Exhibit 2.1
ASSET PURCHASE AGREEMENT
by and between
DIAMETRICS MEDICAL, INC.
and
INTERNATIONAL TECHNIDYNE CORPORATION
Dated as of July 17, 2003
TABLE OF CONTENTS
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SECTION 1. CERTAIN DEFINITIONS...................................................... 1
1.1. Terms Defined in this Section.............................................. 1
1.2. Terms Defined Elsewhere in This Agreement.................................. 6
1.3. Terms Generally............................................................ 7
SECTION 2. ACQUISITION OF ACQUIRED ASSETS AND CONSIDERATION......................... 8
2.1. Acquisition of Acquired Assets............................................. 8
2.2. Consideration.............................................................. 8
2.3. Assumption of Assumed Liabilities.......................................... 8
2.4. Excluded Assets............................................................ 9
2.5. Escrow..................................................................... 9
2.6. Consents................................................................... 9
2.7. Basic Prorations; Utilities; Taxes......................................... 10
2.8. Purchase Price Allocation.................................................. 10
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE SELLER............................. 10
3.1. Organization, Standing, and Authority...................................... 10
3.2. Authorization and Binding Obligation....................................... 11
3.3. Absence of Conflicting Agreements; Consents; Governmental Requirements..... 11
3.4. Sufficiency of Acquired Assets............................................. 12
3.5. Licenses................................................................... 12
3.6. Leasehold Property......................................................... 13
3.7. Tangible Personal Property................................................. 13
3.8. Contracts.................................................................. 13
3.9. SEC Filings................................................................ 14
3.10. Financial Statements....................................................... 14
3.11. Personnel.................................................................. 15
3.12. Claims and Legal Actions................................................... 16
3.13. Compliance with Laws....................................................... 16
3.14. Environmental Matters...................................................... 17
3.15. Transactions with Affiliates............................................... 17
3.16. Protection of Intangible Property.......................................... 17
3.17. Conduct of Business........................................................ 18
3.18. Taxes...................................................................... 19
3.19. Intellectual Property...................................................... 20
3.20. Brokers.................................................................... 20
3.21. Negotiations with Other Parties............................................ 20
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TABLE OF CONTENTS
(Continued)
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3.22. Inventory................................................................. 20
3.23. Receivables............................................................... 21
3.24. Distributors and Suppliers................................................ 21
3.25. Undisclosed Liabilities................................................... 21
3.26. Disclosure................................................................ 22
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER......................... 23
4.1. Organization, Standing, and Authority..................................... 23
4.2. Authorization and Binding Obligation...................................... 23
4.3. Absence of Conflicting Agreements......................................... 23
4.4. Ability to Pay............................................................ 24
SECTION 5. SPECIAL COVENANTS AND AGREEMENTS........................................ 24
5.1. Cooperation............................................................... 24
5.2. Access to Books and Records............................................... 25
5.3. Restrictions on Competitive Activities.................................... 25
5.4. No Inconsistent Action.................................................... 26
5.5. Supply of Products by the Seller for the Purchaser........................ 26
5.6. Collection of Receivables................................................. 27
5.7. Seller Special Meeting.................................................... 28
5.8. No Other Discussions...................................................... 29
5.9. Confidentiality........................................................... 29
5.10. Distribution Agreements................................................... 30
5.11. Publicity................................................................. 30
5.12. Updated Schedules and Evidence of Clear Title............................. 31
5.13. Termination of Permitted Liens............................................ 31
SECTION 6. CONDITIONS TO OBLIGATIONS OF PARTIES AT CLOSING......................... 32
6.1. Conditions to Obligations of the Purchaser................................ 32
6.2. Conditions to Obligations of the Seller................................... 34
SECTION 7. CLOSING AND CLOSING DELIVERIES.......................................... 35
7.1. Closing Date and Place.................................................... 35
7.2. Deliveries by the Seller.................................................. 35
7.3. Deliveries by the Purchaser............................................... 36
SECTION 8. TERMINATION............................................................. 37
8.1. Termination............................................................... 37
8.2. Termination Fee........................................................... 38
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TABLE OF CONTENTS
(Continued)
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8.3. Rights on Termination...................................................... 38
8.4. Specific Performance....................................................... 38
8.5. Attorneys' Fees............................................................ 38
SECTION 9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION;
CERTAIN REMEDIES......................................................... 38
9.1. Representations and Warranties............................................. 39
9.2. Indemnification by the Seller.............................................. 39
9.3. Indemnification by the Purchaser........................................... 40
9.4. Procedure for Indemnification.............................................. 40
SECTION 10. TAXES AND EMPLOYMENT MATTERS............................................. 42
10.1. Transfer Taxes............................................................. 42
10.2. Employees.................................................................. 42
10.3. Survival of Obligations.................................................... 43
10.4. Conflict................................................................... 43
SECTION 11. MISCELLANEOUS............................................................ 43
11.1. Fees and Expenses.......................................................... 43
11.2. Notices.................................................................... 43
11.3. Benefit and Binding Effect................................................. 45
11.4. Further Assurances......................................................... 45
11.5. GOVERNING LAW.............................................................. 45
11.6. Headings................................................................... 45
11.7. Entire Agreement........................................................... 45
11.8. Severability............................................................... 46
11.9. Waiver of Compliance; Consents............................................. 46
11.10. Counting of Time........................................................... 46
11.11. Counterparts............................................................... 46
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TABLE OF CONTENTS
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Schedules
Major Shareholders Schedule A
Acquired Assets Schedule 1.1(a)
Permitted Liens Schedule 1.1(b)
Transferred Regulatory Approvals Schedule 1.1(c)
Excluded Assets Schedule 2.4
Consents Schedule 3.3
Licenses Schedule 3.5
Leasehold Property Schedule 3.6
Assumed Contracts Schedule 3.8
Employees Schedule 3.11
Claims and Legal Actions Schedule 3.12
Environmental Matters Schedule 3.14(b)
Transactions with Affiliates Schedule 3.15
Protection of Intangible Property Schedule 3.16
Conduct of Business Schedule 3.17
Taxes Schedule 3.18
Intellectual Property Schedule 3.19
Brokers Schedule 3.20
Inventory Schedule 3.22
Receivables Schedule 3.23
Distributors Schedule 3.24(a)
Suppliers Schedule 3.24(b)
Undisclosed Liabilities Schedule 3.25
Transition Services Employees Schedule 5.1(b)
Continuing Employees Schedule 10.2
Exhibits
Form of Voting Agreement Exhibit A
Form of Escrow Agreement Exhibit B
Legal Opinion Exhibit C
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ASSET PURCHASE AGREEMENT, dated as of July 17, 2003, by and
between DIAMETRICS MEDICAL, INC., a Minnesota corporation (the "Seller"), and
INTERNATIONAL TECHNIDYNE CORPORATION, a Delaware corporation (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Seller desires to sell to the Purchaser, and the
Purchaser desires to purchase from the Seller, those assets which relate to the
Seller's Intermittent Testing Business, and the Purchaser is willing to assume
certain liabilities which relate to the Intermittent Testing Business, subject
to the terms and upon the conditions set forth herein;
WHEREAS, the board of directors of the Seller have determined
that it is advisable and in the best interests of its shareholders to enter into
this Agreement pursuant to the terms and subject to the conditions set forth
herein; and
WHEREAS, in connection with the execution of this Agreement, and
as an inducement to the Purchaser to enter into this Agreement, certain
principal shareholders of the Seller identified on Schedule A hereto
(collectively, the "Major Shareholders") will have executed and delivered to the
Purchaser, concurrently with the execution and delivery of this Agreement by the
parties hereto, a Voting Agreement in the form attached hereto as Exhibit A.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants set forth herein, the parties hereto, intending to be legally bound
hereby, agree as follows:
SECTION 1. CERTAIN DEFINITIONS
1.1. Terms Defined in this Section.
The following terms, as used in this Agreement, have the meanings set
forth in this Section:
"Acquired Assets" means the Tangible Personal Property, the
Assumed Contracts, the Licenses, the Transferred Regulatory Approvals, the
Intellectual Property, the Receivables, the Inventory, all other assets
currently used by the Seller in connection with the Intermittent Testing
Business and other assets listed or described as the Acquired
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Assets on Schedule 1.1(a) hereto, except for the Excluded Assets set forth in
Schedule 2.4 hereto.
"Affiliate", with respect to any Person, means any other Person
controlling, controlled by, or under common control with such Person. For
purposes of this definition, the term "control" means direct or indirect
ownership of at least a majority of the voting interest or income interest in a
corporation or entity, and the terms "controlled by" and "under common control
with" have meanings corresponding to the meaning of "control".
"Agreement" means this Asset Purchase Agreement, as it may be
amended from time to time.
"Assumed Liabilities" means (a) all liabilities under the Assumed
Contracts and obligations to customers that exist on or before the Closing Date,
(b) all liabilities under the Assumed Contracts and obligations to customers
that arise after the Closing Date, (c) purchase commitments relating to goods or
services from suppliers or vendors ordered prior to the Closing Date in the
ordinary course of the Intermittent Testing Business but received after the
Closing Date and of which the Purchaser will receive the use, benefit, or
revenue, (d) all contractual warranty obligations on the Intermittent Business
Testing Products in effect on or after the Closing Date, and (e) any trade
payables relating to goods or services from suppliers or vendors ordered prior
to the Closing Date in the ordinary course of the Intermittent Testing Business
as conducted by the Seller and received prior to the Closing Date.
"Business Day" means any day (other than a day which is a
Saturday or Sunday) on which banks are permitted to be open for business in the
City of San Francisco.
"Closing" means the consummation of the acquisition of the
Acquired Assets and assumption of the Assumed Liabilities pursuant to this
Agreement, in accordance with the provisions of Section 7.
"Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 7.
"Code" means the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.
"Consents" means the consents, permits, or approvals of
Governmental Entities and other third parties, including consents as may be
required in connection with the Transferred Regulatory Approvals, that are
necessary to transfer the Acquired Assets
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to the Purchaser, or otherwise to consummate the transactions contemplated by
this Agreement in compliance with any provision of law or the terms of any
mortgage, indenture, lease, contract, agreement, instrument, license, or permit
to which any party to this Agreement is a party or by which any party to this
Agreement or its properties may be bound legally.
"Confidentiality Agreement" means the Confidentiality Agreement signed
April 19, 2003 between the Seller and the Purchaser.
"Continuing Employees" means the employees of the Seller listed on
Schedule 10.2 hereto and who accept employment with the Purchaser.
"Convertible Senior Secured Fixed Rate Notes" means the Seller's 7%
Convertible Senior Secured Fixed Rate Notes due August 4, 2005.
"Effective Time" means 12:01 a.m., Pacific time, on the Closing Date.
"Environmental Laws" means all currently effective federal, state,
local, and foreign statutes, regulations, ordinances, all judicial and
administrative orders and determinations, and all common law concerning public
health, and pollution or protection of the environment, including all those
relating to the presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control, or cleanup of any hazardous
materials, substances, or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means such party selected by mutual agreement of the
Seller and the Purchaser prior to the Closing Date.
"Escrow Agreement" means that agreement referenced in Section 2.4 in
substantially the form attached hereto as Exhibit B.
"Intermittent Testing Business" means the worldwide manufacture, sale,
marketing and distribution of Intermittent Testing Business Products.
"Intermittent Testing Business Products" means intermittent blood
testing system hardware, software and testing cartridges or other consumable
single or multi-use assays and any data management systems that can be used in
connection therewith in point of care testing locations. Point of care testing
locations are locations where tests are performed outside of a central
laboratory and where care is or can be administered to a patient. Without
limitation, examples of these locations would be operating, intensive
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care, critical care, and emergency rooms or units and physician offices or
clinics. Notwithstanding anything herein to the contrary, Intermittent Testing
Business Products specifically excludes any continuous blood testing and
monitoring products, whether currently manufactured and sold by the Seller or
that may be manufactured and sold by the Seller in the future.
"Inventory" means all of Seller's inventory of finished goods, raw
materials, parts, supplies and accessories of every kind, nature and description
used or for use in connection with the Intermittent Testing Business, including,
without limitation, all such inventory held in the Roseville Facility or in
other locations in the control of the Seller, or held by distributors, field
representatives or any third parties on behalf of the Seller, for use in
connection with the Intermittent Testing Business.
"Lease" means the Real Property Lease Agreements dated July 31, 1996,
between ▇▇▇▇▇▇▇-▇▇▇▇▇, a Minnesota General Partnership, and the Seller, and all
amendments thereto.
"Licenses" means all licenses, permits, construction permits,
registrations, and other authorizations issued by any Governmental Entities to
the Seller and used or held by the Seller for use in connection with the
Intermittent Testing Business and conduct of the business or operations of the
Roseville Facility in connection with the Intermittent Testing Business, and all
applications therefor, and including the Transferred Regulatory Approvals.
"Material Adverse Effect" means (a) with respect to the Seller, a
material and adverse effect on the Acquired Assets or the business, results of
operations, properties, financial condition, assets, or liabilities of the
Intermittent Testing Business and (b) with respect to the Purchaser, a material
and adverse effect on the business, results of operations, properties, financial
condition, assets or liabilities of the Purchaser and its Affiliates, taken as a
whole; provided, however, that a Material Adverse Effect will not include any
material and adverse effect resulting from (i) general economic conditions
(provided that the Intermittent Testing Business is not disproportionately
affected thereby), (ii) conditions generally affecting the medical device
industry (provided that the Intermittent Testing Business is not
disproportionately affected thereby) and (iii) actions of the parties in
connection with the obligations set forth in this Agreement.
"Permitted Liens" means, with respect to any Acquired Asset, (a) liens
for current taxes not yet due and payable, (b) statutory liens that were created
in the ordinary course of business, and (c) easements and restrictions that are
disclosed on
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Schedule 1.1(b), to the extent, in the case of clauses (a) and (b), that such
liens relate to obligations that will be discharged by the Seller.
"Person" means an individual, corporation, association, partnership,
joint venture, trust, estate, limited liability company, limited liability
partnership, Governmental Entity, or other entity or organization.
"Prohibited Transaction" means any transaction or series of related
transactions involving (i) any sale, lease, exchange, transfer, license,
acquisition or disposition of the Intermittent Testing Business in whole or
substantial part, (ii) any purchase from the Seller or acquisition by any Person
or "group" (as defined under Section 13(d) of the Exchange Act and the rules and
regulations thereunder) of more than a 30% interest in the total outstanding
Seller Common Stock, or any security, note, instrument, or right convertible by
its terms into Seller Common Stock or other voting stock of the Seller, or the
common stock of any of its Affiliates or any tender offer or exchange offer that
if converted, exercised or consummated would result in any Person or "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) beneficially owning 30% or more of the Seller Common Stock or the
common stock of any of its Affiliates or (iii) any merger, consolidation,
business combination or similar transaction involving the Seller.
"Receivables" means the accounts receivable of the Seller related to
the Intermittent Testing Business as reflected in the Updated Asset and
Liabilities List.
"Roseville Facility" means the premises leased by the Seller pursuant
to the Lease.
"Seller Common Stock" means Diametrics Medical, Inc. Common Stock, $.01
par value.
"Series E Convertible Preferred Stock" means Diametrics Medical, Inc.
Series E Convertible Preferred Stock, $.01 par value.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, fixtures, leasehold improvements, office equipment,
materials and supplies, plant, Inventory, video libraries and archives, spare
parts, and other tangible personal property of every kind and description used
in connection with the Intermittent Testing Business and listed on Schedule
1.1(a).
"Transferred Regulatory Approvals" means the pending and approved
marketing authorizations relating to the Intermittent Testing Business and other
applications for governmental regulatory approvals relating to the Intermittent
Testing
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Business and all federal, state and local device establishment registrations and
device listings, as listed on Schedule 1.1(c), part A, all foreign equivalents
of the foregoing, including, but not limited to, those listed on Schedule
1.1(c), part B, and all documentary support for all the foregoing
authorizations, approvals, registrations and applications.
"Voting Agreement" means that agreement referenced in the Recitals, the
form of which is attached hereto as Exhibit A.
