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EXHIBIT 2
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is entered into as of April 18,
1997 between Steri-Oss Inc., a Delaware corporation ("Buyer), and Interpore
Dental, Inc., a California corporation ("Seller").
R E C I T A L S :
A. Seller owns all the assets used in connection with its
dental business;
B. Seller desires to sell, and Buyer desires to purchase,
substantially all of such assets on the terms and conditions set forth in this
Agreement; and
C. Buyer desires to assume and Seller desires to transfer
certain liabilities of Seller on the terms and conditions set forth in this
Agreement.
In consideration of the mutual promises contained herein and
for other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, and intending to be legally bound, the parties agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Construction.
For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires,
(a) the terms defined in this Article I have the
meanings assigned to them in this Article I and include the plural as
well as the singular,
(b) all accounting terms not otherwise defined herein
have the meanings assigned under GAAP,
(c) all references in this Agreement to designated
"Articles," "Sections" and other subdivisions are to the designated
Articles, Sections and other subdivisions of the body of this
Agreement,
(d) pronouns of either gender or neuter shall
include, as appropriate, the other pronoun forms, and
(e) the words "herein," "hereof" and "hereunder" and
other words of similar
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import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
1.2 Definitions
As used in this Agreement and the Exhibits and Schedules
delivered pursuant to this Agreement, the following definitions shall apply:
"Accounts Receivable" has the meaning specified in Section
2.1(a).
"Action" means any action, complaint, investigation, suit or
other proceeding, whether civil or criminal, in law or in equity, or before any
arbitrator or Governmental Entity.
"Affiliate" means a Person that directly or indirectly,
through one or more intermediaries, controls, or is controlled by, or is under
common control with, a specified Person.
"Agreement" means this Agreement by and among Buyer and Seller
as amended or supplemented together with all Exhibits and Schedules attached or
incorporated herein by reference.
"Approval" means any approval, authorization, consent,
qualification or registration, or any waiver of the foregoing, or any required
to be obtained from, or any notice, statement or other communication required to
be filed with or delivered to any Governmental Entity or any other Person.
"Associate" of a Person means
(a) a corporation or organization (other than a party to this
Agreement) of which such person is a director, an officer or partner or is,
directly or indirectly, the beneficial owner of 10% or more of any class of
equity securities;
(b) any trust or other estate in which such person has a
substantial beneficial interest or as to which such person serves as trustee or
representative ; and
(c) any relative or spouse of such person or any relative of
such spouse.
"Assumed Liabilities" has the meaning specified in Section
2.2(b).
"Business" means the dental implant business of Seller, and
all incidents of such business, but excluding the business associated with bone
augmentation material, including the IP 200 Product Line.
"Closing" means the consummation of the transaction
contemplated by this
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Agreement.
"Closing Date" means the date of the Closing, which shall take
place on the date of this Agreement.
"Contract" means any agreement, arrangement, commitment,
franchise, indemnity, instrument, lease, license or understanding, whether or
not in writing, including expired or terminated contracts and agreements,
relating primarily to the Business.
"Disclosure Schedule" means the Disclosure Schedule to be
delivered to Buyer by Seller on the Closing Date.
"Encumbrance" means any claim, charge, lease, covenant,
encumbrance, security interest, lien, option, pledge, rights of others, or
restriction, whether imposed by agreement, understanding, law, equity or
otherwise.
"Equity Securities" means any capital stock or other equity
interest or any securities convertible into or exchangeable for capital stock or
any other rights, warrants or options to acquire any of the foregoing
securities.
"Excluded Assets" has the meaning specified in Section 2.1(a).
"Excluded Liabilities" has the meaning specified in Section
2.2(a).
"GAAP" means generally accepted accounting principles, as in
effect from time to time.
"Governmental Entity" means any government or any agency,
bureau, commission, court, department, official, political subdivision, tribunal
or other instrumentality of any government, whether federal, state or local,
domestic or foreign.
"IP 200 Product Line" shall mean the Interpore 200 Porous
Coralline Hydroxyapatite Bone Void Filler products, or substantially similar
products, however labeled or marketed, and related manufacturing and
distribution operations, income, assets and business.
"Indemnifiable Claim" means any Loss for or against which any
party is entitled to indemnification under this Agreement; "Claim" means any
claim of right to indemnification.
"Intangible Property" means any patents, patent applications,
trade secrets, secret processes, knowhow, or other confidential information or
know-how used primarily in the Business and any and all Marks and applications
for Marks used primarily in the Business.
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"Inventory" has the meaning specified in Section 2.1(a).
"Knowledge" means the present actual knowledge of the
corporate officers of the party referred to.
"Law" means any constitutional provision, statute or other
law, rule, regulation, or interpretation of any thereof and any Order.
"Loss" means any action, cost, damage, disbursement, expense,
liability, loss, deficiency, obligation, penalty or settlement of any kind or
nature, whether foreseeable or unforeseeable, including but not limited to,
interest or other carrying costs, penalties, legal, accounting and other
professional fees and expenses incurred in the investigation, collection,
prosecution and defense of Claims and amounts paid in settlement, that may be
imposed on or otherwise incurred or suffered by the specified person; provided,
however, that in no event shall Losses include any incidental, consequential,
punitive, exemplary, indirect or special losses or damages (including, without
limitation, lost profits, lost revenue and loss of business), whether
foreseeable or not.
"Mark" means any brand name, copyright, service mark,
trademark, trade name, and all registrations or applications for registration of
any of the foregoing used primarily in the Business.
"Material Adverse Effect" means any substantial adverse effect
on the financial condition, results of operations, Purchased Assets or Assumed
Liabilities of the Business, taken as a whole, or on the ability of a party to
consummate the transactions contemplated hereby.
"Material Contract" means any Contract material to the
business of the subject person as of the date hereof (and in the case of Seller,
material to the Business), and includes but is not limited to those Contracts
deemed material by Section 4.5; provided that as such term applies to Seller, it
shall not include any Contracts that do not constitute Purchased Assets and
which do not affect Purchased Assets.
"Order" means any decree, injunction, judgment, order, ruling,
assessment or writ issued by any Governmental Entity.
"Permit" means any license, permit, franchise, certificate of
authority, or order, or any waiver of the foregoing, required to be issued by
any Governmental Entity.
"Person" means an association, a corporation, an individual, a
partnership, a trust or any other entity or organization, including a
Governmental Entity.
"Prepaid Expenses" has the meaning specified in Section
2.1(a).
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"Purchase Price" has the meaning set forth in Section 2.3.
"Purchased Assets" has the meaning set forth in Section
2.1(a).
"Tax" means any foreign, federal, state, county or local
income, sales and use, excise, franchise, real and personal property, transfer,
gross receipt, capital stock, production, business and occupation, disability,
employment, payroll, severance or withholding tax or charge imposed by any
Governmental Entity, any interest and penalties (civil or criminal) related
thereto or to the nonpayment thereof, and any Loss in connection with the
determination, settlement or litigation of any Tax liability.
"Tax Return" means a report, return or other information
required to be supplied to a Governmental Entity with respect to Taxes
including, where permitted or required, combined or consolidated returns for any
group of entities that includes any Subsidiary.
