EXHIBIT 10.3
MASTER AGREEMENT
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TABLE OF CONTENTS
PAGE
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ARTICLE 1 DEFINITIONS ................................................... 2
1.1 Definitions. ................................................. 2
ARTICLE 2 AGREEMENTS .................................................... 2
2.1 Purchase and Sale of Assets. ................................. 2
2.2 Employees. ................................................... 5
2.3 Purchased IT Assets and Leases and Licenses. ................. 6
2.4 Distribution Service. ........................................ 7
2.5 Agreements with Other Entities. .............................. 7
2.6 License. ..................................................... 8
2.7 Cooperation. ................................................. 8
2.8 Supply of Conventional Lenses. ............................... 9
2.9 Accounts Receivable. ......................................... 9
2.10 Trademarks Proprietary to SC. ................................ 10
2.11 Option to Purchase Intellectual Property Proprietary to SE
and/or SECL. ................................................. 10
2.12 Clinical and Analytical Evaluation Services and Use of
Clinical and Analytical Instruments of SE; Option to Purchase. 11
2.13 After-Sales Service. ......................................... 11
2.14 [Intentionally Omitted] ...................................... 11
2.15 Liabilities and Obligations. ................................. 12
2.16 Non Competition. ............................................. 12
2.17 Right of First Refusal. ...................................... 12
ARTICLE 3 CONSIDERATION ................................................. 13
3.1 Consideration. ............................................... 13
3.2 Consideration and Determination of Closing Assets. ........... 14
3.3 Stamp Duty. .................................................. 15
3.4 Consumption Tax. ............................................. 15
3.5 Other Tax. ................................................... 15
ARTICLE 4 CLOSING ....................................................... 16
4.1 Transfer of Purchased Assets and Purchased IT Assets. ........ 16
4.2 Payment for Purchased Assets and Purchased IT Assets. ........ 16
4.3 Offset. ...................................................... 16
4.4 SCI's Deliveries. ............................................ 17
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SCI, SE, SECL AND SC ........ 17
5.1 SCI's Representation and Warranties. ......................... 17
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF OSKK AND OSI ................ 23
6.1 Representations and Warranties of OSKK and OSI. .............. 23
ARTICLE 7 ACTION PRIOR TO THE COMPLETION OF THE TRANSACTION ............. 25
7.1 Investigation of the Business by OSI and OSKK. ............... 25
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TABLE OF CONTENTS
(CONTINUED)
PAGE
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7.2 Preserve Accuracy of Representations and Warranties. ......... 25
7.3 Notice of Certain Matters. ................................... 25
7.4 Business Prior to the Closing Date. .......................... 26
7.5 Transferred Warranties. ...................................... 27
ARTICLE 8 SUBSIDY, EXCHANGE RATE and UNDELIVERED ORDERS ................ 27
8.1 Subsidy. ..................................................... 27
8.2 Exchange Rate. ............................................... 27
8.3 Undelivered Orders. .......................................... 28
ARTICLE 9 CONDITIONS PRECEDENT TO OBLIGATIONS OF OSI AND OSKK ........... 28
9.1 No Misrepresentation or Breach of Covenants and Warranties. .. 28
9.2 No Restraint or Litigation. .................................. 29
9.3 Necessary Approvals. ......................................... 29
9.4 Employees. ................................................... 29
9.5 No Material Adverse Change. .................................. 29
9.6 Contract with Chart K.K. or Other Third Party Distributor. ... 29
9.7 Contract with SE. ............................................ 29
9.8 Purchased IT Assets and Leases and Licenses. ................. 29
9.9 Contract with regard to the Leased Premises. ................. 30
9.10 License Agreements with SC. .................................. 30
ARTICLE 10 CONDITIONS PRECEDENT TO OBLIGATIONS OF SCI, SE, SECL AND SC .. 30
10.1 No Misrepresentation or Breach of Covenants and Warranties. .. 30
10.2 No Restraint or Litigation. .................................. 30
ARTICLE 11 INDEMNIFICATION .............................................. 31
11.1 Indemnification by SCI. ...................................... 31
11.2 Indemnification by SE, SECL and SC. .......................... 31
11.3 Indemnification by OSKK and OSI. ............................. 32
11.4 NO CONSEQUENTIAL OR PUNITIVE DAMAGES. ........................ 32
ARTICLE 12 TERMINATION .................................................. 32
12.1 Termination. ................................................. 32
12.2 Notice of Termination. ....................................... 33
12.3 Effect of Termination. ....................................... 33
ARTICLE 13 GUARANTEES ................................................... 33
13.1 SE's Guarantee. .............................................. 33
13.2 OSI's Guarantee. ............................................. 33
ARTICLE 14 GENERAL PROVISIONS ........................................... 34
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PAGE
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14.1 Survival of Obligations. ..................................... 34
14.2 No Public Announcements. ..................................... 34
14.3 Notices. ..................................................... 34
14.4 Successors and Assigns. ...................................... 35
14.5 Access to Records After Closing Date. ........................ 35
14.6 Entire Agreement; Amendments. ................................ 35
14.7 Interpretation. .............................................. 36
14.8 Waivers. ..................................................... 36
14.9 Expenses. .................................................... 36
14.10 Partial Invalidity. .......................................... 37
14.11 Execution in Counterparts. ................................... 37
14.12 Further Assurances. .......................................... 37
14.13 Confidentiality. ............................................. 37
14.14 Governing Law. ............................................... 38
14.15 Dispute Resolution. .......................................... 38
14.16 Force Majeure. ............................................... 38
14.17 Schedules and Exhibits. ...................................... 39
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MASTER AGREEMENT
This MASTER AGREEMENT ("Agreement"), dated and made effective as of 2:00
pm, California time, on March 11, 2002, is made by and between:
Ocular Sciences K.K., a corporation duly organized and existing under the laws
of Japan and having its registered office at ▇-▇-▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇-▇▇,
▇▇▇▇▇ ("OSKK");
Ocular Sciences, Inc., a corporation duly organized and existing under the laws
of the State of Delaware, the United States and having its registered office at
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ("OSI");
Seiko Contactlens Inc., a corporation duly organized and existing under the laws
of Japan and having its registered office at 28-11, ▇▇▇▇▇ ▇-▇▇▇▇▇, ▇▇▇▇▇-▇▇,
▇▇▇▇▇ ▇▇▇-▇▇▇▇ ▇▇▇▇▇ ("SCI");
Seiko Epson Corporation, a corporation duly organized and existing under the
laws of Japan and having its registered office at 3-5, Owa 3-chome, ▇▇▇▇-▇▇▇,
▇▇▇▇▇▇-▇▇▇ ▇▇▇-▇▇▇▇ ▇▇▇▇▇ ("SE");
Seiko Epson Contact Lens Corporation, a corporation duly organized and existing
under the laws of Japan and having its registered office at 1545 ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇-▇▇▇, ▇▇▇▇▇▇-▇▇▇ ▇▇▇-▇▇▇▇ ▇▇▇▇▇ ("SECL"); and
Seiko Corporation, a corporation duly organized and existing under the laws of
Japan and having its registered office at ▇-▇, ▇▇▇▇▇▇▇▇ ▇-▇▇▇▇▇, ▇▇▇▇-▇▇, ▇▇▇▇▇
▇▇▇-▇▇▇▇ ▇▇▇▇▇ ("SC").
RECITALS
A. SCI is distributing conventional contact lenses, both soft lenses and
hard lenses manufactured by SECL (which SCI purchases from SE), disposable
contact lenses (which SCI purchases and imports from OSI), and other contact
lens related products to other distributors and retailers in Japan.
B. SCI desires to sell certain assets and provide certain services related
to SCI's distribution of contact lenses and contact lens related products, and
OSKK desires to commence its business of distribution of contact lenses and
contact lens related products in Japan utilizing, among others, such assets and
services to be sold and provided by SCI in accordance with the terms and
conditions of this Agreement.
C. As of the Effective Date, SE and SC hold respectively fifty percent
(50%) of all issued and outstanding shares of SCI and jointly control SCI.
However, after the Effective Date, but prior to the Closing Date, SE shall hold
one hundred percent (100%) of all issued and outstanding shares of SCI and shall
have sole control of SCI.
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NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants, representations, warranties, conditions and agreements herein
contained, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions.
In this Agreement (including exhibits and schedules), all capitalized
terms shall have the meanings set forth in Schedule 1.1 and shall be equally
applicable to both the singular and plural forms.
ARTICLE 2
AGREEMENTS
2.1 Purchase and Sale of Assets.
(a) On the terms and subject to the conditions of this Agreement, on and
as of the Closing Date, SCI agrees to sell, transfer, convey, assign and deliver
to OSKK, and OSKK agrees to buy and acquire from SCI, free and clear of all
Encumbrances, all right, title and interest of SCI in and to the assets more
fully described below (excluding those assets excluded from the definition of
Purchased Assets set forth in Schedule 1.1 hereto) (collectively, the "Purchased
Assets"):
(i) all tangible fixed assets, including, without limitation,
leasehold improvements, personal property and fixtures and equipment (including
computers), other than real properties to which SCI has an ownership interest as
of the Closing Date ("Tangible Fixed Assets"). A list of tangible fixed assets
owned by SCI as of the Record Date for which SCI has recorded a positive book
value (excluding Tangible Fixed Assets that will be transferred to OSKK without
charge) is provided on Schedule 2.1(a)(i)(x) hereto and a list of tangible fixed
assets owned by SCI as of the Record Date for which SCI has recorded a zero book
value or which will be transferred to OSKK without charge is provided in
Schedule 2.1(a)(i)(y) hereto. OSKK will not purchase tangible fixed assets to
which SCI has obtained or will obtain ownership after the Record Date without
OSKK's written consent;
(ii) all SCI's accounts receivable, net of bad debt write-offs and
offsets as of the Closing Date other than (x) accounts receivable with respect
to which the payer is OSI or an Affiliate of OSI, (y) accounts receivable
outstanding for more than one hundred twenty-two (122) days and (z) notes and
bills receivable ("Accounts Receivable"). A list of SCI's accounts receivable,
net of bad debt write-offs and offsets, as of the Record Date, and the book
value therefor as of the Record Date is provided on Schedule 2.1(a)(ii) hereto;
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(iii) all Non-Consigned Inventories of SCI as of the Closing Date. A
list of Non-Consigned Inventories owned by SCI as of the Record Date, and the
book value therefor as of the Record Date is provided on Schedule 2.1(a)(iii)
hereto;
(iv) all Consigned Inventories of SCI as of the Closing Date. A list
of Consigned Inventories owned by SCI as of the Record Date, and the book value
therefor as of the Record Date is provided on Schedule 2.1(a)(iv) hereto; and
(v) all intangible assets owned by SCI as of the Closing Date
("Intangible Assets") including, without limitation, (a) the customers list, (b)
the sales know-how, (c) the know-how relating to the Pharmaceutical Affairs Law
of Japan (Law No. 145 of 1960), (d) the know-how of the treatment and the test
of the lenses, (e) all reasonably useful information related to SCI's business,
provided that, such information is not subject to any third party
confidentiality obligations that would prohibit the transfer to OSKK, (f) all
books and records of SCI related to the Purchased Assets including, without
limitation, all repair and maintenance records and operation manuals, (g)
[intentionally omitted], (h) all Intellectual Property owned by SCI, including
the trademarks listed in Schedule 2.1(a)(v)(h), and (i) telephone subscription
rights (denwa-kanyu-▇▇▇) ("Telephone Subscription Rights"), provided on Schedule
2.1(a)(v)(i).
In addition, on the terms and subject to the conditions of this Agreement, on
and as of the Closing Date, SCI shall transfer all rights and obligations with
respect to Undelivered Orders approved by OSI or OSKK in accordance with Article
8.3.
(b) On the terms and subject to the conditions of this Agreement, on and
as of the Closing Date, (i) SCI agrees to sell, transfer, convey, assign and
deliver to OSKK, and OSKK agrees to buy and acquire from SCI, free and clear of
all Encumbrances, all right, title and interest of SCI in and to the Purchased
IT Assets and (ii) SCI agrees to transfer and assign to OSKK the leases and
licenses set forth on Schedule 2.3(b) attached hereto (the "Leases and
Licenses"), to the extent such Leases and Licenses are transferable pursuant to
Article 2.3(b).
(c) On or prior to the Closing Date, SCI shall deliver the following to
OSKK or the places designated by OSKK at SCI's cost:
(i) the Purchased Assets and Purchased IT Assets;
(ii) All assets, materials, data, documents, electronic files or
media which contain or are the subject of the Intangible Assets, the Purchased
IT Assets and the Leases and Licenses (to the extent transferable in accordance
with Article 2.3(b)). SCI will provide OSKK with originals of the foregoing
media, except where SCI is required to submit an original by government
authorities (e.g., tax purposes), in which case, SCI will provide OSKK with a
copy of such original;
(iii) Certificates of title or origin (or like documents) with
respect to the Purchased Assets and Purchased IT Assets for which a certificate
of title or origin is required in order to transfer title;
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(iv) All consents, waivers or approvals required to be obtained by
SCI with respect to the Purchased Assets and the Purchased IT Assets and the
consummation of the transactions contemplated by this Agreement, if any;
(v) Such other bills of sale, assignments and other instruments of
transfer or conveyance as OSKK may reasonably request or as may be otherwise
necessary to evidence and effect the sale, assignment, transfer, conveyance and
delivery of the Purchased Assets, the Purchased IT Assets, and subject to
Article 2.3(b), the Leases and Licenses.
