EXHIBIT 10.15
This ASSET PURCHASE AGREEMENT (“Agreement”), dated as of October 2, 2006 (“Effective Date”), is entered into by and between Bovie Medical Corporation, a Delaware corporation (the "Buyer"), and Lican Developments, Ltd., an Ontario, Canada corporation ("Seller").
WITNESSETH:
WHEREAS, Seller is in the business of creating, engineering and developing intellectual property related to medical devices, for commercialization in the United States, Canada, and elsewhere in the world, and is to transfer certain Assets (as such term and each other capitalized term used herein without definition is defined in Section 7.1) to the Buyer pursuant to this Agreement; and
WHEREAS, the Buyer wishes, on or about November 10, 2006 (“Expected Closing Date”) to purchase or acquire (directly or indirectly through subsidiaries) from Seller, and Seller wishes to sell, assign and transfer to the Buyer, certain Fixed Assets and Intangible Assets (as such terms are defined below) held in connection with, necessary for, or material to Seller’s business and operations (the "Business"), and the Buyer has agreed to assume (directly or indirectly through its subsidiaries) the Assumed Liabilities, all for the Purchase Price and upon the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants, representations and warranties made herein, and of the mutual benefits to be derived hereby, the sufficiency of which is hereby acknowledged, the Parties hereto agree as follows:
ARTICLE I
SALE AND PURCHASE OF THE ASSETS
1.1. Assets. Subject to and upon the terms and conditions set forth in this Agreement, at the Closing, Seller will sell, transfer, convey, assign and deliver to the Buyer, and the Buyer will purchase or acquire from Seller, all right, title and interest of Seller in and to (i) the fixed assets listed on schedule 1.1 (the “Fixed Assets”) and (ii) the intangible assets (including goodwill) listed on Schedule 1.1 (the “Intangible Assets”), whether real, personal or mixed, whether accrued, contingent or otherwise and whether now existing or hereinafter acquired primarily relating to or used or held for use in connection with the Business as the same may exist on the Closing Date (collectively, the "Assets"), including all those items described below, as further set forth on Schedule 1.1:
(a) all machinery, equipment, furniture, furnishings, tools, dies, molds and parts and similar property (including, but not limited to, any of the foregoing purchased subject to any conditional sales or title retention agreement in favor of any other Person);
(b) all inventories of raw materials, work in process, finished products, goods, spare parts, replacement and component parts, and office and other supplies (collectively, the "Inventories"), including Inventories held at any location controlled by Seller, Inventories previously purchased and in transit to Seller at such locations;
(c) all Intellectual Property and all rights thereunder or in respect thereof primarily relating to or used or held for use in connection with the Business, including, but not limited to, rights to sue for and remedies against past, present and future infringements thereof, and rights of priority and protection of interests therein under the laws of any jurisdiction worldwide and all tangible embodiments thereof (together with all Intellectual Property rights included in the other clauses of this Section 1.1, the "Intellectual Property Assets");
(d) all books, records, files, manuals and other materials (in any form or medium), including, without limitation, correspondence, photographs, production data, purchasing materials and records, personnel records, manufacturing and quality control records and procedures, blueprints, research and development files, records, data and laboratory books, Intellectual Property disclosures, accounting records, and other files, related to the Assets;
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(e) to the extent their transfer is permitted by law, all Governmental Approvals (including but not limited to Seller’s manufacturing ISO certifications), including all applications therefor;
(f) all rights to causes of action, lawsuits, judgments, claims and demands of any nature available to or being pursued by Seller with respect to the Business or the ownership, use, function or value of any Asset, whether arising by way of counterclaim or otherwise;
(g) all guarantees, warranties, indemnities and similar rights in favor of Seller with respect to any Asset;
(h) Seller’s permission for, cooperation with, and support of Buyer’s hiring and employing Seller’s organized, ISO-certified workforce consisting of Seller’s former and current Employees; and
(i) Henvil Corp.’s assignable right to all or any portion of the commercial space leased by Henvil Corp. from L&M COCO Construction Ltd. (“Landlord”) being approximately 4,375 square feet municipally located at 3180 Grand Marais Blvd. E., Windsor, Ontario, N8W 4W5 (“Lease”);
Subject to the terms and conditions hereof, at the Closing, the Assets shall be transferred or otherwise conveyed to the Buyer free and clear of all liabilities, obligations, liens and encumbrances excepting only Assumed Liabilities, Liens listed on Schedule 3.1.11, and Permitted Liens.
1.2. Excluded Assets. The Seller will retain and not transfer, and Buyer will not purchase or acquire, the following assets (collectively, the "Excluded Assets"):
(a) the assets listed on Schedule 1.2;
(b) the name and mark "Lican Developments, Ltd.," in whole or in part;
(c) all cash and cash equivalents held by Seller on the Effective Date;
(d) any and all accounts receivable of the Seller; and
(e) any other assets of the Seller not otherwise set out in Section 1.1.
ARTICLE II
THE CLOSING
2.1. Place and Date. The closing of the sale and purchase of the Assets (the “Closing”) shall take place on the 2nd day of October, 2006, at the offices of Buyer, or at such other time, place, and manner, as the Parties may agree. The day on which the Closing actually occurs is herein sometimes referred to as the "Closing Date."
2.2. Purchase Price. On the terms and subject to the conditions set forth in this Agreement, the Buyer agrees to pay or cause to be paid to Seller: (i) an aggregate of Three Hundred and Fifty Thousand Dollars ($350,000), (ii) subject to American Stock Exchange listing approval, a grant to Seller of Two Hundred Thousand (200,000) shares of Bovie Medical Corporation (AMEX:BVX) restricted stock, subject to the vesting schedule described below, (iii) a grant to Seller of up to an aggregate of One Hundred and Fifty Thousand (150,000) BVX shares of restricted stock (conditioned on terms set forth below), (iv) royalty payments of Two-and-One-Half Percent (2.5%) on Buyer’s Net Sales of “Tip on Tube” Products and “RF Skin Resurfacing” Products, as set forth below, and (vi) royalty payments of Three Percent (3%) on Buyer’s Net Sales of “SEAL-N-CUT” Products and “MODULLION” Products, as set forth below (collectively, the "Purchase Price"), and to assume or cause Buyer’s subsidiary to assume, the Assumed Liabilities as provided in Section 2.4. The Purchase Price shall be payable to Seller as follows:
(a) On the Closing Date, by wire transfer, One Hundred and Fifty Thousand Dollars ($150,000) in immediately available funds to Seller’s bank account set forth on Schedule 2.2(a);
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(b) No later than thirty (30) days after each of the first four (4) anniversaries of the Closing Date, by wire transfer, Fifty Thousand Dollars ($50,000) in immediately available funds to Seller’s bank account set forth on Schedule 2.2(a); provided, however, that if Buyer fails to render the payments set forth in this Section 2.2(b) after a thirty (30) day grace period immediately following the due date of each such payment, Seller shall be entitled to an immediate vesting of all remaining unvested shares of restricted BVX stock set forth in Section 2.2(c);
(c) Subject to the provisions of Section 7.7(d), no later than thirty (30) days after the Closing Date, Two Hundred Thousand (200,000) shares of restricted BVX stock, vesting over a four (4) year period as follows: Forty Percent (40%) or 80,000 shares immediately vested, and Twenty Percent (20%) or 40,000 shares vested at each of the first three (3) anniversaries of the Closing Date; provided, however, Seller shall hold all such vested shares for a period of at least one (1) year before Seller may sell or transfer them;
(d) No later than forty-five (45) days after each of the events set forth in subsections (i)-(vi), below (the occurrence of which vests the corresponding number of shares of restricted BVX stock), the number of such shares specified, for an aggregate of up to One Hundred and Fifty Thousand (150,000) such shares; provided, however, Seller shall hold all such vested shares for a period of at least one (1) year before Seller may sell or transfer them :
(i) Forty Thousand (40,000) shares upon Buyer obtaining a 510(k) FDA marketing clearance for the “SEAL-N-CUT” Product;
(ii) Forty Thousand (40,000) shares upon Buyer obtaining a 510(k) FDA marketing clearance for the “MODULLION” Product;
(iii) Seventeen Thousand Five Hundred (17,500) shares upon Buyer attaining a total of One Million Dollars ($1,000,000) in Net Sales of the “SEAL-N-CUT” Product;
(iv) Seventeen Thousand Five Hundred (17,500) shares upon Buyer attaining a total of One Million Dollars ($1,000,000) in Net Sales of the “MODULLION” Product;
(v) Seventeen Thousand Five Hundred (17,500) shares upon Buyer attaining a total of Three Million Dollars ($3,000,000) in Net Sales of the “SEAL-N-CUT” Product; and
(vi) Seventeen Thousand Five Hundred (17,500) shares upon Buyer attaining a total of Three Million Dollars ($3,000,000) in Net Sales of the “MODULLION” Product.
(e) Royalty payments of Two-and-One-Half Percent (2.5%) on Buyer’s Net Sales of “Tip on Tube” Products, as further set forth in Schedule 2.2(e);
(f) Royalty payments of Two-and-One-Half Percent (2.5%) on Buyer’s Net Sales of “RF Skin Resurfacing” Products, as further set forth in Schedule 2.2(f);
(g) Royalty payments of Three Percent (3%) on Buyer’s Net Sales of “SEAL-N-CUT” Products, as further set forth in Schedule 2.2(g); and
(h) Royalty payments of Three Percent (3%) on Buyer’s Net Sales of “MODULLION” Products, as further set forth in Schedule 2.2(h).
(i) In addition to the foregoing, after Buyer obtains the applicable 510(k) FDA marketing clearances, Buyer shall pay Seller royalty payments of Two Percent (2%) on Buyer’s Net Sales of “Morscellator” Products and “Focused Ultrasonic Energy” Skin and Tissue Products, as further set forth in Schedule 2.2(i).
The Parties agree and acknowledge that Steve Livneh’s on-going personal services, and fulfillment of his obligations, under the “Livneh Employment Agreement” (set forth in Section 5.2.5(a), below) are (w) a material inducement for Buyer to enter into this Agreement, (x) a condition precedent to the Seller’s attainment of each of the elements of the Purchase Price set forth in this Section 2.2 (including all subsections (a)-(i), except (b)), (y) a condition precedent to the vesting of shares of restricted BVX stock under subsections 2.2(c) and 2.2(d), and (z) a condition subsequent to the right to receive royalty payments under subsections 2.2(e)-(i) hereof. With regard to Seller’s right to receive royalty payments hereunder, a failure of the condition subsequent in the preceding subsection (z) (i.e., termination for cause or non-renewal of the Livneh Employment Agreement resulting in less than a total of five (5) years of continuous service thereunder) will permit Buyer to reduce such royalty payments by Fifty Percent (50%).
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The provisions of the foregoing paragraph concerning Steve Livneh’s performance under the Livneh Employment Agreement shall not apply if Buyer (or its Affiliate employing Steve Livneh under that agreement) (i) terminates the Livneh Employment Agreement without cause, (ii) fails to renew the Livneh Employment Agreement for an additional two (2) years beyond the initial 3-year term, as provided therein, or (iii) both materially and adversely modifies Steve Livneh’s title, location of employment, definitions or compensation, under the Livneh Employment Agreement, without his written consent. In the event of a termination of the Livneh Employment Agreement due to Steve Livneh’s death as set forth under Section 11(a) thereof, Buyer shall (1) pay to Seller Fifty Percent (50%) of the royalty payments due and payable under this Section 2.2, which royalty payments are earned and in effect as of the date of such termination for death, and Buyer shall immediately accelerate the vesting of any remaining unvested shares of restricted BVX stock set forth in Section 2.2(c), if any.
From and after the Effective Date the Buyer shall be solely responsible for any and all costs and expenses associated with all provisional patent applications being purchased hereunder.
2.3. Allocation of Purchase Price. (a) The Parties agree to allocate the aggregate of the Purchase Price and the Assumed Liabilities acquired from Seller in accordance with an allocation schedule to be prepared by the Buyer. Such allocation schedule shall be prepared in accordance with section 1060 of the Code.
(b) The Purchase Price allocated to Assets in the United States pursuant to Section 2.3(a) shall be allocated among the Assets in accordance with an allocation schedule to be prepared by the Buyer. Such allocation schedule shall be prepared in accordance with section 1060 of the Code. The Purchase Price allocated to the Assets in Canada pursuant to Section 2.3(a) shall be allocated among the Assets in such country in accordance with an allocation schedule to be prepared by the Buyer. Such allocation schedule shall be prepared in accordance with the requirements of the applicable tax laws of Canada and the United States.