1.2. Terms Defined Elsewhere in This Agreement.
For purposes of this Agreement, the following terms have the meanings set
forth in the sections indicated:
Term Section
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Annual Financial Statements Section 3.10
Assumed Contracts Section 3.8
Claimant Section 9.4(a)
Closing Consideration Section 2.2
Distributors Section 3.24(a)
Employees Section 3.11
Escrow Consideration Section 2.2
Exchange Act Section 3.3(a)
Excluded Assets Section 2.4
Governmental Entity Section 3.3(a)
Indemnifying Party Section 9.4(a)
Intellectual Property Section 3.19
Labor Matters Section 3.11(a)
Latest Balance Sheet Section 3.10
Latest Financial Statements Section 3.10
Losses Section 9.2
Major Shareholders Recitals
Non-Competition Period Section 5.3
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Term Section
---- -------
Proprietary Rights and Information Agreement Section 3.16
Proxy Statement Section 3.3(a)
Purchase Price Allocation Section 2.8
Purchaser Recitals
Receivables Gross-Up Section 5.6(b)
Receivables Reduction Amount Section 5.6(a)
Requisite Governmental Approval Section 3.3(a)
Securities Act Section 3.9
SEC Section 3.3(a)
Seller Recitals
Seller SEC Reports Section 3.9
Seller Special Meeting Section 5.7(a)
Suppliers Section 3.24(b)
Tax(es) Section 3.18(d)
Tax Return Section 3.18(d)
Total Consideration Section 2.2
Transfer Tax(es) Section 10.1
Transition Employees Section 5.1(b)
Transition Services Section 5.1(b)
UCC Financing Statements Section 5.12
Updated Asset and Liabilities List Section 7.2(f)
Updated Disclosure Schedule Section 5.12
1.3. Terms Generally.
The definitions in Section 1.1 and elsewhere in this Agreement will apply
equally to both the singular and plural forms of the terms defined. Whenever the
context requires, any pronoun includes the corresponding masculine, feminine,
and neuter forms.
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The words "include", "includes", and "including" are not limiting. Any reference
in this Agreement to a "day" or number of "days" (without the explicit
qualification of "Business") will be interpreted as a reference to a calendar
day or number of calendar days. If any action or notice is to be taken or given
on or by a particular calendar day, and such calendar day is not a Business Day,
then such action or notice will be deferred until, or may be taken or given on,
the next Business Day. As used in this Agreement, "knowledge" of the Seller or
the Purchaser is limited to the actual knowledge of the officers of the Seller
or the Purchaser respectively. As used in this Agreement, "as presently
conducted" and "as currently operated" in reference to the Intermittent Testing
Business refers to the date of this Agreement.
SECTION 2. ACQUISITION OF ACQUIRED ASSETS AND CONSIDERATION
2.1. Acquisition of Acquired Assets.
Subject to the terms and conditions set forth in this Agreement, at the
Closing, but effective as of the Effective Time, the Seller will sell, assign,
transfer, convey, and deliver to the Purchaser, by bills of sale, assignments
and other instruments of transfer in form consistent with this Agreement, and
the Purchaser will purchase and acquire, all of Seller's right, title and
interest, as of the Closing Date, in and to the Acquired Assets, free and clear
of any claims, liabilities, liens, security interests, mortgages, pledges,
encumbrances, or restrictions, except for Permitted Liens. The Acquired Assets
will include at least $600,000 in Receivables related to the Intermittent
Testing Business pursuant to Section 5.6.
2.2. Consideration.
In consideration of the sale, transfer, conveyance, assignment, and
delivery to the Purchaser of the Acquired Assets pursuant to this Agreement, the
Purchaser will deliver at the Closing (a) $4,420,000 in the form of cash by wire
transfer to the Seller in immediately available funds, as may be adjusted
pursuant to Section 5.13 (the "Closing Consideration"); and (b) $780,000, except
as may be adjusted pursuant to the provisions of Section 5.6, in the form of
cash by wire transfer to the Escrow Agent in immediately available funds (the
"Escrow Consideration" and, together with the Closing Consideration, the "Total
Consideration").
2.3. Assumption of Assumed Liabilities.
In addition to the payment and delivery of the Total Consideration, on and
as of the Closing Date the Purchaser will assume and agree to pay or perform, or
cause to be paid or performed in accordance with their terms or otherwise
satisfy, and will release
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and indemnify the Seller from, the Assumed Liabilities, provided, however, that
the total dollar amount of those trade payables included in the definition of
Assumed Liabilities will in no event exceed $550,000. In the event that such
trade payables exceed $550,000 as of the Closing Date, the Seller covenants and
agrees to pay such trade payables as such obligations become due. The Purchaser
will indicate in writing to the Seller those payments in excess of $550,000 that
are to be paid by the Seller. With respect to such trade payables in excess of
$550,000, if any, if Seller fails to pay or provide for such trade payables, or
if the Purchaser reasonably determines that failure to make any payments will
impair the Purchaser's use or enjoyment of the Acquired Assets or conduct of the
Intermittent Testing Business, the Purchaser may, at any time after the Closing
Date, elect to make all or any part of such payments directly (but will have no
obligation to do so), as the Purchaser in its sole discretion will determine,
and set off and deduct the full amount of all such payments from the Escrow
Consideration. The Purchaser will not be responsible for any liabilities,
obligations, claims or assessments of the Seller, whether known, unknown,
contingent or otherwise, other than the Assumed Liabilities.
2.4. Excluded Assets.
Notwithstanding anything set forth in the definition of Acquired Assets,
the Seller will not sell and the Purchaser will not acquire any right, title or
interest in or to the assets identified in Schedule 2.4 attached hereto (the
"Excluded Assets").
2.5. Escrow.
At the Closing, the Purchaser will, pursuant to the terms of the Escrow
Agreement in substantially the form attached hereto as Exhibit B, deliver to the
Escrow Agent the Escrow Consideration.
2.6. Consents.
Nothing in this Agreement will be construed as an attempt or agreement to
assign any lease, contract or other agreement or any License which cannot be
assigned, transferred, subleased or sublicensed without the consent or waiver of
the party or parties thereto (other than the Seller) or any third party
(including a government or governmental unit) unless such consent or waiver has
been obtained, or if such assignment, transfer, sublease or sublicense or
attempt to assign, transfer, sublease or sublicense would constitute a breach
thereof or a violation of any law, decree, order, regulation or other
governmental edict, this Agreement will not constitute an assignment, transfer,
sublease or sublicense thereof. Seller will use all reasonable efforts prior to
and, if necessary with respect to the Acquired Assets after, the Closing, to
obtain such Consents, if any, as may be required for the assignment or transfer
by the Seller of the Acquired Assets listed on Schedule 3.3, it being understood
that all reasonable efforts will not include any
9
requirement to (a) pay any consideration or (b) offer or grant financial
accommodations to any third party with respect to such lease, contract,
agreement or License. The Purchaser will cooperate with the Seller, in such
manner as may be reasonably requested, in connection therewith. If any such
Consent is not obtained prior to the Closing, then the Seller will use all
reasonable efforts to enter into an arrangement with respect to any such lease,
contract, agreement or License to provide the Purchaser with all of the benefits
enjoyed by the Seller under any such License, lease, contract or other
agreement, and the Purchaser will perform all of the obligations under such
Licenses, leases, contracts and other agreements as though they had been
assigned to the Purchaser.
2.7. Basic Prorations; Utilities; Taxes.
On the Closing Date, or as promptly as practicable following the Closing
Date, minimum rent, percentage rent, water, gas, electricity and other
utilities, common area maintenance reimbursements to lessor and other similar
periodic charges or expenses relating to the Roseville Facility will be prorated
with the Purchaser paying the Seller such prorated amount; provided, however,
that if Purchaser enters into a new lease for the Roseville Facility effective
as of the Closing Date, the provisions of this Section 2.7 will not apply.
Utility meter readings for such property will be determined as of the Closing
Date for purposes of establishing utility costs for the first month. All
prorations will be made on the basis of the actual number of days in the year
and month in which the Closing occurs or in the period of computation.
2.8. Purchase Price Allocation.
Within sixty (60) days after the Closing Date, the Seller will prepare and,
following approval by the Purchaser (which approval will not be unreasonably
withheld), deliver to the Purchaser an allocation of the Total Consideration and
the Assumed Liabilities among the Acquired Assets (the "Purchase Price
Allocation") in accordance with Section 1060 of the Code and applicable IRS
regulations. The Seller and the Purchaser will file IRS Form 8594 consistent
with such Purchase Price Allocation, and neither party will take any contrary
position regarding such allocation in any Tax filing or contest.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE SELLER
Except as otherwise disclosed in or pursuant to this Agreement, the Seller
represents and warrants to the Purchaser that:
3.1. Organization, Standing, and Authority.
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The Seller (a) is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Minnesota; (b) has all requisite
corporate power to own and lease the Acquired Assets and to carry on the
Intermittent Testing Business as now being conducted, and (c) has all requisite
corporate power to execute and deliver this Agreement and the documents
contemplated hereby, and to perform and comply with all of the terms, covenants,
and conditions to be performed and complied with by the Seller hereunder.
3.2. Authorization and Binding Obligation.
The execution, delivery and performance by the Seller of this Agreement and
of all of the agreements, documents and/or instruments to be executed and/or
delivered by the Seller pursuant to or in connection with this Agreement have
been duly authorized by all necessary action of the Seller, subject to the
approval on or prior to the Closing Date of the sale of the Acquired Assets in
accordance with the Minnesota Business Corporation Act and the Seller's Articles
of Incorporation and Bylaws. This Agreement has been duly executed and delivered
by the Seller and such agreement constitutes the legal, valid, and binding
obligation of the Seller, subject to the approval on or prior to the Closing
Date of the sale of the Acquired Assets in accordance with the Minnesota
Business Corporation Act and the Seller's Articles of Incorporation and Bylaws,
enforceable against it in accordance with its terms, subject as to enforcement:
(a) to bankruptcy, insolvency, reorganization, arrangement, moratorium and other
laws of general applicability relating to or affecting creditors' rights; and
(b) to general principles of equity, whether such enforcement is considered in a
proceeding in equity or at law.
3.3. Absence of Conflicting Agreements; Consents; Governmental Requirements.
(a) Subject to obtaining the Consents listed on Schedule 3.3, other
than in connection with or in compliance with the specific provisions of (i)
Minnesota law and the Seller's Articles of Incorporation and Bylaws relating to
the approval of this Agreement and the sale of the Acquired Assets by the
Seller's shareholders, (ii) the provisions of the Securities Exchange Act of
1934, as amended, and the rules and regulations adopted thereunder
(collectively, the "Exchange Act"), relating to (I) the filing with, and
clearance by, the Securities and Exchange Commission (the "SEC") of a proxy
statement (the "Proxy Statement") relating to the Seller Special Meeting
referred to in Section 5.7 and (II) the filing of any other reports and
documents with the SEC relating to this Agreement or any of the transactions
contemplated hereby, and (iii) applicable local permit laws, rules and
regulations pertaining to the operation of the Intermittent Testing Business,
the execution, delivery and performance of this Agreement by the Seller does not
and will not: (1) violate any provision of the Articles of Incorporation or
Bylaws of the Seller; (2) violate any statute, ordinance, rule, regulation,
order or decree
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of any court or of any governmental or regulatory body, agency or authority,
federal, state, local or foreign (a "Governmental Entity"), applicable to the
Intermittent Testing Business or by which any of the Acquired Assets may be
bound; (3) require any filing with, or permit, consent or approval of, or the
giving of any notice to, any Governmental Entity (a "Requisite Governmental
Approval"); or (4) result in a violation or breach of, conflict with, constitute
(with or without due notice or lapse of time or both) a default under, or result
in the creation of any lien, security interest, charge or encumbrance on any of
the Acquired Assets under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, contract, lease, license, permit, franchise or
other instrument or obligation to which the Seller is a party, or by which any
of the Acquired Assets is bound or affected, except (A) in the case of
sub-clause (2) above, where the failure to obtain or make any such filing,
permit, consent, or approval or the failure to give such notice or (B) in the
case of sub-clause (4) above, where such violation, breach, conflict, default or
creation of any lien, security interest, charge or encumbrance, could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Seller.
(b) None of the information included in the Proxy Statement (other than
information supplied by or on behalf of Purchaser for inclusion in the Proxy
Statement) will contain, at the date it is first mailed to the Seller's
shareholders or at the time of the Seller Special Meeting, any statement which,
in the light of the circumstances under which such statement is made, is false
or misleading with respect to any material fact, or omit to state any material
fact necessary in order to make the statements therein not false or misleading
or necessary to correct any statement in any earlier communication with respect
to the solicitation of any proxy for the Seller Special Meeting or any amendment
or supplement thereto.
3.4. Sufficiency of Acquired Assets.
The Acquired Assets constitute all of the assets, tangible and intangible,
of any nature whatsoever, necessary to operate the Intermittent Testing Business
in the manner presently operated by the Seller.
3.5. Licenses.
Schedule 3.5 is a true and complete list as of the date of this Agreement
of all material Licenses necessary to conduct the Intermittent Testing Business
as presently conducted, exclusive of any Licenses with respect to state or local
sales, use or other taxes. Each such License has been validly issued, and the
Seller is the authorized legal holder thereof. Such Licenses are in full force
and effect, and the conduct of the Intermittent Testing Business has been and is
now in accordance therewith in all material respects. As of the date of this
Agreement, no request has been made by the Seller or
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other Person seeking the revocation or limitation of any such Licenses. Except
as is indicated on Schedule 3.5, there are no restrictions on Seller's ability
to transfer such Licenses to the Purchaser.
3.6. Leasehold Property.
Except as set forth on Schedule 3.6, the Seller has enforceable rights to
nondisturbance and quiet enjoyment to the Roseville Facility, and no third party
holds any interest in the leased premises with the right to foreclose upon the
Seller's leasehold or subleasehold interest. No other Person, except as
indicated on Schedule 3.6, has any rights as lessee of such property, and the
Seller has not subleased or licensed any others to occupy or use any portion of
the Roseville Facility. The Lease is in full force and effect. Except as set
forth on Schedule 3.6, the Seller has not received any notice of default and has
no knowledge of any default or event or circumstance which, with notice or
passage of time or both, would give rise to a default, under the Lease. Except
as set forth on Schedule 3.6, the Lease has not been amended or modified and the
Purchaser has been given a true, complete and accurate copy of the Lease. The
Seller has paid all applicable rent and other applicable charges and fees,
including allocated taxes, under the Lease through July 31, 2003.
3.7. Tangible Personal Property.
Schedule 1.1(a) lists all items of Tangible Personal Property having an
original cost of $1000 or more used to conduct the Intermittent Testing Business
as presently conducted. Except as described in Schedule 1.1(a) and except for
Tangible Personal Property leased pursuant to any Assumed Contract, the Seller
owns and has good and marketable title to each item of Tangible Personal
Property, and none of the Tangible Personal Property is subject to any liens,
security interests, mortgages, pledges, encumbrances, or restrictions, except
for Permitted Liens. Upon consummation of the transactions contemplated by the
Agreement, the Purchaser will own and have good and marketable title to, free
and clear of any liens, security interests or pledges (except for Permitted
Liens), each and every item of Tangible Personal Property that is owned by the
Seller. Except as is set forth on Schedule 1.1(a), each item of Tangible
Personal Property listed on Schedule 1.1(a) is in good working condition
(subject to normal wear and tear) and is available for immediate use in the
Intermittent Testing Business.
3.8. Contracts.
Schedule 3.8 is a true and complete list as of the date of this Agreement
of all the contracts (exclusive of purchase orders received from customers for
which products have not been supplied and purchase orders from vendors for which
products have not been received and which were entered into in the ordinary
course of business that individually,
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or in the aggregate if from the same vendor or customer, call for a payment or
receipt of less than $5,000) being transferred by the Seller to the Purchaser
relating primarily to or necessary for the conduct of the Intermittent Testing
Business (the "Assumed Contracts"). The Seller has made available to the
Purchaser true and complete copies of all written Assumed Contracts. Except as
disclosed on Schedule 3.8, all of the Assumed Contracts are in full force and
effect and are valid and binding agreements of the parties thereto, enforceable
in accordance with their terms. Neither the Seller nor, to the knowledge of the
Seller, any other party is in default in any material respect under any of the
Assumed Contracts, nor does any condition exist that with the giving of notice
or the lapse of time or both would constitute such a default. There are no
outstanding and, to the Seller's knowledge, no threatened disputes or
disagreements with respect to any Assumed Contract. Except for the need to
obtain the Consents listed on Schedule 3.3, the Seller has full legal power and
authority to assign its rights under the Assumed Contracts to the Purchaser, in
accordance with this Agreement, and such assignments together will not affect
the validity, enforceability, or continuation of any of the Assumed Contracts.
Except as disclosed on Schedule 3.8, as of the date of this Agreement, no party
to any Assumed Contract has informed the Seller of its intention (a) to
terminate such Assumed Contract or amend the terms thereof, (b) to refuse to
renew the Assumed Contract upon expiration of its term, or (c) to renew the
Assumed Contract upon expiration only on terms and conditions that are more
onerous than those now existing.
3.9. SEC Filings.
The Seller has filed with the SEC all required forms, reports,
registration statements and documents required to be filed by it with the SEC
(collectively, all such forms, reports, registration statements and documents
filed since January 1, 2000 are referred to herein as the "Seller SEC Reports").