(vi) all the documents and records related to the Purchased Assets
and Purchased IT Assets;
(vii) duly executed documents necessary to change the registered
name of the titleholder from SCI to OSKK of the Intangible Assets.
(d) The Purchased Assets, the Purchased IT Assets, and subject to Article
2.3(b), the assets subject to the Leases and Licenses, which are under the
custody of third parties other than SCI as of the Closing Date shall be
delivered to OSKK by SCI's instruction to such custodians to keep custody of
such assets for the benefit of OSKK on or after the Closing Date. SCI shall send
a notification stating such instruction to each custodian and the copies thereof
to OSKK immediately after the Effective Date. The contents of such notification
shall be agreed upon by OSKK prior to sending thereof.
(e) Deliveries by SCI under this Article 2.1 shall be completed upon SCI's
receipt of a written acknowledgement issued by OSKK in a form that OSKK
determines.
(f) SCI shall cooperate with OSKK in transferring the Purchased Assets and
Purchased IT Assets (in accordance with Article 2.3) in accordance with all
Applicable Laws and OSKK's instruction made from time to time so that OSKK will
obtain the ownership of the Purchased Assets and Purchased IT Assets on the
Closing Date. OSKK will not pay for the cooperation of SCI under this article.
(g) SCI shall not sell, transfer, convey, assign, deliver, disclose or
dispose of any of the Purchased Assets or the Purchased IT Assets to any third
party other than OSKK and its Affiliates (if so instructed by OSKK); provided,
however, that SCI may sell the Consigned Inventory and Non-Consigned Inventory
to its customers in the ordinary course of SCI's contact lens distribution
business until the Closing Date. SCI shall not permit any third party other than
OSKK and its Affiliates (if so instructed by OSKK) to use, receive any benefit
from, or obtain security interests over, the Purchased Assets or, upon their
acquisition by SCI, the Purchased IT Assets.
(h) As of the Closing Date, SCI shall not sell, transfer, convey, assign,
deliver, disclose or dispose of any of the Consigned Inventory and Non-Consigned
Inventory to any third party other than OSKK and its Affiliates (if so
instructed by OSKK).
(i) On the Closing Date:
(i) SCI shall execute and deliver to OSKK the Zantei-Operation
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Agreement, effective as of the Closing Date;
(ii) SE shall execute and deliver to OSKK the exclusive supply
agreement in the form of Schedule 2.8(b), effective as of the Closing Date;
(iii) (x) SC shall execute and deliver to OSKK the license agreement
in the form of Schedule 2.10(b), effective as of the Closing Date and (y) SCI
shall assign the Cielo Trademark License Agreement to OSKK pursuant to a form of
assignment reasonably acceptable to OSKK, the royalties of which shall have been
fully paid by SCI to SC on or prior to the Closing Date through the end of the
term of such agreement, and SC shall deliver to OSKK SC's written consent to
such assignment;
(iv) SCI and SE shall execute and deliver to OSKK the Clinical and
Analytical Evaluation Services Agreement, effective as of the Closing Date;
(v) SCI shall deliver to OSKK the Closing Date Undelivered Orders
in accordance with Article 8.3;
(vi) OSKK shall execute and deliver to SCI the Zantei-Operation
Agreement, effective as of the Closing Date;
(vii) OSKK shall execute and deliver to SE the exclusive supply
agreement in the form of Schedule 2.8(b), effective as of the Closing Date;
(viii) OSKK shall execute and deliver to SC the license agreement in
the form of Schedule 2.10(b), effective as of the Closing Date; and
(viv) OSKK shall execute and deliver to SCI and SE the Clinical and
Analytical Evaluation Services Agreement, effective as of the Closing Date.
2.2 Employees.
(a) OSKK or OSI shall use best efforts to offer employment to all full
time employees and directors of SCI as of the Record Date as listed in Schedule
2.2(a) ("Employees") upon such terms and conditions of employment to be
determined by OSKK or OSI in its sole discretion, but in compliance with all
Applicable Laws.
(b) SCI shall use best efforts to ensure that all or part of the Employees
to whom OSKK will offer employment will resign from SCI and become employees of
OSKK on or before the Closing Date.
(c) SCI shall use best efforts from the Effective Date until the Closing
Date to provide OSKK and OSI with supportive services such as persuading
employees of SCI who are listed in Schedule 2.2(c) ("Key People") to be employed
by OSKK at no charge so that OSKK will be able to employ all the Key People on
or before the Closing Date.
(d) SCI shall disclose all personnel records of each Employee including,
without limitation, the name, SCI employee number, current job assignment,
current rate of wages or salary, and the amount of service to OSKK immediately
after the
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Effective Date. In the event any Applicable Laws prohibit or restrict the
transfer of personnel information pursuant to this paragraph, the obligations of
SCI shall be to disclose to OSKK only such information as shall be permitted by
such laws or regulations.
(e) The parties confirm that in the case of Employees who do not accept
the offer of employment extended by OSKK or OSI or to whom OSKK or OSI, despite
best efforts, will not offer employment, the employment of such Employees shall
be within the responsibility of SCI and OSKK shall not be obliged to compensate
them in any manner or to extend another offer of employment.
(f) SE and SCI shall respect the rights of SCI's employees whom OSKK or
OSI, despite their best efforts, will not offer employment in OSKK.
(g) SCI shall retain one (1) engineer as an employee of SCI as listed in
Schedule 2.2(h) ("SCI Liaison"). Such employee will be a liaison between SCI and
OSKK in accordance with the Zantei-Operation Agreement (Schedule 2.6(b)), and
will become an employee of OSKK upon termination of the Zantei-Operation
Agreement if the terms and conditions of employment which OSKK will offer to
such employee are accepted by such employee.
2.3 Purchased IT Assets and Leases and Licenses.
(a) On or prior to the Closing Date, SCI will purchase from Century
Leasing Company the assets listed on Schedule 2.3(a) (the "Purchased IT Assets")
at the prices listed on Schedule 2.3(a), and thereafter on the Closing Date, SCI
will transfer the Purchased IT Assets to OSKK.
(b) With respect to SCI's Leases and Licenses listed on Schedule 2.3(b),
between the Effective Date and the Closing Date, SCI and SE will use their best
efforts to obtain the consent of the lessors and licensors to the assignment of
the Leases and Licenses to OSKK on and as of the Closing Date, and with respect
to those Leases and Licenses in which the lessor's or licensor's consent to such
transfer is obtained, on the Closing Date, SCI will transfer such Leases and
Licenses to OSKK. With respect to those Leases and Licenses in which the lessor
or licensor has not consented to the assignment to OSKK prior to the Closing
Date, (i) SCI and SE will use their best efforts to provide OSKK with supportive
services including, without limitation, negotiating with the respective lessors
and licensors in obtaining consent to assignment and/or procuring new leases or
licenses of the assets subject to such Leases and Licenses to OSKK effective on
the Closing Date on similar terms and conditions as those currently extended to
SCI and (ii) to the extent legally permissible, SCI will hold the rights under
such Leases and Licenses in trust for, and for the benefit of, OSKK, and will
cooperate with OSKK in any reasonable arrangement necessary to provide that OSKK
shall receive substantially all beneficial interest and benefits in, to and
under such Leases and Licenses, and OSKK will perform SCI's obligations and
liabilities under such Leases and Licenses, provided that, with respect to
obligations and liabilities requiring the payment of money, SCI will, at the
request of OSKK, make such payments on OSKK's behalf, subject to SCI's
contemporaneous receipt from OSKK of reimbursement therefor. Except as set forth
in this Article 2.3(b), OSKK will not pay for such supportive services to be
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provided by SCI and SE. True and correct copies of the Leases and Licenses have
been provided by SCI to OSKK prior to the Effective Date.
2.4 Distribution Service.
(a) SCI and SE shall use best efforts to assure that on or prior to the
Closing Date, Chart K.K. will enter into an agreement with OSKK in substantially
the form attached hereto as Schedule 2.4(a).
(b) SCI and SE shall never represent or imply directly or indirectly to
Chart K.K. that OSKK will assume SCI's liabilities, obligations or commitments
against Chart K.K., and SCI and SE shall, jointly and severally, indemnify OSKK
and OSI against any and all such liabilities, obligations or commitments to
Chart K.K. incurred by OSKK or OSI.
(c) OSKK will not pay for the assistance of SCI and SE under this article.
2.5 Agreements with Other Entities.
(a) SCI shall use its best efforts so that OSKK can enter into new
agreements (i) with distributors and retailers with which SCI entered into
agreements to sell its products continuously until the Effective Date, and (ii)
with suppliers with which SCI entered into agreements to purchase certain items
until the Effective Date.
(b) SCI shall use its best efforts so that OSKK can enter into new
agreements with lessors of the Leased Premises with which SCI entered into
agreements, at commercially reasonable terms and conditions.
(c) Those distributors, retailers, suppliers and lessors (in accordance
with Articles 2.5(a) and 2.5(b)) with which OSKK seeks to enter into such
agreements are listed in Schedule 2.5(c) hereto ("Counter-parties").
(d) Upon OSKK's reasonable requests made from time to time, on or after
the Effective Date, SCI shall call, write or visit Counter-parties in order to
explain the transaction contemplated hereby between OSKK and SCI and persuade
them to enter into new agreements with OSKK at commercially reasonable terms and
conditions to assist OSKK to conduct its contact lens business and other
businesses related thereto smoothly and effectively.
(e) SCI shall perform their duties under this article in accordance with
OSKK's reasonable instructions conveyed from time to time.
(f) SCI shall report to OSKK using a report form designated by OSKK
immediately after each communication with Counter-parties to be made from time
to time after the Effective Date.
(g) SCI shall never represent or imply directly or indirectly to the
Counter-parties that OSKK will assume SCI's liabilities, obligations or
commitments against Counter-parties, and SCI and SE shall, jointly and
severally, indemnify OSKK and
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OSI against any and all such liabilities, obligations or commitments to any and
all Counter-Parties incurred by OSKK or OSI.
(h) OSKK will not pay for the assistance of SCI under this article.
2.6 License.
(a) SCI and SE shall make their best efforts to cooperate with OSKK,
including, but not limited to, making necessary documents and visiting and
negotiating with the authorities, so that OSKK can (1) obtain the license for
importation and sales of medical devices (iryoyogu-yunyu-hanbai-kyoka), (2)
succeed to the necessary authorizations for such importation (yunyu-▇▇▇▇▇▇)
which SCI has as of the Effective Date, (3) file necessary reports with the
appropriate authorities, and (4) accomplish other required procedures in order
to assist OSKK in conducting its contact lens business and business related
thereto smoothly and effectively on or after the Closing Date under the
Pharmaceutical Affairs Law of Japan, in relation to the products that are
currently distributed by SCI in Japan until OSKK has completed these procedures.
(b) On or prior to the Closing Date, SCI and OSKK shall enter into an
agreement with respect to the terms and conditions of SCI's and/or SE's
cooperation pursuant to Article 2.2(h) and this Article 2.6, in a form attached
hereto as Schedule 2.6(b) ("Zantei-Operation Agreement"), which shall be based
on the Disposable Distribution Agreement and the Daily Wear Distribution
Agreement (both dated November 7, 1996); provided that, OSI shall issue to SCI
an invoice consistent with the Zantei-Operation Agreement, and SCI's payment
thereof shall be made within sixty (60) days from the first (1st) day of the
month following SCI's receipt of the relevant invoice.
(i) ▇▇. ▇▇▇▇▇▇▇'▇ secondment is intended, in part, as a means for
OSKK to get such cooperation on the import license process and thereby require
less reliance and support from SE and SCI while OSKK is completing these
procedures.
(ii) Except as otherwise provided herein, other cooperative support
from SCI while OSKK is completing these procedures shall be without charge.
(c) On or prior to when OSKK successfully obtains under its name the
license for importation and sales of medical devices and succeeds to the
necessary authorizations for such importation from SCI for the products that SCI
currently imports and distributes in Japan, SCI shall import and sell such
products to OSKK in the amount that OSKK requires from time to time at the same
price which SCI purchases them from OSI (including any and all Tax and
incidental costs) in accordance with the Zantei-Operation Agreement.
(d) OSKK shall make payment for any and all invoices issued by SCI
consistent with the Zantei-Operation Agreement to OSKK within sixty (60) days
from the first (1st) day of the month following OSKK's receipt of the relevant
invoice.
2.7 Cooperation.
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Upon the terms and subject to the conditions contained herein, the parties
agree (a) to use all reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, (b) to execute any documents, instruments or conveyances of any kind
which may be reasonably necessary or advisable to carry out the transactions
contemplated hereunder, and (c) to cooperate with each other in connection with
the foregoing.
2.8 Supply of Conventional Lenses.
(a) SE shall supply OSKK exclusively with all conventional contact lenses
and solutions products manufactured or dealt in by SECL as of the Effective Date
until the end of March 2005. SE and/or SECL shall not be required to, and shall
not, purchase from OSKK any conventional contact lenses remaining in OSKK's
inventory as of the end of March 2005.
(b) SE and OSKK shall enter into an exclusive supply agreement in a form
listed in Schedule 2.8(b) on or prior to the Closing Date.
