PURCHASE AGREEMENT
Among
NMT MEDICAL, INC.,
NMT NEUROSCIENCES (US), INC.
NMT NEUROSCIENCES HOLDINGS (UK) LTD.,
NMT NEUROSCIENCES (UK) LTD.,
SPEMBLY MEDICAL LTD.,
SPEMBLY CRYOSURGERY LTD.,
SWEDEMED AB,
INTEGRA NEUROSCIENCES HOLDINGS (UK) LTD.
and
INTEGRA SELECTOR CORPORATION
PURCHASE AGREEMENT
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PURCHASE AGREEMENT (this "Agreement"), executed as of this 20th day of
March, 2000, by and among NMT MEDICAL, INC., a Delaware corporation formerly
known as Nitinol Medical Technologies, Inc. ("Parent"), NMT NEUROSCIENCES (US),
INC., a Delaware corporation and wholly-owned subsidiary of Parent ("NMT-US"),
NMT NEUROSCIENCES HOLDINGS (UK) LTD., a corporation organized under the laws of
England and an indirect wholly-owned subsidiary of Parent ("Seller"), NMT
NEUROSCIENCES (UK) LTD., a corporation organized under the laws of England and
Wales and a wholly-owned subsidiary of Seller ("Neurosciences"), SPEMBLY MEDICAL
LTD., a corporation organized under the laws of England and Wales and a
wholly-owned subsidiary of Neurosciences ("Spembly"), SPEMBLY CRYOSURGERY LTD, a
corporation organized under the laws of England and Wales and a wholly-owned
subsidiary of Spembly ("Spembly-Cryosurgery"), SWEDEMED AB, a corporation
organized under the laws of Sweden and a wholly-owned subsidiary of
Neurosciences ("Swedemed" and, together with Neurosciences, Spembly and
Spembly-Cryosurgery, collectively, the "Acquired Companies" and each,
individually, an "Acquired Company"), INTEGRA NEUROSCIENCES HOLDINGS (UK) LTD.,
a corporation organized under the laws of England and Wales ("Buyer"), and
INTEGRA SELECTOR CORPORATION, a Delaware corporation ("ISC").
WITNESSETH:
WHEREAS, the Acquired Companies are engaged primarily in the
neurosurgical and cryogenic surgical instrument business, with their principal
manufacturing and production operations located in Andover, England;
WHEREAS, NMT-US is the owner of various assets, rights and properties
related to the business of the Acquired Companies located in the United States;
WHEREAS, Seller is willing to sell to Buyer, and Buyer desires to
purchase from Seller, all of the issued and outstanding capital shares of the
Acquired Companies; and
WHEREAS, NMT-US is willing to sell to ISC, and ISC desires to purchase
from NMT-US, all of the assets, rights and properties related to the business of
the Acquired Companies located in the United States.
NOW THEREFORE, in consideration of the mutual premises, covenants,
agreements, representations and warranties contained herein, the parties hereto
agree as follows:
1. DEFINITIONS. In this Agreement the following terms shall have the
meanings assigned to them below.
"Acquired Company" and "Acquired Companies" shall have the meaning set
forth in the preamble.
"Acquired Liabilities" shall have the meaning set forth in Section
2.5(a) hereof.
"Affiliate" of a specified Person (natural or juridical) shall mean a
Person that directly, or indirectly through one or more intermediaries,
controls, was controlled by, or was under common control with, the Person
specified at December 31, 1999 or any time since such date.
"Agreement" shall have the meaning set forth in the preamble.
"Andover Facility" shall mean the facility of the Business at Newbury
Road, Hampshire, England located on the Real Property.
"Assets" shall mean all assets and contractual or other rights used or
directly related to the Business, whether owned, directly or of record, by any
of Parent, NMT-US, Seller, any Acquired Company or any of their respective
Affiliates, including, without limitation, the property described on Exhibit A
attached hereto, but excluding the Excluded Assets, with only such changes
therein as shall have occurred between the Reference Date and the Closing Date
in the ordinary course of business consistent with the Acquired Companies' past
practice and in transactions not inconsistent with any of the representations,
warranties, covenants or agreements of Parent, Seller or any of the Acquired
Companies set forth herein.
"Auditor" shall have the meaning set forth in Section 2.3(b) hereof.
"Authorizations" shall have the meaning set forth in Section 3.4
hereof.
"Barclays Debt" shall mean any and all indebtedness (principal and
interest), charges, fees, prepayment penalties and other amounts now or
hereafter due and owing under that certain Treasury Loan Facility, dated as of
April 18, 1998, between Barclays Bank PLC and Spembly, and any overdraft
facility maintained by any of the Acquired Companies with Barclays Bank PLC.
"Business" shall mean the research, development, manufacturing,
marketing, selling and distribution business conducted or currently proposed to
be conducted by the Acquired Companies and their respective Affiliates related
to, or with respect to, the Products.
"Business Day" shall mean any day banks are open for business in New
York City, New York.
"Buyer" shall have the meaning set forth in the preamble.
"Buyer Indemnified Parties" shall have the meaning set forth in Section
14.1 hereof.
"Chameleon Payment" shall have the meaning set forth in Section 2.2(c).
"Closing" shall have the meaning as set forth in Section 12.1.
"Closing Date" shall mean the date on which the Closing takes place.
The Closing shall be effective as of the close of business, local time, on the
Closing Date.
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"Closing Date Balance Sheet" shall mean the balance sheet of the
Business described in Section 2.3(a) hereof.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended from time to time.
"Confidential Information" shall mean any confidential, proprietary or
secret knowledge, information or data regarding the Business or any of the
Acquired Companies, Products or Assets, including, without limitation, any and
all customers lists, customer leads, financial information, trade secrets,
market information or studies, designs, analyses and similar materials, except
for such knowledge, information and data as is generally available to the public
other than as a result of the unauthorized disclosure by any Person.
"Continued Employee Payment" shall have the meaning set forth in
Section 2.2(c).
"Contract" shall mean any contract, lease, agreement, plan, policy,
note, bond, indenture, license, mortgage or security instrument, arrangement,
obligation or commitment, whether in writing, oral or otherwise.
"Copyrights" shall mean all copyrights, assignments of copyrights,
design rights, rights to mask works and database rights, and all registrations
and applications for registration of any of the foregoing.
"Critical Consents" shall have the meaning set forth in Section 2.6(c)
hereof.
"Damages" shall have the meaning set forth in Section 14.1 hereof.
"Disclosure Schedules" shall have the meaning set forth in Section 3
hereof.
"Distribution Arrangement" shall have the meaning set forth in Section
3.8(b) hereof.
"Election" shall have the meaning set forth in Section 5.11 hereof.
"Elekta" shall mean Elekta AB (publ), a Swedish company and the former
owner of the Business.
"Elekta Agreement" shall have the meaning set forth in Section 3.20
hereof.
"Elekta Payables" shall have the meaning set forth in Section 2.4(a)
hereof.
"Elekta Receivables" shall have the meaning set forth in Section 2.4(a)
hereof.
"Employee Benefit Plans" shall mean all pension, retirement, profit
sharing, deferred compensation, stock ownership, stock purchase, stock option,
share option, restricted stock, bonus, severance or termination pay, redundancy,
cafeteria, medical, hospital, life, health, accident, disability, death, tuition
reimbursement or other employee benefit plans, schemes or arrangements.
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"Environmental Laws" shall mean any applicable Law, Order or Permit or
other binding determination (whether national, provincial, departmental, state
or local) pertaining to (i) the use, analysis, generation, manufacture, storage,
discharge, release, disposal or transportation of Hazardous Materials, (ii) the
health and safety of employees and the public, (iii) environmental regulation,
or (iv) with respect to Hazardous Materials, contamination, clean-up or
disclosure, drinking water, exposure, release, groundwater, landfills, open
dumps, storage tanks (underground or otherwise), solid or liquid waste, waste
water, stormwater runoff, emissions or wells.
"Exchange Act" shall mean the United States Securities Exchange Act of
1934, as amended.
"Excluded Assets" shall mean the property described on Exhibit B
hereto.
"Excluded Employees" shall have the meaning set forth in Section
3.11(h) hereof.
"Excluded Liability Assumption Agreement" shall have the meaning set
forth in Section 2.5(b) hereof.
"Excluded Liabilities" shall have the meaning set forth in Section
2.5(b) hereof.
"GAAP" shall mean Generally Accepted Accounting Principles in effect in
the United States as of the relevant determination date consistently applied for
all periods covered thereby.
"Governmental Authority" shall mean any foreign, federal, state or
local court or other governmental, administrative, or regulatory, authority,
agency, department or body (including, without limitation, the United Kingdom
Inland Revenue and the United States Internal Revenue Service).
"Group Relief" shall have the meaning set forth in Section 3.7(r)
hereof.
"Hazardous Materials" shall mean petroleum, including crude oil or any
fraction thereof, or any other chemical substance, material, object, condition,
waste, pollutant or combination thereof which is hazardous or potentially
hazardous, or designated as or deemed to be hazardous or potentially hazardous
under applicable Environmental Laws to human health or safety or to the
environment as a result of its radioactivity, ignitability, corrosivity,
reactivity, explosivity, toxicity, carcinogenicity, infectiousness or other
harmful or potentially harmful properties or effects and all of those chemicals,
substances, materials, objects, conditions, wastes, pollutants or combinations
thereof which are now listed, defined or regulated by any applicable law or
regulation (whether national, provincial, departmental, state or local) based
upon, directly or indirectly, such properties or effects.
"Improvements" shall mean, collectively, any and all buildings,
fixtures and other improvements located on the Real Property or located at the
Andover Facility.
"Indemnified Party" shall have the meaning set forth in Section 14.5
hereof.
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"Indemnifying Party" shall have the meaning set forth in Section 14.5
hereof.
"Insurance Policies" shall have the meaning set forth in Section 3.13
hereof.
"Intergroup Receivables" shall have the meaning set forth in Section
2.4(a) hereof.
"ISC" shall have the meaning set forth in the preamble.
"Intellectual Property" shall mean any and all Copyrights, Patents,
Know-How, and Trademarks, and all rights (including, without limitation, moral
rights) vesting in the owner thereof pursuant to the applicable Laws of any
competent jurisdiction.
"Know-How" shall mean methods, devices, technology, trade secrets,
industrial designs, know-how, show-how, technical and training manuals and
documentation and other proprietary information, including, without limitation,
proprietary processes, designs and formulae.
"Law" shall mean any law, statute, regulation, rule, ordinance, Order,
consent decree, settlement agreement, common law precedent, or governmental
requirement, and any judgment, decision, decrees, writ, injunction, award,
ruling or order of any court or Governmental Authority.
"Liability" means any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost, fee or expense (including
costs of investigation, collection and defense), claim, deficiency, guaranty or
endorsement of or by any Person of any type, whether accrued, absolute or
contingent, liquidated or unliquidated, matured or unmatured, or otherwise.
"Lien" shall mean any security interest, lien, mortgage, pledge,
hypothecation, adverse claim, charge, encumbrance, preemptive right, conditional
sale agreement, deed of trust or conveyance to secure debt, of any nature
whatsoever and regardless of how created or arising.
"Material Adverse Effect" shall mean an event, change, or occurrence
which, together with any other event, change, or occurrence, individually or in
the aggregate, has a material adverse effect or impact on (i) the financial
position, business or results of operations of Acquired Companies, and the value
of the US-Based Assets, taken as a whole, or (ii) the ability of Parent, NMT-US,
Seller and/or any of the Acquired Companies to perform their obligations under
this Agreement and the Related Agreements or to consummate the transactions
contemplated hereby or thereby.
"Net Worth" shall mean, with respect to (a) the Reference Date Balance
Sheet and the Reference Date, the amount of US$3,022,000, and (b) with respect
to the Closing Date Balance Sheet and the Closing Date, the adjusted amount of
"TOTAL ASSETS" minus the amount "TOTAL LIABILITIES" in each case as are set
forth on the Closing Date Balance Sheet.
"Neurosciences" shall have the meaning set forth in the preamble.
"NMT-US" shall have the meaning set forth in the preamble.
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"Order" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or writ
of any federal, state, local, or foreign or other court, arbitrator, mediator,
tribunal, administrative agency, or Governmental Authority.
"Parent" shall have the meaning set forth in the preamble.
"Patents" shall mean patents and patent applications, all
continuations, continuations-in-part, divisions, reissues, reexaminations,
extensions and foreign counterparts of such patents and patent applications, and
all invention disclosures and rights in inventions.
"Pension Scheme" shall mean The Surgical Technology Group Pension and
Life Assurance Scheme, as amended and in effect on the date hereof and at the
Closing Date.
"Permit" shall mean any national, federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing, franchise,
license, notice, permit, or right to which any Person is a party or that is or
may be binding upon or inure to the benefit of any Person or its securities,
assets, or business.
"Person" shall mean any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, Governmental Authority, joint venture, estate, trust, association,
organization or other entity of any kind or nature.
"Post-Closing Period" shall have the meaning set forth in Section
14.3(a) hereof.
"Pre-Closing Dividend" shall have the meaning set forth in Section
5.2(e) hereof.
"Pre-Closing Period" shall have the meaning set forth in Section
14.3(a) hereof.
"Products" shall mean the products manufactured, assembled, repaired,
developed, created, invented or researched by or on behalf of the Acquired
Companies, including, without limitation, the Selector(TM) Ultrasonic Aspirator,
cryosurgical and TNS product lines, products in the research and development
stage, and such other products as more particularly identified on the Schedule
of Products attached hereto.
"Purchase Price" shall have the meaning set forth in Section 2.2(a)
hereof.
"Purchase Price Adjustment" shall have the meaning set forth in Section
2.3(c) hereof.
"Real Property" shall mean the real property described on Schedule
3.15(b)(i) hereto on which the Andover Facility is located, and which is leased
from The Borough Council of Test Valley by Spembly.
"Reference Date" shall mean December 31, 1999.
"Reference Date Balance Sheet" shall mean the adjusted balance sheet of
the Business as of the Referenced Date attached hereto as Exhibit C.
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"Registered Intellectual Property" shall have the meaning set forth in
Section 3.9(b).
"Release" shall mean any intentional, negligent or accidental spilling,
leaking, pumping, pouring, emitting, emptying, exposure, discharging, injecting,
escaping, leaching, dumping, or disposing of any Hazardous Materials (including
the abandonment or discarding of barrels, containers and other closed
receptacles containing any Hazardous Materials).
"Related Agreements" shall have the meaning set forth in Section
3.1(a).
"SEC" shall mean the United States Securities and Exchange Commission.
"Securities Act" shall mean the United States Securities Act of 1933,
as amended.
"Seller" shall have the meaning set forth in the preamble.
"Seller Indemnified Parties" shall have the meaning set forth in
Section 14.2 hereof.
"Share Payment" shall have the meaning set forth in Section 2.2(a)
hereof
"Shares" shall mean all the issued and outstanding shares in the
capital of Neurosciences, all of which shall be transferred to Seller at the
Closing.
"Spembly" shall have the meaning set forth in the preamble.
"Spembly-Cryosurgery" shall have the meaning set forth in the preamble.
"Stub Tax Period" shall mean the Tax period (or any portion thereof)
commencing on January 1, 2000 and ending on the Closing Date.
"Swedemed" shall have the meaning set forth in the preamble.
"TA" shall have the meaning set forth in Section 3.7(p).
"Tax" shall mean with respect to any Person, any tax, estimated tax,
withholding tax, assessment, levy, impost, fee or other charge, however
denominated, including any interest, penalties, additions to tax or additional
amounts that may become payable in respect thereof, imposed by any Governmental
Authority, which tax shall include, without limitation, any income tax, payroll
and employee withholding tax, unemployment insurance, social security, sales and
use tax, franchise tax, gross receipts tax, occupation tax, real and personal
property tax, transfer tax, workers' compensation, corporation tax, advance
corporation tax, national insurance and social security contributions, capital
gains tax, inheritance tax, value added tax, customs excise and import duties,
stamp duty, stamp duty reserve tax, insurance premium tax, air passenger duty,
landfill tax, petroleum revenue tax, advance petroleum revenue tax, and gas levy
and other obligations of the same or of a similar nature, for which such Person
may be liable (including any such Tax related to any other Person for which such
Person is liable, by contract, as transferee or successor, by law (including as
a result of the application of Treasury Reg. Section 1.1502-6) or otherwise).
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"Tax Return" or "Return" shall mean any United Kingdom, United States
or foreign, federal, state, or local tax return, declaration, report, estimate,
information return, statement, claim for refund or form relating to Taxes,
including any schedule, computation, amendment or attachment thereto.
"TCGA" shall have the meaning set forth in Section 3.7(q) hereof.
"Trademarks" shall mean (a) registered trademarks and registered
service marks, applications for registration for trademarks and service marks,
renewal registrations and applications for renewal registrations, extensions and
foreign counterparts of such registrations and applications for registration;
(b) material unregistered trademarks and service marks; (c) corporate names,
business names and trade names, whether registered or unregistered; and (d)
Internet domain names and associated addresses and URL's, in each case together
with all goodwill associated therewith.
"Tradename" shall have the meaning set forth in Section 5.10.
"TULRC" shall have the meaning set forth in Section 3.10(a) hereof.
"US-Based Assets" shall mean those Assets which are owned by NMT-US or
otherwise located in the United States, including, without limitation, those
Assets identified on Exhibit A (US) hereto.
"US-Based Assets Payment" shall have the meaning set forth in Section
2.2(a).
"1998/1999 Tax Make-Whole Payment" shall have the meaning set forth in
Section 2.2(c).
2. PURCHASE AND SALE Of SHARES AND US-BASED ASSETS; ADJUSTMENTS;
LIABILITIES.
2.1 PURCHASE AND SALE.
(a) The Shares shall be transferred from Seller to Buyer as
follows:
(i) At the Closing, upon the terms and subject to the
conditions of this Agreement, Seller as legal and beneficial owner and with full
title guarantee shall sell, and Buyer shall purchase, the Shares with effect
from Closing free from any Lien together with all accrued benefits and rights
attached thereto and all dividends declared after the Reference Date in respect
of the Shares.
(ii) Seller waives or agrees to procure the waiver of any
rights or restrictions conferred upon it or any other person which may exist in
relation to the Shares under the articles of association of Neurosciences or
otherwise.
(iii) Buyer shall not be obliged to close the purchase of any
of the Shares unless Seller closes the sale of all the Shares simultaneously,
but the closing of the
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purchase of some Shares shall not effect the rights of Buyer with respect to its
rights to the other Shares.
(b) At the Closing, upon the terms and subject to the conditions
of this Agreement, NMT-US, as the legal and beneficial owner of US-Based Assets,
shall sell, assign, transfer and convey the US-Based Assets to ISC, pursuant to
a Bill of Sale in substantially the form of Exhibit E-1 hereto.
2.2 CLOSING PAYMENTS; CERTAIN EXCLUDED PAYMENTS.
(a) Subject to Sections 2.2(c), 2.2(d) and 2.3, the aggregate
purchase price (the "Purchase Price") shall be: (i) US$7,300,000 for the Shares
(as the same may be reduced pursuant to Section 2.2(c), the "Share Payment"),
and (ii) US$700,000 for the US-Based Assets (the "US-Based Assets Payment").
Seller, Parent, NMT-US and Buyer agree that this purchase price allocation shall
be used in all Tax and other filings with any Governmental Authority, and they
shall not take any position contrary unless required to do so pursuant to a
determination (as defined in Section 1313(a) of the Code or any provision
similar to Section 1313(a)), in which event they shall provide prior written
notice to the other parties hereunder.
