healthcare's, or any Affiliate of Seller's, participation in the
United Nations oil-for-food program in Iraq;
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(p) any liability in excess of $10,000 not reflected in the 2004 Audited
Financial Statements that should have been reflected in such financial
statements in accordance with GAAP; and
(q) any liability in excess of $10,000 incurred after September 30, 2004
and prior to the Closing Date that was not incurred in the ordinary course of
business and consistent with past practice.
3.3 Nonassignable Contracts and Authorizations.
To the extent that the assignment of any of the Purchased Assets shall require
the consent of any other party, this Agreement shall not constitute a contract
to assign the same to the extent that an attempted assignment would constitute a
breach of any document, agreement or understanding governing the Purchased
Assets.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF SELLER
4.1 Representations and Warranties of Seller.
Seller represents and warrants to Purchaser that the statements contained in
this Section 4.1 are true and correct as of the date of this Agreement (except
to the extent such representations and warranties expressly relate to an
earlier date, in which case such representation and warranties were true and
current on and as of such earlier date):
4.1.1 Organization and Standing.
(a) Tyco Healthcare is a limited partnership duly organized, validly
existing and in good standing under the laws of Delaware, and Sherwood Services
AG is a corporate entity duly organized, validly existing and in good standing
under the laws of Switzerland, and Tyco Healthcare and Sherwood Services AG each
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have all partnership or corporate power and authority to own or lease its
properties and to carry on the Business as presently conducted, to execute and
deliver this Agreement, to consummate the transactions contemplated hereby and
to perform its obligations hereunder. Tyco Healthcare is qualified to do
business as a foreign limited partnership, and Sherwood Services, AG is
qualified to do business as a Swiss corporation, and each is in good standing in
each of the jurisdictions in which the nature of the Business as now being
conducted by it or the property owned or leased by it principally for the
benefit of the Business makes such qualification, licensing or registration
necessary, except where the failure to be so qualified would not have a Material
Adverse Effect.
4.1.2 Title to Purchased Assets; Condition of Purchased Assets.
(a) Seller or a Selling Affiliate has good and marketable title to, or a
valid leasehold interest in, the Purchased Assets and, subject to the terms,
conditions and exclusions set forth in this Agreement, shall on the Closing Date
convey such title and leasehold interest in the Purchased Assets to Purchaser,
free and clear of all Liens (other than Permitted Liens).
(b) Subject to the terms, conditions and exclusions set forth in this
Agreement, the Purchased Assets include, without limitation:
(i) the Seller's Intellectual Property Rights, including the patents,
patent applications, trademarks (whether registered or unregistered)
and trademark applications, telephone numbers and internet domain
names set forth on Schedule 4.1.2(b)(i) attached hereto and made a
part hereof;
(ii) the Inventory;
(iii) the Books and Records;
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(iv) the Assumed Contracts, including all of the Material Contracts
set forth on Schedule 4.1.12(a) attached hereto and made a part
hereof;
(v) the Personal Property as set forth on Schedule 1.1(e) attached
hereto and made a part hereof;
(vi) the Personal Property Leases, including those Personal Property
Leases which are Material Contracts;
(vii) the Licenses and Permits, including all of the material Licenses
and Permits set forth on Schedule 4.1.2(b)(vii) attached hereto and
made a part hereof;
(viii) the Real Property Leases, all of which are set forth on
Schedule 4.1.2(b)(viii) attached hereto and made a part hereof;
(ix) the Seller's Claims existing as of the Closing Date;
(x) the Seller's Credits existing as of the Closing Date.
(c) Subject to the terms, conditions and exclusions set forth in this
Agreement and to the Purchaser's right to close in the absence of all of the
consents listed on Schedule 4.1.12(c), the Purchased Assets, along with the
rights granted pursuant to the Transition Services Agreement, the Transitional
Supply Agreement, the International Distribution Agreement, or any other
agreement entered into by Seller and Purchaser related to the purchase and sale
of the Purchased Assets, (i) constitute all of the assets, tangible or
intangible, and rights that are (y) primarily used in the operation of the
Business as of September 30, 2004 or (z) necessary to operate the Business in
the manner operated by Seller as of September 30, 2004 and (ii) are sufficient
for the continued conduct of the Business in substantially such manner
immediately following the Closing.
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4.1.3 No Conflict.
Except as set forth in Schedule 4.1.3 attached hereto and made a part hereof,
the execution and delivery of this Agreement does not, and the consummation of
the transactions contemplated hereby will not (i) conflict with, constitute a
default under or result in the acceleration of or the creation in any party of
any right to accelerate, terminate, modify or cancel or require any notice under
any indenture, contract, lease, sublease, license, loan agreement, note or other
obligation or liability to which Seller or a Selling Affiliate is a party or by
which it is bound or to which any of the assets used in the Business (including,
without limitation, the Purchased Assets) is subject, or result in a default
under or violation of any material restriction, lien, encumbrance, indenture,
contract, lease, sublease, loan agreement, note or other obligation or liability
to which it is a party or by which it is bound or to which any of its assets is
subject or result in the creation of any lien or encumbrance upon any of said
assets, (ii) conflict with or result in a breach of or constitute a default
under any provision of the Limited Partnership Agreement (or other constitutive
documents) of Seller or any Selling Affiliates, or (iii) violate or result in a
breach of or constitute a default under any constitution or statute or any
judgment, injunction, order, decree, rule, regulation or restriction of any
court or governmental agency to which the Business or the Purchased Assets is
subject, except, in each of clauses (i) - (iii) above, for such accelerations,
terminations, modifications, cancellations, defaults, liens, encumbrances or
violations as would not have a Material Adverse Effect. Except as set forth on
Schedule 4.1.3 attached hereto and made a part hereof, Seller and the Selling
Affiliates are not required to provide any notice to, make any filing with, or
obtain any authorization, consent or approval of any government or governmental
agency to consummate the transactions contemplated hereby.
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4.1.4 Financial Statements and Information.
(a) True, correct and complete copies of the audited combined statement of
net assets of the Business as of September 30, 2004, and combined statement of
income and cash flows of the Business for the fiscal year ended September 30,
2004 (the "2004 Audited Financial Statements") are attached hereto as Schedule
4.1.4(a). The 2004 Audited Financial Statements (i) have been prepared from and
are in accordance in all material respects with the financial and accounting
records of Seller relating to the Business; (ii) have been prepared in
accordance with GAAP; and (iii) fairly present, in accordance with GAAP, the
financial condition and results of operations of the Business as of September
30, 2004 and for the periods ended September 30, 2004.
(b) Seller has provided Purchaser with the financial information set forth
on Schedule 4.1.4(b) for the quarters ended December 31, 2004, March 31, 2005
and June 30, 2005 which (i) has been prepared from and is in accordance in all
material respects with the financial and accounting records of Seller relating
to the Business; and (ii) has been prepared in accordance with GAAP consistently
applied to the 2004 Audited Financial Statements.
(c) The Interim Period Financial Statements delivered to Purchaser by
Seller pursuant to Section 6.l0 shall: (i) be prepared from and be in accordance
in all material respects with the financial and accounting records of Seller
relating to the Business; (ii) be prepared in accordance with GAAP; and (iii)
fairly present, in accordance with GAAP, the financial condition and results of
operations of the Business as of the dates of and for the periods referred to
therein.
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(d) Any 2005 Audited Financial Statements prepared by Seller for Purchaser
pursuant to Section 6.10 shall: (i) be prepared from and be in accordance in all
material respects with the financial and accounting records of Seller relating
to the Business; (ii) be prepared in accordance with GAAP; and (iii) fairly
present, in accordance with GAAP, the financial condition and results of
operations of the Business as of the dates of and for the periods referred to
therein.
(e) The net worth of Tyco Healthcare, determined in accordance with GAAP
after taking into account the transactions contemplated by this Agreement and
the distribution of the proceeds therefrom, will be in excess of Eighty Million
Dollars ($80,000,000).
4.1.5 Insurance.
Schedule 4.1.5 attached hereto and made a part hereof accurately lists the
policies of insurance (including, without limitation, policies covering
property, casualty, liability, and workers compensation coverage) covering the
assets and operations of the Business, including all of the Purchased Assets.
Except as set forth on Schedule 4.1.5(a), all such policies are legal, valid,
binding, enforceable and subsisting in full force and effect in accordance with
their terms and each policy will continue to be legal, valid, binding,
enforceable and subsisting in full force and effect on identical terms following
the consummation of the transactions contemplated hereby. Seller has not been
denied insurance or suffered the cancellation of any insurance with respect to
the Business since Seller acquired the Business.
4.1.6 Litigation.
(a) Except as set forth in Schedules 4.1.6 and 4.1.13(i) attached hereto
and made a part hereof, (i) there is no action, suit, hearing, proceeding,
25
arbitration or investigation pending or, to the knowledge of Seller, threatened
against Seller with respect to the Business, the Purchased Assets, the Assumed
Liabilities or the transactions contemplated hereby that would, individually or
in the aggregate have a Material Adverse Effect on the Business or materially
delay the consummation of the transactions contemplated hereby, and (ii) there
are no orders, writs, injunctions or decrees currently in force against Seller
with respect to the conduct of the Business that would, individually or in the
aggregate, have a Material Adverse Effect on the Business or that would
materially delay the consummation of the transactions contemplated hereby.
(b) Seller has no actual knowledge of any pending or threatened action,
suit, proceeding, hearing or investigation that would result in a Material
Adverse Effect or materially adversely affect the transactions contemplated
hereby (except for any such action, suit or investigation related to any
Antitrust Laws).
4.1.7 Licenses and Permits; Compliance with Laws.
(a) Except as set forth in Schedule 4.1.7(a)(i) attached hereto and made a
part hereof, with respect to the Business, Seller owns, holds or possesses in
its own name, all Licenses and Permits necessary to entitle it to use its name,
to own or lease, operate and use the assets and properties used in the conduct
of the Business and its operations as presently conducted, except for such
Licenses and Permits, the absence of which would not, individually or in the
aggregate, have a Material Adverse Effect. Seller is not in violation of or
default under any Licenses and Permits which violation or default would,
individually or in the aggregate, have a Material Adverse Effect. Set forth on
Schedule 4.1.2(b)(vii) attached hereto and made a part hereof is a list of the
Licenses and Permits material to operation of the Business, including, without
limitation (i) 510(k)'s for each Product, (ii) corresponding foreign product
26
registrations for ▇▇ ▇▇▇▇▇ and any similar foreign licenses or permits, (iii)
environmental licenses and permits applicable to the operation of the
Burlington, Massachusetts facility, and (iv) ISO and quality certifications.
(b) Except as set forth in Schedule 4.1.7(b) attached hereto and made a
part hereof, with respect to the Business, Seller is in compliance with each
Legal Requirement except for such noncompliance as would not have a Material
Adverse Effect, individually or in the aggregate. No event has occurred or
circumstance exists that (with or without notice or lapse of time) (i) may
constitute or result in a violation by Seller, or a failure on the part of
Seller, to comply with, any Legal Requirements, or (ii) may give rise to any
obligation on the part of Seller to undertake, or to bear all or any portion of
the cost of, any remedial action of any nature, except in each case, for such
violations, obligations or noncompliance as would not, individually or in the
aggregate, have a Material Adverse Effect. For the purposes of this Agreement,
"Legal Requirement(s)" means any applicable federal, state, local, municipal,
foreign, international, multinational or other administrative order,
constitution, law, ordinance, principal of common law, regulation, statute,
judgment or treaty.
4.1.8 Taxes.
(a) Definitions. For purposes of this Agreement:
(i) The term "Tax" means any of the Taxes, and "Taxes" means (A) all
net income, capital gains, gross income, gross receipts, sales use ad
valorem, franchise, capital, profits, license, withholding,
employment, social security, payroll, transfer, conveyance,
documentary, stamp, property, value added, customs duties, minimum
27
taxes, estimated and any other taxes, fees, charges, levies, excises,
duties or assessments of any kind whatsoever, together with additions
to tax or additional amounts, interest and penalties relating thereto
that may be imposed by any federal, state, local or foreign government
or taxing authority (whether payable directly or by withholding and
whether or not requiring the filing of a Tax Return), and (B) any
liability for the payment of any amount of any type described in
clause (A) as a result of a person being a transferee, successor or a
member of an affiliated, consolidated, unitary or combined group or of
a contractual obligation to indemnify any person or other entity;
(ii) "Tax Returns" means all returns, reports, statements and forms
(including elections, declarations, disclosures, schedules, estimates
and information tax returns) required to be filed in respect of any
Tax; and
(iii) "Code" means the Internal Revenue Code of 1986, as amended,
including the rules and regulations thereunder and any substitute or
successor provisions.
(b) There are no liens for Taxes (other than for current Taxes not yet due
and payable) on the Purchased Assets.
(c) Tyco Healthcare is not a person other than a United States person
within the meaning of Section 7701(a)(30) of the Code.
(d) None of the Purchased Assets are required to be treated for Tax
purposes as owned by any other person or entity other than Seller or the Selling
Affiliates.
4.1.9 Brokers; Finders.
Seller has not retained any broker or finder in connection with the transactions
contemplated herein and is not obligated and has not agreed or obligated
Purchaser to pay for any brokerage or finder's commission, fee or similar
compensation.
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4.1.10 Absence of Certain Changes.
Except as set forth in Schedule 4.1.10(i) attached hereto and made a part
hereof, since September 30, 2004 Seller has conducted the Business in the
ordinary course of business, consistent with past practices, and since September
30, 2004, there has not been any Material Adverse Effect in the Business or its
financial condition, operations, or results of operations. Seller has provided
Purchaser with a copy of the most recent capital expenditure budget related to
the Business for the fiscal year 2005 (with actual expenditures through June 30,
2005) and except as set forth on Schedule 4.1.10(ii), Seller has not committed
or expended any capital except in accordance with the total amount of such
capital expenditure budget. Without limiting the generality of the foregoing,
since September 30, 2004:
(a) Seller has not sold, leased, transferred or assigned any of its assets
used in the Business, tangible or intangible, other than in the ordinary course
of business;
(b) Seller has not entered into any agreement, contract, lease or license
(or series of related agreements, contracts, leases and licenses) related to the
Business either (i) involving, with respect to customer purchase orders or
similar agreements to purchase or lease the Products, more than Five Hundred
Thousand Dollars ($500,000), and, otherwise, more than Three Hundred Thousand
Dollars ($300,000) (in either case, which are not cancelable on 30 days notice
or less) or (ii) outside the ordinary course of business;
(c) no party (including Seller or any of its Affiliates) has accelerated
any default or breach remedies, terminated, materially modified or cancelled any
agreement, contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) by which any of the Purchased Assets is bound
or covered involving more than One Hundred Thousand Dollars ($100,000);
29
(d) no security interest (except for mechanics liens that are imposed by
operation of law, or purchase money security interests or other Liens in the
ordinary course of business that do not result in a Material Adverse Effect) has
been imposed upon any of the Purchased Assets;
(e) Seller has not cancelled, waived or released any material claims or
rights of value (or any series of related claims and rights), or sold,
transferred, distributed or otherwise disposed of any Purchased Assets used in
the Business, except for sales of finished goods, inventory or other assets in
the ordinary course of business;
(f) [Reserved];
(g) Seller has not delayed or postponed the payment of accounts payable for
the Business or other liabilities of the Business outside the ordinary course of
business;
(h) Except in the ordinary course of business, consistent with past
practice, Seller has not delayed or postponed the issuance of purchase orders or
the receipt of goods or services under existing purchase orders or made any
material changes in its procurement procedures.