2.9 Accounts Receivable.
(a) Within seven (7) days after the Closing Date, SCI shall dispatch
executed notices of assignment (saiken-joto-tsuchi) to each payer of an Account
Receivable as of the Closing Date in a form listed in Schedule 2.9(a), notifying
the payer of the assignment of Account(s) Receivable from SCI to OSKK and
directing that payment of the Account Receivable be made to OSKK and not to SCI.
SCI shall provide copies of such notices to OSKK upon dispatch.
(b) Any payments received by SCI for Accounts Receivable transferred to
OSKK shall be promptly remitted to OSKK. If there still remain accounts
receivable which have not been paid in cash among the Accounts Receivable as of
the two-hundred and fourteenth (214th) day following the Closing Date, OSKK and
SCI shall treat the difference between the amount of the consideration for the
Accounts Receivable set forth in Article 3.1(b) and the actual amount that OSKK
collected in cash as of the two-hundred and fourteenth (214th) day following the
Closing Date as follows:
(i) If the total actual amount OSKK collected in cash is more than
the amount of the consideration for the Accounts Receivable set forth in Article
3.1(b), OSKK will be entitled to all the surplus; and
(ii) If the total actual amount OSKK collected in cash is less than
the amount of the consideration for the Accounts Receivable set forth in Article
3.1(b), SCI shall pay OSKK an amount equal to the deficit between such actual
amount collected in cash by OSKK and the amount of the consideration for the
Accounts Receivable set forth in Article 3.1(b). The amount shall be paid not
later than the two-hundred and fortieth (240th) day following the Closing Date
by wire transfer of immediately available funds to a bank account designated by
OSKK at SCI's cost.
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(c) Until the two-hundred and fourteenth (214th) day following the
Closing Date, OSKK shall first apply all cash received by OSKK in payment of
accounts receivable from each debtor under Accounts Receivable transferred from
SCI to OSKK on the Closing Date to reduce the balance of the Accounts Receivable
from that debtor transferred from SCI to OSKK.
(d) On the two hundred and fortieth (240th) day following the Closing
Date, SCI shall pay to OSKK, by wire transfer of immediately available funds to
a bank account designated by OSKK, at SCI's cost, an amount equal to the Return
Credit. For purposes of this Agreement, the term "Return Credit" shall be an
amount equal to the sum of the following with respect to product returns made
during the two hundred fourteen (214) days following the Closing Date by debtors
whose Accounts Receivable were assigned to OSKK pursuant to this Agreement:
(i) with respect to any defective products so returned by the
debtor, the amount of the Account Receivable arising from the sale of the
returned product to the debtor;
(ii) with respect to product so returned by the debtor for the
reason that the debtor made an error in ordering the product, an amount (the
"Gross Margin") equal to the Account Receivable arising from the sale of the
returned product to the debtor less the book value of the product as reflected
in the books of SCI immediately prior to the sale of the product to the debtor;
(iii) with respect to products returned upon termination of the
commercial relationship with a debtor, an amount equal to (x) with respect to
returned product that is a Discontinued Product, the amount of the Account
Receivable arising from the sale of the returned Discontinued Product to the
debtor, and (y) with respect to returned product that is not a Discontinued
Product, the Gross Margin related to the returned product; and
(iv) with respect to any product returned that is a Discontinued
Product, the amount of the Account Receivable arising from the sale of the
returned product to the debtor.
2.10 Trademarks Proprietary to SC.
On the Closing Date, (a) SC and OSKK shall enter into a license agreement
in a form listed in Schedule 2.10 by which SC shall grant licenses on the
"Seiko" trademark to OSKK upon terms and conditions set forth in such agreements
and (b) SCI will assign the Cielo Trademark License Agreement to OSKK, pursuant
to which OSKK will receive a fully-paid license to use the "Cielo" trademark,
and SC shall consent to such assignment.
2.11 Option to Purchase Intellectual Property Proprietary to SE and/or
SECL.
SECL and SE hereby grant OSKK, OSI and their Affiliates an option,
effective on the Closing Date, to purchase certain manufacturing know-how,
patents, approvals for manufacturing SECL products issued under the
Pharmaceutical Affairs
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Law of Japan and other Intellectual Properties owned by SE and/or SECL which are
necessary and/or useful to manufacture and/or market the products manufactured
by SECL as of the Record Date for an amount of 400,000 US Dollars exercisable at
any time before March 31, 2005. A list of such Intellectual Properties owned by
SE and/or SECL as of the Record Date is provided on Schedule 2.11 hereto. In the
event that such manufacturing know-how, patents and other Intellectual
Properties include any joint patents or other joint rights with third parties,
SE and SECL shall make commercially reasonable efforts to obtain the joint
party's consent as to the assignment thereof.
2.12 Clinical and Analytical Evaluation Services and Use of Clinical and
Analytical Instruments of SE; Option to Purchase.
(a) Upon requests made from time to time by OSKK or OSI, SCI and SE shall
provide, with charge, support services in connection with clinical and
analytical evaluation requirements (including the use of Clinical and Analytical
Instruments and services related thereto) in compliance with the Pharmaceutical
Affairs Law of Japan. On or prior to the Closing Date, SCI, SE and OSKK shall
enter into an agreement (the "Clinical and Analytical Evaluation Services
Agreement") with respect to such services and use of Clinical and Analytical
Instruments pursuant to this Article 2.12(a) and on the terms and conditions set
forth on Schedule 2.12(a) attached hereto.
(b) SE hereby grants OSKK, OSI and their Affiliates an option, effective
on the Closing Date, to purchase certain Clinical and Analytical Instruments
owned by SE. This option to purchase such Clinical and Analytical Instruments
shall be at their book value at the time of such exercise of option, which must
be exercised no later than March 31, 2005. A list of such Clinical and
Analytical Instruments owned by SE is attached hereto as Schedule 2.12(b).
2.13 After-Sales Service.
After the Closing Date, OSKK shall provide after-sales services for the
Consigned Inventories, Non-Consigned Inventories and other contact lens related
products sold by SCI before the Closing Date. The contents, quality and method
of the after sales services to be provided by OSKK shall be solely determined by
OSKK at its discretion; provided that, OSKK shall fully defend, indemnify and
hold harmless SCI against any and all Losses and Expenses in connection with any
and all claims, lawsuits or proceedings arising from any and all such
after-sales services provided by OSKK, except to the extent such Losses and
Expenses are Excluded Liabilities.
2.14 [Intentionally Omitted]
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2.15 Liabilities and Obligations.
Unless otherwise provided herein, OSKK shall not assume or have any
responsibility for any liability, obligation or commitment of any nature of SCI,
whether now or hereafter existing, known or unknown, accrued or non-accrued, or
due or to become due, including, without limitation, the Excluded Liabilities.
2.16 Non Competition.
(a) In order to avoid any competition with OSKK, as of the Closing Date
and until March 31, 2005, none of SE, SC, SECL and SCI shall, within the
territory of Japan, conduct or have its Affiliate conduct, any business directly
relating to the manufacture and/or distribution of contact lenses and/or
solutions. Notwithstanding the foregoing, this Article 2.16 shall not prohibit
SE, SC, SECL and SCI from making retail sales of contact lenses or solutions, in
the ordinary course of business consistent with past practice, to consumers who
do not purchase the contact lenses or solutions for the purpose of resale or
re-distribution.
(b) In order to avoid any competition with OSI, as of the Closing Date and
for a period of one (1) year thereafter, none of SE, SC, SECL and SCI shall
conduct or have its Affiliate conduct, any business in Japan nor elsewhere in
the world, relating to the manufacture of colored disposable contact lenses
using or incorporating SE's proprietary ink-jet printing technology.
(c) Notwithstanding the foregoing, this article shall not apply to: (a)
SE's supply of the products to OSKK in accordance with Article 2.8, and (b)
SCI's assistance in accordance with Article 2.6.
2.17 Right of First Refusal.
(a) Subject to this Article 2.17, OSI shall have the right of first
refusal to enter into a feasibility study agreement involving a new application
for SE's proprietary ink-jet printing technology in connection with contact
lenses (for example, laying colored ink on disposable contact lenses) with SE.
In the event that OSI proposes to undertake such a feasibility study, OSI shall
deliver to SE written notice of its desire to undertake such a feasibility study
no later than one (1) year after the Closing Date.
(b) Upon OSI's delivery of such notice in writing in accordance with
Article 2.17(a), the parties shall thereafter negotiate in good faith the terms
and conditions of a feasibility study agreement pursuant to which OSI shall be
an exclusive party. OSI acknowledges that SE will not disclose proprietary
information related to SE's ink-jet technology during the course of any
feasibility study or discussions related thereto.
(c) If (i) OSI fails to deliver its notice in writing to SE in accordance
with Article 2.17(a), or (ii) despite negotiations in good faith, the parties
fail to fully execute a feasibility study agreement within eighteen (18) months
after the Closing Date, then OSI shall forfeit the right herein to (1) be an
exclusive party to any such feasibility study, and (2) enter into any
feasibility study agreement. SE may thereafter seek any third party for, and
enter into with such third party, any feasibility study
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agreement (on an exclusive or non-exclusive basis) as if OSI's right of first
refusal herein were not exercised.
(d) Except to the extent provided in Article 2.16(b) and this Article
2.17, nothing in this Agreement shall be construed to limit SE's ability and
right to develop, license and offer to license its ink-jet printing technology
to third parties for any purpose whatsoever, including, licenses to third
parties to manufacture, have manufactured, sell, offer to sell, import, export
or otherwise dispose of any products using or incorporating SE's ink-jet
printing technology.
ARTICLE 3
CONSIDERATION
3.1 Consideration.
All consideration described in Article 3.1 (a) to (g) below shall be
exclusive of any applicable consumption tax levied in accordance with the
Consumption Tax law of Japan:
(a) The consideration for the transfer of all of the Tangible Fixed Assets
shall be the book value of the Tangible Fixed Assets listed on Schedule
2.1(a)(i)(x) hereto as of the Closing Date.
(b) Subject to the adjustment in accordance with Article 2.9(b), the
consideration for the transfer of the Accounts Receivable shall be ninety-four
(94)% of the book value of Accounts Receivable as of the Closing Date.
(c) The consideration for the transfer of the Non-Consigned Inventories
shall be the sum of (i) the book value for the Non-Consigned Inventories other
than those SCI purchased from SE and other than 1-day disposable lenses and
2-week disposable lenses and (ii) for the Non-Consigned Inventories which SCI
purchased from SE (including, but not limited to, the contact lenses and
solutions) other than 1-day disposable lenses and 2-week disposable lenses, the
lesser amount of either (x) the book value as of the Closing Date or (y) the
price that SCI paid to SE, and (iii) OSKK will pay US$0.40 per one unit of 1-day
disposable lenses and US$0.58 per one unit of 2-week disposable lenses, minus
(iv) 260,000 US Dollars. Notwithstanding the foregoing, OSKK will not pay for
the Non-Consigned Inventories that are Excepted Inventories.
(d) The consideration for the transfer of the Consigned Inventories shall
be fifty percent (50%) of the book value as of the Closing Date. Notwithstanding
the foregoing, OSKK will not pay for the Consigned Inventories which consist of
Discontinued Products.
(e) The consideration for the transfer of the Intangible Assets, excluding
Telephone Subscription Rights and the Purchased IT Assets, shall be Four Million
US dollars (US$4,000,000).
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(f) The consideration for the transfer of Telephone Subscription Rights
(denwa-kanyu-▇▇▇) including telex and facsimile used by SCI for its contact lens
business and business related thereto shall be at 20,000 (twenty thousand) yen
per each right.
(g) The consideration for the transfer of the Purchased IT Assets shall be
an amount equal to the sum of the amounts paid by SCI to Century Leasing Company
to acquire the Purchased IT Assets after the Effective Date and on or prior to
the Closing Date, but in no event, more than thirty two million, eight hundred
and fifty-two thousand (32,852,000) yen; provided that, such amount is exclusive
of any and all consumption tax, and OSKK shall reimburse SCI for any and all
consumption tax in accordance with Article 3.4.
(h) The book value and the consideration payable by OSKK with respect (a)
through (d) of this Article shall be determined in accordance with Article 3.2.
(i) The consideration payable by OSKK with respect to (f) and (g) of this
Article shall be determined in accordance with Article 3.2.
(j) OSKK shall not be obliged to pay any amount other than the
considerations provided under this article unless otherwise so provided in this
Agreement.
3.2 Consideration and Determination of Closing Assets.
(a) In order to determine the amount of consideration payable under
Article 3.1(a) through (d) and (f) and (g), within fifteen (15) days following
the Closing Date, SCI will prepare in good faith and deliver to OSKK schedules
identifying in reasonable detail the following (collectively the "Closing Asset
Schedules"):
(i) the Tangible Fixed Assets as of the Closing Date and their
individual and aggregate book value as of the Closing Date;
(ii) the Accounts Receivable as of the Closing Date, the number
of days each individual receivable has been outstanding as of the Closing Date,
and the individual and aggregate book value of the Accounts Receivable as of the
Closing Date (the "Closing Accounts Receivable Schedule");
(iii) the Consigned Inventory (including the location of the
Consigned Inventory) as of the Closing Date and the consideration payable with
respect to the Consigned Inventory determined in accordance with Article 3.1 and
this Article 3.2 as of the Closing Date and the Merchantable Non-Consigned
Inventory as of the Closing Date and the consideration payable with respect to
the Merchantable Non-Consigned Inventory determined in accordance with Article
3.1 and this Article 3.2 as of the Closing Date, each determined by a physical
count of the Inventory by SCI and OSKK immediately prior the Closing Date (the
"Closing Merchantable Inventory Schedule");
(iv) the Excepted Inventory as of the Closing Date determined by
a physical count of the Inventory by SCI and OSKK immediately prior to the
Closing Date (the "Closing Excepted Inventory Schedule");
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(v) the Telephone Subscription Rights, indicating the number and
identification of such rights and the aggregate consideration to be paid for
such rights determined in accordance with Article 3.1(f); and
(vi) the Purchased IT Assets and the consideration payable by
OSKK with respect to the Purchased IT Assets determined in accordance with
Article 3.1(g).