ARTICLE II
SALE OF ASSETS AND ASSUMPTION OF LIABILITIES
2.1 Purchase and Sale of Assets.
(a) Purchased Assets. Subject to the terms and conditions of
this Agreement, Seller hereby sells, conveys, assigns, transfers and delivers to
Buyer, and Buyer purchases, acquires and accepts from Seller, other than the
assets specifically identified in Section 2.1(b) (the "Excluded Assets"), all of
the assets, properties, rights, privileges, claims and contracts of every kind
and nature, real and personal, tangible and intangible, absolute or contingent,
wherever located, owned by Seller and used primarily in connection with the
Business (the "Purchased Assets"). The Purchased Assets include, but shall not
be limited to, the following:
(i) All machinery, apparatus, furniture and fixtures,
materials, supplies, tooling and other equipment of every type owned or
leased by Seller and used primarily in the operation of the Business;
(ii) All of Seller's accounts receivable as of the
date hereof ("Accounts Receivable"), and all other notes, obligations
and amounts due from others;
(iii) All inventory of usable goods, including all
merchandise, raw materials, work in progress, finished products and
other tangible personal property held for sale or used primarily in
connection with the Business as of the date hereof (the "Inventory"),
and all files, records, data, data summaries and other documentation,
or copies, where appropriate (whether in electronic, hard copy or
other data storage format) relating primarily to the purchase,
manufacturing, receipt, processing, testing or distribution of the
Inventory, including, without limitation, copies of all documentation
associated with or relating to
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compliance by Seller, as it relates to the Inventory, with the
requirements of the U.S. Food and Drug Administration and any other
similar agency of any state, local or foreign government;
(iv) All of Seller's rights and interests arising
under or in connection with any Contracts to which Seller is a party
and which relate primarily to the Business (including, without
limitation, distribution agreements) and other documents relating
primarily to the Business;
(v) Seller's prepaid expenses and deposits which
relate primarily to the Business (including, without limitation,
prepaid advertising and trade show and symposium deposits and fees
which relate primarily to the Business) as of the date hereof ("Prepaid
Expenses");
(vi) Sales data, sales history, customer lists,
customer purchasing histories, customer billing and payment histories,
other information relating to customers, suppliers, names, mailing
lists, all advertising matter and all rights thereto relating to the
Business or, where appropriate, copies thereof (whether in electronic,
hard copy or other data storage format);
(vii) All of Seller's Intangible Property, and trade
names, product names, catalogue numbers and other designations which
relate primarily to the Business; all good will associated with the
Business; all books and records which relate primarily to the Business,
or copies where appropriate; and transferable Permits which relate
primarily to the Business; and
(viii) All data, files, licenses, data summaries and
submissions, biocompatibility studies, human and animal clinical data,
engineering studies, process capability studies, and associated product
data (including, without limitation, raw data, notebook data, and
validation studies), vendor qualification information and other data,
or copies, where appropriate, in each case relating to U.S. Food and
Drug Administration ss.510(k) approvals and other regulatory approvals
of products included in the Purchased Assets, and all submissions to
the American Dental Association, including backup and supporting
documentation, or copies, where appropriate.
(b) Excluded Assets. Notwithstanding the foregoing, the
assets that constitute Excluded Assets shall consist only of the following:
(i) The consideration delivered to Seller pursuant to
this Agreement;
(ii) Seller's articles of incorporation,
non-transferable franchises, corporate seals, minute books, stock books
and other corporate records having to do with the corporate
organization and capitalization of Seller and all income tax records
and nontransferable
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Permits; provided, however, that copies of such corporate and tax
records and nontransferable Permits shall be provided to Buyer, at
Buyer's sole cost and expense, upon written request;
(iii) Seller's books of account; provided, however,
that copies of such books of account shall be provided to Buyer, at
Buyer's sole cost and expense, upon written request;
(iv) Any refunds for Taxes that are or may become
available to Seller;
(v) The Exclusive Distribution Agreement between
Seller and Friatec AG, dated as of October 1, 1995, and any amendments
thereto (the "Friatec Agreement");
(vi) Cash;
(vii) The inventory of Seller manufactured by, or
labeled as product manufactured by, Friatec AG, or Seller's porous
coralline hydroxyapatite, including that labeled as "Interpore 200" or
"IP 200";
(viii) All right, title and interest to the bone
augmentation materials business, including the Pro Osteon, IP 200 and
Interpore 200 Product Lines;
(ix) All right, title and interest in and to the
names and related tradenames, marks, copyrights and applications for
the names "Interpore," "Interpore Dental," "Interpore 200," "IP200,"
"Interpore International," and similar names and marks, including the
names and marks covered by the License Agreement and the Distribution
Agreement, it being understood and acknowledged that certain of such
names and marks are being licensed to Buyer pursuant to the License
Agreement and the Distribution Agreement;
(x) All intercompany receivables of Seller which are
owed by an Affiliate of Seller; and
(xi) All insurance policies, welfare plans,
retirement plans, pension plans and employee benefit plans.
2.2 Assumption of Certain Liabilities.
(a) Liabilities Not Assumed. Except for the liabilities and
obligations specifically assumed pursuant to and identified in Section 2.2(b)
below or elsewhere in this Agreement, Buyer shall not assume, shall not take
subject to and shall not be liable for, any liabilities or obligations of any
kind or nature, whether absolute, contingent, accrued, known or unknown, of
Seller or any Affiliate of Seller, the ("Excluded Liabilities") including, but
not limited to, the following:
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(i) Any liabilities or obligations arising out of or
associated with the Friatec Agreement;
(ii) Any liabilities or obligations incurred arising
from or out of or in connection with Seller's operations, the condition
of its assets (arising prior to the Closing) or places of business, its
ownership of the Purchased Assets, or the issuance, sale, repayment or
repurchase of any of its securities;
(iii) Any liabilities or obligations incurred,
arising from or out of, in connection with or as a result of claims
made by or against Seller whether before or after the Closing Date that
arise out of events prior to the Closing Date;
(iv) Any liabilities or obligations incurred, arising
from or out of, in connection with or as a result of any alleged or
actual defect in any product or in connection with any alleged or
actual breach of warranty (whether express or implied) in relation to
any product sold by Seller prior to the Closing Date;
(v) Any liabilities or obligations (whether assessed
or unassessed) of Seller for any Taxes, other than as contemplated in
Section 6.1 hereof, as of, or for any period ending on or prior to, the
Closing Date;
(vi) All fees and expenses of Seller in connection
with the transactions contemplated herein;
(vii) All fees and expenses, if any, of Seller in
connection with the dissolution and liquidation of Seller and
withdrawal from business by Seller;
(viii) Any liabilities or obligations to former or
current officers, directors, employees or Affiliates of Seller,
including without limitation any liabilities or obligations of Seller
or Interpore International in connection with any employee benefit
plans and pension plans (except that Buyer shall be responsible for any
such obligations to employees of Seller hired by Buyer, to the extent
the obligations arise after the Closing);
(ix) Any obligations or liabilities relating to or
arising out of products sold prior to the Closing Date, including
warranty claims, product liability claims, product recalls, marketing
withdrawals, advisory notices and related costs and expenses,
(x) Any liabilities or obligations of Seller
incurred, arising from or out of or in connection with this Agreement.
(b) Assumed Liabilities. Notwithstanding Section 2.2(a), Buyer
hereby assumes the liabilities or obligations specifically identified on
Schedule 2.2(b) attached hereto and incorporated
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herein by this reference (the "Assumed Liabilities").