All of the Seller SEC Reports complied as to form, when filed (or, if amended or
superseded by filing prior to the date hereof, then on the date of such filing),
in all material respects with the applicable provisions of the Securities Act of
1933, as amended (together with the rules and regulations promulgated
thereunder, the "Securities Act") and the Exchange Act. Accurate and complete
copies of the Seller SEC Reports have been made available to the Purchaser. The
Seller SEC Reports (including all exhibits and schedules thereto and documents
incorporated by reference therein) did not, at the time they were filed (or, if
amended or superseded by filing prior to the date hereof, then on the date of
such filing), contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
3.10. Financial Statements.
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(a) Seller has delivered to Purchaser copies of (a) the unaudited
balance sheet, as of March 31, 2003, of Seller (the "Latest Balance Sheet") and
the unaudited statements of operations, shareholders' equity and cash flows of
Seller for the three-month period ended March 31, 2003 (such statements and the
Latest Balance Sheet being herein referred to as the "Latest Financial
Statements") and (b) the audited balance sheets, as of December 31, 2001 and
December 31, 2002, of the Seller and the audited statements of operations,
shareholders' equity and cash flows of the Seller for each of the years ended
December 31, 2001 and December 31, 2002 (collectively, the "Annual Financial
Statements"). The Latest Financial Statements and the Annual Financial
Statements are based upon the information contained in the books and records of
Seller and fairly present, in all material respects, the financial condition of
the Seller as of the dates thereof and results of operations for the periods
referred to therein. The Annual Financial Statements have been prepared in
accordance with generally accepted accounting principles, consistently applied
throughout the periods indicated. The Latest Financial Statements have been
prepared in accordance with generally accepted accounting principles applicable
to unaudited interim financial statements (and thus may not contain all notes
and may not contain prior period comparative data which are required to be
prepared in accordance with generally accepted accounting principles)
consistently with the Annual Financial Statements and reflect all adjustments
necessary to a fair statement of the results for the interim period(s) present.
3.11. Personnel.
(a) Employees and Compensation. Schedule 3.11 contains a true and
complete list as of the date of this Agreement of all employees of the Seller
engaged in the Intermittent Testing Business (collectively, the "Employees") and
a description of all compensation arrangements affecting them, including all
written or oral employment agreements, all accrued vacation and other
obligations that have accrued as of the date of this Agreement, such schedule to
be updated prior to the Closing pursuant to Section 5.12. Except as set forth in
Schedule 3.11, all Employees of the Seller are employed "at will" and may be
terminated at any time with or without cause, without payment of additional
compensation beyond accrued salary and vacation, and with no more than two weeks
notice. There is no organized labor strike, dispute, slowdown or stoppage,
collective bargaining or unfair labor practice claim, union representation
question or arbitration or grievance proceeding, (collectively, "Labor
Matters"), pending, or to the knowledge, of the Seller threatened, against or
affecting the Seller. Schedule 3.11 lists each Labor Matter that involves a
claim or potential claim against, or that enjoins or compels or seeks to enjoin
or to compel any activity by the Seller with respect to the Intermittent Testing
Business. The Seller is and has been in compliance in all material respects with
all applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, including, without limitation, any
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such laws respecting employment discrimination, occupational safety and health,
and unfair labor practices. There is no unemployment discrimination or unfair
labor practice charge or complaint against the Seller pending or, to the
knowledge of the Seller, threatened before the National Labor Relations Board,
Office of Federal Contract Compliance Programs, U.S. Equal Employment
Opportunity Commission, or any comparable state, local or foreign agency. The
Seller has not experienced any material work stoppage in the last 18 months. The
Seller is not delinquent in payments to any of its Employees for any wages,
salaries, commissions, bonuses or other compensation for any services performed
by them or amounts required to be reimbursed to such Employees. Upon termination
of the employment of any of the Employees of the Seller before or after the
Closing Date, neither the Purchaser, or except as set forth in Schedule 3.11,
the Seller, will be liable to such employees for severance pay. The Seller is
not a party to or bound by any collective bargaining agreements.
(b) Neither the Seller nor any entity required to be aggregated
therewith pursuant to Section 414(b) or (c) of the Code and/or Section 4001(b)
of ERISA, has incurred or could reasonably be expected to incur any material
liability under Title IV of ERISA.
3.12. Claims and Legal Actions.
Except as disclosed on Schedule 3.12, as of the date of this Agreement,
there is no claim, legal action, counterclaim, suit, arbitration, or other
legal, administrative, or tax proceeding, nor any order, decree, or judgment, in
progress or pending, or to the Seller's knowledge threatened, against or
relating to the Seller or any of its Affiliates with respect to the Acquired
Assets, the Assumed Liabilities, the Intermittent Testing Business, or with
respect to the Intermittent Testing Business Products sold by the Seller prior
to the Closing Date.
3.13. Compliance with Laws.
The Seller has complied with the Licenses and all federal, state, and
local laws, rules, regulations, ordinances, judgments, orders, and decrees
applicable or relating to the Intermittent Testing Business, including without
limitation all Food and Drug Administration rules and regulations applicable to
the Intermittent Testing Business and Intermittent Testing Business Products,
except for any noncompliance that would not have a Material Adverse Effect or
impair or hinder the ability of the Seller to perform its obligations under this
Agreement.
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3.14. Environmental Matters.
(a) The Seller has complied and is in compliance with all Environmental
Laws as they apply to the Intermittent Testing Business, except for such
noncompliance as would not have a Material Adverse Effect.
(b) The Seller possesses all Licenses required under applicable
Environmental Laws to conduct the Intermittent Testing Business as presently
conducted, and each such License is in full force and effect. To the knowledge
of the Seller, there has not been any disposal, spill, discharge, or release of
any petroleum products, hazardous materials, substances or wastes on, at, or
under the Roseville Facility that could reasonably be expected to require
investigation, removal, or remedial or corrective action. Except as disclosed on
Schedule 3.14(b), the Seller has not transported or arranged for the
transportation of any petroleum products, hazardous materials, substances or
wastes to any location that is listed or proposed for listing as a contaminated,
or potentially contaminated, site under federal or state Environmental Laws. To
the knowledge of the Seller, there has not been any underground or above ground
storage tanks containing petroleum products, hazardous materials, substances, or
waste at the Roseville Facility.
(c) The Seller, with respect to the Intermittent Testing Business or
the Acquired Assets, has not received any written notice regarding any actual or
alleged violation of Environmental Laws, or any liabilities or potential
liabilities, including any investigatory, remedial, or corrective obligations,
arising under Environmental Laws.
3.15. Transactions with Affiliates.
Except as set forth on Schedule 3.15, there are no agreements relating to
the Intermittent Testing Business between the Seller and any of its Affiliates,
the Seller has not been involved in any material business arrangement or
relationship relating to the Intermittent Testing Business or the Acquired
Assets with any of its Affiliates, and no Affiliate of the Seller owns any
property or right, tangible or intangible, that is used in the Intermittent
Testing Business.
3.16. Protection of Intangible Property.
Schedule 3.16A sets forth a true and complete list of all employees and
consultants who have worked on or contributed to the development of the Seller's
Intellectual Property and other proprietary rights. Except as disclosed on
Schedule 3.16A, each of such persons has executed a proprietary rights and
information agreement in the form delivered to the Purchaser (the "Proprietary
Rights and Information Agreement"). The Seller's rights under such Proprietary
Rights and Information Agreements are freely
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assignable to the Purchaser. Complete and correct copies of all such Proprietary
Rights and Information Agreements have been made available to the Purchaser.
Schedule 3.16B sets forth, to the Seller's knowledge, a list of all persons or
entities to whom the Seller has disclosed any of its source codes relating to
the Intermittent Testing Business.
3.17. Conduct of Business.
Except as set forth in Schedule 3.17, since the date of the Latest Balance
Sheet:
(a) There has been no event or condition that has or would reasonably
be expected to have a Material Adverse Effect on the Seller;
(b) There has been no impairment, damage, destruction, loss or claim
affecting any Acquired Assets that has or would reasonably be expected to have a
Material Adverse Effect;
(c) There has not been any sale, assignment, lease, or other transfer
or disposition of any of the assets used in the Intermittent Testing Business of
the types described as Acquired Assets other than in the normal and usual course
of business with suitable replacements being obtained therefor;
(d) There has not been any claim, settlement or judgment by a tribunal
of competent jurisdiction regarding the breach or infringement of the
Intellectual Property;
(e) There has not been any material change or indication of an
intention to discontinue or materially change the Seller's relationships with
suppliers, customers, distributors, lessors or third parties who have an
existing relationship with the Seller relating to the Intermittent Testing
Business;
(f) There has not been any material change in the credit practices,
promotional practices or pricing practices of the Seller with respect to the
Intermittent Testing Business except in the ordinary course of business;
(g) There has not been any action that would result in a default under
any Assumed Contract by which any of the Acquired Assets is bound; and
(h) There has not been any increase in the compensation or benefits
payable or to become payable by the Seller to any Continuing Employee, except
for increases in the normal course of business and except for increases
involving payments or obligations on the part of the Seller that in the
aggregate for all Continuing Employees are less than Fifty Thousand Dollars
($50,000) per annum.
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3.18. Taxes.
(a) Except as set forth in Schedule 3.18(a), the Seller has made
available to the Purchaser all Tax Returns filed by the Seller for all periods
ending on or after December 31, 2000 and before the date of this Agreement, all
Tax elections, claims for refunds of Taxes, correspondence, and any other
information supplied to or received from the taxing authorities for all such
periods. The Seller has filed all Tax Returns required by law to be filed by it
prior to the date of this Agreement, and those Tax Returns are true, complete
and correct in all material respects.
(b) The Seller has paid or made adequate provision in the Latest
Financial Statements for the payment of all Taxes that have accrued or become
due prior to the date of this Agreement. All Taxes that the Seller has been
required to withhold or to collect have been duly withheld or collected, and all
withholdings and collections either have been duly and timely paid over to the
appropriate Governmental Entities or are not yet due and are duly reflected on
the Latest Financial Statements or, for the period after June 30, 2003, are
reflected on the books and records of the Seller.
(c) There are no audits, examinations, administrative proceedings or
court proceedings, pending or, to the Seller's knowledge, proposed, with regard
to any Taxes or Tax Returns filed by the Seller. The Seller has not given or
been requested to give waivers or extensions of any statute of limitations
relating to the filing of Tax Returns or the assessment of Taxes, except for any
waiver or extension which has expired or any extensions resulting from the
filing of a Tax Return after its original due date in the ordinary course of
business. The Seller has not received from any Governmental Entity in a
jurisdiction where the Seller does not file Tax Returns any notice that it
either is or may be subject to taxation by that jurisdiction. The Tax Returns of
the Seller for any taxable period ending after December 31, 2000 have not been
audited by the Internal Revenue Service.
(d) For the purposes of this Section, "Tax" or "Taxes" means any
federal, state, local or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Code Section 59A), customs duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, whether computed on a separate or
consolidated, unitary or combined basis or in any other manner, including any
interest, penalty or addition thereto, and "Tax Return" means any return,
declaration, report, claim for refund, or information return or statement
relating to Taxes, including any amendment thereof.
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3.19. Intellectual Property.
Schedule 3.19 is a true and complete list of each trademark, trademark
application, domain name, patent, patent application, assumed name, trade name,
copyright, trade secret or invention disclosure owned by, licensed to or
licensed by the Seller which is or, to the extent reasonably available, was used
in, or is necessary for the operation of, the Intermittent Testing Business as
presently conducted or which has been developed by the Seller in contemplation
of future use in connection with the Intermittent Testing Business (the
"Intellectual Property"), together with a designation of ownership. The conduct
of the Intermittent Testing Business as presently conducted by the Seller does
not infringe any trademark, trademark application, domain name, patent, patent
application, assumed name, trade name, copyright, or other proprietary right of
any other Person. No litigation is pending or has been threatened against the
Seller or any officer, director, shareholder, employee or agent of the Seller,
for the infringement of any patents, trademarks or trade names of any other
party or for the misuse or misappropriation of any patent, trade secret,
know-how or other proprietary right owned by any other party and related in any
way to the Intermittent Testing Business; nor, to the knowledge of the Seller,
does any basis exist for any such litigation. Except as disclosed on Schedule
3.19, to the knowledge of the Seller, there has been no infringement or
unauthorized use by any other Person of any Intellectual Property belonging to
the Seller.
3.20. Brokers.
Schedule 3.20 lists all Persons entitled to a finder's fee, brokerage
commission or similar payment in connection with the transaction contemplated by
this Agreement. The Seller will indemnify and hold the Purchaser harmless
against all claims for brokers' or finders' fees made or asserted by any party
claiming to have been employed by the Seller or any shareholder, director,
officer, employee or agent of the Seller and all costs and expenses (including
the reasonable fees of counsel) of investigating and defending such claims.
3.21. Negotiations with Other Parties.
Neither the Seller nor any other Person on their behalf is presently
conducting or contemplating negotiations with any other party regarding any
acquisition, merger, sale of assets or similar transaction with respect to the
Intermittent Testing Business.
3.22. Inventory.
All of the Inventory has been produced and packaged in accordance with all
applicable laws, regulations and orders and is usable, leasable or salable in
the ordinary course of business, except for inventory items set forth on
Schedule 3.22, if any, which
20
have been written down in the Latest Balance Sheet to realizable fair market
value or for which adequate reserves have been provided therein.
3.23. Receivables.
The Receivables were generated in the ordinary course of business, and,
except as set forth on Schedule 3.23, are not subject to any set-offs,
counterclaims, deductions, rights to return, or agreements for deduction, free
goods, discounts or other deferred price or quantity adjustments which do not
have a sufficient corresponding accrual on the Latest Balance Sheet.
3.24. Distributors and Suppliers.
(a) Schedule 3.24(a) contains a true and correct list of all
distributors which have purchased the Intermittent Testing Business Products
(whether from the Seller or otherwise) for the period from January 1, 2003
through the date of this Agreement showing the total unit purchases by each such
distributor during that period (the "Distributors"). As of the date of this
Agreement, except as set forth on Schedule 3.24(a), the Seller has not received
notice that any of such Distributors intends to materially decrease its level of
purchases of the Intermittent Testing Business Products from that reflected on
Schedule 3.24(a) before or after the Closing.
(b) Schedule 3.24(b) contains a list of all suppliers to the
Intermittent Testing Business for the most recent fiscal year (the "Suppliers").
As of the date of this Agreement, the Seller has not received notice that any of
such Suppliers intends to materially decrease the quantity of materials sold by
such Supplier to the Seller from that reflected on the Schedule 3.24(b), before
or after the Closing.
3.25. Undisclosed Liabilities.
With respect to the Acquired Assets or the operations of the Intermittent
Testing Business, the Seller has no liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise, whether due or to become due, whether
known or unknown, and regardless of when asserted) arising out of transactions
or events heretofore entered into, or any action or inaction, or any state of
facts existing, with respect to or based upon transactions or events heretofore
occurring, except (i) as reflected in the Latest Balance Sheet, (ii) liabilities
which have arisen after the date of the Latest Balance Sheet in the ordinary
course of business (none of which is an uninsured liability for breach of
contract, breach of warranty, tort, infringement, claim or lawsuit which
individually or aggregated with any other liability or liabilities arising from
similar or related circumstances exceeds $5,000), (iii) the trade payables of
the Seller, included in the
21
definition of Assumed Liabilities, listed in Schedule 3.25 hereto, or (iv) as
otherwise set forth in Schedule 3.25.
3.26. Disclosure.
(a) No representation or warranty or other statement made by the
Seller in this Agreement, including the exhibits and schedules referenced
herein, contains any untrue statement or omits to state a material fact
necessary to make any such representation, warranty or other statement not
misleading.
(b) The Seller does not have knowledge of any fact that has specific
application to the Seller (other than general economic or industry conditions)
and that may be reasonably expected to have a Material Adverse Effect that has
not been set forth in this Agreement or in the exhibits and schedules referenced
herein.
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SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Seller that:
4.1. Organization, Standing, and Authority.
The Purchaser (a) is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware; (b) has all requisite
corporate power to execute and deliver this Agreement and the documents
contemplated hereby, and to perform and comply with all of the terms, covenants,
and conditions to be performed and complied with by the Purchaser hereunder.
4.2. Authorization and Binding Obligation.
The execution, delivery, and performance of this Agreement by the Purchaser
and the performance by the Purchaser of its obligations hereunder have been duly
authorized by all necessary actions on the part of the Purchaser. This Agreement
has been duly executed and delivered by the Purchaser and constitutes the legal,
valid, and binding obligation of the Purchaser, enforceable against the
Purchaser in accordance with its terms, subject as to enforcement: (a) to
bankruptcy, insolvency, reorganization, arrangement, moratorium and other laws
of general applicability relating to or affecting creditors' rights; and (b) to
general principles of equity, whether such enforcement is considered in a
proceeding in equity or at law.
