ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of this 8th day of October, 1998 by and between Linvatec
Corporation, a Florida corporation (the "Linvatec"), and Minnesota Mining and
Manufacturing Company, a Delaware corporation ("3M").
WHEREAS, 3M, through its Medical Surgical Division (the
"Division"), engages in the business of manufacturing and selling certain
arthroscopic fluid control products and directly associated arthroscopic
instruments (the manufacture and sale of such products through such Division
being herein called the "Business"). Arthroscopy is the endoscopic examination
of the interior of a joint, and a joint is the articulating surfaces between
bones. Obviously, arthroscopic products do not include the so-called carpal
tunnel release system or similar products, which are not used in joints.
WHEREAS, 3M now desires to exit the Business without
interrupting the availability of products and customer support and Linvatec
desires to purchase and acquire the assets of the Business, all on the terms and
conditions set forth in this Agreement.
WHEREAS, Linvatec wishes to purchase the Business in a manner
that causes as little disruption as possible to customers of and the
profitability of the Business.
WHEREAS, 3M now desires to sell and Linvatec desires to
purchase and acquire certain assets of the Business, all on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the parties agree as follows:
ARTICLE I
Definitions
1.01 Purchased Assets. The term "Purchased Assets" or any
variation thereof as used in this Agreement shall mean the assets to be sold,
assigned, transferred and conveyed by 3M to Linvatec pursuant to Article II
hereof.
1.02 3M Products. The term "3M Products" or "3M Product Line"
or any variation thereof as used in this Agreement shall mean those 3M products
manufactured or sold through the Division described in the attached Schedule
1.02. .
1.03 Assumed Liabilities. The term "Assumed Liabilities" or
any variation thereof as used in this Agreement shall mean the liabilities and
obligations to be assumed by Linvatec pursuant to Article IV hereof.
1.04 Purchased Intellectual Property. The term "Purchased
Intellectual Property" means patents, patent applications, utility model
registrations, design patents, trademarks (if any), trade secrets and know-how
owned by 3M on the Closing Date that directly and solely relate to the Business
as conducted on the Closing Date and are listed in Schedule 1.04, but excluding
components and materials supplied to the Business by other businesses of 3M.
1.05 Licensed Intellectual Property. The term "Licensed
Intellectual Property" means patents, patent applications, utility model
registrations, design patents, trade secrets and know-how owned by 3M on the
Closing Date that are used directly in both the Business as conducted on the
Closing Date and 3M's cardiovascular perfusion/surgical business, but excluding
Components and Materials supplied to the Business by other businesses of 3M.
1.06 IP Agreements. The term "IP Agreements" means those
agreements licensing patents to or from 3M that directly and solely relate to
the Business as conducted on the Closing Date and are listed in Schedule 1.06,
excluding however supplier, distribution, consulting and confidentiality
agreements.
1.07 Sublicensed IP Agreement. The term "Sublicensed IP
Agreement" means the Automotive Supplier Agreement dated 22nd September 1998
between the Lemelson Medical, Education and Research Foundation, Limited
Partnership and 3M.
1.08 Adverse Material Change. The term "Adverse Material
Change" shall mean any change that significantly affects the valuation of the
Business.
ARTICLE II
Sale of Assets
2.01 Purchased Assets. Subject to the terms and conditions
hereof, 3M agrees to sell, assign, transfer and convey to Linvatec, and Linvatec
agrees to purchase and acquire from 3M, at the Closing (as hereinafter defined)
on the Closing Date (as hereinafter defined), all of 3M's right, title and
interest, if any, immediately prior to the effective time of the Closing in and
to the following assets wherever located:
(a) the fixed assets, machinery, manufacturing equipment, laboratory
and test equipment and 3M Product specifications, drawings and
manufacturing processes documents and office equipment used in
the Business as specified in Schedule 2.01(a).
(b) [intentionally deleted]
(c) Purchased Intellectual Property as provided in Article VI; and
(d) the records directly and solely related to the 3M Product Line and the
Purchased Assets.
(e) the purchase orders directly and solely related to the 3M Product Line,
the Purchased Assets or the Business issued by or to 3M in the
ordinary course of business;
(f) Subject to Section VI (Intellectual Property), the leases, contracts
and written agreements related to the 3M Product Line, the
Purchased Assets or the Business as conducted on the Closing
Date to the extent transferable (all non-assignable contracts
are identified in Schedule 2.01(f) (Non-assignable
contracts)), with 3M being required to secure the assignment
or transfer of all such agreements pursuant to Section 8.03.
2.02 Excluded Assets. It is understood and agreed that the
following assets of the Business are excluded from the Purchased Assets: (i)
cash; (ii) accounts receivable; and (iii) any items listed in Schedule 2.02
(Excluded Assets).