2.3 Purchase Price.
The total purchase price (the "Purchase Price") to be paid to
Seller by Buyer for the Purchased Assets shall be the sum of (i) $3,000,000 in
cash, payable as described herein, subject to certain adjustments as set forth
in Sections 2.5 and 2.6, plus (ii) assumption of the Assumed Liabilities. The
Purchase Price is based on the balance sheet of Seller as of December 31, 1996,
attached hereto as Schedule 2.3 (the "Base Balance Sheet").
2.4 Closing Payment.
On the Closing Date, Buyer shall pay to Seller, by wire transfer
or other immediately available funds, an amount equal to $1,500,000 (the
"Closing Payment").
2.5 Balance Sheet Adjustment.
(a) Within 30 days of the Closing Date, Seller shall deliver
to Buyer an unaudited Balance Sheet of Seller as at the Closing Date (the
"Closing Balance Sheet"), prepared in accordance with GAAP and consistent with
the principles applied by Seller in the preparation of the Base Balance Sheet,
accompanied by a report showing the adjustments to the Purchase Price provided
for in Section 2.5 (b) below, if any. Buyer shall have thirty (30) days after
delivery of the Closing Balance Sheet to Buyer to examine and address with
Seller any questions or issues with respect to the preparation, presentation or
content of the Closing Balance Sheet or the adjustments to the Purchase Price
provided in Section 2.5(b) hereof. Buyer may, at its own expense, cause its
accountants to review the Closing Balance Sheet and Buyer's accountants shall
have access to all the work papers used in preparation of same. Buyer shall have
the right to object, by written notice to Seller, to any item on, or other
matter relating to, the Closing Balance Sheet or the adjustments to the Purchase
Price provided in Section 2.5(b) hereof. If Buyer or Buyer's accountants do not
give Seller such written notice within thirty (30) days after receipt of the
Closing Balance Sheet, Buyer shall be deemed to have accepted the Closing
Balance Sheet and the schedule of adjustments. If Buyer or Buyer's accountants
do so object and if Seller and Seller's accountants are unable, within fifteen
(15) days after receipt by Seller of such notice of objections, to resolve any
disputes as to the Closing Balance Sheet or the adjustments to the Purchase
Price provided in Section 2.5(b) hereof, such dispute shall be referred to the
President of Buyer and Seller, respectively, who shall attempt to resolve the
issue amongst themselves. If after fifteen (15) business days they are unable to
do so, the dispute shall be turned over to a firm of independent certified
public accountants mutually acceptable to Buyer and Seller. The accounting firm
so selected shall, as soon as practicable, deliver to Seller and Buyer a written
report resolving any disputed matters, and its determination will be conclusive
and binding upon the parties. The expense of such a mutually acceptable
accounting firm shall be borne by the parties on a pro rata basis according to
the degree to which the positions of the respective parties are not confirmed by
the accounting firm so selected. The adjustment to the Purchase Price will be
reflected in the Deferred Payment, with the Deferred Payment being increased by
any upward adjustment in the Purchase Price and being decreased by any downward
adjustment
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in the Purchase Price. Notwithstanding the foregoing, the adjustment
described in Section 2.5(b)(G) below shall be determined on January 5, 1998, and
Buyer shall furnish Seller with written notice of the amount of the adjustment,
if any, accompanied by appropriate documentation thereof, prior to the Deferred
Payment Date.
(b) The Deferred Payment shall be adjusted to reflect changes
in the Purchased Assets and Assumed Liabilities between the Base Balance Sheet
and the Closing Balance Sheet (the "Purchase Price Adjustment"). The Deferred
Payment shall be increased by (i) any decrease in the amount of trade payables
to be assumed by Buyer, (ii) any increase in the book value of assets that
constitute Purchased Assets, and (iii) any overage of the value of Inventory
shown on the Closing Balance Sheet and the Inventory determined by physical
count on the Closing Date, valued at Seller's standard cost. The Deferred
Payment shall be decreased by (A) any increase in the amount of trade payables
to be assumed by Buyer, (B) any decrease in the book value of assets that
constitute Purchased Assets, (C) any shortage between the book value of
Inventory shown on the Closing Balance Sheet and the Inventory determined by
physical count on the Closing Date, (D) the book value of Inventory, on a
product-by-product basis, that exceeds an amount determined by multiplying the
units sold during the six months ending December 31, 1996 by four, which product
is multiplied by the Seller's standard cost on a product-by-product basis, to
the extent such amount exceeds the inventory reserve shown on the Closing
Balance Sheet; (E) all Accounts Receivable that have been outstanding 150 days
or more as of the Closing Date, to the extent such Accounts Receivable exceed
the reserve therefor (other than the reserve attributable to the customer
specified in (G) below, (F) the value of obsolete or damaged Inventory, valued
at Seller's standard cost, to the extent it exceeds the inventory reserves shown
on the Base Balance Sheet, and (G) all Accounts Receivable due from Antonio
Ribeiro or his Affiliates (collectively, "Ribeiro") that were included in the
Purchased Assets but remain unpaid as of December 31, 1997, notwithstanding
Buyer's best efforts to collect such accounts, it being understood and agreed
that any payments received by Buyer from Ribeiro shall be first applied to the
oldest invoice.
2.6 Indemnification Adjustment.
The Deferred Payment shall be further adjusted for any
indemnification amounts owing pursuant to Article VII herein which are
determined to be valid pursuant to Section 2.7 hereof. Prior to January 15, 1998
(the "Deferred Payment Date"), Buyer may notify Seller in writing that it elects
to offset from the Deferred Payment any amount (the "Offset Amount") owed for
any potential Loss relating to indemnification hereunder (as described in
Article VII hereof). Buyer shall be entitled to retain the Offset Amount pending
determination of the validity of the offset pursuant to Section 2.7 hereof.
2.7 Determination of Validity.
In the event that Buyer elects to offset any potential Loss
under Article VII against the Deferred Payment, Buyer shall provide notice of
such claim to Seller. Thereafter, if the claim
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is disputed by Seller and notice of such objection is received by Buyer within
15 days following the date of Buyer's notice, the validity of the claim shall be
determined as follows: Buyer and Seller shall use their best efforts to settle
any controversy or claim but, if after 30 days, the parties are not able to
agree on any settlement, such controversy or claim shall be settled by
arbitration to be held in Orange County, California in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, and
judgment upon the award rendered by the Arbitrator(s) may be entered in any
court having jurisdiction thereof. If Buyer does not timely receive an objection
notice, then the Claim in the amount alleged by Buyer shall be deemed to be
valid and correct. No final offset shall be permitted if the relevant Claim is
properly disputed as set forth in the second sentence of this Section 2.7 unless
and until its validity is finally determined in such arbitration proceedings and
evidenced by a written finding or order.
2.8 Deferred Payment.
On the Deferred Payment Date, Buyer shall pay to Seller, by
wire transfer or other immediately available funds, an amount equal to
$1,500,000, increased or decreased, as the case may be, by the Purchase Price
Adjustment, if any, and decreased by any Offset Amount contemplated by Sections
2.6 and 2.7 of this Agreement (the "Deferred Payment").Any amounts which, as of
the Deferred Payment Date, have been properly disputed and not yet determined to
be valid pursuant to Section 2.7 hereof, and which are subsequently determined
not to be valid or appropriate for adjustment, shall be paid to Seller by Buyer
within five days of such determination.
