EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
by and between
TYCO HEALTHCARE GROUP LP
and
▇▇▇▇▇▇ RESPIRATORY CARE INC.
Dated as of September 18, 2000
TABLE OF CONTENTS
Page
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Section 1. Purchase and Sale of Purchased Assets............ 1
Section 2. Assumption of Liabilities........................ 3
Section 3. Purchase Price................................... 5
Section 4. Closing and Payment of Purchase Price............ 5
Section 5. Representations and Warranties of the Seller..... 7
Section 6. Representations and Warranties of the Purchaser.. 12
Section 7. Covenants of the Seller Pending the Closing...... 14
Section 8. Covenants of the Purchaser Pending the Closing... 15
Section 9. Conditions Precedent to Closing by the Seller.... 16
Section 10. Conditions Precedent to Closing by the Purchaser. 18
Section 11. Indemnification.................................. 19
Section 12. Termination of Agreement......................... 21
Section 13. Additional Covenants and Agreements.............. 22
Section 14. Remedies......................................... 28
Section 15. Definitions...................................... 28
Section 16. Confidentiality.................................. 29
Section 17. Expenses......................................... 30
Section 18. Further Assurances............................... 30
Section 19. No Public Announcement........................... 30
Section 20. Entire Agreement................................. 31
Section 21. Amendments and Waivers........................... 31
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Section 22. Notices.......................................... 31
Section 23. Governing Law.................................... 32
Section 24. Successors and Assigns........................... 32
Section 25. Captions......................................... 32
Section 26. Counterparts..................................... 32
Section 27. Severability..................................... 32
Section 28. Attorneys' Fees.................................. 33
Section 29. Waiver of Trial by Jury.......................... 33
SCHEDULES
1(a)(i) Machinery, Equipment and Other Fixed Assets
1(a)(iii) Trademarks, Tradenames
1(a)(iv) Patents
1(a)(v) Material Sales Contracts
1(a)(vi) Other Material Agreements
1(b) Excluded Assets
5(h) Seller's Required Consents
5(i) Litigation
5(l) Absence of Certain Changes
5(n) Customers and Suppliers
5(o) Compliance with Law
5(p) Warranties and Products Liability
5(s) Employee Benefits
6(f) Purchaser's Required Consents
13(h) Transferred Employees
EXHIBITS
A -- Products of the Business
B -- Assignment and Assumption Agreement
C -- Manufacturing and Supply Agreement
D -- Patent License Agreement
E -- Transition Services Agreement
F -- Lease
ASSET PURCHASE AGREEMENT
THIS AGREEMENT, made as of September 18, 2000 (the "Agreement") by and
between Tyco Healthcare Group LP, a Delaware limited partnership (the "Seller"),
and ▇▇▇▇▇▇ Respiratory Care Inc., a California corporation (the "Purchaser").
Capitalized terms used in this Agreement shall have the meanings given to them
upon their first use or in Section 15 herein.
W I T N E S S E T H:
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WHEREAS, Tyco has been engaged in the business of the design, manufacture,
distribution and sale of a product line of endotracheal tubes and related
accessories marketed under the Sheridan trademark (the "Business"), which is
comprised of those specific products listed on Exhibit A attached hereto (the
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"Products");
WHEREAS, the Seller desires to sell and the Purchaser desires to buy, on
the terms and conditions set forth in this Agreement, certain assets of the
Business set forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements hereinafter contained, the parties hereto agree as follows:
Section 1. Purchase and Sale of Purchased Assets.
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(a) Subject to and upon the terms and conditions of this Agreement, the
Seller agrees to sell, assign, transfer and convey to the Purchaser free and
clear of all Liens and the Purchaser agrees to purchase from the Seller, on the
Closing Date (as defined in Section 4), certain assets utilized in the conduct
of the Business which are listed below (and otherwise as noted below):
(i) All machinery and equipment, trade fixtures, tooling, molds, dies,
spare parts and instruments which are used exclusively in the Business (and
certain other fixed assets that are used both in the Business and in other
product lines of the Seller), all of which fixed assets are listed on Schedule
1(a)(i) hereto, and any other such assets acquired by the Seller in the ordinary
course of the Business from the date hereof to the Closing Date (the "Tangible
Assets"); provided however, that possession of the Retained Equipment (as
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defined in the Manufacturing and Supply Agreement (as defined in Section 9(c))
shall be transferred from the Seller to the Purchaser at the termination of the
Manufacturing and Supply Agreement in accordance with the terms thereof;
(ii) All of the Seller's inventories of raw materials, work-in-process
and finished goods (including packaging material) related exclusively to the
Business (the "Inventory");
(iii) All registered and unregistered trademarks, tradenames, service
marks and copyrights (including any and all registrations and applications for
the foregoing), owned by, or registered in the name of the Seller or any of its
Affiliates (including all licenses, consents, approvals and covenants with
respect thereto) which are used exclusively in the Business or in
the design, manufacture, sale or distribution of Products throughout the world,
all of which are listed on Schedule 1(a)(iii) hereto, and any other such assets
acquired by the Seller in the ordinary course of the Business or in the design,
manufacture, sale or distribution of Products throughout the world from the date
hereof to the Closing Date;
(iv) All letters patent and patent applications of the Seller or any
of its Affiliates (including all licenses with respect thereto), and all
reissues, divisions, continuations-in-part and extensions thereof which are used
exclusively in the Business or in the design, manufacture, sale or distribution
of Products throughout the world, all of which are listed on Schedule 1(a)(iv)
hereto, and the Seller's right, title and interest in all technology, know-how,
technical information, inventions, research records and other documentation,
formulae, processes, techniques, technical information, manufacturing and
engineering drawings and information and trade secrets (including all licenses,
consents, approvals and covenants with respect thereto) which relate exclusively
to the Business or in the design, manufacture, sale or distribution of Products
throughout the world (together with the assets in clauses (iii), (vii), (ix) and
(x), the "Intellectual Property");
(v) All rights and privileges of the Seller under and pursuant to
sales contracts of the Seller entered into in the ordinary course of the
Business but only to the extent to which they relate to the Business, all of
which involving payments individually in an aggregate amount greater than
$50,000 for each such contract, are listed in Schedule 1(a)(v) hereto, and any
sales contracts which are entered into in the ordinary course of the Business
from the date hereof to the Closing Date, to the extent that such sales
contracts are uncompleted and outstanding because products have not been shipped
by the Seller prior to the Closing Date, but not including contracts or
arrangements relating to rebates unless such contracts or arrangements are
listed on Schedule 1(a)(v);
(vi) All rights and privileges of the Seller under and pursuant to
contracts or agreements listed in Schedule 1(a)(vi) hereto (together with the
contracts described in clause (v) and the licenses, consents, approvals and
covenants described in clauses (iii) and (iv), the "Assigned Contracts");
(vii) All rights and privileges of the Seller under all guarantees,
warranties, indemnities and other similar rights with respect to any Purchased
Asset (as defined below) and under all permits, licenses, approvals and
qualifications (the "Licenses") held by the Seller exclusively for the purpose
of permitting the manufacture, distribution or sale of Products or exclusively
in the conduct of the Business, in each case, to the extent assignable;
(viii) All rights, claims and causes of action of the Seller against
any third parties with respect to the Business;
(ix) All supplier lists, advertising and promotional materials, price
and product lists, sales records and files, books, records, catalogues, manuals,
financial and accounting records, marketing surveys, production records, quality
control records, papers, software, correspondence and computerized reports of
the Seller (or portions of any aggregated or compiled materials) relating
exclusively to the Business; and
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(x) All customer lists, distribution lists and prospective
customer lists of the Seller relating exclusively to the Business and the
goodwill of the Seller (or portions of any aggregated or compiled materials)
relating exclusively to the Business.
The items of property referred to in Sections 1(a)(i) through 1(a)(x) above
are hereinafter collectively referred to as the "Purchased Assets".
(b) Notwithstanding anything in Section 1(a) to the contrary, the
Purchased Assets shall not include the assets listed on Schedule 1(b) (the
"Excluded Assets").
Section 2. Assumption of Liabilities.
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(a) The Purchaser shall assume the liabilities and obligations of the
Seller under all Assigned Contracts and Licenses, but only to the extent such
liabilities and obligations relate to the Business and arise after the Closing
Date; provided that the Purchaser shall not assume (i) obligations under any
contract or agreement that falls within the definition of Material Contract (as
defined in Section 5(g)), but was not disclosed on Schedules 1(a)(iv), 1(a)(v)
or 1(a)(vi) or (ii) obligations under any purchasing contracts (collectively,
the "Assumed Liabilities");
(b) Except for the obligations expressly assumed under Sections 2(a), (d)
or (e), the Purchaser shall not assume and shall in no event be liable for any
debt, liability, obligation or commitment relating to or arising out of the
Seller's conduct of the Business prior to the Closing Date or any other business
of the Seller whether arising prior to or after the Closing Date (collectively,
the "Excluded Liabilities"), including (without limitation):
(i) Any Tax that is the responsibility of the Seller under Section
13(b);
(ii) Any payments or benefits due to employees and/or independent
contractors of the Seller or any payments or damages (including interest, fines
and penalties) relating to or arising out of any claims made by or with respect
to such employees or independent contractors;
(iii) All welfare-benefit and fringe-benefit claims that were
incurred prior to the Closing by a Transferred Employee (or a Transferred
Employee's eligible spouse or dependent) that are presented within twelve (12)
months following the Closing. For purposes of the foregoing sentence, a claim
will be deemed to have occurred when an individual is provided with medical,
dental, vision or other services that are covered expenses and give rise to the
claim; provided, however, that a claim for life insurance or similar death
benefits will be deemed to have been incurred at the time of death;
(iv) Any long-term disability benefits in accordance with the terms of
an applicable plan to any Transferred Employee whose claim for such long-term
disability benefits was incurred prior to the Closing. For purposes of the
preceding sentence, a long-term disability benefit shall be treated as having
been incurred before the Closing only if the illness or injury
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giving rise to such claim occurred before the Closing and such claim is covered
by a long-term disability benefit insurance coverage prior to the Closing;
(v) All workers' compensation benefits and employers' liability
benefits in accordance with the terms of the applicable workers' compensation
program and applicable law, to any Transferred Employee who immediately prior to
the Closing was legally entitled to workers' compensation benefits and
employers' liability benefits from Seller for any injury or illness that
occurred before the Closing;
(vi) All benefits, if any, accrued with respect to Transferred
Employees prior to the Closing under any deferred compensation plan or right
accrued and vested with respect to a Transferred Employee prior to the Closing;
(vii) Any liability or obligation accruing or arising out of any
claim, circumstance, fact, event or course of conduct occurring or existing at
any time prior to the Closing Date including (without limitation) (A) claims
arising from sales made prior to the Closing Date, including claims due to
Product recalls or for personal injury, death or damage, (B) claims arising from
defects in materials or workmanship, or failure to conform to all other
applicable warranties (other than defects in the design of Products), related to
Products manufactured prior to the Closing Date, (C) rebates accrued or payable
with respect to Products sold to end users (whether by third party resellers or
the Seller) prior to the Closing Date, and (D) intellectual property
infringement claims relating to sales of Products made before the Closing Date;
and
(viii) Any liability or obligation relating to assets (including real
properties) used in the Business and retained by the Seller; and
(ix) Any liability or obligation with respect to the Sheridan
Agreement (as defined below).