4.3. Absence of Conflicting Agreements.
The execution, delivery, and performance by the Purchaser of this Agreement
and the documents contemplated hereby (with or without the giving of notice, the
lapse of time, or both): (a) do not require the consent of any third party
(including any Governmental Entity); (b) will not conflict with the Articles of
Incorporation or Bylaws of the Purchaser; (c) will not violate, conflict with,
or result in a breach of, or constitute a default under, any law, judgment,
order, injunction, decree, rule, regulation, or ruling of any Governmental
Entity applicable to the Purchaser; and (d) will not violate, conflict with,
constitute grounds for termination of, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of any performance
required by the terms of, any mortgage, indenture, lease, contract, agreement,
instrument, license, or permit to which the Purchaser is a party or by which the
Purchaser may be bound legally.
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4.4. Ability to Pay.
Purchaser has the financial capability, in the ordinary course of business
and without seeking any additional third party financing, to fulfill all of its
obligations hereunder.
SECTION 5. SPECIAL COVENANTS AND AGREEMENTS.
5.1. Cooperation.
(a) Upon the terms and subject to the conditions of this Agreement,
each party will use its commercially reasonable efforts to take, or cause to be
taken, all appropriate action, and to do or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including but not limited to (i) cooperating in the preparation and filing of
the Proxy Statement, and any amendments thereto, (ii) using its commercially
reasonable efforts to make all required regulatory filings and applications and
to obtain all Requisite Governmental Approvals and Consents, and (iii)
cooperating in the preparation and filing of any filings with the SEC related to
the consummation of this Agreement or the sale of the Acquired Assets subsequent
to the Closing, including but not limited to commercially reasonable efforts to
ensure that the Seller's independent auditing firm is available to assist the
Purchaser (at the Purchaser's sole expense) in the preparation of audited
financial statements required upon consummation of the transactions contemplated
by this Agreement. The Seller will use all reasonable efforts to provide the
audited financial statements of the Intermittent Testing Business required upon
consummation of the transactions contemplated by this Agreement as of the
Closing Date. Notwithstanding anything to the contrary in the foregoing
sentence, the Seller will provide the aforementioned financial statements to the
Purchaser no later than thirty (30) days after the Closing Date. The Seller will
promptly furnish to the Purchaser copies of all notices, documents, requests,
court papers, or other materials given to or received from any Governmental
Entity or any other third party with respect to the transaction contemplated by
this Agreement. To the extent practicable in the circumstances and subject to
applicable laws or existing confidentiality agreements, the Seller will provide
the Purchaser with the opportunity to review any information relating to such
party, or any of its Affiliates, which appears in any filing made with, or
written materials submitted to, any Governmental Entity or any non-governmental
person in connection with obtaining the Requisite Governmental Approvals, or
with respect to the Transferred Regulatory Approvals. To the extent such
disclosure is prohibited by an existing confidentiality agreement, the Seller
will use all reasonable efforts to obtain a consent to or waiver of the rights
of any party to such confidentiality agreement. In case at any time after the
Closing any further action is necessary or desirable to carry out the
24
purposes of this Agreement, the proper officers and directors of each party will
use their commercially reasonable efforts to take all such necessary action.
Notwithstanding the foregoing, and except as otherwise expressly provided in
this Agreement, the Purchaser will have no obligation to agree to any adverse
change in any License or Assumed Contract in order to obtain a Consent required
with respect thereto.
(b) The Seller will use its commercially reasonable efforts to provide
assistance in the transition of the Intermittent Testing Business to the
Purchaser. For the period commencing on the Closing Date and continuing for up
to ninety (90) days after the Closing Date, the Seller will make the employees
of the Seller listed on Schedule 5.1(b) (subject to any voluntary termination or
termination of employment for cause by the Seller of such employees) (the
"Transition Employees") reasonably available (compatible with the business needs
of the Seller) to the Purchaser in the United States to provide consultation and
training (the "Transition Services") to assist and enable the Purchaser to
transition and operate the Intermittent Testing Business. As part of the
Transition Services, the Seller will make available to the Purchaser the
Transition Employees, and where applicable, systems, to provide consultation and
training with respect to the Intermittent Testing Business in the areas of sales
and marketing, technical support, procurement, human resources and employee
benefits, as well as financial and accounting systems, processes and services.
On or before the Closing Date, the Seller will provide the Purchaser with the
name of the Seller's Transition Services project coordinator, who will be
responsible for coordinating the provision of the Transition Services to the
Purchaser.
5.2. Access to Books and Records.
To the extent requested for any reasonable business purposes hereunder, and
subject to the following two sentences of this Section 5.2, (a) the Seller will
provide the Purchaser access and the right to copy for a period of seven (7)
years from the Closing Date any books and records of the Seller (or true and
complete copies thereof) relating to the Intermittent Testing Business or the
Acquired Assets but not included in the Acquired Assets, and (b) the Purchaser
will provide the Seller access and the right to copy for a period of seven (7)
years from the Closing Date any books and records of the Purchaser (or true and
complete copies thereof) relating to the Intermittent Testing Business or the
Acquired Assets with respect to periods prior to the Closing that are included
in the Acquired Assets. Any party that is required to grant any other party
access and the right to copy any books and records (or true and complete copies
thereof) pursuant to this Section 5.2 may, before doing so, redact or remove
therefrom any information contained therein that does not relate to the
Intermittent Testing Business or the Acquired Assets.
5.3. Restrictions on Competitive Activities.
25
As an inducement to the Purchaser to enter into this Agreement, the Seller
agrees that for a period of seven (7) years from and after the Closing Date (the
"Non-Competition Period"), the Seller, either directly or with or through
another entity, will not compete with the Purchaser or Thoratec Corporation in
the Intermittent Testing Business through the manufacture, sale, marketing,
licensing or distribution in the United States or anywhere throughout the world
of any Intermittent Testing Business Products, provided, however, that the
Non-Competition Period will terminate upon the closing of a merger,
consolidation, or other transaction in which the shareholders of the Seller who
beneficially own all of the voting securities of the Seller immediately before
such transaction, beneficially own securities representing less than 50% of the
voting securities of the Seller immediately after such transaction. The Seller
will take all reasonable actions necessary to ensure that employees and
consultants of the Seller irrevocably assign or otherwise transfer to Seller all
of their respective right, title and interest in and to any and all Intellectual
Property related to the Intermittent Testing Business developed during the
Non-Competition Period, and that such Intellectual Property is promptly
transferred and assigned to the Purchaser for no additional consideration.
5.4. No Inconsistent Action.
Except as otherwise provided in this Agreement, no party to this Agreement
will take any action that is inconsistent with its obligations under this
Agreement or that could reasonably be expected to hinder or delay the
consummation of the transactions contemplated by this Agreement by the
termination date set forth in Section 8.1(d).
5.5. Supply of Products by the Seller for the Purchaser.
(a) From and after the Closing Date until the earlier of such time as
(a) the date six (6) months from the Closing Date or (b) substantially all the
consents necessary to transfer the Transferred Regulatory Approvals have been
obtained or (c) the Purchaser is able to conduct the manufacture of the
Intermittent Testing Business Products in its own right, the Seller will supply
the Purchaser with reasonable quantities of the Intermittent Testing Business
Products for sale by the Purchaser, pursuant to a license granted hereby
specifically to allow those activities of the Seller described in this Section
(a). The Purchaser will submit to the Seller orders, including commercially
reasonable delivery dates, with respect to such requirements, and the Purchaser
will pay to the Seller upon tender of the Intermittent Testing Business Products
in the name of the Seller an amount equal to the Seller's cost thereof. For
purposes hereof, the Seller's cost will equal the purchase price paid by the
Seller to the Purchaser pursuant to paragraph (b) below., plus any expenses
directly incurred by the Seller as a result of the performance of this Section
5.5(a)
26
(b) The Seller hereby engages the Purchaser to manufacture on its
behalf all requirements of the Intermittent Testing Business Products necessary
to satisfy its obligations pursuant to paragraph (a) above. Such Intermittent
Testing Business Products will be supplied at the Purchaser's manufacturing
cost.
5.6. Collection of Receivables.
(a) As an inducement to the Purchaser to enter into this Agreement, the
Seller hereby guarantees that the Acquired Assets will include at least $600,000
in Receivables. In the event that the Acquired Assets do not include at least
$600,000 in Receivables as of the Closing Date, the Purchaser will be entitled
to immediately remove from the Escrow Consideration an amount equal to the
"Receivables Reduction Amount". The Receivables Reduction Amount will be equal
to (i) $600,000 minus (ii) the aggregate dollar amount of the Receivables as of
the Closing Date.
(b) As further inducement to the Purchaser to enter into this
Agreement, the Seller hereby guarantees the collection by the Purchaser of at
least $600,000 in Receivables related to the Intermittent Testing Business
within one hundred eighty (180) days after the Closing Date. If at the end of
such one hundred eighty (180) days the Purchaser has failed to collect at least
$600,000 in Receivables, the Purchaser will be entitled to withhold from the
Escrow Consideration an amount equal to the "Receivables Gross-Up". The
Receivables Gross-Up will be equal to (a) $600,000 minus (b) the dollar amount
of Receivables collected by the Purchaser during the one hundred eighty (180)
day period. The Purchaser hereby agrees to use commercially reasonable efforts
consistent with Purchaser's normal collection practices and procedures to
collect the Receivables during the one hundred eighty (180) day period, and will
not renegotiate the terms of the Receivables to the extent such revised terms
will result in a Receivables Gross-Up payment to Purchaser. Any Receivables
which have not been collected by Purchaser during such one hundred eighty (180)
days and for which Purchaser has submitted a claim against the Escrow
Consideration pursuant to this Section 5.6(b) will be immediately assigned to
Seller, which Seller may then collect for its own account, and Purchaser will
cooperate with Seller in its efforts to collect such Receivables. In the event
that the Purchaser has deducted the Receivables Reduction Amount from the Escrow
Consideration, the Receivables Gross-Up will be reduced by an amount equal to
the Receivables Reduction Amount.
(c) At the Closing, the Purchaser will acquire hereunder, and
thereafter the Purchaser or its designee will have the right and authority to
collect for the Purchaser or its designee's account, all Receivables, letters of
credit and other items which constitute a part of the Acquired Assets, and the
Seller will within five (5) Business Days after receipt of any payment in
respect of any of the foregoing, properly endorse and
27
deliver to the Purchaser any letters of credit, documents, cash or checks
received on account of or otherwise relating to any such Receivables, letter of
credit or other items.
5.7. Seller Special Meeting.
(a) In order to obtain shareholder approval of this Agreement, the
Seller, acting through its board of directors, will duly call, give notice of,
convene and hold a special meeting of the shareholders of the Seller for the
purpose of considering and voting on the adoption of this Agreement and the sale
of the Acquired Assets (the "Seller Special Meeting"), provided, however, that
if the board of directors of the Seller takes action to comply with its
fiduciary duties pursuant to Section 5.7(c) (including, without limitation,
canceling, adjourning or terminating the Seller Special Meeting prior to the
shareholder vote on the sale of the Acquired Assets), such action will not
result in a breach of the Seller's obligations pursuant to this section. The
Seller Special Meeting will be held as soon as practicable after the execution
of this Agreement.
(b) As promptly as practicable, but in no event later than five (5)
Business Days after the execution of this Agreement, the Seller will prepare
and, following approval by the Purchaser (which approval will not be
unreasonably withheld), file with the SEC a preliminary form of the Proxy
Statement for the Seller Special Meeting. The Proxy Statement will comply as to
form in all material respects with the requirements of the Exchange Act except
that the Seller has no liability with respect to any information supplied by or
on behalf of the Purchaser for inclusion in the Proxy Statement. As promptly as
practicable following receipt of SEC comments on such preliminary Proxy
Statement, if any, the Seller will prepare a response to such comments. The
Purchaser will be given a reasonable opportunity to review and comment on any
response letter and amended Proxy Statement prior to filing with the SEC. Upon
resolution of all comments or expiration of any waiting period, the Seller will,
as promptly as practicable following such resolution, mail the definitive Proxy
Statement to the shareholders of the Seller as of the record date for the Seller
Special Meeting. The Seller will use all commercially reasonable efforts to have
the preliminary Proxy Statement cleared by the SEC as promptly as practicable.
The Purchaser and the Seller will promptly furnish to each other all
information, and take such other actions (including, without limitation, using
all commercially reasonable efforts to provide any required consents of their
respective independent auditors), as may reasonably be requested in connection
with any action by any of them in connection with the preceding sentences of
this Section 5.7(b). The Seller and the Purchaser will each correct any
information provided by it for use in the Proxy Statement which will have become
false or misleading.
28
(c) The Proxy Statement will contain the recommendation of the board of
directors of the Seller in favor of the adoption of this Agreement and the sale
of the Acquired Assets. Notwithstanding the foregoing, the board of directors of
the Seller may (i) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to the Purchaser its approval or recommendation of this Agreement
or the transactions contemplated hereby or (ii) resolve or announce its
intention to do so if, after consultation with outside legal counsel, such board
determines by a majority vote of directors in their good faith judgment that
taking such action is necessary to comply with the fiduciary duties of such
board under applicable law.
5.8. No Other Discussions.
Until this Agreement is terminated as provided in this Agreement, none of
the Seller, its Affiliates, employees, agents, and representatives will: (i)
initiate or encourage the initiation by others of discussions or negotiations
with third parties or respond to solicitations by third persons relating to any
merger, sale, or other disposition of any part of the Acquired Assets or the
Intermittent Testing Business (whether by merger, consolidation, sale of stock,
sale of assets, or otherwise); or (ii) enter into any agreement or commitment
(whether or not binding) with respect to any of the foregoing transactions,
unless, after consultation with outside counsel, the board of directors
determines by a majority vote of directors in their good faith judgment that
taking such action is necessary to comply with the fiduciary duties of such
board under applicable law. The Seller will immediately notify the Purchaser if
any third party attempts to initiate any solicitation, discussion, or
negotiation with respect to any of the foregoing transactions. Nothing contained
in this Section 5.8 will prevent the board of directors of the Seller from
complying with Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act.
5.9. Confidentiality.
Each party recognizes that it will receive confidential information
regarding the other parties hereto during the course of the negotiations
contemplated by this Agreement. Accordingly, each of the Purchaser and the
Seller will prevent the unauthorized disclosure of any confidential information
concerning the other party that has been disclosed previously or is disclosed
during the course of the negotiations and investigations contemplated by this
Agreement. The obligations of this paragraph do not apply to information that:
(a) is or becomes part of the public domain (other than through breach of this
Agreement or any other agreement between the parties relating to
confidentiality), (b) is received by the receiving party from a third party
without breach of a nondisclosure obligation of the third party, or (c) is
independently developed. This Section 5.9 and the Confidentiality Agreement by
and between the Seller and the Purchaser will survive the Closing and/or any
termination of this Agreement.
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5.10. Distribution Agreements.
From and after the date of this Agreement, the Purchaser will indicate to
the Seller which of the Distributors set forth on Schedule 3.24(a) the Seller
will be required to terminate with respect to the Intermittent Testing Business,
effective on or prior to the Closing Date. Additionally, the Purchaser will
indicate to the Seller which of the applicable distributor agreements relating
to the Distributors set forth on Schedule 3.24(a) the Seller will assign to the
Purchaser or amend to have the Purchaser replace the Seller, and the Seller
hereby agrees to use its best efforts to cause such assignment and amendment and
to procure any required consents of third parties to such assignment, it being
understood that such best efforts will not include any requirement to (a) pay
consideration or (b) offer or grant financial accommodations to any Distributor.
The Seller will be required to immediately terminate any of the applicable
distributor agreements relating to the Distributors set forth on Schedule
3.24(a) as soon as the Seller ascertains that it is unable to assign to the
Purchaser or amend to have the Purchaser replace the Seller. The Seller will
bear the cost of terminating the agreements with respect to all Distributors
with whom Seller terminates agreements pursuant to this section. In the case of
distributor agreements that cover other products or businesses of the Seller in
addition to the Intermittent Testing Business, only that portion of the
distributor agreement relating to the Intermittent Testing Business will be
assigned to the Purchaser or terminated. All such assignments and/or amendments
will be effective as of the Closing Date.