(i) Seller has not cancelled, compromised, waived, or released any right or
claim (or series of related rights and claims) related to the Purchased Assets
either (i) involving more than One Hundred Thousand Dollars $100,000 in the
aggregate or (ii) outside the ordinary course of business;
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(j) Seller has not granted any license or sublicense of any right under or
with respect to the Purchased Assets, except in the ordinary course of business,
such as a license to end-users to use software included in products sold in the
Business;
(k) no disposal, cancellation or abandonment of any rights in any patent,
trademark, trade name, or copyright included in Seller's Intellectual Property
Right, or, to Seller's knowledge, any unauthorized disclosure to any person not
an employee of Seller or other unauthorized disposal of any confidential and
proprietary customer lists, in either case as used in the Business, has
occurred;
(l) Seller has not experienced any damage, destruction, or loss (whether or
not covered by insurance) exceeding Seventy-five Thousand Dollars ($75,000) in
any instance to the Purchased Assets;
(m) Except as set forth on Schedule 4.1.10(m) attached hereto and made a
part hereof, Seller has not entered into any employment contract or collective
bargaining agreement, whether written or oral, or modified the terms of any
existing such contract or agreement affecting employees of Seller working in the
Business;
(n) Seller has not granted any increase in the base compensation of any of
the employees of Seller working in the Business outside the ordinary course of
business;
(o) Except as set forth on Schedule 4.1.10(o) attached hereto and made a
part hereof, Seller has not adopted, amended, modified, or terminated any bonus,
profit-sharing, incentive, severance, or other plan, contract, or commitment for
the benefit of the employees of Seller working in the Business outside of the
ordinary course of business;
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(p) Seller has not made any material change in any method of accounting or
keeping its books of account or accounting practices, except as may have been
required in accordance with GAAP;
(q) Seller has not received any written notice that any person who is a
customer or distributor of, or supplier, manufacturer or licensor to, or a party
contracting with Seller with respect to the Business has taken any action or
threatened to take any action which will have or reasonably could be expected to
have a Material Adverse Effect; and
(r) Seller has otherwise acted in all material respects in the ordinary
course of business involving the Business or the Purchased Assets.
4.1.11 Real Properties.
(a) All of the Real Property Leases are set forth in Schedule
4.1.2(b)(viii) attached hereto and made a part hereof. Seller does not own any
real property used exclusively or primarily for the Business. Seller has valid
leasehold interests in all Real Property Leases, in each case free and clear of
all mortgages, liens, charges, encumbrances, easements, security interests or
title imperfections (collectively, "Liens") other than (i) those listed in
Schedule 4.1.11(a) hereto and made a part hereof, or (ii) liens not yet due and
delinquent for current taxes, assessments or governmental charges,
(collectively, "Permitted Liens"). The lease of real property by Seller or the
use thereof, as presently used by the Business, does not violate any local
zoning or similar land use laws or governmental regulations where such violation
would have a Material Adverse Effect and there are not pending or, to the
32
knowledge of Seller, threatened lawsuits or administrative actions relating to
the leased property or other matters materially and adversely affecting the
current use, occupancy or value thereof. Seller is not in violation of or in
noncompliance with any covenant, condition, restriction, order or easement
affecting the real property owned or leased by Seller for the benefit of the
Business where such violation or noncompliance would have a Material Adverse
Effect, individually or in the aggregate. There are no material approvals of
governmental authorities (including Licenses and Permits) required in connection
with the operation of the Business on the leased property related to the Real
Property Leases and, the properties have been maintained in accordance with
applicable laws, rules and regulations in all material respects. There is no
condemnation pending or, to Seller's knowledge, threatened affecting the real
property leased by Tyco Healthcare in Burlington, Massachusetts and used in the
Business. Seller has delivered to Purchaser, or provided it with access to,
prior to the Closing complete and correct copies of the Real Property Leases.
(b) Except as set forth on Schedule 4.1.11(b), attached hereto and made a
part hereof:
(i) all Real Property Leases will continue to be legal, valid,
binding, enforceable and in full force and effect on identical terms
following the consummation of the transactions contemplated hereby;
(ii) all Real Property Leases are in full force and effect and, to
Seller's knowledge, no party to any Real Property Leases is in breach
or default, and no event has occurred which, with notice or lapse of
time, would constitute a breach or default or permit termination,
modification, or acceleration thereunder that would result in a
Material Adverse Effect;
33
(iii) no party to a Real Property Lease has repudiated any provision
thereof that would have a Material Adverse Effect;
(iv) there are no disputes, oral agreements, or forbearance programs
in effect as to the Real Property Leases that would have a Material
Adverse Effect;
(v) with respect to the Real Property Leases which are subleases, the
representations set forth above are true and correct for each
underlying lease;
(vi) Seller has not assigned, transferred, conveyed, mortgaged, deeded
in trust, or encumbered any interest in the Real Property Leases;
(vii) all facilities subject to a Real Property Lease are supplied
with utilities and other services necessary for the operation of the
facilities; and
(viii) each parcel of real property subject to a Real Property Lease
abuts on and has direct vehicular access to a public road or has
access to a public road via a permanent, irrevocable, appurtenant
easement benefiting the parcel of real property, and access to the
property is provided by paved public right-of-way with adequate curb
cuts available.
4.1.12 Material Contracts.
(a) Schedule 4.1.12(a) attached hereto and made a part hereof lists, as of
the date hereof, all of the Material Contracts to which Seller is a party and
that relate to the Business. Seller has delivered to Purchaser, or provided
Purchaser with access to, true and correct copies of all Material Contracts
prior to the Closing. As used in this Agreement, "Material Contracts" means all
Assumed Contracts that meet any of the following criteria:
34
(i) all Personal Property Leases which entail annual rental payments
by Seller, in the case of any such Personal Property Lease, in excess
of Eight Thousand Dollars ($8,000);
(ii) all contracts and agreements to which Seller is a party relating
to the Business and which are: (x) outstanding contracts, whether
written or oral, with the officers, employees, agents, consultants,
advisors, salesmen, sales representatives, distributors, sales agents
or dealers of Seller requiring payments in excess of Twenty-Five
Thousand Dollars ($25,000) per annum other than contracts which by
their terms are cancelable by Seller with notice of not more than
ninety (90) days (except as required by any state laws) and without
cancellation penalties or severance payments; or (y) collective
bargaining agreements of Seller covering any employee of Seller
working in the Business;
(iii) all mortgages, indentures, security agreements, pledges, notes,
loan agreements or guarantees relating to the Business;
(iv) all material customer contracts relating to the Business;
(v) all outstanding contracts with vendors selling to the Business
expected to result in payment by Seller in excess of Fifty Thousand
Dollars ($50,000);
(vi) all outstanding material licenses pursuant to which Seller is a
licensee or a licensor and which relate to the Business, except for
licenses for "off the shelf" computer software and hardware licenses
in which Seller is a licensee but the rights licensed are not material
to conduct of the Business;
35
(vii) all written contracts or agreements affecting the Business and
materially restricting Seller's ability to engage in any business or
compete with any person;
(viii) all joint venture agreements and joint product development
agreements relating to the Business;
(ix) all sole source supply agreements relating to the Business; or
(x) all confidentiality agreements or non-disclosure agreements
entered into by Seller in connection with Seller's efforts to sell the
Business.
(b) All Material Contracts are legal, valid and binding obligations of the
Seller are enforceable against Seller; are, to the knowledge of Seller,
enforceable (except as enforcement may be limited by equitable principles
limiting the right to obtain specific performance or other equitable remedies or
by applicable bankruptcy or insolvency laws and related decisions affecting
creditors' rights generally) against the other parties in accordance with their
respective terms; and, except as listed on Schedule 4.1.12(b) hereto, to
Seller's knowledge there is no default or claimed or purported or alleged
default or state of facts which, with notice or lapse of time or both, would
constitute a default on the part of any party in the performance of any
obligation to be performed or paid by any party under any such Material
Contract, and Seller has not received or given notice of any default or claimed
or purported or alleged default or state of facts which, with notice or lapse of
36
time or both, would constitute a default on the part of any party in the
performance or payment thereunder. To the knowledge of Seller, the other parties
to all of the Material Contracts are complying in all material respects with the
terms and provisions thereof.
(c) All of the Material Contracts that require authorization, consent or
approval to sell, assign, transfer, convey and deliver the Material Contracts to
Purchaser are set forth on Schedule 4.1.12(c).
(d) All contracts related to the Business with any international customers
that could reasonably be expected to have a material effect on the Business
after the Closing Date, are set forth on Schedule 4.1.12(d).
(e) All confidentiality agreements or non-disclosure agreements (other than
those set forth in Section 4.1.12(a)(x)) entered into by Seller relating to the
Business, whether or not material to the Business, are set forth on Schedule
4.1.12(e), and all such agreements shall be Assumed Contracts.
4.1.13 Intellectual Property Rights.
Except as set forth in Schedule 4.1.13(i) and the licenses set forth in Schedule
4.1.12(a) hereto, Seller solely owns or has the exclusive right to use, free and
clear of all Liens other than Permitted Liens, all of Seller's Intellectual
Property Rights. Except as set forth in Schedule 4.1.13(i)-Exhibit A hereto,
there is no written claim or demand of any person pertaining to, or any
proceeding pending or, to Seller's knowledge, threatened, which challenges the
exclusive rights of Seller in respect of Seller's Intellectual Property Rights.
Schedule 4.1.13(ii) attached hereto and made a part hereof lists the issued,
abandoned or expired patents and pending applications for patents which are
included in the Seller's Intellectual Property Rights and Seller solely owns or
37
has the exclusive right to such patents and patent applications. Schedule
4.1.13(iii) attached hereto and made a part hereof lists the trademarks,
trademark registrations and pending applications for trademarks which are
included in the Seller's Intellectual Property Rights and Seller solely owns or
has the exclusive right to such trademarks, trademark registrations and pending
applications. Except as set forth in Schedule 4.1.13(i)-Exhibit A, neither any
officer of Seller nor any attorney employed by Seller or representing Seller who
has responsibility for intellectual property matters concerning the Business,
has been made aware of any infringement, or any claim of infringement, of any
intellectual property rights for sales of Products listed on Exhibit A attached
hereto made before the Closing Date.
4.1.14 No Consent Requirements.
Except for such filings and approvals, if any, as maybe required pursuant to the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvement Act of 1976, as amended, and the rules
and regulations thereunder (the "HSR Act"), Schedule 4.1.12(c) attached hereto
and made a part hereof, includes a complete and accurate list of all Material
Contracts that require any consent, approval, authorization, notice, order,
filing, registration or qualification of or with any court, governmental
authority or third person in connection with the execution and delivery of this
Agreement by Seller or the consummation by Seller of the transactions
contemplated hereby.
4.1.15 Authorization.
All partnership and other proceedings required to be taken on the part of
Seller, including, without limitation, all action required to be taken by the
directors or limited partners of Seller to authorize Seller to enter into, carry
out and perform any obligations under this Agreement and to sell, transfer,
convey and deliver the Purchased Assets, have been properly taken. This
Agreement has been duly executed and delivered by Seller and, assuming the due
execution and delivery hereof by Purchaser, constitutes the valid and legally
binding obligation of Seller enforceable against it in accordance with its
terms.
38
4.1.16 Employee Benefit Plans; Employment Agreement.
(a) Set forth on Schedule 4.1.16(a) attached hereto is a complete list of
each material employee benefit plan (as defined in Section 3(3) of ERISA),
whether or not subject to ERISA, or material fringe benefit plan maintained or
contributed to or required to be contributed to by Seller or any of its
subsidiaries or any organization which, together with the Seller and/or such
subsidiary, would be treated as a "single employer" within the meaning of
Section 414(b) or (c) of the Code, with respect to any employee of Seller, or
any Selling Affiliate, working in the Business ("Employee Benefit Plans") and
each contract of employment with any employee of Seller, or any Selling
Affiliate, working in the Business (an "Employment Agreement").
(b) Neither Seller nor, to its knowledge, any of its Affiliates, has ever
maintained or contributed to, or had any obligation to contribute to (or borne
any liability with respect to) any "employee pension benefit plan," within the
meaning of Section 3(2) of ERISA, that is a "multiemployer plan," within the
meaning of Section 3(37) of ERISA on behalf of the Transferred Employees.
(c) Each Employee Benefit Plan intended to be qualified under Section
401(a) of the Code, has been determined to be so qualified by the IRS and, to
Seller's knowledge no facts or circumstances exist which would adversely affect
the qualified status of such Employee Benefit Plan.
(d) Except as would not have a Material Adverse Effect on the Business, no
litigation or administrative or other proceeding, audit, examination or
investigation is pending or asserted, or, to the best knowledge of Seller,
threatened, anticipated or expected to be asserted with respect to any Employee
Benefit Plan or the assets of any such plan (other than routine claims for
benefits arising in the ordinary course).
39
(e) Seller and, to its knowledge, each of its Affiliates have paid and
discharged all of their respective liabilities and obligations arising under
ERISA or the Code of a character which if unpaid or unperformed would result in
the imposition of a lien against the Purchased Assets.
(f) Each Employee Benefit Plan has, in all material respects, been
maintained in compliance with its terms and all material provisions of ERISA and
the Code, applicable thereto (including rules and regulations thereunder).
(g) No Employment Agreement provides for the payment of any compensation or
otherwise provides for the acceleration of any benefits, payments or severance
as a result of the transactions contemplated by this Agreement.
(h) Except as set forth on Schedule 4.1.16(h) each Employee Benefit Plan
which is exempt from ERISA by reason of Section 4(b)(4) thereof (a "Foreign
Plan") is, and has been, established, registered (where required), qualified,
administered, funded (where required) and invested in compliance in all material
respects with the terms thereof and all applicable laws. With respect to each
Foreign Plan, all required filings and reports have been made in a timely and
complete manner with all governmental authorities. All obligations of Seller or
any Affiliates to or under the Foreign Plans (whether pursuant to the terms
thereof or any applicable laws) have been satisfied, and there are no
outstanding defaults or violations thereunder by Seller or any Affiliate of
40
Seller. Full payment has been made in a timely manner of all amounts which are
required to be made as contributions, payments or premiums to or in respect of
any Foreign Plan under applicable law or under any Foreign Plan or any agreement
relating to a Foreign Plan, and no taxes, penalties or fees are owing or
assessable under any such Foreign Plan. To the knowledge of Seller, no event has
occurred with respect to any registered Foreign Plan which would result in the
revocation of the registration of such Foreign Plan, or which would entitle any
person (without the consent of the sponsor of such Foreign Plan) to wind up or
terminate any such Foreign Plan, in whole or in part, or could otherwise
reasonably be expected to have an adverse effect on the tax status of any such
Foreign Plan. There are no going-concern unfunded actuarial liabilities, past
service unfunded liabilities or solvency deficiencies with respect to any of the
Foreign Plans. No contribution holidays have been taken under any of the Foreign
Plans, and there have been no withdrawals of assets or transfers of assets from
any Foreign Plan, except in accordance with applicable laws.
4.1.17 Personal Property.
Except as set forth in Schedule 4.1.17(i) hereto, Seller has or will have at the
Closing: (a) good, valid and unencumbered title (subject to Permitted Liens) to
all of its Personal Property including, without limitation, the personal
property acquired after the date of this Agreement (except for the inventory and
other assets sold or otherwise disposed of in accordance with the provisions of
this Agreement), and (b) valid leasehold interests in all Personal Property
Leases, in each case free and clear of all Liens other than Permitted Liens and
those Liens listed in Schedule 4.1.17(i) hereto. Except as set forth in Schedule
4.1.17(ii) hereto and subject to wear, tear and consumption of the same in the
ordinary course of business prior to the Closing Date, the Personal Property
that is material to the operation of the Business is maintained in good
operating condition. Seller shall deliver or make available to Purchaser prior
to the Closing complete and correct copies of the Personal Property Leases.
41
4.1.18 Inventory.
Except for Inventory that has been reserved as excess or obsolete in the 2004
Audited Financial Statements or in accordance with Seller's written policies on
obsolescence (which have been delivered to Purchaser), all Inventory held for
sale as of the date hereof is saleable in the ordinary course of business.
Schedule 4.1.18 contains a complete and accurate list of addresses at which
Inventory is located and except as set forth on Schedule 4.1.18, no Inventory is
held by any person (including any Affiliate of Seller) on consignment. All
Inventory as of September 30, 2004 is properly reflected on the 2004 Audited
Financial Statements. All Inventory acquired or disposed of after September 30,
2004 was acquired or disposed of in the ordinary course of business consistent
with past practice. The Supply Inventory is sufficient and of the appropriate
levels to enable the Seller to perform its obligations under the Transitional
Supply Agreement. Other than Seller and the Selling Affiliates, no Affiliates of
Seller hold any inventories relating to or used in the Business.