The Seller shall retain, pay, perform, discharge and continue to bear all
responsibility for all Excluded Liabilities.
(c) To the extent that the assignment of any Assigned Contract or any
License issued or to be issued by any government or agency or instrumentality
thereof relating to the Business or the Purchased Assets, including, without
limitation, the Permits (as defined in Section 5(k)) to be assigned to the
Purchaser pursuant to this Agreement shall require the consent of any other
party, this Agreement shall not constitute a contract to assign the same if an
attempted assignment would constitute a breach thereof. The Seller shall use
commercially reasonable efforts, and the Purchaser shall cooperate where
appropriate, to obtain any consent necessary to any such assignment. The Seller
shall not, without the Purchaser's approval, agree to amend or modify any
Assigned Contract or License in order to obtain consent to assignment. If any
such consent is not obtained, then the Seller shall cooperate with the
Purchaser, at Purchaser's sole cost and expense, in any reasonable arrangement
requested by the Purchaser designed to provide to the Purchaser the benefits
under any such contract, license, permit, approval or qualification, including
keeping any Assigned Contract or License in effect and enforcing any and all
rights of
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the Seller against the other party thereto arising out of breach or cancellation
thereof by such other party or otherwise.
(d) The Seller shall retain responsibility for, and shall pay all amounts
associated with, all rebate claims associated with the sale of Products by third
party resellers to end-user customers within thirty (30) days after the Closing
Date. The Purchaser shall be responsible for, and shall pay all amounts
associated with, all rebate claims associated with the sale of Products by third
party resellers to end-user customers more than thirty (30) days after the
Closing Date; provided, however, that the parties acknowledge that the Seller
will process such rebates claims during the term of the Transition Services
Agreement (as defined below) and deduct such payments from remittances to be
made to the Purchaser pursuant to, and in accordance with, Section 3(a) of the
Transition Services Agreement.
(e) The Seller shall retain responsibility for, and shall pay all amounts
associated with, all return claims associated with the sale of Products by the
Seller prior to the Closing Date that are received by the Seller or the
Purchaser within forty-five (45) days after the Closing Date (the "Transition
Period"). The Purchaser shall assume all responsibility for, and shall pay all
amounts associated with, all Product returns with respect to Products sold
(other than returns relating to a Product recall to the extent such recall
involves Products manufactured or sold prior to the Closing Date) after the
Transition Period.
Section 3. Purchase Price.
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Subject to and upon the terms and conditions of this Agreement, the
Purchaser shall purchase and the Seller shall sell the Purchased Assets for a
sum equal to $18,000,000 (the "Cash Purchase Price"), plus the assumption of the
Assumed Liabilities (collectively, the "Purchase Price").
Section 4. Closing, Payment of Purchase Price and Adjustment to Purchase
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Price.
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(a) The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at 10:00 a.m on October 11, 2000 at the offices of
the Seller at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or on such
later date (a) upon which all conditions precedent to the Closing set forth in
Sections 8 and 9 shall have been satisfied or waived or (b) as may be agreed
upon by the Purchaser and the Seller (the "Closing Date").
On the Closing Date, the Seller shall transfer to the Purchaser by all
necessary and appropriate bills of sale, deeds, assignments and other
instruments, all right, title and interest of the Seller in and to the Purchased
Assets and the Purchaser shall deliver to the Seller by wire transfer the Cash
Purchase Price less the amount of the Rebate Consideration.
(b) The Cash Purchase Price set forth in Section 3 above is based upon an
Inventory valuation of $4,727,000. The Cash Purchase Price shall be subject to
adjustment in accordance with the procedures set forth below:
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(i) Within thirty (30) days subsequent to the Closing Date the Seller
shall prepare and deliver to the Purchaser a calculation of the Inventory of
the Business as of the Closing Date (the "Closing Inventory Calculation"), which
calculation shall be prepared in accordance with generally accepted accounting
principles applied consistently with the Seller's past practice. Any fees and
expenses incurred by the Seller in preparing the Closing Inventory Calculation
shall be paid by the Seller. Any physical count conducted in connection with
the Closing Inventory Calculation shall be conducted on a cooperative basis and
the Purchaser shall provide such personnel as are reasonably necessary to
support the Seller's coordination of the count.
(ii) After receipt of the Closing Inventory Calculation, the Purchaser
and its accountants and attorneys shall have thirty (30) days to review the
Closing Inventory Calculation. In addition, the Purchaser and its accountants
and attorneys shall be given reasonable access to the premises of the Seller, to
its books, records and work papers, and to the appropriate personnel of the
Seller for purposes of confirming the Closing Inventory Calculation. Unless the
Purchaser notifies the Seller to the contrary in writing within such thirty (30)
day period pursuant to paragraph (iii) hereof, the Purchaser shall be deemed to
have accepted the Closing Inventory Calculation and such Closing Inventory
Calculation shall be conclusive and binding on the Purchaser. Any fees and
expenses incurred by the Purchaser in undertaking such review shall be paid by
the Purchaser.
(iii) If the Purchaser takes exception to any aspect of the Closing
Inventory Calculation or the preparation thereof, the Purchaser shall notify the
Seller of such exception in writing on or prior to the thirtieth (30th) day
after the Purchaser's receipt of the Closing Inventory Calculation. Unless
resolved by the parties within thirty (30) days thereafter (the "Resolution
Period"), such exception or exceptions shall be submitted to a firm of
nationally recognized independent public accountants (the "Neutral Auditors")
selected by mutual agreement of the Purchaser and the Seller within five (5)
days after the expiration of the Resolution Period or, in the absence of such
mutual agreement, by a firm of nationally recognized independent public
accountants selected by lot eliminating the Seller's principal outside
accountants and the Purchaser's principal outside accountants and one additional
firm designated as objectionable by the Seller, on the one hand, and the
Purchaser, on the other hand. Each party agrees to execute a reasonable
engagement letter, if requested to do so by the Neutral Auditors. All fees and
expenses relating to the work performed by the Neutral Auditors shall be shared
equally by the Seller and the Purchaser. The Neutral Auditors, within forty-
five (45) days after their selection, shall make a determination of all issues
in dispute, which determination shall be set forth in a written statement
delivered to the Purchaser and the Seller and shall be binding and conclusive as
among the parties hereto absent fraud or manifest error.
(iv) The Purchase Price shall be adjusted upon the happening of (a) the
acceptance of the Closing Inventory Calculation by the Purchaser, as evidenced
by written notice thereof to the Seller, (b) the deemed acceptance of the
Closing Inventory Calculation by the Purchaser pursuant to paragraph (ii)
hereof, or (c) the resolution of the parties or the delivery of the statement of
the Neutral Auditors pursuant to paragraph (iii) hereof. If the value of the
Inventory of the Business, as reflected on the Closing Inventory Calculation
(after taking into account any changes resulting from the mutual agreement of
the parties or the statement of the
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Neutral Auditors, if any), is greater than or less than $4,727,000, the Purchase
Price shall be increased or decreased dollar for dollar by the amount of such
excess or deficiency, to the extent such excess or deficiency exceeds $50,000.
Any decrease in the Purchase Price shall be settled by a prompt payment, in
immediately available funds, by the Seller to the Purchaser. Any increase in the
Purchase Price shall obligate the Purchaser to promptly pay such amount, in
immediately available funds, to the Seller.
Section 5. Representations and Warranties of the Seller.
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The Seller hereby represents and warrants to the Purchaser as follows:
(a) Due Formation. The Seller is a limited partnership duly formed,
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validly existing and in good standing under the laws of the State of Delaware.
The Seller has all requisite power and authority to own, lease and operate its
properties, to carry on its business as presently conducted by it, to enter into
this Agreement, the Additional Agreements (defined below) to which it will be a
party and the other instruments and agreements of the Seller provided for
herein, and to consummate the transactions contemplated hereby and thereby.
(b) Authorization. The execution and delivery by the Seller of this
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Agreement, the Additional Agreements to which it will be a party, and the other
instruments and agreements of the Seller provided for herein, and the
performance of its obligations hereunder and thereunder, have been duly and
validly authorized by all necessary action on its part, and this Agreement, the
Additional Agreements and all other such instruments and agreements delivered or
to be delivered by the Seller in connection with the transactions contemplated
hereby are, or (when executed and delivered in accordance herewith) will be,
duly executed and delivered and constitutes or will constitute at Closing, the
legal, valid and binding obligations of the Seller, enforceable against it in
accordance with their respective terms.
(c) Non-Contravention. Neither the execution and delivery by the Seller of
-----------------
this Agreement and the Additional Agreements, nor the performance by it of its
obligations hereunder and thereunder will, or with the giving of notice or the
lapse of time, or both, would:
(i) conflict with, result in a breach of, or constitute a default under
or result in or create in any party the right to accelerate, terminate, modify
or cancel, any provision of the certificate of limited partnership or agreement
of limited partnership of the Seller or any Assigned Contract or, except for
matters which would have no Material Adverse Effect, of any other contract,
indenture, lease, sublease, loan agreement, restriction, Lien or other
obligation or liability to which the Seller is a party or by which it, or any of
its properties or assets, is affected or bound;
(ii) violate any order, writ, injunction, decree, law, statute, rule or
regulation applicable to the Seller; or
(iii) result in the creation or imposition of any Lien upon any of the
Purchased Assets.
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(d) Asset Listing. The Seller has delivered to the Purchaser a true and
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complete listing of the net book value of each Tangible Asset as of June 30,
2000 (the "Asset Listing") which is attached hereto as Schedule 1(a)(i). The
Asset Listing (i) has been prepared from the books and records of the Seller and
fairly presents such assets, at the specified date in accordance with generally
accepted accounting principles, applied consistently with prior periods and (ii)
sets forth the location of each Tangible Asset.
(e) Title to Purchased Assets; Condition of Purchased Assets. Except as
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set forth in Schedule 1(a)(i), 1(a)(iii) or 1(a)(iv), the Seller has, and upon
the Closing the Purchaser will acquire, good and marketable title to and
possession of all the Purchased Assets, free and clear of all Liens; and no
interest in or right to any such Purchased Assets is held, legally or
beneficially by any person or entity other than the Seller. Except for the
Excluded Assets, the Purchased Assets constitute substantially all of the assets
and rights owned or held by the Seller and used in the conduct of the Business.
Except for the Excluded Assets, immediately following the Closing the Purchaser
will own all assets and rights reasonably required to enable the Purchaser to
conduct the Business as conducted on the date hereof and the Closing Date. The
Purchased Assets have been properly maintained and are in good operating
condition, reasonable wear and tear excepted.