5.11. Publicity.
All notices, releases, statements and communications to employees,
suppliers, distributors and customers and any person other than their respective
officers, directors, shareholders, representatives or agents of Seller,
Purchaser and to the general public and the press relating to the transactions
contemplated by this Agreement will be made only at such times and in such
manner as may be mutually agreed upon in writing by Seller and Purchaser,
provided, however, that any party will be entitled to make a public announcement
or statement or other public disclosure relating to the transactions
contemplated hereby if, in the opinion of its legal counsel, such announcement
or statement or other public disclosure is required to comply with any law
(including, without limitation, federal securities laws) or any subpoena or
other process; provided, further, however, that such party gives prior written
notice of its intention to make such disclosure, the content of such disclosure
and the provision of law, subpoena or process requiring such disclosure and
further, provided, the Seller and the Purchaser will be permitted to file this
Agreement and to describe the transactions contemplated hereby in a Current
Report on Form 8-K, a Quarterly Report on Form 10-Q and/or a proxy statement
30
on Schedule 14A, filed under the Exchange Act, or if the board of directors of
the Seller or the Purchaser, respectively, deems it to be necessary or advisable
to make such a filing.
5.12. Updated Schedules and Evidence of Clear Title.
No later than three (3) Business Days prior to the Closing, the Seller
will deliver to the Purchaser updated schedules reflecting items arising or
changes occurring in connection with the operation of the Intermittent Testing
Business between the date of this Agreement and the Closing Date (the "Updated
Disclosure Schedule"). The Updated Disclosure Schedule will also include
complete and current searches in the name of the Seller and other appropriate
parties of all Uniform Commercial Code Financing Statements records (the "UCC
Financing Statements") maintained by the Secretary of State of Minnesota, and
wherever else the Seller or the Purchaser know that a UCC Financing Statement
has been filed, and all other liens, security interests, mortgages, pledges,
encumbrances, or restrictions that to the Seller's knowledge apply to the
Acquired Assets, together with such releases, termination statements and other
documents as may be necessary to provide reasonable evidence that all Acquired
Assets to be sold under this Agreement are free and clear of all liens, security
interests, mortgages, pledges, encumbrances, or restrictions, other than the
Permitted Liens. No additional disclosure made in the Updated Disclosure
Schedule will be deemed to be a breach of any representation or warranty of the
Seller contained in this Agreement unless the item disclosed results from
conduct in violation of this Agreement; provided, however, that no disclosure
set forth in the Updated Disclosure Schedule will be deemed to cure any
inaccuracy or misrepresentation in the Disclosure Schedule that existed as of
the date of this Agreement, and provided, further, that disclosure in the
Updated Disclosure Schedule of matters occurring prior to the Closing Date may
be taken into account for purposes of determining whether an event may be deemed
to have had a Material Adverse Effect for the purposes of Section 6.1(g).
5.13. Termination of Permitted Liens
No later than three (3) Business Days prior to the Closing, the Seller
will prepare and deliver to the Purchaser all information and instructions
necessary to enable the Purchaser to pay, on behalf of the Seller, the amounts
required to terminate the Permitted Liens. Pursuant to the instructions, the
Purchaser will deliver at the Closing, by wire transfer to the holders of the
Permitted Liens, the amounts set forth in the instructions, and such amounts
will be deemed to be paid on behalf of the Seller, will be considered part of
the Closing Consideration, and will be deducted from the Closing Consideration
to be paid to the Seller. The Seller will take all additional action necessary
to cause the holders of the Permitted Liens to terminate and release the
Permitted Liens. The Seller will deliver fully executed releases, termination
statements and other documents as are
31
necessary to provide reasonable evidence that the Permitted Liens have been
terminated as set forth in Section 7.2(g).
SECTION 6. CONDITIONS TO OBLIGATIONS OF PARTIES AT CLOSING.
6.1. Conditions to Obligations of the Purchaser.
All obligations of the Purchaser at the Closing are subject at the
Purchaser's option to the fulfillment prior to or at the Closing Date of each of
the following conditions:
(a) Injunction, etc. There will be no effective injunction, writ, or
preliminary restraining order or any order of any nature issued by a
Governmental Entity to the effect that transactions contemplated by this
Agreement may not be consummated as herein provided, no proceeding or lawsuit
will have been commenced and be continuing by any Governmental Entity for the
purpose of obtaining any such injunction, writ, or preliminary restraining
order, and no written notice directed to either the Seller or the Purchaser will
have been received from any such Governmental Entity indicating an intent to
restrain, prevent, materially delay, or restructure the transactions
contemplated by this Agreement; provided, however, that the Purchaser will have
used all commercially reasonable efforts to prevent the entry of any such
injunction or other order that may be entered.
(b) Voting Agreements. The Major Shareholders will have entered into
and delivered to the Purchaser the Voting Agreement.
(c) Consents. All Consents, approvals and filings described on
Schedule 3.3 will have been obtained or made in a manner reasonably satisfactory
to the Purchaser.
(d) Performance. The Seller will have performed in all material
respects all obligations that this Agreement requires it to perform on or before
the Closing Date.
(e) Representations and Warranties. Except as otherwise provided
pursuant to Section 5.12, (i) the representations and warranties of the Seller
contained in this Agreement that contain an express materiality qualification
will be true and correct in all respects as of the date of this Agreement and as
of immediately prior to the Closing (other than representations and warranties
which address matters only as of a particular date, in which case such
representations and warranties will be true and correct in all respects, on and
as of such particular date), with the same force and effect as if then made and
(ii) the representations and warranties of the Seller contained in this
Agreement that do not contain an express materiality qualification will be true
and correct in all material respects as of the date of this Agreement and as of
immediately prior to the Closing (other
32
than representations and warranties which address matters only as of a
particular date, in which case such representations and warranties will be true
and correct in all material respects, on and as of such particular date), with
the same force and effect as if then made.
(f) Regulatory Approvals. All Requisite Governmental Approvals will
have been obtained and will remain in full force and effect except for the
Transferred Regulatory Approvals, as to which the Seller will have submitted all
documentation necessary on its part to be submitted requesting transfer thereof.
(g) Material Adverse Change. Since the date of this Agreement, there
will have occurred no event or other occurrence which will have caused or may
reasonably be expected to cause a Material Adverse Effect with respect to the
Seller.
(h) Extension of Lease. The Lease will have been amended, or a new
lease will have been executed, whereby the Purchaser will be entitled to use of
the Roseville Facility pursuant to terms which are reasonably acceptable to the
Purchaser.
(i) Deliveries. The Seller will have made all the deliveries to the
Purchaser set forth in Section 7.2.
(j) Shareholder Approval. The Seller will have obtained the approval
of its shareholders of this Agreement and the sale of the Acquired Assets
pursuant hereto in accordance with the Minnesota Business Corporation Act and
the Seller's Articles of Incorporation and Bylaws.
(k) Distributors. The Seller will have given notice at least one (1)
day prior to the Closing Date to the Distributors, effective within the lesser
of (i) thirty (30) calendar days following the Closing Date or (ii) the shortest
possible duration under the notice provisions of each respective distributor
agreement, of the Seller's intent to terminate agreements with any Distributors
that the Purchaser does not wish to retain pursuant to Section 5.10. The Seller
will have given notice to the Distributors, effective within the lesser of (i)
thirty (30) calendar days following the Closing Date or (ii) the shortest
possible duration under the notice provisions of each distributor agreement, of
the Seller's intent to assign or amend agreements with any Distributors to the
Purchaser pursuant to Section 5.10.
(l) Series E Convertible Preferred Stock Purchase Agreement. The
Seller will have obtained from each holder of Series E Convertible Preferred
Stock of the Seller (i) a written consent to this Agreement, and (ii) a waiver
of any rights and interest,
33
contingent or actual, that such holders may have in the Acquired Assets. Each of
the written consent and waiver will be in a form reasonably acceptable to the
Purchaser.
(m) Convertible Senior Secured Fixed Rate Note. The Seller will have
obtained from each holder of Convertible Senior Secured Fixed Rate Notes of the
Seller (i) a written consent to this Agreement, and (ii) a waiver of any rights
and interest, contingent or actual, that such holders may have in the Acquired
Assets. Each of the written consent and waiver will be in a form reasonably
acceptable to the Purchaser.
6.2. Conditions to Obligations of the Seller.
All obligations of the Seller at the Closing are subject at the Seller's
option to the fulfillment prior to or at the Closing Date of each of the
following conditions:
(a) Injunction, etc. There will be no effective injunction, writ, or
preliminary restraining order or any order of any nature issued by a
Governmental Entity to the effect that transactions contemplated by this
Agreement may not be consummated as herein provided, no proceeding or lawsuit
will have been commenced and be continuing by any Governmental Entity for the
purpose of obtaining any such injunction, writ, or preliminary restraining
order, and no written notice directed to either the Seller or the Purchaser will
have been received from any such Governmental Entity indicating an intent to
restrain, prevent, materially delay, or restructure the transactions
contemplated by this Agreement; provided, however, that the Seller will have
used all commercially reasonable efforts to prevent the entry of any such
injunction or other order that may be entered.
(b) Performance. The Purchaser will have performed in all material
respects all obligations that this Agreement requires it to perform on or before
the Closing Date.
(c) Representations and Warranties. The representations and warranties
of the Purchaser contained in this Agreement that contain an express materiality
qualification will be true and correct in all respects as of the date of this
Agreement and as of immediately prior to the Closing (other than representations
and warranties which address matters only as of a particular date, in which case
such representations and warranties will be true and correct in all respects, on
and as of such particular date), with the same force and effect as if then made
and (ii) the representations and warranties of the Purchaser contained in this
Agreement that do not contain an express materiality qualification will be true
and correct in all material respects as of the date of this Agreement and as of
immediately prior to the Closing (other than representations and warranties
which address matters only as of a particular date, in which case such
34
representations and warranties will be true and correct in all material
respects, on and as of such particular date), with the same force and effect as
if then made.
(d) Regulatory Approvals. All Requisite Governmental Approvals will
have been obtained and will remain in full force and effect, except for the
Transferred Regulatory Approvals, as to which the Purchaser will have submitted
all documentation necessary on its part to be submitted requesting transfer
thereof.
(e) Deliveries. The Purchaser will have made all the deliveries set
forth in Section 7.3.
(f) Shareholder Approval. The Seller will have obtained the approval
of its shareholders of this Agreement and the sale of the Acquired Assets
pursuant hereto in accordance with the Minnesota Business Corporation Act and
the Seller's Articles of Incorporation and Bylaws.
SECTION 7. CLOSING AND CLOSING DELIVERIES.
7.1. Closing Date and Place.
Subject to the satisfaction or waiver of the conditions set forth in
Section 6, the Closing will be held at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ White &
▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ as
promptly as practicable following satisfaction or waiver of the conditions set
forth in Section 6, other than those conditions which by their terms are to be
satisfied at the Closing, but not later than five (5) Business Days following
such satisfaction or waiver. The effective time of the conveyance of the
Acquired Assets and the assumption of the Assumed Liabilities, and the transfer
of the Total Consideration will be deemed to have been the Effective Time.
7.2. Deliveries by the Seller.
On the Closing Date, the Seller will deliver to the Purchaser the
following, in form and substance reasonably satisfactory to the Purchaser and
its counsel:
(a) Transfer Documents. Duly executed instruments of conveyance and
transfer, including bills of sale, motor vehicle titles, assignments, and other
transfer documents that are sufficient to vest good and marketable title to the
Acquired Assets in the name of the Purchaser, free and clear of all liens,
security interests, mortgages, pledges, encumbrances, or restrictions (other
than any liens, security interests, mortgages, pledges, encumbrances, or
restrictions that are included within the Assumed Contracts or resulting from
the failure to obtain any Consent), except for Permitted Liens.
35
(b) Consents. Copies of all instruments evidencing receipt of any
Consents and estoppel certificates that have been obtained prior to the Closing.
(c) Licenses, Contracts, Business Records, Etc. Copies of all
Licenses, Assumed Contracts, Proprietary Rights and Information Agreements,
blueprints, schematics, working drawings, plans, projections, engineering
records, and all files and records included in the Acquired Assets.
(d) Escrow Agreement. A copy of the Escrow Agreement, duly executed by
the Seller.
(e) Opinion of Counsel. An opinion of counsel for the Seller, in form
and substance reasonably satisfactory to the Purchaser, in the form attached
hereto as Exhibit C.
(f) Updated Asset and Liabilities List. The Seller will prepare and
deliver an updated listing of the assets and liabilities of the Intermittent
Testing Business as of the Closing Date (the "Updated Asset and Liabilities
List").
(g) Termination of Permitted Liens and All Other Encumbrances. The
Seller will deliver fully executed releases, termination statements and other
documents as may be necessary to provide reasonable evidence that the Permitted
Liens and any and all liens, security interests, mortgages, pledges,
encumbrances, or restrictions as reported on the Updated Disclosure Schedule
have been terminated.
(h) Other Documents. Such additional customary closing documents as
the Purchaser will reasonably request, including certificates executed by
appropriate officers of the Seller certifying as to the accuracy of the
representations and warranties of Seller as of the Closing Date in accordance
with Section 6.1(e), including an express statement that the Updated Disclosure
Schedule as delivered pursuant to Section 5.12 remains complete and accurate as
of the Closing Date, and fulfillment of all of the Seller's obligations under
this Agreement as of the Closing Date in accordance with Section 6.1(d).
7.3. Deliveries by the Purchaser.
On the Closing Date, the Purchaser will deliver to the Seller (or to the
Escrow Agent, into the Escrow) the following, in form and substance reasonably
satisfactory to the Seller and its counsel:
(a) Consideration. The Total Consideration as provided in Section 2.2.
36
(b) Escrow Agreement. A copy of the Escrow Agreement, duly executed by
the Purchaser and the Escrow Agent.
(c) Other Documents. Such additional customary closing documents,
information, and materials as the Seller will reasonably request, including
certificates executed by appropriate officers of the Purchaser certifying as to
the accuracy of the representations and warranties of the Purchaser as of the
Closing Date in accordance with Section 6.2(c) and fulfillment of all of the
Purchaser's obligations under this Agreement as of the Closing Date in
accordance with Section 6.2(b).
SECTION 8. TERMINATION.
8.1. Termination.
This Agreement may be terminated at any time prior to the Closing, whether
before or after the requisite approval of the shareholders of the Seller:
(a) by the mutual written consent of the Seller and the Purchaser;
(b) by either the Purchaser or the Seller if the shareholders of the
Seller will not have approved the sale of the Acquired Assets in accordance with
the Minnesota Business Corporation Act and the Seller's Articles of
Incorporation and Bylaws at the Seller Special Meeting;
(c) by either the Purchaser or the Seller if any Governmental Entity
will have issued an order, decree or ruling or taken other action restraining,
enjoining or otherwise prohibiting the purchase and sale of the Acquired Assets;
(d) (i) by the Purchaser if the Proxy Statement has not been mailed to
the shareholders of the Seller within ninety (90) days after the date of this
Agreement or (ii) by either the Purchaser or the Seller if the sale of the
Acquired Assets has not been consummated within one hundred twenty (120) days
after the date of this Agreement, provided, however, that no party will be
entitled to terminate this Agreement pursuant to this clause (d) if such party
is in material breach of this Agreement; or
(e) by the Purchaser if the Seller (i) is unable to pay its debts as
they become due, (ii) ceases wholly, or substantially in the reasonable and good
faith judgment of the Purchaser, to carry on the Intermittent Testing Business,
(iii) applies or petitions for bankruptcy, corporate re-organization,
composition, administration, examination, arrangement or any other procedure
similar to any of the foregoing under the law of any applicable jurisdiction,
(iv) applies for or consents to the appointment of a liquidator, receiver,
administrator, examiner, trustee or similar officer of it or of all or a
37
material part of its assets, rights or revenues, or (v) suffers the seizure,
confiscation or condemnation of all or substantially all of the Acquired Assets
and/or the Intermittent Testing Business.
8.2. Termination Fee.
In the event that this Agreement is terminated by the Purchaser or the
Seller pursuant to Sections 8.1(b) or (d), and the Seller enters into a
Prohibited Transaction within one hundred eighty (180) days after such
termination, the Seller will promptly, but in no event later than two (2) days
after the closing of any agreements to effect the Prohibited Transaction, pay
the Purchaser a fee equal to $500,000, in immediately available funds.
8.3. Rights on Termination.
In the event of termination of this Agreement by either the Purchaser or
the Seller as provided in Section 8.1, this Agreement will become void and there
will be no liability on the part of either Purchaser or Seller, or their
respective shareholders, officers, or directors, except that Sections 5.9, 5.11,
8.2, 11.1 and 11.5 hereof will survive indefinitely, and except with respect to
willful breaches of this Agreement prior to the time of such termination.
8.4. Specific Performance.
The parties recognize that if any party breaches this Agreement and
refuses to perform under the provisions of this Agreement, monetary damages
alone would not be adequate to compensate the other parties for their injury.
Each party will therefore be entitled, in addition to any other remedies that
may be available, including money damages, to obtain specific performance
(without necessity of posting bond) of the terms of this Agreement. If any
action is brought by any party to enforce this Agreement, the other parties will
waive the defense that there is an adequate remedy at law.