2.03 [Intentionally excluded]
2.04 Retention of Certain Records. It is understood and agreed
that 3M reserves the right to retain copies or written records of the items
referred to in Sections 2.01(c) and (d) for the purpose of defending any claims,
losses, causes of action or lawsuits, including those related to the sale of the
3M Product Line by 3M, and for the purpose of preparing any tax returns or
financial statements or reports, provided that 3M shall maintain the
confidentiality of such documents and shall promptly notify Linvatec of any
lawsuit or claim served upon 3M relating to the Business and/or records or
documents.
ARTICLE III
Purchase Price
3.01 Purchase Price and Payment. ln consideration for the
Purchased Assets, Linvatec agrees to pay to 3M seventeen million five hundred
thousand Dollars ($17,500,000.00) (the "Purchase Price"). The Purchase Price
shall be payable in cash at the Closing by wire transfer of immediately
available federal funds to 3M at Norwest Bank, Minnesota, N.A., Minneapolis,
Minnesota, ABA #091 000 019, credit to 3M General Account #30103.
3.02 Allocation of Total Purchase Price. It is understood and
agreed by the parties that, except as hereinafter provided, the Purchase Price
shall be allocated among the Purchased Assets in accordance with the attached
Exhibit A, and that said allocation will be used for state and federal tax
purposes. Each party acknowledges that such allocation is consistent with the
requirements of Section 1060 of the Internal Revenue Code 1986, as amended, and
the regulations thereunder. Each party agrees (i) to jointly complete and
separately file Form 8594 with its federal income tax return for the tax year in
which the Closing Date occurs, and (ii) that such party will not take a position
on any income, transfer or gains tax return before any governmental agency
charged with the collection of any such tax or in any judicial proceeding, that
is in any manner inconsistent with the terms of such allocation without the
written consent of the other party. Notwithstanding anything to the contrary
provided herein, neither party shall be bound by such allocation in the event
the Internal Revenue Service or another tax authority successfully challenges
the allocation. In the event of any challenge to such allocation by the Internal
Revenue Service or another tax authority, the parties will give each other
notice of the challenge and advise each other periodically of the status of such
challenge and reasonably cooperate with each other with respect to such
challenge.
3.03 Sales, Use and Transfer Taxes. Linvatec shall be
responsible for all sales, use and transfer taxes, deed taxes and recording
fees, if any, in each case applicable to the sale and transfer of the Purchased
Assets hereunder. Linvatec will furnish 3M at the Closing with properly executed
exemption certificates, dated the Closing Date, relating to the supplies and
manufacturing equipment being transferred pursuant to this Agreement as to which
Linvatec is claiming an exemption from sales, use or other transfer taxes.
ARTICLE IV
Assumption of Liabilities
4.01 Assumption of Liabilities. Subject to the terms and
conditions hereof and subject to Article VI (Intellectual Property), at the
Closing, Linvatec shall assume and agree to carry out and perform all of the
following liabilities and obligations which have not been paid, performed or
discharged prior to the effective time of the Closing by 3M:
(a) all obligations of 3M payable or performable after the Closing Date
under any of the licenses, purchase orders, leases, contracts,
or written agreements included in the Purchased Assets, but
excluding raw material and component parts purchases made by
3M in connection with 3M's performance under the Supply
Agreement, (collectively, the "Contracts"), the Sublicensed IP
Agreement and the IP Agreements;
(b) all warranty obligations of 3M with respect to 3M Products sold on or
prior to the Closing Date, as set forth in the attached
Schedule 4.01(b); and
(c) such other liabilities of the Business related to the 3M Product Line,
the Purchased Assets or the Business arising after the
Closing.
(d) the language of Section 4.01(a)-(c) notwithstanding, Linvatec shall not
be responsible for any taxes or liens upon the Purchased
Assets that arise from pre-Closing facts or circumstances.
ARTICLE V
Representations and Warranties
5.01 3M Representations. 3M hereby represents and warrants as
follows:
(a) Organization of 3M. 3M is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware
(b) Authority of 3M. 3M has full corporate power and authority to execute,
deliver and perform this Agreement and each of the Transaction
Documents (as hereinafter defined) to be entered into by it at
the Closing, and such execution, delivery and performance have
been duly authorized by all necessary and proper corporate
action of 3M. This Agreement has been duly executed and
delivered by 3M, and (assuming due authorization, execution
and delivery hereof by Linvatec) is the valid and binding
obligation of 3M enforceable against 3M in accordance with its
terms (except as such enforceability may be limited by
bankruptcy, reorganization, insolvency, moratorium and other
similar laws affecting creditors' rights generally or by
general principles of equity.) Upon execution and delivery
thereof by 3M at the Closing (and assuming due authorization,
execution and delivery thereof by Linvatec, to the extent
applicable), each of the Transaction Documents to be entered
into by 3M at the Closing will be the valid and binding
obligation of 3M enforceable against 3M in accordance with its
terms (except as such enforceability may be limited by
bankruptcy, reorganization, insolvency, moratorium or other
similar laws affecting creditors' rights generally or by
general principles of equity).