(b) Subject to Sections 2.2(c), 2.2(d) and 2.3, at the Closing
Buyer shall (i) pay to Seller (or Seller's designee) in cash or by wire transfer
of immediately available funds (to an account designated in writing not less
than three (3) business days prior to Closing) an amount equal to the Share
Payment, and (ii) ISC shall pay to NMT-US (or NMT-US's designee) in cash or by
wire transfer of immediately available funds (to an account designated in
writing not less than three (3) business days prior to Closing) an amount equal
to the US-Based Assets Payment.
(c) Notwithstanding the provisions of Sections 2.2(a) and 2.2(b)
or any other adjustments to the Purchase Price hereunder (including, without
limitation, any adjustments or payments pursuant to Sections 2.3 or 14 hereof),
the Share Payment shall be reduced on a dollar-for-dollar basis by (i) the
amount of the Liability incurred by the Acquired Companies with respect to the
continued employment by Neurosciences of Steve Sinyard for a period of four (4)
months following the Closing Date, including, without limitation, all amounts
now or hereafter payable by any of the Acquired Companies or Buyer to or on
behalf of, or in connection with the employment of, Steve Sinyard with respect
to salary, bonus, insurance, pension, other employee benefits, or severance,
termination or other redundancy payments (statutory or otherwise) (collectively,
the "Continued Employee Payment"), (ii) the amount of any Liability now or
hereafter incurred by the Acquired Companies in connection with the purchase and
installation of, and related pre-operational consultancy services for, a new
Chameleon brand integrated financial and accounting software system from Panacea
Limited (the "Chameleon Payment"), and (iii) the amount of any Liability in
respect of Taxes of any of the Acquired Companies for the Tax periods ended
December 31, 1998 and December 31, 1999 that is not properly and fully reflected
in the accrual therefor listed on the Reference Date Balance Sheet (or which was
not paid in full prior to the Reference Balance Sheet Date) (the "1998/1999 Tax
Make-Whole Payment"). Schedule 2.2(c) hereto sets forth Parent's good faith
estimate of the amount of each of the Continued Employee Payment, the Chameleon
Payment and the 1998/1999 Tax Make-
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Whole Payment as of the Closing Date, together with reasonable detail of the
calculation thereof, the aggregate amount of which the parties agree shall be
deducted from the amount of the Share Payment payable by Buyer to Seller (or
Seller's designee) at the Closing pursuant to Section 2.2(b). In the event that
the actual amount of any of the Continued Employee Payment, the Chameleon
Payment or the 1998/1999 Tax Make-Whole Payment exceeds the amount thereof set
forth on Schedule 2.2(c), Buyer shall notify Seller and Parent in writing of the
amount of such excess (and provide reasonable detail therefor), and Seller and
Parent shall immediately pay to Buyer (or Buyer's designee) the full amount
thereof. The parties agree that this provision shall not be subject to any
offset, deduction or thresholds as may be applicable to other payments or rights
to payments hereunder.
(d) To the extent that Buyer is required to withhold any amounts
from the Share Payment or the US-Based Assets Payment to satisfy any Tax
withholding obligations of any applicable Tax authority in connection with or as
a result of the transaction contemplated hereby, the amount of the Share Payment
or the US-Based Assets Payment shall be reduced by such amounts required to be
withheld.
2.3 ADJUSTMENT TO PURCHASE PRICE.
(a) Within ninety (90) calendar days after the Closing Date, a
balance sheet of the Business reflecting the assets and Liabilities of the
Business as of the close of business on the date immediately prior to the
Closing Date including a calculation of Net Worth will be prepared by Buyer and
delivered to Seller. Such balance sheet, as adjusted, is referred to herein as
the "Closing Date Balance Sheet." The Closing Date Balance Sheet shall be
prepared in a manner consistent with the Reference Date Balance Sheet (including
with respect to adjustment procedures, discretionary allocations and other
judgments) and shall reflect the consolidation of the assets and Liabilities of
Acquired Companies and the Business in accordance with GAAP; provided, however,
that, notwithstanding anything contained on the Reference Date Balance Sheet or
herein to the contrary, the Closing Date Balance Sheet (i) shall not include any
intercompany accounts as between any of the Acquired Companies, on the one hand,
and Parent or any subsidiary or Affiliate of Seller (other than the Acquired
Companies), on the other hand, including, without limitation, the Intergroup
Receivables; (ii) shall not include any purchase accounting adjustments; (iii)
shall not contain any Excluded Liabilities or any Liabilities related to
indebtedness (other than capital lease obligations), including, without
limitation, the Barclays Debt; (iv) shall not include any Liability underlying
the obligations of the Acquired Companies with respect to the Continued Employee
Payment or the Chameleon Payment (it being agreed that such Liabilities and
corresponding payments shall be determined and paid pursuant to Section 2.2(c));
(v) shall include only such inventory that is (A) reflected on the Reference
Date Balance Sheet or has been manufactured since the Reference Date, and (B)
located at the Andover Facility or such other locations designated by Buyer. All
foreign currency amounts shall be expressed in United States dollars using the
exchange rate and conversion mechanism as required by GAAP; and (vi) shall
include as an accrued expense for unpaid Taxes for the 1998 and 1999 Tax years
an amount equal to that shown on the Reference Date Balance Sheet for such Tax
years (for the avoidance of doubt, it is agreed among the parties that any
deficiencies of such accrual shall be resolved on a dollar-for-dollar basis
pursuant to the 1998/1999 Tax Make-Whole
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Payment under Section 2.2(c) or, as necessary, the indemnification rights under
Section 14.3). Parent shall have the right to review the computations and work
papers (including access to accountants' work papers, subject to such
confidentiality restrictions and indemnities as Buyer's accountants shall
reasonably request) and underlying books and records used in connection with
Buyer's preparation of the Closing Date Balance Sheet and to have access to the
key employees and independent accountants of Buyer in connection therewith.
Buyer shall maintain separate books and records for the Business until such time
as any post-Closing adjustment under this Section 2.3 has been paid by the
relevant party.
(b) If Buyer and Parent cannot reach agreement with respect to the
Closing Date Balance Sheet and the determination of Net Worth within ten (10)
days after the delivery of the Closing Date Balance Sheet to Seller, Buyer and
Parent shall jointly appoint an internationally-recognized accounting firm
(other than any firm that has been engaged by Parent, Buyer or any of their
Affiliates at any time during the prior three (3) years) (the "Auditor") (the
cost of which shall be divided equally between Buyer and Parent) to determine
the proper resolution of the disagreements between Buyer and Parent concerning
the Closing Date Balance Sheet and the determination of Net Worth, whose
determination shall be made within thirty (30) days and shall be final and
binding on the parties. If Buyer and Parent cannot agree on the appointment of
such a certified public accounting firm, such firm shall be selected at random
from a list comprised of two firms chosen by Buyer and two firms chosen by
Parent. The Auditor shall resolve all disputes and disputed items as soon as
practicable, provided that the Auditor shall be bound by the provisions of
Sections 2.2, 2.3 and 2.5, as applicable, and may not assign a value to any item
greater than the greatest value for such item claimed by either party or less
than the smallest value for such item claimed by either party. Each of Buyer and
Parent shall permit the Auditor to have full access to the books, records, key
employees and independent accountants of Buyer and Parent and their respective
subsidiaries and affiliates in order to resolve any such disagreements. Unless
the Auditor otherwise directs, each of the parties shall be limited to an
initial written presentation to the Auditor and a written rebuttal. The parties
shall present to the Auditor, and shall exchange, initial presentation documents
no later than twenty (20) calendar days after retention or appointment of the
Auditor pursuant to the third and fourth sentences of this Section 2.3(b), as
applicable, and shall present to the Auditor, and shall exchange, written
rebuttals no later than ten (10) calendar days thereafter. All determinations
made by the Auditor shall be final, conclusive and binding on the parties.
(c) Within ten (10) calendar days after final determination of the
Closing Date Balance Sheet and the Net Worth as of the Closing Date, Parent and
Seller shall pay to Buyer the amount, if any, by which the Net Worth as of the
Reference Date (i.e., US$3,022,000) exceeds the Net Worth as of the Closing Date
(the "Purchase Price Adjustment"). The Purchase Price Adjustment shall be paid
by Parent or Seller to Buyer by wire transfer in immediately available funds to
an account designated in writing by Buyer. Notwithstanding the foregoing, Parent
shall not be required to make any payment pursuant to this Section 2.3(c) in the
event that the Purchase Price Adjustment is equal to or less than US$250,000;
provided, however that in the event that the Purchase Price Adjustment exceeds
US$250,000 Seller and Parent shall pay the entire amount of the Purchase Price
Adjustment in full, without regard to such threshold. The parties agree that to
the extent that any portion of a Purchase Price Adjustment required to be
11
paid hereunder is directly attributable to the diminution in value of the
US-Based Assets between the Reference Date and the Closing Date, Parent and
NMT-US shall, at the request of the Buyer, cause such portion of the Purchase
Price Adjustment to be paid directly to ISC, which amount shall be paid by
Parent or NMT-US by wire transfer in immediately available funds to an account
designated in writing by ISC.
2.4 AGREEMENT REGARDING CERTAIN ACCOUNTS RECEIVABLES.
(a) Notwithstanding the fact that all accounts receivable by the
Acquired Companies from Elekta (the "Elekta Receivables") are excluded from the
Assets and all accounts payable to Elekta (the "Elekta Payables") are Excluded
Liabilities, the parties hereby agree that the aggregate amount of accounts
receivable of the Acquired Companies from any Affiliate of Parent (other than
another Acquired Company) (the "Intergroup Receivables") shall be reduced, on a
dollar-for-dollar basis, by an amount equal to the amount, if any, by which the
Elekta Payables exceed the Elekta Receivables, in each case as such amounts
exist immediately prior to the Closing Date.
(b) Notwithstanding any provision herein to the contrary, Buyer
hereby agrees to assume, effective at the Closing, from the relevant obligor the
liability to pay the amount, if any, of any Intergroup Receivables that exist at
Closing, it being agreed that Buyer shall only assume payment liability for such
Intergroup Receivables to the extent that a corresponding and equivalent asset
is owned by the Acquired Companies at Closing. Buyer may assign its obligation
to assume such payment liability hereunder to one or more of its Affiliates
(other than the Acquired Companies).
2.5 ACQUIRED AND EXCLUDED LIABILITIES.
(a) Notwithstanding the fact that the transaction contemplated
hereby is structured as a purchase of the Shares and the US-Based Assets, Buyer
and ISC shall acquire at the Closing only: (i) those Liabilities included on the
Closing Date Balance Sheet, and (ii) the obligations of the Acquired Companies
under the contracts listed on Schedule 3.8 attached hereto (collectively, the
"Acquired Liabilities"). Following the Closing, Buyer shall cause the Acquired
Companies to discharge and perform all obligations related to the Acquired
Liabilities, except to the extent that Buyer in good faith disputes the amount
or existence thereof.
(b) From and after the Closing, Seller, NMT-US and Parent shall
retain any and all Liabilities related to the Business other than the Acquired
Liabilities (collectively, the "Excluded Liabilities"), which shall include,
without limitation, each of those Liabilities set forth on Exhibit D attached
hereto, which Excluded Liabilities shall be explicitly assumed and retained by
Seller, NMT-US and Parent pursuant to an Assignment and Assumption of
Liabilities among Seller, Parent and each of the Acquired Companies in the form
attached hereto as Exhibit E-2 (the "Excluded Liability Assumption Agreement").
Seller, NMT-US and Parent shall discharge and perform, or cause to be discharged
and performed, all obligations related to the Excluded Liabilities, except to
the extent that Parent in good faith disputes the amount or existence thereof.
After Closing, none of Buyer, ISC, any of the Acquired Companies or any of
12
their respective Affiliates shall have any responsibility or Liability to
Seller, Parent or any other Person for any Excluded Liabilities.
2.6 CONSENTS.
(a) The parties and each of their respective Affiliates shall
cooperate in securing before and after the Closing all consents, approvals and
authorizations from, and providing all notices to, each Governmental Authority
whose consent, approval, authorization or receipt of notice is necessary to the
sale, transfer or assignment of the Shares, any of the Assets or the US-Based
Assets, or which is necessary to permit Buyer to own and operate the Acquired
Companies, or ISC to own and operate the US-Based Assets, immediately following
the Closing, including, without limitation, those consents, approvals,
authorizations and notices listed on Schedule 2.6(a) attached hereto.
(b) Parent, Seller, NMT-US, the Acquired Companies and their
respective Affiliates shall obtain the waiver, consent, authorization and
approval of, and give timely notice to, all Persons whose waiver, consent,
authorization, approval or receipt of notice (i) is required in order to
consummate the transactions contemplated by this Agreement or any Related
Agreement, including, without limitation, the sale, transfer or assignment of
any of the Shares, the Assets or the US-Based Assets or the Business which is
necessary to permit Buyer to own the Shares, and to own and operate the Business
immediately following the Closing, or (ii) is required by any Contract, Order or
Permit to which Parent, Seller, NMT-US or any Acquired Company is or will be a
party or subject on the Closing Date and (A) which would prohibit, or require
the waiver, consent or approval of, or notice to, any Person to such
transactions or (B) under which, without such waiver, consent, approval or
notice, such transactions would constitute an occurrence of default under the
provisions thereof, result in the acceleration of any obligation thereunder or
give rise to a right of any party thereto to terminate or modify its obligations
thereunder, including, without limitation, those waivers, consents,
authorizations, approvals and notifications listed on Schedule 2.6(b) attached
hereto.
(c) Notwithstanding any provision in Sections 2.6(a) or 2.6(b) to
the contrary, Buyer shall not be obligated to close until Parent, Seller, NMT-US
and/or the relevant Acquired Companies have obtained each of the consents,
approvals and authorizations, and delivered each of the notices, listed on
Schedule 2.6(c) hereto (the "Critical Consents").
3. REPRESENTATIONS AND WARRANTIES OF PARENT, SELLER AND NMT-US. Parent, Seller
and NMT-US, jointly and severally, represent and warrant to Buyer and ISC, that
the statements contained in this Article 3 are correct and complete as of the
date of this Agreement and will be correct and complete as of the Closing (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Article 3), except as set forth in the disclosure
schedules delivered by Parent, Seller and NMT-US to the Buyer and ISC on the
date hereof (the "Disclosure Schedules"). Nothing in any schedule shall be
deemed adequate to disclose an exception to a representation or warranty made
herein, however, unless such schedule identifies the exception with reasonable
particularity and describes the relevant facts in reasonable detail. Each
reference to an Acquired Company in this
13
Section 3 shall be deemed to mean each Acquired Company and the Acquired
Companies collectively. The Disclosure Schedules will be arranged in numbered
schedules corresponding to the section numbers contained in this Agreement; all
references to a Schedule in this Article 3 refer to the corresponding section of
the Disclosure Schedules.
3.1 ORGANIZATION, POWER, EXECUTION.
(a) Each of Parent, Seller and NMT-US is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite power and authority
(corporate and other) to own its properties, to carry on its business as now
being conducted, to execute, and deliver this Agreement and each of the
agreements, documents and instruments contemplated herein (the "Related
Agreements") to which it is a party, and to carry out the transactions
contemplated hereby and thereby. Each of Parent, Seller and NMT-US is duly
qualified to do business and in good standing in all jurisdictions in which its
ownership of property or the character of its business requires such
qualification, except where the failure to be so qualified or in good standing
would not have a Material Adverse Effect. Certified copies of the charter and
bylaws or other governing documents of each of Parent, Seller and NMT-US, as
amended to date, are being delivered to Buyer and ISC herewith, are complete and
correct, and no amendments have been made thereto or have been authorized since
the date thereof.
(b) Each Acquired Company is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite power and authority (corporate and other) to
own its properties (including, without limitation, the Assets), to carry on its
business as now being conducted, to execute, and deliver this Agreement and the
Related Agreements to which it is a party, and to carry out the transactions
contemplated hereby and thereby. Each Acquired Company is duly qualified to do
business and in good standing in all jurisdictions in which its ownership of
property or the character of its business requires such qualification, except
where the failure to be so qualified or in good standing would not have a
Material Adverse Effect. Certified copies of the charter and bylaws or other
governing documents of each Acquired Company, as amended to date, are being
delivered to Buyer herewith, are complete and correct, and no amendments have
been made thereto or have been authorized since the date thereof.
(c) The execution and delivery of this Agreement and the Related
Agreements to which Parent, Seller, NMT-US and each Acquired Company is a party,
and the consummation of all transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the part of Parent,
Seller, NMT-US and such Acquired Company. This Agreement and each Related
Agreement to which Parent, Seller, NMT-US or any Acquired Company is a party
have been duly executed and delivered by Parent, Seller, NMT-US and/or such
Acquired Company, and constitute, and each other Related Agreement required
hereby to be executed and delivered by Parent, Seller, NMT-US or any Acquired
Company will, when delivered, constitute, the valid and legally binding
obligation of Parent, Seller, NMT-US and/or such Acquired Company, as the case
may be, enforceable in accordance with its terms, subject to bankruptcy laws and
general equitable principles.
14
3.2 NO VIOLATION. Except for those consents identified on Schedule
2.6(a) and Schedule 2.6(b), none of the execution and delivery of this Agreement
and the Related Agreements, the consummation of the transactions provided for
herein and therein or contemplated hereby and thereby, and the fulfillment by
the Parent, Seller, NMT-US and each Acquired Company of the terms hereof or
thereof, will (with or without notice or passage of time or both) (a) conflict
with or result in a breach of any provision of the charter documents or by-laws
of the Parent, Seller, NMT-US or any Acquired Company, (b) result in a default,
give rise to any right of termination, non-renewal or acceleration, or require
the giving of any notice, or receipt of any consent or approval (other than
approval by the Boards of Directors of each of such party, which approvals have
been obtained, and prior to the Closing Date will not have been revoked,
rescinded or restricted) under any of the terms, conditions or provisions of any
Contract, Distribution Arrangement or other obligation to which Parent, Seller,
NMT-US or any Acquired Company is a party or by which it or any of their
respective assets may be bound, except where such default, termination,
non-renewal or acceleration, or failure to give such notice or receive such
consent or approval has not resulted and could not reasonably be expected to
result in a Material Adverse Effect; (c) violate any Law applicable to the
Parent, Seller, NMT-US or any Acquired Company, or any of their respective
assets, or (d) give rise to the imposition or creation of any Lien on any of the
Shares.
3.3 CAPITALIZATION; VALIDITY OF THE SHARES.
(a) Schedule 3.3(a) sets forth the authorized capital shares of
each of the Acquired Companies and the record and beneficial owners of the
issued and outstanding shares thereof as of the date hereof and as of the
Closing Date. All of the issued and outstanding capital shares of each of the
Acquired Companies have been and are duly and validly issued and outstanding and
are fully paid and non-assessable, and are owned of record and beneficially by
such Persons identified on Schedule 3.3(a) free and clear of any and all Liens.
Other than this Agreement, there are no outstanding preemptive, conversion or
other rights, options, warrants or agreements granted or issued by or binding
upon Parent, Seller, any of the Acquired Companies or any of their respective
Affiliates for the purchase or acquisition of any capital shares of any of the
Acquired Companies. All outstanding capital shares of each of the Acquired
Companies were issued in compliance with all applicable Laws. None of the
Acquired Companies has any stock appreciation rights, profit participation,
phantom share plan or similar rights outstanding with respect to its capital
shares.
(b) Immediately following the Closing, the Shares will be duly and
validly issued, fully paid, non-assessable and legally and beneficially owned by
Buyer free and clear of all Liens and preemptive rights.
(c) Seller has and will at Closing have no other assets, rights or
properties other than the Shares.