ARTICLE III
CLOSING
3.1 Closing Date. The Closing of the transactions contemplated hereby
shall take place on the Closing Date at the offices of Phillips & Haddan, 4695
MacArthur Court, Suite 840, Newport Beach, California, or at such other location
or time as Seller and Buyer may agree.
3.2 Items to be Delivered at the Closing By Seller. At the Closing,
Seller shall deliver or cause to be delivered to Buyer:
(a) A Bill of Sale and Assignment, in substantially the form
of Exhibit A;
(b) A list of all Accounts Receivable and related aging
schedule, dated within five business days of the Closing Date, and a schedule
identifying Accounts Receivable shown thereon which have been outstanding for
150 days or more as of the date of the schedule; and
(c) the Disclosure Schedule.
3.3 Items to be Delivered at the Closing by Buyer. At the Closing,
Buyer shall deliver to
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Seller:
(a) The Closing Payment; and
(b) An Assumption Agreement, in the form of Exhibit B;
and
(c) A reseller's certificate in customary form specifying
Buyer's intent to resell the Inventory, and permitting Seller to sell the
Inventory to Buyer without withholding of California sales or use tax.
3.4 Ancillary Agreements
At the Closing, and as a condition to the consummation of the
transactions contemplated by this Agreement, (a) Buyer and Interpore
Orthopaedics, Inc. shall execute and deliver a Distribution Agreement for the
Interpore IP 200 in the form of Exhibit C, (b) Buyer shall execute and Seller
shall acknowledge a Collateral Assignment of Acquisition Instruments in favor of
First Source Financial LLP in the form of Exhibit D, (c) Buyer and Interpore
International shall execute and deliver a License Agreement in the form of
Exhibit E, and (d) Buyer, Seller and Interpore International shall execute and
deliver a Noncompetition Agreement in the form of Exhibit F.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as otherwise indicated on Seller's Disclosure Schedule,
Seller represents and warrants as follows:
4.1 Organization and Related Matters.
Seller is a corporation duly organized, validly existing and
in good standing under the laws of the State of California. Seller has all
necessary corporate power and authority to execute, deliver and perform this
Agreement. Seller has all necessary corporate power and authority to own its
properties and assets and to carry on its business as now conducted and is duly
qualified or licensed to do business as a foreign corporation in good standing
in all jurisdictions listed on Schedule 4.1, except where the failure to be so
qualified or licensed is not and will not have a material adverse effect on the
Purchased Assets and Assumed Liabilities, taken as a whole. True, correct and
complete copies of the charter documents of Seller as in effect on the date
hereof have been delivered to Buyer.
4.2 Stock.
All of the outstanding Equity Securities of Seller are owned,
beneficially and of record, by Interpore International, free and clear of any
Encumbrance. There are no outstanding Contracts or other rights to subscribe for
or purchase, or Contracts or other obligations to issue or
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grant any rights to acquire, any Equity Securities of Seller, or to restructure
or recapitalize Seller. There are no outstanding Contracts of Seller to
repurchase, redeem or otherwise acquire any Equity Securities.
4.3 Financial Statements.
(a) Financial Statements. Seller has delivered to Buyer the
balance sheet of Seller at December 31, 1996 and the related statements of
operations for the year then ended. All such financial statements have been
prepared in conformity with GAAP, applied on a consistent basis (except for
changes, if any, required by GAAP and disclosed therein). Such statements of
operations present fairly the results of operations of Seller for the periods
covered, and the balance sheet presents fairly the financial condition of Seller
as of its date. Seller has made available to Buyer copies of each management
letter, if any, or other letter, if any, delivered to Seller by its auditors in
connection with such financial statements or relating to any review by its
auditors of the internal controls of Seller during the one-year period ended
December 31, 1996 or thereafter, and has given its consent to its auditors to
make available for inspection all reports and working papers produced or
developed by such auditors or management in connection with their examination of
such financial statements.
(b) No Material Adverse Changes. Since December 31, 1996,
whether or not in the ordinary course of business, there has not been, occurred
or arisen:
(i) any change in or event affecting Seller, the Business, the
Purchased Assets or the Assumed Liabilities that has had or, to the
Knowledge of Seller, may reasonably be expected to have a Material
Adverse Effect on Seller, the Business or the Purchased Assets and the
Assumed Liabilities, or
(ii) any material casualty, loss, damage or destruction
(whether or not covered by insurance) of any of the Purchased Assets.
(c) No Other Liabilities or Contingencies. Seller does not
have any liabilities of any nature, whether accrued, absolute, or contingent,
and whether due or to become due, except liabilities that (i) are reflected or
disclosed in the Base Balance Sheet, (ii) were incurred after December 31, 1996
in the ordinary course of business, which in either case have had, or to the
Knowledge of Seller, are reasonably expected to have, a Material Adverse Effect
on Seller, the Business or the Purchased Assets.
4.4 Tax and Other Returns and Reports.
Seller has timely filed or will file (or, where permitted or
required, its respective direct or indirect parents have timely filed or will
file) all required Tax Returns and has paid all Taxes due for all periods ending
on or before December 31, 1996. Adequate provision has been made in the
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books and records of Seller and/or its Affiliates, as appropriate, and, to the
extent required by GAAP, in the financial statements referred to in Section 4.3
above or delivered to Buyer, for all Taxes whether or not due and payable and
whether or not disputed. All required Tax Returns, including amendments to date,
have been prepared in good faith without negligence or willful misrepresentation
and are complete and accurate in all material respects. No Governmental Entity
has proposed (tentatively or definitively), asserted or assessed or, to the
Knowledge of Seller, threatened to propose or assert, any deficiency, assessment
or claim for Taxes.
4.5 Material Contracts.
All Material Contracts to which Seller is a party or to which
Seller is subject or otherwise bound are listed on Schedule 4.5. Each Contract
(including Contracts that have expired, been terminated or with respect to which
Seller is in default), that (a) after December 31, 1996 obligates Seller to pay
an amount of $10,000 or more, (b) has an unexpired term in excess of two years,
(c) relates to the purchase, processing or sale of the Inventory, (d) relates to
the distribution or marketing of products (e) contains a covenant not to compete
or otherwise significantly restricts business activities, (f) provides for the
extension of credit other than consistent with normal credit terms, (g) provides
for a guaranty or indemnity by Seller, (h) grants a power of attorney, agency or
similar authority to another person or entity, (i) contains a right of first
refusal, (j) contains a right or obligation (other than in the ordinary course
of business) of any Affiliate, officer or director or any Associate of Seller,
or (k) requires Seller to buy or sell goods or services with respect to which
there will be material losses or will be costs and expenses materially in excess
of expected receipts shall be deemed to be a Material Contract. True, correct
and complete copies of the agreements appearing on Schedule 4.5, including all
amendments and supplements, have been delivered to Buyer. Except as set forth on
Schedule 4.5, each Material Contract is valid and subsisting, Seller has duly
performed all its obligations thereunder to the extent that such obligations to
perform have accrued, and, to Seller's Knowledge, no breach or default, alleged
breach or default, or event which would (with the passage of time, notice or
both) constitute a breach or default thereunder by Seller has occurred or will
occur as a result of this Agreement or its performance . Consummation of the
transactions contemplated by this Agreement will not (and will not give any
person a right to) terminate or modify any rights of, or accelerate or augment
any obligation of, Seller under any Material Contract.