(f) Intellectual Property. Schedules 1(a)(iii) and 1(a)(iv) set forth a
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complete and accurate list of all patents, trademarks, copyrights, service marks
and trade names and/or applications and registrations therefor, and any
licenses, contracts and consents related thereto, used in the conduct of the
Business or in the design, manufacture, distribution and/or sale of Products
anywhere in the world. Unless otherwise indicated in such Schedules 1(a)(iii)
and 1(a)(iv); (i) each item of Intellectual Property is valid, enforceable and,
to the extent ownership is recorded or registered, is validly registered and/or
recorded in the name of the Seller or one of its Affiliates and all necessary
filings or payments required to maintain each item of Intellectual Property, and
any and all registrations and/or recordings thereof, have been made and/or paid
by the Seller or one of its Affiliates; (ii) the Seller or one of its Affiliates
exclusively own the entire right, title and interest in and to each item of
Intellectual Property; (iii) to the Seller's Knowledge, none of the Intellectual
Property is being infringed by third parties in the United States or in any
foreign country; (iv) to the Seller's Knowledge the use by the Seller of the
Intellectual Property does not infringe on the intellectual property rights of
others in the United States or in any foreign country; and (v) there is no claim
of any type whatsoever pending or, to the Seller's Knowledge, threatened with
respect to any Intellectual Property. Schedules 1(a)(iii) and 1(a)(iv) also
correctly set forth a list of all licenses or rights with respect to
Intellectual Property granted by the Seller to others and by others to the
Seller relating exclusively to the Business or in the design, manufacture,
distribution and sale of Products anywhere in the world, including any and all
royalty agreements. Except as set forth in Schedules 1(a)(iii) and 1(a)(iv),
(i) all of such licenses or rights are currently in full force and effect,
binding upon the Seller and, to the Seller's Knowledge, the other parties
thereto, and enforceable against the Seller and, to the Seller's Knowledge, the
other parties thereto in accordance with their terms; (ii) the Seller is
complying in all material respects with the terms and provisions thereof; (iii)
to the Seller's Knowledge the other parties to all of such licenses or rights
are complying in all material respects with the terms and provisions thereof;
and (iv) the consummation of the transactions contemplated hereby will not
impair any right or privilege enjoyed by the Seller under any
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license granted to the Seller by others or by the Seller to others, or give rise
to any right of termination or cancellation under any of the foregoing.
(g) Contracts. Schedules 1(a)(v) and (vi) list all Assigned Contracts,
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whether written or oral, to which the Seller is a party or by which the Seller
or any of the Purchased Assets are bound and, with respect to sales contracts
only, which individually involve payments in excess of $50,000, and all
Intellectual Property agreements and licenses (collectively, the "Material
Contracts"). The Seller has delivered to the Purchaser true and complete copies
of all Material Contracts. Except as set forth in such Schedules 1(a)(v) and
(vi), (i) all of the Material Contracts were entered into in the ordinary course
of the Business, (ii) all of the Material Contracts are currently in full force
and effect, binding upon the Seller and, to the Seller's Knowledge, the other
parties thereto, and enforceable against the Seller and, to the Seller's
Knowledge, the other parties thereto in accordance with their terms, (iii) the
Seller has complied and is complying in all material respects with the terms and
provisions of each Material Contract and there has not occurred any event which
would with notice or passage of time (or both) constitute a default thereunder
on the part of the Seller, (iv) to the Seller's Knowledge, the other parties to
all of the Material Contracts are complying in all material respects with the
terms and provisions thereof, and (v) subject to the receipt of all necessary
consents and approvals set forth in Schedule 5(h), the consummation of the
transactions contemplated hereby will not impair any right or privilege enjoyed
by the Seller under any Material Contract, or give rise to any right of
termination or cancellation thereunder. The Seller shall not, as of the Closing
Date, have billed any customers for Products ordered but not shipped prior to
the Closing Date. The Seller has not (i) granted any general or special powers
of attorney with respect to the Business, (ii) entered into any transactions
with Affiliates in connection with the Business that create any obligations
included in the Assumed Liabilities, (iii) entered into, and the Purchased
Assets are not subject to, any arrangement or license that imposes any
restriction on the conduct of the Business, other than the Material Agreements,
or (iv) assumed any liability or obligations as a guarantor, surety, co-signer,
endorser, co-maker, indemnitor, or obligor in connection with the Business in
respect of any obligation of any other Person, except as may be set forth in the
Material Agreements.
(h) Consents of Third Parties. Except as set forth in Schedule 5(h), and
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except to the extent the failure to obtain any such consent, approval or
agreement would not have a Material Adverse Effect, no consent, approval or
agreement of any Person, party, court, government or entity is required to be
obtained by the Seller in connection with the execution and delivery of this
Agreement, the Additional Agreements or the other instruments or agreements
provided herein or therein, or the consummation of the transactions contemplated
hereby or thereby.
(i) Litigation. Except as set forth in Schedule 5(i), there is no
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litigation, arbitration, claim, governmental or other investigation or
proceeding (formal or informal) pending or, to the Seller's Knowledge,
threatened with respect to the Business, or the Purchased Assets or the
transactions contemplated hereby and, to the Seller's Knowledge, there exists no
bases or grounds for any of the foregoing. There is no outstanding order,
judgment or decree applicable to the Business or the Purchased Assets.
(j) No Broker. No agent, broker, person or firm acting on behalf of the
---------
Seller, or under its authority, is or will be entitled to a financial advisory
fee, brokerage commission,
9
finder's fee or like payment in connection with this Agreement or any of the
transactions contemplated hereby.
(k) Governmental Permits, Licenses. Since March 1, 1999, the Seller has
------------------------------
possessed all necessary governmental permits, licenses, franchises and
authorizations (collectively, the "Permits") to conduct the Business, including
any licenses or permits issued by the Food and Drug Administration (the "FDA"),
except where the failure to have any such Permit would not have a Material
Adverse Effect. Each Permit is in full force and effect in all material
respects and there are no defaults or breaches or events which but for notice or
lapse of time or both would constitute a material breach or default on the part
of the Seller under the Permits.
(l) Absence of Certain Changes. Since January 1, 2000, the Business has
--------------------------
been operated in the ordinary course consistent with past practice and, except
as disclosed on Schedule 5(l), there has not been: (i) any failure to pay when
due any material obligation of the Seller in connection with the Business; (ii)
any amendment, modification or termination of any Material Contract relating to
the Business other than in the ordinary course of business; (iii) any sale or
grant to any Person of any license, franchise, option or other right to the
Business or its properties or assets, or the termination of any such rights,
other than in the ordinary course of business; (iv) the creation of any Lien on
any of the Purchased Assets, or any assumption by the Business of, or taking of
any properties or assets subject to, any liability other than in the ordinary
course of business; (v) except for changes in the ordinary course of business or
as reflected in the Material Contracts, any material change in (A) inventory or
manufacturing policies, practices or schedules, (B) discount, rebate or return
programs, (C) collection practices, (D) sales, promotion and advertising
programs, practices or budgets or (E) capital expenditure, maintenance and
repair programs, practices or budgets; (vi) any material alteration in the
manner of keeping the books, accounts or records of the Business or in the
accounting practices of the Seller in connection with the Business; or (vii) the
occurrence of any event or circumstance, or the development of any other
condition, which has had, individually or in the aggregate, a Material Adverse
Effect.
(m) Inventory. All Inventory is recorded on the books of the Business at
---------
the lower of cost or fair market value (determined in accordance with generally
accepted accounting principles). All Inventory is currently located at
facilities owned or operated by the Seller. Purchase commitments for raw
materials and parts related exclusively to the Business are not materially in
excess of normal requirements of the Business, consistent with past practice.
(n) Customers and Suppliers. Schedule 5(n) sets forth the name of the ten
-----------------------
largest customers (the "Large Customers") of the Business (based on sales to
such customers during the 10 months ended July 31, 2000) and the amount for
which each of the Large Customers was invoiced during such period. Since
January 1, 2000, the Seller has not received any notice, nor has any reason to
believe, that any such Large Customers have ceased, or will cease, to purchase
or use Products, or have substantially reduced, or will substantially reduce,
the purchase or use of Products at any time. The Seller is current and in
material compliance with respect to all of their material obligations to their
Large Customers. Schedule 5(n) sets forth the name and address of the ten
largest suppliers (the "Large Suppliers") of the Business (based on the Seller's
good faith budgeted purchases during the fiscal year commencing September 1,
2000 from which the Seller
10
orders raw materials, supplies and other goods and services. The Seller has not
received any notice that any Large Supplier has ceased, or will cease, to supply
such raw materials, supplies or other goods or services to the Business, or has
substantially reduced, or will substantially reduce, the supply of such items to
the Business at any time. The Seller is current and in material compliance with
respect to all of their material obligations to their Large Suppliers.
(o) Compliance With Laws.
--------------------
(i) Except as set forth on Schedule 5(o), since March 1, 1999 the
Business has been conducted in material compliance with all Applicable Laws,
including, without limitation, all laws, regulations, ordinances and
requirements relating to insurance, environmental, antitrust, consumer
protection, medical device manufacturing and sale, labor and employment, zoning
and land use, pension and securities matters. Since March 1, 1999, the Seller
has not received any notice of any asserted past or present failure by the
Seller to comply with any Applicable Laws which had or could reasonably be
expected to have a Material Adverse Effect.
(ii) Exhibits A sets forth a complete and correct list of each Product
being researched, designed, developed, manufactured, distributed or sold in the
Business. With respect to each Product, the Seller has obtained all applicable
licenses, registrations, approvals, clearances and authorizations (including,
without limitation, all applicable "510(k)" pre-market notifications pursuant to
21 C.F.R. Part 807, Subpart E, and Part 814) required by any governmental
authority which regulates the safety, effectiveness and market clearance for
such Product and that are necessary for such Product to be manufactured,
distributed and sold by the Seller in the jurisdictions in which it is
distributed and sold, except to the extent the failure to have obtained any such
license, registration, approval, clearance or authorization would not have a
Material Adverse Effect. Schedule 5(o) contains a complete and current list of
all countries and other jurisdictions in which such licenses, registrations,
approvals, clearances, and authorizations have been applied for or obtained by
the Seller, and identifying the name of the Person that applied for or holds the
same and the expiration date thereof.
(iii) Seller has not engaged in any unfair labor practice, and there
exists no basis for the assessment of any unpaid wages with respect to any
Transferred Employee. There is no unfair labor practice complaint pending or, to
Seller's Knowledge, threatened against Seller before the National Labor
Relations Board or any state or local governmental agency with respect to Seller
and any of the Transferred Employees. None of the Transferred Employees are
covered by a collective bargaining agreement or, to the Seller's Knowledge, no
union representation or organization campaign or effort exists with respect to
any such employees nor are any of such employees members of any union. No
Transferred Employee has asserted any claim against Seller alleging
discrimination, sexual harassment or any other misconduct by Seller or any of
its officers, directors, employees or agents and to Seller's Knowledge, there is
no valid basis for such a claim.