4.1.19 Product Warranty.
No product of the Business manufactured, sold, leased or delivered in the United
States by Seller is subject to any written guaranty, warranty, or other
indemnity, or to Seller's knowledge any non-written guaranty, warranty or other
indemnity, beyond the Seller's applicable regular or standard or usual terms and
conditions of sale or lease or as otherwise provided by law. Seller has
delivered or made available to Purchaser true and correct copies of the forms of
Seller's regular, standard or usual customer contracts used in the United
States.
42
4.1.20 Environmental Matters.
(a) For purposes of this Agreement, the following terms shall have the
following meanings: (i) "Environmental Laws" shall mean any and all federal,
state, and local laws, and all rules or regulations promulgated thereunder,
relating to pollution or protection of the environment (including, without
limitation, ambient air, surface water, ground water, land surface, subsurface
strata, wildlife, plants, or other natural resources), (ii) "Release" shall mean
any past or present releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, disposing, or dumping into
the environment of a Hazardous Substance, as defined below, (iii) "Hazardous
Substances" shall mean all pollutants, contaminants, chemicals, wastes, and any
other infectious, carcinogenic, ignitable, corrosive, reactive, toxic or
otherwise hazardous substances or materials (whether solids, liquids or gases)
subject to regulation, control or remediation under applicable Environmental
Laws, (iv) "Environmental Claims" shall mean all written notices of violation,
liens, claims, demands, suits, or causes of action for any damage, including,
without limitation, personal injury or property damage, arising out of or
related to Environmental Conditions or pursuant to applicable Environmental
Laws, and (v) "Environmental Conditions" shall mean the presence of Hazardous
Substances in the environment (including natural resources, soil, surface water,
ground water, any present or potential drinking water supply, subsurface strata
or ambient air) relating to or arising out of Seller's ownership of the
Business.
(b) Except as set forth on Schedule 4.1.20(b) attached hereto and except as
would not have a Material Adverse Effect, the Business and the Purchased Assets
are in compliance with applicable Environmental Laws, and the Seller has
obtained, and is in compliance with, all permits required under applicable
Environmental Laws in connection with Seller's operation of the Business or the
Purchased Assets.
43
(c) Except as set forth on Schedule 4.1.20(c) attached hereto and made a
part hereof, to the knowledge of Seller, there have been no Releases of
Hazardous Substances at or on the real property subject to the Real Property
Leases in quantities that could trigger the need for investigation and/or
remediation costs pursuant to Environmental Laws.
(d) Except as set forth on Schedule 4.1.20(d) attached hereto, there are no
Environmental Claims against the Seller that refer or relate to the Business or
the Purchased Assets.
4.1.21 Powers of Attorney.
Except as set forth in Schedule 4.1.21 attached hereto and made a part hereof,
there are no powers of attorney executed on behalf of Seller with respect to the
Business.
4.1.22 Undisclosed Liabilities.
Except as reflected elsewhere in this Agreement, the schedules hereto or the
2004 Audited Financial Statements, and except for any liabilities or obligations
that arise subsequent to the date hereof and are incurred pursuant to the terms
of Section 7.1 hereto, there are no liabilities or obligations of the Business
assumed by Purchaser pursuant to the terms of this Agreement, whether accrued,
absolute, contingent or otherwise, which are material to the Business taken as a
whole.
4.1.23 Labor Matters.
(a) Except as set forth in Schedule 4.1.23(a) attached hereto and made a
part of the date hereof there are no (i) labor strikes, disputes, slowdowns,
44
representation campaigns or work stoppages with respect to employees of Seller
working in the Business pending or, to the knowledge of Seller, threatened
against Seller and related to the Business or affecting the Business, (ii)
grievance or arbitration proceedings arising out of collective bargaining
agreements to which Seller is a party (other than informal grievances), (iii)
unfair labor practice complaints pending or, to the knowledge of Seller,
threatened against the Seller and related to the Business, or (iv) collective
bargaining agreements, works council or other labor contracts applicable to
persons employed by Seller working in the Business. To the knowledge of Seller,
there are no activities or proceedings of any labor union to organize any such
employees, except, in each case, for such strikes, disputes, slowdowns,
representation campaigns, work stoppages, grievances, arbitration proceedings,
complaints, agreements, activities and proceedings as would not have a Material
Adverse Effect.
(b) Except to the extent set forth in Schedule 4.1.23(b) hereto, Seller is
in compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours and is not
engaged in any unfair labor practice, except for such noncompliance or practices
as would not have a Material Adverse Effect.
4.1.24 Certain Relationships.
Seller has not received any written notice within the past twenty-four (24)
months that any person who is a customer or distributor of, or supplier,
manufacturer or licensor to, or a party contracting with Seller with respect to
the Business has taken any action or threatened to take any action which will
have or reasonably could be expected to have a Material Adverse Effect.
45
4.1.25 Export.
(a) In the two-year period prior to the date hereof, Seller, its
Affiliates, and (to Seller's knowledge) any distributor or purchaser of Seller's
products have (i) complied with all applicable laws or regulations related to
the sale, marketing, promotion or export of goods promulgated or enforced by the
Office of Foreign Assets Control in the Unites States Department of the
Treasury, the United States Department of Commerce or any other department or
agency of the United States federal government, including, without limitation,
the Arms Export Control Act, the Trading with the Enemy Act, the International
Emergency Economic Powers Act, the Export ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇, the Foreign Corrupt Practices Act, the Export Administration Regulations,
the International Traffic in Arms Regulations, the United States Customers
Regulations (the "Trade Laws"), (ii) made reasonable efforts to ensure that no
products have been sold directly or indirectly to any entity where such sales
are, or were at any time during the previous two years, prohibited by these
Trade Laws or other regulations.
(b) In the two-year period prior to the date hereof, neither Seller nor its
Affiliates has any knowledge or reasonable basis to believe that the Seller or
any of its Affiliate has been the subject of any investigation, complaint or
claim of any violation of any Trade Law by any governmental entity, except as
such investigation, complaint or claim would not reasonably be expected to have
a Material Adverse Effect on the Seller.
4.1.26 Certifications; Product Safety.
(a) All operations of the Business have achieved and maintained all
required ISO (International Organization for Standardization) and quality
certifications and are compliant, in all material respects, with the applicable
FDA Quality System Regulations, and there is no pending, and, to Seller's
46
knowledge, no threatened, action to audit, repeal, fail to renew or challenge
any such certification. Since April 1, 2003 and except as set forth in Schedule
4.1.26 attached hereto and made a part hereof, none of the Seller nor any of its
Affiliates has been required to file any notification or other report with or
provide information to any product safety agency, commission, board or other
governmental entity of any jurisdiction concerning actual or potential hazards
with respect to any product purchased, distributed, sold or leased, or with
respect to services rendered, by the Seller or any of its Affiliates, to the
extent such products or services relate to the Business. To Seller's knowledge,
each product distributed, sold, or leased, or service rendered, by Seller
related to the Business complies in all material respects with all product
safety standards of each applicable product safety agency, commission, board or
other governmental entity having jurisdiction over the Products. The Seller
manufactures each Product in accordance with each device master record (as such
term is defined in the FDA Quality System Regulations) maintained by Seller for
each Product.
(b) Seller has received no notice that requires, and, to Seller's
knowledge, no development exists that would require, any product recalls or
field corrective actions that would or could reasonably be expected to result in
a Material Adverse Effect.
4.1.27 Product Liability Claims.
Except as set forth on Schedule 4.1.27, attached hereto and made a part hereof,
no product liability claims related to the Business or any Products have been
made against the Seller or any Selling Affiliate during the five (5) years
preceding the date hereof.
47
4.1.28 Transfer of Production.
Neither Tyco Healthcare, nor any Affiliate of Tyco Healthcare, has any intent to
transfer the production of the Products outside of the Boulder, Colorado or
Tijuana, Mexico facilities where such Products are currently produced.
4.1.29 Selling Affiliate Transfer of Assets.
Pursuant to the Selling Affiliate Transfer Agreements, each Selling Affiliate
will transfer good and marketable title to the Purchased Assets subject thereto
to the Purchaser or one of its Affiliates.
4.1.30 Transitional Supply Agreement Products.
For the twelve (12) months ended June 30, 2005, except for any Products
discontinued during such period, there have been no sales revenues related to
Products that are produced in Seller's Boulder, Colorado or Tijuana, Mexico
facilities, other than revenues resulting from sales of the Products listed on
Exhibit ▇-▇, ▇▇▇▇▇▇▇ ▇-▇ and Exhibit A-3 to the Transitional Supply Agreement,
attached hereto as Exhibit G.
4.1.31 Maintenance of Molds, Tools & Dies.
To the knowledge of Seller, and based on its communications with vendors in the
ordinary course of business, (a) Seller has no reason to believe that any vendor
that supplies parts or raw materials to manufacture Products in Boulder,
Colorado or Tijuana, Mexico, will not be able to do so following the date of
this Agreement, and (b) Seller has no reason to believe that any mold or other
tool that constitutes a Purchased Asset is not fully functional in accordance
with its specifications.
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4.1.32 No Other Representations and Warranties.
Notwithstanding anything contained in this Article 4 or any other provision of
this Agreement to the contrary: (i) Purchaser acknowledges and agrees that
neither Seller nor any of its officers, directors, Affiliates, agents or
representatives is making (or has made) any representation or warranty
whatsoever, whether express or implied (including, but not limited to, any
implied warranty or representation as to the value, condition, merchantability
or suitability of any of the Purchased Assets) or contained, or referred to, in
any materials (including, without limitation, projections, forecasts, budgets
and estimates) that have been provided to the Purchaser of any of its
Affiliates, agents or representatives beyond those expressly given by the Seller
in this Agreement, and (ii) it is understood that, except for the
representations and warranties contained herein and Seller's obligations
pursuant to this Agreement, Purchaser takes the Business, Purchased Assets and
Assumed Liabilities "as is," "where is" and "with all faults."
ARTICLE 5.REPRESENTATIONS AND WARRANTIES OF PURCHASER
5.1 Representations and Warranties.
Purchaser represents and warrants to Seller that the statements contained in
this Section 5.1 are true and correct in all material respects as of the date of
this Agreement (except to the extent such representations and warranties
expressly relate to an earlier date, in which case such representation and
warranties were true and current on and as of such earlier date):
5.1.1 Organization and Standing.
(a) Integra LifeSciences Corporation is a corporation duly organized,
validly existing and in good standing under the laws of Delaware and has all
corporate power and authority to carry on the businesses in which it is engaged,
to own and use the properties owned and used by it, to execute and deliver this
Agreement, to consummate the transactions contemplated hereby and to perform its
obligations hereunder.
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(b) Integra LifeSciences (Ireland) Limited is a legal entity duly
organized, validly existing and in good standing under the laws of Ireland and
has all company power and authority to carry on the business in which it is
engaged, to own and use the properties owned and used by it, to execute and
deliver this Agreement, to consummate the transactions contemplated hereby and
to perform its obligations hereunder.
5.1.2 Authorization.
All corporate and other proceedings required to be taken on the part of
Purchaser, including, without limitation, all action required to be taken by the
directors or shareholders of Purchaser to authorize Purchaser to enter into,
carry out and perform any obligations under this Agreement and to purchase the
Purchased Assets and assume the Assumed Liabilities, have been properly taken.
This Agreement has been duly executed and delivered by Purchaser and, assuming
the due execution and delivery hereof by Seller, constitutes the valid and
legally binding obligation of Purchaser enforceable against it in accordance
with its terms.
5.1.3 No Conflict.
Except as set forth in Schedule 5.1.3 attached hereto and made a part hereof,
the execution and delivery of this Agreement does not, and the consummation of
the transactions contemplated hereby will not (i) conflict with, constitute a
default under, result in the acceleration of, or the creation in any party of
any right to accelerate, terminate, modify or cancel or require any notice under
any material indenture, contract, lease, sublease, license, loan agreement, note
or other obligation or instrument or liability to which Purchaser is a party or
by which it is bound or to which any of its assets is subject, (ii) subject to
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obtaining and making the approvals, consents, notices and filings referred to in
Section 5.1.6, conflict with or result in a breach of or constitute a default
under any provision of the Articles of Incorporation or Bylaws (or other
constitutive documents) of Purchaser, or a default under or violation of any
material restriction, lien, encumbrance, indenture, contract, lease, sublease,
loan agreement, note or other obligation or liability to which it is a party or
by which it is bound or to which any of its assets is subject or result in the
creation of any lien or encumbrance upon any of said assets, or (iii) violate or
result in a breach of or constitute a default under any constitution or statute
or any judgment, injunction, order, decree, rule, regulation or restriction of
any court or governmental agency to which Purchaser is subject. Except as set
forth on Schedule 5.1.3 attached hereto and made a part hereof, Purchaser is not
required to provide any notice to, make any filing with, or obtain any
authorization, consent or approval of any government or governmental agency to
consummate the transactions contemplated hereby.
5.1.4 Litigation.
Except as set forth in Schedule 5.1.4 attached hereto and made a part hereof,
there is no action, suit, hearing, proceeding, arbitration or investigation
pending or, to the knowledge of Purchaser, threatened, against Purchaser, or the
directors, officers, agents or employees of Purchaser which would, individually
or in the aggregate, materially threaten the ability of Purchaser to consummate
the transactions contemplated hereby, or materially delay the consummation of
the transactions contemplated hereby, and there are no orders, writs,
injunctions or decrees currently in force against Purchaser or the directors,
officers, agents or employees of Purchaser which would, individually or in the
aggregate, materially threaten the ability of Purchaser to consummate, or
materially delay the consummation of, the transactions contemplated hereby.
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5.1.5 Brokers; Finders.
Purchaser has not retained any broker or finder in connection with the
transactions contemplated herein and is not obligated and has not agreed or
obligated Seller to pay any brokerage or finder's commission, fee or similar
compensation.
5.1.6 Consent Requirements.
Except for such filings and approvals if and as may be required pursuant to the
HSR Act and as set forth in Schedule 5.1.6 attached hereto and made a part
hereof, no consent, approval, authorization, order, filing, registration or
qualification of or with any court, governmental authority or third person is
required to be made or obtained by Purchaser in connection with the execution
and delivery of this Agreement by Purchaser or the consummation by Purchaser of
the Transactions contemplated hereby.
5.1.7 Financing.
At the Closing Purchaser will have sufficient funds available (from its working
capital and/or unrestricted credit facilities or otherwise) to enable it to
consummate the transactions contemplated by this Agreement.
ARTICLE 6. COVENANTS AND AGREEMENTS
6.1 Employee Matters.
6.1.1 Employment Status.
Within a reasonable period of time (but not less than five (5) calendar days)
prior to the Closing Date, Purchaser shall make an offer of employment, with
such employment commencing as of the Closing Date (or such later date as may be
applicable for employees on leave), to each employee of Seller working in the
Business and set forth in Schedule 6.1.1(i) attached hereto and made a part
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hereof (such schedule shall include each employee's location, their current
employment status (whether working or on official leave of absence, including
any such employee of Seller working in the Business who is absent due to
vacation, holiday, illness, leave of absence or disability), their job title,
and whether salaried or hourly and such schedule shall be updated ten (10) days
prior to the Closing), (each a "Business Employee") in the same job or position
and location as in effect immediately prior to the Closing Date, and at a salary
or wage at least equal to the salary or wage level to which they were entitled
immediately prior to the Closing Date. Purchaser and its Affiliates shall
provide each Transferred Employee, as of the Closing Date, with compensation and
benefits (including, without limitation, incentive and equity-based
compensation) that are, taken as a whole, of similar economic value to the
compensation and benefits provided to such Transferred Employees as of the date
hereof. Each such Business Employee who accepts such an offer of employment and
becomes an employee of Purchaser is referred to as a "Transferred Employee," and
all such employees collectively are referred to as the "Transferred Employees."