(c) In connection with the determination of the foregoing allocation schedules, the Parties shall cooperate with each other and provide such information as any of them shall reasonably request. The Parties will each report the federal, state and local and other Tax consequences of the purchase and sale contemplated hereby (including the filing of Internal Revenue Service Form 8594 by the Buyer) in a manner consistent with such allocation schedules.
2.4. Assumption of Liabilities. Subject to the terms and conditions set forth herein, at the Closing, the Buyer shall assume and agree to pay, honor and discharge when due all of the following liabilities relating to the Assets and arising on or after the Closing Date (collectively, the "Assumed Liabilities"):
(a) any and all liabilities, obligations and commitments relating exclusively to the Assets that are incurred after the Closing Date except for (A) liabilities related to product liability claims, (B) liabilities for Taxes relating to or arising out of the Business accruing, or with respect to any event or time period occurring, at or prior to Closing, (C) liabilities in respect of Employees;
(b) any and all liabilities, obligations and commitments (x) arising out of the agreements, contracts and commitments set forth on the Schedule 3.1.12(a) (or not required to be set forth therein because of the amount involved), but not including any obligation or liability for any breach thereof occurring prior to the Closing Date or (y) listed on Schedule 2.4(b);
(c) liabilities in respect of Transferred Employees to the extent specifically and expressly assumed by Buyer pursuant to Article VI of this Agreement; and
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(d) any and all liabilities, obligations and commitments of the Seller relating to the Lease of the premises from which the Business is currently being conducted including, without limitation, the payment of rent and all utilities.
2.5. Excluded Liabilities. Notwithstanding the provisions of Section 2.4 or any other provision hereof or any schedule or exhibit hereto and regardless of any disclosure to the Buyer, the Buyer shall not assume any liabilities, obligations or commitments of Seller relating to or arising out of either the operation of the Business or the ownership of the Assets prior to the Closing Date other than the Assumed Liabilities (the "Excluded Liabilities").
2.6. Consent of Third Parties. Notwithstanding anything to the contrary in this Agreement, this Agreement shall not constitute an agreement to assign or transfer any Governmental Approval, instrument, contract, lease, permit or other agreement or arrangement (collectively, “Party Right”) or any claim, right or benefit arising thereunder or resulting therefrom if an assignment or transfer or an attempt to make such an assignment or transfer without the consent of a third party would constitute a breach or violation thereof or affect adversely the rights of the Buyer or Seller thereunder; and any transfer or assignment to the Buyer by Seller of any interest under any such Party Right that requires the consent of a third party shall be made subject to such consent or approval being obtained. In the event any such consent or approval is not obtained on or prior to the Closing Date, Seller shall continue to use all reasonable efforts to obtain any such approval or consent after the Closing Date until such time as such consent or approval has been obtained, or Seller has reasonably determined, in good faith, that it cannot obtain such consent or approval, and Seller will cooperate with the Buyer in any lawful and economically feasible arrangement to provide that the Buyer shall receive the interest of Seller, as the case may be, in the benefits under any such Party Right, including performance by Seller, as the case may be, as agent, if economically feasible, provided that the Buyer shall undertake to pay or satisfy the corresponding liabilities for the enjoyment of such benefit to the extent the Buyer would have been responsible therefor hereunder if such consent or approval had been obtained. Seller shall pay and discharge, and shall indemnify and hold the Buyer harmless from and against, any and all out-of-pocket costs of seeking to obtain or obtaining any such consent or approval whether before or after the Closing Date. Nothing in this Section 2.6 shall be deemed a waiver by the Buyer of its right to have received on or before the Closing an effective assignment of all of the Assets nor shall this Section 2.6 be deemed to constitute an agreement to exclude from the Assets any assets described under Section 1.1.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of Seller. As of the Effective Date and as of the Closing Date, Seller represents and warrants to the Buyer as follows:
3.1.1. Authorization. Seller has the corporate power and authority to execute and deliver this Agreement and each of the Collateral Agreements to which it will be a party, to perform fully its obligations hereunder and thereunder, and to consummate the transactions contemplated thereby. The execution and delivery by Seller of this Agreement, and the consummation of the transactions contemplated hereby, have been, and on the Closing Date, the execution and delivery of the Collateral Agreements to which it will be a party and the consummation of the transactions contemplated thereby will have been, duly authorized by all requisite corporate action of Seller. This Agreement is, and on the Closing Date each of the Collateral Agreements to which Seller is a party will be, legal, valid and binding obligations of Seller, enforceable against it in accordance with their respective terms.
3.1.2. Corporate Status. (a) Seller is a corporation duly organized, validly existing and in good standing under the laws of the Province of Ontario, Canada, with full corporate power and authority to carry on its business and to own or lease and to operate its properties as and in the places where such business is conducted and such properties are owned, leased or operated.
(b) Seller is duly qualified or licensed to do business and is in good standing in the Province of Ontario, Canada, where it does business or owns property, which is the only jurisdiction in which the operation of the Business or the character of the properties owned, leased or operated by it in connection with the Assets makes such qualification or licensing necessary.
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(c) Seller has delivered to the Buyer complete and correct copies of its certificate of incorporation and by-laws or other organizational documents, as amended and in effect on the date hereof. Seller is not in violation of any of the provisions of its certificate of incorporation or by-laws or other organizational documents.
3.1.3. No Conflicts. The execution, delivery and performance by Seller of this Agreement and each of the Collateral Agreements to which it is a party, and the consummation of the transactions contemplated thereby, do not and will not conflict with, result in a violation or breach of or default under (with or without the giving of notice or the lapse of time or both), give rise to a right or claim of termination, amendment, modification, vesting, acceleration or cancellation of any right or obligation or loss of any material benefit under, or result in the creation of any Lien (or any obligation to create any Lien) upon any of the Assets under (i) any Applicable Law applicable to Seller or any Affiliate thereof or any of the properties or assets of Seller (including but not limited to the Assets), (ii) the certificate of incorporation or by-laws or other organizational documents of Seller or (iii) except as set forth in Schedule 3.1.3, any Contract or other contract, agreement or other instrument to which Seller or any Affiliate thereof is a party or by which Seller or any of their properties or assets, including but not limited to the Assets, may be bound or affected. Except as specified in Schedule 3.1.3, no Governmental Approval or other Consent is required to be obtained or made by Seller in connection with the execution and delivery of this Agreement and the Collateral Agreements or the consummation of the transactions contemplated thereby.
3.1.4. Financial Statements. Seller has delivered to the Buyer Seller’s unaudited consolidated financial statements as of and for the period ended August 29, 2006 (the "Unaudited Balance Sheet Date"), together with a report thereon by Seller's Accountants (the "Unaudited Financial Statements"), including a balance sheet, statements of income and retained earnings and a statement of cash flows (all parts of the Unaudited Financial Statements collectively known as the "Financial Statements"). The Unaudited Financial Statements have been prepared. From February 1, 2006 forward, the balance sheets included in the Financial Statements do not include any material assets or liabilities not intended to constitute a part of the Business or the Assets after giving effect to the transactions contemplated hereby, and present fairly the financial condition of the Business as at their respective dates. The statements of income and retained earnings and statements of cash flows included in the Financial Statements do not reflect the operations of any entity or business not intended to constitute a part of the Business after giving effect to all such transactions, reflect all costs that historically have been incurred by the Business (other than the Excluded Liabilities) and present fairly the results of operations and cash flows of the Business for the periods indicated.
3.1.5. Absence of Undisclosed Liabilities. To Seller’s Knowledge, Seller has no liabilities or obligations of any nature, whether known or unknown, absolute, accrued, contingent or otherwise and whether due or to become due, arising out of or relating to the Business or Assets, except (a) as set forth in Schedule 3.1.5, (b) as and to the extent disclosed or reserved against in the Unaudited Balance Sheet and (c) for liabilities and obligations that (i) were incurred after the date of the Unaudited Balance Sheet in the ordinary course of business consistent with prior practice and (ii) individually and in the aggregate are not material to the Business and have not had or resulted in, and will not have or result in, a Material Adverse Effect. None of Seller’s employees is now, or will by the passage of time, hereinafter become entitled to receive any vacation time, vacation pay or severance pay attributable to services rendered prior to such date except as disclosed on the Unaudited Balance Sheet.
3.1.6. Taxes. (a) Seller has (or by the Closing Date will have) duly and timely filed all Tax Returns relating to the Business with respect to Covered Taxes required to be filed on or before the Closing Date ("Covered Returns"). Except for Covered Taxes set forth on Schedule 3.1.6(a), which are being contested in good faith and by appropriate proceedings, the following Covered Taxes have (or by the Closing Date will have) been duly and timely paid: (i) all Covered Taxes shown to be due on the Covered Returns, (ii) all deficiencies and assessments of Covered Taxes of which notice has (or by the Closing Date will have) been received by Seller that are or may become payable by the Buyer or chargeable as a lien upon the Business or the Assets, and (iii) all other Covered Taxes due and payable on or before the Closing Date for which neither filing of Covered Returns nor notice of deficiency or assessment is required, of which Seller is or reasonably should be (or by the Closing Date will be or reasonably should be) aware that are or may become payable by the Buyer or chargeable as a lien upon the Business or Assets. All Taxes required to be withheld by or on behalf of Seller in connection with amounts paid or owing to any employee, independent contractor, creditor or other party with respect to the Business or the Assets ("Withholding Taxes") have been withheld, and such withheld taxes have either been duly and timely paid to the proper Governmental Authorities or set aside in accounts for such purpose.
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(b) Except as set forth on Schedule 3.1.6(b), no agreement or other document extending, or having the effect of extending, the period of assessment or collection of any Covered Taxes or Withholding Taxes, and no power of attorney with respect to any such Taxes, has been filed with any Governmental Authority (including, but not limited to, the IRS).
(c) Except as set forth on Schedule 3.1.6(c), (i) there are no Covered Taxes or Withholding Taxes asserted in writing by any Governmental Authority to be due and (ii) no issue has been raised in writing by any Governmental Authority in the course of any audit with respect to Covered Taxes or Withholding Taxes. Except as set forth on Schedule 3.1.6(c), no Covered Taxes and no Withholding Taxes are currently under audit by any Governmental Authority. Except as set forth on Schedule 3.1.6(c), neither the IRS nor any other Governmental Authority is now asserting or, to the best Knowledge of Seller, threatening to assert against Seller any deficiency or claim for additional Covered Taxes or any adjustment of Covered Taxes that would, if paid by the Buyer, have a Material Adverse Effect, and there is no reasonable basis for any such assertion of which Seller is or reasonably should be aware.
(d) Except as set forth on Schedule 3.1.6(d), there is no litigation or administrative appeal pending or, to the best Knowledge of Seller, threatened against or relating to Seller in connection with Covered Taxes.
3.1.7. Absence of Changes. Except as set forth in Schedule 3.1.7, since the Unaudited Balance Sheet Date, Seller has conducted the Business only in the ordinary course consistent with prior practice and, to the Seller’s Knowledge, has not, on behalf of, in connection with or relating to the Business or the Assets:
(a) suffered any Material Adverse Effect;
(b) incurred any obligation or liability, absolute, accrued, contingent or otherwise, whether due or to become due, except current liabilities for trade or business obligations incurred in connection with the purchase of goods or services in the ordinary course of business consistent with prior practice, none of which liabilities, in any case or in the aggregate, could have a Material Adverse Effect;
(c) discharged or satisfied any Lien other than those then required to be discharged or satisfied, or paid any obligation or liability, absolute, accrued, contingent or otherwise, whether due or to become due, other than current liabilities shown on the Unaudited Balance Sheet and current liabilities incurred since the date thereof in the ordinary course of business consistent with prior practice;
(d) assigned, mortgaged, pledged or otherwise subjected to Lien, any property, business or assets (including Assets), tangible or intangible, held in connection with the Business;
(e) sold, transferred, leased to others or otherwise disposed of any of the Assets, except for inventory sold in the ordinary course of business, or forgiven, canceled or compromised any debt or claim, or waived or released any right of substantial value;
(f) received any notice of termination of any contract, lease or other agreement or suffered any damage, destruction or loss (whether or not covered by insurance) which, in any case or in the aggregate, has had a Material Adverse Effect;
(g) transferred or granted any rights or licenses under, or entered into any settlement regarding the breach or infringement of, any Intellectual Property, or modified any existing rights with respect thereto;
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(h) made any change in the rate of compensation, commission, bonus or other direct or indirect remuneration payable, or paid or agreed or orally promised to pay, conditionally or otherwise, any bonus, incentive, retention or other compensation, retirement, welfare, fringe or severance benefit or vacation pay, to or in respect of any shareholder, director, officer, employee, salesman, distributor or agent of Seller relating to the Business or the Assets;
(i) encountered any labor union organizing activity, had any actual or threatened employee strikes, work stoppages, slowdowns or lockouts, or had any material change in its relations with its employees, agents, customers or suppliers;
(j) instituted, settled or agreed to settle any litigation, action or proceeding before any court or governmental body relating to the Business or the Assets;
(k) (i) entered into any transaction, contract or commitment other than in the ordinary course of business, (ii) breached any contract or commitment or (iii) paid or agreed to pay any brokerage, finder's fee, Taxes or other expenses in connection with, or incurred any severance pay obligations by reason of, this Agreement or the transactions contemplated hereby;
(l) made any material changes in policies or practices relating to selling practices, returns, discounts or other terms of sale or accounting therefor or in policies of employment;
(m) made any prepayment of any accounts payable, delayed payment of any trade payables or other obligations other than in the ordinary course of business consistent with past practice, or made any other cash payments other than in the ordinary course of business;
(n) failed to maintain all of the tangible Assets and all other tangible properties and assets owned, leased, occupied, operated or used in connection with the Business in good repair, working order and operating condition subject only to ordinary wear and tear;
(o) failed to use best efforts to keep in full force and effect insurance comparable in amount and scope of coverage to insurance now carried in connection with the Business; or
(p) taken any action or omitted to take any action that would result in the occurrence of any of the foregoing.