4.6 Condition of Property.
Seller has good and marketable title to each of the Purchased
Assets, free and clear of any Encumbrances. Seller has all rights, power and
authority to sell, convey, assign, transfer and deliver the Purchased Assets to
Buyer in accordance with the terms of this Agreement. At the Closing, Seller
shall deliver the Purchased Assets to Buyer free and clear of any Encumbrances.
The Purchased Assets are in a good state of maintenance and repair, have been
regularly and appropriately maintained, repaired and replaced, and are not
materially defective except for ordinary wear and tear and are adequate for use
in the Business. The Purchased Assets include all of the assets primarily used
in the operation of the Business.
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4.7 Intangible Property.
Schedule 4.7 lists any and all Marks, patents and other
material items of Intangible Property in which Seller has an interest and the
nature of such interest. Such assets include all Permits or other rights with
respect to any of the foregoing. Seller has complete rights to and ownership of
all Intangible Property required for use in connection with the Business, the
absence of which would have a material adverse effect on the Business. Seller
does not use any Intangible Property by consent of any other person (other than
Affiliates) and is not required to and do not make any payments to others with
respect thereto. The Intangible Property of Seller is fully assignable free and
clear of any Encumbrances. Seller has in all material respects performed all
obligations required to be performed by it, and Seller is not in default in any
material respect under any Contract, if any, relating to any of the foregoing.
Seller has not received any notice to the effect (or is otherwise aware) that
the Intangible Property or any use by Seller of any such property conflicts with
or allegedly conflicts with or infringes the rights of any Person.
4.8 Authorization; No Conflicts.
The execution, delivery and performance of this Agreement, and
all agreements attached hereto as Exhibits, by Seller have been duly and validly
authorized by the Board of Directors of Seller and by all other necessary
corporate action on the part of Seller. This Agreement, and all agreements
attached hereto as Exhibits, where applicable, constitute the legally valid and
binding obligations of Seller, enforceable against Seller in accordance with
their respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws and
equitable principles relating to or limiting creditors rights generally. The
execution, delivery and performance of this Agreement, and all agreements
attached hereto as Exhibits, by Seller, will not violate, or constitute a breach
or default (whether upon lapse of time and/or the occurrence of any act or event
or otherwise) under, the charter documents or bylaws of Seller or any Material
Contract to which Seller is a party, result in the imposition of any Encumbrance
against any assets or properties of Seller or any of the Purchased Assets, or
violate any Law to which Seller is subject. Schedule 4.8 lists all Permits and
Approvals required to be obtained by Seller to consummate the transactions
contemplated by this Agreement. Except for matters identified in Schedule 4.8 as
requiring that certain actions be taken by or with respect to a third party or
Governmental Entity, the execution and delivery of this Agreement by Seller and
the performance of this Agreement and any related or contemplated transactions
by Seller will not require filing or registration with, or the issuance of any
Permit by, any other third party or Governmental Entity.
4.9 Legal Proceedings.
There is no Order or Action pending, or, to the Knowledge of
Seller, threatened, against or affecting Seller or any of the Purchased Assets
that individually or when aggregated with one or more other Orders or Actions
has or might reasonably be expected to have a Material Adverse Effect. There is
no matter as to which Seller (or any Affiliate) has received any notice, claim
or
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assertion, or, to the Knowledge of Seller, which otherwise has been
threatened against or affecting any director, officer, employee, agent or
representative of Seller or any other Person, in connection with which any such
Person has or may reasonably be expected to have any right to be indemnified by
Seller.
4.10 Accounting Records.
Seller has records that accurately and validly reflect its
transactions, and accounting controls sufficient to insure that such
transactions are (i) executed in accordance with management's general or
specific authorization and (ii) recorded in conformity with GAAP so as to
maintain accountability for assets.
4.11 Insurance.
Seller is, and at all times during the past two years has
been, insured (either directly or through one or more of its Affiliates) with
reputable insurers against all risks normally insured against by companies in
similar lines of business, and all of the insurance policies and bonds required
to be maintained by Seller are in full force and effect.
4.12 Permits.
Seller holds all Permits that are required by any Governmental
Entity to permit it to conduct its business as now conducted and operate the
Purchased Assets as they are now operated, except where failure to obtain a
Permit would not have a Material Adverse Effect, and all such Permits are valid
and in full force and effect and will remain in full force and effect in favor
of Buyer upon consummation of the transactions contemplated by this Agreement.
All such Permits which relate primarily to the Business are Purchased Assets. To
the Knowledge of Seller, no suspension, cancellation or termination of any of
such Permits has been threatened.
4.13 Compliance with Law.
Seller has complied in all material respects with all
applicable Laws relating to the operation of the Business, and no notices have
been received by, and to the Knowledge of Seller, no claims have been filed
against, Seller alleging a material violation of any such Laws.
4.14 Dividends and other Distributions.
There has been no dividend or other distribution of assets,
declared, issued or paid by Seller subsequent to the date of the Base Balance
Sheet (other than the sale of Inventory in the ordinary course of business and
the sale of the Purchased Assets as contemplated herein).
4.15 No Brokers or Finders.
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No agent, broker, finder, or investment or commercial banker,
or other Person or firm engaged by or acting on behalf of Seller or any of its
Affiliates in connection with the negotiation, execution or performance of this
Agreement or the transactions contemplated by this Agreement, is or will be
entitled to any brokerage or finder's or similar fee or other commission as a
result of this Agreement or such transactions, except amounts payable to Cleary
& Oxford Associates, which amounts are the obligation of and will be paid by
Seller.
4.16 Accuracy of Information.
All information furnished by Seller, or by any other Person
authorized by Seller, to Buyer in writing in connection with Seller, the
Business, the Purchased Assets, the Excluded Assets, the Assumed Liabilities and
the Excluded Liabilities and the transactions contemplated by this Agreement is
true and complete in all material respects and does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
any statement therein not misleading.
4.17 Inventories.
All Inventory is of good merchantable quality (in the case of
inventory held for sale) or currently usable (in the case of other inventory) in
the ordinary course of business, except as provided in the Seller's Inventory
reserve. All Inventory has a remaining shelf life of twelve months or more.
4.18 Accounts Receivable.
All Accounts Receivable of Seller, whether reflected on the
Base Balance Sheet or otherwise included in the Purchased Assets, represent
sales actually made in the ordinary course of business. Seller has delivered to
Buyer a complete and accurate list of all Accounts Receivable, dated within five
business days of the Closing Date, including the date of invoice, identity and
address of the account debtor, amount of each account, aging of each account,
and terms of payment.
4.19 Customers and Suppliers.
Schedule 4.19 lists the names of (and any Material Contracts
with) the twenty-five largest customers of and five most significant suppliers
of Seller at the date of this Agreement (based on sales during the 1996 calendar
year), and any sole-source suppliers of significant goods or services to Seller
with respect to which alternative sources of supply are not readily available on
comparable terms and conditions. Seller has no Knowledge of facts which cause it
to believe that any of such customers or suppliers have plans to terminate their
relationships with Seller or materially reduce the volume of such business.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants as follows:
5.1 Organization and Related Matters.
Buyer is a corporation duly organized, validly existing and in
good standing under the laws of Delaware. Buyer has all necessary corporate
power and authority to carry on its business as now being conducted. Buyer has
the necessary corporate power and authority to execute, deliver and perform this
Agreement, and any related agreements to which it is a party.