For the sake of clarity, a Business Employee who accepts employment with
Purchaser, but is on a leave of absence or short-term or long-term term
disability leave on the Closing Date as reflected on shall become a Transferred
Employee on the date such Business Employee returns to active employment; all
other Business Employees who accept employment with Purchaser and are actively
performing services at the Closing Date shall become a Transferred Employee on
the Closing Date. A list of all Business Employees who are on a leave of absence
or short-term or long-term disability leave as of the date hereof is set forth
on Schedule 6.1.1(i) (and such schedule shall be updated ten (10) days prior to
Closing). Schedule 6.1.1(ii) sets out the number of employees who were
terminated in the ninety (90) days preceding the date hereof while working at
the ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ facility, and the reasons for
each such termination, and Seller shall provide Purchaser with an update to
Schedule 6.1.1(ii) on the Closing Date.
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6.1.2 Liabilities.
From and after the Closing Date, Purchaser shall, to the extent permitted by
applicable law, assume, honor and be solely responsible for paying, providing or
satisfying when due (i) all vacation days, sick pay and other paid time off for
Transferred Employees accrued but unused as of the Closing Date, but only to the
extent such amounts (and the accrual rate of such vacation days, sick pay and
other paid time off) are set forth on Schedule 6.1.2 attached hereto and made a
part hereof (and such schedule shall be updated ten (10) days prior to Closing),
and in accordance with Purchaser's policies and past practices; and (ii) all
compensation (including salary, wages, commissions, incentive compensation,
overtime, premium pay and shift differentials), vacation, sick pay and other
paid time off, benefits and benefit claims, severance and termination pay,
notice and benefits under all applicable Federal, state or local law and under
any plan, policy, practice or agreement and all other Liabilities, in each case
accruing, incurred, or arising as a result of employment or separation from
employment with Purchaser or its Affiliates, on or after the Closing Date with
respect to Transferred Employees.
6.1.3 Certain Welfare Plan Matters.
Following the Closing Date, (i) Purchaser shall ensure that no waiting periods,
exclusions or limitations with respect to any pre-existing conditions, evidence
of insurability or good health exclusions are applicable to any Transferred
Employee or their dependents or beneficiaries under any welfare benefit plans in
which such employees may be eligible to participate; and (ii) Purchaser shall be
solely responsible for compliance with the requirements of Section 4980B of the
Code and part 6 of subtitle B of Title I of ERISA ("COBRA"), including, without
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limitation, the provisions of continuation coverage with respect to all
Transferred Employees, and their spouses and dependents, for whom a qualifying
event occurs on or after the Closing Date. For purposes of this Section 6.1.3,
the "continuation coverage" and "qualifying event" shall have the meanings
ascribed to them in COBRA.
6.1.4 Certain Severance Benefits.
For a period of up to twelve (12) months after the Closing Date, Purchaser shall
provide severance benefits to the Transferred Employees in the amount and
according to the terms set forth on Schedule 6.1.4 attached hereto and made a
part hereof.
6.1.5 Credited Service.
With respect to each employee benefit plan, policy and practice, including,
without limitation, severance, vacation and paid time off plans, policies and
practices, sponsored or maintained by Purchaser or its Affiliates, Purchaser
shall grant or cause to be granted to all Transferred Employees from and after
the Closing Date credit for all service with the Seller and its predecessors,
prior to the Closing Date for all purposes (including, without limitation,
eligibility to participate, vesting credit, eligibility to commence benefits,
benefit accrual and severance).
6.1.6 Certain Bonus Payments.
After the conclusion of the fiscal year of Seller that includes the Closing
Date, and within thirty (30) days after Purchaser's receipt of notice from
Seller that such bonus payments have been approved by the board of directors of
Tyco International, Ltd., Purchaser shall pay to each of the Transferred
Employees a cash bonus that is determined by (a) multiplying the amount that is
set forth opposite each Transferred Employee's name on Schedule 6.1.6 by the
number of days between the Closing Date and the last day of the fiscal year of
Seller that includes the Closing Date and (b) dividing such product by three
hundred and sixty-five (365).
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6.2 Commercially Reasonable Efforts to Close.
(a) During the period commencing on the date of the execution of this
Agreement and continuing until the Closing Date, Purchaser and Seller shall
comply in all material respects at the earliest practicable date with any formal
or informal request for information received by it or any of their respective
Affiliates from any governmental entity pursuant to and in connection with the
transactions contemplated by this Agreement, provided, however, that neither
Purchaser nor Seller has any obligation to take actions pursuant to Subsections
6.2(a) beyond those described in Subsection 6.2(b) below.
(b) In connection with any governmental or regulatory inquiry the parties
hereto shall use commercially reasonable efforts to comply within sixty (60)
days with any request for additional information or documentary material issued
to either Purchaser or Seller or their respective Affiliates by the Federal
Trade Commission or the United States Department of Justice Antitrust Division
under the HSR Act (a "Second Request").
(c) The parties hereto shall promptly inform each other of any material
communication made to or received from any governmental entity relating to any
of the transactions contemplated hereby and shall provide each other with an
accurate description of the material contents of such communication.
(d) For purposes of this Agreement, the term "Antitrust Laws" shall mean
the ▇▇▇▇▇▇▇ Act, as amended, the ▇▇▇▇▇▇▇ Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended and all other federal, state and
foreign statutes, rules, regulations, orders, decrees, administrative and
judicial doctrines, and other laws that are designed or intended to prohibit,
restrict or regulate actions having the purpose or effect of monopolization,
restraint of trade or other harm to competition.
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(e) If after the Antitrust Clearance Period, (i) there remains any
necessary clearance related to any Antitrust Laws which must be received, or any
waiting period related to any Antirust Laws which must be terminated, or any
governmental action related to any Antitrust Laws which must be resolved, and
(ii) there is no preliminary or permanent injunction, action, suit or proceeding
that would prevent the consummation of the transactions which are the subject of
this Agreement (other than any injunction, action, suit or proceeding related to
any Antitrust Laws), and (iii) all representations and warranties of Seller
contained in this Agreement are true and correct in all material respects as of
the end of the Antitrust Clearance Period, and (iv) neither the Seller, nor the
Business, nor the Purchased Assets have suffered a Material Adverse Effect, and
(v) Seller has fully performed and complied with in all material respects all
covenants, obligations, agreements, conditions and commitments required to be
fulfilled or complied with by the end of the Antitrust Clearance Period, and
(vi) Seller has obtained (but Seller shall not be required to have delivered)
all authorizations, consents or approvals which are necessary to sell, assign,
transfer, convey and deliver the Material Contracts, then Purchaser shall
promptly pay to Seller $7,000,000 (the "Antitrust Break-Up Fee").
(f) For purposes of this Section 6.2, the "Antitrust Clearance Period"
shall mean forty-six (46) weeks after the date hereof plus (i) the number of
days that elapse after Purchaser delivers to Seller a certificate signed by an
officer of Purchaser certifying that Purchaser has complied with its initial
filing obligations pursuant to the HSR Act and before Seller delivers to
Purchaser a certificate signed by an officer of Seller certifying that Seller
has complied with its initial filing obligations pursuant to the HSR Act, plus
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(ii) the number of days that elapse after Purchaser delivers to Seller a
certificate signed by an officer of Purchaser certifying that Purchaser has
substantially complied with any request for additional information under the HSR
Act and before Seller delivers to Purchaser a certificate signed by an officer
of Seller certifying that Seller has substantially complied with any request for
additional information under the HSR Act, but in no event shall the Antitrust
Clearance Period extend beyond the first anniversary of the date of this
Agreement.
6.3 Press Release; Disclosures.
Except as required by law or NASDAQ or SEC regulations, and except for the press
release attached hereto as Exhibit C (and except for announcements and
disclosures that are consistent with and limited to the information included in
such press release), prior to Closing, neither Seller nor Purchaser, without the
prior written consent of the other (which consent shall not be unreasonably
withheld), will make any press release or any similar public announcement
concerning the transactions contemplated hereby. Except as required by law or
NASDAQ or SEC regulations, and except for the press release attached hereto as
Exhibit C (and except for announcements and disclosures that are consistent with
and limited to the information included in such press release), no written or
oral announcement or private disclosure with respect to the transactions
contemplated hereby will be made, either prior to or after the Closing, to any
person unrelated to Seller or Purchaser unless jointly approved by Seller and
Purchaser. If disclosure is required by law or NASDAQ regulations, the
disclosing party shall consult in advance with the other party and attempt in
good faith to reflect such other party's concerns in the required disclosure.
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6.4 Books and Records and Information.
6.4.1 Inspection of Documents.
Purchaser agrees that all documents related to the operation of the Business
prior to Closing delivered to Purchaser by Seller pursuant to this Agreement
(including, but not limited to, files, books and records) shall, after the
Closing, and upon a reasonable request of Seller, be open for inspection by
representatives of Seller at any time during Purchaser's regular business hours
for reasonable and necessary purposes until such time as documents are destroyed
or possession thereof is given to the other party as provided for in Section
6.4.2 hereof and that Seller may during such period at its expense make such
copies thereof as it may reasonably request. Seller agrees that all documents
that are retained by Seller after the Closing Date and that are related to the
operation of the Business prior to Closing (other than tax records of Seller)
shall, upon a reasonable request of Purchaser, be open for inspection by
representatives of Purchaser at any time during Seller's regular business hours
until such time as documents are destroyed or possession thereof is given up to
the other party as provided for in Section 6.4.2 hereof and that Purchaser may
during such period at its expense make such copies thereof as it may reasonably
request.
6.4.2 Cooperation Regarding Information and Books and Records.
For a period of two (2) years from the Closing Date, Purchaser and Seller shall
provide each other with such cooperation, information (including without
limitation financial information) and business records as may be reasonably
requested to assist with the parties' efforts to comply with all applicable
Legal Requirements. Purchaser and Seller shall make their employees available to
each other on a mutually convenient basis to provide explanation of any
documents or information provided hereunder. Notwithstanding the foregoing,
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neither Purchaser nor Seller shall be required to prepare any documents or
determine any information not then in its possession in response to a request
under this Section 6.4.2. Any information obtained under this Section 6.4.2
shall be kept confidential, except as may be otherwise necessary in connection
with the applicable Legal Requirements.
6.4.3 Destruction of Documents.
Without limiting the generality of Section 6.4.1 hereof, for a period ending on
the sixth anniversary of the Closing Date, neither Purchaser nor Seller shall
destroy or give up possession of any item referred to in Section 6.4.1 hereof
without first offering to the other the opportunity, at such other's expense
(but without any other payment) to obtain the same. Thereafter each party shall
be free to dispose of them as it deems fit. Notwithstanding this provision,
either Purchaser or Seller may comply with any document retention policies then
in effect for either Purchaser or Seller, as the case may be, and the
destruction of any item referred to in Section 6.4.1 solely as a result of
compliance with such document retention policies shall not result in a breach of
this Section 6.4.3.
6.4.4 Confidentiality.
Seller will treat confidentially and hold as such all information to the extent
concerning the Business that is not already generally available to the public or
that becomes part of the public domain or publicly known or available other than
as a result of a disclosure directly or indirectly by Seller or its
representatives ("Confidential Information"), refrain from using any of the
Confidential Information except in connection with this Agreement, and deliver
promptly to Purchaser or destroy, at the request and option of Purchaser, all
tangible embodiments (and all copies) of the Confidential Information in its
possession. In the event that Seller is requested or required (by oral question
or request for information or documents in any legal proceeding, interrogatory,
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subpoena, civil investigative demand, or similar process) to disclose any
Confidential Information, Seller will notify Purchaser promptly of the request
or requirement so that Purchaser may seek an appropriate protective order or
waive compliance with the provisions of this Section 6.4.4. If, in the absence
of a protective order or the receipt of a waiver hereunder, Seller is, on the
advice of counsel, compelled to disclose any Confidential Information to any
tribunal or else stand liable for contempt, Seller may disclose the Confidential
Information to the tribunal; provided, however, that Seller shall use its
commercially reasonable efforts to obtain, at the reasonable request of
Purchaser, an order or other assurance that confidential treatment will be
accorded to such portion of the Confidential Information required to be
disclosed as Purchaser shall designate.
6.4.5 2006 Capital Expenditure Budget Documents.
Seller agrees to provide Purchaser with copies of any capital expenditure budget
related to the Business for fiscal year 2006 as soon as such capital expenditure
budget documents become available.
6.5 Litigation Support.
In the event and for so long as either party is contesting or defending against
any action, suit, proceeding, hearing, investigation, charge, complaint, claim
or demand with any third party in connection with (i) the transaction
contemplated under this Agreement, or (ii) any fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction on or prior to the Closing Date involving
the Business, the other party will cooperate with the reasonable requests of the
contesting or defending party and its counsel in the contest or defense, upon a
reasonable request, provide reasonable access to its personnel, and provide such
information, testimony and access to its books and records as shall be necessary
61
in connection with the contest or defense, subject to any requirement for a
protective order or other measures as such other party may reasonably deem
desirable to protect the confidentiality of such information, testimony, books
or records, and further subject to withholding by such other party of any
information, testimony, books or records that it deems to be the subject of an
attorney-client, attorney work product or like privilege, all at the sole cost
and expense of the contesting or defending party (unless the contesting or
defending party is entitled to indemnification as set forth herein).
6.6 Transition.
During a transition period of twelve (12) months from and after the Closing
Date, neither the management of Seller nor of any of Seller's Affiliates that
previously manufactured, warehoused, distributed, serviced, promoted or sold
Products will take any action, or authorize or condone any action by its
subordinate employees, that is designed or intended to have the effect of
discouraging any lessor, licensor or supplier (collectively, "Business
Partners") of Seller from maintaining the same business relationships with the
Purchaser after the Closing as it maintained with the Seller prior to the
Closing insofar and to the extent such business relationships relate to the
Business. Seller and its foregoing Affiliates will instruct those of their
respective personnel who Seller or its Affiliates reasonably deem are in a
position to influence decisions by Business Partners to continue such
relationships with Purchaser after the Closing, that they are not to take any
action that is designed or intended to have the effect of discouraging any
Business Partners of Seller from maintaining the same business relationships
with the Purchaser after the Closing as it maintained with the Seller prior to
the Closing insofar and to the extent such business relationships relate to the
Business.
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6.7 Covenant Not to Compete.
For a period of four (4) years from and after the Closing Date, none of Seller
nor its Affiliates will, without the prior written consent of Purchaser,
directly or indirectly, own or invest in any business that designs,
manufactures, markets, sells or distributes products (collectively, the
"Competitive Products") that (i) perform radiosurgery (use ionizing
electromagnetic energy) or (ii) perform ultrasonic surgical aspiration (the
"Procedure"), or (iii) provide image guided navigation (by means other than
Injectable Agents) for surgical procedures in the cranium or spine using
existing optical tracking technology, or (iv) provide stereotactic navigation
(by means other than Injectable Agents) using artificial physical markers
affixed to or implanted in the patient for surgical procedures in the cranium or
spine; or (v) provide stereotactic navigation (by means other than Injectable
Agents) by frames affixed to the patient for surgical procedures anywhere in the
body; provided, however, that nothing herein shall limit the right of Seller or
its Affiliates to own or invest in a business involved in the research, design,
manufacture, marketing, sale or distribution, of products that (a) use or
produce high-intensity focused ultrasound (defined as transmitting at least one
beam or wave of ultrasound energy by non-mechanical means to a focused position
within the body without aspiration), radiofrequency, microwave or other
non-ionizing electromagnetic energy for any purpose or (b) use or produce
ultrasonic energy for any purpose other than the Procedure; provided, further,
however, that nothing in clauses (iii) or (iv) shall limit the right of Seller
or its Affiliates to own or invest in a business involved in the research,
design, manufacture, marketing, sale or distribution, of products that are used
to assist in performing, or to enhance the process to perform, any ablation
procedure (other than using ultrasonic aspiration) or any non-ionizing
electromagnetic energy-based pain management procedure outside of the cranium.