8.5. Attorneys' Fees.
In the event of a default by any party that results in a lawsuit or other
proceeding for any remedy available under this Agreement, the prevailing party
will be entitled to reimbursement from the other party of its reasonable legal
fees and expenses (whether incurred in arbitration, at trial, or on appeal).
SECTION 9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; CERTAIN
REMEDIES.
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9.1. Representations and Warranties.
Without prejudice to representations and warranties in other agreements
delivered hereunder, all representations and warranties contained in this
Agreement will be deemed continuing representations and warranties and will
survive the Closing Date for a period of two hundred seventy (270) days
following the Closing Date.
9.2. Indemnification by the Seller.
The Seller hereby agrees to indemnify and hold harmless the Purchaser from
and against, and to reimburse the Purchaser for, any and all losses,
liabilities, and damages (including punitive and exemplary damages and fines or
penalties and any interest thereon), costs and expenses (including reasonable
fees and disbursements of counsel and expenses of investigation and defense),
claims, or other obligations of any nature (collectively, "Losses") that result
from:
(a) Any inaccuracy in or breach of any representation and warranty, or
any breach or nonfulfillment of any covenant or agreement of the Seller
contained in this Agreement or in any certificate, document, or instrument
delivered to the Purchaser under this Agreement;
(b) Any failure by the Seller to terminate the distribution agreements
with Distributors set forth on Schedule 3.24(a) pursuant to Section 5.10;
(c) The operation or ownership of the Intermittent Testing Business
and the Acquired Assets prior to the Closing including any liabilities arising
under the Licenses or the Assumed Contracts that relate to events occurring
prior the Closing Date, except to the extent any of the foregoing constitute
Assumed Liabilities.
The Seller will be liable to the Purchaser for any Losses (i) only if the
Purchaser delivers to the Seller written notice, setting forth in reasonable
detail the identity, nature and amount of Losses related to such claim or claims
on or prior to the 270/th/ day after the Closing Date and (ii) only if the
aggregate amount of all Losses exceeds $52,000, in which case the Seller will be
obligated to indemnify the Purchaser, it being understood that once such amount
is exceeded, the Purchaser will be entitled to receive the aggregate of all such
claims from the first dollar of Losses. Except for fraud, for which liability
will be unlimited, the Seller will not be required to pay the Purchaser for
aggregate Losses in excess of the Total Consideration. The amount of the Escrow
Consideration held by the Escrow Agent will be the initial source of funds for
the payment of Losses to the Purchaser.
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9.3. Indemnification by the Purchaser.
The Purchaser hereby agrees to indemnify and hold harmless the Seller from
and against, and to reimburse the Seller for, any and all Losses that result
from:
(a) Any inaccuracy in or breach of any representation and warranty, or
any breach or nonfulfillment of any covenant or agreement of the Purchaser
contained in this Agreement or in any certificate, document, or instrument
delivered to the Seller under this Agreement; and
(b) The operation or ownership of the Intermittent Testing Business
and the Acquired Assets from and after the Closing including any liabilities
arising under the Licenses or the Assumed Contracts that relate to events
occurring from and after the Closing Date, except to the extent such Losses
result from or arise from breach of a representation or warranty made by the
Seller or a breach of a covenant of the Seller contained in this Agreement.
The Purchaser will be liable to the Seller for any Losses (i) only if the
Seller delivers to the Purchaser written notice, setting forth in reasonable
detail the identity, nature and amount of Losses related to such claim or claims
on or prior to the 270/th/ day after the Closing Date and (ii) only if the
aggregate amount of all Losses exceeds $52,000, in which case the Purchaser will
be obligated to indemnify the Seller, it being understood that once such amount
is exceeded, the Seller will be entitled to receive the aggregate of all such
claims from the first dollar of Losses. Except for fraud, for which liability
will be unlimited, the Purchaser will not be required to pay the Seller for
aggregate Losses in excess of the Escrow Consideration (as such amount will be
adjusted pursuant to Section 5.6).
9.4. Procedure for Indemnification.
The procedure for indemnification will be as follows:
(a) The party claiming indemnification (the "Claimant") will promptly
give notice to the party from which indemnification is claimed (the
"Indemnifying Party") of any claim, whether between the parties or brought by a
third party, specifying in reasonable detail the factual basis for the claim. If
the claim relates to an action, suit, or proceeding filed by a third party
against Claimant, such notice will be given by Claimant within ten (10) Business
Days after written notice of such action, suit, or proceeding was given to
Claimant. The Claimant's failure to give such notice timely will not relieve the
Indemnifying Party from any liability that it otherwise may have to the Claimant
except to the extent the Indemnifying Party is actually prejudiced by such
failure.
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(b) With respect to claims solely between the parties, following
receipt of notice from the Claimant of a claim, the Indemnifying Party will have
thirty (30) days to make such investigation of the claim as the Indemnifying
Party deems necessary or desirable. For the purposes of such investigation, the
Claimant agrees to make available to the Indemnifying Party and its authorized
representatives the information relied upon by the Claimant to substantiate the
claim. If the Claimant and the Indemnifying Party agree at or prior to the
expiration of the thirty (30) day period (or any mutually agreed upon extension
thereof) to the validity and amount of such claim, the Indemnifying Party will
immediately pay to the Claimant the full amount of the claim. If the Claimant
and the Indemnifying Party do not agree within the thirty (30) day period (or
any mutually agreed upon extension thereof), the Claimant may seek appropriate
remedy at law or equity.
(c) With respect to any claim by a third party as to which the
Claimant is entitled to indemnification under this Agreement, the Indemnifying
Party will have the right at its own expense, to participate in or assume
control of the defense of such claim (subject to Section 9.4(d)), and the
Claimant will cooperate fully with the Indemnifying Party, subject to
reimbursement for actual out-of-pocket expenses incurred by the Claimant as the
result of a request by the Indemnifying Party. If the Indemnifying Party elects
to assume control of the defense of any third-party claim, the Claimant will
have the right to participate in the defense of such claim at its own expense
(except that the Claimant will have the right to participate in the defense of
such claim at the Indemnifying Party's expense if (i) the Claimant has been
advised by its counsel that use of the same counsel to represent both the
Indemnifying Party and the Claimant would present a conflict of interest, which
will be deemed to include any case where there may be a legal defense or claim
available to the Claimant that is inconsistent with those available to the
Indemnifying Party, or (ii) the Indemnifying Party fails vigorously to defend or
prosecute such claim within a reasonable time). If the Indemnifying Party does
not elect to assume control or otherwise participate in the defense of any
third-party claim, the Indemnifying Party will be bound by the results obtained
by the Claimant with respect to such claim.
(d) The Indemnifying Party may not control the defense of any claim,
without the written consent of the Claimant, if (i) the Claimant has been
advised by its counsel that use of the same counsel to represent both the
Indemnifying Party and the Claimant would present a conflict of interest, or
(ii) the claim involves any material risk of the sale, forfeiture, or loss of,
or the creation of any lien (other than a judgment lien) on, any material
property of the Claimant or could entail a risk of criminal liability to the
Claimant.
41
(e) Indemnification of Losses under this Agreement will be net of any
insurance proceeds actually paid to the Claimant with respect to the event
giving rise to such Loss, but no Claimant will have any obligation under this
Agreement to make any claim under any insurance policy that may be applicable to
such event.
(f) After the Closing, the rights set forth in this Section 9 will be
each party's sole and exclusive remedies against the other party hereto for
misrepresentations or breaches of covenants contained in this Agreement.
Notwithstanding the foregoing, nothing herein will prevent either of the parties
from bringing an action based upon allegations of fraud or other intentional
breach of an obligation of or with respect to either party in connection with
this Agreement. In the event such action is brought, the prevailing party's
attorneys' fees and costs will be paid by the nonprevailing party.
(g) Any indemnification payable under this Section 9 will be, to the
extent permitted by law, an adjustment to purchase price.
SECTION 10. TAXES AND EMPLOYMENT MATTERS
10.1. Transfer Taxes.
The Seller will pay all Transfer Taxes arising out of the transfer of the
Acquired Assets to the Purchaser and any Transfer Taxes to effect any recording
or filing with respect thereto. For purposes of this Section, "Transfer Tax" or
"Transfer Taxes" means any federal, state, county, local, foreign and other
sales, use, transfer, conveyance, gross receipts, documentary transfer,
recording or other similar tax, fee or charge imposed upon the sale, transfer or
assignment of property or any interest therein or the recording thereof, and any
penalty, addition to tax or interest with respect thereto, but such term will
not include any tax on, based upon or measured by, the net income, gains or
profits from such sale, transfer or assignment of the property or any interest
therein.
10.2. Employees.
The Purchaser will offer employment to the Continuing Employees listed on
Schedule 10.2. The employment by the Seller of all Continuing Employees who are
employed at the Roseville Facility on the Closing Date will be terminated by the
Seller effective immediately prior to the Effective Time. The Seller will have
no responsibility for any employee benefits for Continuing Employees or other
former employees of the Seller employed by the Purchaser with respect to events
occurring or services provided after the Effective Time, and the Purchaser will
assume, and indemnify and hold harmless the Seller and its affiliates from and
against, any and all Losses with respect to such events or services, except as
provided on Schedule 3.11. The Purchaser will have no responsibility for any
liabilities for existing or former employees of the Seller, including
42
but not limited to those who are subsequently employed by the Purchaser, with
respect to events occurring or services provided on or before the Effective
Time, and for the avoidance of doubt, the Purchaser will not be assuming or
taking assignment of any of the liabilities, plans or policies set forth in
Schedule 3.11, and the Seller will assume, and indemnify and hold harmless the
Purchaser from and against, any and all Losses with respect to all such matters.
The Purchaser has no present intention of taking any action for which the Seller
would be required to give notice to employees under the Worker Adjustment and
Retraining Act of 1988.
10.3. Survival of Obligations.
The obligations of the parties set forth in this Section 10 will survive
the Closing, will be unconditional and absolute and will remain in effect
without limitation as to time.
10.4. Conflict.
In the event of a conflict between the provisions of this Section 10 and
any other provisions of this Agreement, the provisions of this Section 10 will
govern.
SECTION 11. MISCELLANEOUS
11.1. Fees and Expenses.
Except as otherwise provided in this Agreement, each party will pay its
own expenses incurred in connection with the authorization, preparation,
execution, and performance of this Agreement, including all fees and expenses of
counsel, accountants, agents, and representatives, and each party will be
responsible for all fees or commissions payable to any finder, broker, advisor,
or similar Person retained by or on behalf of such party.
11.2. Notices.
All notices, demands, and requests required or permitted to be given under
the provisions of this Agreement will be (a) in writing, (b) delivered by
personal delivery, or sent by commercial delivery service or registered or
certified mail, return receipt requested, or sent by facsimile transmission or
electronic mail (email), (c) deemed to have been given on the date of personal
delivery or the date set forth in the records of the delivery service or on the
return receipt or by facsimile confirmation or email confirmation, and (d)
addressed as follows:
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If to the Seller to: Diametrics Medical, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
With a copy to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
Suite 1500
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇.▇▇▇@▇▇▇▇▇▇.▇▇▇
If to the Purchaser to: International Technidyne Corporation
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
With copies to: Thoratec Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ White & ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
or to any other or additional Persons and addresses as the parties may from time
to time designate in a writing delivered in accordance with this Section 11.2.
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11.3. Benefit and Binding Effect.
No party may assign this Agreement without the prior written consent of
each other party hereto, except that, any party may assign any or all of its
rights under this Agreement to any Affiliate (which assignment will not relieve
the assigning party of any obligations or liabilities under this Agreement).
This Agreement will be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns.
11.4. Further Assurances.
Except as otherwise specifically provided for in this Agreement, the
parties will take any actions and execute any other documents that may be
necessary or desirable to the implementation and consummation of this Agreement.
11.5. GOVERNING LAW.
THIS AGREEMENT WILL BE GOVERNED, CONSTRUED, AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CHOICE OF LAW
PROVISIONS THEREOF.
11.6. Headings.
The headings in this Agreement are included for ease of reference only and
will not control or affect the meaning or construction of the provisions of this
Agreement.
11.7. Entire Agreement.
This Agreement, the schedules hereto, and all documents, certificates, and
other documents to be delivered by the parties pursuant hereto, collectively
represent the entire understanding and agreement between the Seller and the
Purchaser with respect to the subject matter of this Agreement. This Agreement
supersedes all prior negotiations among the parties and the other agreements
contemplated therein (other than the Confidentiality Agreement) and cannot be
amended, supplemented, or changed except by an agreement in writing that makes
specific reference to this Agreement and that is signed by each party against
which enforcement of any such amendment, supplement, or modification is sought.
This document will not constitute or otherwise evidence an agreement among the
parties hereto relating to the subject matter hereof unless and until it has
been executed and delivered by the parties hereto.
45
11.8. Severability.
Whenever possible, each provision of this Agreement will be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be prohibited by or invalid under
applicable law, such provision will be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
11.9. Waiver of Compliance; Consents.
Except as otherwise provided in this Agreement, any failure of any of the
parties to comply with any obligation, representation, warranty, covenant,
agreement, or condition herein may be waived by the party entitled to the
benefits thereof only by a written instrument signed by the party granting such
waiver, but such waiver or failure to insist upon strict compliance with such
obligation, representation, warranty, covenant, agreement, or condition will not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or on behalf of
any party hereto, such consent will be given in writing in a manner consistent
with the requirements for a waiver of compliance as set forth in this Section
11.9.
11.10. Counting of Time.
Unless otherwise specified, computations of calendar days or Business
Days pursuant to this Agreement will commence on the first calendar day or
Business Day, as applicable, following the event which gives rise the
contractual obligation.
11.11. Counterparts.
This Agreement may be signed in counterparts with the same effect as if
the signature on each counterpart were upon the same instrument.
46
IN WITNESS WHEREOF, this Agreement has been executed by the parties as
of the date first written above.
DIAMETRICS MEDICAL, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Title: President and CEO
---------------------------
Date Signed: July 17, 2003
---------------------
INTERNATIONAL TECHNIDYNE CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Title: President
---------------------------
Date Signed: July 17, 2003
---------------------
Exhibit A
FORM OF
VOTING AGREEMENT
This VOTING AGREEMENT ("Agreement") is made and entered into as of July
___, 2003 by and between International Technidyne Corporation, a Delaware
corporation ("ITC"), and the person whose name appears on the signature page
hereto as a shareholder of Diametrics Medical, Inc., a Minnesota corporation
(the "Company"), acting in his capacity as a shareholder of the Company and not
in any other capacity ("Shareholder").
A. Concurrently with the execution of this Agreement, the Company and ITC
are entering into an Asset Purchase Agreement of even date herewith (the
"Agreement"), pursuant to which the parties thereto have agreed, upon the terms
and subject to the conditions set forth therein, to sell certain assets of the
Company to ITC (the "Sale of Assets"). Capitalized terms used and not otherwise
defined herein, and defined in the Asset Purchase Agreement, shall have the
respective meanings ascribed to them in the Asset Purchase Agreement.
B. As of the date hereof, Shareholder is a record holder of the number of
shares of the Common Stock, par value $0.01 per share, of the Company ("Company
Common Stock") set forth on the signature page hereto.
C. As inducement and a condition to entering into the Asset Purchase
Agreement, the Company has required Shareholder to agree, and Shareholder has
agreed, to enter into this Agreement.
The parties agree as follows:
1. Certain Definitions. For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities means having "beneficial ownership" of such securities as determined
pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Without duplicative counting of the same securities by the
same holder, securities Beneficially Owned by a person include securities
Beneficially Owned by all other persons with whom such person would constitute a
"group" within the meaning of Section 13(d) of the Exchange Act with respect to
the securities of the same issuer.
(b) "Existing Shares" means all issued and outstanding shares of Company
Common Stock owned of record or Beneficially Owned by Shareholder and over which
Shareholder has voting control as of the record date for persons entitled to
receive notice of, and to vote at, a meeting of the shareholders of the Company
called for purposes of voting on the Asset Purchase Agreement and the Sale of
Assets.
A-1
2. Representations and Warranties of Shareholder. Shareholder represents
and warrants to ITC as follows:
(a) On the date hereof, Shareholder is a record holder of the shares of
Company Common Stock set forth on the signature page hereto. On the date hereof,
such shares constitute all of the shares of Company Common Stock owned of record
by Shareholder. On the date hereof, there are no outstanding options or other
rights to acquire from Shareholder, or obligations of Shareholder to sell, any
shares of Company Common Stock.
(b) Shareholder has the legal capacity, power and authority to enter
into and perform all of Shareholder's obligations under this Agreement. This
Agreement has been duly and validly executed and delivered by Shareholder and
constitutes a valid and binding agreement of Shareholder, enforceable against
Shareholder in accordance with its terms, except to the extent that its
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights generally or by general equitable principles.