5.2 Authorization; No Conflicts.
The execution, delivery and performance of this Agreement, and
all agreements attached hereto as Exhibits, by Buyer have been duly and validly
authorized by the Board of Directors of Buyer and by all other necessary
corporate action on the part of Buyer. This Agreement, and all agreements
attached hereto as Exhibits, where applicable, constitute the legally valid and
binding obligations of Buyer, enforceable against Buyer in accordance with their
respective terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws and equitable
principles relating to or limiting creditors rights generally. The execution,
delivery and performance of this Agreement, and all agreements attached hereto
as Exhibits, by Buyer, will not violate, or constitute a breach or default
(whether upon lapse of time and/or the occurrence of any act or event or
otherwise) under, the charter documents or bylaws of Buyer or any Material
Contract to which Buyer is a party, or violate any Law to which Buyer is
subject. The execution and delivery of this Agreement by Buyer and the
performance of this Agreement and any related or contemplated transactions by
Buyer will not require filing or registration with, or the issuance of any
Permit by, any other third party or Governmental Entity.
5.3 No Conflicts.
The execution, delivery and performance of this Agreement and
the agreements attached hereto as Exhibits by Buyer will not violate the
provisions of, or constitute a breach or default whether upon lapse of time
and/or the occurrence of any act or event or otherwise under (a) the charter
documents or bylaws of Buyer, (b) any Law to which Buyer is subject or (c) any
Contract to which Buyer is a party that is material to the financial condition,
results of operations or conduct of the business of Buyer.
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5.4 No Brokers or Finders.
No agent, broker, finder or investment or commercial banker,
or other Person or firms engaged by or acting on behalf of Buyer or its
Affiliates in connection with the negotiation, execution or performance of this
Agreement or the transactions contemplated by this Agreement, is or will be
entitled to any brokerage or finder's or similar fee or other commission as a
result of this Agreement or such transactions.
5.5 Consents and Approvals.
No consent, approval, license, permit or authorization of, or
filing with, any Governmental Entity, or any other person or entity, is required
to have been made or obtained by Buyer in connection with the execution,
delivery and performance of this Agreement and the agreements attached hereto as
exhibits or the consummation of the transactions contemplated hereby and
thereby, other than such Consents have been previously received and delivered to
Seller.
5.6 Legal Proceedings.
There is no Order or Action pending, or, to the Knowledge of
Buyer, threatened, against or affecting Buyer that individually or when
aggregated with one or more other Orders or Actions has or might reasonably be
expected to have a material adverse effect on Buyer. There is no matter as to
which Buyer (or any Affiliate) has received any notice, claim or assertion, or,
to the Knowledge of Buyer, which otherwise has been threatened against or
affecting any director, officer, employee, agent or representative of Buyer or
any other Person, in connection with which any such Person has or may reasonably
be expected to have any right to be indemnified by Buyer.
5.7 Accuracy of Information.
All information furnished by or on behalf of Buyer to Seller
in connection with Buyer and the transactions contemplated by this Agreement is
true and complete in all material respects and does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
any statement therein not misleading.
5.8 Bulk Sales Compliance.
Buyer has taken whatever actions it deems necessary or
appropriate in order to comply with Division 6 of the California Commercial
Code.
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ARTICLE VI
POST-CLOSING MATTERS
6.1 Sales Tax.
Seller and Buyer shall each pay one-half of all sales and use
taxes, if any, imposed on or in connection with the purchase, sale or transfer
of the Purchased Assets and assumption of the Assumed Liabilities by Seller
pursuant to this Agreement.
6.2 Nondisclosure of Proprietary Data.
Neither Seller nor any of its representatives shall, at any
time, make use of, divulge or otherwise disclose, directly or indirectly, any
trade secret or other proprietary data (including, but not limited to, any
customer list, record or financial information) concerning the Business or the
business or policies of Seller related to the Business that Seller or any
representative of Seller may have learned as a shareholder, employee, officer or
director of Seller; provided, however, that the provisions of this Section 6.2
shall have no effect on the rights of Seller's Affiliates to make use of,
divulge or otherwise disclose, directly or indirectly, any information currently
used in their respective businesses or which might reasonably be expected to be
used in their respective businesses in the future.
6.3 Tax Cooperation.
(a) After the Closing, Seller shall, and shall cause its
Affiliates to, cooperate fully with Buyer in the preparation of all Tax Returns
and shall provide, or cause to be provided at Buyer's sole cost and expense, to
Buyer any records and other information requested by such parties in connection
therewith as well as access to, and the cooperation of, the independent
accountants of Seller and its Affiliates. Seller shall, and shall cause its
Affiliates to, cooperate fully with Buyer in connection with any Tax
investigation, audit or other proceeding.
(b) After the Closing, Buyer shall, and shall cause its
Affiliates to, cooperate fully with Seller in the preparation of all Tax Returns
and shall provide, or cause to be provided at Seller's sole cost and expense, to
Seller any records and other information requested by such parties in connection
therewith as well as access to, and the cooperation of, the independent
accountants of Buyer and its Affiliates. Buyer shall, and shall cause its
Affiliates to, cooperate fully with Seller in connection with any Tax
investigation, audit or other proceeding.
6.4 Litigation Cooperation.
After the Closing, each party shall, and shall cause its
Affiliates to, cooperate fully with the other party in connection with any
claims, disputes, or controversies between the other party and any third party
or Governmental Entity relating to the Business or the Purchased Assets. In
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connection with such cooperation each party shall provide, or cause to be
provided at the other party's sole cost and expense, any records and other
information requested by such party relating to the Business or the Purchased
Assets.
6.5 Warranty Services.
After the Closing, Buyer shall assist Seller in the
performance of its obligations with respect to product warranties for products
sold by Seller prior to the Closing, to the extent such products are similar to,
or in the same product line as, the products included in the Inventory (the
"Warranty Products"). All inquiries and claims relating to the Warranty Products
shall be handled by Buyer, and Seller shall refer any such inquiries or claims
to Buyer. Depending on the nature of the claim and the product involved, Buyer
shall either (a) replace the product, (b) repair the product, or (c) where
replacement or repair of the product is not feasible, refund the purchase price.
Seller's maximum obligation for any claim made hereunder with respect to a
single product shall be its standard cost for such product. It shall be the
responsibility of Buyer, prior to reimbursement from Seller, to show that the
product which is subject to a warranty claim was sold prior to the Closing Date.
In performing these services, Buyer shall be guided by the warranty policies and
practices used by Seller prior to the Closing, but shall exercise its reasonable
discretion to make adjustments where necessary or appropriate to satisfy the
customer. Within thirty days after the end of each calendar quarter, Buyer shall
submit an invoice to Seller for the costs incurred by Buyer in servicing such
warranty claims for such quarter, including the cost of any replacement products
or repairs, any other out-of-pocket costs incurred by Buyer in responding to or
resolving warranty claims, and a reasonable charge, based on allocable labor
cost and overhead, for the time spent by Buyer's employees in administering
warranty claims under this section.
6.6 Collection of Ribeiro Receivables.
After the Closing Buyer shall use its best efforts to collect
any accounts receivable due from Ribeiro (as that term is defined in Section
2.5) that were included in the Accounts Receivable, using efforts substantially
equivalent to those customarily used by Buyer to collect its own accounts
receivable.