3.1.8. Litigation. To Seller’s Knowledge, except as set forth on Schedule 3.1.8, there is no action, claim, demand, suit, proceeding, arbitration, grievance, citation, summons, subpoena, inquiry or investigation of any nature, civil, criminal, regulatory or otherwise, in law or in equity, pending or threatened against or relating to Seller in connection with the Assets or the Business or against or relating to the transactions contemplated by this Agreement, and Seller does not know or have reason to be aware of any basis for the same. Except as set forth in such Schedule 3.1.8, no citations, fines or penalties have been asserted against Seller since February 1, 2006, under any foreign, federal, state or local law relating to occupational health or safety.
3.1.9. Compliance with Laws; Governmental Approvals and Consents; Governmental Contracts. (a) Except as disclosed in Schedule 3.1.9(a) since February 1, 2006, Seller has complied in all material respects with all Applicable Laws applicable to the Business or the Assets, and Seller has not received any notice alleging any such conflict, violation, breach or default.
(b) Schedule 3.1.9(b) sets forth all Governmental Approvals and other Consents necessary for, or otherwise material to, the conduct of the Business and the ownership and use of the Assets. Except as set forth in Schedule 3.1.9(b), all such Governmental Approvals and Consents have been duly obtained and are in full force and effect, and Seller is in compliance with each of such Governmental Approvals and Consents held by it with respect to the Assets and the Business.
(c) Schedule 3.1.9(c) sets forth all Contracts with any Governmental Authority.
(d) To Seller’s Knowledge, there are no proposed laws, rules, regulations, ordinances, orders, judgments, decrees, governmental takings, condemnations or other proceedings which would be applicable to the business, operations or properties of Seller and which might adversely affect the properties, assets, liabilities, operations or prospects of Seller, either before or after the Closing Date.
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3.1.10. Operation of the Business. Except as set forth in Schedule 3.1.10, (a) Seller has conducted the Business only through Seller and not through any other divisions or any direct or indirect subsidiary or affiliate of Seller and (b) no part of the Business is operated by Seller through any entity other than Seller.
3.1.11. Assets. Except as disclosed in Schedule 3.1.11, Seller has good title to all the Assets free and clear of any and all Liens other than Permitted Liens. The Assets, together with the services and arrangements described in Section 5.2.5, comprise all assets and services required for the continued conduct of the Business, by the Buyer, as now being conducted. The Assets, taken as a whole, constitute all the properties and assets relating to or used or held for use in connection with the Business during the past twelve (12) months. Except for Excluded Assets, there are no assets or properties used in the operation of the Business and owned by any Person other than Seller that will not be leased or licensed to the Buyer under valid, current leases or license arrangements. As of the Effective Date, the Assets are in all material respects adequate for the purposes for which such assets were then currently used or were held for use, and were in reasonably good repair and operating condition (subject to normal wear and tear) and, to the Knowledge of Seller, there are no facts or conditions affecting the Assets which could, individually or in the aggregate, interfere in any material respect with the use, occupancy or operation thereof as currently used, occupied or operated, or their adequacy for such use.
3.1.12. Contracts. (a) Schedule 3.1.12(a) contains a complete and correct list of all agreements, contracts, commitments and other instruments and arrangements (whether written or oral) of the types described below (x) by which any of the Assets are bound or affected or (y) to which Seller is a party or by which it is bound in connection with the Business or the Assets (the "Contracts"):
(i) leases, licenses, permits, franchises, insurance policies, Governmental Approvals and other contracts concerning or relating to the Real Property;
(ii) employment, consulting, agency, collective bargaining or other similar contracts, agreements, and other instruments and arrangements relating to or for the benefit of current, future or former employees, officers, directors, sales representatives, distributors, dealers, agents, independent contractors or consultants;
(iii) loan agreements, indentures, letters of credit, mortgages, security agreements, pledge agreements, deeds of trust, bonds, notes, guarantees, and other agreements and instruments relating to the borrowing of money or obtaining of or extension of credit;
(iv) licenses, licensing arrangements and other contracts providing in whole or in part for the use of, or limiting the use of, any Intellectual Property;
(v) brokerage or finder's agreements;
(vi) joint venture, partnership and similar contracts involving a sharing of profits or expenses (including but not limited to joint research and development and joint marketing contracts);
(vii) stock purchase agreements, asset purchase agreements and other acquisition or divestiture agreements, including but not limited to any agreements relating to the acquisition, sale, lease or disposal of any Assets (other than sales of inventory in the ordinary course of business) or involving continuing indemnity or other obligations;
(viii) orders and other contracts for the purchase or sale of materials, supplies, products or services, each of which involves aggregate payments in excess of Ten Thousand Dollars ($10,000) in the case of purchases;
(ix) contracts with respect to which the aggregate amount that could reasonably expected to be paid or received thereunder in the future exceeds Ten Thousand Dollars ($10,000);
(x) sales agency, manufacturer's representative, marketing or distributorship agreements;
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(xi) contracts, agreements or arrangements with respect to the representation of the Business in foreign countries;
(xii) lease agreements providing for the leasing of both (A) personal property primarily used in, or held for use primarily in connection with, the Business and (B) other personal property;
(xiii) contracts, agreements or commitments with any employee, director, officer, stockholder or Affiliate of Seller; and
(xiv) any other contracts, agreements or commitments that are or will be material to the Business.
(b) Seller has delivered to Buyer complete and correct copies of all written Contracts, together with all amendments thereto, and accurate descriptions of all material terms of all oral Contracts, set forth or required to be set forth in Schedule 3.1.12(a).
(c) All Contracts are in full force and effect and enforceable against each party thereto. There does not exist under any Contract any event of default or event or condition that, after notice or lapse of time or both, would constitute a violation, breach or event of default thereunder on the part of Seller or, to the best Knowledge of Seller, any other party thereto except as set forth in Schedule 3.1.12(c) and except for such events or conditions that, individually and in the aggregate, (i) have not had or resulted in, and will not have or result in, a Material Adverse Effect and (ii) have not and will not materially impair the ability of Seller to perform their respective obligations under this Agreement and under the Collateral Agreements. Except as set forth in Schedule 3.1.12(c), no consent of any third party is required under any Contract as a result of or in connection with, and the enforceability of any Contract will not be affected in any manner by, the execution, delivery and performance of this Agreement or any of the Collateral Agreements or the consummation of the transactions contemplated thereby.
(d) Seller has no outstanding power of attorney relating to the Business or the Assets.
3.1.13. Territorial Restrictions. Seller is not restricted by any written agreement or understanding with any other Person from carrying on the Business anywhere in the world. To Seller’s Knowledge, the Buyer, solely as a result of its purchase of the Assets from Seller pursuant hereto and the assumption of the Assumed Liabilities, will not thereby become restricted in carrying on any business anywhere in the world.
3.1.14. Inventories. All Inventories are of good, usable and merchantable quality in all material respects and, except as set forth on Schedule 3.1.14, do not include obsolete or discontinued items. Except as set forth on Schedule 3.1.14, (a) all Inventories are of such quality as to meet the quality control standards of Seller and any applicable governmental quality control standards, (b) all Inventories that are finished goods are saleable as current inventories at the current prices thereof in the ordinary course of business, (c) all Inventories are recorded on the books of the Business at the lower of cost or market value determined in accordance with GAAP, and (d) no write-down in inventory has been made or should have been made pursuant to GAAP during the past two years. Schedule 3.1.14 lists the locations of all Inventories.
3.1.15. Suppliers; Raw Materials. Schedule 3.1.15 sets forth the names and addresses of all suppliers from which Seller ordered raw materials, supplies, merchandise and other goods and services with an aggregate purchase price for each such supplier of One Thousand Dollars ($1,000) or more during the twelve-month period immediately preceding the Unaudited Balance Sheet Date. Seller has neither received any notice nor has any reason to believe that there has been any material adverse change in the price of such raw materials, supplies, merchandise or other goods or services, or that any such supplier will not sell raw materials, supplies, merchandise and other goods to the Buyer at any time after the Closing Date on terms and conditions similar to those used in its current sales to Seller, subject to general and customary price increases. To the best Knowledge of Seller, no supplier of Seller described hereinabove has otherwise threatened to take any action described in the preceding sentence as a result of the consummation of the transactions contemplated by this Agreement and the Collateral Agreements.
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3.1.16. Products. (a) Warranties. Seller has neither manufactured nor sold any products, to any customers, for which there are or could be any product liability claims. Except as required by Applicable Law or as set forth on Schedule 3.1.16(a), no product manufactured, sold, or delivered by, or service rendered by or on behalf of, Seller is subject to any guaranty, warranty or other indemnity, express or implied, beyond such standard terms and conditions.
(b) Product Liability. Except as set forth on Schedule 3.1.16(b), Seller has no liability or obligation of any nature (whether known or unknown, accrued, absolute, contingent or otherwise, and whether due or to become due), whether based on strict liability, negligence, breach of warranty (express or implied), breach of contract or otherwise, in respect of any product, component or other item manufactured, sold, designed or produced prior to the Closing by, or service rendered prior to the Closing by or on behalf of, Seller or any predecessor thereto, that (i) is not fully and adequately covered by policies of insurance or by indemnity, contribution, cost sharing or similar agreements or arrangements by or with other Persons, and (ii) is not otherwise fully and adequately reserved against as reflected in the Financial Statements.
(c) Rebates. Except as set forth on Schedule 3.1.16(c), Seller has not entered into, or offered to enter into, any agreement, contract commitment or other arrangement (whether written or oral) pursuant to which Seller is or will be obligated to make any rebates, discounts, promotional allowances or similar payments or arrangements to any customer ("Rebate Obligations"). All Rebate Obligations are reflected in the Unaudited Financial Statements or have been incurred after the date thereof in the ordinary course of business.
3.1.17. Absence of Certain Business Practices. To Seller’s Knowledge, neither Seller nor any of its officers, employees or agents, or any other person acting on their behalf, has, directly or indirectly, within the past five (5) years, given or agreed to give any gift or similar benefit to any customer, supplier, governmental employee or other person who is or may be in a position to help or hinder the Business (or assist Seller in connection with any actual or proposed transaction relating to the Business) (i) which subjected or might have subjected Seller to any damage or penalty in any civil, criminal or governmental litigation or proceeding, (ii) which if not given in the past, might have had a Material Adverse Effect, (iii) which if not continued in the future, might have a Material Adverse Effect or subject Seller to suit or penalty in any private or governmental litigation or proceeding, (iv) for any of the purposes described in or equivalent to Section 162(c) of the Code or (v) for the purpose of establishing or maintaining any concealed fund or concealed bank account.
3.1.18. Intellectual Property. (a) Title. Schedule 3.1.18(a) contains a complete and correct list of all Intellectual Property that is owned by Seller and primarily related to, used in, held for use in connection with, or necessary for the conduct of, or otherwise material to the Business (the "Owned Intellectual Property"). Seller owns or has the exclusive right to use pursuant to license, sublicense, agreement or permission all Intellectual Property Assets, free from any Liens and free from any requirement of any past, present or future royalty payments, license fees, charges or other payments, or conditions or restrictions whatsoever. As of the Effective Date, the Intellectual Property Assets comprise all of the Intellectual Property necessary for the Buyer to conduct and operate the Business as now being conducted by Seller.