(b) For purposes of this Agreement, "book value" shall be determined in
accordance with SCI's accounting policies and practices, applied in a manner
consistent with SCI's past practices. A copy of SCI's accounting policies and
practices is set forth on Exhibit B hereto.
(c) SCI and OSKK shall meet to discuss and agree on the Closing Asset
Schedules during the period commencing on the date of SCI's delivery of the
Closing Asset Schedules and continuing, if necessary, until the Payment Date. In
the event OSKK and SCI cannot agree on the Closing Asset Schedules, an
independent and impartial third party accountant or appraiser employed by a big
five accounting firm agreeable to both SCI and OSKK shall determine the book
value of the Tangible Fixed Assets, Accounts Receivable, Non-Consigned
Inventories and Consigned Inventories as of the Closing Date, such determination
to be final and binding, and OSKK and SCI shall equally bear the third party
accountant or appraiser fees.
(d) OSI and OSKK shall have the right to conduct an audit, or cause an
audit to be conducted on their behalf, of the Purchased Assets and Purchased IT
Assets, which audit may include a physical count of the Inventory, and SCI and
SE shall provide such information and assistance during such audit as may be
reasonably requested by OSI and OSKK.
3.3 Stamp Duty.
Stamp duty payable in connection with the execution of this Agreement
shall be borne by SCI and OSKK equally.
3.4 Consumption Tax.
Consumption tax payable in connection with the execution of this Agreement
in accordance with the Consumption Tax law of Japan shall be borne entirely by
OSKK.
3.5 Other Tax.
(a) Unless otherwise provided herein, SCI shall be responsible for and pay
all Tax of SCI, the Purchased Assets and the Purchased IT Assets arising at any
time with respect to periods ending on or prior to the Closing Date, including
the portion of real, personal or other property Tax attributable to such
periods.
(b) Unless otherwise provided herein, OSI and/or OSKK shall be responsible
for and pay all Tax of OSI and/or OSKK, the Purchased Assets and the Purchased
IT
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Assets arising at any time with respect to the period beginning and
continuing after the Closing Date, including any portion of real, personal or
other property Tax attributable to such period.
ARTICLE 4
CLOSING
4.1 Transfer of Purchased Assets and Purchased IT Assets.
Subject to fulfillment or waiver by SCI of the conditions set forth in
Article 10 below, SCI will transfer all right, title, ownership and any other
benefit in the Purchased Assets, the Purchased IT Assets and, to the extent
transferable, the Leases and Licenses, free and clear of all Encumbrances
(except those disclosed in Schedule 4.1(a)), to OSKK on the Closing Date.
4.2 Payment for Purchased Assets and Purchased IT Assets.
(a) Subject to fulfillment or waiver by OSKK of the conditions set forth
in Article 9 below and the completion of deliveries in accordance with Article
4.4, in exchange for the deliveries set forth in Article 2.1, on the Closing
Date, OSKK shall make payment of the amount of the consideration for the
Intangible Assets set forth in Article 3.1(e) to SCI by wire transfer of
immediately available funds to a bank account designated by SCI.
(b) Subject to fulfillment or waiver by OSKK of the conditions set forth
in Article 9 below and the completion of the deliveries in accordance with
Articles 2.1 and 4.4 on or prior to the Closing Date, and the completion of the
deliveries and procedures set forth in Article 3.2, on the Payment Date, OSKK
shall make payment of the sum of the consideration for the Purchased Assets,
Telephone Subscription rights and Purchased IT Assets set forth in Articles
3.1(a) through (d) and 3.1 (f) and (g) to SCI by wire transfer of immediately
available funds to a bank account designated by SCI.
4.3 Offset.
Notwithstanding Article 4.2, OSKK may offset SCI's accounts payable to OSI
which OSI will transfer to OSKK with all and any of OSKK's accounts payable to
SCI under this Agreement on each of the Closing Date and the Payment Date. On or
prior to each of the Closing Date and the Payment Date, OSI shall inform SCI in
writing of the amount of SCI's accounts payable to OSI which OSI will transfer
to OSKK. Subject to Article 11.3(c), SCI hereby gives OSI its consent without
any objection to OSI's transfer of SCI's accounts payable to OSKK. If, on the
Payment Date, the total amount of OSKK's accounts payable to SCI under this
Agreement is less than the amount of SCI's accounts payable to OSI which OSI
will transfer to
-▇▇-
▇▇▇▇, ▇▇▇ shall pay such difference to OSKK on the Payment Date by wire transfer
of immediately available funds to a bank account designated by OSKK.
4.4 SCI's Deliveries.
On the Closing Date, SCI shall deliver to OSKK copies of the minutes of
the resolutions of the Board of Directors of SCI and the general meeting of
shareholders of SCI authorizing the execution and performance of this Agreement
and the transactions contemplated hereby, certified by the representative
directors thereof.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SCI, SE, SECL AND SC
5.1 SCI's Representation and Warranties.
As an inducement to OSI and OSKK to enter into this Agreement and to
consummate the transactions contemplated hereby, SCI represents and warrants to
OSI and OSKK that the statements contained in this Article 5.1 are correct and
complete as of the Effective Date and will be correct and complete as of the
Closing Date:
(a) Organization of SCI.
SCI is a corporation duly organized and validly existing under the laws of
Japan. SCI is duly qualified to carry on its business as currently conducted.
SCI has full corporate power and authority to own and use the Purchased Assets
and the Purchased IT Assets (subject to Article 2.3) and to carry on its
business as currently conducted. As of the Effective Date, SE and SC hold
respectively fifty (50) percent of all issued and outstanding shares of SCI.
However, after the Effective Date, but prior to the Closing Date, SE shall hold
one hundred percent (100%) of all issued and outstanding shares of SCI.
(b) Authorization.
(i) SCI has full power and authority to execute, deliver and perform
this Agreement and to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement by SCI have been duly and
validly authorized and approved by all required corporate proceedings on the
part of SCI, and do not require any further authorization or consent of SCI.
This Agreement has been duly authorized, executed and delivered by SCI and
constitutes, or upon execution and delivery by SCI will constitute, as the case
may be, legal, valid and binding obligations of SCI enforceable against SCI in
accordance with their terms, subject as to enforcement to applicable insolvency,
bankruptcy, reorganization and
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other such legal protections for debtors and to injunctive relief being
discretionary to any court.
(ii) Neither the execution and delivery of this Agreement or the
consummation of any of the transactions contemplated hereby nor compliance with
or fulfillment of the terms, conditions and provisions hereof or thereof will:
(i) violate, conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event creating
rights of acceleration, termination or cancellation or a loss of rights under,
or result in the creation or imposition of any Encumbrance upon any of the
Purchased Assets or Purchased IT Assets under (a) the organizational documents
of SCI, (b) any other note, instrument, agreement, mortgage, lease, license,
franchise, permit or authorization, right, restriction or obligation to which
SCI is a party or any of the Purchased Assets or Purchased IT Assets is subject
or by which any of the Purchased Assets or Purchased IT Assets is bound, (c) any
Governmental Order to which SCI is a party or any of the Purchased Assets or
Purchased IT Assets is subject or by which SCI or any of the Purchased Assets or
Purchased IT Assets is bound, or (d) any Applicable Laws affecting SCI or its
property; or (ii) require the approval, consent, authorization or act of, or the
making by SCI of any declaration, filing or registration with, any Governmental
Body, or any other Person.
(c) Title to Purchased Assets and Purchased IT Assets.
SCI has good and indefeasible title to all of the Purchased Assets, and as
of the Closing Date, SCI will have good and indefeasible title to all of the
Purchased IT Assets (subject to Article 2.3), free and clear of all Encumbrances
(except as set forth in Schedule 4.1(a)). Upon delivery to OSKK on the Closing
Date in accordance with Article 2.1 above, SCI will thereby transfer to OSKK
good and indefeasible title to the Purchased Assets and Purchased IT Assets
(subject to Article 2.3), free and clear of all Encumbrances. The Purchased
Assets, together with the Purchased IT Assets, the Leases and Licenses, the
Permits, the Contracts, the Leased Premises and the Clinical and Analytical
Instruments, include all property, rights and assets primarily used in, and
necessary for, the operation of SCI's business as currently conducted. Except as
set forth in Schedule 5.1(c), all of the Tangible Fixed Assets, the Leased
Premises and the tangible assets subject to the Leases and Licenses are in good
operating condition and repair, subject to normal wear and tear, and are usable
in the ordinary course of business as currently conducted.
(d) Intellectual Property.
(i) Schedule 2.1(v)(h) sets forth, for each of SCI's registered trademarks
and for each SCI trademark application, the application serial number or
registration number, the class of goods covered and the expiration date for each
country in which any such trademark has been registered.
(ii) The Purchased Assets, the Purchased IT Assets and the Leases and
Licenses include all Intellectual Property rights necessary to conduct SCI's
business as currently conducted.
(iii) Neither the execution, delivery and performance of this Agreement
nor the consummation of the transactions contemplated hereby will impair the
right of the
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OSKK to use, possess, sell or license any Intangible Assets or any portion
thereof. Except as set forth in Schedule 5.1(d)(iii), there are no royalties,
honoraria, fees or other payments payable by SCI to any third person by reason
of the ownership, use, possession, license, sale, marketing, advertising or
disposition of any Intellectual Property used by SCI in the conduct of its
business as currently conducted.
(iv) The marketing, license, sale, furnishing or intended use of any
product or service related to SCI's business currently licensed, utilized, sold,
provided or furnished by SCI does not violate any license or agreement between
SCI and any third party.
(v) The marketing, license, sale, furnishing or intended use of the
Purchased Assets (including the Intangible Assets) and the AS400 software
included in the Purchased IT Assets (excluding for purposes of this
representation, products or services manufactured or provided by OSI and its
Affiliates) neither infringes nor misappropriates any Intellectual Property
rights of any other party; and there is no pending or, to the knowledge of SCI,
threatened claim or litigation contesting the validity, ownership or right of
SCI to use, possess, sell, market, advertise, license or dispose of any
Intellectual Property used by SCI in its business.
(vi) The computer software currently utilized in SCI's business is capable
of meeting the needs of SCI's business as currently conducted and adequately
performs the functions for which it is used, and to the knowledge of SCI,
contains no defects. The Purchased Assets together with the Purchased IT Assets
and the Leases and Licenses contain all of the computer software and rights with
respect to computer software necessary to operate SCI's business as currently
conducted. All license fees due and payable with respect to such computer
software have been paid by SCI for SCI's use of same. OSI and OSKK acknowledge
that OSKK may have to pay fees under Leases and Licenses for OSKK's use of the
assets subject to the Leases and Licenses.
(e) Employees.
(i) Schedule 2.2(a) contains a list of all SCI's employees as of the
Effective Date (other than ▇▇. ▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇) and a list
of the annual compensation provided by SCI to such employees as of the Effective
Date.
(ii) Insofar as it pertains to the business currently conducted by
SCI, SCI is not a party to or bound by any union contract and has not
experienced any strike, grievance or any arbitration proceeding, claim of unfair
labor practices filed against SCI or threatened to be filed against SCI or any
other material labor difficulty and there is no labor union of which any of the
Employees is a member. None of the Employees is involved in or is otherwise
threatening a potential labor dispute.
(f) Contracts.
(i) Schedules 5.1(f) and 2.3(b) collectively list each contract,
agreement, arrangement, commitment, or other instrument, written or oral, that
is material to the business currently conducted by SCI or the Leased Premises to
which SCI is a party or by which SCI, the Purchased Assets or the business
currently
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conducted by SCI may be bound (collectively, the "Contracts") as of the
Effective Date, including, without limitation, the following:
(x) agreements not made in SCI's ordinary course of business;
(y) the Leases and Licenses;
(z) confidentiality and non-disclosure agreements (subject to the
terms and conditions therein);
(xx) agreements containing covenants limiting the freedom of SCI or
any officer, director or employee of SCI to engage in any line of business or
compete with any Person that relates directly or indirectly to SCI's business as
currently conducted;
(yy) leases of the Leased Premises;
(zz) material leases of personal property;
(xxx) material distribution agreements, supply agreements and
customer agreements; and
(yyy) any other agreement material to the operation of SCI's
business as currently conducted.
(ii) Each Contract constitutes a valid, legal and binding obligation
of the respective parties thereto; and no defenses, offsets, or counterclaims
thereto have been asserted, or may be made by any party thereto. SCI has not
received notice of any default under any of such Contracts. There are no
material existing defaults or events of default, real or claimed, or events
which with notice or lapse of time or both would constitute a material default
under any Contract. There exists no actual or threatened termination,
cancellation, or limitation of, or any amendment, modification, or change to any
Contract. SCI is neither renegotiating any of the Contracts nor is it paying
damages in lieu of performance thereunder. Complete and correct copies of each
of the written Contracts have heretofore been delivered or will be delivered
prior to the Effective Date to OSKK by SCI.