ARTICLE VII
INDEMNIFICATION
7.1 Obligations of Seller.
Subject to the limitations of Section 7.6, Seller agrees to
indemnify and hold harmless Buyer and its directors, officers, employees,
affiliates, agents and assigns from and against any and all Losses incurred or
suffered by Buyer, directly or indirectly, as a result of, or based upon or
arising from:
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(a) any inaccuracy in or breach or nonperformance of any of the
representations, warranties, covenants or agreements made by Seller in
or pursuant to this Agreement; or
(b) any other matter as to which Seller, in Section 7.3 of
this Agreement, has agreed to indemnify Buyer.
7.2 Obligations of Buyer.
Subject to the limitations of Section 7.6 hereof, Buyer agrees
to indemnify and hold harmless Seller and its directors, officers, employees,
Affiliates, agents and assigns, from and against any Losses of Seller, directly
or indirectly, as a result of, or based upon or arising from (i) any inaccuracy
in or breach or nonperformance of any of the representations, warranties,
covenants or agreements made by Buyer in or pursuant to this Agreement, (ii) the
Assumed Liabilities, after the Closing, and (iii) ownership of the Purchased
Assets and operation of the Business after the Closing.
7.3 Certain Tax Matters.
Subject to the limitations of Section 7.6 hereof, Seller
agrees to indemnify, defend and hold harmless Buyer against (i) any Tax payable
by or on behalf of Seller or any of its Affiliates for any taxable period ending
on or prior to the Closing Date, (ii) any deficiencies in any Tax payable by or
on behalf of Seller or any of its Affiliates arising from any audit by any
taxing agency or authority with respect to any period ending on or prior to the
Closing Date, and (iii) Taxes of any member of a consolidated or combined tax
group of which Seller or any of its Affiliates is, or was at any time, a member,
for which Buyer is jointly or severally liable as a result of Seller's inclusion
in such group.
7.4 Procedure.
(a) Notice. Any party seeking indemnification (an "Indemnified
Party") with respect to any Loss resulting from the assertion of liability by
any third party (including, without limitation, a notice of any Tax audit or of
any request to waive or extend the statute of limitations applicable to any Tax)
shall give notice to the party required to provide indemnification (the
"Indemnifying Party") within 30 days after becoming aware of any Indemnifiable
Claim if it appears reasonably probable that such Indemnifiable Claim might
involve matters as to which a party would be entitled to indemnification by the
other party under this Article VII. Notwithstanding the foregoing, (i) no
Indemnified Party shall have any obligation to give any notice of any assertion
of liability by a third party unless such assertion is in writing, and (ii) the
rights of any Indemnified Party to be indemnified in respect of any
Indemnifiable Claim resulting from the assertion of liability by any third party
shall not be adversely affected by the Indemnified Party's failure to give or
delay in giving notice unless (and then only to the extent that) the
Indemnifying Party is materially prejudiced thereby.
(b) Defense. If any such liability is asserted against any
Indemnified Party and it gives such notice to the Indemnifying Party, the
Indemnifying Party will promptly assume the defense
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thereof with experienced counsel satisfactory to the Indemnified Party. If (i)
the Indemnifying Party, within 10 days after receipt of a notice of an
Indemnifiable Claim, fails to assume the defense of an Indemnified Party against
an Indemnifiable Claim, or (ii) the Indemnified Party reasonably believes and so
notifies the Indemnifying Party that an Indemnifiable Claim may materially and
adversely affect the business or operations of the Indemnified Party, other than
as a result of money damages or other money payments, the Indemnified Party
shall have the right to control the defense, compromise or settlement of any
Indemnifiable Claim on behalf of and for the account and risk of the
Indemnifying Party who shall be bound by the result so obtained. In all cases,
the party that is not assigned the right to control the defense shall have the
right to participate in the defense of the Indemnifiable Claim at its own
expense.
(c) Settlement Limitations. Notwithstanding anything in this
Section 7.4 to the contrary, in the circumstances described in clauses (i) and
(ii) of subsection (b) above, the Indemnifying Party shall not, without the
written consent of the Indemnified Party, settle or compromise any Claim or
permit a default or consent to entry of any judgment in respect thereof unless
such settlement, compromise or consent includes as an unconditional term thereof
the giving by the claimant to the Indemnified Party a release from all liability
in respect of such Claim. Except in the circumstances described in the preceding
sentence, if a settlement offer solely for money damages is made by the
applicable third party claimant, and the Indemnifying Party notifies the
Indemnified Party in writing of the Indemnifying Party's willingness to
unconditionally accept the settlement offer and pay the amount called for by
such offer, and the Indemnified Party unreasonably declines to accept such
offer, the Indemnified Party may continue to contest such Claim, free of any
participation by the Indemnifying Party, and the amount of any ultimate
liability with respect to such Indemnifiable Claim that the Indemnifying Party
has an obligation to pay hereunder shall be limited to the lesser of (A) the
amount of the settlement offer that the Indemnified Party declined to accept
plus the Losses of the Indemnified Party relating to such Indemnifiable Claim
through the date of its rejection of the settlement offer or (B) the aggregate
Losses of the Indemnified Party with respect to such Claim. The provisions of
this Article are subject to the rights of any Indemnified Party's insurer which
may be defending any such claim. If the Indemnifying Party makes any payment
hereunder, the Indemnifying Party shall be subrogated, to the extent of such
payment, to all rights and remedies of the Indemnified Party to any insurance
benefits or other claims of the Indemnified Party with respect to such Claim.
7.5 Offsets.
If any matter as to which Buyer may be able to assert a claim
hereunder is pending or unresolved at the time any payment is due from Buyer
under this Agreement (including the Deferred Payment), Buyer shall have the
right, in addition to other rights and remedies (whether under this Agreement or
applicable Law), to withhold from such payment an amount equal to the amount of
the claim until such matters are resolved as provided in Section 2.7 hereof.
7.6 Limitations.
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Notwithstanding anything to the contrary contained in this
Agreement:
(a) Seller shall not be liable to Buyer under
this Agreement for any Loss pursuant to this Article VII and Buyer shall not be
liable to Seller under this Agreement for any Loss pursuant to this Article VII
until and unless the aggregate amount for all Losses due the Indemnified Party
exceeds an accumulated total of $50,000 U.S. Dollars (the "Threshold Amount"),
in which case the amount of such Losses that exceed $25,000 shall be subject to
indemnification.
(b) Seller shall not be liable to Buyer under
this Agreement for any Losses pursuant to this Article VII and Buyer shall not
be liable to Seller under this Agreement for any Losses pursuant to this Article
VII for any amounts in excess of the Purchase Price, less the balance sheet
adjustment contemplated by Section 2.5.
(c) In no event shall any party be liable for
any incidental, consequential, punitive, exemplary, indirect or special losses
or Losses (including, without limitation, lost profits, lost revenues and lost
business), whether foreseeable or not, whether occasioned by any failure to
perform, whether breach of any representation, warranty, covenant or other
obligation under this Agreement or any cause whatsoever.
(d) The rights of Buyer under this Agreement
shall be the exclusive remedy of Buyer with respect to the claims based on the
Excluded Liabilities or a breach or alleged breach of the representations,
warranties and covenants of Seller contained herein. The rights of Seller under
this Agreement shall be the exclusive remedy of Seller with respect to the
Assumed Liabilities or claims based upon a breach or alleged breach of the
representations, warranties and covenants of Buyer contained herein. Except as
expressly set forth in this Agreement, neither Seller nor any of its Affiliates
or agents makes any representations or warranties, express or implied, in
connection with the transactions contemplated by this Agreement or the Purchased
Assets.