3.4 AUTHORIZATIONS; COMPLIANCE.
(a) Each Acquired Company and, to the knowledge of Parent, Seller,
NMT-US and each of the Acquired Companies, each other relevant Person
(including, with respect to
15
the US-Based Assets, NMT-US) has all Orders and Permits which are required by
any Governmental Authority or pursuant to any Law to own, occupy and operate the
Assets, to manufacture, distribute, market, promote and sell the Products, and
to carry on the Business as presently conducted (collectively, the
"Authorizations"), except where the failure to possess such Authorizations has
not had and could not reasonably be expected to have a Material Adverse Effect.
The Authorizations are in full force and effect, and will be in full force and
effect immediately following the Closing. All of the Products comply, and have
been manufactured, marketed, distributed and sold in compliance with, all
applicable Authorizations, Laws, Orders and Permits, except to the extent that
failure to comply has not had or could not reasonably be expected to have a
Material Adverse Effect. None of Parent, Seller or any of the Acquired Companies
has reasonable grounds to believe that any of the Authorizations will not be
renewed or continued in the ordinary course or as a result of the transactions
contemplated hereby. The current ownership and operations of the Business and
Assets are not in violation of any applicable Authorization, Law, Order or
Permit, except to the extent that failure to comply has not had or could not
reasonably be expected to have a Material Adverse Effect.
(b) Schedule 3.4(b) sets forth a list by location of all
Authorizations in respect of any of the Products held, registered or maintained
in the name of any Person other than the Acquired Companies, including, without
limitation, all Authorizations held by distributors and resellers of the
Products.
(c) To the knowledge of the Parent, Seller, NMT-US and each of the
Acquired Companies, none of the Parent, Seller, NMT-US or any of the Acquired
Companies, or any of their respective Affiliates has received notice that there
has been, or is otherwise aware of, any breach of any of the terms or conditions
of any Authorizations (or has knowledge of any threat thereof). None of the
Parent, Seller, NMT-US or any of the Acquired Companies, or any of their
respective Affiliates, has received notice requiring, or is otherwise aware of,
any requirements regarding the accumulation and submission of substantial
clinical data necessary to establish the safety and effectiveness of any Product
not previously required or imposing any other material condition or requirement
restricting the continued commercial distribution or use of such Product.
3.5 FINANCIAL STATEMENTS; NO LIABILITIES.
(a) The Reference Date Balance Sheet was prepared in accordance
with GAAP. Except as clearly indicated on the face thereof, the Reference Date
Balance Sheet reflects all assets and all Liabilities of the Business existing
as of the date thereof which are required to be reflected in financial
statements prepared in accordance with GAAP. The Reference Date Balance Sheet,
fairly presents, in all material respects, the financial condition of the
Business at the date of such Reference Date Balance Sheet. Except as reflected
in the Reference Date Balance Sheet or as disclosed in Schedule 3.5(a) and
Schedule 3.8(c), none of the Acquired Companies or NMT-US is in default with
respect to any material Liabilities or obligations. Any Liabilities incurred or
accrued subsequent to the date of the Reference Date Balance Sheet have been, or
are being, paid, performed and discharged in the ordinary course as they become
due, and all such Liabilities and obligations were incurred in the ordinary
course of
16
business consistent with the Acquired Companies' and NMT-US's past practice. All
the books, records and accounts of the Acquired Companies are accurate and
complete in all material respects, are in accordance with good business practice
and all Laws applicable to the Acquired Companies and the conduct of their
respective businesses and accurately present and reflect all of the transactions
described therein. None of the Acquired Companies is engaged in any financing
(including the incurring of any borrowing or any indebtedness in the nature of
acceptances or acceptance credits) of a type which would not be required to be
shown or reflected in the Reference Date Balance Sheet.
(b) Since the Reference Date, there has been (i) no change in the
financial condition, results of operations, assets, Liabilities or business of
the Business, which has had or could reasonably be expected to have a Material
Adverse Effect; (ii) no damage, destruction or loss (whether or not covered by
insurance) which has had or could reasonably be expected to have a Material
Adverse Effect; (iii) no labor trouble which has had or could reasonably be
expected to have a Material Adverse Effect; (iv) no sale or transfer of any
Assets, except sales in the ordinary course of business consistent with the
Acquired Companies' and NMT-US's past practice; (v) no imposition of any
material Lien, or claim upon any of the Shares or Assets and any current year
Lien with respect to personal or real property Taxes not yet due and payable and
which shall be properly accrued for on the Closing Date Balance Sheet; (vi) no
default in any Liability or obligation of any of the Acquired Companies or
NMT-US which has had or could reasonably be expected to have a Material Adverse
Effect; (vii) no agreement by any of the Acquired Companies or NMT-US to any
change in the terms of any Contract to which it is a party that has had or could
reasonably be expected to have a Material Adverse Effect; (viii) no waiver,
cancellation or disposal by any of the Acquired Companies or NMT-US of, for less
than the greater of face or fair value thereof, any claim or right which it has
against others that has had or could reasonably be expected to have a Material
Adverse Effect; (ix) no transaction or event which has increased or could
reasonably be expected to materially increase the Tax Liability of any of the
Acquired Companies or with respect to the US-Based Assets for any prior taxable
year or the Tax Liability of any of the Acquired Companies or with respect to
the US-Based Assets for any prior taxable year for which any of the Acquired
Companies, Buyer or ISC would become liable following the Closing; (x) no
transaction other than in the ordinary course of business; and (xi) no reduction
in the profits available for distribution (as defined in Section 263(3) of the
Companies Act, 1985) of any of the Acquired Companies that results in a negative
amount as of the Closing Date.
(c) None of the Acquired Companies or, with respect to the
US-Based Assets, NMT-US, has any material Liabilities, except for (i)
Liabilities shown on the Reference Date Balance Sheet, (ii) Liabilities which
have arisen since the Reference Date in the ordinary course of business
consistent with past custom and practice, and (iii) contractual and other
Liabilities incurred in the ordinary course of business which are not required
by GAAP to be reflected on a balance sheet. None of the Acquired Companies has
or will have at Closing any Liability related to the Barclays Debt.
(d) All accounts receivable of the Acquired Companies are
reflected properly on the books and records, are valid receivables subject to no
setoffs or counterclaims, are current
17
and collectible, and will be collected in accordance with their terms at their
recorded amounts, subject only to the reserve for bad debts set forth on the
face of the Reference Balance Sheet, as adjusted for the passage of time through
the Closing Date in accordance with the past custom and practice of the Acquired
Companies. Except as set forth on Schedule 3.5(d)(ii), all accounts receivable
listed on the Closing Date Balance Sheet will be valid receivables subject to no
setoffs or counterclaims, will be current and collectible, and, except for such
accounts receivable as are fully-insured as to collectability, will be collected
in accordance with their terms at their recorded amounts, (subject only to the
reserve for bad debts set forth on the face of the Closing Date Balance Sheet)
within ninety (90) days following the date of their creation.
3.6 ABSENCE OF CERTAIN CHANGES. Since September 30, 1999, each of
the Acquired Companies and, with respect to the US-Based Assets, NMT-US, has
operated its business in the ordinary course of its business and consistent with
past practice. Since September 30, 1999, except as disclosed in Schedule 3.6,
(i) there have been, and as of Closing there will have been, no events, changes,
or occurrences which have had or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, and (ii) none of
the Acquired Companies or NMT-US has taken any action, or failed to take any
action, prior to the date of this Agreement, which action or failure, if
occurring after the date of this Agreement, would represent or result in a
breach or violation of any of the covenants and agreements applicable to the
Acquired Companies and NMT-US set forth in Section 5. Without limiting the
generality of the foregoing and except as disclosed on Schedule 3.6, since
September 30, 1999, none of the Acquired Companies or, as applicable and with
respect to the US-Based Assets, NMT-US, has:
(a) (i) abandoned or sold, leased, transferred or assigned any of
its assets, tangible or intangible, other than for a fair consideration in the
ordinary course of its business, consistent with past practice and which assets
do not have an aggregate book value in excess of US$50,000 (excluding sales of
inventory in the ordinary course), or (ii) mortgaged, incurred or permitted to
be attached any Liens in excess of US$50,000 on any of its assets, tangible or
intangible;
(b) entered into any Contract involving more than US$50,000 in the
aggregate, outside the ordinary course of business, consistent with past
practice, and which cannot be terminated on less than thirty (30) days notice by
such Acquired Company or NMT-US without penalty;
(c) accelerated, terminated, modified (other than modifications in
the ordinary course of business and consistent with past practice), or cancelled
any Contract (or series of related Contracts) involving more than US$50,000 in
the aggregate to which such Acquired Company or NMT-US is a party or is
otherwise bound;
(d) merged or consolidated with, or made any capital investment
in, any loan to, any advance to, or any acquisition of the securities or assets
of, any other Person (or series of related capital investments, loans, and
acquisitions);
18
(e) issued any note, bond, or other debt security or created,
incurred, assumed, or guaranteed any indebtedness or capitalized lease
obligation;
(f) issued, sold or otherwise disposed, directly or indirectly, of
any of its capital shares, or granted any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise) any of its
capital shares;
(g) granted any license or sublicense, transferred or assigned any
right, or commenced or settled any litigation or dispute with respect to any
Intellectual Property
(h) made or instituted any unusual or new methods of manufacture,
purchase, sale, distribution, shipment or delivery, lease, management,
accounting or operation, or shipped or delivered any quantity of Products in
excess of normal shipment or delivery levels;
(i) experienced any damage, destruction, or loss (whether or not
covered by insurance) to its assets or property in an aggregate amount greater
than US$50,000;
(j) made any loan to, or entered into any other transaction with,
any of its directors, officers, or employees or any of their family members,
trustees or beneficiaries;
(k) entered into any employment contract, deferred compensation
agreement, severance agreement, retirement agreement or collective bargaining
agreement, written or oral, or modified the terms of any existing such contract
or agreement;
(l) granted, provided or paid compensation or benefits to any of
its directors, officers, or employees, other than salary increases in the
ordinary course of such Acquired Company's business consistent with past
practice;
(m) adopted, amended, modified, or terminated any Employee Benefit
Plan, including, without limitation, accelerating any payments due or to become
due under any deferred compensation plan;
(n) made any other change in employment terms for any of its
directors, officers or employees;
(o) made or pledged to make any charitable or other capital
contribution which is (i) not reflected on the September 30, 1999 balance sheet
delivered to Buyer's representatives or (ii) in excess of US$50,000 in the
aggregate which remains unfulfilled;
(p) made any capital expenditure or commitment for any capital
expenditure in excess of US$50,000 in the aggregate;
(q) amended its articles or memorandum/articles of
incorporation/association, by-laws or other governing instruments;
(r) made any change in any accounting methods or systems of
internal accounting controls;
19
(s) waived, released or compromised any right or claim in excess
of US$50,000 in the aggregate;
(t) commenced or settled any litigation or similar adversarial
proceeding, including, without limitation, any such litigation or proceeding
involving the such Acquired Company or NMT-US that, if adversely determined,
could restrict the operations of any of the Acquired Companies or the Business;
(u) entered into any closing agreement or settled or agreed to
settle any claim or assessment for Taxes or surrendered any right to claim a
refund of Taxes or otherwise offset or reduce any Tax liability;
(v) made or changed any election with respect to Taxes;
(w) experienced any labor dispute, other than individual
grievances, or any lockouts, strikes, slowdowns, work stoppages by or with
respect to any of its employees; or
(x) experienced any event, occurrence, development or set of
circumstances of facts, which individually or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect.
3.7 TAXES.
(a) Parent, Seller and each of the Acquired Companies have, except
as set forth on Schedule 3.7(a), timely filed with the appropriate taxing
authorities all Returns (including, without limitation, information Returns and
other material information) in respect of Taxes with respect to the Business or
any of the Acquired Companies, required to be filed through the date hereof and
will timely file any such Returns required to be filed on or prior to the
Closing Date. The Returns and other information filed are complete, true and
accurate in all material respects. None of Parent, Seller or any of the Acquired
Companies has requested any extension of time within which to file Returns
(including, without limitation, information Returns) in respect of any Taxes.
Parent, Seller and each of the Acquired Companies have delivered to Buyer true,
complete and accurate copies of the Acquired Companies' Tax Returns (and
statements of deficiency assessed against, or agreed to by the Acquired
Companies or any other entity on behalf of the Acquired Companies) for the Tax
periods of the Acquired Companies as to which the statutes of limitations with
respect to Taxes have not expired.
(b) Except as set forth on Schedule 3.7(b), all Taxes for which
the Acquired Companies are or may be liable, in respect of periods (or portions
thereof) ending on or before the Closing Date, have been timely paid or will be
timely paid.
(c) No deficiencies for Taxes have been claimed, asserted,
proposed or assessed by any taxing or other Governmental Authority (foreign or
domestic) against any Acquired Company. There are no pending or, to the best of
the knowledge of Parent, Seller and each of the Acquired Companies, threatened
audits, investigations or claims for or relating to any Liability in respect of
Taxes, and there are no matters under discussion with any Governmental
20
Authorities with respect to Taxes that in the reasonable judgment of the
Acquired Companies, or their auditors or counsel, is likely to result in
additional Liability of any Acquired Company for Taxes. No extension or waiver
of a statute of limitations relating to Taxes is in effect with respect to any
Acquired Company. No power of attorney has been executed by any Acquired Company
with respect to any matter or matters relating to Taxes which are currently in
force. There is no compromise or settlement with any taxing or other
Governmental Authority that is binding any Acquired Company for any Tax period
ending after the Closing Date. There are no requests for rulings or
determinations relating to any Acquired Company pending with any taxing or other
Governmental Authority. Except as set forth on Schedule 3.7(a), each of the Tax
Returns of the Acquired Companies for the past six (6) years have been agreed
with the Taxing Authorities and no adjustments have been made (or suggested) to
any Tax Returns of the Acquired Companies by any Governmental Authority. Set
forth on Schedule 3.7(c) for each Acquired Company are the jurisdictions in
which such Acquired Company has filed Tax Returns within the last three (3) Tax
years. No taxing authority in a jurisdiction where an Acquired Company does not
file Tax Returns has made any claim within the last three (3) years that such
Acquired Company may be subject to taxation in that jurisdiction. The Acquired
Companies have properly requested, received and retained all necessary exemption
certificates and other documentation supporting any claimed exemption or waiver
of Taxes on sales or other transactions as to which the Acquired Companies would
have been obligated to collect or withhold Taxes.
(d) There are no Liens on any of the Assets of the Acquired
Companies or on any of the US-Based Assets that arose in connection with any
failure (or alleged failure) to pay any Tax. None of the Assets of the Acquired
Companies or the US-Based Assets is property that is required to be treated for
Tax purposes as being owned by any other person.
(e) The transaction contemplated herein is not subject to the Tax
withholding provisions of Section 3406 of the Code, or of Subchapter A of
Chapter 3 of the Code or of any other provision of Law.
(f) The provisions for Taxes shown on the Reference Date Balance
Sheet are, and the provisions for Taxes shown on the Closing Date Balance Sheet
will be, adequate to discharge all Taxes incurred by the Acquired Companies with
respect to all periods ending on or before the date thereof, including, with
respect to the Closing Date Balance Sheet, as if the taxable year of each of the
Acquired Companies ended on the Closing Date.
(g) Except as set forth on Schedule 3.7(g) hereto, none of the
Acquired Companies has, or has ever had, a permanent establishment (as defined
by applicable Tax treaty) or other taxable presence nor has been subject to Tax
in any country other than such Acquired Company's country of incorporation.
(h) None of the Acquired Companies has ever been a member of an
"affiliated group" of corporations (within the meaning of Section 1504 of the
Code), other than the group of which NMT Medical, Inc. is the common parent. No
member of any "affiliated group" of which NMT Medical, Inc. is the common parent
has any outstanding waivers or extensions of any
21
applicable statute of limitations relating to the assessment of Taxes. No
Acquired Company has any actual or potential Liability for any Tax obligation of
any other taxpayer (including without limitation any affiliated group of
corporations or other entities that included such Acquired Company during a
prior period).
(i) None of the Acquired Companies (i) has any investment in
"United States property" within the meaning of Section 956 of the Code, (ii) is
a passive foreign investment company within the meaning of the Code or (iii) has
been engaged in a United States trade or business for federal income tax
purposes.
(j) None of the Acquired Companies (i) has consented at any time
under any foreign tax provision similar to Section 341(v)(1) of the Code, to
have provisions similar to Section 341(v)(2) of the Code apply to any
disposition of the Acquired Companies' assets, or (ii) has agreed, or is
required, under any foreign tax provision similar to Section 481(a) of the Code
to make any adjustment by reason of a change in accounting method or otherwise.
(k) All material elections with respect to Taxes affecting the
Acquired Companies as of the date hereof are set forth on Schedule 3.7(k).
(l) None of the Acquired Companies is party or subject to any Tax
sharing, indemnity, allocation or similar agreements, whether or not reduced to
writing.
(m) Except as set forth on Schedule 3.7(m) hereto, none of the
Acquired Companies is a party to any joint venture, partnership or other
arrangement or contract that is or could be treated as a partnership for Tax
purposes.
(n) [INTENTIONALLY OMITTED]
(o) [INTENTIONALLY OMITTED]
(p) Except as set forth in Schedule 3.7(p) hereto, no Acquired
Company is or has ever been a close company as defined by Section 414 of the
Income and Corporation Taxes Act, 1988 ("TA").
(q) No Acquired Company has acquired any asset other than trading
stock from any other company (other than another Acquired Company) belonging at
the time of acquisition to the same group of companies as that Acquired Company
within the meaning of Section 170 of the Taxation of Chargeable Gains Act, 1992
("TCGA") and no member of any group of companies of which any Acquired Company
is or has at any material time been the principal company (as defined in Section
170(2)(b) of the TCGA) has so acquired any asset.
(r) Schedule 3.7(r) contains particulars of all arrangements
relating to relief under Sections 402-413 of the TA ("Group Relief") to which
the Acquired Companies are or have been party and:
22
(i) all claims by any Acquired Company for such group relief
were when made and are now valid and have been or will be allowed by way of
relief from corporation tax;
(ii) no Acquired Company has made or is liable to make any
payment for group relief otherwise than in consideration for the surrender of
Group Relief allowable to the Acquired Company by way of relief from corporation
tax;
(iii) each Acquired Company has received all payments due to it
under any arrangement or agreement for surrender of Group Relief by it for
periods prior to the Reference Date;
(iv) no such payment exceeds or could exceed the amount
permitted by Section 402(6) of the TA;
(v) there exist or existed for any period of account in respect
of which a surrender has been made or purports to have been made no arrangements
such as are specified in Section 410(1)-(6) of the TA.
(s) Schedule 3.7(s) contains particulars of all arrangements for
the surrender under Section 240 of the TA of any amount of advance corporation
tax and in respect of receipts and surrenders disclosed:
(i) no Acquired Company has paid or is liable to pay for the
benefit of any advance corporation tax which is or may become incapable of set
off against that company's liability to corporation tax;
(ii) each Acquired Company has received all payments due to it
for all surrenders or purported surrenders of advance corporation tax made by
it;
(iii) no such payment exceeds or could exceed the amount
permitted by Section 240(8) of the TA; and
(iv) there exist or existed for any period in respect of which
a claim under Section 240 of the TA has been or is to be made no arrangements
such as are specified in sub-section (11) of that section whereby any person
could obtain control of the Acquired Company or of any subsidiary to which such
surrender purports or is purported to be made.
(t) None of the activities of the Acquired Companies have created
Subpart F income, as described in Section 952(a) of the Code, from the date
Parent and its Affiliates acquired such Acquired Companies to and including the
Closing Date.