(g) No Violation, Litigation or Regulatory Action.
(a) The Purchased Assets, the Purchased IT Assets, the assets subject to
the Leases and Licenses and their uses in the business currently conducted by
SCI as presently conducted comply in all material respects with all Applicable
Laws and Governmental Orders, (b) SCI has complied in all material respects with
all Applicable Laws and Governmental Orders which are applicable to the
Purchased Assets, the Purchased IT Assets, the assets subject to the Leases and
Licenses or the business currently conducted by SCI, (c) there are no lawsuits,
claims, suits, proceedings or investigations pending or threatened against or
affecting SCI in respect of the Purchased Assets, the Purchased IT Assets, the
assets subject to the Leases and Licenses or the business currently conducted by
SCI, and there are no lawsuits, suits or proceedings pending in which SCI is the
plaintiff or claimant and which relate to the Purchased Assets, the Purchased IT
Assets, the assets subject to the Leases and Licenses or the business currently
conducted by SCI; nor is there any basis for the
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same, and (d) there is no action, suit or proceeding pending against SCI or
threatened which questions the legality of the transactions contemplated by this
Agreement.
(h) Financial Data.
SCI has provided to OSI and OSKK certain information regarding the
historical expenses and revenues of the business currently conducted by SCI. The
historical financial information, including balance sheets and profit and loss
statements, for the years ended March 31, 1999, 2000, 2001 provided to OSI and
OSKK have been prepared in accordance with SCI's own accounting policies and
practices consistently applied, and do not contain any inaccuracies or
misstatements or omit to state a material fact necessary to make the information
set forth not misleading.
(i) [Intentionally Omitted]
(j) Inventory.
The Inventory has been stored and handled in a reasonable manner and in
accordance with any applicable manufacturer's guidelines. The Inventory which
shall be listed by SCI on the Closing Merchantable Inventory Schedule shall have
a book value determined in accordance with Article 3.2, none of the
Non-Consigned Inventory listed on the Closing Merchantable Inventory Schedule
shall be Excepted Inventories, and none of the Consigned Inventory listed on the
Closing Merchantable Inventory Schedule shall consist of Discontinued Products.
(k) Disclosure.
None of the representations or warranties of SCI contained herein, and
none of the information which SCI has disclosed to OSKK and/or OSI contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements herein or therein not
misleading.
(l) Accounts Receivable.
The Accounts Receivable which shall be listed by SCI on the Closing
Accounts Receivable Schedule shall represent bona fide claims of SCI against
debtors for sales, services performed or other events arising on or before the
Closing Date, and all goods delivered and services performed which gave rise, or
will give rise prior to the Closing Date, to such Accounts Receivable were
delivered or performed, or shall be delivered or performed prior to the Closing
Date, in accordance with applicable orders, Contracts or customer requirements.
The Accounts Receivable which shall be listed on the Closing Accounts Receivable
Schedule (i) shall have a book value determined in accordance with Article 3.2
and (ii) shall not have been outstanding more than one hundred twenty-two (122)
days as of the Closing Date. Schedule 5.1(l) attached hereto reflects SCI's true
and accurate bad debt expense for accounts receivable and bills receivable
recorded by SCI for the past five (5) fiscal years.
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(m) Absence of Changes. Since December 31, 2001: (i) there has occurred no
Material Adverse Effect and no event or condition has occurred that could
reasonably be expected to result in a Material Adverse Effect, (ii) except as
expressly contemplated by this Agreement, there has not been any sale or other
disposition, except in the ordinary course of business, of any of the Purchased
Assets, or any Encumbrance placed on the Purchased Assets, and (iii) SCI has
operated its business in the ordinary course so as to preserve its business
intact, to keep available to its business the services of its employees, and to
preserve its business and the goodwill of SCI's suppliers, customers,
distributors and others having business relations with SCI.
(n) Permits.
Schedule 5.1(n) sets forth a complete list of all Permits used in and
necessary for the operation of SCI's business, all of which are as of the
Effective Date, and all of which will be as of the Closing Date, in full force
and effect.
(o) Leased Premises.
The Leased Premises set forth on Exhibit A constitute all of the real
property and facilities used by SCI in the conduct of its business as presently
conducted.
(p) No Brokers.
None of SCI, its Affiliates or any officers, directors, employees, agents
or other representatives of SCI and its Affiliates has entered into or will
enter into any contract, agreement, arrangement or understanding with any
broker, finder, agent or other Person which will result in the obligation of
OSI, OSKK or any of their Affiliates to pay any finder's fee, brokerage fee or
commission or similar payment in connection with the transactions contemplated
by this Agreement..
5.2 Representations and Warranties of SE, SECL and SC.
As an inducement to OSI and OSKK to enter into this Agreement and to
consummate the transactions contemplated hereby, SE, SECL and SC hereby
represent and warrant to OSI and OSKK that the statements contained in this
Article 5.2 are correct and complete as of the Effective Date and will be
correct and complete as of the Closing Date and as of the Payment Date:
(a) Organization.
SE, SECL and SC are entities duly organized and validly existing under the
laws of Japan. Each of SE, SECL and SC has full corporate power and authority to
own or lease and to operate and use its properties and assets and to carry on
its business as now conducted.
(b) Authorization.
(i) Each of SE, SECL and SC has full power and authority to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by SE,
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SECL and SC and constitutes, or upon execution and delivery by SE, SECL and SC
will constitute, as the case may be, legal, valid and binding obligations of SE,
SECL and SC enforceable against SE, SECL and SC in accordance with their terms.
(ii) Neither the execution and delivery of this Agreement or the
consummation of any of the transactions contemplated hereby nor compliance with
or fulfillment of the terms, conditions and provisions hereof or thereof will:
(i) violate, conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event creating
rights of acceleration, termination or cancellation or a loss of rights under
(a) the organizational documents of SE, SECL and SC, (b) any other note,
instrument, agreement, mortgage, lease, license, franchise, permit or
authorization, right, restriction or obligation to which any of SE, SECL and/or
SC is a party or any of its properties is subject or by which any of SE, SECL
and/or SC or any of its properties is bound, (c) any Governmental Order to which
any of SE, SECL and/or SC is a party or any of its properties is subject or by
which any of SE, SECL and/or SC or any of its properties is bound, or (d) any
Applicable Laws affecting any of SE, SECL and/or SC or its property; or (ii)
require the approval, consent, authorization or act of, or the making by SE,
SECL and/or SC of any declaration, filing or registration with, any Person,
subject as to enforcement to applicable insolvency, bankruptcy, reorganization
and other such legal protections for debtors and to injunctive relief being
discretionary to any court.
(c) No Proceedings.
There is no action, suit or proceeding pending against SE, SECL and/or SC
or threatened that challenges, or may have the effect of preventing, delaying,
making illegal, or otherwise interfering with, any of the transactions
contemplated by this Agreement.
(d) No Issued Patents or Pending Patent Applications.
There are no issued patents or pending patent applications with respect to
SE's proprietary ink-jet printing technology for laying colored ink on
disposable contact lenses. Furthermore, there is no collaboration with any third
party to develop or commercialize SE's proprietary ink-jet printing technology
for laying colored ink on disposable contact lenses.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF OSKK AND OSI
6.1 Representations and Warranties of OSKK and OSI.
As an inducement to SE, SC and SCI to enter into this Agreement and to
consummate the transactions contemplated hereby, OSKK and OSI hereby represent
and warrant to SE, SC, SECL and SCI that the statements contained in this
Article 6.1
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are correct and complete as of the Effective Date and will be correct and
complete as of the Closing Date and as of the Payment Date:
(a) Organization.
OSKK is an entity duly organized and validly existing under the laws of
Japan. OSI is an entity duly organized and validly existing under the laws of
the State of Delaware, the United States. Each of OSKK and OSI has full
corporate power and authority to own and use its properties and assets and to
carry on its business as now conducted. Sidecastle, Ltd., a limited liability
company existing by virtue of the laws of the Republic of Ireland
("Sidecastle"), is the majority shareholder of all issued and outstanding shares
of OSKK.
(b) Authorization.
(i) OSKK and OSI have full power and authority to execute, deliver
and perform this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly authorized, executed and delivered by OSKK
and OSI and constitutes, or upon execution and delivery by OSKK and OSI will
constitute, as the case may be, legal, valid and binding obligations of OSKK and
OSI enforceable against OSKK and OSI in accordance with their terms, subject as
to enforcement to applicable insolvency, bankruptcy, reorganization and other
such legal protections for debtors and to injunctive relief being discretionary
to any court.
(ii) Neither the execution and delivery of this Agreement or the
consummation of any of the transactions contemplated hereby nor compliance with
or fulfillment of the terms, conditions and provisions hereof or thereof will:
(i) violate, conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event creating
rights of acceleration, termination or cancellation or a loss of rights under
(a) the organizational documents of OSKK, Sidecastle and OSI, (b) any other
note, instrument, agreement, mortgage, lease, license, franchise, permit or
authorization, right, restriction or obligation to which OSKK, Sidecastle and/or
OSI is a party or any of their properties is subject or by which OSKK,
Sidecastle and/or OSI or any of their properties is bound, (c) any Governmental
Order to which OSKK, Sidecastle and/or OSI is a party or any of their properties
is subject or by which OSKK, Sidecastle and/or OSI or any of their properties is
bound, or (d) any Applicable Laws affecting OSKK, Sidecastle and/or OSI or their
property; or (ii) require the approval, consent, authorization or act of, or the
making by OSKK, Sidecastle and/or OSI of any declaration, filing or registration
with, any Person, subject as to enforcement to applicable insolvency,
bankruptcy, reorganization and other such legal protections for debtors and to
injunctive relief being discretionary to any court.
(c) No Proceedings.
There is no action, suit or proceeding pending against OSKK, OSI and/or
Sidecastle or threatened that challenges, or may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the transactions
contemplated by this Agreement.
(d) No Brokers.
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None of OSI, OSKK, their Affiliates or any officers, directors, employees,
agents or other representatives of OSI, OSKK and their Affiliates has entered
into or will enter into any contract, agreement, arrangement or understanding
with any broker, finder, agent or other Person which will result in the
obligation of SCI, SE, SECL or SC or any of their Affiliates to pay any finder's
fee, brokerage fee or commission or similar payment in connection with the
transactions contemplated by this Agreement.
ARTICLE 7
ACTION PRIOR TO THE COMPLETION OF THE TRANSACTION
The respective parties hereto covenant and agree to take the following
actions prior to the completion of the transaction contemplated hereby.
7.1 Investigation of the Business by OSI and OSKK.
Prior to the Payment Date, upon reasonable advance notice by OSI or OSKK
to SCI, SCI shall afford to the officers, employees and authorized
representatives of OSI and OSKK (including, without limitation, independent
public accountants and attorneys) reasonable access during normal business hours
to the offices, properties, employees and business and financial records
(including computer files, retrieval programs and similar documentation) of SCI
and shall furnish to OSI or OSKK or its authorized representatives such
additional information as shall be reasonably requested, including all such
information as shall be reasonably necessary to enable OSI or OSKK or its
representatives to verify the accuracy of the representations and warranties
contained in this Agreement, to verify that the covenants of SCI contained in
this Agreement have been complied with and to determine whether the conditions
set forth in Article 9 have been satisfied.
7.2 Preserve Accuracy of Representations and Warranties.
Each of the parties hereto shall refrain from taking any action which
would render any representation or warranty contained in Article 5 or 6 of this
Agreement not to be true and correct in all material respects as of the Closing
Date and the Payment Date. Each party shall promptly notify the other of any
action, suit or proceeding that shall be instituted or threatened against such
party to restrain, prohibit or otherwise challenge the legality of any
transaction contemplated by this Agreement.
7.3 Notice of Certain Matters.
Without limiting either party's right to rely on the representations and
warranties as set forth herein, each of the parties hereto shall provide the
other parties
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with prompt written notice with respect to any material facts of which they
become aware which arise between the Effective Date and the Payment Date which,
if they had occurred and been known prior to the Effective Date, would have been
required to have been disclosed in order to make the representations and
warranties contained in Articles 5 and 6 true and correct as of the Effective
Date. In addition, SCI shall provide OSKK with prompt written notice if between
the Effective Date and the Payment Date, there is a change in the Purchased
Assets, the Purchased IT Assets, the assets subject to the Leases and Licenses
or its business which has or may be reasonably expected to have a Material
Adverse Effect. Subject to the applicable confidentiality provisions of this
Agreement, during the period prior to the Payment Date, SCI will as promptly as
reasonably possible under the circumstances advise OSKK in writing of (a) any
notice or other communication from any third Person alleging that the consent of
such third Person is or may be required in connection with the transactions
contemplated by this Agreement, and (b) any material default under any
agreements, contracts or licenses, permits, approvals or other authorizations
from a Governmental Body or event which, with notice or lapse of time or both,
would become such a default on or prior to the Payment Date.