(b) Transfer. Immediately after the Closing, Buyer will own all of the Owned Intellectual Property and will have a right to use all other Intellectual Property Assets, free from any Liens and on the same terms and conditions as in effect prior to the Closing Date.
(c) No Infringement. To Seller’s Knowledge, the conduct of the Business does not infringe or otherwise conflict with any rights of any Person in respect of any Intellectual Property. To Seller’s Knowledge, none of the Intellectual Property Assets is being infringed or otherwise used or available for use, by any other Person.
(d) Licensing Arrangements. Schedule 3.1.18(d) sets forth all agreements, arrangements or laws (i) pursuant to which Seller has licensed Intellectual Property Assets to, or the use of Intellectual Property Assets is otherwise permitted (through non-assertion, settlement or similar agreements or otherwise) by, any other Person and (ii) pursuant to which Seller has had Intellectual Property licensed to it, or has otherwise been permitted to use Intellectual Property (through non-assertion, settlement or similar agreements or otherwise). All of the agreements or arrangements set forth on Schedule 3.1.18(d) (x) are in full force and effect in accordance with their terms and no default exists thereunder by Seller, or to the Knowledge of Seller after due inquiry, by any other party thereto, (y) are free and clear of all Liens, and (z) do not contain any change in control or other terms or conditions that will become applicable or inapplicable as a result of the consummation of the transactions contemplated by this Agreement. Seller has delivered to the Buyer true and complete copies of all licenses and arrangements (including amendments) set forth on Schedule 3.1.18(d). All royalties, license fees, charges and other amounts payable by, on behalf of, to, or for the account of, Seller in respect of any Intellectual Property are disclosed in the Unaudited Financial Statements.
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(e) No Intellectual Property Litigation. To Seller’s Knowledge, no claim or demand of any Person has been made nor is there any proceeding that is pending or threatened, nor is there a reasonable basis therefor, nor has Seller received any written notice of a claim, demand or proceeding, which (i) challenges the rights of Seller in respect of any Intellectual Property Assets, (ii) asserts that Seller is infringing or otherwise in conflict with, or is, except as set forth in Schedule 3.1.18(d), required to pay any royalty, license fee, charge or other amount with regard to, any Intellectual Property, or (iii) claims that any default exists under any agreement or arrangement listed on Schedule 3.1.18(d). To Seller’s Knowledge, none of the Intellectual Property Assets is subject to any outstanding order, ruling, decree, judgment or stipulation by or with any court, arbitrator, or administrative agency, or has been the subject of any litigation within the last five (5) years, whether or not resolved in favor of Seller.
(f) Due Registration. Except for trade secrets, the Owned Intellectual Property has been duly registered with, filed in or issued by, as the case may be, the United States Patent and Trademark Office, United States Copyright Office or such other filing offices, domestic or foreign, and Seller has taken such other actions (including such other actions as may apply to trade secrets), to ensure full protection under any applicable laws or regulations, and such registrations, filings, issuances and other actions remain in full force and effect, in each case to the extent material to the Business and the Assets.
(g) Use of Name and Mark. To Seller’s Knowledge, except as set forth in Schedule 3.1.18(g), there are, and immediately after the Closing will be, no contractual restriction or limitations pursuant to any orders, decisions, injunctions, judgments, awards or decrees of any Governmental Authority, on Buyer's right to use the names and marks "SEAL-N-CUT" and “MODULLION” (and all respective close variants thereof) in its conduct of the Business as presently carried on by Seller or as such Business may be extended or pursued by the Buyer.
3.1.19. Insurance. Schedule 3.1.19 contains a complete and correct list and summary description of all insurance policies maintained by Seller for the benefit of or in connection with the Assets or the Business. Seller has delivered to the Buyer complete and correct copies of all such policies together with all riders and amendments thereto. Such policies are in full force and effect, and all premiums due thereon have been paid. Seller has complied in all material respects with the terms and provisions of such policies. The insurance coverage provided by such policies is adequate and customary for the Business and the Assets, and is on such terms (including without limitation as to deductibles and self-insured retentions), covers such risks, contains such deductibles and retentions, and is in such amounts, as the insurance customarily carried by comparable companies of established reputation similarly situated and carrying on the same or similar business. Schedule 3.1.19 sets out all claims made by Seller under any policy of insurance during the past two years with respect to the Business or the Assets.
3.1.20. Employees, Labor Matters. Except as set forth in Schedule 3.1.20, Seller is not a party to nor bound by any collective bargaining agreement and there are no labor unions or other organizations representing, purporting to represent or attempting to represent any employees employed in the operation of the Business. Since February 1, 2006 there has not occurred or, to the best Knowledge of Seller, been threatened any material strike, slowdown, picketing, work stoppage, concerted refusal to work overtime or other similar labor activity with respect to any employees employed in the operation of the Business. There are no labor disputes currently subject to any grievance procedure, arbitration or litigation and there is no representation petition pending or, to the best Knowledge of Seller after due inquiry, threatened with respect to any employee employed in the operation of the Business. Seller has complied with all provisions of Applicable Law pertaining to the employment of employees, including, without limitation, all such Laws relating to labor relations, equal employment, fair employment practices, entitlements, prohibited discrimination or other similar employment practices or acts, except for any failure so to comply that, individually or together with all such other failures, has not and will not result in a material liability or obligation on the part of the Buyer, and has not had or resulted in, and will not have or result in, a Material Adverse Effect.
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3.1.21. Confidentiality. Except as set forth on Schedule 3.1.21, Seller has taken reasonable steps necessary to protect the confidential nature of all material confidential information (including, without limitation, any proprietary information and Seller’s Intellectual Property) with respect to the Business and the Assets.
3.1.22. No Guarantees. None of the obligations or liabilities of the Business or of Seller incurred in connection with the operation of the Business (including the use of the Assets) is guaranteed by or subject to a similar contingent obligation of any other Person. Seller has not guaranteed or become subject to a similar contingent obligation in respect of the obligations or liabilities of any other Person. There are no outstanding letters of credit, surety bonds or similar instruments of Seller or any of its Affiliates in connection with the Business or the Assets.
3.1.23. Records. The books of account of Seller, insofar as they relate to or affect the Business and the Assets, are sufficient to prepare the Financial Statements in accordance with GAAP.
3.1.24. Brokers, Finders. All negotiations relating to this Agreement, the Collateral Agreements, and the transactions contemplated thereby, have been carried on without the participation of any Person acting on behalf of Seller or its Affiliates in such manner as to give rise to any valid claim against the Buyer or any of its subsidiaries for any brokerage or finder's commission, fee or similar compensation, or for any bonus payable to any officer, director, employee, agent or sales representative of or consultant to Seller or their respective Affiliates upon consummation of the transactions contemplated hereby or thereby.
3.1.25. Disclosure. No representation or warranty by Seller contained in this Agreement nor any statement or certificate furnished or to be furnished by or on behalf of Seller to the Buyer or its representatives in connection herewith or pursuant hereto contains or will contain any untrue statement of a material fact, or omits or will omit to state any material fact required to make the statements contained herein or therein not misleading. To Seller’s Knowledge, there is no fact (other than matters of a general economic or political nature which do not affect the Business uniquely) known to Seller that has not been disclosed by Seller to the Buyer that might reasonably be expected to have or result in a Material Adverse Effect.
3.2. Representations and Warranties of the Buyer. As of the Effective Date and as of the Closing Date, the Buyer represents and warrants to Seller as follows:
3.2.1. Corporate Status; Authorization. Buyer is a corporation duly organized, validly existing and in good standing, under the laws of the jurisdiction of its incorporation with full corporate power and authority to execute and deliver this Agreement and the Collateral Agreements to which it is a party, to perform its obligations thereunder, and to consummate the transactions contemplated thereby. The execution and delivery by the Buyer of this Agreement, and the consummation of the transactions contemplated hereby, have been, and on the Closing Date the execution and delivery of the Collateral Agreements to which it is a party will have been, duly authorized by all requisite corporate action of Buyer. The Buyer has duly executed and delivered this Agreement. This Agreement is, and on the Closing Date each of the Collateral Agreements to which the Buyer is a party will be, valid and legally binding obligations of the Buyer, enforceable against the Buyer in accordance with their respective terms.
3.2.2. No Conflicts. The execution, delivery and performance by Buyer of this Agreement and each of the Collateral Agreements to which it is a party, and the consummation of the transactions contemplated thereby, do not and will not conflict with or result in a violation or breach of or default under (with or without the giving of notice or the lapse of time, or both) (i) the certificate of incorporation or by-laws or other organizational documents of Buyer, (ii) any Applicable Law applicable to Buyer or any of its Affiliates or any of its or their properties or assets or (iii) any contract, agreement or other instrument applicable to Buyer or any of its Affiliates or any of its or their properties or assets, except, in the case of clause (iii), for violations and defaults that, individually and in the aggregate, have not and will not materially impair the ability of Buyer to perform its obligations under this Agreement or under any of the Collateral Agreements to which it is a party. Except as specified in Schedule 3.2.2, no Governmental Approval or other Consent is required to be obtained or made by Buyer in connection with the execution and delivery of this Agreement or the Collateral Agreements or the consummation of the transactions contemplated thereby.
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3.2.3. Litigation. To Buyer’s Knowledge, there is no action, claim, suit, proceeding, arbitration, grievance, citation, summons, subpoena, inquiry or investigation pending or threatened, by or against or affecting Buyer, in connection with or relating to the transactions contemplated by this Agreement or of any action taken or to be taken in connection herewith or the consummation of the transactions contemplated hereby.
3.2.4. Brokers, Finders. All negotiations relating to this Agreement, the Collateral Agreements, and the transactions contemplated hereby and thereby, have been carried on without the participation of any Person acting on behalf of the Buyer in such manner as to give rise to any valid claim against Seller for any brokerage or finder's commission, fee or similar compensation.
ARTICLE IV
COVENANTS
4.1. Covenants of Seller.
4.1.1. Conduct of Business. From the Effective Date to the Closing Date, except as expressly permitted or required by this Agreement or as otherwise consented to by the Buyer in writing, Seller shall:
(a) carry on the Business in, and only in, the ordinary course, in substantially the same manner as heretofore conducted, and use all reasonable efforts to preserve intact its present business organization, maintain its properties in good operating condition and repair, keep available the services of its present officers and significant employees, and preserve its relationship with customers, suppliers and others having business dealings with it, to the end that its goodwill and going business shall be in all material respects unimpaired following the Closing;
(b) pay accounts payable and other obligations of the Business when they become due and payable in the ordinary course of business consistent with prior practice;
(c) perform in all material respects all of its obligations under all Contracts and other agreements and instruments relating to or affecting the Business or the Assets, and comply in all material respects with all Applicable Laws applicable to it, the Assets or the Business;
(d) not enter into or assume any material agreement, contract or instrument relating to the Business, or enter into or permit any material amendment, supplement, waiver or other modification in respect thereof;
(e) not grant (or commit to grant) any increase in the compensation (including incentive or bonus compensation) of any employee employed in the operation of the Business or institute, adopt or amend (or commit to institute, adopt or amend) any compensation or benefit plan, policy, program or arrangement or collective bargaining agreement applicable to any such employee; and
(f) not take any action or omit to take any action, which action or omission would result in a breach of any of the representations and warranties set forth in Section 3.1.7.
4.1.2. No Solicitation. During the term of this Agreement, Seller, its Affiliates and any Person acting on their behalf shall not (i) solicit or encourage any inquiries or proposals for, or enter into any discussions with respect to, the acquisition of any properties and assets held for use in connection with, necessary for the conduct of, or otherwise material to, the Business or (ii) furnish or cause to be furnished any non-public information concerning the Business to any Person (other than the Buyer and its agents and representatives), other than in the ordinary course of business or pursuant to Applicable Law and after prior written notice to the Buyer. Seller shall not sell, transfer or otherwise dispose of, grant any option or proxy to any Person with respect to, create any Lien upon, or transfer any interest in, any Asset, other than in the ordinary course of business and consistent with this Agreement.
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4.1.3. Access and Information. (a) So long as this Agreement remains in effect, Seller will give the Buyer and its accountants, attorneys, consultants, employees and agents, full access during normal business hours to, and furnish them with, all documents, records, work papers and information with respect to Seller’s properties, assets, books, contracts, commitments, reports and records relating to the Assets or the Business, as the Buyer shall from time to time reasonably request. In addition, Seller will permit the Buyer and its accountants, attorneys, consultants, employees and agents, reasonable access to such personnel of Seller during normal business hours as may be reasonably necessary to the Buyer in its review of the properties, assets and business affairs of the Assets and the Business and the above-mentioned documents, records and information; provided, however, that such access is undertaken by the Buyer without undue interference to or with the business of the Seller and under the direct supervision of an officer of the Seller or its nominee.