Notwithstanding the foregoing, Seller shall not be deemed to be in violation of
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this Agreement solely by reason of being the owner of up to five percent (5%) of
the outstanding stock (or other form of equity interest) in any publicly traded
company, nor shall this provision prevent Seller or any of its Affiliates from
acquiring any company or business that designs, manufactures, markets, sells or
distributes (A) Competitive Products that perform the Procedure if the revenues
of such company or business derived from such Competitive Products represent
less than five percent (5%) of the revenues of the acquired business as a whole
and, for a period of two (2) years following Seller's acquisition of the company
or business or, if sooner, until the above-stated four (4) year non-compete
period expires, Tyco Healthcare or its Affiliates does not use employees who are
working in its Valleylab division to design, manufacture, market, sell or
distribute any such Competitive Products or (B) Competitive Products that do not
perform the Procedure and represent less than fifteen percent (15%) of the
revenues of the acquired business as a whole or (C) Competitive Products that
perform the Procedure represent more than five percent (5%) of the revenue of
the acquired business as a whole and the Competitive Products represent less
than fifteen percent (15%) of the acquired business as a whole and Seller agrees
to use commercially reasonable efforts to divest the Competitive Products that
perform the Procedure in as quick a manner as is practicable or (D) Competitive
Products that, whether or not they perform the Procedure, represent more than
fifteen percent (15%) but less than forty percent (40%) of the revenues of the
acquired business as a whole and Seller agrees to use commercially reasonable
efforts to divest the competitive portion of such business in as quick a manner
as is practicable. For purposes of the foregoing, the "revenues of the acquired
business" shall be the business' revenues during the most recent twelve (12)
full calendar month period preceding Seller's acquisition of such business. If
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the final judgment of a court of competent jurisdiction declares that any term
or provision of this Section 6.7 is invalid or unenforceable, the parties hereto
agree that the court making the determination of invalidity or unenforceability
shall have the power to reduce the scope, duration or area of the term or
provision, to delete specific words or phrases, or to replace any invalid or
unenforceable term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Agreement shall be enforceable as so
modified after the expiration of the term within which the judgment may be
appealed and until the above-stated four (4) year non-compete period expires.
For the purposes of this Section 6.7, "Injectable Agents" shall mean contrast
agents, radiopharmaceuticals or any other agents administered by injection,
orally, or by inhalation that allow images or scans, or assist in or enhance
performance of any imaging or therapeutic procedure or image-guided therapy and
shall include the devices used to prepare and/or administer such agents to the
patient.
6.8 Tax Matters.
6.8.1 Controversies.
Purchaser shall promptly forward to Seller all notifications and other
communications from any taxing authority relating to any Tax audit or other
proceeding relating to the Tax liability of Seller with respect to the Purchased
Assets (with respect to a taxable year or period (or portion thereof) ending on
or prior to the Closing Date). The failure of Purchaser to give Seller such
written notice shall excuse Seller from its obligations under Section 10.1
hereof with respect to any increased Tax liability directly or indirectly
attributable to any such notification or other communication to the extent that
the failure to provide such written notice adversely affects the ability of
Seller to contest any claim arising from such Tax audit or other proceeding.
Seller and its duly appointed representatives shall have the exclusive authority
to control any audit or examination by any taxing authority, initiate any claim
for refund, amend any Tax Return, resolve and defend against any assessment for
additional Taxes, notice of Tax deficiency or other adjustment of Taxes of or
relating to any liability of Seller for all taxable periods and with respect to
the Business and Purchased Assets for all taxable years or periods (or portions
thereof) ending on or prior to the Closing Date, and Seller shall be entitled to
any Tax refund relating to any such taxable period. Purchaser shall have the
exclusive authority to control any audit or examination by any taxing authority,
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initiate any claim for refund, amend any Tax Return, resolve and defend against
any assessment for additional Taxes, notice of Tax deficiency or other
adjustment of Taxes of or relating to any liability for Taxes that are imposed
upon or by reference to the Purchased Assets or the conduct of the operation of
the Business for all taxable periods (or portions thereof) beginning after the
Closing Date; provided, however, that neither Purchaser nor its duly authorized
representatives shall, without the prior written consent of Seller, which
consent shall not unreasonably be withheld, enter into any settlement of any
contest or otherwise compromise any issue that affects or may affect the
property (or ad valorem) Tax liability of Seller for any taxable year or period
(or portion thereof) ending on or prior to the Closing Date.
6.8.2 Apportionment of Taxes.
For purposes of this Agreement, in the case of any Taxes that are imposed on a
period basis and are payable for a Tax period that includes (but does not end
on) the Closing Date, the portion of such Tax related to the Tax period ending
on the Closing Date will (i) in the case of Taxes other than Taxes based upon or
related to income, sales, gross receipts, wages, capital expenditures, expenses
or any similar Tax base, be deemed to be the amount of such Tax for the entire
period multiplied by a fraction, the numerator of which is the number of days
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from the beginning of the Tax period through the Closing Date and the
denominator of which is the number of days in the entire Tax period and (ii) in
the case of any Taxes based upon or related to income, sales, gross receipts,
wages, capital expenditures, expenses or any similar Tax base, be deemed equal
to the amount of Taxes that would be payable if the relevant Tax period ended at
the end of the Closing Date.
6.8.3 Cooperation and Exchange of Information.
Purchaser and Seller shall provide each other with such cooperation, information
and business records as may be reasonably requested with respect to the filing
of any Tax Return, amended Tax Return or claim for refund, the determination of
a liability for Taxes or a right to refund of Taxes, or the evaluation of any
claim for indemnification of Taxes under Sections 10.1 or 10.2 hereof or the
conduct of any audit, investigation or contest or other proceeding in respect of
Taxes. Such cooperation, information and business records shall include
providing copies of all relevant Tax Returns, documents relating to rulings or
other determinations by taxing authorities and records concerning the ownership
and tax basis of property, which Purchaser or Seller may possess concerning the
Business. Purchaser and Seller shall make their employees available to each
other on a mutually convenient basis to provide explanation of any documents or
information provided hereunder. Notwithstanding the foregoing, neither Purchaser
nor Seller shall be required to prepare any documents or determine any
information not then in its possession in response to a request under this
Section 6.8.3. Any information obtained under this Section 6.8.3 shall be kept
confidential, except as may be otherwise necessary in connection with the filing
of Tax Returns or claims for refund or in conducting any audit or other
proceeding in respect of Taxes.
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6.8.4 Allocation of Purchase Price.
The allocation of the Purchase Price (including any Assumed Liabilities only to
the extent such Assumed Liabilities are required to be treated as part of the
purchase price under the Code (or a counterpart provision of foreign, state or
local law)), as adjusted in accordance with the provisions of this Agreement, to
the Purchased Assets shall be in accordance with Section 1060 of the Code and
the parties shall prepare and file IRS Form 8594 (including any supplemental or
amended IRS Form 8594) consistent with Schedule 2.2(a) as revised to reflect any
adjustments to the Purchase Price. Except as provided in the preceding sentence,
neither party shall file any Tax Return or other document or otherwise assert
any position inconsistent with Schedule 2.2(a) at any time after the Closing
except as may be adjusted following an audit by the Internal Revenue Service
("IRS") or by court decision.
6.9 Seller's Tradename and Trademarks.
(a) Purchaser, each Affiliate thereof and their respective directors,
officers, successors, assigns, agents, or representatives shall not register, or
attempt to register, and shall not directly or indirectly use or seek to
register, in connection with any products or services anywhere in the world in
any medium, any intellectual property that includes, is identical to or is
confusingly similar to, any of the trademarks, service marks, domain names,
trade names or other indicia of origin set forth on Schedule 1.2(j), nor shall
any of them challenge or assist any third party in opposing the rights of any
Seller or any Affiliate of any Seller anywhere in the world in any such
intellectual property.
(b) In the event any intellectual property not acquired or licensed by
Purchaser pursuant to this Agreement, or any other agreement between Purchaser
and Seller related to the Business, appears on or is used in any packaging
material acquired by Purchaser pursuant to this Agreement, Seller hereby grants
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to Purchaser an irrevocable, worldwide, royalty-free and nontransferable license
to use, in a manner substantially consistent with its use prior to Closing, any
such intellectual property on or with any packaging materials for (i) Inventory
acquired pursuant to this Agreement, and (ii) inventory produced in the
operation of the Business for a period of six (6) months following the Closing
(the "Post-Closing Inventory"). Seller's grant of a license pursuant to this
Section 6.9 extends only to the sale and distribution of all such Inventory and
Post-Closing Inventory until such Inventory and Post-Closing Inventory has been
entirely sold and distributed. After a period of twelve (12) months, Purchaser
agrees that it will affix a prominent sticker on any packaging materials for
Inventory acquired pursuant to this Agreement and any Post-Closing Inventory
that shall cover any of Seller's trademarks not included among the Intellectual
Property Rights, and clearly identify Purchaser, or an Affiliate of Purchaser,
as the manufacturer of such Inventory or Post-Closing Inventory.
6.10 Financial Statements and Information.
(a) Seller will prepare and deliver to Purchaser the financial information
set forth on Schedule 6.10(a) for each quarterly (or, as applicable, monthly)
period completed subsequent to the date of this Agreement and prior to the
Closing (the "Quarterly Financial Information"), in each case within thirty (30)
days after the end of such quarterly (or, as applicable, monthly) period, except
with respect to any international information which shall be delivered to
Purchaser within sixty (60) days after the end of such quarterly (or, as
applicable, monthly) period, and accompanied by a certificate and prior to
Closing, duly executed by the chief financial officer, chief accounting officer
or other senior financial officer of Tyco Healthcare in such person's capacity
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as an officer, stating, with respect to such Quarterly Financial Information,
that such Quarterly Financial Information has been prepared from and in
accordance with the information contained in the books and records of the
Seller, which have been regularly kept and maintained in accordance with
Seller's normal and customary practices and applicable accounting practices, and
that such Quarterly Financial Information was prepared consistently with the
2004 Audited Financial Statements, and that such Quarterly Financial Information
has been prepared in accordance with GAAP consistently applied with the 2004
Audited Financial Statements.
(b) In the event Closing does not occur prior to September 30, 2005, Seller
will prepare and deliver, prior to the Closing Date, true, correct and complete
copies of the audited combined statement of net assets of the Business as of
September 30, 2005 and combined statement of income and cash flow of the
Business for the fiscal year ended September 30, 2005 (the "2005 Audited
Financial Statements") accompanied by the audit report of Deloitte & Touche LLP
without qualification or exception, and shall provide Purchaser and its agents
with access to the work papers of Deloitte & Touche LLP used in connection with
the preparation of such financial statements.
(c) Seller will prepare and deliver to Purchaser an unaudited comparative
combined statement of net assets of the Business and related unaudited
comparative consolidated statements of income and cash flows of the Business for
the interim period beginning on October 1, 2004 and ending on the last day of
the last quarterly fiscal period ended prior to the Closing Date (or, in the
event the Closing does not occur prior to September 30, 2005, the interim period
beginning on October 1, 2005 and ending on the last day of the last quarterly
fiscal period ended prior to the Closing Date (the "Interim Period Financial
Statements" and together with the 2004 Audited Financial Statements and the 2005
Audited Financial Statements, the "Financial Statements"), within thirty (30)
days after the Closing and accompanied by (i) an associated review or audit
report of Deloitte & Touche LLP under SAS 100 without exception or
qualification, and (ii) a certificate, duly executed by the chief financial
officer, chief accounting officer or other senior financial officer of Tyco
Healthcare in such person's capacity as an officer, stating with respect to such
Interim Period Financial Statements, that such Interim Period Financial
Statements have been prepared from and in accordance with the information
contained in the books and records of the Seller, which have been regularly kept
and maintained in accordance with Seller's normal and customary practices and
applicable accounting practices, and that such Interim Period Financial
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Statements fairly present, in all material respects, the financial condition of
the Business as of the dates thereof and results of operations and cash flows
for the periods referred to therein, and that such Interim Period Financial
Statements have been prepared in accordance with GAAP consistently applied with
the 2004 Audited Financial Statements.
(d) The reasonable fees and expenses charged by Deloitte & Touche LLP in
connection with its preparation of the 2004 Audited Financial Statements shall
be the sole responsibility of Seller. In the event Seller is required to deliver
the 2005 Audited Financial Statements pursuant to Section 6.10(b), Seller and
Purchaser agree to share equally the reasonable fees and expenses charged by
Deloitte & Touche LLP in connection with the preparation of the 2005 Audited
Financial Statements and any Interim Period Financial Statements for any interim
period subsequent to September 30, 2005, but in no event shall Purchaser's
obligations pursuant to this Subsection 6.10(d) exceed a maximum of $250,000.
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(e) Seller agrees to assist Purchaser, as it may reasonably request, in
complying with any questions, comments or information requests of the Securities
and Exchange Commission related to the 2004 Audited Financial Statements, the
2005 Audited Financial Statements and any Interim Period Financial Statements
(as applicable) or in complying with any other applicable Legal Requirements.
6.11 Exclusivity.
As of the date of this Agreement and up to the Closing Date, Seller shall not,
and shall cause its Affiliates, employees, agents and representatives not to
directly, or indirectly through any other person, encourage, solicit, initiate,
engage or participate in discussion or negotiations with any person (other than
Purchaser) concerning any merger, consolidation, sale, lease or licensing of
assets, sale of equity interests, or other business combination involving the
Purchased Assets or the Business.
6.12 Updated Schedules.
Upon the Closing Date, Seller shall deliver to Purchaser an updated copy of
Schedule 4.1.12(a) (Material Contracts) and Schedule 6.1.1.(ii) (terminated
employees). No more than ten (10) days prior to the Closing Date, Seller shall
deliver to Purchaser an updated copy of Schedule 6.1.1(i) (Business Employees)
and Schedule 6.1.2 (accrued paid time off for Transferred Employees).
6.13 Auditor's Consent and Cooperation.
Seller shall use commercially reasonable efforts to cause Deloitte & Touche LLP
to deliver to Purchaser, prior to the Closing Date, a duly executed letter in
which Deloitte & Touche LLP: (i) acknowledges that it understands that Purchaser
intends to file the 2004 Audited Financial Statements, the Interim Period
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Financial Statement and the 2005 Audited Financial Statements (as applicable) in
statements and reports required by the Securities and Exchange Commission
pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934,
(ii) subject to its usual procedures and professional standards and after being
given reasonable opportunity to review such filings with the Securities and
Exchange Commission and any documents incorporated by reference therein, agrees
that it shall consent to the references in such filings to Deloitte & Touche LLP
as experts and the inclusion of any of its audit reports on the 2004 Audited
Financial Statements, the Interim Period Financial Statements or the 2005
Audited Financial Statements until such financial statements and consents are no
longer required to be included in such filings with the Securities and Exchange
Commission, (iii) agrees that it shall provide Purchaser with access to all
back-up materials used to prepare the 2005 Audited Financial Statements and any
Interim Period Financial Statements (as applicable), including, without
limitation, working papers, and (iv) agrees to assist Purchaser in complying
with any questions, comments or information requests of the Securities and
Exchange Commission related to the 2004 Audited Financial Statements, the 2005
Audited Financial Statements and any Interim Period Financial Statements (as
applicable) or in complying with any other applicable Legal Requirements.