7.4 Business Prior to the Closing Date.
(a) Except as expressly contemplated by this Agreement, until the Closing
Date: (i) SCI shall operate and carry on its business only in the ordinary
course and substantially as presently operated, and in compliance with all
Applicable Laws, Governmental Orders, and the binding agreements, covenants and
restrictions applicable thereto; (ii) SCI shall keep and maintain the Purchased
Assets, the Purchased IT Assets, and the assets subject to the Leases and
Licenses in reasonably good operating condition and repair and, except to the
extent specifically agreed to in writing by OSKK, shall use its best efforts to
maintain the business organization of its business intact and to preserve the
goodwill of the suppliers, contractors, employees, customers and other Persons
having business relations with SCI, (iii) SCI shall not (a) transfer or cause to
be transferred from or to SCI any Employee without the knowledge of OSKK or (b)
otherwise attempt to persuade any Employee to terminate his or her relationship
with the business currently conducted by SCI, and (iv) SCI shall not sell or
otherwise transfer or subject to any Encumbrance any of the assets owned by SCI
as of the Record Date and listed on Schedule 2.1(a)(i) hereto.
(b) In furtherance of the foregoing subsection, and without limitation
thereof, except as expressly contemplated by this Agreement or except with the
express written approval of OSKK, until the Closing Date SCI shall (i) use the
Purchased Assets and the Purchased IT Assets, and the assets subject to the
Leases and Licenses in the usual, regular and ordinary course and in
substantially the same manner as heretofore used, (ii) continue to make payments
when due and not slow down those payments as compared to its normal payment
procedures and to perform its obligations under the leases, contracts,
commitments and other agreements, (iii) not sell, dispose of, encumber or enter
into any agreement for the sale, disposition or Encumbrance of, all or any part
of the Purchased Assets, the Purchased IT Assets or the assets subject to the
Leases and Licenses, except for the sale of Inventories in the ordinary course
of business consistent with past practice and the purchase of the Purchased IT
Assets in accordance with Article 2.3(a), (iv) with respect to any
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Employee, not enter into any employment contract or, except in the ordinary
course of business, increase any such Employee's compensation or benefits
without the consent of OSKK, and (v) not enter into any contracts or commitments
with respect to the business currently conducted by SCI not in the ordinary
course of business or involving receipt or payment of more than two hundred
thousand (200,000) yen.
7.5 Transferred Warranties.
SCI shall use its best efforts prior to the Closing Date to transfer to
OSKK on the Closing Date: (i) any applicable manufacturer's warranties with
respect to the Purchased Assets, and (ii) any applicable manufacturer's and/or
third party licensor's warranties with respect to the Purchased IT Assets.
7.6 Court-Appointed Examination.
OSKK shall use its best efforts to apply for the examination by the
relevant court-appointed examiner pursuant to Article 246 of the Commercial Code
of Japan (Law No. 48 of 1899) (jigo-setsuritsu) as soon as practicable after the
Effective Date.
ARTICLE 8
SUBSIDY, EXCHANGE RATE AND UNDELIVERED ORDERS
8.1 Subsidy.
OSI and OSKK agree that upon and subject to the consummation of the
transactions contemplated herein on the Closing Date, SCI and its Affiliates
shall be relieved from all obligations outstanding on the Closing Date under the
Disposable Distribution Agreement between OSI and SCI, dated as of November 7,
1996 (the "Disposable Distribution Agreement") to pay the difference between (i)
the Projected Quarterly Cost of Goods Sold and (ii) the actual OSI Cost of
Production plus OSI Other Expenses (each as defined in the Disposable
Distribution Agreement), for supply of product by OSI and its Affiliates to SCI
and its Affiliates prior to the Closing Date. Notwithstanding the foregoing, SCI
and its Affiliates shall not be relieved of any obligations to pay OSI's
allocation of Gross Profit (as defined in the Disposable Distribution Agreement)
for product supplied by OSI and its Affiliates to SCI and its Affiliates
pursuant to the Disposable Distribution Agreement.
8.2 Exchange Rate.
Tokyo Mitsubishi Bank's TTM (Telegraphic Transfer Mean) exchange rate
between Japanese Yen and United States Dollars shall be applicable to any and
all payments due or amount offset under this Agreement. Such TTM exchange rate
shall be determined as of the seventh (7th) business day before each and every
payment made or amount offset is applied.
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8.3 Undelivered Orders.
During the period between the Effective Date and the Closing Date, SCI
will not enter into any commitments or agreements to purchase supplies
("Post-Effective Date Supply Orders"), unless SCI has first (i) provided OSKK
and OSI a copy of the unexecuted Post-Effective Date Supply Order, including,
the name of the counter-party, price terms and quantity, and (ii) received
OSKK's and OSI's written approval to SCI's entry into the Post-Effective Date
Supply Order. With respect to Post-Effective Date Supply Orders and supply
orders entered into prior to the Effective Date by SCI that are undelivered to
SCI as of the Closing Date and which have been approved by OSKK and OSI in
writing ("Undelivered Orders"), on the Closing Date, SCI will assign the
Undelivered Orders to OSKK and OSKK will assume SCI's obligations under the
Undelivered Orders. OSKK will not assume any obligations under any supply orders
not approved in writing by OSKK.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF OSI AND OSKK
The obligations of OSKK to consummate the transactions provided for in
this Agreement shall be subject, at the option of OSI and OSKK, to the
satisfaction on or prior to the Closing Date, of the following conditions.
9.1 No Misrepresentation or Breach of Covenants and Warranties.
Each of the representations and warranties of SCI, SE, SECL and SC
contained or referred to herein that are qualified by materiality or Material
Adverse Effect shall have been true and correct when made and shall be true and
correct on the Closing Date (except that those representations and warranties
that address matters only as of a particular date need only be true and correct
as of such date), and each of the representations and warranties of SCI, SE,
SECL and SC that are not so qualified shall have been true and correct in all
material respects when made and shall be true and correct in all material
respects on the Closing Date; SCI, SE, SECL and SC shall have complied with and
not otherwise breached the covenants set forth herein; and SCI, SE, SECL and SC
shall have delivered to OSKK and OSI such certificates of their officers to
evidence compliance with the conditions set forth in this Article 9.1 as may be
reasonably requested by OSKK and OSI.
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9.2 No Restraint or Litigation.
No action, suit, investigation or proceeding shall have been instituted or
overtly threatened to restrain or prohibit or otherwise challenge the legality
or validity of the transactions contemplated hereby.
9.3 Necessary Approvals.
The parties shall have received the approvals and consents of all Persons
necessary to consummate the transactions contemplated hereby.
9.4 Employees.
85% or more of the Key People identified by OSKK on Schedule 2.2(c) and
75% or more of the Employees on Schedule 2.2(a) shall have accepted offers of
employment by OSKK.
9.5 No Material Adverse Change.
There shall have been no change or changes with respect to the Purchased
Assets, the Purchased IT Assets, the assets subject to the Leases and Licenses
or the business currently conducted by SCI having a Material Adverse Effect.
9.6 Contract with Chart K.K..
On or prior to the Closing Date, OSKK shall have entered into a
distribution service agreement with Chart K.K. in substantially the form
attached hereto as Schedule 2.4(a).
9.7 Contract with SE.
On or prior to the Closing Date, OSKK and SE shall have entered into an
agreement in a form listed in Schedule 2.8(b).
9.8 Purchased IT Assets and Leases and Licenses.
On or prior to the Closing Date, (i) SCI shall have acquired the Purchased
IT Assets from Century Leasing Company and shall be prepared to transfer to OSKK
the Purchased IT Assets on the Closing Date and (ii) OSKK shall have entered
into lease or license agreements for all of the assets subject to the Leases and
Licenses on terms and conditions reasonably satisfactory to OSKK, other than
those assets subject to the Leases and Licenses set forth on Schedule 9.8
attached hereto ("Non-Essential Leases and Licenses"), or the lessors or
licensors of the Leases and Licenses, other than the lessors and licensors of
the Non-Essential Leases and Licenses, shall have consented to the transfer of
the Leases and Licenses to OSKK.
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9.9 Contract with regard to the Leased Premises.
On or prior to the Closing Date, OSKK and the owners of the Leased
Premises shall have entered into lease agreements for the Leased Premises on
terms substantially in accordance with the terms set forth in the memoranda of
understanding attached hereto as Schedule 9.9.
9.10 License Agreements with SC.
On or prior to the Closing Date, OSKK and SC shall have entered into the
license agreement in a form listed in Schedule 2.10(b) and SCI shall have
assigned the fully-paid Cielo Trademark License Agreement to OSKK and SC shall
have consented to the assignment.
9.11 Permits.
OSKK shall have obtained all Permits necessary or used in the operation of
SCI's business as currently conducted, other than the importation licenses
identified in Article 2.6(a)(1) and (2) and licenses related to drug sales.
ARTICLE 10
CONDITIONS PRECEDENT TO OBLIGATIONS OF SCI, SE, SECL AND SC
The obligations of SCI, SE, SECL and SC to consummate the transactions
provided for in this Agreement shall be subject, at the option of SCI, SE, SECL
and SC to the satisfaction on or prior to the Closing Date, of the following
conditions:
10.1 No Misrepresentation or Breach of Covenants and Warranties.
Each of the representations and warranties of OSKK and OSI contained or
referred to herein that are qualified by materiality shall have been true and
correct when made and shall be true and correct on the Closing Date (except that
those representations and warranties that address matters only as of a
particular date need only be true and correct as of such date), and each of the
representations and warranties of OSKK and OSI that are not so qualified shall
have been true and correct in all material respects when made and shall be true
and correct in all material respects on the Closing Date; OSKK and OSI shall
have complied with and not otherwise breached the covenants set forth herein;
and OSKK and OSI shall have delivered to SCI, SE, SECL and SC such certificates
of their officers to evidence compliance with the conditions set forth in this
Article 10.1 as may be reasonably requested by SE, SECL and SC.
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10.2 No Restraint or Litigation.
No action, suit, investigation or proceeding shall have been instituted or
overtly threatened to restrain, prohibit or otherwise challenge the legality or
validity of the transactions contemplated hereby.
ARTICLE 11
INDEMNIFICATION
11.1 Indemnification by SCI.
SCI agrees to indemnify and hold harmless (collectively,
"indemnification") each OSI Group Member from and against any and all Losses and
reasonable Expenses incurred by such OSI Group Member in connection with or
arising from:
(a) any breach by SCI of any of its covenants in this Agreement;
(b) any breach of any warranty or the inaccuracy of any
representation of SCI contained or referred to in this Agreement or any
certificate of title delivered by or on behalf of SCI pursuant hereto; and
(c) the Excluded Liabilities.
The indemnification provided for in Article 11.1 shall survive termination
or expiration of this Agreement.
11.2 Indemnification by SE, SECL and SC.
SE, SECL and SC agree to indemnify and hold harmless (collectively,
"indemnification") each OSI Group Member from and against any and all Losses and
reasonable Expenses incurred by such OSI Group Member in connection with or
arising from:
(a) any breach by SE, SECL and/or SC of any of their covenants in
this Agreement;
(b) any breach of any warranty or the inaccuracy of any
representation of SE, SECL and/or SC contained or referred to in this Agreement
or any certificate of title delivered by or on behalf of SE, SECL and/or SC
pursuant hereto; and
(c) the Excluded Liabilities.
The indemnification provided for in Article 11.2 shall survive termination
or expiration of this Agreement.
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11.3 Indemnification by OSKK and OSI.
OSKK and OSI agree to indemnify and hold harmless (collectively,
"indemnification") each SCI Group Member from and against any and all Losses and
reasonable Expenses incurred by such SCI Group Member in connection with or
arising from:
(a) any breach by OSKK and/or OSI of any of their covenants in this
Agreement;
(b) any breach of any warranty or the inaccuracy of any
representation of OSKK, Sidecastle and/or OSI contained or referred to in this
Agreement or any certificate delivered by or on behalf of OSKK and/or OSI
pursuant hereto, and
(c) OSI's transfer of SCI's accounts payable to OSKK.
The indemnification provided for in Article 11.3 shall survive termination
or expiration of this Agreement.
11.4 NO CONSEQUENTIAL OR PUNITIVE DAMAGES.
In no event shall any Party be liable to any other, whether arising under
contract, tort (including negligence), strict liability or otherwise, for loss
of anticipated profits or consequential loss or consequential damage of any
nature, nor exemplary or punitive damages, arising at any time from any cause
whatsoever, incurred or claimed to have been incurred by THE other Party. This
Article 11.4 shall apply notwithstanding any other provision of this Agreement
and shall survive the termination or expiration of this Agreement.
ARTICLE 12
TERMINATION
12.1 Termination.
Notwithstanding anything in this Agreement to the contrary, this Agreement
may be terminated:
(a) by the mutual consent of all of the parties;
(b) by OSI Group Members in the event of any material breach by any
SCI Group Members of any of the representations, warranties, covenants or
agreements of any SCI Group Members contained herein and the failure of any SCI
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Group Members to cure such breach within fifteen (15) days after receipt of
notice from OSI Group Members requesting such breach to be cured;
(c) by SCI Group Members in the event of any material breach by any
OSI Group Members of any of any OSI Group Members' representations, warranties,
covenants or agreements contained herein and the failure of any OSI Group
Members to cure such breach within fifteen (15) days after receipt of notice
from any SCI Group Members requesting such breach to be cured; or
(d) by any party hereto in the event that any other party to this
Agreement suspends payments (shiharai-teishi), becomes unable to make payments
(shiharai-funou), is subject to disposition due to delinquency in payment of
taxes and public imposts, is subject to provisional attachment or disposition
(▇▇▇▇-sashiosae/▇▇▇▇-shobun), is ordered to suspend transactions with banks and
financial institutions, a note or check drawn by such party is dishonored
(fuwatari), is filed for compulsory execution (kyousei-shikkou), public auction,
bankruptcy, corporate reorganization procedure, civil rehabilitation procedure
or other similar proceeding, or its dissolution is resolved.