(p) Product Warranty and Liability. Schedule 5(p) sets forth complete and
------------------------------
correct lists of (i) all warranties applicable to Products, (ii) all Product
recalls with respect to Products during the past five (5) years and the dates,
if any, such recalls were closed, and (iii) all Product
11
complaints with respect to Products that are open as of the date hereof or that
were closed at any time after January 1, 1998, and the dates such complaints
were closed. Except as set forth on Schedule 5(p), there are no outstanding
Product recalls or Product complaints with respect to the Products, and to the
Seller's Knowledge, there is no basis for any present or future Product recall
or Product complaint with respect to any Products. The parties acknowledge and
agree that the Purchaser is not assuming, nor will the Purchaser be responsible
for, any Losses (as defined in Section 11(a) below) incurred with respect to the
Product recalls or Product complaints listed on Schedule 5(p), such matters
being Excluded Liabilities under Section 2(b). The performance of the Products
will not be adversely affected by dates after the commencement of the year 2000.
(q) Insurance. The insurance policies maintained by the Seller for the
---------
benefit of or in connection with the Purchased Assets and the Business are in
full force and effect, and all premiums due thereon have been paid through the
date hereof. The insurance coverage provided by such insurance policies is
reasonably adequate and customary for the Business. No notice or other
communication has been received by the Seller from any insurance company
canceling or materially amending any of its insurance policies and, to the
Seller's Knowledge, no such cancellation or amendment is threatened.
(r) Net Assets. As of August 31, 2000, the total tangible net assets of the
----------
Seller (excluding intercompany liabilities owing to Affiliates) on an
unconsolidated book value basis was not less than $600,000,000.
(s) Employee Compensation and Benefits. Schedule 13(h) contains a complete
----------------------------------
and accurate list of all of the Transferred Employees (as defined in Section
13(h) below), together with the current annual salaries or wage rates of all
such persons. Schedule 5(s) lists all employee benefit plans of the Seller
(written or otherwise) applicable to the Transferred Employees (together, the
"employee benefit plans") including, without limitation, any employment
agreement or any pension, retirement, profit-sharing, bonus, stock option,
incentive, deferred compensation, welfare or other plan, contract, arrangement
or practice in which one or more of the Transferred Employees participates or is
eligible to participate, any employee benefit plan described in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
any plan, practice or arrangement, whether or not reduced to writing, that
constitutes a "fringe benefit" plan, vacation plan or policy, sick leave
program, medical, disability or life insurance plan. The Seller has not
established and does not maintain or have any plan, program, arrangement or
other obligation to provide post-retirement medical benefits to any Transferred
Employee (with the sole exception of continued benefits as may be required under
sections 601-608 of ERISA). All employee benefit plans listed in Schedule 5(s)
have been operated in compliance with their terms and with ERISA, the Code and
the regulations promulgated thereunder (to the extent applicable), as well as
with all other applicable federal, state and local statutes, ordinances and
regulations, except where the failure to do so would not have a Material Adverse
Effect.
Section 6. Representations and Warranties of the Purchaser.
-----------------------------------------------
The Purchaser represents and warrants to the Seller as follows:
12
(a) Due Organization. The Purchaser is a corporation duly organized,
----------------
validly existing and in good standing under the laws of the State of California,
with all requisite corporate power and authority to enter into this Agreement,
the Additional Agreements to which it is a party and the other instruments and
agreements to be delivered by it hereunder, and to consummate the transactions
contemplated hereby and thereby.
(b) Authorization. The execution and delivery by the Purchaser of this
-------------
Agreement, the Additional Agreements to which it is a party, and the other
instruments and agreements to be delivered by it hereunder, and the performance
by it of its obligations hereunder and thereunder, have been duly and validly
authorized by all necessary corporate action on its part, and this Agreement,
the Additional Agreements and all other such instruments and agreements
delivered or to be delivered by the Purchaser in connection with the
transactions contemplated hereby are, or (when executed and delivered in
accordance herewith) will be, the legal, valid and binding obligations of the
Purchaser, enforceable against it in accordance with their respective terms.
(c) Non-Contravention. Neither the execution and delivery of this
-----------------
Agreement and the Additional Agreements by the Purchaser nor the performance by
the Purchaser of its obligations hereunder and thereunder will, or with the
giving of notice or the lapse of time, or both, would:
(i) conflict with, result in a breach of, or constitute a default
under, any provision of the Purchaser's charter or by-laws, or of any contract,
indenture, lease, sublease, loan agreement, Lien or other obligation or
liability to which the Purchaser is a party or by which it is bound; or
(ii) violate any order, writ, injunction, decree, law, statute, rule
or regulation applicable to or by which it or its properties are bound.
(d) Litigation. There is no litigation, arbitration, claim, governmental
----------
or other investigation or proceeding (formal or informal) involving the
transactions contemplated hereby pending or, to the knowledge of the Purchaser,
threatened, against the Purchaser, and to the knowledge of the Purchaser there
exists no bases or grounds for any of the foregoing.
(e) No Broker. No agent, broker, person or firm acting on behalf of the
---------
Purchaser or under its authority, is or will be entitled to a financial advisory
fee, brokerage commission, finder's fee or like payment in connection with this
Agreement or any of the transactions contemplated hereby.
(f) Consents of Third Parties. Except as set forth on Schedule 6(f)
-------------------------
attached hereto, no consent, approval or agreement of any Person, party, court,
government or entity is required to be obtained by the Purchaser in connection
with the execution and delivery of this Agreement, or the other instruments and
agreements provided herein or the consummation of the transactions contemplated
hereby.
(g) Financing. The Purchaser has sources of funds available to it
---------
sufficient to pay the Cash Purchase Price on the Closing Date and all other fees
and expenses payable by the Purchaser in connection with the consummation of the
transactions contemplated herein.
13
Section 7. Covenants of the Seller Pending the Closing.
-------------------------------------------
The Seller covenants and agrees that between the date of this Agreement and
the Closing or termination of this Agreement prior to Closing:
(a) The Seller will not take any action, or omit to take any action, which
action or omission would make any of the representations and warranties of the
Seller untrue or incorrect in any material respect at the Closing Date, and will
not undertake any course of action inconsistent with this Agreement, or which
would render any of the conditions to Closing by any of the other parties unable
to be satisfied at or prior to the Closing Date.
(b) Subject to the provisions of Section 16, the Purchaser and its
officers, employees, and other agents, including accountants and counsel, shall
have reasonable access to all of the assets, contracts, operations, books of
account, records, permits, franchises, plans and other business records of the
Seller related exclusively to the Business, at reasonable times during business
hours, for the purpose of examining and inspecting the same and making copies of
and extracts from such records and documents. Inspections, investigations or
the receipt of information shall not constitute a waiver of any representation,
warranty, covenant or condition contained in this Agreement.
(c) The Seller will carry on the Business in the ordinary course,
consistent with past practice and will use commercially reasonable efforts to
preserve intact the present business organization and preserve the relationships
with Persons having business dealings with the Seller in connection with the
Business. Without the Purchaser's prior written consent, the Seller shall not:
(i) sell or transfer any assets or properties of the Business, except
for sales of Inventory made in the ordinary course of business;
(ii) cause or permit to exist any Lien on any assets or properties of
the Business;
(iii) (A) enter into any agreement that would constitute a Material
Contract, or (B) amend, modify or terminate any Assigned Contract, or (C) enter
into any transactions with Affiliates relating to the Business that would be an
Assumed Liability;
(iv) alter in any material respect the manner of keeping books of
account or records or the accounting practices therein reflected in connection
with the conduct of the Business;
(v) cause any material change in the manner that the Seller conducts
the Business;
(vi) change in any material respect (A) inventory or manufacturing
policies, practices or schedules, (B) discount, rebate or return programs, (C)
collection practices, (D)
14
sales, promotion and advertising programs, practices or budgets or (E) capital
expenditure, maintenance and repair programs, practices or budgets;
(vii) ▇▇▇▇ customers for Products ordered but not shipped prior to
the Closing Date; or
(viii) take any material action not consistent with the past
practices of the Seller or the Business in the ordinary course.
(d) The Seller will use all reasonable efforts to (i) promptly make all
filings and seek to obtain all authorizations required under Applicable Laws
with respect to the transactions contemplated hereby and by the Additional
Agreements and will cooperate with the Purchaser with respect thereto, (ii)
promptly take or cause to be taken all other actions necessary, proper or
appropriate to satisfy the conditions set forth in Section 10 and to consummate
and make effective the transactions contemplated by this Agreement and the
Additional Agreements on the terms and conditions set forth herein and therein
as soon as practicable, and (iii) not take any action that would reasonably be
expected to impair the ability of the Seller to consummate the transactions
contemplated by this Agreement and the Additional Agreements by the Closing
Date. The reasonable efforts of the Seller shall include, without limitation,
good faith response, in cooperation with the Purchaser, to all requests for
information, documentary or otherwise, by any governmental agency.
(e) From the date hereof through the Closing Date, the Seller shall not,
nor will it permit its Affiliates, shareholders, officers, directors, employees,
agents or other representatives to, directly or indirectly, solicit, initiate or
encourage the submission of inquiries, proposals or offers from, engage in any
discussions with, or provide any non-public information to any person with
respect to any Acquisition Proposal. The term "Acquisition Proposal" means any
proposal for a transaction involving the acquisition by a third party (directly
or indirectly) of all or a substantial portion of the Purchased Assets or any
interest in the Business. The Seller will promptly communicate to the Purchaser
in writing the fact that it has received any proposal or inquiry regarding an
Acquisition Proposal.
Section 8. Covenants of the Purchaser Pending the Closing.
----------------------------------------------
The Purchaser hereby covenants and agrees that between the date of this
Agreement and the Closing or termination of this Agreement prior to the Closing:
(a) the Purchaser will not take any action, or omit to take any action,
which action or omission would make any of its representations and warranties
untrue or incorrect in any material respect at the Closing Date, and will not
undertake any course of action inconsistent with this Agreement, or which would
render any of the conditions to Closing by any of the other parties unable to be
satisfied at or prior to the Closing Date.
(b) the Purchaser will use all reasonable efforts to (i) promptly make all
filings and seek to obtain all authorizations required under Applicable Laws
with respect to the transactions contemplated hereby and by the Additional
Agreements and will cooperate with the Seller with
15
respect thereto, (ii) promptly take or cause to be taken all other actions
necessary, proper or appropriate to satisfy the conditions set forth in Section
9 and to consummate and make effective the transactions contemplated by this
Agreement and the Additional Agreements on the terms and conditions set forth
herein and therein by the Closing Date, and (iii) not take any action that would
reasonably be expected to impair its ability to consummate the transactions
contemplated by this Agreement and the Additional Agreements at the earliest
practicable time. The reasonable efforts of the Purchaser shall include, without
limitation, good faith response, in cooperation with the Seller, to all requests
for information, documentary or otherwise, by any governmental agency; but shall
not include any obligation to make any changes to Purchaser's actual or intended
business, business plans, personnel or other matters pertaining to the manner in
which Purchaser conducts or intends to conduct its business.