6.14 Intellectual Property of Seller.
Seller covenants not to ▇▇▇ Purchaser, its directors, officers, employees, or
agents or its Affiliates, or any of their customers, suppliers, or distributors,
for infringement of any patent owned by Seller, or as to which Seller has the
right to ▇▇▇, by reason of Purchaser, its suppliers or its Affiliates making,
using, having made, offering to sell, selling, or importing, or their customers
or distributors using, offering to sell, selling, or importing from Purchaser in
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the United States or elsewhere, any Products, as such Products are designed as
of the Closing Date (and including any insubstantial changes to such Products),
and further including any design changes that have been developed as of the
Closing Date pursuant to the Seller's product development process (which will be
listed on Schedule 6.14 as of the Closing Date), or any other medical
instruments or products of the same design as the foregoing sold under a
different trademark or model designation for use with the Business distributed
by or for Purchaser. As used in the preceding sentence, "insubstantial changes"
shall mean (i) changes that cause a Product to continue to infringe the same
claim or claims in the Field of Use that it infringed before the change but that
do not cause it to infringe any previously non-infringed claim or claims, or
(ii) changes that are limited solely to making the ultrasonic aspiration
Products acquired pursuant to this Agreement compatible with any electrosurgery
generator that, but for said compatibility change, does not infringe any issued
patents owned by Seller as of the Closing Date, any patent applications owned by
Seller pending as of the Closing Date, or any issued patents as to which Seller
has the right to ▇▇▇ as of the Closing Date. In no event shall the covenant in
this Section 6.14 provide Purchaser the right to manufacture, use, sell, offer
for sale, import or distribute standalone electrosurgical products other than as
set forth in the preceding Section 6.14(ii). For the purposes of the foregoing,
"Field of Use" shall mean those fields set forth in Section 6.7(i) to (v) of
this Agreement. This provision shall survive expiration of this Agreement for so
long as Purchaser or its successors or assigns remain in the Business.
Notwithstanding the foregoing, Seller shall have no duty or obligation to
maintain any of the patents or patent applications for which Seller has
covenanted not to ▇▇▇ Purchaser or its directors, officers, employees, or agents
or its Affiliates, or any of their customers, suppliers, or distributor pursuant
to this Section 6.14 and Seller shall be free to abandon such patents or such
patent applications at any time at its sole discretion.
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6.15 Intellectual Property of Purchaser.
Purchaser covenants not to ▇▇▇ Seller, its directors, officers, employees, or
agents or its Affiliates, or any of their customers, suppliers, or distributors,
for infringement of any patents listed in Schedule 6.15 by reason of Seller
making and using any products that use, radio frequency or microwave energy for
any purpose outside the cranium. Notwithstanding the foregoing sentence, nothing
contained herein shall be construed to waive Purchaser's right to ▇▇▇ Seller,
its directors, officers, employees, or agents or its Affiliates under the
provisions of Section 6.7. This provision shall survive termination of this
Agreement until expiration of the last to expire patent listed in Schedule 6.15.
Notwithstanding the foregoing, Purchaser shall have no duty or obligation to
maintain any of the patents or patent applications for which Purchaser has
covenanted not to ▇▇▇ Seller, its directors, officers, employees, or agents or
its affiliates, or any of their customers, suppliers, or distributors pursuant
to this Section 6.15 and Purchaser shall be free to abandon such patents or such
patent applications at any time at its sole discretion.
6.16 Customer Complaints.
For a transitional period of two (2) years following the Closing Date, Tyco
Healthcare shall instruct its customer service and quality affairs department
personnel that any complaints received from customers concerning Products shall
be forwarded, if in writing, and, if oral, referred, to Purchaser and, if such
complaints are subject to Section 3.2(j), to appropriate personnel within Tyco
Healthcare or its Affiliates.
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6.17 Customer Inquiries.
For a transitional period of twelve (12) months, Tyco Healthcare shall notify
its customer service, quality affairs and sales department personnel and all
other sales personnel, as appropriate and no less frequently than once every
three (3) months, that any inquiries received from customers concerning Products
shall be forwarded, if in writing, and, if oral, referred, to Purchaser.
6.18 Assignment of Material Contracts.
If any consent, authorization or approval necessary to assign, transfer or
convey the Material Contracts listed on Schedule 4.1.12(c) is not obtained prior
to Closing, pursuant to Section 8.2.6(a), and Purchaser agrees to close, then
Seller shall use commercially reasonable efforts to provide Purchaser the
benefits of any such Material Contract listed on Schedule 4.1.12(c).
Notwithstanding the foregoing, Seller shall use its commercially reasonable
efforts to obtain any such consent, authorization or approval necessary to
assign, transfer and convey a Material Contract not previously obtain pursuant
to Section 8.2.6(a), as soon as practicable after the Closing.
6.19 Selling Affiliates Transfer Agreement.
Seller covenants that it will cause each of the Selling Affiliates to execute,
prior to the Closing Date, transfer agreements, substantially in the form
attached hereto as Exhibit B (the "Selling Affiliate Transfer Agreements")
pursuant to which each Selling Affiliate will sell and transfer to Purchaser or
a designated Affiliate of Purchaser, at the Purchase Price allocated to such
Selling Affiliate pursuant to Sections 2.2(a)-(b) above, all of the Purchased
Assets held by such Selling Affiliate. Each Selling Affiliate Transfer Agreement
shall contain provisions specific to the laws of the country of the relevant
Selling Affiliate regarding the obligation of the Purchaser to pay VAT and the
obligation of the parties to comply with the laws of such country regarding
filing or other obligations in connection with VAT.
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6.20 [Reserved.]
[Reserved.]
6.21 Compatibility.
Seller covenants that for a period of four (4) years from the Closing Date, it
will not make any changes to the electrosurgery generators being sold by Seller
as of the date of this Agreement by Tyco Healthcare, including the ForceFX
generator but excluding any multi-functional generator, that would make such
electrosurgery generators incompatible with the current CUSA/CEM system.
Furthermore, Seller covenants that for a period of two (2) years from the
Closing Date, any electrosurgery generators manufactured by Seller that only
perform electrosurgery will be compatible with the current CUSA/CEM system.
6.22 Treatment of Certain Contracts.
6.22.1 Service Agreements.
Seller covenants that no later than ten (10) days after the execution of this
Agreement, it shall deliver a letter, substantially in the form attached hereto
as Exhibit D, notifying each party to the service agreements with Seller set
forth on Schedule 4.1.12(a) (the "Service Agreements"), which schedule shall be
updated ten (10) days prior to Closing, that Purchaser has entered into this
Agreement with Seller to purchase the Business and requesting consent for
Purchaser to perform all of Seller's obligations under the Service Agreements
related to the service of any Products if and when the Closing occurs. In the
event that any party to a Service Agreement does not return a consent to
Purchaser's performance of Seller's obligations under the Service Agreements (to
the extent related to the service of Products) by the Closing Date, Purchaser
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and Seller covenant as follows:
(a) Seller will remain the contract party under the Service Agreements;
(b) Purchaser will perform (or otherwise arrange for the performance of)
all of Seller's obligations under the Service Agreements to the extent related
to the service of Products;
(c) Seller shall invoice the counterparty as may be required pursuant to
the terms of the Service Agreement;
(d) Upon Seller's receipt of payment pursuant to the terms of the Service
Agreement, Seller shall deliver to Purchaser a check for the amount or payment
received;
(e) In the event a party to such Service Agreement does not pay Seller as
required pursuant to the terms of the Service Agreement, Seller shall notify
Purchaser and Purchaser shall have the right to determine whether Seller shall
exercise any right to terminate such agreement.
6.22.2 Certain Customer Contracts.
Purchaser hereby agrees to honor the terms, conditions and obligations of
Purchaser pursuant to those customer contracts set forth on Schedule 6.22.2.
6.23 Consent to Assignment of the BPCS License.
Seller hereby agrees to consent, prior to the Closing Date, to the assignment to
Purchaser of the BPCS licenses being used by Seller as of the Closing Date at is
Burlington, Massachusetts facility.
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6.24 Notice of Transfer of Products.
Promptly after Seller determines the date upon which it will commence transfer
of any Products held at its North Haven, Connecticut facility to its Joliet,
Illinois facility, Seller will provide Purchaser with notice of such transfer
and the opportunity to review any plans related to such transfer reasonably
requested by Purchaser.
6.25 Enforcement of Non-Competition Agreements.
Seller covenants to use commercially reasonable efforts to enforce, between the
date of this Agreement and the Closing Date, any non-competition provisions in
any agreement with any of Seller's distributors of the Products.
6.26 Transfer of Demonstration Units.
Seller covenants that at the Closing, Seller shall transfer no less than fifty
(50) fully functional CUSA consoles and no less than 100 of the fully functional
related hand pieces to be used for demonstration purposes.
6.27 CUSA Production Levels.
Seller covenants that it will sustain production levels of the CUSA Products, as
defined in the Transitional Supply Agreement attached as Exhibit G, based on
Seller's production levels of such CUSA Products for the twenty-four (24) months
ended on June 30, 2005, provided, however, Seller shall not be required to
continue production of the CUSA Products at such levels at any time that Seller
holds inventory of CUSA Products that is in excess of the sum of (a) Seller's
average inventory of CUSA Products as of September 30, 2004, and (b) three times
the average monthly production of CUSA Products for the twenty-four (24) month
period ended on June 30, 2005. Notwithstanding any contrary or inconsistent
provision in Article 7 below, if and to the extent Seller at any time holds an
inventory of CUSA Products that exceeds Seller's foregoing September 30, 2004
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average inventory, Seller may hold such excess inventory at its North Haven,
Connecticut, Joliet, Illinois and/or Boulder, Colorado facility, in Seller's
discretion.
6.28 Notice of Transfer of Production.
Promptly after Seller determines to transfer production of any Products
manufactured in its Tijuana, Mexico facility, Seller will provide Purchaser with
written notice of such transfer and an opportunity to audit the new facility
where such Products will be manufactured and review the validation of such new
facility.
ARTICLE 7. CONDUCT OF BUSINESS PENDING CLOSING
7.1 Conduct of Business Pending Closing.
Seller agrees that, during the period between the date of this Agreement and the
Closing Date, Seller shall conduct the Business in a manner substantially
consistent with past practices of Seller, and Seller shall not take any action
or engage in any transactions related to the Business out of the ordinary course
of business. Furthermore, except as may otherwise be required under this
Agreement, Seller will not authorize or enter into any agreement to do any of
the following without the prior written consent of Purchaser:
(a) incur or permit to be incurred any obligation or other liabilities by
the Business (exclusive of health and property insurance premiums) individually
in excess of One Hundred and Fifty Thousand Dollars ($150,000), except for
Inventory purchases in the normal and ordinary course of business consistent
with past practice;
(b) voluntarily permit to be incurred any lien or encumbrance on any of the
Purchased Assets;
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(c) other than a short term performance-based or other bonus that will be
an obligation of Tyco Healthcare solely, increase the rate of compensation for
any employee of Seller working in the Business (other than increases in the
ordinary course of business and consistent with past practices or pursuant to a
written agreement in effect on the date hereof), or otherwise enter into or
alter the material terms of any employment, consulting or service agreement
respecting the Business;
(d) commence, enter into or alter any Employee Benefit Plan, profit
sharing, deferred compensation, bonus, stock option, stock purchase, pension,
retirement, incentive plan or any fringe benefit plan for the employees of
Seller working in the Business, other than in the ordinary course of business or
a bonus or other incentive plan for which Tyco Healthcare assumes sole
responsibility;
(e) offer employment to any person, except to the extent necessary to fill
positions that are open as of the date hereof, to the extent indicated on
Schedule 6.1.1(i), or replace employees of Seller working in the Business who
resign or are terminated for cause after the date hereof, or sever or terminate
any employee of Seller working in the Business except for cause (including, but
not limited to, performance deemed unsatisfactory by Seller) in the ordinary
course of business;
(f) commit to any capital expenditure related to the Business other than as
contemplated in the capital expenditure budget provided to Purchaser by Seller;
or
(g) dispose of any of the Purchased Assets, except for sales of products of
the Business in the ordinary course of business.
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7.2 Notice of Developments.
Following its receipt of knowledge thereof, each party hereto will give prompt
written notice to the other party of any material adverse development causing a
breach of any of its own representations and warranties in Article 4 and Article
5 hereof. No disclosure by any party pursuant to this Section 7.2, however,
shall be deemed to amend or supplement the schedules attached hereto or to
prevent or cure any misrepresentation, breach of warranty, or breach of
covenant.
ARTICLE 8. CLOSING DATE; CONDITIONS AND TRANSACTIONS
8.1 Closing Date and Place.
The consummation of the sale and purchase of the Business contemplated by this
Agreement (the "Closing") will take place at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ as soon as practicable after the last of
the conditions set forth in this Article 8 have been satisfied or waived (other
than any such conditions that can only be satisfied on the Closing Date), but in
no event later than the fifth (5th) Business Day thereafter or at such other
date and time as may be mutually agreeable to the parties hereto (the "Closing
Date"). The parties hereto agree that the Closing may be effected by facsimile.
8.2 Conditions Precedent to the Obligations of Purchaser.
The obligations of Purchaser under this Agreement are subject to the fulfillment
by Seller prior to or at the Closing of each of the following conditions, any
one or more of which 0may be waived in writing by Purchaser:
8.2.1 No Injunctive Proceedings.
No preliminary or permanent injunction, action, suit or proceeding or other
order (including a temporary restraining order) of any state or
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federal court or other governmental agency which (i) prevents the consummation
of the transactions which are the subject of this Agreement or (ii) adversely
affects Purchaser's ownership or use of the Business shall have been issued or
threatened and remain in effect.
8.2.2 Representations and Warranties.
All representations and warranties of Seller contained in this Agreement shall
have been true and correct in all material respects as of the date of this
Agreement and shall be true and correct in all material respects as of the
Closing Date, except (i) for each of the representations and warranties of
Seller contained herein that are limited by materiality which shall be true and
correct in all respects as of the Closing Date (except to the extent such
representations and warranties expressly relate to an earlier date (in which
case such representation and warranties shall be true and current on and as of
such earlier date)), and (ii) that no representation or warranty of Seller shall
be deemed to be untrue or incorrect by reason of any transaction that conforms
to the requirements of Article 7 hereof or is otherwise contemplated by this
Agreement.
8.2.3 No Material Adverse Effect.
Neither the Seller, nor the Business, nor the Purchased Assets shall have
suffered a Material Adverse Effect.
8.2.4 Performance of Covenants.
Seller shall have fully performed and complied with in all material respects all
covenants, obligations, agreements, conditions and commitments required to be
fulfilled by Seller pursuant to the terms hereof on or prior to the Closing
Date.
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8.2.5 Officer Certificate.
Tyco Healthcare shall have delivered to Purchaser its certificate, dated the
Closing Date, executed on its behalf by its Chief Executive Officer, President
or Vice President as to the fulfillment of the conditions set forth in this
Article 8.
8.2.6 Consents and Approvals.
(a) Seller shall have delivered to Purchaser all authorizations, consents
or approvals which are necessary to sell, assign, transfer, convey, and deliver
the Material Contracts which shall be in full force and effect;
(b) All applicable waiting periods (and any extensions thereof) under the
HSR Act shall have expired or otherwise been terminated and Seller and Purchaser
shall have received all other authorizations, consents, and approvals of
governments and governmental agencies as may be required to consummate the
transactions contemplated herein;
(c) At or prior to Closing, Seller shall deliver to Purchaser: (i) a fully
executed Acknowledgement Of Patent Assignment in the form set forth on
8.2.6(c)(i) (which Acknowledgement shall include the same issued, abandoned and
expired patents and pending applications listed on Schedule 4.1.13(ii)); a fully
executed Acknowledgement Of Patent Assignment in the form set forth on
8.2.6(c)(ii) (which Acknowledgement shall include the same issued, abandoned and
expired patents and pending applications listed on Schedule 4.1.13(i)-Exhibit
B); and a fully executed Acknowledgement Of Trademark Assignment in the form set
forth on Schedule 8.2.6(c)(iii) (which Acknowledgement shall include the same
trademarks, trademark registrations and pending applications listed on Schedule
4.1.13(iii)).
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(d) Seller shall have delivered to Purchaser the materials set forth on
Schedule 8.2.6(d).
(e) Seller shall have delivered to Purchaser the Estoppel Certificate and
Consent to Assignment of Lease set forth on Schedule 8.2.6(e), executed by ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ Realty Trust, the landlord of the premises located at ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇.
(f) Seller shall have delivered to Purchaser fully executed amendments to
the agreements listed on Schedule 8.2.6(f), which amendments shall enable Seller
to assign such agreements to Purchaser.
8.2.7 ▇▇▇▇ of Sale.
Seller shall have delivered on the Closing Date a ▇▇▇▇ of Sale, duly executed by
Seller, in the form attached hereto as Exhibit E, sufficient to assign,
transfer, convey, and deliver to Purchaser all right, title and interest of
Seller in and to the Purchased Assets free and clear of Liens other than
Permitted Liens.