(u) Schedule 3.7(u) sets forth in reasonable detail all Tax
accruals of the Acquired Companies for the 1999 Tax year (it being agreed that,
notwithstanding said schedule, for the purposes of the Reference Date Balance
Sheet, the 1998/1999 Tax Make-Whole Payment
23
and the Purchase Price Adjustment, the Tax accrual amount shall be as stated on
the Reference Date Balance Sheet).
3.8 CONTRACTS, LICENSES, ETC.
(a) Except as set forth in the appropriate subsection on Schedule
3.8(a), or otherwise disclosed on Schedule 3.7(m), Schedule 3.8(b)(i), Schedule
3.11(c), Schedule 3.13, Schedule 3.15(a)(ii) or Schedule 3.15(b)(i), none of the
Acquired Companies (or, with respect to the US-Based Assets, NMT-US) is a party
to any Contract:
(i) other than the Barclays Debt, evidencing indebtedness for
borrowed money or the deferred purchase price of property, or pursuant to which
such Acquired Company has guaranteed any obligation of any other Person, except
any such Contracts with an aggregate outstanding principal amount not exceeding
US$50,000 and which may be prepaid on not more than thirty (30) days' notice
without payment of penalty or permission;
(ii) creating or purporting to create a material Lien on any of
the Acquired Companies' properties or Assets, including the US-Based Assets;
(iii) prohibiting or limiting the ability of any Acquired
Company to engage in any line of business, to compete with any Person or to
carry on its business anywhere in the world, including, without limitation,
restricting any Acquired Company from selling, licensing or otherwise
distributing any Products to any class or type of customers or through any type
of channel in any geographic area or during any period of time;
(iv) that are confidentiality agreements, joint venture,
partnership or limited liability company agreements or similar arrangements;
(v) for the purchase or sale of materials, commodities,
supplies, products or other personal property, or for the furnishing or receipt
of services, the performance of which will extend more than one year or involve
consideration in excess of US$50,000 in the aggregate;
(vi) for the sale, transfer, lease, license or parting with
possession or ownership of any material assets of any of the Acquired Companies
on, prior to or after the date hereof (other than sales of Products by the
Acquired Companies pursuant to written orders in the ordinary course of business
and consistent with past practice);
(vii) that are license agreements pursuant to which any
Acquired Company or NMT-US is a licensee or otherwise required to pay royalties,
or which contain (A) a provision requiring such Acquired Company, NMT-US or any
of their respective Affiliates to pay royalties to the licensor without regard
to whether or not the licensed property is actually being used by Acquired
Company or Affiliate, or (B) contain any provision which restricts, prohibits or
is triggered by changes in control of the licensee;
24
(viii) pursuant to which any Acquired Company or NMT-US
receives or is entitled to receive royalty or similar payments;
(ix) that grants to any Person or otherwise affects any of the
Acquired Companies' or NMT-US's exclusive right to manufacture, produce,
assemble, license or market any of the Products;
(x) for the lease of personal property to or from any Person
providing for lease payments in excess of US$50,000 per annum in the aggregate;
(xi) requiring the performance of services or delivery of goods
or materials by or to any Acquired Company or NMT-US for consideration exceeding
US$50,000 in any one year that are not terminable by such Acquired Company or
NMT-US on not more than thirty (30) days' without penalty;
(xii) for the employment or engagement of any Person on a
full-time, part-time, consulting, or other basis providing annual compensation
in excess of US$50,000 in the aggregate or which provide for the payment of
deferred compensation;
(xiii) under which it has advanced or loaned any amount to any
of its directors, officers, and employees outside the ordinary course of
business, consistent with past practice; or
(xiv) that are material to any of the Acquired Companies or
NMT-US, either individually or in the aggregate.
Parent, Seller, NMT-US and the Acquired Companies have delivered or
made available to Buyer a true, complete and correct copy of each written
Contract and a reasonably detailed written description of each oral Contract
listed on Schedule 3.8(a).
(b) (i) Except as set forth on Schedule 3.8(b)(i), none of the
Parent, Seller, NMT-US or any of the Acquired Companies or any of their
respective Affiliates is party or subject to any Contract, promise, arrangement,
understanding or Liability with any other Person with respect to the
distribution, sale, sale representation, brokerage, resale or consignment of
Products, whether oral, written or otherwise (the "Distribution Arrangements").
(ii) Except as disclosed on Schedule 3.8(b)(ii), each of the Distribution
Arrangements to which any Acquired Company or NMT-US is party or subject, or
which relates to any of the Products, may be terminated at any time by such
Acquired Company or NMT-US without any charge, penalty, fee or other Liability
payable by or imposed upon Buyer or any Acquired Company, or any right to
injunctive relief with respect to Buyer or any Acquired Company. (iii) The
Exclusive Distributorship Agreement, dated as of August 28, 1995, by and between
Candela Corporation and Spembly-Cryosurgery has been validly and legally
terminated in accordance with the terms thereof prior to the date hereof. Except
as set forth on Schedule 3.8(b)(iii), none of the Acquired Companies has, nor
will the Buyer have at Closing or any time thereafter, any obligations or
liabilities in connection with said agreement or the termination thereof.
25
(c) Except as disclosed on Schedule 3.8(c) hereto, each of the
Contracts identified on Schedule 3.7(m), Schedule 3.8(a), Schedule 3.8(b)(i),
Schedule 3.11(c), Schedule 3.13, Schedule 3.15(a)(ii) or Schedule 3.15(b)(i)
hereto:
(i) is a valid and legally binding obligation of the Acquired
Companies and, as applicable, Parent, Seller, NMT-US and their respective
Affiliates party thereto, and, to the knowledge of Parent, Seller, NMT-US and
the Acquired Companies, each other party thereto;
(ii) will continue to be a valid and legally binding obligation
in full force and effect on identical terms following the consummation of the
transactions contemplated hereby;
(iii) none of Parent, Seller, NMT-US or any of the Acquired
Companies is in default under any such Contract except for such defaults which,
individually or in the aggregate, have not had and could not reasonably be
expected to have a Material Adverse Effect;
(iv) to the knowledge of Parent, Seller, NMT-US and the
Acquired Companies, no other Person that is a party to such Contract is in
default thereunder; and
(v) except as disclosed on Schedule 2.6(a) and Schedule 2.6(b),
to the knowledge of Parent, Seller, NMT-US and the Acquired Companies, no event
has occurred or circumstance exists that (with or without the giving of notice,
the lapse of time or both) gives any Person other than the Acquired Company that
is a party to such Contract the right to declare a default, exercise any remedy
under, accelerate the maturity or performance of, or terminate such Contract.
(d) Except as disclosed on Schedule 3.8(d), none of the Acquired
Companies or, with respect to the US-Based Assets, NMT-US, has received any
payment from any contracting party in connection with or as an inducement for
entering into any Contract except for payment for actual services rendered or to
be rendered by the Acquired Companies or NMT-US consistent with amounts
historically charged for such services.
3.9 INTELLECTUAL PROPERTY.
(a) Schedule 3.9(a) includes a complete and correct list and
summary description of all Intellectual Property owned by the Acquired Companies
and, with respect to the US-Based Assets, NMT-US, together with a complete list
of all material Contracts relating thereto, including without limitation all
licenses granted by or to the Acquired Companies or, with respect to the
US-Based Assets, NMT-US, with respect to any Intellectual Property. Except as
disclosed on Schedule 3.9(a), all such Intellectual Property is legally and
beneficially owned and owned of record by the Acquired Company indicated as the
owner thereof, and, with respect to the US-Based Assets, NMT-US, free and clear
of all Liens and constitutes all of such Intellectual Property necessary for the
ownership and operation of the Assets and the lawful conduct of the Business as
now conducted, except for Liens thereon that would not be reasonably
26
likely to have a Material Adverse Effect. Other than the tradename "NMT",
neither Parent nor any of its subsidiaries or Affiliates (including Seller and
NMT-US, but excluding the Acquired Companies) owns or licenses any Intellectual
Property used or required to be used in connection with the Business.
(b) Each of the Acquired Companies and, with respect to the
US-Based Assets, NMT-US, has such rights to use, protect, prosecute, sell,
transfer, license, sublicense, dispose of or bring actions for the infringement
of its rights in and to, and to exclude others from using, the Intellectual
Property required to be listed on Schedule 3.9(a) as are established by the
applicable Laws of each relevant jurisdiction (and to the extent provided in
each agreement under which each Acquired Company or NMT-US is licensee) and
granted to the sole and exclusive owner of an item of Intellectual Property of
such kind. Except as disclosed on Schedule 3.9(b), each Acquired Company and,
with respect to the US-Based Assets, NMT-US, is the sole beneficial and record
owner of its Intellectual Property. The Intellectual Property required to be
listed on Schedule 3.9(a) which is registered or the subject of an application
for registration (collectively, the "Registered Intellectual Property") has been
duly maintained in accordance with the legal and administrative requirements of
the appropriate jurisdictions in all material respects, and has (except for
patents which may have expired on their normal expiration dates) not lapsed,
expired, been canceled or been abandoned. No registration or application for
registration of any item of Registered Intellectual Property is the subject of
any pending opposition, challenge, interference, cancellation or other legal or
governmental proceeding filed before any Governmental Authority.
(c) Except as disclosed on Schedule 3.9(c), none of the Acquired
Companies or, with respect to the US-Based Assets, NMT-US has received notice of
any violation of and, to the knowledge of Parent, Seller, NMT-US and the
Acquired Companies, (i) none of Acquired Companies (and none of their employees
or agents) is infringing, misappropriating, misusing or violating, the rights of
others in any Intellectual Property, and (ii) neither the Business nor any
Acquired Company is subject to any claim to pay compensation pursuant to
Sections 40 and 41 of the Patents Act 1977, and there are no facts or
circumstances likely to give rise to such a claim.
(d) To the knowledge of Parent, Seller, NMT-US and the Acquired
Companies, there has been no infringement, unauthorized use, breach of
confidentiality obligations, disclosure or misappropriation by any Person of any
Intellectual Property required to be listed on Schedule 3.9(a).
(e) Each of the Acquired Companies has reviewed its operations
with a view towards assessing whether the Assets, Products and Business are Year
2000 Compliant. Schedule 3.9(e) contains a true, correct and complete list of
all written or oral studies, audits, surveys, reports and investigations
conducted by or on behalf of the Acquired Companies with respect to the
foregoing. All computer software used in the Business is Year 2000 Compliant, it
being agreed that no representations or warranties are being made with respect
to the Chameleon financial and accounting software system. For purposes of this
Agreement, "Year 2000 Compliant" with the foregoing shall mean that all such
equipment and software has and will
27
continue to, (i) function on and after January 1, 2000 and (ii) process, store
and otherwise handle data containing or depending upon dates, on and after
January 1, 2000, including leap year calculations.
(f) Parent, Seller, NMT-US and each of the Acquired Companies and
their respective Affiliates have taken reasonable security measures to safeguard
and maintain their respective property rights in all Intellectual Property owned
by the Acquired Companies and, with respect to the US-Based Assets, NMT-US. All
officers, employees and consultants of the Acquired Companies or, with respect
to the US-Based Assets, NMT-US, who have access to proprietary information have
executed and delivered to the applicable Acquired Company(ies) or NMT-US an
agreement regarding the protection of proprietary information, and the
assignment to or ownership by the Acquired Companies of all Intellectual
Property arising from the services performed for the Acquired Companies by such
Persons. To the knowledge of the Parent, Seller, NMT-US and the Acquired
Companies, no current or prior officers, employees or consultants of the Parent,
Seller, NMT-US or any of the Acquired Companies claim, and the none of such
parties is aware of any grounds to assert a claim to, any ownership interest in
any Intellectual Property of the Acquired Companies or, with respect to the
US-Based Assets, NMT-US as a result of having been involved in the development
of such property while employed by or consulting to the Acquired Companies,
NMT-US or otherwise.
(g) None of Parent, Seller, NMT-US or any of the Acquired
Companies or their respective Affiliates (i) have sold, transferred, licensed or
otherwise granted the right to any Person to use the name "Neurosciences" (or
any word substantially similar thereto), whether alone or in combination with
any other text or graphics, or (ii) except as set forth on Schedule 3.9(g)
hereto, have registered, filed any application in respect of or otherwise sought
ownership or rights in and to the name "Integra" (or any word substantially
similar thereto), whether alone or in combination with any other text or
graphics.
3.10 LABOR MATTERS.
(a) Within the last three (3) years none of the Acquired Companies
has been the subject of any trade dispute as defined in Section 218 of the UK
Trade Union Labour Relations (Consolidation) Act 1992 ("TULRC"), nor has there
been any strike, work stoppage or slow-down of any kind called or threatened to
be called against any of them, and no event has occurred which could or might
give rise to such dispute or action. None of the Acquired Companies has
committed a violation of any applicable Law relating to trade or trade
practices, which violation has had or could reasonably be expected to have a
Material Adverse Effect.
(b) Except as specified in Schedule 3.10(b), there are no
Contracts, including recognition agreements and collective agreements, between
any of the Acquired Companies and any trade union, workers' council or other
body representing employees.
(c) Except as set forth on Schedule 3.10(c), no supervisory
employee of any of the Acquired Companies has given or received notice
terminating his or her employment or office, and no such supervisory employee
will be entitled to give such notice as a result of this Agreement or any of the
Related Agreements.
28
(d) To the knowledge of Parent, Seller and the Acquired Companies,
there are no current investigations by any Governmental Authority in relation to
any employment practice in the Acquired Companies.
(e) Except as set forth on Schedule 3.10(e) hereto, there are no
notices, consents, authorizations or approvals, or payments or indemnifications,
in respect of any employee of the Business which would be required in the event
that any of the Acquired Companies ceased operations and terminated its
workforce.
(f) No Acquired Company has entered into any agreement and no
event has occurred which may involve an Acquired Company in the future acquiring
any undertaking or part of one such that the United Kingdom Transfer of
Undertakings (Protection of Employment) Regulations 1981 (as amended) may apply
thereto.
3.11 EMPLOYEE BENEFIT PLANS
(a) All Employee Benefit Plans have been maintained in compliance
with the requirements of all applicable Laws and any rules, policies and
procedures thereof.
(b) None of the Acquired Companies maintains, contributes to, or
is obligated to contribute to any "multiemployer plan," as defined in Section
3(37) of Employee Retirement Income Security Act of 1974 (as amended).
(c) Schedule 3.11(c) hereto contains a complete and correct list
of all Employee Benefits Plans currently maintained or contributed to by the
Acquired Companies with respect to any employee or former employee of the
Acquired Companies.
(d) No action, investigation or audit (other than routine claims
for benefits) is pending or threatened against any Employee Benefit Plan of any
of the Acquired Companies.
(e) The Reference Date Balance Sheet reflects, and the Closing
Date Balance Sheet will reflect, an accrual for any unpaid Liabilities relating
to Employee Benefit Plans which are required to be accrued by GAAP.
(f) No amounts will be paid or become payable, or benefits or
vesting of benefits accelerated under, any Employee Benefit Plan of any Seller
as a result of the transactions provided for in this Agreement.
(g) Schedule 3.11(g) hereto contains a current list of all
employees of the Acquired Companies and their current employer, compensation
(including salary, bonus and other benefit schemes, arrangements and
understandings), title, job function and length of employment. Copies of all
other standard terms and conditions, staff handbooks and policies have
previously been provided to Buyer.
(h) Schedule 3.11(h) hereto contains a list of all current
employees of the Acquired Companies who shall cease to be employees of the
Acquired Companies effective upon
29
the Closing (collectively, the "Excluded Employees"), and all accrued vacation,
pension, benefit and similar Liabilities of the Acquired Companies in respect
thereof.
(i) No power under the Pension Scheme to augment benefits or to
provide benefits which would not otherwise have been provided has been exercised
since the date of its last actuarial valuation.
(j) Only employees of the Acquired Companies have participated in
the Pension Scheme.
(k) All lump sum death-in-service benefits (other than a refund of
the member's contributions with interest where appropriate) payable under the
Pension Scheme on death before normal pension age of a member while in an
employment to which the Pension Scheme relates are insured fully under a policy
with an insurance company of good repute.
(l) All contributions to the Pension Scheme have at all times been
made in accordance with the provisions of the Pension Scheme and the
recommendations of the actuary to the Pension Scheme. The assets of the Pension
Scheme will not be less than the greater of the Projected Benefit Obligation
under US GAAP or the UK Minimum Funding Standard as of the Closing Date.
(m) Except as set forth in Schedule 3.11(m) hereto, there has been
no increase or decrease in the rate of any contribution to the Pension Scheme by
any Seller at any time in the three (3) years ending on the date of this
Agreement and no such increase or decrease has been agreed to, or, on the basis
of actuarial advice received in respect of the Pension Scheme, proposed or
advised.
(n) All life insurance and long term disability benefits under the
Pension Scheme are fully insured outside of the Pension Scheme.
(o) There are no material actions, suits or claims pending or
threatened (other than routine claims for benefits) in respect of the Pension
Scheme or the benefits thereunder.
(p) No "surplus payment" within the meaning of the Pension Scheme
Surpluses (Administration) Regulations 1987 (S.I. 1987 No. 352) has been made
out of the Pension Scheme.
3.12 ENVIRONMENTAL, HEALTH AND SAFETY MATTERS. Except as set forth
in Schedule 3.12 hereto:
(a) The Acquired Companies and, with respect to the US-Based
Assets, NMT-US, are and have at all times been in compliance with all applicable
Environmental Laws in connection with the leasing, ownership, manufacture,
operation and condition of the Real Property, the Assets and the Business. There
are no past or pending violations or alleged violations by any of the Acquired
Companies or, with respect to the US-Based Assets, NMT-US, of any Environmental
Laws asserted by any Governmental Authority or third party. Set forth in
30
Schedule 3.12(a) hereto are all Orders, Permits and other approvals necessary to
conduct the Business or operate at the Real Property in compliance with
Environmental Laws.
(b) There is no past or ongoing Release of Hazardous Materials
whether or not caused by the Acquired Companies into the environment on, from or
within any real property owned, leased, or utilized at any time by the Business.
No Release of Hazardous Materials into the environment has caused or aggravated
any condition or damage which would necessitate response, removal, or other
remedial action or otherwise restrict the use or occupation of any property
whether under Environmental Laws or otherwise after the date of this Agreement
with respect to any property, regardless of whether the property is owned,
leased or otherwise utilized by the Acquired Companies. All environmental
assessments, reports and investigations with respect to any property currently
or previously owned, leased, or utilized by the Business, whether commissioned
by the Acquired Companies or third parties, are identified on Schedule 3.12(b)
and have been made available to Buyer prior to the date hereof.
(c) Except as disclosed on Schedule 3.12(c) hereto, (i) there are
no Hazardous Materials located on, contained in, or otherwise part of any
property utilized by the Business, (ii) none of the Acquired Companies or, with
respect to the US-Based Assets, NMT-US, has arranged for the transportation,
storage, treatment or disposal of any Hazardous Materials at any property or
site not owned or controlled by the Business or has otherwise owned or operated
at any property that has or could reasonably be expected to give rise to any
Liability of the Acquired Companies or, after the date hereof, Buyer or ISC,
under any Environmental Law, and (iii) none of Parent, Seller, NMT-US, the
Acquired Companies or any of their respective Affiliates, employees, agents or
representatives has received any notice or is aware of any requirement under any
Environmental Law regarding the removal, containment, treatment or other action
in respect of asbestos located in or on any real or personal property,
including, without limitation, the Real Property and Improvements utilized in
the Business.