Section 9. Conditions Precedent to Closing by the Seller.
---------------------------------------------
The obligations of the Seller to sell the Purchased Assets and to
consummate the transactions contemplated hereby are subject, at its sole option,
to the fulfillment prior to or at the Closing of each of the following
conditions:
(a) All of the agreements and covenants contained in this Agreement that
are to be complied with, satisfied or performed by the Purchaser on or before
the Closing Date shall have been complied with, satisfied and performed in all
material respects.
(b) All of the representations and warranties made by the Purchaser in this
Agreement shall be true and correct in all material respects both on and as of
the date of this Agreement and on and as of the Closing Date.
(c) The Seller shall have received a certificate, signed by the President
or any Vice President of the Purchaser and dated as of the Closing Date, stating
that (i) all of its representations and warranties set forth in this Agreement
are true and correct in all material respects as of the Closing Date, (ii) all
of the agreements and covenants set forth in this Agreement to be satisfied,
complied with and performed by the Purchaser on or prior to the Closing Date
have been satisfied, complied with and performed in all material respects, and
(iii) all of the conditions set forth in this Section 9 have been fulfilled.
(d) The Purchaser shall have delivered the consideration set forth in
Section 3 to the Seller.
(e) The following instruments and agreements (the "Additional Agreements")
shall have been duly executed and delivered by the appropriate parties:
(i) An assignment and assumption of liabilities agreement between the
Purchaser and the Seller, substantially in the form attached hereto as Exhibit
B;
(ii) A Manufacturing and Supply Agreement relating to the manufacture
and supply of certain components by the Seller to the Purchaser, substantially
in the form attached thereto as Exhibit C (the "Manufacturing and Supply
Agreement");
16
(iii) A Patent License Agreement (the "Patent License Agreement")
relating to the license to the Seller of rights to use certain patents of the
Seller in connection with the sale of Products, substantially in the form
attached hereto as Exhibit D; and
(iv) A Transition Services Agreement (the "Transition Services
Agreement") relating to certain transition services pertaining to the operation
of the Business to be performed by the Seller for the Purchaser, substantially
in the form attached hereto as Exhibit E.
(v) An Industrial Lease (the "Lease") relating to the lease by the
Seller to the Purchaser of certain portions of the Seller's facility at ▇▇▇▇▇
▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, substantially in the form attached hereto as Exhibit F.
(f) The Seller shall have received a certificate signed by the Secretary or
Assistant Secretary of the Purchaser and dated as of the Closing Date,
certifying as to (i) the due adoption by the Purchaser's Board of Directors of
resolutions authorizing this Agreement, the Additional Agreements to which it
shall be a party and all other agreements and instruments to be delivered by
such party hereunder, and the consummation of the transactions contemplated
hereby and thereby, and (ii) the incumbency and signatures of signing officers.
(g) All consents, approvals and authorizations, including the expiration or
termination of the waiting period under the HSR Act (if applicable), and
registrations, qualifications or filings, required to have been made or obtained
by the Purchaser from any governmental authorities to permit the consummation by
the Purchaser of the transactions contemplated hereby shall have been made or
obtained, except for such consents, approvals, authorizations registrations,
qualifications or filings which if not made or obtained would not have a
Material Adverse Effect.
(h) The United States Federal Trade Commission (the "FTC") shall have
accepted, subject to final approval, an Agreement Containing Consent Order
("Consent Agreement") with respect to the Merger of Mallinckrodt, Inc. with and
into EVM Merger Corp. (a second-tier subsidiary of Tyco International Ltd.)
indicating that Seller should divest the Purchased Assets to the Purchaser
within ten (10) days of the Public Record Date (as defined in the Consent
Agreement), in a form reasonably satisfactory to Seller.
(i) No action or proceeding before a court or other governmental body shall
be pending or threatened in writing by any government or agency thereof, or by
any other third party, to restrain or prohibit the consummation of the
transactions contemplated hereby.
(j) The Seller shall have received from the Purchaser's counsel an opinion
reasonably satisfactory to the Seller, as to the matters set forth in Sections
6(a) and (b).
17
Section 10. Conditions Precedent to Closing by the Purchaser.
------------------------------------------------
The obligations of the Purchaser to purchase the Purchased Assets and to
consummate the transactions contemplated hereby are subject, at its sole option,
to the fulfillment prior to or at the Closing of each of the following
conditions:
(a) All of the agreements and covenants contained in this Agreement that
are to be complied with, satisfied or performed by the Seller on or before the
Closing Date shall have been complied with, satisfied and performed in all
material respects.
(b) All of the representations and warranties made by the Seller in this
Agreement shall be true and correct in all material respects both on and as of
the date of this Agreement and on and as of the Closing Date.
(c) The Purchaser shall have received a certificate, signed by the
President or any Vice President on behalf of the Seller and dated as of the
Closing Date, stating that (i) all of its representations and warranties set
forth in this Agreement are true and correct in all material respects as of the
Closing Date, (ii) all of the agreements and covenants set forth in this
Agreement to be satisfied, complied with and performed by the Seller on or prior
to the Closing Date have, been satisfied, complied with and performed in all
material respects, and (iii) all of the conditions set forth in this Section 10
have been fulfilled.
(d) The Seller shall have duly executed and delivered each of the
Additional Agreements to which it is a party.
(e) The Purchaser shall have received certificates, signed by the Secretary
or Assistant Secretary of the Seller and dated as of the Closing Date,
certifying as to (i) the due authorization of the Seller to enter into and
perform its obligations under this Agreement, the Additional Agreements to which
it shall be a party and all other agreements and instruments to be delivered by
the Seller hereunder, and (ii) the incumbency and signatures of signing
officers.
(f) All consents, approvals and authorizations, including the expiration or
termination of the waiting period under the HSR Act (if applicable), and
registrations, qualifications or filings, required to have been made or obtained
by the Seller from any governmental authorities to permit the consummation by
the Seller of the transactions contemplated hereby shall have been made or
obtained, except for such consents, approvals, authorizations, registrations,
qualifications or filings which if not made or obtained would not have a
Material Adverse Effect.
(g) The FTC shall have accepted, subject to final approval, the Consent
Agreement in a form reasonably satisfactory to Purchaser.
(h) Since the date of this Agreement, there shall not have occurred any
event, circumstance or occurrence which has had, or could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect.
18
(i) No action or proceeding before a court or other governmental body shall
be pending or threatened in writing by any government or agency thereof to
restrain or prohibit the consummation of any of the transactions contemplated
hereby.
(j) The Purchaser shall have received from the Seller appropriate bills of
sale and assignments, reasonably satisfactory to the Purchaser, to transfer the
Purchased Assets to the Purchaser.
(k) The Purchaser shall have received from Seller's counsel an opinion
reasonably satisfactory to the Purchaser, as to the matters set forth in
Sections 5(a), (b) and (c).
Section 11. Indemnification.
---------------
(a) The parties shall be entitled to rely upon the representations and
warranties of the other parties set forth in this Agreement, and except as
otherwise specifically provided herein, such representations and warranties
shall survive the Closing and remain in full force and effect for a period of
eighteen (18) months after the Closing; provided that all representations and
warranties for which a timely claim of breach has been made shall survive until
the claim is finally resolved; and provided further, that the representations
-------- -------
and warranties set forth in Section 5(b) and the first sentence of Section 5(e)
shall survive indefinitely. All covenants and agreements set forth herein
(other than representations and warranties) shall survive indefinitely.
(b) The Seller hereby agrees to indemnify and hold harmless the Purchaser
and its officers, directors, employees, stockholders, agents, representatives
and Affiliates (collectively, the "Purchaser Indemnified Parties"), from and
against any loss, liability, claim, damage or expense (including reasonable
attorneys' fees and expenses) (a "Loss") suffered or incurred by any such
indemnified party based upon, arising out of or resulting from any of the
following:
(i) Any breach of any representation or warranty of the Seller
contained in this Agreement;
(ii) Any breach of any covenant of the Seller contained in this
Agreement;
(iii) Noncompliance with any so-called bulk sales law of any state
applicable to the transactions contemplated hereby; and
(iv) Any Excluded Liability.
(c) The Purchaser hereby agrees to indemnify and hold harmless the Seller
and its officers, directors, employees, stockholders, agents, representatives
and Affiliates (collectively, the "Seller Indemnified Parties"), from and
against any Loss suffered or incurred by any such indemnified party based upon,
arising out of or resulting from any of the following:
(i) Any breach of any representation or warranty of the Purchaser
contained in this Agreement;
19
(ii) Any breach of any covenant of the Purchaser contained in this
Agreement;
(iii) Assumed Liabilities; and
(iv) Any liability or obligation arising out or resulting from the
conduct of the Business from and after the Closing Date.
(d) Promptly after any Person entitled to indemnification under this
Section 11 (the "Indemnified Party") has received notice of or has knowledge of
any claim against the Indemnified Party by a Person not a party to this
Agreement (a "Third Person") or the commencement of any action or proceeding by
a Third Person, it shall give the other party (the "Indemnifying Party") written
notice of such claim or the commencement of such action or proceeding; provided,
however, that the failure to provide such written notice shall not release the
Indemnifying Party from any of its obligations under this Section 11, except to
the extent (and only to the extent) that the Indemnifying Party is materially
prejudiced by such failure. Such notice shall state the nature and the basis of
such claim and, if possible, a reasonable estimate of the Loss. Subject to this
Section 11(d), the Indemnifying Party shall have right to defend, at its own
expense and by its own counsel, which counsel must be reasonably satisfactory to
the Indemnified Party, any such matter so long as the Indemnifying Party pursues
the same in good faith and diligently, but only if the Indemnifying Party
acknowledges to the Indemnified Party its obligations to indemnify the
Indemnified Party with respect to all elements of such claim. If the
Indemnifying Party undertakes to defend or settle, it shall promptly notify the
Indemnified Party of its intention to do so, and the Indemnified Party shall
cooperate with the Indemnifying Party and its counsel in the defense thereof and
in any settlement thereof. Such cooperation shall include, but shall not be
limited to, furnishing the Indemnifying Party with any books, records or
information reasonably requested by the Indemnifying Party that are in the
Indemnified Party's possession or control. The Indemnified Party shall have the
right to participate in (but not control) any matter through counsel of its own
choosing at its own expense. After the Indemnifying Party has notified the
Indemnified Party of its intention to undertake to defend or settle any such
asserted liability, and for so long as the Indemnifying Party diligently pursues
such defense, the Indemnifying Party shall not be liable for any additional
legal expenses incurred by the Indemnified Party in connection with any defense
or settlement of such asserted liability. If the Indemnifying Party desires to
accept a final and complete settlement of any such Third Person claim, such
settlement shall require as terms thereof that (i) the Third Person deliver to
the Indemnified Party an unconditional and absolute release from all liability
in respect of such claim and (ii) the Indemnified Party shall have approved such
settlement. If the Indemnified Party refuses to consent to such settlement,
then the Indemnifying Party's liability under this Section with respect to such
Third Person's claim shall be limited to the amount so offered in settlement by
said Third Person and the Indemnified Party shall reimburse the Indemnifying
Party for any additional costs of defense which it subsequently incurs with
respect to such claim. If (i) the Indemnifying Party does not or is not
permitted to undertake to defend such matter to which the Indemnified Party is
entitled to indemnification hereunder, (ii) there is a conflict of interest
which prevents counsel for the Indemnifying Party from representing the
Indemnified Party or (iii) the Indemnifying Party fails to diligently pursue
such defense, then, in each case, the Indemnified Party may undertake and
control such defense through counsel of its choice, at the cost and expense of
the Indemnifying
20
Party, and the Indemnified Party may settle such matter, and the Indemnifying
Party shall promptly reimburse the Indemnified Party for the amount paid in such
settlement and any other liabilities or expenses as incurred by the Indemnified
Party in connection therewith. Notwithstanding anything herein to the contrary,
in no event may the Indemnifying Party accept any settlement of a Third Person
claim to the extent that such settlement would have a material adverse effect on
the ability of the Indemnified Party to continue its business as then being
conducted.