8.2.8 Financial Statements.
Seller shall have delivered to Purchaser the Financial Statements and financial
information referred to in Section 6.10 hereof.
8.2.9 Tax Forms and Certificates.
Tyco Healthcare shall have delivered to Purchaser, (i) an IRS Form W-9, (ii) a
certificate in the form set forth in Treasury Regulations section
1.1445-2(b)(2), to the effect that Tyco Healthcare is not a foreign person.
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8.2.10 Transitional Services and Supply Agreements.
Tyco Healthcare shall have delivered to Purchaser a duly executed counterpart to
the Transition Services Agreement and the Transitional Supply Agreement, each
between Purchaser and Tyco Healthcare in the forms attached hereto as Exhibit F
and Exhibit G, respectively.
8.2.11 International Distribution Agreement.
Tyco Healthcare shall have delivered to Purchaser a duly executed counterpart to
the International Distribution Agreement between Purchaser and Tyco Healthcare
that is contemplated by the term sheet attached hereto as Exhibit H.
8.2.12 Selling Affiliate Transfer Agreements.
Seller shall have delivered to Purchaser the Selling Affiliate Transfer
Agreements, duly executed by each of the Selling Affiliates.
8.3 Conditions Precedent to the Obligations of Seller.
The obligations of Seller under this Agreement are subject to the fulfillment by
Purchaser prior to or at the Closing of each of the following conditions, any
one or more of which may be waived in writing by Seller:
8.3.1 No Injunctive Proceedings.
No preliminary or permanent injunction, action, suit or proceeding or other
order (including a temporary restraining order) of any state or federal court or
other governmental agency which (i) prevents the consummation of the
transactions which are the subject of this Agreement or (ii) adversely affects
Purchaser's ownership or use of the Business shall have been issued or
threatened and remain in effect.
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8.3.2 Payment.
Purchaser shall have delivered to Tyco Healthcare, Sherwood Services, AG and
each of the Selling Affiliates the Initial Purchase Price provided for in
Section 2.1 hereof pursuant to the wire instructions delivered to Purchaser
pursuant to Section 2.2(b).
8.3.3 Representations and Warranties.
All representations and warranties of Purchaser contained in this Agreement
shall be true and correct in all material respects as of the Closing Date,
except that no representation or warranty of Purchaser shall be deemed to be
untrue or incorrect by reason of any transaction contemplated by this Agreement.
8.3.4 Covenants.
Purchaser shall have performed and complied with all of its covenants hereunder
in all material respects though the Closing.
8.3.5 Performance of Agreements, Instruments of Transfer.
Purchaser shall have fully performed in all material respects all obligations,
agreements, conditions and commitments required to be fulfilled by Purchaser on
or prior to the Closing Date.
8.3.6 Compliance Certificate.
Purchaser shall have delivered to Seller its certificate, dated the Closing
Date, executed on its behalf by its President or a Vice President, as to the
fulfillment of the conditions set forth in Sections 8.3.3, 8.3.4 and 8.3.5
hereof.
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8.3.7 Consents, etc.
(a) All authorizations, consents or approvals necessary to sell, assign,
transfer, convey, and deliver the Purchased Assets, including without limitation
the Material Contracts, shall have been obtained and be in full force and
effect.
(b) All applicable waiting periods (and any extensions thereof) under the
HSR Act shall have expired or otherwise been terminated and Seller and Purchaser
shall have received all other authorizations, consents, and approvals of
governments and governmental agencies as may be required to consummate the
transactions contemplated herein.
8.3.8 Selling Affiliate Transfer Agreements.
Purchaser shall have delivered to Seller the Selling Affiliate Transfer
Agreements, duly executed by Purchaser or an Affiliate designated by Purchaser.
ARTICLE 9.
TERMINATION
9.1 Termination of this Agreement.
This Agreement may be terminated at any time prior to the Closing without any
liability of either party to the other as follows (except for any liability of
any party then in breach):
(a) by the mutual agreement of Seller and Purchaser; provided, that such
termination is set forth in writing executed by both parties;
(b) by Purchaser, if any of the conditions specified in Section 8.2 hereof
shall not have been met by the 366th day after the date hereof and shall not
have been waived in writing by Purchaser, or Seller has materially breached any
of its representations and warranties or covenants hereunder;
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(c) by Seller, if any of the conditions set forth in Section 8.3 hereof
shall not have been met by the 366th day after the date hereof and shall not
have been waived in writing by Seller or Purchaser has materially breached any
of its representations and warranties or covenants hereunder; or
(d) by either Purchaser or Seller, if the Antitrust Break-Up Fee has been
paid by Purchaser.
ARTICLE 10.
INDEMNIFICATION
10.1 Indemnification by Seller.
Subject to the limits set forth in this Article 10, Seller agrees to indemnify,
defend and hold Purchaser, Purchaser's Affiliates, and each of their
shareholders, Affiliates, officers, directors, employees, agents, successors and
assigns (Purchaser and such persons are collectively hereinafter referred to as
"Purchaser's Indemnified Persons"), harmless from and against any and all loss,
liability, obligation, expense, damage or deficiency (including interest,
penalties, costs of preparation and investigation and of reasonable attorneys'
fees, but excluding lost profits, lost revenues, lost opportunities,
consequential, punitive, treble or other special damages (regardless of the
legal theory) unless actually paid to a third party in connection with a claim
by such third party that is indemnifiable hereunder) (collectively "Losses")
that Purchaser's Indemnified Persons may suffer, sustain, incur or become
subject to, arising out of or due to: (a) any inaccuracy or breach of any
representation or warranty of Seller or Tyco Healthcare in this Agreement; (b)
the non-fulfillment or breach of any covenant, undertaking agreement or other
obligation of Seller or Tyco Healthcare under this Agreement; (c) any
noncompliance by Seller with bulk sales laws or similar laws which may be
applicable to the sale or transfer of the Purchased Assets; (d) any Excluded
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Liability; (e) all Taxes with respect to the Business or the Purchased Assets
for or pertaining to all periods up to and including the Closing Date; and (f)
any and all liability related to the Seller's, or any Affiliate of Seller's,
employment of any employees in Belgium related to the Business, any termination
of such employees, or any liabilities under any Belgian laws relating to such
employees, including, without limitation, the liabilities resulting from any
claim by any employee of Seller that he or she is entitled to work for Purchaser
after the Closing Date under any law, collective labor agreement or employment
contract, or any claim by any employee relating to the termination of his or her
employment contract with Seller.
10.2 Indemnification by Purchaser.
Subject to the limits set forth in this Article 10, Purchaser agrees to
indemnify, defend and hold Seller and each of Seller's shareholders, Affiliates,
officers, directors, employees, agents, successors and assigns (Seller and such
persons are hereinafter collectively referred to as "Seller's Indemnified
Persons"), harmless from and against any and all Losses that Seller's
Indemnified Persons may suffer, sustain, incur or become subject to arising out
of or due to: (a) any inaccuracy or breach of any representation or warranty of
Purchaser in this Agreement; (b) the non-fulfillment or breach of any covenant,
undertaking, agreement or other obligations of Purchaser under this Agreement,
including but not limited to, the discharge of the Assumed Liabilities; (c) the
manufacture, sale, shipment or other distribution of the products of the
Business occurring after the Closing Date, subject to the indemnity provisions
of the Transitional Services and Supply Agreements referred to in Section
8.2.10, which, to the extent inconsistent herewith, shall supersede the
indemnity provisions in this Section 10.2(c); (d) the ownership, operations, or
control of the Business, occurring after the Closing Date subject to the
indemnity provisions of the Transitional Services and Supply Agreements referred
to in Section 8.2.10, which, to the extent inconsistent herewith, shall
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supersede the indemnity provisions in this Section 10.2(d); or (e) all Taxes
with respect to the Business or the Purchased Assets for or pertaining to all
periods beginning after the Closing Date.
10.3 Survival of Representations and Warranties.
The several representations and warranties of the parties contained in this
Agreement and an indemnified persons' right to indemnity in accordance with this
Article 10 shall survive the Closing Date and shall remain in full force and
effect thereafter for a period of eighteen (18) months after the Closing Date
and shall be effective with respect to any inaccuracy therein or breach thereof,
notice of which shall have been duly given within such eighteen (18) month
period in accordance with Section 10.4 hereof after which eighteen (18) month
period they shall terminate and be of no further force or effect.
Notwithstanding the foregoing, Purchaser's Indemnified Persons may give notice
of, make a claim relating to and shall be indemnified in connection with: (i)
the breach of the representations and warranties contained in Sections 4.1.8 or
4.1.16 hereof, at any time prior to sixty (60) days after the expiration of the
appropriate statute of limitations and any extensions thereof or contained in
Sections 4.1.20 or 4.1.2(c) hereof, at any time within thirty-six (36) months
following the Closing Date; and (ii) any breach of the representations and
warranties contained in Sections 4.1.2(a) and 4.1.15 hereof, at anytime. Except
as otherwise provided in this Section 10.3, no indemnified person shall be
entitled to any indemnification under this Article 10 with respect to any
inaccuracy or breach of such representations or warranties unless and until the
cumulative amount of all Losses exceed $400,000 (the "Basket Amount"), and then
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only to the extent such Losses exceed the Basket Amount. However, in no event
shall either party be liable to the other, with respect to any inaccuracy or
breach of such representations or warranties, in an aggregate amount in excess
of thirty percent (30%) of the Purchase Price, as adjusted pursuant to Section
2.3 above (the "Cap"). Notwithstanding the foregoing, the Basket Amount and the
Cap shall not be applicable to any claims for indemnification related to or
arising under Sections 4.1.2(a), 4.1.8, or 4.1.15. Notwithstanding anything
contained in this Section 10.3 to the contrary, the covenants of the parties
contained in this Agreement shall survive in accordance with their respective
terms.
10.4 Indemnification Procedure.
(a) Within a reasonable period of time after the incurrence of any Loss by
any of Purchaser's Indemnified Persons or Seller's Indemnified Persons,
including any claim by a third party described in Section 10.5, which might give
rise to indemnification hereunder, the party seeking indemnification (the
"Indemnitee") shall deliver to the party from which indemnification is sought
(the "Indemnitor") a certificate (the "Certificate"), which Certificate shall:
(i) state that the Indemnitee has suffered, sustained, incurred or
become subject to Losses for which such Indemnitee is entitled to
indemnification pursuant to this Agreement;
(ii) specify in reasonable detail each individual item of Loss
included in the amount so stated, the date that the Indemnitee
suffered, sustained, incurred or became subject to such item and the
nature of the misrepresentation, breach of covenant or claim to which
each such item is related and the computation of the amount to which
such Indemnitee claims to be entitled hereunder; and
(iii) be delivered to the Indemnitee.
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(b) In the event that the Indemnitor shall object to the indemnification of
an Indemnitee in respect of any claim or claims specified in any Certificate,
the Indemnitor shall, within thirty (30) days after receipt by the Indemnitor of
such Certificate, deliver to the Indemnitee a notice to such effect and the
Indemnitor and the Indemnitee shall, within the thirty (30) day period beginning
on the date of receipt by the Indemnitee of such objection, attempt in good
faith to agree upon the rights of the respective parties with respect to each of
such claims to which the Indemnitor shall have so objected. If the Indemnitor
and the Indemnitee shall succeed in reaching agreement on their respective
rights with respect to any of such claims, the Indemnitor and the Indemnitee
shall promptly prepare and sign a memorandum setting forth such agreement.
Should the Indemnitor and the Indemnitee be unable to agree as to any particular
item or items or amount or amounts, then the Indemnitor and the Indemnitee shall
submit such dispute to a court of competent jurisdiction. The party which
receives a final judgment in such dispute shall be indemnified and held harmless
for all reasonable attorneys' and consultant's fees or expenses by the other
party.
(c) Claims for Losses specified in any Certificate to which an Indemnitor
shall not object in writing within thirty (30) days of receipt of such
Certificate, claims for Losses covered by a memorandum of agreement of the
nature described in Section 10.4(b) hereof, claims for Losses the validity and
amount of which have been the subject of judicial determination as described in
Section 10.4(b) and claims for Losses the validity and amount of which shall
have been the subject of a final judicial determination, or shall have been
settled with the consent of the Indemnitor, as described in Section 10.5 hereof,
are hereinafter referred to, collectively, as "Agreed Claims." Within ten (10)
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days of the determination of the amount of any Agreed Claims, the Indemnitor
shall pay to the Indemnitee an amount equal to the Agreed Claim by wire transfer
in immediately available funds to the bank account designated by the Indemnitee
in a notice to the Indemnitee not less than two (2) Business Days prior to such
payment.
10.5 Notice and Opportunity to Defend.
If a claim by a third party is made against any Indemnitee and if such
Indemnitee intends to seek indemnification with respect thereto under this
Article 10, then such Indemnitee will give the Indemnitor written notice of such
claim or the commencement of such action or proceeding (which notice, for
purposes of this Section 10.5, shall describe the claim in reasonable detail,
the amount thereof if known and quantifiable, and include a copy of any summons,
complaint, written demand or other documents received by or otherwise in the
custody or control of Indemnitee and relating directly to such claim) within
thirty (30) days of Indemnitee's becoming aware thereof; provided, however, that
delay or failure to so notify the Indemnitor shall only relieve the Indemnitor
of its obligations to the extent, if at all, that it is materially prejudiced by
reasons of such delay or failure. The Indemnitor shall have a period of thirty
(30) days within which to respond thereto. If the Indemnitor accepts full
responsibility for the claim or demand within such 30-day period (the "Claim
Notice Period") without any reservation of rights, the Indemnitor may compromise
or defend, at its own expense and with counsel reasonably satisfactory to the
Indemnitee, such matter. If and insofar as the Indemnitor responds within the
Claim Notice Period and rejects responsibility for such matter in whole or in
part, reserves its rights in whole or in part or does not respond or assume
defense of the claim, the Indemnitee shall be free to assume the defense and
compromise and settle the claim as and to the extent hereafter provided. The
Indemnitee agrees to cooperate fully with the Indemnitor and its counsel in the
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defense against asserted liability in instances where the Indemnitor accepts
responsibility for the claim. In any event, the Indemnitee shall have the right
to participate, at its own expense and with counsel of its choosing, in the
defense of any asserted liability. Any compromise by the Indemnitor of such
asserted liability or admission of wrongdoing shall require the prior written
consent of the Indemnitee, which consent shall not be unreasonably withheld,
conditioned or delayed, and until such consent is obtained, the Indemnitor shall
continue the defense of such asserted liability. If, however, the Indemnitee
refuses its consent to a bona fide offer of settlement containing a complete
release of the Indemnitee from all liability in connection with the underlying
claim that the Indemnitor wishes to accept, (i) the Indemnitee may continue to
pursue such matter, free of any participation by the Indemnitor, at the sole
expense of the Indemnitee, and (ii) the obligation of the Indemnitor to the
Indemnitee shall be equal to the lesser of (A) the amount of the offer of
settlement which the Indemnitee refused to accept plus the costs and expenses of
the Indemnitee prior to the date the Indemnitor notifies the Indemnitee of the
offer of settlement; or (B) the actual out-of-pocket amount the Indemnitee is
obligated to pay as a result of the Indemnitee's continuing to pursue such
matter. The Indemnitor shall be entitled to recover from the Indemnitee any
additional expenses incurred by the Indemnitor as a result of the decision of
the Indemnitee to pursue such matter. So long as the Indemnitor has assumed full
responsibility for the claim and is reasonably contesting the claim in good
faith, the Indemnitee shall not pay or settle such claim without the
Indemnitor's prior written consent, which consent shall not be unreasonably
withheld; provided that the Indemnitee may pay or settle such claim if it waives
its right to indemnity therefor from the Indemnitor. Notwithstanding any of the
foregoing, if and insofar as Indemnitor responds to Indemnitee's notice of a
claim within the Claim Notice Period applicable thereto and rejects
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responsibility for such claim in whole or in part, reserves its rights in whole
or in part or does not respond or undertake the defense of the claim within such
Claim Notice Period, the Indemnitee (upon further written notice to the
Indemnitor) shall have the right to undertake the defense of such claim, by
counsel of its own choosing until and unless Indemnitor affirmatively assumes
such defense and fully accepts responsibility for the claim without any
reservation of rights, but Indemnitee may not settle or compromise such claim
without the written consent of Indemnitor, which consent shall not be
unreasonably withheld. In the event that the Indemnitee undertakes the defense
of a claim under this Section 10.5, the Indemnitor shall promptly pay to the
Indemnitee, in addition to the other sums required to be paid hereunder, the
reasonable costs and expenses incurred by the Indemnitee in connection with such
defense as those costs and expenses are incurred, and, to the extent Indemnitor
has consented thereto, compromise or settlement as and when such costs and
expenses are so incurred, subject to the limitations on damages referenced in
Section 10.3.