12.2 Notice of Termination.
Any party desiring to terminate this Agreement pursuant to Article 12.1
above shall give written notice of such termination to the other party to this
Agreement.
12.3 Effect of Termination.
In the event that this Agreement shall be terminated pursuant to this
Article 12, all further obligations and liabilities of the parties under this
Agreement (other than Articles 14.2, 14.13 and 14.14) shall be terminated,
except for liabilities resulting from the willful breach of this Agreement
occurring prior to the proper termination of this Agreement..
ARTICLE 13
GUARANTEES
13.1 SE's Guarantee.
SE hereby guarantees SCI's performance of the obligations under this
Agreement. Even in the case where SCI is dissolved in the future, SE shall
perform SCI's obligations under this Agreement.
13.2 OSI's Guarantee.
OSI hereby guarantees OSKK's performance of the obligations under this
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Agreement. Even in the case where OSKK is dissolved in the future, OSI shall
perform OSKK's obligations under this Agreement.
ARTICLE 14
GENERAL PROVISIONS
14.1 Survival of Obligations.
All representations, warranties, covenants and obligations contained in
this Agreement shall survive the consummation of the transactions contemplated
by this Agreement; provided that all remedies and claims in connection with
breaches of this Agreement shall be subject to Article 11 and the limitations
contained therein. The respective representations and warranties of each party
hereto contained herein shall not be deemed waived or otherwise affected by any
investigation made by the other party hereto and shall survive the Payment Date.
14.2 No Public Announcements.
Except as heretofore made, neither SCI, SE, SECL, SC, OSI nor OSKK shall,
without the approval of the others, make any press release or other public
announcement concerning this Agreement, its existence or the transactions
contemplated by this Agreement, except as and to the extent that any such party
shall be so obligated by law, in which case the other party shall be advised and
the parties shall use their reasonable efforts to cause a mutually agreeable
release or announcement to be issued.
14.3 Notices.
All notices, requests, instructions or other communications or other
documents required or permitted hereunder shall be in writing and shall be
deemed given or delivered when delivered personally via telecopier or five (5)
days after being sent, when sent by registered or certified mail, or one (1) day
after being sent, when sent by overnight courier, addressed as follows:
If to OSI, to:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇
Attn.: ▇▇▇▇▇ ▇▇▇▇▇▇▇, President & CEO
If to OSKK, to:
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28-11, ▇▇▇▇▇ ▇-▇▇▇▇▇, ▇▇▇▇▇-▇▇, ▇▇▇▇▇ ▇▇▇-▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇▇▇ ▇▇▇▇, President
If to SCI, SE, SECL or SC to:
Seiko Epson Corporation
8793 ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇-▇▇▇▇▇, ▇▇▇▇▇▇▇-▇▇▇, ▇▇▇▇▇▇-▇▇▇
▇▇▇-▇▇▇▇ ▇▇▇▇▇
Attn.: Osamu Kamiwaki, Corporate General Manager
or to such other address as such party may indicate by a notice delivered
to the other parties hereto.
14.4 Successors and Assigns.
(a) This Agreement and the rights of either party under this
Agreement shall not be assignable without the prior written consent of the other
party hereto.
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended or shall be construed to confer
upon any Person other than the parties and successors and assigns permitted by
this Article 14.4 any right, remedy or claim under or by reason of this
Agreement.
14.5 Access to Records After Closing Date.
For a period of three (3) years after the Closing Date, OSKK and its
representatives shall have reasonable access to all of the books and records of
SCI's business which SCI or any of its Affiliates have retained after the
Closing Date. Such access shall be afforded upon receipt of reasonable advance
notice and during normal business hours.
14.6 Entire Agreement; Amendments.
(a) This Agreement and the exhibits and schedules referred to herein and
the documents delivered pursuant hereto (including the Shukko Agreement in
relation to ▇▇. ▇▇▇▇▇▇▇) contain the entire understanding of the parties hereto
with regard to the subject matter contained herein or therein, and supersede all
prior agreements or understanding between or among any of the parties hereto.
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(b) The Non-Disclosure Agreements between SE, SECL, SCI and OSI dated
October 19, 1995 and May 20, 1999 are hereby terminated (subject to the survival
of those rights and obligations respectively therein in accordance with their
respective terms). The Letter of Intent between the parties dated March 16, 2001
(including Article 7 thereof) is hereby terminated. The Letter of Intent between
the parties dated September 25, 2001 is hereby terminated.
(c) Termination of the Disposable and Daily Wear Distribution Agreements
between OSI and SCI dated November 7, 1996 (subject to the survival of those
rights and obligations respectively therein in accordance with their respective
terms) shall become effective as upon OSKK having obtained, under its name, the
license for importation and sales of medical devices for the products that SCI
currently imports and distributes in Japan and having transferred to it the
authorizations for the importation of such products. The Clinical Investigation
Agreements, mentioned in Article 17(f) and Article 15(f) of such Disposable and
Daily Wear Distribution Agreements, respectively, shall terminate in accordance
with those articles.
(d) This Agreement shall not be amended, modified or supplemented except
by a written instrument signed by an authorized representative of each of the
parties hereto.
14.7 Interpretation.
Article titles and headings to sections herein are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement. The schedules referred to
herein shall be construed with and as an integral part of this Agreement to the
same extent as if they were set forth verbatim herein.
14.8 Waivers.
Any term or provision of this Agreement may be waived, or the time for its
performance may be extended, by the party or parties entitled to the benefit
thereof. Any such waiver shall be validly and sufficiently authorized for the
purposes of this Agreement if, as to any party, it is authorized in writing by
an authorized representative of such party. The failure of any party hereto to
enforce at any time any provision of this Agreement shall not be construed to be
a waiver of such provision, nor in any way to affect the validity of this
Agreement or any part hereof or the right of any party thereafter to enforce
each and every such provision. No waiver of any breach of this Agreement shall
be held to constitute a waiver of any other or subsequent breach.
14.9 Expenses.
Except as otherwise expressly agreed to in writing by the parties, each
party hereto will pay all Expenses incident to its negotiation and preparation
of this
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Agreement and to its performance and compliance with all agreements and
conditions contained herein on its part to be performed or complied with.
14.10 Partial Invalidity.
Wherever possible, each provision hereof shall be interpreted in such
manner as to be effective and valid under Applicable Laws, but in case any one
or more of the provisions contained herein shall be held to be invalid, illegal
or unenforceable in any respect, such provision shall be ineffective to the
extent, but only to the extent, of such invalidity, illegality or
unenforceability without invalidating the remainder of such invalid, illegal or
unenforceable provision or provisions or any other provisions hereof, unless
such a construction would be unreasonable.
14.11 Execution in Counterparts.
This Agreement may be executed in one or more counterparts, each of which
shall be considered an original instrument, but all of which shall be considered
one and the same agreement, and shall become binding when one or more
counterparts have been signed by each of the parties hereto and delivered to
each of SCI and OSKK. A facsimile copy of a signature shall have the same effect
as an original signature.
14.12 Further Assurances.
(a) On the Closing Date SCI shall (i) deliver to OSKK such other
bills of sale, deeds, endorsements, assignments and other good and sufficient
instruments of conveyance and transfer, in a form reasonably satisfactory to
OSKK and its counsel, as OSKK may reasonably request or as may be otherwise
reasonably necessary to vest in OSKK all the rights, title and interest of SCI
in, to or under any or all of the Purchased Assets and Purchased IT Assets
(subject to Article 2.3)), and (ii) take all steps as may be reasonably
necessary to put OSKK in actual possession and control of all the Purchased
Assets and Purchased IT Assets (subject to Article 2.3).
(b) OSKK and SCI hereby agree that, from time to time following the
Closing Date, in addition to those documents and actions specified herein, and
without the receipt of further consideration, they will execute and deliver such
documents and take such actions as the other party may reasonably request in
such form as may be appropriate, if necessary or advisable in connection with
the consummation of the transactions contemplated hereby or of any other
agreement delivered in connection herewith, including, without limitation, the
transfer of the Purchased Assets and Purchased IT Assets.
14.13 Confidentiality.
(a) OSI and OSKK agree to hold in strict confidence all proprietary
information and documents received from SE and SCI concerning the Purchased
Assets, Purchased IT Assets and the business currently conducted by SCI (except
for
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those OSKK purchased), and OSI and OSKK will not use any such information and
documents for any purpose other than in connection with the transactions
contemplated hereby; provided, however, that the foregoing limitations shall
cease to be effective on the Closing Date, subject to any third party
confidentiality obligations. If the transactions herein contemplated are not
consummated, OSI and OSKK will continue to hold such information and documents
in strict confidence and, upon receipt of notice requesting such action, will
return to SE and SCI all such documents without retaining copies thereof;
provided, however, that the obligation of OSI and OSKK to maintain such
confidentiality shall not apply to any information or documents (i) that are
required by Applicable Laws or the terms of this Agreement to be disclosed, or
(ii) that are in the public domain at the time furnished, or that become in the
public domain thereafter through any means other than as a result of any act of
OSI or OSKK which constitutes a breach of this Agreement.
(b) Beginning as of the Closing Date, SE and SCI agree to hold in
strict confidence all proprietary information provided by OSI and OSKK under the
terms of this Agreement and will not use such information except in furtherance
of its continuing business relationships with OSI and OSKK. If the transactions
herein contemplated are not consummated, SE and SCI will continue to hold such
information in strict confidence; provided, however, that the obligations of SE
and SCI hereunder shall not apply to any information or documents (i) that are
required by Applicable Laws or the terms of this Agreement to be disclosed, or
(ii) that are in the public domain at the time furnished, or that become in the
public domain thereafter through any means other than as a result of any act of
SE or SCI which constitutes a breach of this Agreement.
14.14 Governing Law.
This Agreement shall be interpreted in English and shall be governed by
and construed in accordance with the laws of Japan (without giving effect to its
conflicts of laws provisions).
14.15 Dispute Resolution.
Any dispute or claim arising out of or relating to this Agreement, or
breach hereof shall be brought to the Tokyo District Court.
14.16 Force Majeure.
No delay or non-performance by either party hereto of any obligation under
this Agreement (except the obligation to pay money) caused by the occurrence of
any of the following events shall constitute a default or breach under this
Agreement or give rise to any claim for damages or indemnification: earthquake,
typhoon, tidal wave, hurricane, storm, lightning, or other natural or physical
disasters, epidemics, plagues, confiscation, nationalization, war, rebellion,
hostilities, terrorist acts, strikes, labor shortages, or any other event beyond
the reasonable control of each party, as the case may be.
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14.17 Schedules and Exhibits.
All schedules and exhibits referenced in this Agreement shall be in
Japanese, except for Schedules 2.2(c), 2.5(c), 4.1(a), 5.1(c), 5.1(d)(iii),
5.1(l) and 9.8, and Exhibit C, which shall be in English.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the date first above written.
OSKK
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇
-------------------------------
Title: President
-------------------------------
OSI
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
Title: President & CEO
-------------------------------
SCI
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------
Title: President
-------------------------------
SE
By: /s/ Osamu Kamiwaki
---------------------------------
Name: Osamu Kamiwaki
-------------------------------
Title: Corporate General Manager
-------------------------------
MANAGER
SECL
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇
-------------------------------
Title: President
-------------------------------
SC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
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Title: Executive Director
-------------------------------
Schedule 1.1
DEFINITIONS
"Accounts Receivable" has the meaning specified in Article 2.1(a)(ii)
hereof.
"Affiliate" means any entity that controls, is controlled by, or is under
common control with, each party, as the case may be. An entity shall be deemed
to be in control of another entity only if, and for so long as, it owns or
controls more than fifty percent (50%) of the shares of the subject entity
entitled to vote in the election of directors (or, in the case of an entity that
is not a corporation, for the election of the corresponding managing authority).
"Applicable Laws" means any applicable federal, state and local laws,
statutes, regulations, rules, codes, ordinances, judgments, guidelines,
injunctions, decrees, orders, permits, approvals, and treaties, enacted,
adopted, issued or promulgated by any Governmental Body on or prior to the
Payment Date.
"Chart K.K." means Chart K.K. having its registered office at ▇-▇
▇▇▇▇▇▇▇▇ ▇-▇▇▇▇▇, ▇▇▇▇▇▇▇-▇▇, ▇▇▇▇▇, ▇▇▇▇▇.
"Cielo Trademark License Agreement" means the Trademark License Agreement
between SC and SCI dated as of May 12, 1998.
"Clinical and Analytical Evaluation Services Agreement" has the meaning
specified in Article 2.12(a) hereof.
"Clinical and Analytical Instruments" means clinical and analytical
instruments owned by SE for examining and evaluating imported products for
compliance with the Pharmaceutical Affairs Law of Japan, a list of which is set
forth on Schedule 2.12(b).
"Closing Accounts Receivable Schedule" has the meaning specified in
Article 3.2(a) hereof.
"Closing Asset Schedules" has the meaning specified in Article 3.2(a)
hereof.
"Closing Date" means April 1, 2002 (or such other time and date as the
parties shall agree in writing), or if the conditions set forth in Articles 9
and 10 shall have not been satisfied or waived by such date (except for
conditions set forth in Articles 9 and 10 which by their terms are to be
completed on the Closing Date), as soon as practicable (but in no event more
than 10 business days) after such conditions shall have been satisfied or waived
by such date.