(b) Seller will retain all books and records relating to the Assets and the Business in accordance with Seller's record retention policies as presently in effect. During the seven (7) year period beginning on the Closing Date, Seller shall not dispose of or permit the disposal of any such books and records not required to be retained under such policies without first giving sixty (60) days' prior written notice to the Buyer offering to surrender the same to the Buyer at the Buyer's expense.
4.1.4. {RESERVED}
4.1.5. Public Announcements. Except as required by Applicable Law, Seller shall not make any public announcement in respect of this Agreement or the transactions contemplated hereby without the prior written consent of the Buyer.
4.1.6. Further Actions. (a) Seller agrees to use all reasonable good faith efforts to take all actions and to do all things necessary, proper or advisable to consummate the transactions contemplated hereby by the Expected Closing Date.
(b) Seller will, as promptly as practicable, file or supply, or cause to be filed or supplied, all applications, notifications and information required to be filed or supplied by it pursuant to Applicable Law in connection with this Agreement, the Collateral Agreements, the sale and transfer of the Assets pursuant to this Agreement and the consummation of the other transactions contemplated thereby.
(c) Seller, as promptly as practicable, will use all reasonable efforts to obtain, or cause to be obtained, all Consents (including, without limitation, all Governmental Approvals and any Consents required under any Contract) necessary to be obtained by it to consummate the sale and transfer of the Assets pursuant to this Agreement and the consummation of the other transactions contemplated thereby.
(d) Seller will coordinate and cooperate with the Buyer in exchanging such information and supplying such assistance as may be reasonably requested by the Buyer in connection with the filings and other actions contemplated by Section 4.2.2.
(e) At all times prior to the Closing, Seller shall promptly notify the Buyer in writing of any fact, condition, event or occurrence that will or may result in the failure of any of the conditions contained in Sections 5.1 and 5.2 to be satisfied, promptly upon becoming aware of the same.
4.1.7. Further Assurances. Following the Closing, Seller shall, and shall cause each of its Affiliates to, from time to time, execute and deliver such additional instruments, documents, conveyances or assurances and take such other actions as shall be necessary, or otherwise reasonably requested by the Buyer, to confirm and assure the rights and obligations provided for in this Agreement and in the Collateral Agreements and render effective the consummation of the transactions contemplated thereby.
4.1.8. Liability for Transfer Taxes. Except as prohibited by Applicable Law, Seller shall indemnify and hold harmless the Buyer against, all sales (including, without limitation, bulk sales), use, value added, documentary, stamp, gross receipts, registration, transfer, conveyance, excise, recording, license and other similar Taxes and fees ("Transfer Taxes"), arising out of or in connection with or attributable to the transactions effected pursuant to this Agreement and the Collateral Agreements. Seller shall prepare and timely file all Tax Returns required to be filed in respect of Transfer Taxes (including, without limitation, all notices required to be given with respect to bulk sales taxes), provided that the Buyer shall be permitted to prepare any such Tax Returns that are the primary responsibility of the Buyer under Applicable Law. The Buyer's preparation of any such Tax Returns shall be subject to Seller's approval, which approval shall not be withheld unreasonably nor delayed.
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4.1.9. {RESERVED}
4.2. Covenants of the Buyer.
4.2.1. Public Announcements. Prior to the Closing, except as required by Applicable Law, the Buyer shall not, and shall not permit its Affiliates to, make any public announcement in respect of this Agreement or the transactions contemplated hereby without the prior written consent of Seller.
4.2.2. Further Actions. (a) Buyer agrees to use all reasonable good faith efforts to take all actions and to do all things necessary, proper or advisable to consummate the transactions contemplated hereby by the Expected Closing Date.
(b) Buyer will, as promptly as practicable, file or supply, or cause to be filed or supplied, all applications, notifications and information required to be filed or supplied by Buyer pursuant to Applicable Law in connection with this Agreement, the Collateral Agreements, the Buyer' acquisition of the Assets pursuant to this Agreement, and the consummation of the other transactions contemplated thereby.
(c) Buyer will coordinate and cooperate with Seller in exchanging such information and supplying such reasonable assistance as may be reasonably requested by Seller in connection with the filings and other actions contemplated by Section 4.1.5.
(d) At all times prior to the Closing, the Buyer shall promptly notify Seller in writing of any fact, condition, event or occurrence that will or may result in the failure of any of the conditions contained in Sections 5.1 and 5.3 to be satisfied, promptly upon becoming aware of the same.
(e) Buyer, as promptly as practicable, will use all reasonable efforts to obtain, or cause to be obtained, all Consents (including, without limitation, all Governmental Approvals and consents required under any document) necessary to be obtained by it to consummate the purchase and acquisition of the Assets pursuant to this Agreement, and the consummation of the other transactions contemplated thereby.
4.2.3. Further Assurances. Following the Closing, the Buyer shall, and shall cause its Affiliates to, from time to time, execute and deliver such additional instruments, documents, conveyances or assurances and take such other actions as shall be necessary, or otherwise reasonably requested by Seller, to confirm and assure the rights and obligations provided for in this Agreement and in the Collateral Agreements and render effective the consummation of the transactions contemplated thereby.
ARTICLE V
CONDITIONS PRECEDENT
5.1. Conditions to Obligations of Each Party. The obligations of the Parties to consummate the transactions contemplated hereby shall be subject to the fulfillment on or prior to the Closing Date of the following conditions:
5.1.1. {RESERVED}
5.1.2. No Injunction. Consummation of the transactions contemplated hereby shall not have been restrained, enjoined or otherwise prohibited by any Applicable Law, including any order, injunction, decree or judgment of any court or other Governmental Authority. No court or other Governmental Authority shall have determined any Applicable Law to make illegal the consummation of the transactions contemplated hereby or the Collateral Agreements and no proceeding with respect to the application of any such Applicable Law to such effect shall be pending.
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5.2. Conditions to Obligations of the Buyer. The obligations of the Buyer to consummate the transactions contemplated hereby shall be subject to the fulfillment (or waiver by the Buyer) on or prior to the Closing Date of the following additional conditions, which Seller agrees to use reasonable good faith efforts to cause to be fulfilled:
5.2.1. Representations, Performance. The representations and warranties of Seller contained in this Agreement and in the Collateral Agreements (i) shall be true and correct in all respects (in the case of any representation or warranty containing any materiality qualification) or in all material respects (in the case of any representation or warranty without any materiality qualification) at and as of the Effective Date, and (ii) shall be repeated and shall be true and correct in all respects (in the case of any representation or warranty containing any materiality qualification) or in all material respects (in the case of any representation or warranty without any materiality qualification) on and as of the Closing Date with the same effect as though made on and as of the Closing Date. Seller shall have duly performed and complied in all material respects with all agreements and conditions required by this Agreement and each of the Collateral Agreements to be performed or complied with by it prior to or on the Closing Date. Seller shall have delivered to the Buyer a certificate, dated the Closing Date and signed by its duly authorized officer(s), to the foregoing effect.
5.2.2. Financing. The Buyer shall have obtained funds sufficient to enable the Buyer to consummate the transactions contemplated by this Agreement.
5.2.3. Consents. Seller shall have obtained and shall have delivered to the Buyer copies of (i) all Governmental Approvals required to be obtained by Seller in connection with the execution and delivery of this Agreement and the Collateral Agreements and the consummation of the transactions contemplated hereby or thereby and (ii) all Consents (including, without limitation, all Consents required under any Contract) necessary to be obtained in order to consummate the sale and transfer of the Assets pursuant to this Agreement and the consummation of the other transactions contemplated thereby and by the Collateral Agreements, unless the failure to obtain such Consent would not, individually or in the aggregate, have a Material Adverse Effect.
5.2.4. No Material Adverse Effect. Except as set forth in Schedule 3.1.8, no event, occurrence, fact, condition, change, development or effect shall have occurred, exist or come to exist since February 1, 2006 that, individually or in the aggregate, has constituted or resulted in, or could reasonably be expected to constitute or result in, a Material Adverse Effect.
5.2.5. Collateral Agreements. Seller shall have entered into each of the following agreements with the Buyer:
(a) an employment agreement between Buyer (or its subsidiary guaranteed by Buyer) and Steve Livneh for a duration of three (3) years, subject to the approval of Buyer’s Board of Directors (the “Livneh Employment Agreement”), attached hereto as Schedule 5.2.5(a);
(b) an employment agreement between Buyer (or its subsidiary guaranteed by Buyer) and Howard Stallard for a duration of three (3) years, subject to the approval of Buyer’s Board of Directors, attached hereto as Schedule 5.2.5(b);
(c) a release and consent agreement from Henvil, in favor of Buyer and its Affiliates, officers, directors, employees, agents, advisors, attorneys, accountants, and consultants, permitting the immediate cancellation of all Buyer purchase orders pending with Henvil as of the Effective Date, attached hereto as Schedule 5.2.5(c);
(d) an assignment of lease agreement, in the form attached hereto in Schedule 5.2.5(d), pursuant to which Buyer (or its subsidiary) shall lease the commercial space of the Lease; and
(e) a non-competition agreement, in the form attached hereto as Schedule 5.2.5(e), pursuant to which Seller agrees not to engage, either directly or indirectly, in any business competitive with Buyer anywhere in the world for a period of five (5) years.
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5.2.6. Corporate Proceedings. All corporate and other proceedings of Seller in connection with this Agreement and the Collateral Agreements and the transactions contemplated thereby, and all documents and instruments incident thereto, shall be reasonably satisfactory in substance and form to the Buyer and its counsel, and the Buyer and its counsel shall have received all such documents and instruments, or copies thereof, certified if requested, as may be reasonably requested.
5.2.7. Transfer Documents. Seller shall have delivered to the Buyer at the Closing all documents, certificates and agreements necessary to transfer to the Buyer good and marketable title to the Assets, free and clear of any and all Liens thereon, other than Permitted Liens, including without limitation:
(a) a bill of sale, assignment and general conveyance, in form and substance reasonably satisfactory to the Buyer, dated the Closing Date, with respect to the Fixed Assets, as set forth in Schedule 5.2.7(a);
(b) assignments of all Intellectual Property and any other agreements and instruments constituting Intangible Assets, dated the Closing Date, assigning to the Buyer all of Seller's right, title and interest therein and thereto, with any required Consent endorsed thereon, as set forth in Schedule 5.2.7(b);
(c) an assignment of lease agreement to Buyer (or its subsidiary), dated as of the Closing Date or other mutually agreeable date, with respect to the Lease in the form attached as Schedule 5.2.5(d).
5.2.8. Consents. Buyer has received consent from the lessor of the Lease in Schedule 1.1(i) to assign the Lease to the Buyer (or its subsidiary).
5.3. Conditions to Obligations of Seller. The obligation of Seller to consummate the transactions contemplated hereby shall be subject to the fulfillment (or waiver by Seller), on or prior to the Closing Date, of the following additional conditions, which the Buyer agrees to use reasonable good faith efforts to cause to be fulfilled.
5.3.1. Representations, Performance. The representations and warranties of the Buyer contained in this Agreement and the Collateral Agreements (i) shall be true and correct in all respects (in the case of any representation or warranty containing any materiality qualification) or in all material respects (in the case of any representation or warranty without any materiality qualification) at and as of the Effective Date and (ii) shall be repeated and shall be true and correct in all respects (in the case of any representation or warranty containing any materiality qualification) or in all material respects (in the case of any representation or warranty without any materiality qualification) on and as of the Closing Date with the same effect as though made at and as of such time. Buyer shall have duly performed and complied in all material respects with all agreements and conditions required by this Agreement and the Collateral Agreements to be performed or complied with by it prior to or on the Closing Date. Buyer shall have delivered to Seller a certificate, dated the Closing Date and signed by its duly authorized officer, to the foregoing effect.
5.3.2. Corporate Proceedings. All corporate proceedings of Buyer in connection with this Agreement and the Collateral Agreements and the transactions contemplated thereby, and all documents and instruments incident thereto, shall be reasonably satisfactory in substance and form to Seller, and its counsel, and Seller and its counsel shall have received all such documents and instruments, or copies thereof, certified if requested, as may be reasonably requested.