(d) Except as disclosed on Schedule 3.12(d), there are no
landfills, lagoons, impoundments, waste piles, drum storage areas, or storage
tanks (above or underground) on any property previously or currently owned,
leased, or utilized by the Business.
3.13 INSURANCE. All policies and binders of insurance for product
liability, directors and officers, fire, liability, property workers'
compensation and other customary matters held by or on behalf of, or which
provide coverage for, the Acquired Companies or, with respect to the US-Based
Assets, NMT-US, (the "Insurance Policies") are identified on Schedule 3.13(i)
hereto and have been made available to Buyer. The Insurance Policies are in full
force and effect and none of the Acquired Companies, NMT-US or any other Person
is in default with respect to any material provision contained in any Insurance
Policy nor have any of the Acquired Companies, NMT-US or any other Person failed
to give any notice of any material claim under any Insurance Policy in due
timely fashion, nor has any coverage for current claims been denied. Since July
8, 1998, there has been no material adverse change in Parent's, Seller's,
NMT-US's or any Acquired Company's relationship with its insurers or in premiums
payable. Schedule 3.13(ii) contains a list of pending insurance claims relating
to the Business, the Assets and the
31
Products, and a history of insurance claims/loss run relating to the Business
and the Assets for the five (5) years preceding the date of this Agreement.
3.14 RELATED PARTY RELATIONSHIPS. None of the Acquired Companies is, or
at Closing will be, indebted, directly or indirectly, or committed to make loans
or extend credit, to any current or former officer or director (or any members
of their immediate families) of any of the Acquired Companies, Parent, Seller,
NMT-US or any of their respective Affiliates, in any amount whatsoever other
than in connection with expenses or advances of expenses incurred in the
ordinary course of the Business. No officer or director (or any members of their
immediate families) of any of the Acquired Companies, Parent, Seller, NMT-US or
any of their respective Affiliates or is, directly or indirectly, indebted to
the Acquired Companies or has any direct or indirect ownership interest in any
firm or entity with which the Acquired Companies is affiliated or with which any
of the Acquired Companies has a business relationship, or any firm or entity
which competes with any of the Acquired Companies. No officer or director (or
any members of their immediate families) of any of the Acquired Companies,
Parent, Seller, NMT-US or any of their respective Affiliates has, directly or
indirectly, a financial interest in any Contract with any of the Acquired
Companies. None of the Acquired Companies is a guarantor or indemnitor of any
indebtedness of any other Person.
3.15 OWNERSHIP OF TANGIBLE ASSETS AND LEASES.
(a) With respect to the Assets other than the Real Property and
Improvements:
(i) Except as disclosed on Schedule 3.15(a)(i) hereto (with
respect to leased Assets), the Acquired Companies have or will have at Closing
good, valid and marketable title to all of the Assets (other than the US-Based
Assets) free and clear of any Liens; provided, however, that to the extent that
any Assets (other than the US-Based Assets) are owned by Parent, Seller or any
of their respective Affiliates (other than the Acquired Companies), such Assets
shall be transferred to the Acquired Companies prior to the Closing.
(ii) Schedule 3.15(a)(ii) hereto describes each of the Assets
which has a value in excess of US$50,000 which is held under any lease or
conditional sale or other title retention agreement and lists the related
leases, conditional sale agreements or other title retention agreements.
(iii) None of the Acquired Companies has received any payment
from a lessor in connection with or as inducement for entering into any such
lease except as set forth on Schedule 3.15(a)(iii). Any security deposits made
under the leases and agreements relating to the Assets described on Schedule
3.15(a)(ii) are set forth on such Schedule.
(iv) None of the Assets are leased by any of the Acquired
Companies or NMT-US to any other person or entity.
(v) The property and Assets (including Intellectual Property)
owned, leased or licensed by the Acquired Companies, or which they otherwise
have a right to use, together with all Contracts to which they are a party,
consist only of properties, assets, rights and
32
Contracts relating to the Business and such property, Assets (including
Intellectual Property), rights and Contracts are adequate to conduct the
Business as currently conducted and proposed to be conducted.
(vi) All machinery, equipment and tools used in the Business
are usable and operable in good working order and condition, and are in a
reasonable state of repair, subject only to ordinary wear and tear, and have
been subject to regular maintenance, except where the failure to be in such
state or condition has not had and could not reasonably be expected to have a
Material Adverse Effect.
(vii) Except pursuant to this Agreement, none of the Acquired
Companies or NMT-US is a party to any Contract whereby there has been granted to
anyone an absolute or contingent right to purchase, obtain or acquire any rights
in any of the Assets.
(viii) All of the Assets are, or will at Closing, be located at
the Andover Facility or at such other locations as contemplated by Section
5.8(a).
(ix) NMT-US has, and will transfer to ISC at Closing, good,
valid and marketable title to all of the US-Based Assets free and clear of any
Liens.
(b) With respect to the Real Property and Improvements:
(i) Schedule 3.15(b)(i) hereto describes all real property
leased for use in the Business and lists the related leases. The leases
described in Schedule 3.15(b)(i) hereto are in full force and effect and
constitute valid and legally binding obligations of the applicable Acquired
Companies and the other respective parties thereto and are enforceable in
accordance with their terms, subject to bankruptcy laws and general equitable
principles. There are no material defaults of any Acquired Company or, to the
knowledge of Parent, Seller or any of the Acquired Companies, any third party
under any such leases (nor are there any events or conditions which, with notice
or lapse of time, or both, would constitute a material default).
(ii) None of the property, nor any part thereof, described in
Schedule 3.15(b)(i) is leased by any of the Acquired Companies to any other
person or entity.
(iii) No consent of any landlord, property agent, manager or
any other Person is required under any of the leases listed on Schedule
3.15(b)(i) is required in connection with the transactions contemplated hereby.
(iv) No Taxes, rates, assessments, water charges or sewer
charges relating to the Real Property or the Improvements are in arrears and
there are no special Taxes, assessments or charges pending or, to the knowledge
of the Parent, Seller or any of the Acquired Companies, threatened, against the
Real Property or the Improvements.
(v) The Real Property and the Improvements are usable and
operable in the Business as presently conducted, the Improvements are in good
working order and
33
condition, and in a reasonable state of repair, subject only to ordinary wear
and tear, and, since July 8, 1998, have been subject to regular maintenance.
(vi) There are no pending, and none of Parent, Seller or any of
the Acquired Companies has received any written notice of, nor do any of Parent,
Seller of any of the Acquired Companies have any knowledge of, any threatened or
contemplated court or arbitration proceedings affecting the Real Property, the
Improvements or any part thereof.
(vii) None of the Acquired Companies is or has been in
occupation of or entitled to any estate or interest in land or premises except
for the Real Property.
(viii) Except for the deposit of the title deeds of the Real
Property, such property and its title deeds are free from any Lien or other
third party right whether in the nature of security or otherwise. All
assignments through the date of closing with respect to each of the leases
listed on Schedule 3.15(b)(i) have been properly and legally made and, as
necessary, consented to by the appropriate parties, and are valid and
enforceable.
(ix) The Acquired Companies have performed and observed all
covenants affecting or relating to the Real Property (or the use or occupancy
thereof) requiring observance or performance by it, except for such failure to
observe or perform such covenants as has not had or could reasonably be expected
to have a Material Adverse Effect, and none of Parent, Seller or any of the
Acquired Companies has received any notice of, nor is aware of, any breach of
any such covenants.
(x) Except as set forth on Schedule 3.15(b)(x), all
manufacturing, distribution and related operations of the Business are carried
out at the Andover Facility. Except for the operations of the Business, no
business or operations of Parent or any Affiliate of Parent (other than the
Acquired Companies) are conducted at the Andover Facility.
(xi) The Acquired Companies have no Liabilities (in any
capacity including as principal contracting party or guarantor) in relation to
any lease, license or other interest in, or agreement relating to, land apart
from the Real Property.
(xii) All disclosure and replies to inquiries related to the
Real Property made or given by or on behalf of Seller or the Acquired Companies
to the Buyer or its counsel are complete and accurate and do not omit or fail to
state any material information so requested.
3.16 BROKERS-SELLERS. None of the Parent, Seller, NMT-US or any of
the Acquired Companies or any of their respective Affiliates have engaged any
person or entity which has or could have any valid claim against Buyer, ISC or
any of the Acquired Companies for a finder's fee, brokerage commission or other
similar payment nor otherwise acted in such a manner as to give rise to any
valid claim against Buyer, ISC or any of the Acquired Companies for a finder's
fee, brokerage commission or other similar payment.
3.17 LITIGATION. There is no suit, action, proceeding, claim or
investigation pending or, to the knowledge of Parent, Seller, NMT-US or any of
the Acquired Companies,
34
threatened, against NMT-US (with respect to the US-Based Assets) or any of the
Acquired Companies relating to any of the Business or any of the Products or
Assets, including, without limitation, claims for breach of product warranties,
product liability claims and claims covered by any of the Insurance Policies.
During the five (5) years preceding the date of this Agreement, there have been
no product liability claims asserted in writing against any of the Acquired
Companies or any of their Affiliates or predecessors-in-interest with respect to
any of the Products, except as disclosed on Schedule 3.17 hereto.
3.18 PRODUCT WARRANTY AND PRODUCT LIABILITY CLAIMS. No Product
manufactured, sold, distributed or delivered by or on behalf of any Acquired
Company or NMT-US is subject to any warranty, guaranty, right of return or other
indemnity other than the relevant Acquired Company's applicable standard terms
and conditions of sale, which are consistent with customary industry practice.
The Parent has maintained product liability insurance coverage covering the
Acquired Companies, NMT-US and the Products in amounts of not less than
US$1,000,000 per occurrence and US$10,000,000 in the aggregate with respect to
products manufactured, sold, distributed or delivered by the Acquired Companies
and NMT-US. Such product liability insurance is on a claims made basis. With
respect to Liabilities related to actual or potential warranty claims, the
Acquired Companies have established an adequate reserve therefor in conformity
with GAAP and the Acquired Companies' past custom and practice. The Acquired
Companies do not have nor will they have any Liability for warranty claims in
excess of the reserve so established with respect to any Products sold prior to
the Closing Date, provided that the Acquired Companies continue to perform
warranty repair work in a manner consistent with their past practice.
3.19 ENTERPRISE RESOURCE PLANNING SOFTWARE. None of the Acquired
Companies has any Liabilities or has made any payments with respect to the Movex
system. The Movex system is currently sufficient for all of the Acquired
Companies' material financial and accounting software needs and will be
sufficient until such time as the Acquired Companies have reinstalled an
operating and fully-functional Chameleon system. Following reinstallation of the
Chameleon system and the transfer of data related to the Acquired Companies and
the Products from the Movex system to the Chameleon system, all Confidential
Information will be stored in, contained on or accessible only through or by
such systems, software or hardware owned by the Acquired Companies and located
solely at the Andover Facility.
3.20 ELEKTA AGREEMENT. Other than as set forth on Schedule 3.20
hereto, none of the Acquired Companies or, with respect to the US-Based Assets,
NMT-US, has any Liability to, or claims for indemnification against, Elekta
pursuant to that certain Purchase Agreement, dated as of May 8, 1998 (as
amended, the "Elekta Agreement"), between Elekta. None of Parent, Seller, NMT-US
or any of the Acquired Companies is aware of any fact, condition or circumstance
which gives, or could reasonably be expected to give, rise to any Liability of
any of the Acquired Companies or, with respect to the US-Based Assets, NMT-US,
to Elekta, pursuant to the Elekta Agreement or otherwise. Except as disclosed on
Schedule 3.20, none of the Acquired Companies or, with respect to the US-Based
Assets, NMT-US, is currently obtaining any service or product from, or is
otherwise required to make payments to, Elekta or any of its Affiliates.
35
3.21 INVENTORY. All inventory reflected on the Reference Date Balance
Sheet and all other inventory acquired by the Acquired Companies since December
31, 1999, was acquired in the ordinary course of business and in a manner
consistent with the Acquired Companies' and NMT-US's regular inventory
practices. Except for demonstration inventory, all such inventory is in good and
saleable condition, other than products in the development phase which have not
been completed for offer or sale to customers. Except as set forth on Schedule
3.21, none of the Acquired Companies' or, with respect to the US-Based Assets,
NMT-US's inventory is held by any Person (including any of their Affiliates) on
consignment or is located outside of the Andover Facility or NMT-US's facility
in Atlanta, Georgia. In the aggregate, adequate reserves have been established
on the Reference Date Balance Sheet and on the Acquired Companies books of
account with respect to excessive and obsolete inventory (it being agreed that
for the purposes of this Section 3.21, the term "excessive and obsolete
inventory" shall refer to any on-hand raw materials, parts, supplies, or
finished Products which (a) cannot be sold at current prices in the ordinary
course of business, (b) which are not usable in the production of current
Products, or (c) which consist of on-hand quantities in excess of one year's
historical usage).
3.22 CERTIFICATIONS; PRODUCT SAFETY.
(a) Except as set forth on Schedule 3.22(a), (i) all operations of
the Business have achieved and maintained the ISO 9001 certification and are
compliant with United States Food and Drug Administration Quality System
Regulations in all material respects, and (ii) there is no pending and none of
Parent, Seller or any of the Acquired Companies has received any notice of, nor
is aware of, any threatened, action to audit, repeal, fail to renew or challenge
any of such certifications.
(b) Except as set forth on Schedule 3.22(b), none of Parent,
Seller, NMT-US, any Acquired Company or any of their respective Affiliates has
been required to file any notification or other report with or provide
information to any product safety agency, commission, board or other
Governmental Authority of any jurisdiction concerning actual or potential
hazards with respect to any Product manufactured, distributed, sold or leased or
service rendered by any Acquired Company or any employee or agent thereof. Each
Product manufactured, sold or leased, or service rendered by the Acquired
Companies complies in all material respects with all product safety standards of
each applicable product safety agency, commission, board or other Governmental
Authority.
3.23 CUSTOMERS, SUPPLIERS AND LICENSORS. None of Parent, Seller, NMT-US,
any of the Acquired Companies or any of their respective Affiliates has received
written notice of or has knowledge that any customers or distributors of, or
suppliers or licensors to the Business or any Product has taken any action (or
intends or could reasonably be expected to take any action as a result of the
transactions contemplated hereby), which could materially adversely affect the
business relationship of any of the Acquired Companies with such customer,
distributor, supplier or licensor.
3.24 EXPORT. Except as set forth on Schedule 3.24, none of Parent,
Seller, NMT-US or any of the Acquired Companies has sold at any time since July
8, 1998, or to the knowledge of
36
Parent, Seller, NMT-US and the Acquired Companies, at any time prior thereto,
directly or indirectly through any Affiliate, or to its knowledge, through a
distributor or other Person, any Products in or to any of the following
countries (or to any Person acting on behalf of any of the following countries):
Burma (Myanmar), Cuba, Libya, Iran, Iraq, North Korea, Sudan, Syria, Yugoslavia,
or the Taliban in Afghanistan or UNITA in Angola.
3.25 [INTENTIONALLY OMITTED]
4. REPRESENTATIONS AND WARRANTIES OF BUYER AND ISC. Buyer and ISC, jointly
and severally, represent and warrant to Parent, Seller, NMT-US, as of the date
hereof and as of the Closing Date, as follows:
4.1 ORGANIZATION, POWER, EXECUTION.
(a) Each of Buyer and ISC is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite power and authority (corporate and other) to
own its properties, to carry on its business as now being conducted, to execute,
and deliver this Agreement and each of the Related Agreements to which it is a
party, and to carry out the transactions contemplated hereby and thereby.
(b) The execution and delivery of this Agreement and the Related
Agreements to which Buyer or ISC is a party, and the consummation of all
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Buyer and ISC. This Agreement and each
Related Agreement to which Buyer or ISC is a party have been duly executed and
delivered by Buyer and ISC, and constitute, and each other Related Agreement
required hereby to be executed and delivered by Buyer or ISC will, when
delivered, constitute, the valid and legally binding obligation of Buyer or ISC,
as applicable, enforceable in accordance with its terms, subject to bankruptcy
laws and general equitable principles.
4.2 NO VIOLATION. Except for those consents identified on Schedule
2.6(a), Schedule 2.6(b) or Schedule 4.2, none of the execution and delivery of
this Agreement and the Related Agreements, the consummation of the transactions
provided for herein and therein or contemplated hereby and thereby, and the
fulfillment by Buyer and ISC of the terms hereof or thereof, will (with or
without notice or passage of time or both) (a) conflict with or result in a
breach of any provision of the charter documents or by-laws of Buyer or ISC, (b)
result in a default, give rise to any right of termination, cancellation or
acceleration, or require any consent or approval (other than approval by the
Boards of Directors of Buyer and ISC, which approvals have been obtained, and
prior to the Closing Date will not be revoked, rescinded or restricted) under
any of the terms, conditions or provisions of any Contract or obligation to
which either of Buyer or ISC is a party or by which it or any of its assets may
be bound, or (c) violate any Law applicable to Buyer, ISC or any of their
respective assets.
4.3 BROKERS-BUYER AND ISC. Neither Buyer nor ISC has engaged any
person who could have any valid claim against any Parent, Seller or NMT-US for a
finder's fee, brokerage commission or other similar payment.
37
5. COVENANTS. Parent, Seller, NMT-US and each of the Acquired Companies,
jointly and severally, covenant and agree, on their respective behalf, as
follows:
5.1 CONDUCT OF THE BUSINESS. From the date hereof through the
Closing Date, except as otherwise permitted by this Agreement or unless the
prior written consent of Buyer is obtained (such consent not to be unreasonably
withheld or delayed), each Acquired Company and, with respect to the US-Based
Assets, NMT-US shall, and Parent and Seller shall cause each Acquired Company
and NMT-US to: (a) carry on the Business in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted and use its best
efforts to maintain the present business organization and goodwill, keep
available the services of present employees, and preserve relationships with
customers, suppliers, distributors and others having dealings with the Business,
(b) pay all bonuses and other compensation due to the employees of the Acquired
Companies for all periods prior to the Closing, and (c) refrain from taking any
action which would (i) adversely affect the ability of any party to obtain any
consents required for the transactions contemplated hereby, (ii) adversely
affect the ability of any party to perform its covenants and agreements under
this Agreement or any Related Agreement, or (iii) constitute a breach of and
representation or warranty contained in, or require additional disclosure under,
Section 3.6, clauses (a) through (x), inclusive. Notwithstanding any provision
herein to the contrary, Parent, Seller, NMT-US and the Acquired Companies agree
that Buyer shall be entitled to receive full information regarding any pending
material Contract negotiations and shall have the right to advise and approve
any and all such Contracts to be entered into by any of the Acquired Companies
that will continue in effect following the Closing, including, without
limitation, any agreements or arrangements with Dantec Measurement Technology
Ltd. or Gyrus Medical Ltd.