"Closing Excepted Inventory Schedule" has the meaning specified in Article
3.2(a) hereof.
"Closing Merchantable Inventory Schedule" has the meaning specified in
Article 3.2(a) hereof.
"Consigned Inventory" means the Inventory to which SCI owns the ownership,
but which SCI has its retailers or distributors possess and manage for the
benefit of SCI.
"Contracts" has the meaning specified in Article 5.1(f) hereof.
"Counter-parties" has the meaning specified in Article 2.5(c) hereof.
"Discontinued Products" means the products set forth on Exhibit C hereto.
"Disposable Distribution Agreement" has the meaning specified in Article
8.1 hereof.
"Effective Date" means the date of this Agreement first written above.
"Encumbrance" means any lien, claim, charge, security interest, mortgage,
pledge, easement, conditional sale or other title retention agreement, defect in
title, covenant or other restrictions of any kind.
"Environmental Law" shall mean all laws which regulate or relate to the
protection or clean-up of the environment, the use, treatment, storage,
transportation, generation, manufacture, processing, distribution, handling or
disposal of, or emission, discharge or other release or threatened release of,
Substances or otherwise dangerous substances, wastes, pollution or materials
(whether gas, liquid or solid), the preservation or protection of waterways,
groundwater, drinking water, air, wildlife, plants or other natural resources,
or the health and safety of persons or property, including protection of the
health and safety of employees.
"Excepted Inventory" means Non-Consigned Inventory (i) which is damaged,
defective, opened, improperly labeled or otherwise not in resalable condition or
which are not legally approved for sale in Japan, (ii) which has an expiration
date of shorter than six (6) months from the Closing Date, (iii) which is in
excess of two (2) years' supply computed from calendar year 2001 net shipments,
(iv) which is part of a rejected lot or (v) which consists of Discontinued
Products.
"Excluded Liabilities" means all Losses and Expenses of SCI, whether
liquidated or unliquidated, or known or unknown, whether arising out of
occurrences prior to, at or after the Effective Date, including, without
limitation: (a) Losses or Expenses related to any Pre-Closing Environmental
Matter, (b) any Loss or Expense to or in respect of any employees or former
employees of SCI, including, without limitation (i) any employment agreement,
whether or not written, between SCI and any person, (ii) any Loss or Expense
under any consulting, severance or similar contract, arrangement, policy, plan
(written or oral), program, or commitment providing for insurance coverage,
workers' compensation, disability benefits, supplemental unemployment benefits,
pension benefits, welfare benefits, vacation benefits, retirement benefits,
life, health, disability or accident benefits, deferred compensation,
profit-sharing bonuses or other forms of incentive compensation or
post-retirement insurance, compensation or benefits which SCI may have incurred,
and (iii) any claim of an unfair labor practice, or any claim under any
unemployment compensation or worker's compensation law or regulation or under
Applicable Law
regarding employment discrimination, which shall have been asserted on or prior
to the Closing Date or is based on acts or omissions which occurred on or prior
to the Closing Date; (c) any Loss or Expense of SCI in respect of any Tax, and
any Loss or Expense in respect of Taxes attributable to Purchased Assets and
Purchased IT Assets for taxable periods, or portions thereof, ending on or prior
to the Closing Date consistent with Article 3.5; (d) any Loss or Expense arising
from any injury to or death of any person or damage to or destruction of any
property, whether based on negligence, breach of warranty, strict liability,
enterprise liability or any other legal or equitable theory arising from defects
in products manufactured or from services performed by or on behalf of SCI on or
prior to the Closing Date, except to the extent any such Loss or Expense is
attributable to defects in products supplied to SCI by OSI or its Affiliates;
and (e) any Loss or Expense of SCI arising out of or related to any action, suit
or proceeding against SCI or any action, suit or proceeding which adversely
affects the Purchased Assets or the Purchased IT Assets and which shall have
been asserted on or prior to the Closing Date or to the extent the basis of
which shall have arisen on or prior to the Closing Date.
"Expenses" means any and all costs and expenses incurred, including,
without limitation, court filing fees, court costs, arbitration fees or costs,
witness fees, and fees and expenses of legal counsel, investigators, expert
witnesses, consultants, accountants and other professionals.
"Governmental Body" means any national, federal, state, county, local,
district, public authority, public agency, or any other political subdivision,
public corporation, or governmental or regulatory authority whether
international or of any country or autonomous territory.
"Governmental Order" means any judgment, order, award or decree of any
foreign, national, federal, state, local or other court or tribunal, or any
Governmental Body and any award in any arbitration proceeding, as in effect
during the period from the Effective Date up to and including the Payment Date.
"Gross Margin" has the meaning specified in Article 2.9 hereof.
"Intangible Assets" has the meaning specified in Article 2.1(a)(v) hereof.
"Intellectual Property" means (a) inventions, whether or not patentable,
whether or not reduced to practice, and whether or not yet made the subject of a
pending patent application or applications; (b) ideas and conceptions of
potentially patentable subject matter, including without limitation, any patent
disclosures, whether or not reduced to practice and whether or not yet made the
subject of a pending patent application or applications; (c) all worldwide
statutory invention registrations, patents, patent registrations and patent
applications (including all reissues, divisions, continuations,
continuations-in-part, extensions and reexaminations) and all rights therein
provided by law, multinational treaties or conventions and all improvements to
the inventions disclosed in each such registration, patent or application; (d)
trademarks, service marks, trade dress, logos, trade names and corporate names,
including all of the goodwill associated therewith, whether or not registered,
including all common law rights, and
registrations and applications for registration thereof, including, but not
limited to, all marks registered in the Patent Office of Japan, and the
trademark offices of other nations throughout the world, and all rights therein
provided by multinational treaties or conventions; (e) copyrights, whether or
not registered, and registrations and applications for registration thereof, and
all rights therein provided by law, multinational treaties or conventions; (f)
mask works or registrations of mask works; (g) trade secrets and confidential,
technical information (including ideas, formulas, compositions, inventions, and
conceptions of inventions whether patentable or unpatentable and whether or not
reduced to practice); (h) technology (including know-how and show-how),
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, plans, proposals, technical data
and copyrightable works, whether secret or confidential or not; (i) copies and
all tangible embodiments of all of the foregoing, in whatever form or medium;
(j) all rights to obtain and rights to apply for patents, and to register
trademarks and copyrights; and (k) all rights to ▇▇▇ for and recover and retain
damages, costs or attorneys' fees for present and past infringement of any of
the intellectual property rights hereinabove set out.
"Inventory" means disposable contact lenses, conventional contact lenses,
solutions and other contact lens related products that SCI has purchased for its
contact lens business and business related thereto, but SCI has not yet sold to
anyone. The Inventory consists of the Consigned Inventory and the Non-Consigned
Inventory.
"Leased Premises" means the premises where SCI conducts its contact lens
business and business related thereto listed in Exhibit A.
"Losses" means any and all losses, costs, obligations, liabilities,
settlement payments, awards, judgments, fines, penalties, damages, deficiencies
or other charges.
"Material Adverse Effect" means a material adverse effect on the physical
condition or value of the Purchased Assets, the Purchased IT Assets, the assets
subject to the Leases and Licenses or the business currently conducted by SCI.
"Merchantable Consigned Inventory" means Consigned Inventory other than
Excepted Inventory.
"Non-Consigned Inventory" means all Inventory other than Consigned
Inventory.
"Non-Essential Leases and Licenses" has the meaning specified in Article
9.8 hereof.
"OSI Group Member" means OSI, OSKK, their officers, directors,
stockholders, agents and Affiliates.
"Payment Date" means the date that is twenty-nine (29) days following the
Closing Date; provided, however, in the event SCI and OSKK shall not have agreed
upon the Closing Asset Schedules pursuant to Article 3.2 with respect to which
the consideration specified in Article 3.1 is to be determined, such later date
on which
disputes with respect to the Closing Asset Schedules shall be agreed upon
pursuant to Article 3.2), or such other time and date as the parties shall agree
in writing.
"Permits" means all licenses, permits, franchises, approvals,
authorizations, consents or orders of, or filings with, any Governmental Body or
any other Person, necessary or used in the business of SCI as conducted on and
prior to the Effective Date.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, Governmental Body or any other entity.
"Post-Effective Date Supply Order" has the meaning specified in Article
8.3 hereof.
"Pre-Closing Environmental Matters" means (a) the production, use,
generation, emission, storage, treatment, transportation, recycling, disposal,
discharge, release, or other handling or disposition of any kind on or prior to
the Closing Date (collectively, "Handling") by SCI or its Affiliates (including
any other entities, the assets or obligations of which have been acquired or
assumed by SCI or to which SCI has succeeded, collectively, "Predecessors") of
any Substance, either in, on, from or under any real property or facility owned,
leased or used at any time by SCI or its Affiliates or their Predecessors in
connection with the operation of SCI's business, including any offsite disposal
facilities (an "Operating Site"), including, without limitation, the effects of
such Handling of Substances on resources, Persons, or property within or outside
the boundaries of any Operating Site, and (b) any other act or omission of the
SCI or its Affiliates or their Predecessors prior to the Closing Date that gives
rise to liability or potential liability under any Environmental Law.
"Purchased Assets" has the meaning specified in Article 2.1(a) hereof.
Purchased Assets are exclusive of (i) those Intellectual Properties proprietary
to SE and/or SECL set forth in Schedule 2.11, (ii) the Clinical and Analytical
Instruments owned by SE (set forth in Schedule 2.12(b)), (iii) any Purchased IT
Assets or assets subject to the Leases and Licenses, and (iv) any third party
Intellectual Property.
"Purchased IT Assets" has the meaning specified in Article 2.3(a) hereof;
provided, however, for purposes of this Agreement, Purchased IT Assets are
neither Tangible Fixed Assets nor Intangible Assets nor Purchased Assets.
"Record Date" means January 31, 2002.
"Return Credit" has the meaning specified in Article 2.9 hereof.
"SCI Group Member" means SCI, SE, SECL, SC, their officers, directors,
stockholders, agents and Affiliates.
"SCI Liaison" has the meaning specified in Article 2.2(h) hereof.
"Substance" means any pollutants, contaminants, chemicals, waste and any
toxic, infectious, carcinogenic, reactive, corrosive, ignitible or flammable
chemical or chemical compound or hazardous substance, material or waste, whether
solid, liquid or gas, including any quantity of asbestos in any form, urea
formaldehyde, PCB's, radon gas, crude oil or any fraction thereof, all forms of
natural gas, petroleum products or by-products or derivatives, radioactive
substance, waste waters, sludges, slag and any other substance, material or
waste that is subject to regulation, control or remediation under any
Environmental Laws.
"Tangible Fixed Assets" has the meaning specified in Article 2.1(a)(i)
hereof.
"Tax" means any national, federal, prefectural, state or local net income,
alternative or add-on minimum, gross income, gross receipts, property, sales,
use, value-added, registration, transfer, gains, license, excise, employment,
payroll, withholding or minimum tax, or any other tax custom, duty other than
stamp duty, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or any penalty, addition to tax or
additional amount imposed by any Governmental Body.
"Undelivered Orders" has the meaning specified in Article 8.3 hereof.
LIST OF SCHEDULES AND EXHIBITS
Schedule 1.1
Definitions
Schedule 2.1(a)(i)(x)
Tangible Fixed Assets At Book Value (as of the Record Date), Excluding Assets
Without Charge
Schedule 2.1(a)(i)(y)
Tangible Fixed Assets With No Book Value or Without Charge (as of the Record
Date)
Schedule 2.1(a)(ii)
Accounts Receivable (as of the Record Date)
Schedule 2.1(a)(iii)
Non-Consigned Inventories (as of the Record Date)
Schedule 2.1(a)(iv)
Consigned Inventories (as of the Record Date)
Schedule 2.1(a)(v)(h)
Trademarks
Schedule 2.1(a)(v)(i)
Telephone Subscription Rights (as of the Record Date)
Schedule 2.2(a)
Employees (as of the Record Date)
Schedule 2.2(c)
Key People
Schedule 2.2(h)
SCI Liaison
Schedule 2.3(a)
Purchased IT Assets
Schedule 2.3(b)
Leases and Licenses
Schedule 2.4(a)
Form of Distribution Service Agreement With Chart K.K.
Schedule 2.5(c)
Counter-parties
Schedule 2.6(b)
Zantei-Operation Agreement
Schedule 2.8(b)
Supply Agreement
Schedule 2.9(a)
Form of Notice of Assignment of Account(s) Receivable
Schedule 2.10
Seiko Trademark License Agreement
Schedule 2.11
Intellectual Properties owned by SE and/or SECL (as of the Record Date)
Schedule 2.12(a)
Clinical and Analytical Evaluation Services Agreement Terms
Schedule 2.12(b)
Clinical and Analytical Instruments Owned by SE
Schedule 4.1(a)
Disclosure of Encumbrances on Purchased Assets
Schedule 5.1(c)
Tangible Fixed Assets Not In Good Condition or Repair
Schedule 5.1(d)(iii)
Royalties Payable On Intellectual Property
Schedule 5.1(f)
Contracts
Schedule 5.1(l)
History of Bad Debt Expense
Schedule 5.1(n)
Permits
Schedule 9.8
Non-Essential Leases and Licenses
Schedule 9.9
Memoranda of Understanding Regarding Leased Premises
Exhibit A
Leased Premises
Exhibit B
SCI Accounting Policies and Practices
Exhibit C
Discontinued Products