5.3.3. Consents and Approvals. Seller shall have obtained and delivered to Buyer copies of all Governmental Approvals and Consents necessary to be obtained by it to consummate the transactions contemplated under this Agreement and the Collateral Agreements, unless failure to obtain such Governmental Approvals or Consents would not individually or in the aggregate, have a Material Adverse Effect.
5.3.4. Collateral Agreements. Buyer shall have entered into each of the Collateral Agreements to which it is a party.
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5.3.5. Closing Deliveries. Buyer shall have delivered to and/or entered into with, as the case may be, the Seller at the Closing (or as soon as practicable thereafter) the following items:
(a) an assignment of lease agreement to Buyer, dated as of the Closing Date (or a date subsequent as practicable after the formation of Buyer’s formation, as mutually agreed), with respect to the Lease in form attached as Schedule 5.2.5(d);
(b) funds in the amount of One Hundred and Fifty Thousand Dollars ($150,000) by wire transfer; and
(c) Buyer shall have assumed the Assumed Liabilities as soon as practicable after the formation of Buyer’s subsidiary.
5.3.6. Consents. Seller shall have received the Consent from the lessor of the Lease to assign the lease to the Buyer, as set forth in Schedule 5.3.6.
ARTICLE VI
EMPLOYEES AND EMPLOYEE BENEFIT PLANS
6.1. Employment of Seller's Employees. (a) Seller will use its best efforts to cause the employees employed by Seller in the Business as of the Closing Date to make available their employment services to the Buyer and its subsidiary. For a period of five (5) years from the Closing Date, Seller will not, and will not permit any of its Affiliates to, solicit, offer to employ or retain the services of or otherwise interfere with the relationship of Buyer with any Person employed by or otherwise engaged to perform services for Buyer in connection with the operation of the Business or the use of the Assets. Seller shall not be entitled to receive any additional compensation, beyond that set forth in Section 2.2, above, for Seller’s obligations under this Article VI.
(b) Effective as of the Closing Date, Buyer shall offer employment to all of the Employees who are employed by Seller principally in the Business, at wage or salary levels, as applicable, and with employee benefits that are in compliance with applicable law. Those Employees who accept such offers of employment shall be referred to herein as the "Transferred Employees." As soon as practicable after formation of Buyer’s subsidiary, Buyer shall employ the Transferred Employees set forth in Schedule 6.1(b).
(c) As soon as practicable after formation of the Buyer’s subsidiary, conditional on Closing, Buyer shall assume and be responsible for all Plans and other benefits of the Transferred Employees, accruing on or after the Closing Date. The Seller shall quantify to Buyer the amount of accrued vacation pay due and owning to the Transferred Employees as of the Effective Date.
6.2. Workers Compensation. From and after the Closing Date, Seller shall remain solely responsible for any and all liabilities to or in respect of any Transferred Employee relating to or arising in connection with any and all claims for workers' compensation benefits arising in connection with any occupational injury or disease occurring or existing on or prior to the Closing Date.
ARTICLE VII
DEFINITIONS, MISCELLANEOUS
7.1. Definition of Certain Terms. The terms defined in this Section 7.1, whenever used in this Agreement (including in the Schedules), shall have the respective meanings indicated below for all purposes of this Agreement. All references herein to a Section, Article or Schedule are to a Section, Article or Schedule of or to this Agreement, unless otherwise indicated.
Affiliate: of a Person means a Person that directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the first Person. "Control" (including the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of a person, whether through the ownership of voting securities, by contract or credit arrangement, as trustee or executor, or otherwise.
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Agreement: this Asset Purchase Agreement, including the Schedules hereto.
Applicable Law: 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) Governmental Approvals and (iii) orders, decisions, injunctions, judgments, awards and decrees of or agreements with any Governmental Authority.
Assets: as defined in Section 1.1.
Assumed Liabilities: as defined in Section 2.5.
Business: the business of the Seller pertaining to the Assets, and the Assumed Liabilities, and relating generally to the creation, engineering and development of intellectual property related to medical devices, and the provision of technical and professional services in connection therewith.
Buyer: as defined in the first paragraph of this Agreement.
Buyer Indemnities: as defined in Section 7.2(a).
Closing: as defined in Section 2.1.
Closing Date: as defined in Section 2.1.
Code: the Internal Revenue Code, as amended.
Collateral Agreements: the agreements and other documents and instruments described in Sections 5.2.5 and 5.2.7.
Consent: any consent, approval, authorization, waiver, permit, grant, franchise, concession, agreement, license, exemption or order of, registration, certificate, declaration or filing with, or report or notice to, any Person, including but not limited to any Governmental Authority.
Contract: as defined in Section 3.1.12(a).
Covered Returns: as defined in Section 3.1.6.
Covered Taxes: any and all Taxes required to be paid by Seller in connection with the ownership, operation or transfer of the Business, Assets or otherwise.
$ or Dollars: lawful money of the United States of America.
Employees: all of employees of Seller employed or formerly employed in the operation of the Business, including their respective beneficiaries and dependents.
Excluded Liabilities: as defined in Section 2.6.
Financial Statements: each of the financial statements required to be provided by Section 3.1.4.
Fixed Assets: as defined in Section 1.1 and more specifically described in Schedule 1.1.
GAAP: generally accepted accounting principles as in effect in the United States.
Governmental Approval: any Consent of, with or to any Governmental Authority.
Governmental Authority: any nation or government, any state or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including, without limitation, any government authority, agency, department, board, commission or instrumentality of the United States, any State of the United States or any political subdivision thereof, and any tribunal or arbitrator(s) of competent jurisdiction, and any self-regulatory organization.
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Henvil Corp..: the Ontario, Canada corporation, which is a Fifty Percent (50%) shareholder in Seller, owned and controlled by Steve Livneh, and located at 3180 Grand Marais E., Windsor, Ontario Canada N8W 4W5.
Indemnified Party: as defined in Section 7.2(d).
Indemnifying Party: as defined in Section 7.2(d).
Intangible Assets: as defined in Section 1.1 and more specifically described in Schedule 1.1.
Intellectual Property: any and all United States and foreign: (a) patents (including design patents, industrial designs and utility models) and patent applications (including docketed patent disclosures awaiting filing, reissues, divisions, continuations-in-part and extensions), patent disclosures awaiting filing determination, inventions and improvements thereto; (b) trademarks, service marks, trade names, trade dress, logos, business and product names, slogans, and registrations and applications for registration thereof; (c) copyrights (including software) and registrations thereof but excluding the name "Lican Developments, Ltd."; (d) inventions, processes, designs, formulae, trade secrets, know-how, industrial models, confidential and technical information, manufacturing, engineering and technical drawings, product specifications and confidential business information; (e) mask work and other semiconductor chip rights and registrations thereof; (f) intellectual property rights similar to any of the foregoing; (g) copies and tangible embodiments thereof (in whatever form or medium, including electronic media).
Intellectual Property Assets: as defined in Section 1.1(c).
Inventories: as defined in Section 1.1(b).
IRS: the Internal Revenue Service.
Knowledge: an individual will be deemed to have "Knowledge" of a particular fact or other matter if: (a) such individual is actually aware of such fact or other matter; or (b) a prudent individual could reasonably be expected to discover or otherwise become aware of such fact or other matter with the exercise of reasonable and prudent diligence and oversight. A Person (other than an individual) will be deemed to have "Knowledge" of a particular fact or other matter if any individual who is serving, or who has at any time served, as a director, officer, partner, executor, or trustee of such Person (or in any similar capacity) has, or at any time had, Knowledge of such fact or other matter. For purposes of this Agreement, “Knowledge” when used with respect to Seller shall mean the Knowledge of Mr. Steve Livneh, and when used with respect to Buyer shall mean the Knowledge of Mr. Moshe Citronowicz.
Lease: means the real property lease pursuant to which Seller is the lessee, for the use of the commercial space within which the Business is currently being conducted.
Lien: any mortgage, pledge, hypothecation, right of others, claim, security interest, encumbrance, lease, sublease, license, occupancy agreement, adverse claim or interest, easement, covenant, encroachment, burden, title defect, title retention agreement, voting trust agreement, interest, equity, option, lien, right of first refusal, charge or other restrictions or limitations of any nature whatsoever, including but not limited to such as may arise under any Contracts.
Losses: as defined in Section 7.2(a).
Material Adverse Effect: any event, occurrence, fact, condition, change or effect that is materially adverse to the business, operations, prospects, results of operations, prospects, condition (financial or otherwise), properties (including intangible properties), assets (including intangible assets) or liabilities of the Business or related to the Assets.
MODULLION™ Products: medical devices and related services based on or derived from the Intellectual Property Assets pertaining to the “Modullion” designs and trade name.
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Net Sales: the arithmetic result determined by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight out, and any cash discounts allowed.
Non-Competition Agreement: as defined in Section 5.2.5.
Owned Intellectual Property: as defined in Section 3.1.18(a).
Permitted Liens: (i) Liens reserved against in the Unaudited Financial Statements, to the extent so reserved, (ii) Liens for Taxes not yet due and payable or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of Seller in accordance with GAAP, or (iii) Liens that, individually and in the aggregate, do not and would not materially detract from the value of any of the property or assets of the Business or materially interfere with the use thereof as currently used or contemplated to be used or otherwise.
Person: any natural person, firm, partnership, association, corporation, company, trust, business trust, Governmental Authority or other entity.
Plans: any "employee benefit plan," and each bonus, incentive or deferred compensation, severance, termination, retention, change of control, stock option, stock appreciation, stock purchase, phantom stock or other equity-based, performance or other employee or retiree benefit or compensation plan, program, arrangement, agreement, policy or understanding, whether written or unwritten, that provides or may provide benefits or compensation in respect of any Employees or under which any Employee is or may become eligible to participate or derive a benefit and that is or has been maintained or established by Seller, or to which Seller or any Related Person contributes or is or has been obligated or required to contribute or with respect to which Seller may have any liability or obligation.
Purchase Price: as defined in Section 2.2.
Restricted Stock: Shares of Common Stock of Bovie Medical Corporation which have not been registered under the United States Securities Act of 1933, as amended (the “Act”), and each restricted stock certificate shall bear a restrictive legend to the effect that the shares have not been registered under the Act and may not be transferred or sold in the absence of an effective registration statement duly filed with the U.S. Securities and Exchange Commission with respect to the shares, or the Issuer is otherwise furnished with an opinion of counsel, satisfactory to it, that registration is not required under the Act.
RF Skin Resurfacing: the invention of the Seller described in Exhibit “B” hereto.
RF Skin Resurfacing Products: medical devices and related services based on or derived from the Intellectual Property Assets pertaining to the “RF Skin Resurfacing” designs and trade name.
SEAL-N-CUT: the invention of the Seller described in the Exhibit “C” hereto.
SEAL-N-CUT Products: medical devices and related services based on or derived from the Intellectual Property Assets pertaining to the “SEAL-N-CUT” designs and trade name.
Sellers Accountants: means Canadian Chartered Accountant Mario Parete.
Seller: as defined in the first paragraph of this Agreement.
Subsidiaries: each corporation or other Person in which a Person owns or controls, directly or indirectly, capital stock or other equity interests representing at least 50% of the outstanding voting stock or other equity interests.
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Tax: any United States or Canadian federal, state, provincial, local, foreign or other income, alternative, minimum, accumulated earnings, personal holding company, franchise, capital stock, net worth, capital, profits, windfall profits, gross receipts, value added, sales, use, goods and services, excise, customs duties, transfer, conveyance, mortgage, registration, stamp, documentary, recording, premium, severance, environmental (including taxes under Section 59A of the Code), real property, personal property, ad valorem, intangibles, rent, occupancy, license, occupational, employment, unemployment insurance, social security, disability, workers' compensation, payroll, health care, withholding, estimated or other similar tax, duty or other governmental charge or assessment or deficiencies thereof (including all interest and penalties thereon and additions thereto whether disputed or not).
Tax Return: any return, report, declaration, form, claim for refund or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
Tip-on-Tube: the invention of the Seller described in Exhibit “D” hereto.
Tip-on-Tube Products: medical devices and related services based on or derived from the Intellectual Property Assets pertaining to the “Tip on Tube” designs and trade name.
Transaction Expenses: as defined in Section 7.4.
Transfer Amounts: as defined in Section 6.2(c).
Transferred Employees: as defined in Section 6.1(b).
Transfer Taxes: as defined in Section 4.1.8.
Treasury Regulations: the regulations prescribed pursuant to the Code.
Unaudited Balance Sheet Date: as defined in Section 3.1.4.
Withholding Taxes: as defined in Section 3.6(a).