(e) Each Indemnified Party shall use reasonable
efforts and shall consult and cooperate with the other parties hereto with a
view towards mitigating Losses that may give rise to indemnification under this
Article VII.
ARTICLE VIII
GENERAL
8.1 Survival of Representations and Warranties
Any claim for indemnification under this Agreement must be
asserted on or prior to June 30, 1998.
8.2 Amendments; Waivers.
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This Agreement and any schedule or exhibit attached hereto may
be amended only by agreement in writing of all parties. No waiver of any
provision nor consent to any exception to the terms of this Agreement shall be
effective unless in writing and signed by the party to be bound and then only to
the specific purpose, extent and instance so provided.
8.3 Schedules; Exhibits: Integration.
Each schedule and exhibit delivered pursuant to the terms of
this Agreement shall be in writing and shall constitute a part of the Agreement,
although schedules need not be attached to each copy of this Agreement. This
Agreement, together with such schedules and exhibits, constitutes the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements and understandings of the parties in connection
therewith.
8.4 Best Efforts; Further Assurances.
Each party will use its best efforts to cause all conditions
to its obligations hereunder to be timely satisfied, and to perform and fulfill
all obligations on its part to be performed and fulfilled under this Agreement,
to the end that the transactions contemplated by this Agreement shall be
effected substantially in accordance with its terms as soon as reasonably
practicable. The parties shall cooperate with each other in such actions and in
securing requisite Approvals. Each party shall execute and deliver such further
certificates, agreements and other documents and take such other actions as may
be necessary or appropriate to consummate or implement the transactions
contemplated hereby or to evidence such events or matters.
8.5 Governing Law.
This Agreement and the legal relations between the parties
shall be governed by and construed in accordance with the laws of the State of
California applicable to contracts made and performed in such State and without
regard to conflicts of law doctrines, except to the extent that certain matters
are preempted by federal law or are governed by the law of the jurisdiction of
incorporation of the respective parties.
8.6 Assignment.
Neither this Agreement nor any rights or obligations under it
may be assigned by either party without the written consent of the other party,
which consent shall not be unreasonably withheld. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
8.7 Headings.
The descriptive headings of the Articles, Sections and
subsections of this Agreement
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are for convenience only and do not constitute a part of this Agreement.
8.8 Counterparts.
This Agreement and any other agreement (or document) delivered
pursuant hereto may be executed in one or more counterparts and by different
parties in separate counterparts. All of such counterparts shall constitute one
and the same agreement (or other document) and shall become effective when one
or more counterparts of this Agreement have been signed by each party and
delivered to the other party.
8.9 Publicity and Reports.
Seller and Buyer shall coordinate all publicity relating to
the transactions contemplated by this Agreement and no party shall issue any
press release, publicity statement or other public notice relating to this
Agreement, or the transactions contemplated by this Agreement, without the
advance written approval of the other party, except to the extent that a
particular action is required by applicable law or the rules and regulations of
the NASDAQ Stock Market.
8.10 Confidentiality.
All information disclosed by any party (or its
representatives) in connection with the transactions contemplated by, or the
discussions and negotiations preceding, this Agreement to any other party (or
its representatives)if such information is presented in writing and has been
designated in writing as confidential shall be kept confidential by such other
party and its representatives and shall not be used by any such Persons other
than as contemplated by this Agreement, except to the extent that such
information (i) was known by the recipient when received, (ii) it is or
hereafter becomes lawfully obtainable from other sources, (iii) is necessary or
appropriate to disclose to a Governmental Entity having jurisdiction over the
parties, (iv) as may otherwise be required by law or (v) to the extent such duty
as to confidentiality is waived in writing by the other party.
8.11 Parties in Interest.
This Agreement shall be binding upon and inure to the benefit
of each party and its permitted assigns, and nothing in this Agreement, express
or implied, is intended to confer upon any other person any rights or remedies
of any nature whatsoever under or by reason of this Agreement. Nothing in this
Agreement is intended to relieve or discharge the obligation of any third person
to or to confer any right of subrogation or action over against, any party to
this Agreement.
8.12 Notices.
Any notice or other communication hereunder must be given in
writing and either (a) delivered in person, (b) transmitted by facsimile
transmission or (c) sent by prepaid overnight courier, addressed as follows:
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If to Buyer, addressed to:
Steri-Oss Inc.
22895 East Park Drive
Yorba Linda, CA 92887 (Facsimile (714) 282-4835)
With a copy to:
Robert J. Zepfel, Esq.
Phillips & Haddan LLP
4695 MacArthur Court, Suite 840
Newport Beach, CA 92660 (Facsimile (714) 752-6161)
If to Seller, addressed to:
Interpore Dental, Inc.
181 Technology Drive
Irvine, CA 92618
Attn: President
With a copy to:
Latham & Watkins
650 Town Center Drive, 20th Floor
Costa Mesa, CA 92626 (Facsimile (714) 755-8290)
Attn: Charles Ruck
or to such other address or to such other person as either party shall have last
designated by such notice to the other party. Each such notice or other
communication shall be effective (i) if given by facsimile, when transmitted to
the applicable number so specified in (or pursuant to) this Section 8.12 and an
appropriate answerback is received, or (ii) if given by any other means, when
actually delivered at such address.
8.13 Expenses.
Seller and Buyer shall each pay their own expenses incident to
the negotiation, preparation and performance of this Agreement and the
transactions contemplated hereby, including but not limited to the fees,
expenses and disbursements of their respective accountants and counsel.
8.14 Remedies; Waiver.
Other than the provisions of Article VII, which shall
constitute the exclusive remedy
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for the matters described therein, to the extent permitted by Law, all rights
and remedies existing under this Agreement and any related agreements or
documents are cumulative to, and not exclusive of, any rights or remedies
otherwise available under applicable Law. No failure on the part of any party to
exercise or delay in exercising any right hereunder shall be deemed a waiver
thereof, nor shall any single or partial exercise preclude any further or other
exercise of such or any other right.
8.15 Attorney's Fees.
In the event of any Action for the breach of this Agreement,
the prevailing party shall be entitled to reasonable attorney's fees, costs and
expenses incurred in such Action.
8.16 Representation By Counsel: Interpretation.
Seller and Buyer each acknowledge that each party to this
Agreement has been represented by counsel in connection with this Agreement and
the transactions contemplated by this Agreement. Accordingly, any rule of Law,
including but not limited to Section 1654 of the California Civil Code, or any
legal decision that would require interpretation of any claimed ambiguities in
this Agreement against the party that drafted it has no application and is
expressly waived. The provisions of this Agreement shall be interpreted in a
reasonable manner to effect the intent of Buyer and Seller.
8.17 Severability.
If any provision of this Agreement is determined to be
invalid, illegal or unenforceable by any Governmental Entity, the remaining
provisions of this Agreement shall remain in full force and effect, provided
that the economic and legal substance of the transactions contemplated is not
affected in any manner materially adverse to any party.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized officers as of the day and year
first above written.
Steri-Oss Inc.
By: /s/ KENNETH A. DARIENZO
-----------------------------------
Kenneth A. Darienzo, President
Interpore Dental, Inc.
By: /s/ DAVID C. MERCER
-----------------------------------
David C. Mercer, President
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