(e) Anything to the contrary contained herein notwithstanding, neither the
Purchaser Indemnified Parties, on the one hand, nor the Seller Indemnified
Parties, on the other hand, shall be entitled to recovery from the Indemnifying
Party with respect to (i) any inaccuracy or breach of any representation or
warranty in Sections 5 or 6 hereof (other than pursuant to Section 5(b) and the
first sentence of Section 5(e)), as applicable, unless and until the aggregate
amount of such Losses suffered, sustained or incurred by the Purchaser
Indemnified Parties or the Seller Indemnified Parties, as the case may be, by
reason of such inaccuracy or breach, shall exceed two and one-half percent
(21/2%) of the Cash Purchase Price calculated on a cumulative basis and not on a
per item basis (the "Basket Amount"), and then only with respect to the excess
over the Basket Amount, but in no event shall either the Seller, on the one
hand, or the Purchaser, on the other hand, be liable to the Purchaser
Indemnified Parties or the Seller Indemnified Parties, as the case may be, in
each case in an aggregate amount in excess of $5,250,000 of the Cash Purchase
Price and (ii) any inaccuracy or breach of any representation or warranty in
Section 5(b) or the first sentence in Section 5(e) in an aggregate amount in
excess of the Cash Purchase Price.
Section 12. Termination of Agreement.
------------------------
(a) This Agreement may be terminated at any time prior to the Closing:
(i) by mutual written consent of the parties hereto;
(ii) by the Seller, on the one hand, or by the Purchaser, on the other
hand, if the Closing shall not have been consummated on or prior to November 30,
2000 or such later date, if any, as the Purchaser and the Seller shall agree in
writing (the "Termination Date"); provided that the terminating party shall not
then be in breach of any of its obligations hereunder; and
(iii) by the Seller, on the one hand, or by the Purchaser, on the other
hand, in the event of a material breach or default by the other party hereto of
any provision of this Agreement and such breach is not capable of being cured by
the Termination Date.
(b) Upon termination of this Agreement as provided in paragraph (a) above,
all obligations of the parties hereunder shall terminate, but such termination
will in no way limit any obligation or liability of any party based on or
arising from a breach or default by such party which occurs prior to such
termination with respect to any of its representations, warranties, covenants or
agreements contained in this Agreement. The provisions of this Section 12 and of
Sections 16, 17 and 19 shall survive the termination of this Agreement.
21
Section 13. Additional Covenants and Agreements.
-----------------------------------
(a) Books, Records and Information.
------------------------------
(i) The Purchaser agrees that all documents delivered to the Purchaser
by the Seller pursuant to this Agreement and all documents of the Business shall
after the Closing be open for inspection by representatives of the Seller at any
time during regular business hours for reasonable and necessary purposes until
such time as documents are destroyed or possession thereof is given to the other
party as provided for in Section 13(a)(ii) hereof and that the Seller may during
such period at its expense make such copies thereof as it may reasonably
request. The Seller agrees that all documents that are retained by the Seller
after the Closing Date and that are related to the Business (other than tax
records of the Seller) shall be open for inspection by representatives of the
Purchaser at any time during regular business hours until such time as documents
are destroyed or possession thereof is given up to the other party as provided
for in Section 13(a)(ii) hereof and that the Purchaser may during such period at
its expense make such copies thereof as it may reasonably request.
(ii) Without limiting the generality of Section 13(a)(i), for a period
ending on the sixth anniversary of the Closing Date, neither the Purchaser nor
the Seller shall destroy or give up possession of any item referred to in
Section 13(a)(i) hereof without first offering to the other the opportunity, at
such other's expense (but without any other payment), to obtain the same.
Thereafter each party shall be free to dispose of them as it deems fit.
(iii) Without limiting the generality of Sections 13(a)(i) and (ii), the
Purchaser agrees to cooperate with the Seller in the Seller's defense of any
litigation, arbitration, claim, investigation or proceeding relating to the
operation of the Business prior to Closing (including, without limitation, the
litigation described on Schedule 5(i) attached hereto). Such cooperation shall
include making available employees of the Purchaser engaged in the operation of
the Business after the Closing for such purposes as may be reasonably requested
by the Seller in connection with such defense (including, without limitation,
interviews and depositions). The Seller agrees to reimburse the Purchaser for
its reasonable out-of-pocket expenses incurred in providing such services to the
Seller.
(b) Tax Matters.
-----------
(i) The Seller shall be solely responsible for and shall indemnify
and hold harmless the Purchaser for all Taxes with respect to the Seller or the
Business for or pertaining to all periods up to and including the Closing Date,
and the Purchaser shall be responsible for and indemnify and hold harmless the
Seller for all Taxes with respect to the Business for or pertaining to all
periods thereafter, except that any Taxes imposed upon the ownership of property
on a particular date, or similar tax, shall be prorated over the period ending
on the Closing Date and the period thereafter. Any claim for indemnification
hereunder shall be subject to the procedures set forth in Section 11(d) hereof.
22
(ii) The Purchaser and the Seller recognize their mutual obligations
pursuant to Section 1060 of the Code to timely file IRS Form 8594 with each of
their respective federal income tax returns. Prior to the Closing, the Purchaser
and the Seller shall agree upon an allocation of the Purchase Price among the
Purchased Assets in accordance with the provisions of Section 1060 of the Code
and the Treasury Regulations thereunder. Unless otherwise required by a
determination within the meaning of Section 1313 of the Code (or a counterpart
provision of foreign, state or local law), all foreign, federal, state and local
income tax returns filed by the Purchaser and the Seller shall be filed
consistently with that allocation.
(c) Collection of Accounts Receivable. Except as provided in the
---------------------------------
Transition Services Agreement, the Seller will be solely responsible for
collecting all accounts receivable arising from the Business and outstanding as
of the date immediately prior to the Closing Date. Except as provided in the
Transition Services Agreement, the Purchaser shall have no obligation whatsoever
to collect such accounts receivable, but shall provide such assistance as may be
reasonably requested by the Seller, provided that the Seller shall reimburse the
Purchaser for all cost and expense related thereto. The Seller covenants and
agrees that it will not take any action in connection with the collection of
accounts receivable arising from the Business that would reasonably be expected
to impair, injure or jeopardize the commercial relationship between the
Purchaser and any account debtor of the Seller, who is also a customer of the
Purchaser. Any and all accounts receivable arising from or relating to Products
shipped to customers on and after the Closing Date shall be owned by the
Purchaser.
(d) License for Packaging Materials. Effective upon Closing, the Seller
-------------------------------
hereby grants the Purchaser a fully paid, non-exclusive license with respect to
any tradenames or trademarks on the packaging materials that are part of the
Inventory, which license shall expire eighteen (18) months following the Closing
Date.
(e) License of Sheridan Trademark. Effective upon Closing, the Purchaser
-----------------------------
hereby grants to the Seller a fully paid, non-exclusive license to use the
"Sheridan" trademark (the "Licensed ▇▇▇▇") in connection with the marketing and
sale of any products (other than Products) marketed and sold by the Seller under
the Licensed ▇▇▇▇ as of the date hereof, which license shall expire eighteen
(18) months following the Closing Date. Seller shall maintain the same quality
and quality control standards on all products sold under and/or bearing the
Licensed ▇▇▇▇ pursuant to this license as it has in the six (6) months preceding
the date hereof. It is understood and agreed that Purchaser is the sole and
exclusive owner of all right, title and interest in and to the Licensed ▇▇▇▇.
Nothing contained in this paragraph shall be construed as a sale, assignment or
other transfer to Seller of any right, title or interest in and to the Licensed
▇▇▇▇. Seller shall not use the Licensed ▇▇▇▇ other than as permitted hereunder.
Seller agrees that in using the Licensed ▇▇▇▇, it will in no way represent that
it has any right, title or interest in or to the Licensed ▇▇▇▇ other than those
rights expressly granted under the terms of this paragraph. Seller agrees to
assign and hereby assigns all right, title and interest, if any, accruing in the
Licensed ▇▇▇▇ as a result of its use hereunder, including all goodwill
appurtenant thereto, to Purchaser. Seller may not use any of the trademarks or
copyrights identified on Schedule 1(a)(iii) hereto, including without limitation
the Licensed ▇▇▇▇, anywhere in the world except as expressly permitted in this
paragraph.
23
(f) FTC Consent Agreement. If the Closing shall have occurred prior to the
---------------------
date the Consent Agreement becomes final, and if the FTC notifies the Seller
that the Purchaser is not an acceptable acquiror of the Purchased Assets or the
manner in which the sale of the Purchased Assets was accomplished is not
acceptable, then the Closing shall be immediately annulled and the parties shall
be put in the same position relative to the Purchased Assets, the Assumed
Liabilities and each other as they were in prior to the execution of this
Agreement. The Purchaser acknowledges that the Seller shall in such event be
under an obligation to divest the Purchased Assets within six (6) months from
the date the Consent Agreement becomes final, absolutely in good faith, at no
minimum price, to an acquiror that receives the prior approval of the FTC and
only in a manner that receives the prior approval of the FTC. The parties hereto
shall cooperate with each other in good faith in connection with rescinding the
sale of the Purchased Assets to Purchaser, as contemplated herein.
(g) Sheridan Earnout.
----------------
(i) The parties hereto acknowledge that the Seller has continuing
obligations under that certain Asset Purchase Agreement, dated as of September
23, 1994 (the "Sheridan Agreement"), by and among the Seller (as successor-in-
interest to The ▇▇▇▇▇▇▇ Company), Sheridan Catheter Corp. and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇▇"), which require the Seller to make certain payments to Sheridan if
the combined sales of Products and certain other products sold by the Seller
exceed certain levels during the calendar years 2000, 2001 and 2002 (the
"Earnout Years"). The Purchaser agrees to make available to the Seller such
information, and otherwise cooperate with the Seller, as may be required to
enable the Seller to satisfy its obligations under the Sheridan Agreement.