(c) Except for any applicable filings under federal and state
securities laws, no filing with, and no permit, authorization, consent or
approval of, any Governmental Entity is required to be made or obtained by
Shareholder for the execution of this Agreement by Shareholder or compliance by
Shareholder with the provisions hereof. Neither the execution and delivery of
this Agreement by Shareholder nor the compliance by Shareholder with the
provisions hereof will (i) result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default (or give rise to any
third party right of termination, cancellation, acceleration, redemption or
purchase) under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Shareholder is a party or by which Shareholder
or any of Shareholder's properties or assets is bound, or (ii) violate any
order, writ, injunction, decree, judgment, statute, rule or regulation
applicable to Shareholder or any of Shareholder's properties or assets.
(d) Except as permitted by this Agreement, the shares of Company Common
Stock set forth on the signature page hereto are held by Shareholder, or by a
nominee or custodian for the benefit of Shareholder, free and clear of all
mortgages, claims, charges, liens, security interests, pledges, options,
proxies, voting trusts or agreements ("Encumbrances"), except for any such
Encumbrances arising hereunder.
(e) Shareholder understands and acknowledges that ITC is entering into
the Asset Purchase Agreement in reliance upon Shareholder's concurrent execution
and delivery of this Agreement.
3. Representations And Warranties Of ITC. ITC hereby represents and
warrants to Shareholder as follows:
(a) ITC has the corporate power and authority to enter into and perform
all of its obligations under this Agreement. This Agreement has been duly and
validly executed and
A-2
delivered by ITC and constitutes a valid and binding agreement of ITC,
enforceable against ITC in accordance with its terms, except to the extent that
its enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights generally or by general equitable principles.
4. Disclosure. Shareholder hereby agrees to permit ITC to publish and
disclose in any press release or other disclosure document which ITC reasonably
determines to be necessary or desirable in connection with the Sale of Assets
and any transactions related thereto, Shareholder's identity and ownership of
Company Common Stock and the nature of Shareholder's commitments, arrangements
and understandings under this Agreement, provided that any public announcement
or disclosure is made in accordance with the terms of the Asset Purchase
Agreement.
5. Voting Of Company Common Stock. Shareholder hereby irrevocably and
unconditionally agrees that, during the period commencing on the date hereof and
continuing until the first to occur of the Effective Time or termination of this
Agreement, (a) Shareholder will appear (in person or by proxy) at any meeting
(whether annual or special and whether or not an adjourned or postponed meeting)
of the holders of Company Common Stock, however called, or otherwise cause the
Existing Shares to be counted as present thereat for purposes of establishing a
quorum, and (b) Shareholder will vote the Existing Shares (or will cause the
Existing Shares to be voted) in favor of the Sale of Assets.
6. Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use its reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable to effectuate the provisions by this
Agreement.
7. Termination. This Agreement shall terminate on the earliest to occur of:
(a) the termination of the Asset Purchase Agreement; (b) the agreement of the
parties hereto to terminate this Agreement; or (c) the consummation of the Sale
of Assets.
8. Miscellaneous.
(a) Subject to applicable law, this Agreement may be amended, modified
or supplemented only by written agreement of ITC and Shareholder at any time
prior to the Effective Time.
(b) Any failure of Shareholder, on the one hand, or ITC, on the other
hand, to comply with any obligation, covenant, agreement or condition herein may
be waived by ITC or Shareholder, respectively, only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure. Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance as set forth in this
Section 9(b).
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(c) All notices and other communications hereunder shall be in writing
and shall be delivered personally, by overnight courier or similar means or sent
by facsimile with written confirmation of receipt, to the parties at the
addresses specified below (or at such other address for a party as shall be
specified by like notice; provided that notices of a change of address shall be
effective only upon receipt thereof). Any such notice shall be effective upon
receipt, if personally delivered, or on the next business day following
transmittal, if sent by confirmed facsimile. Notices shall be delivered as
follows:
(1) if to ITC, to:
International Technidyne Corporation
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, President
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ White & ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
(2) If to Shareholder, at the address set forth on the
signature page: with a copy to:
▇▇▇▇▇▇ & Whitney LLP
Suite 1500
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(d) Neither this Agreement nor any right, interest or obligation
hereunder shall be assigned by either of the parties hereto without the prior
written consent of the other party. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement is not intended to confer any rights or
remedies hereunder upon any other person except the parties hereto.
(e) This Agreement shall be governed by the laws of the State of
Delaware without reference to principles of conflicts of law.
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(f) This Agreement may be executed 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.
(g) In case any one or more of the provisions contained in this
Agreement should be finally determined to be invalid, illegal or unenforceable
in any respect against a party hereto, it shall be adjusted if possible to
effect the intent of the parties. In any event, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby, and such invalidity, illegality or
unenforceability shall only apply as to such party in the specific jurisdiction
where such final determination shall have been made.
(h) The article and section headings contained in this Agreement are
solely for the purpose of reference and shall not in any way affect the meaning
or interpretation of this Agreement.
(i) This Agreement embodies the entire agreement and understanding of
the parties hereto in respect of the subject matter contained herein. There are
no representations, promises, warranties, covenants, or undertakings, other than
those expressly set forth or referred to herein and therein.
(j) Each of the parties hereto recognizes and acknowledges that a breach
by it of any covenants or agreements contained in this Agreement will cause the
other party to sustain damages for which it would not have an adequate remedy at
law for money damages. Therefore, in the event of any such breach, the aggrieved
party shall be entitled to the remedy of specific performance of such covenants
and agreements and injunctive and other equitable relief in addition to any
other remedy to which it may be entitled, at law or in equity.
(k) All costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expenses.
(l) From time to time, at any other party's reasonable request and
without further consideration, each party hereto shall execute and deliver such
additional documents and take all such further lawful action as may be necessary
or reasonably desirable to effectuate the provisions of this Agreement.
(m) Notwithstanding any other provision of this Agreement, nothing
contained in this Agreement shall bind or obligate Shareholder to act or refrain
from acting in any capacity other than as a shareholder of the Company, it being
expressly understood and agreed that this Agreement shall not bind or obligate
Shareholder in his capacity as a director or officer of the Company.
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IN WITNESS WHEREOF, the parties hereto have signed this Voting Agreement,
in the case of ITC by its duly authorized officer, as of the date first above
written.
INTERNATIONAL TECHNIDYNE
CORPORATION
----------------------------------------
Shareholder Name
By:
---------------------------------
Print Name:
-------------------------
Signature: Print Title:
------------------------------- ------------------------
NUMBER OF SHARES
OWNED OF RECORD BY
SHAREHOLDER:
----------------------------
ADDRESS OF SHAREHOLDER:
----------------------------------------
----------------------------------------
Exhibit B
FORM OF
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of ______ 2003, (the "Agreement") by and
among International Technidyne Corporation, a Delaware corporation (the
"Purchaser"), Diametrics Medical, Inc., a Minnesota corporation (the "Seller")
and Deutsche Bank Trust Company Americas, a New York banking corporation, a
wholly-owned subsidiary of Deutsche Bank AG, as escrow agent (the "Escrow
Agent").
WHEREAS, the Seller and the Purchaser have entered into an Asset
Purchase Agreement (the "Asset Purchase Agreement"), dated as of July __, 2003,
pursuant to which the Purchaser will acquire certain assets and assume certain
liabilities of the Seller to the extent provided therein.
WHEREAS, the Asset Purchase Agreement provides, among other things,
that a portion of the purchase price will be held in an escrow account pending a
final adjustment, if any, in the purchase price payable by the Purchaser to the
Seller for the assets acquired, and to provide a source of payment to satisfy
the Seller's obligation to indemnify the Purchaser as provided therein (the
"Escrow Fund Obligations").
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged by each of the parties hereto, the
parties hereto, intending to be legally bound, do hereby agree as follows:
Section 1. Appointment of Escrow Agent. The Purchaser and the Seller
hereby appoint Deutsche Bank Trust Company Americas as escrow agent in
accordance with the terms and conditions set forth herein, and the Escrow Agent
hereby accepts such appointment.
Section 2. Deposit into the Escrow Property. The Purchaser,
simultaneously with the execution and delivery of this Agreement, has caused to
be deposited with the Escrow Agent the sum of $780,000 in immediately available
funds (the "Escrowed Proceeds"), and which Escrowed Proceeds shall be held by
the Escrow Agent upon the terms and conditions hereinafter set forth. The
foregoing property and/or funds, plus all interest, dividends and other
distributions and payments thereon (collectively, the "Distributions") received
by the Escrow Agent, less any property and/or funds distributed or paid in
accordance with this Agreement, are collectively referred to herein as the
"Escrow Property". The Escrow Agent shall have no duty to solicit the Escrow
Property.
Section 3. Investment of the Escrow Property. During the term of this
Agreement, the Escrow Agent shall invest and reinvest the Escrow Property in any
of the following investments, in each case at the written direction of an
Authorized Person (as hereinafter defined) of the Seller:
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(1) Money Market or Mutual Funds registered under the Investment Act of
1940;
(2) commercial paper (having original maturities of not more than 270
days) of any corporation which on the date of acquisition has been rated by any
nationally recognized statistical rating organization in its highest short-term
unsecured debt rating category available.
(3) direct obligations of, or obligations fully guaranteed as to
principal and interest by, the United States or any agency or instrumentality
thereof, provided such obligations are backed by the full faith and credit of
the United States; or
(4) time deposits.
The Escrow Agent shall have no obligation to invest or reinvest the Escrow
Property if deposited with the Escrow Agent after 11:00 a.m. (E.S.T.) on such
day of deposit. Instructions received after 11:00 a.m.(E.S.T.) will be treated
as if received on the following business day. The Escrow Agent shall have no
responsibility for any investment losses resulting from the investment,
reinvestment or liquidation of the Escrow Property. Any interest or other income
received on such investment and reinvestment of the Escrow Property shall become
part of the Escrow Property and any losses incurred on such investment and
reinvestment of the Escrow Property shall be debited against the Escrow
Property. If a selection is not made and a written direction not given to the
Escrow Agent, the Escrow Property shall remain uninvested with no liability for
interest therein. It is agreed and understood that the entity serving as Escrow
Agent may earn fees associated with the investments outlined above in accordance
with the terms of such investments. Notwithstanding the foregoing, the Escrow
Agent shall have the power to sell or liquidate the foregoing investments
whenever the Escrow Agent shall be required to release all or any portion of the
Escrow Property pursuant to Section 4 hereof. In no event shall the Escrow Agent
be deemed an investment manager or adviser in respect of any selection of
investments hereunder. It is understood and agreed that the Escrow Agent or its
affiliates are permitted to receive additional compensation that could be deemed
to be in the Escrow Agent's economic self-interest for (1) serving as investment
adviser, administrator, shareholder servicing agent, custodian or sub-custodian
with respect to certain of the investments, (2) using affiliates to effect
transactions in certain investments and (3) effecting transactions in
investments.
Section 4. Purpose; Term. This Agreement has been executed and the
deposit of the Escrow Proceeds hereunder shall be made pursuant to Section 2.5
of the Asset Purchase Agreement. The deposit of the Escrow Proceeds has been
made for the purpose of funding and securing, to the extent of the Escrow
Proceeds, the Escrow Fund Obligations until the close of business on the one
hundred eightieth (180th) day after the date hereof (the "Termination Date").
Section 5. Procedures for Disbursement of the Escrow Amount to
Purchaser. At any time prior to the Termination Date, whenever there shall be
delivered to the Escrow Agent (i) a certificate signed by the Purchaser and the
Seller certifying, or (ii) a certified copy of a final, non-appealable judgment
of a court of competent jurisdiction determining, that an amount is due to
Purchaser pursuant to Section 2.3, Section 5.6 or Section 9.2 of the Asset
Purchase Agreement, the Escrow Agent shall, to the extent that the amount of the
Escrow Property shall be
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sufficient for such purpose, promptly (and in no event later than five Business
Days following receipt of either document referred to in clauses (i) and (ii) of
this Section 5) cause a portion of the Escrow Property equal to such amount (but
in no event greater than $780,000, less the sum of all amounts previously
distributed to Purchaser under this Agreement) to be delivered to Purchaser.
Section 6. Termination of Escrow. At the close of business on the
Termination Date, the Escrow Agent shall deliver the balance of any Escrow
Property, together with interest accrued thereon, to the Seller; provided,
however, that there shall be deducted from the amount to be delivered to the
Seller pursuant to this Section 6 an amount equal to the Escrow Funds Reserved
Amount (as defined in Section 7 hereof) if and only if the notification relating
to such Escrow Funds Reserved Amount required by Section 7 has been delivered to
the Escrow Agent and the Seller prior to the Termination Date. This Agreement
shall automatically terminate if and when the Escrow Funds Reserved Amount shall
have been distributed by the Escrow Agent in accordance with the terms of this
Agreement.
Section 7. Retention and Disbursement of Escrow Amount Following the
Termination Date.
(a) In the event that Purchaser shall have determined in good faith that it
intends to pursue an indemnification claim pursuant to Section 9.2 of the Asset
Purchase Agreement, then Purchaser shall, at any time prior to the Termination
Date, notify concurrently the Escrow Agent and the Seller to such effect in
writing, which written notice shall describe briefly the nature of each such
claim, the facts and circumstances which give rise to each such claim and the
estimated amount, determined solely by Purchaser in its good faith judgment, of
the potential liability with respect to each such claim, and the provisions of
the Asset Purchase Agreement or this Agreement on which each such claim is
based. The Escrow Agent shall have no obligation to verify that delivery of such
notice has been made by the Purchaser to the Seller, but agrees to forward to
the Seller, promptly, by telecopier and overnight mail, a copy of the notice
received by it. If such notice is delivered to the Escrow Agent on or prior to
the Termination Date, an amount of the Escrow Property equal to one hundred
percent (100%) of the total of the amounts claimed (but in no event greater than
$780,000, less the sum of all amounts, other than interest, previously
distributed to the Purchaser or the Seller under this Agreement) shall be set
aside and retained (to the extent available in the then remaining Escrow
Property) by the Escrow Agent as a reserve to cover such claim or claims (such
amounts so set aside and reserved, as reduced from time to time pursuant to the
provisions of this Section 7, or of Section 5 hereof, being herein called the
"Escrow Funds Reserved Amount").
(b) Following the Termination Date, the Escrow Agent agrees to hold and
invest such Escrow Funds Reserved Amount, together with accrued interest
thereon, in the same manner as the Escrow Property hereunder. The Escrow Funds
Reserved Amount shall be disbursed by the Escrow Agent in the same manner as the
Escrow Property is to be disbursed pursuant to Section 5, but only to cover the
claims identified in the notice sent pursuant to Section 7(a), that led to the
establishment of such Escrow Funds Reserved Amount. In addition, if at any time
the Purchaser determines in good faith that it will not pursue or, under the
terms of the Asset Purchase Agreement, cannot pursue any claim for
indemnification to which all or any portion of
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the Escrow Funds Reserved Amount relates, or a court of competent jurisdiction
by final, non-appealable judgment so finds, Purchaser shall direct the Escrow
Agent to disburse all or such portion of the Escrow Funds Reserved Amount,
together with accrued interest thereon, to the Seller.
Section 8. Compensation of Escrow Agent. The Escrow Agent shall be
entitled to payment from the Purchaser for customary fees and expenses for all
services rendered by it hereunder as separately agreed to in writing between the
Purchaser and the Escrow Agent (as such fees may be adjusted from time to time).
The Purchaser shall reimburse the Escrow Agent on demand for all loss,
liability, damage, disbursements, advances or expenses paid or incurred by it in
the administration of its duties hereunder, including, but not limited to, all
counsel, advisors' and agents' fees and disbursements and all taxes or other
governmental charges. At all times, the Escrow Agent will have a right of set
off and first lien on the funds in the Escrow Property for all such loss,
liability, damage or expenses. Such expenses shall be paid from the Escrow
Property to the extent not otherwise paid hereunder. The obligations contained
in this Section 8 shall be the sole obligation of the Purchaser with respect to
the payment of customary fees and expenses, and shall be joint and several
obligations of the Purchaser and the Seller with respect to the all such loss,
liability, damage or expenses, and shall survive the termination of this Escrow
Agreement and the resignation or removal of the Escrow Agent.