5.2 CERTAIN CHANGES. Between the date hereof and the Closing Date,
except as otherwise specifically permitted by this Agreement or unless the prior
written consent of Buyer is obtained (such consent not to be unreasonably
withheld or delayed), none of Parent, Seller, NMT-US or any Acquired Company
shall permit (a) the imposition or attachment of any Lien on any of the Assets,
other than inchoate liens incurred in the ordinary course of business which
would not have a Material Adverse Effect, individually or in the aggregate, (b)
the sale, assignment, transfer, abandonment or other disposition of any of the
Assets, or any interest therein, other than sales of Products in the ordinary
course of the Business, (c) the sale, merger or consolidation of any of the
Acquired Companies or any equity interests therein to or with any Person, (d)
the modification, amendment, alteration, waiver or termination of any of the
Contracts required to be disclosed on Schedule 3.7(m), Schedule 3.8(a), Schedule
3.8(b)(i), Schedule 3.11(c), Schedule 3.13(ii), Schedule 3.15(a)(ii) or Schedule
3.15(b)(i) hereto or of any right or interest of any Acquired Company or NMT-US
thereunder, (e) the declaration or payment of any dividends or other
distributions to an equityholder by any of the Acquired Companies (except for
the dividend (the "Pre-Closing Dividend") to be made by each of the Acquired
Companies in an amount equal to the lesser of (i) the maximum amount of a
dividend that may be legally declared and paid in accordance with the
requirements and limitations of the Companies Act, 1985, and (ii) the amount of
the Intergroup Receivable (after giving effect to the adjustments under Section
2.4 above) of such Acquired Company from Affiliates of Parent (other than
another Acquired Company)) or the purchase or redemption of any of their capital
shares; or
38
(f) any of the Acquired Companies to (i) take any action to amend its charter or
bylaws or other governing documents; (ii) issue any stock, bonds, shares of its
capital or other securities, or grant any option or issue any warrant to
purchase or subscribe for any of such securities or issue any securities
convertible into or exchangeable for such securities; (iii) incur any obligation
or Liability (absolute or contingent), except current Liabilities incurred and
obligations under Contracts entered into in the ordinary course of the Business
consistent with the Acquired Companies' past practice; (iv) cancel any debts or
claims, except in the ordinary course of the Business consistent with the
Acquired Companies' past practice; (v) make, accrue or become liable for any
bonus, profit sharing or incentive payment, except for accruals under existing
Employee Benefit Plans, if any, or increase the rate of compensation payable or
to become payable by it to any of its officers, directors or employees, other
than increases in the ordinary course of the Business consistent with past
practice; (vi) make any election or give any consent under the Code or the Tax
Laws of any jurisdiction or make any termination, revocation or cancellation of
any such election or any consent or compromise or settle any claim for past or
present Tax due; (vii) waive or relinquish any rights of material value; (viii)
make or permit any act or omission constituting a breach or default under any
contract, indenture or agreement by which it or its properties are bound; (ix)
enter into any Contracts other than those entered into in the ordinary course of
business calling for payments which in the aggregate do not exceed US$50,000 for
each such lease, contract, agreement or understanding; (x) engage any employee
for a salary in excess of US$75,000 per annum; (xi) alter the terms, status or
funding condition of any employee benefit plan; or (xii) commit or agree to do
any of the foregoing in the future.
5.3 ACCESS TO INFORMATION.
(a) From the date hereof until the Closing Date, upon reasonable
notice, Parent, Seller, NMT-US and each of the Acquired Companies shall, and
shall cause each of their respective officers, directors, employees, agents,
representatives, accountants and counsel to: (i) afford the officers, employees
and authorized agents, accountants, counsel and representatives of the Buyer
reasonable access, during normal business hours and without unreasonable
interference with business operations, to the offices, properties, plants, other
facilities, books and records of the Acquired Companies or NMT-US (with respect
to the US-Based Assets), or otherwise related to the Business, and to those
officers, directors, employees, agents, accountants, counsel, customers and
suppliers of the Acquired Companies who have any knowledge relating to the
Assets or the Business, (ii) furnish to the officers, employees and authorized
agents, accountants, counsel and representatives of the Buyer such additional
financial and operating data and other information regarding the Assets,
properties and goodwill of the Acquired Companies, NMT-US and the Business (or
legible copies thereof) as the Buyer may from time to time reasonably request,
and (iii) provide Buyer with (A) all forms, certificates and/or other
instruments required to pay the transfer and recording Taxes and charges arising
from the transactions contemplated by this Agreement and any Related Agreement,
together with evidence satisfactory to Buyer that such transfer Taxes and
charges have been paid by the Parent and/or Seller, (B) a clearance certificate
or similar document(s) which may be required by any Taxing authority to relieve
Buyer of any obligation to withhold any portion of the payments to Parent and/or
Seller pursuant to this Agreement or any Related Agreement and (C) all filings,
rulings, clearances, interest clearance requests, Group Relief requests,
communications with
39
Inland Revenue and other such documentation that affects the Tax or financial
position of the Acquired Companies.
(b) Parent, Seller, NMT-US and the Acquired Companies shall
promptly furnish to the Buyer all material financial reports and statements,
budgets and similar items related to the Acquired Companies and NMT-US (with
respect to the US-Based Assets) that are prepared in the ordinary course of
business and which relate to the Business or the Assets between the date hereof
and the Closing Date, including, without limitation, monthly reports of income,
sales, revenue and cash flow, balance sheets and such other reports as are
customarily distributed to senior management.
5.4 EMPLOYEES.
(a) Parent, Seller, NMT-US and the Acquired Companies agree to
encourage the employees of the Business (other than the Excluded Employees) to
continue their employment with the Acquired Companies following the Closing.
(b) Subject to the provisions of Section 2.2(c) and the Transition
Services Agreement, Buyer agrees that it shall cause Neurosciences to continue
to employ Steven Sinyard for a period of four (4) months following the Closing
Date (or such shorter period as may be requested by Parent or as may result from
the earlier termination of Steven Sinyard's employment for any reason other than
a termination by Neurosciences); provided, however, that in the event Steven
Sinyard is not employed by Neurosciences for such four (4) month period, Buyer
shall reimburse, or cause to be reimbursed, to Seller the unused portion of the
Continued Employee Payment (which reimbursement amount shall be subject to
offset for any amounts for which Buyer, ISC or any of the Acquired Companies has
made a claim for indemnification under Section 14 hereof).
5.5 EXCLUSIVITY. Prior to the Closing Date or the date on which
this Agreement is terminated pursuant to Section 11, neither Parent, Seller,
NMT-US the Acquired Companies nor any of their respective Affiliates,
equityholders, officers, directors, representatives or agents shall directly, or
indirectly through any other Person, encourage, solicit, initiate, engage or
participate in discussions or negotiations with any Person (other than Buyer)
concerning any merger, consolidation, sale, lease or licensing of assets, sale
of equity interests, or other business combination involving the Assets
(including, without limitation, the US-Based Assets), the Business, the Products
or any of the Acquired Companies, or (b) provide any non-public information
concerning the Assets (including, without limitation, the US-Based Assets), the
Business, the Products, or the operations, properties or assets of any Acquired
Company to any Person (other than Buyer and its representatives). Parent,
Seller, NMT-US and the Acquired Companies shall immediately notify the Buyer of,
and shall disclose to the Buyer all details of, any inquires, discussions or
negotiations of the nature described in the first sentence of this Section 5.5.
5.6 LIMITATIONS ON EMPLOYEE SOLICITATION AND COMPETITION. During
the period of two (2) years following the Closing Date, none of Parent, NMT-US,
Seller nor any of their Affiliates as of the Closing Date shall:
40
(a) offer employment to or employ any individual who is or was an
employee of the Acquired Companies (other than Excluded Employees) at the time
of the offer of employment or at any time within one (1) year prior to the offer
employment; or
(b) manufacture, market, distribute or sell any product which has
the same or substantially the same form, function or primary applications as any
of the Products.
The parties hereto agree that the duration and geographic scope of the
non-solicitation and non-competition provisions set forth in this Section 5.6
are reasonable. In the event that any court determines that the duration or the
geographic scope, or both, are unreasonable and that such provision is to that
extent unenforceable, the parties hereto agree that the provision shall remain
in full force and effect for the greatest time period and in the greatest area
that would not render it unenforceable. The parties intend that these
non-solicitation and non-competition provisions shall be deemed to be a series
of separate covenants, one for each and every county of each and every state of
the United States of America and each and every political subdivision of each
and every country outside the United States of America where this provision is
intended to be effective. Parent and Seller agree that damages are an inadequate
remedy for any breach of this provision and that Buyer, ISC and the Acquired
Companies shall, whether or not it is pursuing any potential remedies at law, be
entitled to equitable relief in the form of preliminary and permanent
injunctions without bond or other security upon any actual or threatened breach
of this non-solicitation and non-competition provision.
5.7 EMPLOYEE NOTIFICATION. Prior to the Closing Date, Parent,
Seller and the Acquired Companies shall (a) complete all consultations required
to be made with their respective worker's committees or works councils regarding
the transactions contemplated hereby and (b) provide all notices required to be
given to employees regarding the transactions contemplated hereby.
5.8 AGREEMENT ON TRANSFER OF INVENTORY, OTHER ASSETS, ETC.
(a) Within 60 days following the Closing Date, and subject to the
terms of the Transition Services Agreement, Parent shall, and shall cause its
Affiliates to, at no cost to Buyer or the Acquired Companies, transfer all of
the Products and other Assets principally related to the Business (other than
the US-Based Assets), including, without limitation, all inventory, consignment
inventory, parts, field samples, sales and marketing materials, customer lists,
customer leads, information, Confidential Information and data related to or
used in the Business, wherever located and in whatever form (including, without
limitation, in electronic, digital or magnetic format), to the Andover Facility;
provided however, this provision shall not apply to Products that constitute
demo equipment located at hospitals and TNS products which are currently leased
to third parties pursuant to leases which are not currently in default.
(b) Within 60 days following the Closing Date, and subject to the
terms of the Transition Services Agreement, NMT-US shall transfer all Products
located in the United States and other Assets related to the Business of the
type described in Section 5.8(a) to NMT-US's Facility located in Atlanta,
Georgia; provided, however, this provision shall not apply to Products that
constitute demo equipment located at hospitals.
41
(c) As soon as possible following the date hereof, but in no event
later than the five (5) days prior to Closing, Parent, Seller and NMT-US shall
cause to be prepared and delivered to Buyer a list indicating the name and
address of each Person to whom Products were sold by any of the Acquired
Companies or NMT-US since July 8, 1998.
(d) Parent, Seller, NMT-US and their respective Affiliates (i)
have not heretofore and shall not hereafter disclose, provide, allow access to
or otherwise make available to any Person other than Buyer, ISC and their
representatives, except pursuant to a valid and enforceable confidentiality
agreement, any Confidential Information, (ii) shall promptly inform Buyer of any
breach or threatened breach of any confidentiality agreement or other
non-disclosure obligation with respect to any Confidentiality Information (it
being agreed that in the event of any such breach or threatened breach Parent,
Seller, NMT-US and their respective Affiliates shall assign to Buyer, ISC and
the Acquired Companies (or in the event such assignment is not permitted, grant
or cause to be granted to Buyer, ISC or an Acquired Company a power of attorney
for the purpose of enforcing) all rights and remedies under such confidentiality
agreement or other non-disclosure obligation), and (iii) shall, on or prior to
the Closing (or, if earlier, the date of the disposition of the equity or assets
of any of Parent's subsidiaries or Affiliates (other than the Acquired
Companies) engaged in the neuroscience, cryogenic or similar business) ensure
that all such Confidential Information is returned to the Acquired Companies,
including, without limitation, any financial information or data on the Movex
system (except with respect to two Persons to whom Confidential Information has
been provided and whose counsel has retained one copy of such information under
seal pursuant to the terms of a valid and binding confidentiality agreement and
with whom neither Parent nor any of its Affiliates is currently in active
discussions).
5.9 ACCOUNTING REFERENCE DATE CHANGE; SCHEDULES; SALES AND
TRANSFER TAXES; FEES.
(a) Parent and Seller shall cause each of the Acquired Companies
to pass, effective immediately prior to the Closing Date, a resolution of its
Board of Directors changing the accounting reference date of such Acquired
Company to the Closing Date and shall give notice of such change to the
Registrar of Companies in accordance with Section 225 of the Companies Act,
1985.
(b) Schedule 5.9(b) hereto sets forth a reasonable estimate of the
following information with respect to each Acquired Company for the 1998 Tax
year: (i) the Tax basis of each Acquired Company's assets; (ii) the amount of
any net operating loss, net capital loss and unused credits of each Acquired
Company; and (iii) the amount of any deferred gain or loss allocable to each
Acquired Company arising out of any intercompany or intergroup transactions, and
group surrender and relief. For the 1999 Tax year and the Stub Tax Period,
Parent and Seller shall provide Buyer such information set forth in (i) through
(iii) of this Section 5.9(b) with respect to each Acquired Company no later than
30 days' prior to the time the relevant Returns and computations are required to
be filed for such year and such information shall be in form and substance
reasonably satisfactory to Buyer and the Acquired Companies. In the event that
the information contemplated by the immediately preceding sentence is not timely
provided or is not
42
reasonably satisfactory to Buyer and the Acquired Companies in the form
provided, Buyer and the Acquired Companies shall, at Parent's and Seller's sole
cost and expense, direct their accountants and financial personnel to prepare
such information and Parent and Seller shall reimburse Buyer and the Acquired
Companies for the full amount of such preparation costs and expenses immediately
upon receipt of written notice thereof (with reasonable supporting detail) from
Buyer or the Acquired Companies.
(c) Schedule 5.9(c) hereto sets forth a reasonable estimate of the
following information with respect to each Acquired Company for the 1998 Tax
year: (i) the amount of current and accumulated earnings and profits as of the
date hereof and the amount expected as of the Closing Date; (ii) the amount of
previously taxed income within the meaning of Section 959 of the Code as of the
date hereof and the amount expected as of the Closing Date (taking into account
the amount of dividend income to NMT Medical, Inc. or any of its subsidiaries
under Section 1248 of the Code from the transaction contemplated by this
Agreement); and (iii) the amount, if any, NMT Medical, Inc. or any of its
subsidiaries, or the Buyer would be required to include in gross income with
respect to each such Acquired Company pursuant to Section 951 of the Code if the
taxable year of such Acquired Company were deemed to end on the Closing Date.
For the 1999 Tax year and the Stub Tax Period, Parent and Seller shall provide
Buyer such information set forth in (i) through (iii) of this Section 5.9(c)
with respect to each Acquired Company no later than 30 days' prior to the time
the relevant Returns and computations are required to be filed for such year. In
the event that the information contemplated by the immediately preceding
sentence is not timely provided or is not reasonably satisfactory to Buyer and
the Acquired Companies in the form provided, Buyer and the Acquired Companies
shall, at Parent's and Seller's sole cost and expense, direct their accountants
and financial personnel to prepare such information and Parent and Seller shall
reimburse Buyer and the Acquired Companies for the full amount of such
preparation costs and expenses immediately upon receipt of written notice
thereof (with reasonable supporting detail) from Buyer or the Acquired
Companies.
(d) All transfer, documentary, sales, use, registration, stamp and
other such Taxes (including all applicable real estate transfer or gains Taxes)
and related fees (including any penalties, interest and additions to Tax)
incurred in connection with this Agreement and the transactions contemplated
hereby, including, without limitation, the transfer of the Shares and the
Assets, shall be borne equally by Parent, Seller and NMT-US, on the one hand,
and Buyer and ISC, on the other hand. Parent, Seller, NMT-US, Buyer and ISC
shall cooperate timely in making all filings, Tax Returns, reports and forms as
may be required to comply with the provisions of such Tax laws.
(e) Parent, Seller and NMT-US shall deliver to Buyer and ISC at
the Closing all necessary forms and certificates complying with applicable law,
in form and substance satisfactory to Buyer, duly executed and acknowledged,
certifying that the transactions contemplated hereby are exempt from withholding
under the Code (including Section 1445 thereunder) and any provision of foreign,
state or local law.
43
(f) Parent, Seller and NMT-US shall cause the provisions of any
Tax allocation or sharing agreement, whether or not written, or similar
arrangement that may have been entered into by Parent, Seller, NMT-US or any of
their respective Affiliates and the Acquired Companies to be terminated on or
before the Closing Date, and no payments which are owed by or to the Acquired
Companies pursuant thereto shall be made thereunder. After the Closing Date, no
party shall have any rights or obligations under any such Tax allocation or
sharing agreement or similar arrangement.
5.10 RIGHT TO "NEUROSCIENCES" NAME; USE OF "NMT" NAME. Parent,
Seller, NMT-US and each of their relevant Affiliates (other than the Acquired
Companies) confirm and, at Closing, shall reconfirm, to Buyer, ISC and the
Acquired Companies that they have no objection to Buyer, ISC or any of the
Acquired Companies or their respective Affiliates using the word "Neurosciences"
(and all derivatives thereof), whether alone or in combination with any other
text or graphics (collectively, the "Tradename"). In addition, Parent and Seller
acknowledge and agree that, while neither Buyer or ISC is acquiring ownership of
the acronym "NMT" (or any derivatives thereof), Buyer and the Acquired Companies
shall have, for a period of three (3) years from Closing, a limited license to
continue to use the acronym "NMT" to the extent that the same appears or is used
upon any promotional or marketing materials, brochures, information, labels,
packaging or similar materials related to any of the Products or used in
connection with the Business, in each case as exist on the Closing Date.
Following the Closing Date, Seller, directly or indirectly through an Affiliate,
shall have the reasonable right to monitor the quality of Products bearing the
acronym "NMT". The license to the acronym "NMT" granted under this Section 5.10
is subject to and conditioned on the maintenance of Product quality consistent
with the quality of the Products measured on the date hereof.
5.11 SECTION 338 ELECTION. Buyer shall not make an election under
Section 338(g) of the Code with respect to the purchase of the Shares (the
"Election") unless Parent provides written consent for such election which
consent shall not be unreasonably withheld, delayed or conditioned. If such
Parent consent is withheld, Parent shall provide Buyer a report prepared by a
nationally recognized accounting firm showing the present value (discounted at
8%) incremental tax cost to Parent of such Election. In the event that Buyer
indemnifies Parent for such incremental tax cost, Buyer shall be permitted to
make such Election.
5.12 CONTINUATION OF PARENT INSURANCE COVERAGE. On or prior to the
Closing Date, Parent shall obtain, and shall, for a period of not less than five
(5) years thereafter, maintain in full force and effect, continuation or "tail"
insurance policy coverage in respect of its product liability insurance with
respect to the Products, which coverage shall be in such amounts and of such
types consistent with Parent's product liability coverage in effect immediately
prior to Closing.
5.13 AGREEMENT REGARDING ACCOUNTS RECEIVABLE. In the event that
Parent or Seller make any indemnification payment to Buyer or any of the
Acquired Companies as a result of the failure of any accounts receivable of the
Acquired Companies at Closing to be collected within 90 days of the date of
their creation (or within such longer period set forth on Schedule 3.5(d)(ii)),
Buyer and the Acquired Companies shall assign to Parent or Parent's
44
designee all of their respective right, title and interest in and to such
accounts receivable for which Buyer or the Acquired Companies have actually
received indemnification payment.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND ISC. All of the obligations
of Buyer and ISC to consummate the transactions contemplated by this Agreement
and the Related Agreements shall be contingent upon and subject to the
satisfaction, on or before the Closing Date, of each and every one of the
following conditions, all or any of which may be waived, in whole or in part, by
Buyer for purposes of consummating such transactions, but without prejudice to
any other right or remedy which Buyer or ISC may have hereunder as a result of
any misrepresentation by, or breach of any covenant, representation or warranty
of, Seller, Parent, NMT-US or any Acquired Company contained in this Agreement
or any other certificate or instrument furnished by Parent, Seller or NMT-US
hereunder. To the extent that a representation is not qualified as to the best
knowledge of or as to a Material Adverse Effect then it must be true in all
material aspects.
6.1 REPRESENTATIONS AND WARRANTIES OF PARENT, SELLER, NMT-US. The
representation and warranties made by Parent, Seller and NMT-US to Buyer in
Section 3 of this Agreement shall be true and correct in all material respects
(except for such representations and warranties as are qualified by materiality
or made to the best knowledge, which shall be true and correct) on and as of the
Closing Date with the same force and effect as though such representations and
warranties had been made on and as of such time, except and solely to the extent
such representations and warranties speak as of a different date.