Without limitation to the foregoing, the Purchaser agrees to deliver to the
Seller within fifteen days after the end of each Earnout Year a written report
of its calculation of Net Sales (as defined below) during the such Earnout Year
(the "Report"). The Purchaser shall keep full and true records of the Net
Sales. For a period of forty-five (45) days after the delivery of each Report,
the Seller, Sheridan and their respective representatives shall have reasonable
access upon prior reasonable notice to inspect the books and records of the
Purchaser for the purposes of verifying that the Reports are accurate; provided
however, that the Seller and Sheridan may each request access no more than once
per Earnout Year. It shall be a condition precedent to Sheridan's right to
inspect any books and records of the Purchaser that Sheridan shall have executed
and delivered to the Purchaser a confidentiality agreement reasonably acceptable
to the Purchaser.
(ii) In accordance with the terms of Section 16(b), the Seller agrees
to keep confidential the Reports and any other information provided to the
Seller pursuant to this Section 13(g), provided that such information may be
provided to Sheridan and its representatives pursuant to the Sheridan Agreement.
The Seller agrees that such Reports and information will only be made available
to those of its employees in its finance, accounting and legal departments who
are responsible for the preparation of the reports that Seller is required to
provide to Sheridan under the Sheridan Agreement. In no event shall the Seller
permit such Reports and information to be seen or otherwise made available to
any of its employees engaged in sales and marketing activities.
24
(iii) For purposes of this Section 13(g), the term "Net Sales" shall
mean gross revenues of the Purchaser for the Products (including any and all
modifications, improvements, updates or lines extensions of such Products)
computed in accordance with generally accepted accounting principles applied
consistently less credits for returned goods, discounts, rebates, and group
fees. Net Sales shall not include any transfer between the Purchaser and any of
its Affiliates for resale but shall include the resale from an Affiliate to an
independent third party. With respect to Combination Products (defined below),
Net Sales shall be equal to the total net sales of the Combination Product
multiplied by a fraction, the numerator of which shall be the actual cost of the
Product included in such Combination Product and the denominator of which shall
be the actual cost of such Product and all other devices or products included in
the Combination Product. For purposes of this Section 13(g), the term
"Combination Product" means a Product that is sold in combination with or as a
part of other devices or products, for example as part of a kit or tray.
(h) Employee and Employee Benefits Matters.
--------------------------------------
(i) Employment Status. The Sellers and the Purchaser agree that,
-----------------
effective immediately following the Closing, each of the employees listed on
Schedule 13(h) (collectively, the "Transferred Employees") shall be deemed
--------------
terminated by the Seller and hired by the Purchaser. The Purchaser agrees that
each of the Transferred Employees shall be hired at the salary of such
Transferred Employee in effect as of the Closing Date. Between the date hereof
and the Closing Date, the Purchaser agrees not to increase the salary of any
Transferred Employee, except for increases in the ordinary course of business at
levels consistent with past practice. The parties hereto understand and agree
that, to the maximum extent permitted by applicable law, such employment shall
continue to be employment at will.
(ii) Employee Benefits; Crediting of Service. The Purchaser shall
---------------------------------------
provide to each of the Transferred Employees, employee benefits that are, on the
whole, substantially equivalent to those provided by the Seller to such
Transferred Employee during the term of the Lease. The Purchaser shall grant
and shall continue to grant to all of the Transferred Employees under all of its
employee benefit plans in which the Transferred Employees are or will be
eligible to participate, all service with the Business (whether employed by Tyco
Healthcare or its predecessor) credited to them as of the Closing Date in
respect of employee benefits for all purposes under such plans. The Purchaser
shall credit to each Transferred Employee all accrued vacation time as of the
Closing Date; provided, however, that the Seller shall reimburse the Purchaser
for the actual value of such accrued vacation time. The Seller agrees to cause
each Transferred Employee to become fully vested in his or her account under the
Seller's 401(k) plan as of the Closing Date. The Seller agrees to cooperate
with the Purchaser to effect the rollover of such accounts to the Purchaser's
401(k) plan, to the extent that Transferred Employees elect to make such
rollovers.
(iii) Severance. The Purchaser agrees to provide Severance Benefits
---------
(as defined below) to any Transferred Employee who is terminated within one year
following the Closing Date; provided, however, that the Purchaser shall have no
obligation to pay Severance Benefits to any Transferred Employee who retires,
voluntarily quits, refuses intercompany reassignments, is terminated for cause
or is terminated due to unsatisfactory work performance. As used herein, the
term Severance Benefits shall mean (i) with respect to salaried employees
25
having an annual base salary of less than $60,000, a payment equal to one and
one-half weeks base pay for each year of service to the Purchaser, the Seller
and its predecessor (Sheridan Catheter Corp.), with a minimum payment of eight
weeks base pay and a maximum payment of fifty-two weeks base pay, (ii) with
respect to salaried employees having an annual base salary of $60,000 or more, a
payment equal to two weeks base pay for each year of service to the Purchaser,
the Seller and its predecessor (Sheridan Catheter Corp.), with a minimum payment
of ten weeks base pay and a maximum payment of fifty-two weeks base pay, (iii)
with respect to hourly employees, a payment of one week base pay for each year
of service to the Purchaser, the Seller and the Seller's predecessor (Sheridan
Catheter Corp.), with a minimum of four weeks base pay and a maximum of 26 weeks
base pay and (iv) with respect to all Transferred Employees, reasonable
outplacement services.
(i) Non-Solicitation; Transitional Cooperation.
------------------------------------------
(i) The Seller hereby agrees that any violation on the part of itself
or any of its Affiliates of any terms of the Consent Agreement pertaining to
non-solicitation of any existing customers of the Business shall be deemed a
violation of this Agreement, for which the Purchaser may pursue all available
remedies at law or in equity.
(ii) The Seller hereby agrees that from the Closing Date until twelve
(12) months thereafter, neither the Seller nor the any of its Affiliates will
utilize Sheridan Sales Employees (as defined below) to market or promote
endotrachael tube products of the type included in the Business to any customer
of the Business as of the Closing Date located in Germany, France, Spain, Japan
and Mexico. For purposes hereof, the term Sheridan Sales Employees shall mean
all sales and marketing employees of the Seller and its Affiliates as of the
date hereof who directly participated in the marketing or promotion of the
Products within the 12 (twelve) months prior to the Closing Date.
(iii) To the extent that the Business is making sales of Products
outside of the United States pursuant to any public tenders awarded to the
Seller, the Seller agrees to consent to the transfer of such public tender and
the sales thereunder to the Purchaser.
(iv) Upon the Purchaser's request, the Seller and the Purchaser shall
jointly prepare and distribute one or more mutually acceptable forms of notice
letters to customers of the Business and distributors of Products, including
both domestic and international customers and distributors. The Purchaser may
request that such notices be distributed prior to the Closing Date, provided
that in such case, the Seller shall distribute such notices without disclosing
the identity of the recipients to the Purchaser until the Closing, and such
notices shall provide that the instructions therein may be rescinded by either
the Seller or the Purchaser at any time prior to the expected date of Closing
set forth in such notice.
(v) From and after the Closing, the Seller and its Affiliates shall,
and shall use commercially reasonable efforts to cause their third party
representatives to, cooperate with the Purchaser and its Affiliates to effect
the transfer of any contract rights, licenses, permits, Product registrations
(to the extent such licenses, permits and Product registrations are transferable
under applicable law) and other Purchased Assets acquired by the Purchaser
pursuant to this
26
Agreement. For twelve (12) months following the Closing Date, the Seller and its
Affiliates shall, and shall use commercially reasonable efforts to cause their
third party representatives to, direct all sales inquiries related to the
Business and requests for Product information to the Purchaser's customer
service department.
(vi) The Seller acknowledges and recognizes that the businesses and
markets of the Seller is national and international in scope, that the Purchaser
is investing substantial sums of money to acquire and promote the Business, that
the Purchaser would not be doing so but for the covenants contained in this
Section 13(i), and that such covenants are necessary in order to protect and
maintain the proprietary interests and other legitimate business interests of
the Business and are reasonable in all respects.
(vii) If any court determines that any of the covenants set forth in
this Section 13(i), or any part thereof, contained in this Agreement is invalid
or unenforceable, the remainder of such covenant shall not thereby be affected
and shall be given full effect without regard to the invalid portions. If any
court determines that any of the covenants set forth in this Section 13(i), or
any part thereof, are unenforceable because of the duration of such provision or
the product or area covered thereby, such court shall have the power, and the
parties intend and desire that such court exercise such power, to reduce the
duration or coverage of such provision to the minimum extent necessary to render
such provision enforceable, and in its reduced form, such provision shall then
be enforceable and shall be enforced. The Seller hereby waives any and all
right to attack the validity of the covenants set forth in this Section 13(i) on
the ground of the breadth of their geographic or product coverage or the length
of their term.
(viii) Each party intends to and does hereby confer jurisdiction to
enforce the covenants set forth in this Section 13(i) upon the courts of any
jurisdiction within the geographic scope of such covenants. If the courts of
any one or more of such jurisdictions holds such covenants wholly unenforceable
by reason of the breadth of such scope or otherwise, it is the intention of such
party that such determination not bar or in any way affect the right of the
Purchaser to relief in the courts of any other jurisdiction within the
geographic scope of such covenants, as to breaches of such covenants in such
respective jurisdictions, such covenants as they relate to each jurisdiction
being, for this purpose, severable into diverse and independent covenants.
(ix) The Seller hereby agrees that a violation or attempted or
threatened violation of the covenants set forth in this Section 13(i), or any
part thereof, by the Seller or any of its Affiliates will cause irreparable
injury to the Purchaser for which money damages would be inadequate, and that
the Purchaser shall be entitled, in addition to any other rights or remedies it
may have, whether in law or in equity, to obtain an injunction enjoining and
restraining the Seller or its Affiliates or all of them from violating or
attempting or threatening to violate any provision of the covenants contained in
this Section 13(i).
(x) The Seller acknowledges that after the Closing Date the Purchaser
will be free to design, manufacture, distribute and sell Products throughout the
world.
27
(j) Manufacturing Support.
---------------------
(i) The Purchaser acknowledges that in order for the Seller to be able
to continue manufacturing a certain product not included in the Business, the
Seller will need to able to continue to purchasing from Magnus Molding a 15mm
connector which Magnus Molding manufactures using a mold included in the
Purchased Assets. Upon the Seller's request, the Purchaser agrees to issue a
written consent to Magnus Molding instructing such vendor that the Seller may
continue to purchase such 15mm connector from Magnus Molding.