7.2. Indemnification. (a) By Seller. Seller covenants and agrees to defend, indemnify and hold harmless the Buyer, its officers, directors, employees, agents, advisers, representatives and Affiliates (collectively, the "Buyer Indemnitees") from and against, and pay or reimburse the Buyer Indemnitees for, any and all claims, liabilities, obligations, losses, fines, costs, royalties, proceedings, deficiencies or damages (whether absolute, accrued, conditional or otherwise and whether or not resulting from third party claims), including out-of-pocket expenses and reasonable attorneys' and accountants' fees incurred in the investigation or defense of any of the same or in asserting any of their respective rights hereunder (collectively, "Losses"), resulting from or arising out of:
(i) any material inaccuracy of any representation or warranty by Seller herein or in any Collateral Agreement or in connection herewith or therewith;
(ii) any material failure of Seller to perform any covenant or agreement hereunder or Collateral Agreement or to fulfill any other obligation in respect hereof or of Collateral Agreement;
(iii) any Excluded Liabilities or Excluded Assets;
(iv) any and all Taxes of Seller and its Affiliates not relating to or arising out of the Business;
(v) any and all Benefit Liabilities in respect of Employees except, with respect to Transferred Employees, to the extent expressly assumed by the Buyer pursuant to Article VI;
(vi) any product liability claim with respect to products manufactured or sold or events occurring prior to the Closing; and
(vii) any failure of the Seller to comply with applicable bulk sales laws (in consideration of which indemnification obligation the Buyer hereby waives compliance by Seller with any applicable bulk sales laws).
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Except for inaccuracies in the representations and warranties contained in Sections 3.1.1, 3.1.2, 3.1.3 and 3.1.6, Seller shall not be required to indemnify the Buyer Indemnities with respect to any claim for indemnification pursuant to clause (i) of the first sentence of this Section 7.2(a) unless and until the aggregate amount of all claims against Seller under such clause exceeds One Thousand Dollars ($1,000) and then only to the extent such aggregate amount exceeds One Thousand Dollars ($1,000).
(b) By the Buyer. Buyer covenants and agrees to defend, indemnify and hold harmless Seller and its officers, directors, employees, agents, advisers, representatives and Affiliates (collectively, the "Seller Indemnities") from and against any and all Losses resulting from or arising out of:
(i) any material inaccuracy in any representation or warranty by Buyer herein or in any Collateral Agreement or in connection therewith; or
(ii) any material failure of Buyer to perform any covenant or agreement made or contained in this Agreement or any Collateral Agreement or to fulfill any other obligation in respect thereof;
(iii) the Assumed Liabilities; and
(iv) the Buyer's ownership, operation or use of the Assets following the Closing Date,
except, in the case of clause (iv), to the extent such Losses result from or arise out of the Excluded Liabilities or constitute Losses for which Seller is required to indemnify the Buyer Indemnities under Section 7.2(a). Except for inaccuracies in the representations and warranties contained in Sections 3.2.1 and 3.2.2, Buyer shall not be required to indemnify Seller Indemnitees with respect to any claim for indemnification pursuant to clause (i) of the first sentence of this Section 7.2(b) unless and until the aggregate amount of all claims against Buyer under such clause exceeds One Thousand Dollars ($1,000) and then only to the extent such aggregate amount exceeds One Thousand Dollars ($1,000).
(c) Indemnification Procedures. In the case of any claim asserted by a third party against a party entitled to indemnification under this Agreement (the "Indemnified Party"), notice shall be given by the Indemnified Party to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual Knowledge of any claim as to which indemnity may be sought, and the Indemnified Party shall permit the Indemnifying Party (at the expense of such Indemnifying Party) to assume the defense of any claim or any litigation resulting therefrom, provided that (i) the counsel for the Indemnifying Party who shall conduct the defense of such claim or litigation shall be reasonably satisfactory to the Indemnified Party, (ii) the Indemnified Party may participate in such defense at such Indemnified Party's expense, and (iii) the omission by any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its indemnification obligation under this Agreement except to the extent that such omission results in a failure of actual notice to the Indemnifying Party and such Indemnifying Party is materially damaged as a result of such failure to give notice. Except with the prior written consent of the Indemnified Party, no Indemnifying Party, in the defense of any such claim or litigation, shall consent to entry of any judgment or enter into any settlement that provides for injunctive or other non-monetary relief affecting the Indemnified Party or that does not include as an unconditional term thereof the giving by each claimant or plaintiff to such Indemnified Party of a release from all liability with respect to such claim or litigation. In the event that the Indemnified Party shall in good faith determine that the conduct of the defense of any claim subject to indemnification hereunder or any proposed settlement of any such claim by the Indemnifying Party might be expected to affect adversely the Indemnified Party's Tax liability or the ability of the Buyer to conduct its business (including, but not limited to, use, license or transfer of the Assets, or any part thereof), or that the Indemnified Party may have available to it one or more defenses or counterclaims that are inconsistent with one or more of those that may be available to the Indemnifying Party in respect of such claim or any litigation relating thereto, the Indemnified Party shall have the right at all times to take over and assume control over the defense, settlement, negotiations or litigation relating to any such claim at the sole cost of the Indemnifying Party, provided that if the Indemnified Party does so take over and assume control, the Indemnified Party shall not settle such claim or litigation without the written consent of the Indemnifying Party, such consent not to be unreasonably withheld. In the event that the Indemnifying Party does not accept the defense of any matter as above provided, the Indemnified Party shall have the full right to defend against any such claim or demand and shall be entitled to settle or agree to pay in full such claim or demand. In any event, the Indemnifying Party and the Indemnified Party shall cooperate in the defense of any claim or litigation subject to this Section 7.2 and the records of each shall be available to the other with respect to such defense.
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(d) Time Limitation. All claims for indemnification under clause (i) of the first sentence of Section 7.2(a) or clause (i) of the first sentence of Section 7.2(b) must be asserted within thirty (30) days of the termination of the respective survival periods set forth in Section 7.3.
7.3. Survival of Representations and Warranties. The representations and warranties contained in this Agreement shall survive the execution and delivery of this Agreement, any examination by or on behalf of the Parties hereto and the completion of the transactions contemplated herein, but only to the extent specified below:
(a) except as set forth in clauses (b) and (c) below, the representations and warranties contained in Section 3.1 and Section 3.2 shall survive for a period of five (5) years following the Closing Date.
(b) the representations and warranties contained in Sections 3.1.1, 3.1.2, 3.1.3, 3.2.1 and 3.2.2 shall survive without limitation; and
(c) the representations and warranties of Seller contained in Section 3.1.6 shall survive as to any Tax covered by such representations and warranties for so long as any statute of limitations for such Tax remains open, in whole or in part, including without limitation by reason of waiver of such statute of limitations.
7.4. Expenses. Except as provided in Section 4.1.8, Seller, on the one hand, and Buyer, on the other hand, shall bear their respective expenses, costs and fees (including attorneys', auditors' and financing commitment fees) in connection with the transactions contemplated hereby, including the preparation, execution and delivery of this Agreement and compliance herewith (the "Transaction Expenses"), whether or not the transactions contemplated hereby shall be consummated.
7.5. Severability. If any provision of this Agreement, including any phrase, sentence, clause, Section or subsection is inoperative or unenforceable for any reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatsoever.
7.6. Notices. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if (a) delivered personally, (b) mailed by first-class, registered or certified mail, return receipt requested, postage prepaid, or (c) sent by next-day or overnight mail or delivery or (d) sent by facsimile or telegram.
(i) if to the Buyer to,
Bovie Medical Corporation
7100 30th Avenue, North
St. Petersburg, FL 33710
Attn: Moshe Citronowicz, COO
with a copy to:
Bovie Medical Corporation
7100 30th Avenue, North
St. Petersburg, FL 33710
Attn: General Counsel
(ii) if to Seller,
Lican Developments, Ltd.
3180 Grand Marais Blvd. E.
Windsor, Ontario
Canada N8W 4W5
Attn: Steve Livneh, President
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with a copy to:
Miller Canfield Paddock and Stone, LLP
443 Ouellette Avenue
Windsor, Ontario, Canada
Attn: Jeffrey Slopen
or, in each case, at such other address as may be specified in writing between the Parties.
All such notices, requests, demands, waivers and other communications shall be deemed to have been received (w) if by personal delivery on the day after such delivery, (x) if by certified or registered mail, on the seventh business day after the mailing thereof (provided sender produces countersigned return receipt), (y) if by next-day or overnight mail or delivery, on the day delivered, (z) if by facsimile or telegram, on the next day following the day on which such facsimile or telegram was sent, provided that a copy is also sent by certified or registered mail.
7.7. Change in Control. (a) Buyer Acquired. If Buyer is acquired by a third party during the period of five (5) years after the Closing Date, and Buyer thereafter elects not to commercialize the products for which Seller is entitled to receive the royalty payments set forth in Section 2.2, Seller shall notify in writing Buyer of its election to invoke this Section of the Agreement.
(b) Appraiser. No later than thirty (30) days after Buyer’s receipt of Seller’s notice under 7.7(a), Buyer and Seller shall mutually select an appraiser (the “Appraiser”) whose determination of Seller’s Added Value shall be binding upon the Parties only for the purposes set forth in this Section 7.7. If Buyer and Seller cannot agree on an Appraiser, Buyer and Seller shall each select an appraiser that satisfies the qualifications and experience requirements of the Appraiser, who in turn will select the Appraiser. Appraiser shall possess professional qualifications and industry experience suitable to the determination of Seller’s Added Value. Buyer and Seller shall each pay one-half of the professional fees and expenses of the Appraiser (and of Buyer’s and Seller’s appraisers, if necessary, as set forth above). “Seller’s Added Value” means the incremental value above Buyer’s market capitalization (as of the Closing Date) attributed to the Assets acquired under this Agreement.
(c) Fee Payable. No later than ninety (90) days after the Parties’ receipt of the Appraiser’s report containing the determination of Seller’s Added Value, Buyer shall pay to Seller an amount (the “Change in Control Fee”) equal to Five Percent (5%) of Seller’s Added Value.
(d) Accelerated Vesting. Upon Buyer’s payment to Seller of the Change in Control Fee set forth in Section 7.7(c), Buyer shall immediately accelerate the vesting of all remaining unvested, restricted shares granted pursuant to Section 2.2(c), if any.
(e) Release. Upon Buyer’s payment to Seller of the Change in Control Fee in Section 7.7(c) and Buyer’s accelerated vesting of restricted shares in Section 7.7(d), Seller shall contemporaneously deliver to Buyer a duly executed release in favor of Buyer and its Affiliates, officers, directors, employees, agents, advisors, attorneys, accountants, and consultants (collectively, the “Released Parties”), in a form acceptable to Buyer’s counsel, relieving the Released Parties from any further obligations under Section 2.2.
7.8. Miscellaneous.
7.8.1. Headings. The headings contained in this Agreement are for purposes of convenience only and shall not affect the meaning or interpretation of this Agreement.
7.8.2. Entire Agreement. This Agreement (including the Schedules and Exhibits hereto) and the Collateral Agreements (when executed and delivered) constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, between the Parties with respect to the subject matter hereof.
7.8.3. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original and all of which shall together constitute one and the same instrument.
| CONFIDENTIAL (11.10.06) | Page 26 of 34 | BUYER: ___ SELLER: ___ |
7.8.4. Governing Law. This Agreement shall be governed in all respects, including as to validity, interpretation and effect, by the internal laws of the State of Florida, without giving effect to the conflict of laws rules thereof to the extent that the application of the law of another jurisdiction would be required thereby. Buyer and Seller hereby irrevocably submit to the jurisdiction of the courts of the State of Florida and the Federal courts of the United States of America located in the State, City and County of St. Petersburg, Florida, USA, solely in respect of the interpretation and enforcement of the provisions of this Agreement and of the documents referred to in this Agreement, and hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or of any such document, that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that the venue thereof may not be appropriate or that this Agreement or any of such document may not be enforced in or by said courts, and the Parties irrevocably agree that all claims with respect to such action or proceeding shall be heard and determined in such a St. Petersburg, Florida, State or Federal court. Buyer and Seller hereby consent to and grant any such court jurisdiction over the person of such Parties and over the subject matter of any such dispute and agree that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 7.6, or in such other manner as may be permitted by law, shall be valid and sufficient service thereof.
7.8.5. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective heirs, successors and permitted assigns.