6.2 COVENANTS OF PARENT, SELLER, NMT-US AND ACQUIRED COMPANIES.
Parent, Seller, NMT-US and each of the Acquired Companies shall have performed
in all material respects all of the covenants, acts and undertakings to be
performed by them on or prior to the Closing Date.
6.3 NO INJUNCTION, ETC. No action, proceeding, investigation,
regulation or legislation shall have been instituted or threatened before any
Governmental Authority to enjoin, restrain, or prohibit the consummation of the
transactions contemplated hereby, or the ownership of any of the Shares or
Assets, or operation of the Business by Buyer, ISC or any of their respective
Affiliates following the Closing.
6.4 ABSENCE OF ADVERSE CHANGES. Since the Reference Date, there
shall have been no material adverse change in the value or condition of, or
title to the Shares, the Assets (including the US-Based Assets), the Business or
the Products.
6.5 FINANCIAL ACCOUNTING SYSTEM. The Acquired Companies shall have
placed a purchase order with respect to an updated Chameleon financial and
accounting software system that shall allow the Acquired Companies to operate
with respect to such matters on a stand-alone basis without any need for data or
software from any other Person, including, without limitation, any information
contained on the Movex system.
6.6 PRE-CLOSING DIVIDEND. Each of the Acquired Companies shall
have declared and paid the Pre-Closing Dividend.
45
6.7 OTHER DELIVERIES. Parent, Seller and NMT-US shall have
delivered each of the Closing deliveries specified in Section 12.2(a).
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PARENT, SELLER AND NMT-US. All of
the obligations of Seller, Parent and NMT-US to consummate the transactions
contemplated by this Agreement shall be contingent upon and subject to the
satisfaction, on or before the Closing Date, of each and every one of the
following conditions, all or any of which may be waived, in whole or in part, by
Parent for purposes of consummating such transactions, but without prejudice to
any other right or remedy which it may have hereunder as a result of any
misrepresentation by, or breach of any covenant, representation warranty of
Buyer or ISC contained in this Agreement, or any certificate or instrument
furnished by it hereunder. To the extent that a representation is not qualified
as to the best knowledge of or as to a Material Adverse Effect then it must be
true in all material aspects.
7.1 REPRESENTATIONS AND WARRANTIES OF BUYER AND ISC. The
representations and warranties made by Buyer and ISC to Parent, Seller and
NMT-US in Section 4 of this Agreement shall be true and correct in all material
respects (except for such representations and warranties as are qualified by
materiality or made to the best knowledge, which shall be true and correct) in
as of the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of such date, except and
solely to the extent such representations and warranties speak of a different
date.
7.2 COVENANTS OF BUYER AND ISC. Buyer and ISC shall have performed
in all material respects all of the covenants, acts and undertakings to be
performed by it on or prior to the Closing Date.
7.3 NO INJUNCTION, ETC. No action, proceeding, investigation,
regulation or legislation shall have been instituted or threatened before
Governmental Authority to enjoin, restrain, prohibit the consummation of the
transactions contemplated hereby.
7.4 OTHER DELIVERIES. Buyer and ISC shall have delivered each of
the Closing deliveries specified in Section 12.2(b).
8. PUBLICITY. So long as this Agreement is in effect, the Buyer and Parent shall
use all reasonable efforts to develop a joint communications plan and each party
shall use all reasonable efforts (a) to ensure that all press releases and other
public statements with respect to the transactions contemplated hereby shall be
consistent with such joint communications plan and (b) unless otherwise required
by applicable law or by obligations pursuant to any listing agreement with or
rules of any securities exchange, to consult with each other before issuing any
press release or otherwise making any public statement with respect to this
Agreement or the transactions contemplated hereby. Notwithstanding the
foregoing, the parties agree that the form of press releases attached hereto as
Exhibit F shall be issued following the date hereof.
9. CONFIDENTIALITY. Prior to the Closing, the parties hereto, and their
representatives and assignees shall hold confidential all Confidential
Information obtained from each of the other parties, and their respective
Affiliates in connection herewith and, if the Closing shall be
46
abandoned as provided herein, shall treat such information as confidential and,
where such information is in documentary form, return such information to
Parent; provided, however, Buyer's counsel may retain one copy of such
information for its files. The provisions of this Section 9 shall not apply to
information which is in the public domain due to no fault of Buyer or its
representatives. The parties hereto, on their own behalf and on behalf of their
respective representatives and assignees, agree that damages are an inadequate
remedy for breach of this provision and that the non-breaching party shall,
whether or not it is pursuing any potential remedies at law, be entitled to
equitable relief in the form of preliminary and permanent injunctions without
the posting of a bond or other security upon any actual or threatened breach of
this Section 9.
10. COOPERATION. From time to time after the Closing, Parent, Seller, NMT-US,
Buyer and ISC shall, and shall cause their respective Affiliates to, at the
reasonable request of Buyer or Parent, as the case may be, and without further
consideration, execute and deliver such further instruments of assignment,
transfer, license or assumption and take such further actions Buyer or Parent
may reasonably request in order more effectively to transfer, reduce to
possession, vest in, and record title to any of the Shares or the Business
(other than the US-Based Assets) more fully to Buyer, or the US-Based Assets
more fully to ISC or to implement the assumption and retention by Parent and
Seller of the Excluded Liabilities, including, without limitation, cooperation
before and after the Closing on matters relating to the retention of certain of
the Acquired Companies' personnel by Buyer, integration of sales force activity,
identification of the Assets, ordering and relocation of inventory, and
preservation of relationships with customers, suppliers and distributors. The
parties shall render, at no additional cost or charge to the other, such
cooperation to one another with respect to such matters and with respect to such
other matters concerning the transition of control of the Business as reason and
commercial prudence dictate should be addressed before and after the Closing;
provided, however, that reasonable out of pocket expenses incurred in compliance
with this Section 10 by one party at the request of another party shall be
promptly reimbursed by the requesting party to the party incurring such
expenses.
11. TERMINATION.
11.1 BOTH PARTIES. This Agreement may be terminated at any time
prior to the Closing: (a) by the mutual consent of Parent and Buyer; (b) by
Parent or Buyer if there shall be any action or proceeding (other than an action
or proceeding commenced or induced by a party hereto or by a party claiming a
successor interest to a party hereto seeking to terminate or restrain
performance under this Agreement) instituted by any Governmental Authority which
shall seek to restrain, assess Liability in respect of, or prohibit or
invalidate the transactions contemplated by this Agreement and which, in the
judgment of such party, made in good faith and based upon the advice of its
counsel, makes it inadvisable to proceed with the Closing; or (c) by Parent or
Buyer if, through no fault of the terminating party, the Closing shall not have
occurred by April 30, 2000.
11.2 BUYER. This Agreement may be terminated by Buyer: (a) at any
time prior to the Closing, if any of Parent, Seller, NMT-US or any Acquired
Company shall have failed to
47
comply in any material respect with any of its covenants or agreements contained
in this Agreement and such failure shall not have been rectified during the
period of twenty-eight (28) days after written notification thereof to Parent,
(b) at any time prior to the Closing, if there shall be any action or proceeding
(other than an action or proceeding commenced or induced by a party hereto or by
a party claiming a successor interest to a party hereto seeking to terminate or
restrain performance under this Agreement) instituted by or before any court or
other Governmental Authority which could reasonably be expected to materially
affect the right of Buyer to own, operate or control the Shares, the Assets
(other than the US-Based Assets) or the Business, or the right of ISC to own,
operate or control the US-Based Assets, subsequent to the Closing and which
makes it impractical to proceed with the Closing; or (c) if any of the
conditions precedent to the performance of its obligations at the Closing shall
not have been fulfilled on or prior to April 30, 2000.
11.3 PARENT. This Agreement may be terminated by Parent: (a) at any
time prior to the Closing, if either of Buyer or ISC shall have failed to comply
in any material respect with any of its covenants or agreements contained in
this Agreement and such failure shall not have been rectified during the period
of twenty-eight (28) days after written notification thereof to Buyer or (b) if
any of the conditions precedent to the performance of its obligations at the
Closing shall not have been fulfilled on or prior to April 30, 2000.
11.4 EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement by either Parent
or Buyer as provided in Sections 11.1, 11.2 or 11.3, this Agreement shall
forthwith become void and there shall be no Liability or obligation on the part
of Parent, Seller, NMT-US, any of the Acquired Companies, Buyer or ISC, or their
respective Affiliates, representatives, officers or directors, except (i) with
respect to Section 9, this Section 11.4, Section 16.2, Section 16.10 and Section
17, (ii) with respect to any Liabilities or damages incurred or suffered by a
party as a result of the willful breach by the other party of any of its
covenants or other agreements set forth in this Agreement.
(b) In the event that this Agreement is terminated by Buyer
pursuant to Section 11.2(a) or 11.2(c) (as a result of the failure of any
condition precedent specified in Section 6.1 or 6.2), then the Parent, Seller
and the Acquired Companies shall, jointly and severally, be obligated to pay to
Buyer a cash fee of US$750,000, which amount shall be payable by wire transfer
of immediately available funds no later than two (2) Business Days after such
termination.
(c) In the event that this Agreement is terminated by Parent
pursuant to Section 11.3(a) or 11.3(b) (as a result of the failure of any
condition precedent specified in Section 7.1 or 7.2, then Buyer shall pay to
Parent a cash fee of US$750,000, which amount shall be payable by wire transfer
of immediately available funds no later than two (2) Business Days after such
termination.
48
12. CLOSING.
12.1 TIME AND PLACE OF CLOSING. The meeting (the "Closing") of the
parties at which the sale, assignment, transfer, endorsement and delivery of the
Shares to Buyer, and the payment of the Purchase Price by Buyer to Seller, are
completed, shall be held at a location mutually acceptable to the parties at
10:00 a.m. (local time) on such date as may be mutually agreed to in writing by
the parties, but in no event later than April 30, 2000.
12.2 PARENT/SELLER/NMT-US CLOSING DELIVERIES
(a) At the Closing, Parent, Seller and NMT-US shall deliver
(and/or cause their Affiliates to deliver) to Buyer the following:
(i) transfers in common form relating to all Shares duly
executed in favor of the Buyer (or as it may direct);
(ii) share certificates relating to the Shares;
(iii) such bills of sale, assignments, assignments of leases,
deeds, licenses and other instruments of assignment, conveyance and transfer, in
form and substance reasonably satisfactory to Buyer, if any, as shall be
necessary to convey to and vest in Buyer all of Parent's and Seller's right,
title and interest in and to the Shares and to vest in the Acquired Companies,
the Assets (other than the US-Based Assets);
(iv) such bills of sale, assignments, assignments of leases,
deeds, licenses and other instruments of assignment, conveyance and transfer, in
form and substance reasonably satisfactory to ISC, as shall be necessary to
convey to and vest in ISC all of Parent's and NMT-US's right, title and interest
in and to the US-Based Assets and to vest in ISC the US-Based Assets;
(v) such instruments acknowledging Parent's and Seller's
assumption and retention of the Excluded Liabilities, in form and substance
reasonably satisfactory to Buyer, as shall be effective to assure Buyer that
Parent and Seller will perform, or caused to be performed, all obligations
related to the Excluded Liabilities following the Closing;
(vi) a certificate, signed by the President and the Chief
Financial Officer of Parent, certifying to the fulfillment of the conditions set
forth in Sections 6.1 and 6.2 hereof;
(vii) copies or satisfactory evidence of the consents, waivers
and approvals described in Section 2.6 and listed on Schedule 2.6(c), together
with such UCC-3 Termination Statements from Parent's secured creditors as Buyer
may reasonably request;
(viii) a legal opinion of UK counsel to each of Parent and
Seller in the form of Exhibit G attached hereto;
49
(ix) such other evidence of the performance of all covenants
and satisfaction of all conditions required of the Parent, Seller and NMT-US by
this Agreement, at or prior to the Closing, as Buyer or its counsel may
reasonably require;
(x) a copy of the resolutions of the Board of Directors of each
of Parent, Seller, NMT-US and the Acquired Companies authorizing and approving
the Agreement, the Related Agreements and all other transactions and agreements
contemplated hereby and thereby;
(xi) an undertaking by Parent, on behalf of itself and each of
its Affiliates, that it will not object to the use of the Tradename by Buyer and
its Affiliates following the Closing;
(xii) a Transition Services Agreement, in substantially the
form of Exhibit H hereto;
(xiii) a listing of all accounts receivables included in the
Assets as of a date not more than two (2) business days prior to the Closing
Date, duly certified by the Chief Financial Officer of Parent as true and
correct; and
(xiv) resignations in the agreed terms duly executed as deeds
of all the directors (other than Patrick Sparkes) and the secretary of any
Acquired Company from their offices as director or secretary of and their
employment with any Acquired Company containing a confirmation that they have no
claims (whether statutory, contractual or otherwise) against any Acquired
Company for compensation for loss of office or termination of employment or for
unpaid remuneration or otherwise together with delivery to the Buyer of all
property of any Acquired Company in their possession or under their control;
(xv) the written resignations of the auditors or each Acquired
Company containing an acknowledgement that they have no claim against any
Acquired Company for compensation for loss of office, professional fees or
otherwise and a statement under section 394(i) of the Companies Act 1985;
(xvi) the common seals, certificates of incorporation and
statutory books, share certificate books and cheque books of each Acquired
Company;
(xvii) all land certificates, charge certificates, leases title
deeds and other documents relating to the Real Property (except to the extent
that the same are in possession of mortgagees pursuant to mortgages disclosed in
Schedule 3.15(b)(i);
(xviii) to the extent not in the possession of any Acquired
Company, all books of account or references as to customers and/or suppliers and
other records and all insurance policies in any way relating to or concerning
the businesses of any Acquired Company;
(xix) to the extent not in the possession of any Acquired
Company, all licenses, consents, Permits and authorizations obtained by or
issued to any Acquired Company or
50
any other person in connection with the business carried on by any of them and
such contracts, deeds or other documents (including assignments of any such
licenses) as shall have been acquired by the Buyer prior to the date hereof;
(xx) duly executed transfers of each share (other than the
Shares) in the Acquired Companies not registered in the name of any Acquired
Company in favor of the Buyer (or as it may direct);
(xxi) share certificates relating to all of the issued shares
(not including the Shares) in the capital of each of the Acquired Companies;
(xxii) a release in the agreed terms duly executed as a deed in
a form such satisfactory to the Buyer releasing each Acquired Company and their
respective officers and employees from any liability whatsoever (actual or
contingent) which may be owing to the Parent or Seller by any Acquired Company
except those arising in the ordinary course of trade;
(xxiii) a funds flow memo prepared by Parent's accountants
setting forth the transactions among and between the parties hereto in
connection with the transactions contemplated hereby;
(xxiv) such other certificates, instruments and other documents
reasonably requested by Buyer to effect the transactions contemplated hereby,
all of which shall be reasonably satisfactory in form and substance to Buyer and
its counsel.
(b) PARENT/SELLER CLOSING RESOLUTIONS. At or prior to Closing (and
prior to the taking effect of the resignations of the directors referred to in
Section 12.2(a)(xiv) above), Parent and Seller shall procure the passing of
board resolutions of each Acquired Company:
(i) sanctioning for registration (subject to where necessary to
due stamping) the transfers in respect of the Shares and any shares to which
Section 12.2(a)(xx) refers;
(ii) authorizing the delivery to the Buyer of share
certificates in respect of the Shares and any shares to which Section
12.2(a)(xx) refers;
(iii) appointing Stuart M. Essig and John B. Henneman, III to
be the directors and John B. Henneman, III to be the secretary of each Acquired
Company; and
(iv) revoking all mandates to bankers and giving authority in
favor of the directors appointed under Section 12.2(b)(iii) above or such other
persons as the Buyer may nominate to operate the bank accounts thereof.
(c) Parent and Seller shall procure that prior to or at Closing:
(i) there are repaid in full all sums (if any) owing to any
Acquired Company by the Seller or the Parent or any member of their group (other
than any of the
51
Acquired Companies) or by the directors of any Acquired Company or any of their
connected persons except those arising in the ordinary course of trade and
whether or not such sums are due for repayment; and
(ii) each Acquired Company is released from any guarantee,
indemnity, bond, letter of comfort or Lien or other similar obligation given or
incurred by it which relates in whole or in part to debts or other liabilities
or obligations whether actual or contingent, of any person other than an
Acquired Company;
and prior to such repayment or release the Parent and Seller
undertake to Buyer (on behalf of themselves and as trustee on behalf of each
Acquired Company) to keep each Acquired Company fully indemnified against any
failure to make any such repayment or any liability arising under any such
guarantee, indemnity, bond, letter of comfort or Lien.
(d) BUYER/ISC CLOSING DELIVERIES. At the Closing, Buyer and ISC
shall deliver to Parent the following:
(i) evidence (which shall consist of a United States federal
reference number) of the wire transfer of the Share Payment and US-Based Assets
Payment to the appropriate parties;
(ii) a certificate, signed by a duly authorized officer of
Buyer, certifying to the fulfillment of the conditions set forth in Sections 7.1
and 7.2 hereof;
(iii) satisfactory evidence of the approvals, consents and
notifications listed on Schedule 4.2;
(iv) such other evidence of the performance of all the
covenants and satisfaction of all of the conditions required of Buyer and ISC by
this Agreement at or before the Closing as the Parent or its counsel may
reasonably require; and
(v) a copy of the resolutions of the Boards of Directors of the
Buyer and ISC authorizing and approving the Agreement and all other transactions
and agreements contemplated hereby.
13. [INTENTIONALLY OMITTED]
14. INDEMNIFICATION.
14.1 INDEMNIFICATION BY PARENT AND SELLER. Parent, NMT-US and Seller
shall, jointly and severally, indemnify and hold Buyer, ISC and their respective
Affiliates (including, without limitation, the Acquired Companies following the
Closing), and their respective directors, officers, employees and
representatives (collectively, "Buyer Indemnified Parties") harmless from and
against all damages, losses, costs, claims, expenses, interest, penalties and
Liabilities including reasonable attorneys' and accountants' fees and costs of
52
investigation (collectively, "Damages") suffered or incurred, directly or
indirectly, by any Buyer Indemnified Party arising from or related to:
(a) subject to the limitations set forth in Section 14.4, the
breach or falsity of any representation or warranty of Parent, Seller, NMT-US or
any Acquired Company contained herein;
(b) any of the matters disclosed or required to be disclosed on
Schedule 3.7(a), Schedule 3.7(b), Schedule 3.8(b)(ii), Schedule 3.8(c), Schedule
3.9(c), Schedule 3.13(ii), Schedule 3.17, or Schedule 3.20;
(c) the breach of any covenant by Parent, Seller, NMT-US or, prior
to the Closing, any Acquired Company, contained herein; or
(d) any of the Excluded Liabilities.
14.2 INDEMNIFICATION BY BUYER AND ISC. Buyer and ISC shall, jointly
and severally, indemnify and hold the Parent, Seller, NMT-US, and their
respective Affiliates, and their respective directors, officers, employees and
representatives (collectively, "Seller Indemnified Parties") harmless from and
against all Damages suffered or incurred, directly or indirectly, by any Seller
Indemnified Party arising from or related to:
(a) subject to the limitations set forth in Section 14.4, the
breach or falsity of any representation or warranty of Buyer or ISC contained
herein;
(b) the breach of any covenant by Buyer or ISC contained herein;
or
(c) any of the Acquired Liabilities following the Closing (except
those relating to a breach of a covenant, representation or warranty by any of
Parent, Seller, NMT-US or any of the Acquired Companies).