10.6 Reduction for Insurance and Other Claims.
(a) The amount which the Indemnitor is required to pay to, for, or on
behalf of the Indemnitee pursuant to this Article 10 shall be reduced
(including, without limitation, retroactively) by any insurance proceeds
actually recovered by or on behalf of the Indemnitee in reduction of the related
indemnifiable loss (the "Indemnifiable Loss"). Amounts required to be paid, as
so reduced, are hereinafter sometimes called an "Indemnity Payment." If the
Indemnitee shall have received, or if the Indemnitor shall have paid on its
behalf, an Indemnity Payment in respect of an Indemnifiable Loss and shall
subsequently receive, directly or indirectly, insurance proceeds (which
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duplicate in whole or in part, the Indemnity Payment) in respect of such
Indemnifiable Loss, then the Indemnitee shall promptly pay to the Indemnitor the
amount of such insurance proceeds, or, if less, the amount of the Indemnity
Payment. The parties hereto agree that the foregoing shall not affect the
subrogation rights of any insurance companies making payments hereunder.
(b) Notwithstanding anything to the contrary contained in this Article 10,
if any Purchaser's Indemnified Person is entitled to indemnification pursuant to
any Assumed Contract or any other agreement, arrangement or understanding with
respect to all or any portion of any Indemnifiable Loss under this Article 10,
such Purchaser's Indemnified Person shall pursue all rights and remedies under
any such Assumed Contract or other agreement, arrangement or understanding prior
to asserting its rights under this Article 10. Any payment of an Indemnifiable
Loss under this Article 10 shall be net of any proceeds received by the
Purchaser's Indemnified Person under any such Assumed Contract or other
agreement, arrangement or understanding.
10.7 Limitations of Remedies.
Notwithstanding anything to the contrary set forth herein, the parties hereto
agree that the indemnification provisions set forth in this Article 10 shall
constitute the sole and exclusive remedy of either party for any breach or
inaccuracy of any representation or warranty contained in this Agreement, other
than such breaches or inaccuracies involving fraud or willful misconduct.
10.8 Purchase Price Adjustment.
All Indemnity Payments made pursuant to this Article 10 shall be treated by the
parties for income Tax purposes as adjustments to the Purchase Price, unless
otherwise required by applicable law. The indemnification obligation of
Indemnitor shall be adjusted so as to give effect to (i) any net reduction in
federal, state, local or foreign income Tax liability actually realized at any
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time by the Indemnitee as a result of the satisfaction by the Indemnitee of the
underlying claims with respect to which the indemnification is sought hereunder
and (ii) any net increase in federal, state, local or foreign income Tax
liability actually incurred at any time by the Indemnitee with respect to its
receipt of any Indemnity Payments received pursuant to this Article 10
(including any additional amounts paid pursuant to this Section 10.8).
ARTICLE 11.
MISCELLANEOUS
11.1 Expenses.
Except as otherwise set forth in this Agreement, each of the parties hereto
shall pay its own expenses and costs incurred or to be incurred by it in
negotiating, closing and carrying out this Agreement. 11.2 Notices.
All notices, requests, demands and other communications given hereunder
(collectively, ("Notices") shall be in writing and personally delivered, sent by
facsimile or mailed by registered or certified mail, postage prepaid, as
follows:
(a) If to Seller at: United States Surgical ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President, Chief Corporate Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
Tyco Healthcare Group LP
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President, Business Development
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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(b) If to Purchaser at: Integra LifeSciences Corporation ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Attention: Vice
President and General Counsel Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
Sears Tower, Suite 5800
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(c) All Notices shall be deemed delivered when actually received if
personally delivered or sent by facsimile, or three days after having been
placed in the mail in accordance with Sections 11.2(a) or (b) hereof, as the
case may be, provided that any notice sent by facsimile must immediately be
placed in the mail. Each of the parties shall hereafter notify the other in
accordance with this Section 11.2 of any change of address to which notice is
requited to be mailed.
11.3 Counterparts.
This Agreement may be executed simultaneously in two or more counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
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11.4 Entire Agreement.
This Agreement constitutes the entire agreement between the parties and
supersedes any prior understandings, agreements or representations by or among
the parties, written or oral, to the extent they related in any way to the
subject matter hereof.
11.5 Headings.
The headings contained in this Agreement and in the schedules hereto are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement. 11.6 Assignment and Amendment of Agreement.
This Agreement shall be binding upon the respective successors and assigns of
the parties hereto. This Agreement may be amended only by written agreement of
the parties hereto, duly executed by an authorized representative of each of the
parties hereto. Notwithstanding the forgoing, Purchaser shall have the absolute
right to assign its rights and obligations under this Agreement in whole or in
part, to any direct or indirect wholly owned subsidiary or to any Affiliate of
which Purchaser is a direct or indirect wholly owned subsidiary; provided,
further, that if Purchaser makes any such assignment, Purchaser shall remain
liable under this Agreement.
11.7 Governing Law.
This Agreement shall be governed by and construed and enforced in accordance
with the laws of the state of New York applicable to contracts made in that
state, without giving effect to the conflict of laws principles that would
result in the application of any law other than the state of New York. Except as
otherwise expressly provided in this Agreement, the parties hereto agree that
any suit, action or proceeding seeking to enforce any provision of, or based on
any matter arising out of or in connection with, this Agreement or the
transactions contemplated hereby may only be brought in the United States
District Court for the Southern District of New York or any New York State court
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sitting in New York City, New York, and each of the parties hereby consents to
the jurisdiction of such courts (and of the appropriate appellate courts
therefrom) in any such suit, action or proceeding and irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such suit, action or proceeding in any
such court or that any such suit, action or proceeding which is brought in by
any such court has been brought in an inconvenient forum. Process in any such
suit, action or proceeding may be served on any party anywhere in the world,
whether within or without the jurisdiction of any such court.
11.8 Failure to Close.
If for any reason this Agreement is terminated prior to the Closing, Purchaser
shall return to Seller all documents and other information, including all
originals and all copies thereof, theretofore delivered to Purchaser by Seller.
Purchaser shall not retain copies of any such documents or other information,
and that certain Confidentiality Agreement between Seller and Purchaser, dated
as of September 8, 2004, as amended, shall remain in full force and effect.
11.9 Further Assurances.
Each party agrees that it will execute and deliver, or cause to be executed and
delivered, after the Closing Date, all such other instruments and will take all
reasonable actions as may be necessary to transfer and convey the Purchased
Assets to Purchaser, on the terms herein contained, and to consummate the
transactions herein contained to effectuate the provisions and purposes hereof.
11.10 No Third Party Rights.
This Agreement is not intended and shall not be construed to create any rights
in any parties other than Seller and Purchaser and no person shall have any
rights as a third-party beneficiary hereunder.
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11.11 Waiver of Bulk Sales Laws.
Subject to the provisions of Section 11.1 hereof, the parties hereto waive
compliance with the provisions of any applicable bulk sales laws.
11.12 Non-Waiver.
The failure in any one or more instances of a party to insist upon performance
of any of the terms, covenants or conditions of this Agreement, to exercise any
right or privilege in this Agreement conferred or the waiver by said party of
any breach of any of the terms, covenants or conditions of this Agreement shall
not be construed as a subsequent waiver of any such terms, covenants,
conditions, rights or privileges, but the same shall continue and remain in full
force and effect.
11.13 Severability.
The invalidity of any provision of this Agreement or portion of a provision
shall not affect the validity of any other provision of this Agreement or the
remaining portion of the applicable provision.
11.14 Incorporation of Schedules.
The schedules and exhibits hereto are incorporated into this Agreement and shall
be deemed a part hereof as if set forth herein in full. References herein to
"this Agreement" and the words "herein," "hereof" and words of similar import
refer to this Agreement (including its schedules as an entirety). In the event
of any conflict between the provisions of this Agreement and any such schedule
the provisions of this Agreement shall control.
11.15 Waiver of Jury Trial.
SELLER AND PURCHASER HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED
BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
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(WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
ARTICLE 12.
DEFINED TERMS
12.1 Definitions.
(a) For purposes of this Agreement, the term "to the knowledge of Seller"
or other term of similar import means the actual knowledge of ▇▇▇▇ ▇▇▇▇▇▇▇
(Chief Litigation Counsel, Tyco Healthcare); ▇▇▇▇ ▇▇▇▇▇▇▇ (Vice President, Chief
Corporate Counsel, US Surgical/Valleylab/Radionics); ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ (General
Manager, Radionics); ▇▇▇▇ ▇▇▇▇▇ (Senior Corporate Counsel, US
Surgical/Valleylab/Radionics); ▇▇▇▇ ▇▇▇▇▇▇ (Vice President and Chief
Intellectual Property Counsel, US Surgical/Valleylab/Radionics); ▇▇▇▇ ▇▇▇▇▇▇
(Senior Patent and Trademark Counsel, US Surgical/Valleylab/Radionics); ▇▇▇▇▇
▇▇▇▇▇▇▇ (Senior Director, Human Resources, US Surgical/Valleylab/Radionics);
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (Deputy General Counsel, EMEA, Tyco Healthcare); ▇▇▇▇ ▇▇▇▇▇
(Manager, Health, Safety and Environmental, US Surgical/Valleylab/Radionics);
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (Vice President, Logistics, Tyco Healthcare/US Surgical); ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, (Vice President, Quality and Regulatory Affairs, US
Surgical/Valleylab/Radionics); ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (Director, Regulatory Affairs,
Quality Assurance, Radionics); and ▇▇▇▇▇ ▇▇▇▇▇ (Vice President, International
Business Development); and, with respect to Section 4.1.31, those employees of
Seller responsible for maintaining communications with Seller's vendors in the
ordinary course of business.
103
(b) For purposes of this Agreement, "Business Day" means any day other than
a Saturday, a Sunday or a day on which banks in New York, New York are
authorized or required by law to close.
(c) For purposes of this Agreement, "GAAP" means generally accepted
accounting principles for financial reporting in the United States and applied
consistently with the 2004 Audited Financial Statements.
(d) For purposes of this Agreement, "Material Adverse Effect" means any
change, effect or circumstance that, individually or when taken together with
all other changes, effects or circumstance that have occurred prior to the date
of determination of the occurrence of the material adverse effect, is materially
adverse to the Purchased Assets or the financial condition, or results of
operations of the Business, excluding, in each case, any change, effect or
circumstance that results from or relates to (i) changes in (A) United States or
global economic conditions which do not disproportionately impact the Purchased
Assets or Business; (B) the industry in which the Business is operated which do
not disproportionately impact the Purchased Assets or the Business, (C) laws or
accounting standards, principles or interpretations of general application which
do not disproportionately impact the Purchased Assets or the Business, (ii) the
announcement of this Agreement or consummation of the transactions contemplated
hereby or (iii) the announcement by Purchaser of its plans or intentions with
respect to the conduct of the Business.
12.2 Other Definitions.
In addition to the foregoing, the following terms shall have the respective
meanings assigned thereto in the Sections indicated below:
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Term Section
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2004 Audited Financial Statements 4.1.4(a)
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2005 Audited Financial Statements 6.10(b)
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Accounting Expert 2.2(a)
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Accounts Receivable 1.2(l)
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Action 3.2(i)
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Affiliate 1.2 (f)
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Agreed Claims 10.4(c)
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Agreement Preamble
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Antitrust Break-Up Fee 6.2(e)
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Antitrust Clearance Period 6.2(f)
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Antitrust Laws 6.2(d)
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Assumed Contracts 1.1(d)
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Assumed Liabilities 3.1
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Audited Inventory 1.1(b)
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Basket Amount l0.3
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105
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Books and Records 1.1(c)
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Business Employee 6.1.1
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Business Recitals
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Business Day 12.1(b)
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Business Partners 6.6
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Cap 10.3
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Certificate 10.4(a)
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Claim Notice Period 10.5
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Closing 8.1
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Closing Date 8.1
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Closing Supply Inventory 2.3(a)
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COBRA 6.1.3
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Code 4.1.8(a)(iii)
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Competitive Products 6.7
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Confidential Information 6.4.4
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Employee Benefit Plans 4.1.16(a)
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Employment Agreement 4.1.16(a)
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Environmental Claims 4.1.20(a)
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Environmental Conditions 4.1.20(a)
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Environmental Laws 4.1.20(a)
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106
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ERISA 3.2(c)
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Estimated Supply Inventory 2.1
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Excluded Assets 1.2
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Excluded Contracts 1.2(e)
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Excluded Liabilities 3.2
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Excluded Records 1.2(k)
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FDA 1.1(c)
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Financial Statements 6.10(c)
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Foreign Plan 4.1.16(h)
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GAAP 12.1(c)
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Hazardous Substances 4.1.20(a)
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HSR Act 4.1.14
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Indemnifiable Loss 10.6(a)
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Indemnitee 10.4(a)
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Indemnitor 10.4(a)
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Indemnity Payment 10.6(a)
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Initial Purchase Price 2.1
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Interim Period Financial Statements 6.10(b)
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Injectable Agents 6.7
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Inventory 1.1(b)
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IRS 6.8.4
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Legal Requirement(s) 4.1.7(b)
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Licenses and Permits 1.1(g)
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107
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Liens 4.1.11(a)
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Losses 10.1
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Material Adverse Effect 12.1(d)
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Material Contracts 4.1.12(a)
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Notices 11.2
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Permitted Liens 4.1.11(a)
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Personal Property 1.1(e)
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Personal Property Leases 1.1(f)
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Post-Closing Adjustment Amount 2.1
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Post-Closing Inventory 6.9(b)
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Procedure 6.7
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Products Recitals
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Purchase Price 2.1
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Purchased Assets 1.1
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Purchaser Preamble
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108
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Purchaser's Indemnified Persons 10.1
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Quarterly Financial Information 6.10(a)
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Real Property Leases 1.1(h)
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Release 4.1.20(a)
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Seller Preamble
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Second Request 6.2(b)
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Selling Affiliates 1.1
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Selling Affiliate Transfer Agreements 6.19
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Seller's Claims 1.1(i)
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Seller's Credits 1.1(k)
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Seller's Indemnified Persons 10.2
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Seller's Intellectual Property Rights 1.1(a)
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Service Agreement 6.22.1
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Supply Inventory 2.1
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Tax 4.1.8(a)(i)
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Tax Returns 4.1.8(a)(ii)
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Taxes 4.1.8(a)(i)
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to the knowledge of Seller 12.1(a)
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Trade Laws 4.1.25(a)(i)
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Transfer Taxes 2.4(a)
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Transferred Employee(s) 6.1.1
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Tyco Healthcare Preamble
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Valuation Objection Notice 2.3(b)
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Valuation Period 2.3(a)
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VAT 2.4(b)
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WARN Act 3.1(b)
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[Signature Page Follows]
109
IN WITNESS WHEREOF, Seller and Purchaser have duly executed and
delivered this Agreement as of the day and year first above written.
TYCO HEALTHCARE GROUP LP
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
Title: Vice President
----------------------------
SHERWOOD SERVICES, AG
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
Title: as attorney-in fact
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INTEGRA LIFESCIENCES CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Title: President and Chief Executive Officer
----------------------------
INTEGRA LIFESCIENCES (IRELAND) LTD.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Title: Director
----------------------------
110