7.8.6. Assignment. This Agreement shall not be assignable or otherwise transferable by any Party hereto without the prior written consent of the other party hereto, provided that the Buyer may assign this Agreement to any Subsidiary of the Buyer or to any lender to the Buyer or any Subsidiary or Affiliate thereof as security for obligations to such lender in respect of the financing arrangements entered into in connection with the transactions contemplated hereby and any re-financings, extensions, re-funding or renewals thereof, provided, further, that no assignment to any such lender shall in any way affect the Buyer's obligations or liabilities under this Agreement.
7.8.7. No Third Party Beneficiaries. Except as provided in Section 7.2 with respect to indemnification of Indemnified Parties hereunder, nothing in this Agreement shall confer any rights upon any person or entity other than the Parties hereto and their respective heirs, successors and permitted assigns.
7.8.8. Amendment; Waivers. No amendment, modification or discharge of this Agreement, and no waiver hereunder, shall be valid or binding unless set forth in writing and duly executed by the Party against whom enforcement of the amendment, modification, discharge or waiver is sought. Any such waiver shall constitute a waiver only with respect to the specific matter described in such writing and shall in no way impair the rights of the Party granting such waiver in any other respect or at any other time. Neither the waiver by any of the Parties hereto of a breach of or a default under any of the provisions of this Agreement, nor the failure by any of the Parties, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder, shall be construed as a waiver of any other breach or default of a similar nature, or as a waiver of any of such provisions, rights or privileges hereunder. The rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies that any Party may otherwise have at law or in equity. The rights and remedies of any Party based upon, arising out of or otherwise in respect of any inaccuracy or breach of any representation, warranty, covenant or agreement or failure to fulfill any condition shall in no way be limited by the fact that the act, omission, occurrence or other state of facts upon which any claim of any such inaccuracy or breach is based may also be the subject matter of any other representation, warranty, covenant or agreement as to which there is no inaccuracy or breach. The representations and warranties of Seller shall not be affected or deemed waived by reason of any investigation made by or on behalf of the Buyer (including but not limited to by any of its advisors, attorneys, consultants or representatives) or by reason of the fact that the Buyer or any of such advisors, attorneys, consultants or representatives knew or should have known that any such representation or warranty is or might be inaccurate.
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7.8.9. Foreign Currencies. Unless otherwise stated, all dollars specified in this Agreement and the Collateral Agreements shall be in U.S. dollars. All foreign currency shall be converted to U.S. dollar equivalents determined on the basis of the exchange rates published in The Wall Street Journal on the date three (3) days prior to the relevant Closing (or, if The Wall Street Journal is not published on such date, the next preceding date on which it is published).
IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the Effective Date.
| BOVIE MEDICAL CORPORATION | |
| By: | /S/ Moshe Citronowicz |
| Name: | Moshe Citronowicz |
| Title: | VP/COO |
| LICAN DEVELOPMENTS, LTD. | |
| By: | /S/ Steve Livneh |
| Name: | Steve Livneh |
| Title: | President |
| CONFIDENTIAL (11.10.06) | Page 28 of 34 | BUYER: ___ SELLER: ___ |
SCHEDULES – Exceptions and Declarations
Schedule 1.1 (Assets)
Fixed Assets (Seller)
| Item | Asset | Model | S/N | Owner | ||||
| 1 | Emcomat Tabletop Lathe | 8.4 | 8.4 | Lican | ||||
| 2 | Hardinge Lathe | HC | CT-A | Lican | ||||
| 3 | 16 Speed Heavy Duty Drill Press | 1412 | 4299 | Lican | ||||
| 4 | Castek EDM Hole Driller | SD20 | 80207144 | Lican | ||||
| 5 | 8" Bench Grinder | 55-3516-6 | 4075 | Lican | ||||
| 6 | Degreasing Machine | E110 | 1056332 | Lican | ||||
| 7 | Foredom Hand grinder | F060343 | Lican | |||||
| 8 | Baldor Polisher | P4-96 | Lican | |||||
| 9 | Baltec Riveter | RN081 | 810029 | Lican | ||||
| 10 | See Attached List of Office Equipment, Telephone System, TV, Work Bench, Software Licenses, Printers (4), Routers (2), Facsimile Machine (1), Computers (7), and Monitors (7). | See Attached List | See Attached List | Lican |
Intangible Assets (Seller)
| Item | Asset | Owner | ||||
| 1 | Provisional Patent Applications for MODULLION | See Exhibit A | Lican | |||
| 2 | Provisional Patent Applications for RF Skin Resurfacing | See Exhibit B | Lican | |||
| 3 | Provisional Patent Applications for SEAL-N-CUT | See Exhibit C | Lican | |||
| 4 | Provisional Patent Applications for TIP-ON-TUBE | See Exhibit D | Lican | |||
| 5 | MODULLION trademark (unregistered) | Lican | ||||
| 6 | SEAL-N-CUT trademark (unregistered) | Lican | ||||
| 7 | TIP-ON-TUBE trademark (unregistered) | Lican | ||||
| 8 | Organized ISO-Certified Workforce | Lican | ||||
| 9 | ISO Certified Manufacturing Process & ISO Certification |
Schedule 1.2 (Excluded Assets)
None.
Schedule 2.2(a) (Seller’s Wire Transfer Information)
Routing Number: 38842004
Account Number: 0298-7303273
Bank Name: TD Canada Trust Bank
3281 Dougall Street, Windsor, ON
| CONFIDENTIAL (11.10.06) | Page 29 of 34 | BUYER: ___ SELLER: ___ |
Lican Developments Ltd.
3180 Grand Marais Blvd., Windsor, ON
Schedule 2.2(e) (Tip-on-Tube Product Royalties)
The royalties payable under these subsections shall be determined for Net Sales on a calendar year basis and shall be disbursed no later than sixty (60) days after the end of each calendar year during the Term.
Schedule 2.2(f) (RF Skin Resurfacing Product Royalties)
The royalties payable under these subsections shall be determined for Net Sales on a calendar year basis and shall be disbursed no later than sixty (60) days after the end of each calendar year during the Term.
Schedule 2.2(g) (Seal-n-Cut Product Royalties)
The royalties payable under these subsections shall be determined for Net Sales on a calendar year basis and shall be disbursed no later than sixty (60) days after the end of each calendar year during the Term.
Schedule 2.2(h) (Modullion Product Royalties)
The royalties payable under these subsections shall be determined for Net Sales on a calendar year basis and shall be disbursed no later than sixty (60) days after the end of each calendar year during the Term.
Schedule 2.2(i) (Morsellator Product Royalties and Focused Ultrasonic Energy Skin Products Royalties)
The royalties payable under these subsections shall be determined for Net Sales on a calendar year basis and shall be disbursed no later than sixty (60) days after the end of each calendar year during the Term.
Schedule 2.4(b) (Assumed Liabilities)
There are no additional Assumed Liabilities.
Schedule 3.1.3 (No Conflicts)
None.
Schedule 3.1.5 (Absence of Undisclosed Liabilities)
None.
Schedule 3.1.6(a) (Covered Taxes)
None.
Schedule 3.1.6(b) (Taxes)
None.
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Schedule 3.1.6(c) (Taxes)
None.
Schedule 3.1.6(d) (No Litigation or Appeal for Taxes)
None.
Schedule 3.1.7 (Absence of Changes Since Unaudited Balance Sheet Date)
Seller has operated the Business since the Unaudited Balance Sheet Date in the ordinary course and in a manner consistent with prior practices.
Schedule 3.1.8 (No Litigation)
None.
Schedule 3.1.9(a) (Governmental Approvals)
None.
Schedule 3.1.9(b) (Governmental Approvals)
| · | Consent of relevant Governmental Authority to the transfer of Seller’s ISO registration. |
| · | Consent of relevant Governmental Authority to the transfer of all provisional patent applications related to the Intellectual Property Assets. |
Schedule 3.1.9(c) (Governmental Authority Contracts)
Federal (IRAP) grant of CDN $90,000 to support the development of the MODULLION project.
Schedule 3.1.10 (Operation of the Business)
Lease and other matters related to the Business were conducted through Henvil Corp.
Schedule 3.1.11 (Title to Assets)
Personal Property Security Act (Ontario) registration bearing reference file number 900855936.
Schedule 3.1.12(a) (Contracts)
| · | Lease between Henvil Corp. and L&M COCO Construction Ltd. for the lease of approximately 4,375 square feet of the premises municipally located at 3180 Grand Marais Blvd. E., Windsor, Ontario, N8W 4W5; |
| · | Federal (IRAP) grant of CDN $90,000 to support the development of the MODULLION; and |
| · | Verbal employment agreements for eight (8) current employees of the Seller. |
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Schedule 3.1.12(c) (Contracts)
None.
Schedule 3.1.14 (Inventories)
None.
Schedule 3.1.15 (Suppliers)
See Attached.
Schedule 3.1.16(a) (Product Warranties)
None.
Schedule 3.1.16(b) (Product Liabilities)
None.
Schedule 3.1.16(c) (Product Rebates)
None.
Schedule 3.1.18(a) (Owned Intellectual Property)
1. Multi-Mode Surgical Instrument (68,197-003) filed 1/25/2005 and published on 7/28/2005 [Non-provisional application].
2. Apparatus and Method for Skin Tightening and Corrective Forming (68,197-008) filed 3/17/2006 [Provisional application].
3. Apparatus and Method for Skin Tightening and Corrective Forming (68,197-009) filed 7/5/2006 [Provisional application].
4. Surgical and General Instrument Having Detachable and Movable Jaws with Stationary Tip Mechanism (68,197-010) filed 6/30/2006 [Provisional application].
5. Seal-N-Cut Forceps (68,197-011) filed 7/13/2006 [Provisional application].
6. The unregistered trademarks TIP-ON-TUBE, SEAL-N-CUT, MODULLION, and MORSELLATOR.
Schedule 3.1.18(d) (Licensing Arrangements)
None.
Schedule 3.1.18(g) (Use of Name and Mark)
None.
| CONFIDENTIAL (11.10.06) | Page 32 of 34 | BUYER: ___ SELLER: ___ |
Schedule 3.1.19 (Insurance Policies)
Seller has no insurance policies in force.
Schedule 3.1.20(a) (Employee & Labor Matters)
| · | Verbal employment agreements for eight (8) current employees of the Seller. |
Schedule 3.1.21 (Confidentiality)
None.
Schedule 3.2.2 (No Governmental Approvals or Consents)
There are no Governmental Approvals required of the Buyer. The Buyer requires its Board of Directors’ approval for the Asset Purchase Agreement and each Collateral Agreement, including the employment agreements for Steve Livneh and Howard Stallard.
Schedule 5.2.5(a) (Livneh Employment Agreement)
See Attached.
Schedule 5.2.5(b) (Stallard Employment Agreement)
See Attached.
Schedule 5.2.5(c) (Release and Consent from Henvil)
See Attached.
Schedule 5.2.5(d) (Lease Assignment Agreement)
See Attached.
Schedule 5.2.5(e) (Lican Non-Competition Agreement)
See Attached.
Schedule 5.2.7(a) (Bill of Sale & General Conveyance for Assets)
See Attached.
Schedule 5.2.7(b) (Assignments and Consents)
See Attached.
Schedule 5.3.6 (Consent from Seller’s Lessor)
See Attached.
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Schedule 6.1(b) (List of Transferred Employees)
| Girald, Conrad J. | 465-768-679 | 257 King Street, Amherstberg, ON N9V 2C4 | ||
| Qian, Dong | 520-343-286 | 3655 Sandwich Street, Windsor, ON N9C 1B8 | ||
| Stallard, Howard | 472-400-043 | 2357 Docherty Drive, Tecumseh, ON N8N 4R1 | ||
| Lifei, Jiang | 548-707-306 | 3655 Sandwich Street, Windsor, ON N9C 1B8 | ||
| Stallard, Sean | 523-778-744 | 3655 Sandwich Street, #209, Windsor, ON N9C 1B8 | ||
| Livneh, Steve | 484-298-047 | 440 Dalhousie, Amherstburg, ON N9V 1X3 | ||
| Yu, Yingue | 533-841-979 | 3655 Sandwich Street, #210, Windsor, ON N9C 1B8 | ||
| Turnbull, Zachary | 524-508-843 | 3655 Sandwich Street, Windsor, ON N9C 1B8 |
Exhibit A – Provisional Patent Applications for Modullion
See Attached.
Exhibit B – Provisional Patent Applications for RF Skin Resurfacing
See Attached.
Exhibit C – Provisional Patent Applications for Seal-n-Cut
See Attached.
Exhibit D - Provisional Patent Applications for Tip-on-Tube
See Attached.
| CONFIDENTIAL (11.10.06) | Page 34 of 34 | BUYER: ___ SELLER: ___ |