14.3 TAX INDEMNIFICATION AND OTHER TAX MATTERS
(a) Notwithstanding anything to the contrary in the Agreement,
Parent, Seller and NMT-US shall, jointly and severally, indemnify, save and hold
harmless the Buyer Indemnified Parties from and against any and all Damages
incurred in connection with, arising out of, resulting from or relating to (i)
any fact inconsistent with, or any untruth, inaccuracy or breach of, any
representation, warranty or covenant of Parent, Seller, NMT-US or any of the
Acquired Companies or the Seller contained in Sections 2.2(c) (with respect to
the 1998/1999 Tax Make-Whole Payment), 3.7, 5.2(f)(vi), 5.9 or 5.11, and (ii) to
the extent not covered in foregoing clause (i), paid under Section 2.2(c) or
reflected in the accrual for Taxes (other than any accrual for deferred Taxes
established to reflect timing differences between book and Tax income) on the
Closing Date Balance Sheet, any and all Taxes attributable to the Acquired
Companies and the US-Based Assets (A) with respect to all periods ending on or
prior to the Closing Date, and (B) with respect to the Stub Tax Period. For the
purposes of this Agreement, the period from January 1, 2000 through and
including the Closing Date is referred to as the
53
"Pre-Closing Period" and any period thereafter is referred to herein as the
"Post-Closing Period."
(b) For purposes of this Section 14.3, Tax or Taxes shall include
the amount of Taxes which would have been paid but for the application of any
credit or net operating or capital loss deduction attributable to periods or
portions of a period beginning after the Closing Date.
(c) For the avoidance of doubt, the parties agree that the
provisions of this Section 14.3 shall be interpreted and applied in such a
manner such that none of Buyer, ISC or any of the Acquired Companies shall be
entitled to double or multiple recovery with respect to any Damages (i.e., to
the extent that Buyer is paid out in full under Section 2.2(c) for an
under-accrual of Taxes for the 1998 or 1999 Tax year, none of Buyer, ISC or any
of the Acquired Companies shall be entitled to indemnification under this
Section 14.3 on the basis of said under-accrual).
(d) Buyer or its duly authorized agents shall cause the Acquired
Companies to prepare and file all Returns in respect of Taxes for periods ending
after the Closing Date. Seller or its duly authorized agents shall prepare and
file all Returns in respect of Taxes for periods ending prior to or on the
Closing Date, including, without limitation, the Stub Tax Period. Seller or its
duly authorized agents shall conduct the preparation, submission and agreement
of all United Kingdom Tax Returns of the Acquired Companies (and correspondence
and other documentation relating thereto) for all accounting periods ending on
or before the Closing Date, subject to all such Returns (including workpapers)
being submitted in draft form to Buyer or its duly authorized agents for comment
and approval within a reasonable time before they are due to be sent to Inland
Revenue. If Buyer or its agents have any comments, Seller and its agents shall
not unreasonably refuse to adopt such comments. Seller and Buyer shall
respectively afford (or procure to be afforded) to the other or their agents
such information and assistance as may reasonably be required to prepare, submit
and agree all relevant Tax Returns. Buyer shall provide that the Acquired
Companies shall cause the Returns (and correspondence and other documentation
relating thereto) referred to in this Section to be authorized, signed and
returned to Seller for submission to the appropriate authority without undue or
unreasonable delay. Nothing herein shall oblige Buyer to submit any Return or
other document unless it is satisfied that it is accurate and complete in all
material respects. Promptly after the Acquired Companies or Buyer acquires
actual knowledge of an amount of Taxes due and unpaid with respect to any period
ending on or before the Closing Date, the Acquired Companies or Buyer, as the
case may be, shall give notice thereof to Parent. Parent shall pay the amount of
such Taxes Buyer (or Buyer's designee), within 30 days after the receipt of such
notice.
(e) Parent and Buyer agree to give prompt notice to each other of
any proposed adjustment to Taxes for periods ending on or prior to the Closing
Date. Seller shall have the right to conduct any audit or proceeding with
respect to Taxes involving the Acquired Companies for such period(s) provided
that: (i) Buyer is kept fully informed of all relevant material matters relating
to the Tax affairs of the Acquired Companies; (ii) Buyer receives copies of all
relevant material written correspondence from any Tax authority; (iii) no
material written
54
communication is sent to any Tax authority without first submitting in draft
form to Buyer allowing reasonable time for comment (such comments not to be
unreasonably withheld or delayed); (iv) any reasonable comments made by Buyer
are incorporated into the relevant document; and (v) nothing shall oblige Buyer
to submit any Return or other document unless it is satisfied that it is
accurate and complete in all material respects. Buyer or the Acquired Companies
shall have the right at their option and expense to participate in any audit or
proceeding with respect to Taxes involving the Acquired Companies for such
period(s).
14.4 LIMITATIONS ON INDEMNIFICATION.
(a) Survival. All representations, warranties and covenants
contained herein and each of the Related Agreements shall survive the execution
and Closing of this Agreement; provided, however, that any claim for
indemnification under Sections 14.1, 14.2 or 14.3 for the breach or falsity of
any representation or warranty (but not covenants) must be made by giving
written notice of such claim to the party from whom indemnity is sought not
later than eighteen (18) months after the Closing Date; except, that:
(i) the survival period for the representation or warranties
under Section 3.11, 3.12 and 3.20 shall be five (5) years after the Closing
Date;
(ii) the survival period for the representation or warranties
under Sections 3.3, 3.15(a)(i) and 3.15(b)(ii), shall be seven (7) years from
the Closing Date; and
(iii) the survival period for the representation or warranties
under Section 3.7 shall be until thirty (30) days after the applicable statute
of limitations has run.
(b) Threshold. There shall be no indemnification for any such
claim for breach of representation or warranty under Sections 14.1 or 14.2
unless the amount of any such single claim exceeds US$50,000 (excluding costs
and interest claimed) and until the aggregate amount of all claims which each
exceed US$50,000 (excluding costs and interest claimed) made by the party
seeking indemnification exceeds an amount equal to US$200,000, after which time
such party shall be fully indemnified for all such claims (to the extent
provided in Sections 14.1 or 14.2, as the case may be) from the first dollar of
each such claim (including the amounts used to satisfy the US$200,000 threshold
set forth in this Section 14.4); provided, however, that the foregoing
limitations shall not apply to any claims for indemnification under Sections
14.1(b), 14.1(d), 14.2(c) or 14.3; provided, further, that for purposes of
further clarification, the parties agree that the foregoing limitations shall
not apply with respect to the breach of any covenant of any party to make
payment to any other party hereunder, including, without limitation, any breach
of the payment obligations contained in Section 2, Section 5, Section 11 or
Section 14 of this Agreement.
(c) Maximum Liability. The cumulative maximum liability (including
costs and interest claimed) of Parent, Seller and NMT-US for indemnification
pursuant to Section 14.1(a) and Section 14.1(c) shall not exceed the amount of
the Purchase Price.
55
14.5 CLAIMS FOR INDEMNIFICATION. Whenever any claim shall arise for
indemnification hereunder, the party seeking indemnification (the "Indemnified
Party") shall promptly notify the party from whom indemnification is sought (the
"Indemnifying Party") of the claim and, when known, the facts constituting the
basis for such claim. For purposes of this Section 14.5, notice shall be deemed
to be promptly made if it is given to the Indemnifying Party within ten (10)
days of receipt by the Indemnified Party of any written notice of any third
party claim. In the event of any claim for indemnification under this Agreement
resulting from or in connection with any claim or legal proceedings by a third
party, the notice to the Indemnifying Party shall specify, if known, the amount
or an estimate of the amount of the Liability arising from such claim or legal
proceeding. Except as provided in Section 14.6 of this Agreement, the
Indemnified Party shall not settle or compromise any claim by a third party for
which it may claim indemnification under this Agreement without the prior
written consent of the Indemnifying Party.
14.6 DEFENSE BY INDEMNIFYING PARTY. In connection with any claim by
an Indemnified Party resulting from or arising out of any claim or legal
proceeding by a person who is not a party to this Agreement, the Indemnifying
Party at its sole cost and expense may, upon written notice to the Indemnified
Party, assume the defense of any such claim or legal proceeding if it
acknowledges to the Indemnified Party in writing its obligation to indemnify the
Indemnified Party with respect to all elements of such claim. The Indemnified
Party shall be entitled to participate in (but not control) the defense of any
such action, with its own counsel and at its own expense. If the Indemnifying
Party does not assume the defense of any such claim or litigation resulting
therefrom within thirty (30) days after the date of such claim is made, (a) the
Indemnified Party may defend against such claim or litigation, in such manner as
it may deem appropriate, including, but not limited to, settling such claim or
litigation, after giving notice of the same to the Indemnifying Party, on such
terms as the Indemnified Party may deem appropriate, and (b) the Indemnifying
Party shall be entitled to participate in (but not control) the defense of such
action, with its own counsel and at its own expense.
14.7 PAYMENT OF INDEMNIFICATION OBLIGATION. All indemnification
hereunder shall be effected by payment of cash or delivery of a cashier's or
certified check in the amount of the indemnification Liability. Any
indemnification payment by a Seller to Buyer hereunder shall be deemed to be a
reduction in the Purchase Price.
14.8 EXCLUSIVE REMEDY. The rights of indemnification set forth in
this Section 14 shall be, from and after the Closing Date, the exclusive remedy
of each party for the breach by the other party of any representation, warranty,
covenant or other term in this Agreement, except for claims based upon fraud and
claims for specific performance or other equitable relief
14.9 ELEKTA AGREEMENT. If Buyer or, following the Closing, any of
the Acquired Companies, suffers Damages as a result of a condition or event that
does not constitute a breach by Parent, Seller or NMT-US under this Agreement
but such condition or event constitutes a breach by Elekta under the Elekta
Agreement and would permit Parent, Seller or NMT-US to seek indemnification from
Elekta pursuant to the terms of the Elekta Agreement, Parent, Seller and NMT-US
agree to seek such indemnification and to deliver to Buyer or such
56
Acquired Company, as the case may be, all amounts so recovered. Buyer agrees to
reimburse Parent, Seller and NMT-US for all reasonable expenses incurred in
connection with seeking such indemnification to the extent not required to be
paid by Elekta under the Elekta Agreement.
15. ADDITIONAL ACTIONS.
15.1 SERVICES. The parties recognize that in order for Buyer to
assume control of the Acquired Companies and the Business and for ISC to assume
control of the US-Based Assets in an orderly manner it will be necessary for
Parent, Seller, NMT-US and their respective Affiliates (other than the Acquired
Companies) to assist Buyer, ISC and their Affiliates in the performance of
certain business support functions after the Closing in view of the fact that
the Acquired Companies and the Business have not been a freestanding enterprise.
Understanding that Buyer and ISC must diligently develop the capacity to support
the Acquired Companies and the Business as soon as practicable after the Closing
Date, the parties shall cooperate during the period from the date hereof to the
Closing Date to identify those areas which will require support from Parent,
Seller, NMT-US and their respective Affiliates (other than the Acquired
Companies) following the Closing and to enter into one or more service
agreements providing for the rendering of such support by Parent, Seller, NMT-US
and their Affiliates to Buyer and ISC such services to be performed at a
reasonable level and at no charge to the Buyer and ISC (including without
limitation, the Transaction Services Agreement referenced in Section
12.2(a)(ix)).
15.2 ADDITIONAL AGREEMENTS. In addition, the parties agree that:
(a) Confidential Information.
(i) From and after the Closing Date, the Parent, Seller, NMT-US
shall hold in confidence, and use their best efforts to have all of their
Affiliates, assignees and successors, and their respective officers, directors
and personnel, to hold in confidence, all Confidential Information and shall not
disclose, publish or make use of the same without the consent of the Buyer,
except to the extent that such Confidential Information shall have become public
knowledge other than by breach of this Agreement by any of such bound parties or
to the extent required by law.
(ii) Each of Parent, Seller and NMT-US agrees that damages are
an inadequate remedy for any breach of this provision and that Buyer and ISC
shall, whether or not it is pursuing any potential remedies at law, be entitled
to equitable relief in the form of preliminary and permanent injunctions without
posting of bond or other security upon any actual or threatened breach of this
non-solicitation and non-competition provision.
(b) Sharing of Data. Parent and Seller shall have the right for a
period of three (3) years following the Closing Date to have reasonable access
to such books, records and accounts, including financial and Tax information,
correspondence, production records, employment records and other similar
information as are transferred to Buyer pursuant to the terms of this Agreement
for the limited purposes of concluding its involvement in the Business prior to
the Closing Date and for complying with its obligations under applicable
securities, Tax,
57
environmental, employment or other Laws. Buyer shall have the right for a period
of three (3) years following the Closing Date to have reasonable access to those
books, records and accounts, including financial and Tax information,
correspondence, production records, employment records and other records which
are retained by Parent, Seller or any of their respective Affiliates, assignees
or successors pursuant to the terms of this Agreement to the extent that any of
the foregoing relates to the Business transferred to, or Liabilities assumed by,
Buyer hereunder or is otherwise needed by Buyer in order to comply with its
obligations under applicable securities, Tax, environmental, employment or other
laws and regulations.
(c) Cooperation in Litigation. Each party hereto will fully
cooperate with the other in the defense or prosecution of any litigation or
proceeding already instituted or which may be instituted hereafter against or by
such party relating to the Assets or arising out of the conduct of the Business
prior to or after the Closing Date (other than litigation arising out the
transactions contemplated by this Agreement or any Related Agreement). The party
requesting such cooperation shall pay the out-of-pocket expenses (including
legal fees and disbursements) of the party providing such cooperation and of its
officers, directors, employees and agents reasonably incurred in connection with
providing such cooperation, but shall not be responsible to reimburse the party
providing such cooperation for such party's time spent in such cooperation or
the salaries or costs of fringe benefits or similar expenses paid by the party
providing such cooperation to its officers, directors, employees and agents
while assisting in the defense or prosecution of any such litigation or
proceeding.
16. GENERAL.
16.1 [INTENTIONALLY OMITTED]
16.2 PAYMENT OF EXPENSES. Except as specifically set forth
elsewhere in this Agreement, expenses related to this Agreement and attendant
transactions, including the fees of brokers, counsel and accountants, shall be
borne by the party incurring such expenses. No transaction expenses have been or
shall be borne by any of the Acquired Companies.
16.3 MODIFICATIONS; WAIVERS. This Agreement may be modified and
rights hereunder may be waived only by a writing executed and delivered on
behalf of the party against whom such modification or waiver is asserted. In no
case shall any such modification or waiver be effective without the written
consent of Buyer.
16.4 ASSIGNABILITY. This Agreement and the rights and obligations
hereunder shall be binding upon and inure to the benefit of the parties hereto
and their respective successors (including successors by operation of law),
assigns and legal representatives. This Agreement shall not be assignable by any
party hereto, except that each of Parent, Seller, NMT-US, Buyer and ISC may
assign their respective rights and obligations hereunder to one or more of its
Affiliates, provided that, the assignor shall guarantee the performance of such
assignees under this Agreement and further provided that if the Affiliate of
Buyer or ISC to which the Buyer or ISC assigns its rights and obligations under
this Agreement ceases to be an Affiliate of Buyer or ISC, Buyer or ISC, as the
case may be shall cause such former Affiliate to assign its rights and
obligations under this Agreement to Buyer or one of their Affiliates.
58
16.5 NO OTHER REPRESENTATIONS. Each of the parties acknowledges
that in entering into this Agreement it has not relied on any representation,
warranty, agreement or statement not set out in this Agreement or in any of the
Related Agreements (or in any document, instrument or certificate contemplated
hereby or thereby), whether express or implied, and that (in the absence of
fraud) it will not have any right or remedy arising out of any such
representation, warranty, agreement or statement.
16.6 NOTICES. Any communication to be given hereunder by any
parties to the other party shall be in writing and delivered by messenger, sent
by overnight courier, or transmitted by facsimile or electronic mail (with
confirmation of receipt by the intended party), to the address or designation of
such party set forth below or as changed by such party by notice given
hereunder. A communication transmitted by facsimile shall be deemed effective
when transmitted; a communication sent by overnight courier shall be deemed
effective two business days after being sent; and a communication delivered by
messenger shall be deemed effective when delivered.
if to Parent,
Seller, NMT-US: c/o NMT Medical, Inc.
27 Wormwood Street
Boston, Massachusetts 02110-1625
Attention: Thomas M. Tully, President
Facsimile: (617) 737-0924
E-mail: tmt@nmtmedical.com
with a copy to: Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Attention: Steven D. Singer, Esq.
Facsimile: (617) 526-5000
E-mail: Steven.Singer@haledorr.com
to Buyer or ISC: c/o Integra Life Sciences Corporation
311 Enterprise Drive
Plainsboro, New Jersey 08536
Attention: Stuart M. Essig and
John B. Henneman, III
Facsimile: (609) 275-1082
E-mail: Stuart_Essig@integra-ls.com
Jack_Henneman@integra-ls.com
with a copy to: Latham & Watkins
Sears Tower, Suite 5800
Chicago, Illinois 60606
Attention: Michael D. Levin, Esq.
Facsimile: (312) 993-9767
E-mail: Michael.Levin@lw.com
59
The foregoing is not intended to be exclusive; any written communication
actually received shall be effective when received.
16.7 CAPTIONS. The section captions used in this Agreement are for
reference and cross-reference purposes only and shall not otherwise affect the
meaning or interpretation of this Agreement.
16.8 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original and all of which shall be deemed
to constitute the same Agreement.
16.9 KNOWLEDGE. Any statement in this Agreement qualified by the
expression "so far as Parent, Seller, NMT-US and/or any of the Acquired
Companies are aware" or "to the knowledge of any of Parent, Seller, NMT-US or
the Acquired Companies" or "to the knowledge of Parent, Seller or NMT-US" or any
similar expressions shall be deemed to include the knowledge of the directors of
each of Parent, Seller, NMT-US and the Acquired Companies and, additionally,
each of those individuals identified in Schedule 16.9 attached hereto.
16.10 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Delaware, without regard
to the conflict of laws principles thereof.
17. ENTIRE AGREEMENT. This Agreement (including the Exhibits, Schedules and
attachments hereto) constitutes the entire agreement between the parties hereto
and supersedes and cancels any prior agreements, representations, warranties, or
communications, whether oral or written, between the parties hereto relating to
the transactions contemplated hereby or the subject matter herein. Neither this
Agreement nor any provision hereof may be changed, waived, discharged or
terminated orally, but only by an agreement in writing signed by the party
against whom or which the enforcement of such change, waiver, discharge or
termination is sought.
[SIGNATURE PAGES FOLLOW]
60
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement
to be duly executed in its corporate name by a duly authorized officer thereof
as of the date first above written.
PARENT:
------
NMT MEDICAL, INC.
By:
-----------------------------
Name:
Title:
SELLER:
------
NMT NEUROSCIENCES HOLDINGS (UK), LTD.
By:
-----------------------------
Name:
Title:
NMT-US:
------
NMT NEUROSCIENCES (US), INC.
By:
-----------------------------
Name:
Title:
ACQUIRED COMPANIES:
------------------
NMT NEUROSCIENCES (UK), LTD.
By:
-----------------------------
Name:
Title:
1
SPEMBLY MEDICAL LTD.
By:
-----------------------------
Name:
Title:
SPEMBLY CRYOSURGERY LTD.
By:
-----------------------------
Name:
Title:
SWEDEMED AB
By:
-----------------------------
Name:
Title:
BUYER:
-----
INTEGRA NEUROSCIENCES HOLDINGS (UK) LTD.
By:
-----------------------------
Name:
Title:
ISC:
INTEGRA SELECTOR CORPORATION
By:
-----------------------------
Name:
Title:
2