(ii) If prior to the Closing Date the Seller determines that it will
require support from the Purchaser to manufacture extruded tubing and provide
packaging services for the Seller's continued production of an inter-uterine
manipulator not included in the Business, the Purchaser agrees to execute and
deliver on the Closing Date a mutually acceptable supply agreement, pursuant to
which the Purchaser would agree to supply such tubing and packaging to the
Seller, at a price equal to the Seller's current standard cost of such items,
plus ten percent (10%), for a term not to exceed six months. The parties agree
that the terms and conditions of any such supply agreement would be
substantially equivalent to the terms and conditions of the Manufacturing and
Supply Agreement.
Section 14. Remedies.
--------
The Seller agrees that the Purchased Assets are unique and that the
Purchaser will be irreparably harmed in the event that this Agreement, including
the obligations of the Seller to sell and deliver the Purchased Assets to the
Purchaser, is not specifically enforced. The parties further agree it is
impossible to measure in money the damage which will accrue by reason of a
refusal by the Seller to perform such obligations under this Agreement.
Therefore, in the event that the Purchaser shall institute any action to enforce
such obligations, the Seller hereby acknowledges that the Purchaser does not
have an adequate remedy at law and that injunctive or other equitable relief
will not constitute any hardship upon the Seller.
Section 15. Definitions.
-----------
As used in this Agreement, the following terms shall have the meanings
ascribed to them below:
(a) "Affiliate" means, when used with reference to a specified party, (i)
any entity that, directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, the specified
party, and (ii) any entity of which the specified party is, directly or
indirectly, the owner of an equity interest of ten percent (10%) or more.
(b) "Applicable Laws" means all applicable provisions of all (i)
constitutions, treaties, statutes, laws (including the common law), rules,
regulations, ordinances, codes or orders of any governmental authority, (ii)
consents of any governmental authority and (iii) orders, decisions, injunctions,
judgments, awards and decrees of or agreements with any governmental authority.
28
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
(e) "Lien" means any mortgage, lien, pledge, restriction, charge, security
interest, claims, encumbrance, or rights, title and interest of others.
(f) "Material Adverse Effect" means any change, effect or circumstance
that, individually or in the aggregate, is materially adverse to the business,
operations, assets (including intangible assets), financial condition or results
of operations of the Business taken as a whole.
(g) "Person" means any individual, general partnership, limited
partnership, corporation, limited liability company, joint venture, trust,
business trust, cooperative, association or other form of organization.
(h) "Seller's Knowledge" means all information which one or more of the
following individuals knows, or would have known after reasonable inquiry:
▇▇▇▇▇▇ ▇▇▇▇▇ (Marketing), ▇▇▇▇▇ ▇▇▇▇▇▇ (Finance), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
(Manufacturing), ▇▇▇ ▇▇▇▇▇▇▇ (Business Development) and ▇▇▇▇▇ ▇▇▇▇▇▇
(Regulatory).
(i) "Tax" means any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security, unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto, whether disputed or not.
Section 16. Confidentiality.
---------------
(a) Prior to the Closing, neither party hereto shall disclose, or permit
any of its directors, officers, employees, agents, advisors, Affiliates or
representatives to disclose, the terms of any non-public confidential
information of the other party hereto or any Affiliate thereof obtained in
connection with such proposed transactions without the prior written consent of
the other party. If the acquisition of the Purchased Assets is not consummated
as provided for herein, the parties and their representatives shall, for a
period of two (2) years from the date hereof, treat all information of the other
parties as confidential (except to the extent that such information: (i) is
now, or later comes to be, in the public domain, other than through the acts of
the receiving party or its representatives in breach of this provision, (ii) can
be shown to have been known by the receiving party prior to the time of
disclosure to it by the other party, (iii) is later disclosed to the receiving
party on a nonconfidential basis by a Person having no obligation to keep such
information confidential or (iv) is independently developed, as evidenced by
written records, by employees of the receiving party who did not have access to
such information) and
29
shall return to the disclosing party all copies of confidential information
received during such investigation.
(b) For a period of five (5) years following the Closing Date, the Seller
will, and will cause each of their respective Affiliates, shareholders,
officers, directors, employees, agents and representatives (collectively,
"Representatives") to, (i) hold in strict confidence and not to disclose to any
Person (including any Representatives of the Seller or any of its Affiliates
employed by or performing services for any business activity of the Seller or
any of its Affiliates that competes with the Business following the Closing
Date), in whole or in part, any confidential or proprietary information or data
concerning the Business (collectively, the "Confidential Information") in any
manner whatsoever; provided, however, that the foregoing covenant shall not
-------- -------
apply to (and the term "Confidential Information" shall not include) any
information that is or becomes generally available to the public through no
fault of the Seller or such Affiliates or Representatives and (ii) not, and not
permit any of its Affiliates or their respective Representatives to, utilize any
Confidential Information in any manner that is competitive or detrimental to,
the Purchaser or the Business.
(c) At the request of the Purchaser, the Seller shall use commercially
reasonable efforts to enforce any confidentiality agreement entered into by the
Seller (or any of its Representatives or Affiliates) and any Person to whom
confidential information was provided in connection with the sale of the
Business; provided, however, that the Purchaser shall promptly reimburse the
-------- -------
Seller any cost and expense incurred by the Seller and its Representatives and
Affiliates in connection with any such enforcement.
Section 17. Expenses.
--------
Whether or not the transactions contemplated by this Agreement are
consummated, each party will pay its respective expenses, including all fees and
expenses of counsel, accountants and other advisors, incurred in connection with
the origination, negotiation, execution and performance of this Agreement;
provided, however, that the Purchaser, on the one hand, and the Seller, on the
other hand, shall each pay half of all transfer taxes, sales taxes, recording or
documentary taxes, stamps or other charges imposed by governmental authorities
in connection with the consummation of the transactions contemplated hereby.
Section 18. Further Assurances.
------------------
From time to time after the execution hereof, at the request of the
Purchaser and without further consideration, the Seller shall execute and
deliver such other and further instruments of conveyance, assignment, transfer
and consent, and take such other action as the Purchaser may reasonably request
in connection with the transfer of the Purchased Assets and the Business and for
the more effective consummation of the transactions contemplated hereby.
Section 19. No Public Announcement.
----------------------
Prior to the Closing Date, neither party shall make, or permit any of its
directors, officers, employees, agents, advisors, Affiliates or representatives
to make, any press release, public
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announcement or other public disclosure with respect to the existence of this
Agreement or the Additional Agreements or the transactions contemplated hereby
or thereby without the prior consent of the other party, which shall not be
unreasonably withheld except as and to the extent that counsel for such party
shall determine that such announcement or disclosure is required by law, rule,
regulation or order of any governmental, regulatory or judicial body.
Section 20. Entire Agreement.
----------------
This Agreement and the Additional Agreements (including all attachments
hereto and thereto) comprise the entire agreement among the parties hereto as to
the subject matter hereof and thereof, and supersede all prior agreements and
understandings between them relating thereto.
Section 21. Amendments and Waivers.
----------------------
This Agreement may not be amended or modified, except by a writing executed
by the parties hereto. No waiver of the performance of any obligation of any
party hereto shall be effective unless it is made in a writing signed by the
party granting such extension or waiver. Unless it specifically states
otherwise, no waiver shall constitute or be construed as a waiver of any
subsequent breach or non-performance.
Section 22. Notices.
-------
Any notice, request, demand, waiver, consent, approval or other
communication which is required or permitted to be given pursuant to this
Agreement shall be in writing and shall be given in person or by telecopy or by
certified or registered first-class mail or internationally recognized express
courier delivery service addressed as follows:
If to the Seller: Tyco Healthcare Group LP
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Vice President-Business Administration
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Tyco Healthcare Group LP
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Law Department
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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If to the Purchaser: ▇▇▇▇▇▇ Respiratory Care Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Any such address may be changed by any party by written notice to the other
parties given in accordance herewith. Any notice shall be deemed to be given on
the earlier of (i) actual receipt by any party or (ii) three (3) days after
being deposited in the United States mail, so addressed with postage or other
charges prepaid, twenty-four (24) hours after deposit with an overnight courier,
or five (5) hours after confirmation of delivery by telecopy.
Section 23. Governing Law.
-------------
This Agreement is made and shall be construed in accordance with the laws
of The Commonwealth of Massachusetts without giving effect to the conflict of
laws principles thereof.
Section 24. Successors and Assigns.
----------------------
This Agreement shall inure to the benefit of, and be binding upon and
enforceable against, the respective successors and permitted assigns of the
parties hereto, but may not be assigned by either party hereto without the prior
written consent of the other.
Section 25. Captions.
--------
Section headings and other captions are supplied herein for convenience
only and shall not be deemed a part of this Agreement for any purpose.
Section 26. Counterparts.
------------
This Agreement may be executed by facsimile and in any number of
counterparts, each of which shall be deemed an original for all purposes, and
all of which together shall constitute one agreement.
Section 27. Severability.
------------
If any term or provision of this Agreement or any of the Additional
Agreements, or the application thereof to any person or circumstance, shall to
any extent be overly broad, invalid or
32
unenforceable, the remainder of this Agreement (or such Additional Agreement, as
the case may be), or the application of such term or provision to persons or
circumstances other than those as to which it is overly broad, invalid or
unenforceable, shall not be affected thereby and each term and provision of this
Agreement (or such Additional Agreement, as the case may be) shall be valid and
enforced to the fullest extent permitted by law.
Section 28. Attorneys' Fees.
---------------
In the event of any action, suit or other proceeding arising under or in
connection with the subject matter of this Agreement, the prevailing party shall
be entitled, in addition to any other rights and remedies it may have, to
reimbursement for its expenses, including court costs and reasonable fees of
attorneys and other professionals.
Section 29. Waiver of Trial by Jury.
-----------------------
Each party hereby waives the right to a trial by jury in any action, suit
or proceeding under this agreement or arising out of the transactions
contemplated hereby, regardless of which party initiates such action, suit or
proceeding.
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the day and year first above written.
TYCO HEALTHCARE GROUP LP
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Title: President
----------------------
▇▇▇▇▇▇ RESPIRATORY CARE INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Title: President and Chief
Executive Officer
---------------------------
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Title: Chief Financial Officer
---------------------------
34
SCHEDULES AND SIMILAR ATTACHMENTS
TO ASSET PURCHASE AGREEMENT (OMITTED)
Schedule Description
-------- -----------
1(a)(i) Machinery, Equipment and Other Fixed Assets
1(a)(iii) Trademarks, Tradenames
1(a)(iv) Patents
1(a)(v) Material Sales Contracts
1(a)(vi) Other Material Agreements
1(b) Excluded Assets
5(h) Seller's Required Consents
5(i) Litigation
5(l) Absence of Certain Changes
5(n) Customers and Suppliers
5(o) Compliance with Law
5(p) Warranties and Products Liability
5(s) Employee Benefits
6(f) Purchaser's Required Consents
13(h) Transferred Employees
Exhibit A Products of the Business
Upon request, the Registrant will provide the Commission with a copy of any
omitted schedule or similar attachment referenced above.