Section 9. Resignation of Escrow Agent. The Escrow Agent may resign and
be discharged from its duties hereunder at any time by giving thirty (30)
calendar days' prior written notice of such resignation to the Purchaser and the
Seller. The Purchaser and the Seller may remove the Escrow Agent at any time by
giving thirty (30) calendar days' prior written notice to the Escrow Agent. Upon
such notice, a successor escrow agent shall be appointed by the Purchaser and
the Seller, who shall provide written notice of such to the resigning Escrow
Agent. Such successor escrow agent shall become the escrow agent hereunder upon
the resignation or removal date specified in such notice. If the Purchaser and
the Seller are unable to agree upon a successor escrow agent within thirty (30)
days after such notice, the Escrow Agent may apply to a court of competent
jurisdiction for the appointment of a successor escrow agent or for other
appropriate relief. The costs and expenses (including its attorneys' fees and
expenses) incurred by the Escrow Agent in connection with such proceeding shall
be paid by the Purchaser. Upon receipt of the identity of the successor escrow
agent, the Escrow Agent shall deliver the Escrow Property then held hereunder to
the successor Escrow Agent, less the Escrow Agent's fees, costs and expenses or
other obligations owed to the Escrow Agent to be paid from any interest earned
in respect of the Escrow Property, or hold any interest earned in respect of the
Escrow Property (or any portion thereof), pending distribution, until all such
fees, costs and expenses or other obligations are paid. Upon its resignation and
delivery of the Escrow Property as set forth in this Section 9, the Escrow Agent
shall be discharged of and from any and all further obligations arising in
connection with the Escrow Property or this Agreement.
Section 10. Indemnification of Escrow Agent. The Purchaser and the
Seller shall jointly and severally indemnify, defend and hold harmless the
Escrow Agent and its officers, directors, employees, representatives and agents,
from and against and reimburse the Escrow Agent for any and all claims,
expenses, obligations, liabilities, losses, damages, injuries (to person,
property, or natural resources), penalties, stamp or other similar taxes,
actions, suits, judgments,
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reasonable costs and expenses (including reasonable attorney's fees and
expenses) of whatever kind or nature regardless of their merit, demanded,
asserted or claimed against the Escrow Agent directly or indirectly relating to,
or arising from, claims against the Escrow Agent by reason of its participation
in the transactions contemplated hereby, including without limitation all
reasonable costs required to be associated with claims for damages to persons or
property, and reasonable attorneys' and consultants' fees and expenses and court
costs except to the extent caused by the Escrow Agent's gross negligence or
willful misconduct. The provisions of this Section 10 shall survive the
termination of this Agreement or the earlier resignation or removal of the
Escrow Agent.
Section 11. The Escrow Agent.
(a) The duties, responsibilities and obligations of Escrow Agent shall
be limited to those expressly set forth herein and no duties, responsibilities
or obligations shall be inferred or implied against the Escrow Agent. The Escrow
Agent shall not be subject to, nor required to comply with, any other agreement
to which the Purchaser or the Seller is a party, even though reference thereto
may be made herein, or to comply with any direction or instruction (other than
those contained herein or delivered in accordance with this Escrow Agreement)
from the Purchaser or the Seller or an entity acting on its behalf. The Escrow
Agent shall not be required to expend or risk any of its own funds or otherwise
incur any liability, financial or otherwise, in the performance of any of its
duties hereunder.
(b) The Escrow Property shall be held by the Escrow Agent either
directly or through the Federal Reserve/Treasury Book-Entry System for United
States and federal agency securities (the "Book-Entry System"), The Depository
Trust Company, a clearing agency registered with the Securities and Exchange
Commission ("DTC"), or through any other clearing agency or similar system (a
"Clearing Agency"). The Escrow Agent shall have no responsibility and shall not
be liable for ascertaining or acting upon any calls, conversions, exchange
offers, tenders, interest rates changes, or similar matters relating to
securities held at DTC or with any Clearing Agency unless the Escrow Agent shall
have received actual and timely notice of the same, nor shall the Escrow Agent
have any responsibility or liability for the actions or omissions to act of the
Book-Entry System, DTC or any Clearing Agency.
(c) If at any time the Escrow Agent is served with any judicial or
administrative order, judgment, decree, writ or other form of judicial or
administrative process which in any way affects the Escrow Property (including
but not limited to orders of attachment or garnishment or other forms of levies
or injunctions or stays relating to the transfer of the Escrow Property), the
Escrow Agent is authorized to comply therewith in any manner it or legal
counsel of its own choosing deems appropriate; and if the Escrow Agent complies
with any such judicial or administrative order, judgment, decree, writ or other
form of judicial or administrative process, Escrow Agent shall not be liable to
any of the parties hereto or to any other person or entity even though such
order, judgment, decree, writ or process may be subsequently modified or vacated
or otherwise determined to have been without legal force or effect.
(d) The Escrow Agent shall not be liable for any action taken or
omitted or for any loss or injury resulting from its actions or its performance
or lack of performance of its duties
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hereunder in the absence of gross negligence or willful misconduct on its part.
In no event shall the Escrow Agent be liable (i) for acting in accordance with
or conclusively relying upon any instruction, notice, demand, certificate or
document from the Purchaser and the Seller or any entity acting on behalf of the
Purchaser or the Seller, (ii) for any indirect, consequential, punitive or
special damages, regardless of the form of action and whether or not any such
damages were foreseeable or contemplated, (iii) for the acts or omissions of its
nominees, correspondents, designees, agents, subagents or subcustodians, (iv)
for the investment or reinvestment of any cash held by it hereunder, in each
case in good faith, in accordance with the terms hereof, including without
limitation any liability for any delays (not resulting from its gross negligence
or willful misconduct) in the investment or reinvestment of the Escrow Property,
or any loss of interest or income incident to any such delays, or (v) for an
amount in excess of the value of the Escrow Property, valued as of the date of
deposit, but only to the extent of direct money damages.
(e) The Escrow Agent may consult with legal counsel of its own
choosing, at the expense of the Purchaser and the Seller, as to any matter
relating to this Escrow Agreement, and the Escrow Agent shall not incur any
liability in acting in good faith in accordance with any advice from such
counsel.
(f) The Escrow Agent shall not incur any liability for not performing
any act or fulfilling any duty, obligation or responsibility hereunder by reason
of any occurrence beyond the control of the Escrow Agent (including but not
limited to any act or provision of any present or future law or regulation or
governmental authority, any act of God or war, or the unavailability of the
Federal Reserve Bank wire or facsimile or other wire or communication facility).
(g) The Escrow Agent shall be entitled to conclusively rely upon any
order, judgment, certification, demand, notice, instrument or other writing
delivered to it hereunder without being required to determine the authenticity
or the correctness of any fact stated therein or the propriety or validity or
the service thereof. The Escrow Agent may act in conclusive reliance upon any
instrument or signature believed by it to be genuine and may assume that any
person purporting to give receipt or advice to make any statement or execute any
document in connection with the provisions hereof has been duly authorized to do
so.
(h) The Escrow Agent shall not be responsible in any respect for the
form, execution, validity, value or genuineness of documents or securities
deposited hereunder, or for any description therein, or for the identity,
authority or rights of persons executing or delivering or purporting to execute
or deliver any such document, security or endorsement. The Escrow Agent shall
not be called upon to advise any party as to the wisdom in selling or retaining
or taking or refraining from any action with respect to any securities or other
property deposited hereunder.
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(i) The Escrow Agent shall not be under any duty to give the Escrow
Property held by it hereunder any greater degree of care than it gives its own
similar property and shall not be required to invest any funds held hereunder
except as directed in this Escrow Agreement. Uninvested funds held hereunder
shall not earn or accrue interest.
(j) At any time the Escrow Agent may request an instruction in writing
in English from the Purchaser and the Seller and may, at its own option, include
in such request the course of action it proposes to take and the date on which
it proposes to act, regarding any matter arising in connection with its duties
and obligations hereunder. The Escrow Agent shall not be liable for acting in
accordance with such a proposal on or after the date specified therein, provided
that the specified date shall be at least three (3) business days after the
Purchaser and the Seller receives the Escrow Agent's request for instructions
and its proposed course of action, and provided further that, prior to so
acting, the Escrow Agent has not received the written instructions requested.
(k) When the Escrow Agent acts on any information, instructions,
communications, (including, but not limited to, communications with respect to
the delivery of securities or the wire transfer of funds) sent by telex,
facsimile, email or other form of electronic or data transmission, the Escrow
Agent, absent gross negligence, shall not be responsible or liable in the event
such communication is not an authorized or authentic communication of the
Purchaser or the Seller or is not in the form the Purchaser and the Seller sent
or intended to send (whether due to fraud, distortion or otherwise). The
Purchaser and the Seller shall indemnify the Escrow Agent against any loss,
liability, claim or expense (including legal fees and expenses) it may incur
with its acting in accordance with any such communication.
(l) In the event of any ambiguity or uncertainty hereunder or in any
notice, instruction or other communication received by the Escrow Agent
hereunder, the Escrow Agent may, in its sole discretion, refrain from taking any
action other than to retain possession of the Escrow Property, unless the Escrow
Agent receives written instructions, signed by the Purchaser and the Seller,
which eliminates such ambiguity or uncertainty.
(m) In the event of any dispute between or conflicting claims among the
Purchaser and the Seller and any other person or entity with respect to any
Escrow Property, the Escrow Agent shall be entitled, in its sole discretion, to
refuse to comply with any and all claims, demands or instructions with respect
to such Escrow Property so long as such dispute or conflict shall continue, and
the Escrow Agent shall not be or become liable in any way to the Purchaser and
the Seller for failure or refusal to comply with such conflicting claims,
demands or instructions. The Escrow Agent shall be entitled to refuse to act
until, in its sole discretion, either (i) such conflicting or adverse claims or
demands shall have been determined by a final order, judgment or decree of a
court of competent jurisdiction, which order, judgment or decree is not subject
to appeal, or settled by agreement between the conflicting parties as evidenced
in a writing satisfactory to the Escrow Agent or (ii) the Escrow Agent shall
have received security or an indemnity satisfactory to it sufficient to hold it
harmless from and against any and all losses which it may incur by reason of so
acting. Any court order, judgment or decree shall be accompanied by a legal
opinion by counsel for the presenting party, satisfactory to the Escrow Agent,
to the effect that said order, judgment or decree represents a final
adjudication of the
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rights of the parties by a court of competent jurisdiction, and that the time
for appeal from such order, judgment or decree has expired without an appeal
having been filed with such court. The Escrow Agent shall act on such court
order and legal opinions without further question. The Escrow Agent may, in
addition, elect, in its sole discretion, to commence an interpleader action or
seek other judicial relief or orders as it may deem, in its sole discretion,
necessary. The costs and expenses (including reasonable attorneys' fees and
expenses) incurred in connection with such proceeding shall be paid by, and
shall be deemed a joint and several obligation of, the Purchaser and the Seller.
(n) The Escrow Agent shall have no responsibility for the contents of
any writing of the arbitrators or any third party contemplated herein as a means
to resolve disputes and may conclusively rely without any liability upon the
contents thereof.
(o) The Escrow Agent does not have any interest in the Escrow Property
deposited hereunder but is serving as escrow holder only and having only
possession thereof. The Seller shall pay or reimburse the Escrow Agent upon
request for any transfer taxes or other taxes relating to the Escrow Property
incurred in connection herewith and shall indemnify and hold harmless the Escrow
Agent from any amounts that it is obligated to pay in the way of such taxes. Any
payments of income from this Escrow Account shall be subject to withholding
regulations then in force with respect to United States taxes. The Purchaser and
the Seller will provide the Escrow Agent with appropriate W-9 forms for tax
identification number certifications, or W-8 forms for non-resident alien
certifications. This paragraph shall survive notwithstanding any termination of
this Escrow Agreement or the resignation or removal of the Escrow Agent.
(p) The Escrow Agent shall provide to the Purchaser and the Seller
monthly statements identifying transactions, transfers or holdings of Escrow
Property and each such statement shall be deemed to be correct and final upon
receipt thereof by the Purchaser and the Seller unless the Escrow Agent is
notified in writing, by the Purchaser and the Seller, to the contrary within
thirty (30) business days of the date of such statement.
Section 12. Miscellaneous. (a) This Agreement embodies the entire
agreement and understanding among the parties relating to the subject matter
hereof.
(b) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without reference to the principles of
conflict of laws.
(c) Each of the parties hereto hereby irrevocably consents to the
jurisdiction of the courts of the State of New York and of any Federal Court
located in the Borough of Manhattan in such State in connection with any action,
suit or other proceeding arising out of or relating to this Agreement or any
action taken or omitted hereunder, and waives any claim of forum non conveniens
and any objections as to laying of venue. Each party further waives personal
service of any summons, complaint or other process and agrees that service
thereof may be made by certified or registered mail directed to such person at
such person's address for purposes of notices hereunder.
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(d) All notices and other communications under this Agreement shall be
in writing in English and shall be deemed given when delivered personally, on
the next Business Day after delivery to a recognized overnight courier or mailed
first class (postage prepaid) or when sent by facsimile to the parties (which
facsimile copy shall be followed, in the case of notices or other communications
sent to the Escrow Agent, by delivery of the original) at the following
addresses (or to such other address as a party may have specified by notice
given to the other parties pursuant to this provision):
If to the Purchaser, to:
International Technidyne Corporation
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Thoratec Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ White & ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Seller, to:
Diametrics Medical, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇▇▇ & Whitney LLP
Suite 1500
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Escrow Agent, to:
Deutsche Bank Trust Company Americas
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Mail Stop: NYC60-2710
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Escrow Team
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(e) The headings of the Sections of this Agreement have been inserted
for convenience and shall not modify, define, limit or expand the express
provisions of this Agreement.
(f) This Agreement and the rights and obligations hereunder of parties
hereto may not be assigned except with the prior written consent of the other
parties hereto. This Agreement shall be binding upon and inure to the benefit of
each party's respective successors and permitted assigns. Except as expressly
provided herein, no other person shall acquire or have any rights under or by
virtue of this Agreement. This Agreement is intended to be for the sole benefit
of the parties hereto, and (subject to the provisions of this Section 10(f))
their respective successors and assigns, and none of the provisions of this
Agreement are intended to be, nor shall they be construed to be, for the benefit
of any third person.
(g) This Agreement may not be amended, supplemented or otherwise
modified without the prior written consent of the parties hereto.
(h) The Escrow Agent makes no representation as to the validity, value,
genuineness or the collectability of any security or other document or
instrument held by or delivered to it.
(i) The Escrow Agent shall not be called upon to advise any party as to
the wisdom in selling or retaining or taking or refraining from any action with
respect to any securities or other property deposited hereunder.
(j) Any payments of income from the Escrow Property shall be subject to
withholding regulations then in force with respect to United States taxes. Each
of the Purchaser and the Seller will provide the Escrow Agent with its Employer
Identification Number for use by the Escrow Agent if necessary. It is understood
that the Escrow Agent shall be
B-10
responsible for income reporting only with respect to income earned on the
Escrow Property and will not be responsible for any other reporting.
(k) This Agreement may be executed in two or more counterparts, each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
(l) The rights and remedies conferred upon the parties hereto shall be
cumulative, and the exercise or waiver of any such right or remedy shall not
preclude or inhibit the exercise of any additional rights or remedies. The
waiver of any right or remedy hereunder shall not preclude the subsequent
exercise of such right or remedy.
(m) The Purchaser and the Seller hereby represent and warrant (i) that
this Escrow Agreement has been duly authorized, executed and delivered on its
behalf and constitutes its legal, valid and binding obligation and (ii) that the
execution, delivery and performance of this Escrow Agreement by the Purchaser
and the Seller does not and will not violate any applicable law or regulation.
(n) The invalidity, illegality or unenforceability of any provision of
this Escrow Agreement shall in no way affect the validity, legality or
enforceability of any other provision; and if any provision is held to be
unenforceable as a matter of law, the other provisions shall not be affected
thereby and shall remain in full force and effect.
(o) No printed or other material in any language, including
prospectuses, notices, reports, and promotional material which mentions "Bankers
Trust Company", "Deutsche Bank Trust Company Americas" or "Deutsche Bank AG" or
any of their respective affiliates by name or the rights, powers, or duties of
the Escrow Agent under this Escrow Agreement shall be issued by any other
parties hereto, or on such party's behalf, without the prior written consent of
the Escrow Agent.
(p) For purposes of this Agreement, "Business Day" shall mean any day
that is not a Saturday or Sunday or a day on which banks are required or
permitted by law or executive order to be closed in the City of New York.
(q) For purposes of sending and receiving instructions or directions
hereunder, all such instructions or directions shall be, and the Escrow Agent
may conclusively rely upon such instructions or directions, delivered, and
executed by representatives of the Purchaser and Seller, as the case may be,
designated on Scheduled I attached hereto and made a part hereof (each such
representative, an "Authorized Person") which such designation shall include
specimen signatures of such representatives, as such Schedule I may be updated
from time to time.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
(Purchaser)
By
----------------------------------------
Name:
Title:
(Seller)
By
----------------------------------------
Name:
Title:
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Escrow Agent
By
----------------------------------------
Name:
Title:
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Schedule I
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Authorized Representatives
Name Title Specimen Signature
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