(c) Title to Purchased Assets. Except as set forth in Schedule 5.01(c),
Article VI (Intellectual Property) or elsewhere in this
Agreement, 3M has or will have at the Closing title to the
Purchased Assets, free and clear of all mortgages, liens,
security interests, claims, tax liabilities, charges and
encumbrances.
(d) Contracts. The attached Schedule 5.01(d) lists, as of the date of this
Agreement, all leases, contracts, agreements and commitments
related to the 3M Product Line, other than those IP agreements
listed on Schedule 1.06, the Purchased Assets or the Business
to which 3M is a party or by which 3M is bound and which
involve payments of more than $10,000 per annum, excluding
purchase orders issued by or to 3M in the ordinary course of
business.
(e) No Brokers. With respect to the transactions contemplated by this
Agreement, 3M has not dealt with or been contacted by any
finder or broker and is not in any way obligated to compensate
such persons.
(f) Compliance with Law. To 3M's knowledge, the Business is not in
violation of any law, ordinance or regulation of any
governmental entity, which violations would have Adverse
Material Change. To 3M's knowledge, all governmental
approvals, permits, licenses and other authorizations required
in connection with the conduct of any material aspect of the
Business (collectively, "Governmental Authorizations") have
been obtained and are in full force and effect and are being
complied with in all material respects. However, 3M has the
authorization to CE mark only model 83100 tubesets. 3M has not
received any written notification of any asserted past or
present violation in connection with the conduct of the
Business of any law, ordinance or regulation, which violation
would have a Adverse Material Change, or any written
complaint, inquiry or request for information from any
governmental entity relating thereto. 3M represents that to
3M's knowledge none of the 3M Products are subject to a
recall, or need to be recalled.
(g) FDA Approval Status. 3M warrants that to 3M's knowledge, all 3M
Products including any accessories currently are being
marketed in compliance with all Food and Drug Act and other
legal requirements.
(h) Completeness of Purchased Assets. The Purchased Assets constitute all
assets necessary for 3M, or used by 3M in, the conduct of the
Business, particularly the manufacture of the 3M Products,
except those assets identified on Schedule 2.02 as the
Excluded Assets or intellectual property, which is governed by
Article VI.
(i) Financials. The financial statements provided by 3M and attached hereto
as Schedule 5.01(i) are true and accurate in all material
respects, have been derived from the books and records of 3M
that have been prepared and maintained in accordance with
Generally Accepted Accounting Principles (GAAP).
(j) Claims Status. 3M is unaware of any claims that are being asserted
other than those already disclosed, with respect to product
liability, regulatory or other claims.
(k) Intellectual Property. 3M's disclaims any representation or warranty
provided in this Agreement as it might be construed to apply
to intellectual property except as provided in Article VI
(Intellectual Property).
5.02 Linvatec Representations. Linvatec hereby represents and
warrants as follows:
(a) Organization of Linvatec. Linvatec is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Florida.
(b) Authority of Linvatec. Linvatec has full corporate power and authority
to execute, deliver and perform this Agreement and each of the
Transaction Documents to be entered into by it at the Closing,
and such execution, delivery and performance have been duly
authorized by all necessary and proper corporate action of
Linvatec. This Agreement has been duly executed and delivered
by Linvatec, and (assuming due authorization, execution and
delivery hereof by 3M) is the valid and binding obligation of
Linvatec enforceable against Linvatec in accordance with its
terms (except as such enforceability may be limited by
bankruptcy, reorganization, insolvency moratorium and other
similar laws affecting creditors' rights generally or by
general principles of equity). Upon execution and delivery
thereof by Linvatec at the Closing (and assuming due
authorization, execution and delivery thereof by 3M, to the
extent applicable), each of the Transaction Documents to be
entered into by Linvatec at the Closing will be the valid and
binding obligation of Linvatec enforceable against Linvatec in
accordance with its terms (except as such enforceability may
be limited by bankruptcy, reorganization, insolvency,
moratorium or other similar laws affecting creditors' rights
generally or by general principles of equity).
(c) Financial Ability of Linvatec. Linvatec has available cash and/or
existing committed borrowing facilities sufficient to enable
it to consummate the transactions contemplated by this
Agreement.
(d) No Brokers. With respect to the transactions contemplated by this
Agreement, Linvatec has not dealt with or been contacted by
any finder or broker and is not in any way obligated to
compensate such persons.
ARTICLE VI
Intellectual Property
6.01 Intellectual Property Recitals. The transfer of
intellectual property, and any representations or warranties regarding
intellectual property by 3M, are exclusively controlled by this Article. 3M
disclaims any warranty or representation provided elsewhere in this Agreement as
it might be construed to apply to intellectual property owned, licensed or
controlled by 3M or any third party intellectual property right. Except as
provided in this Article, intellectual property is being transferred or licensed
on an "AS IS" basis. The general intent of this Article is to transfer or
license to Linvatec sufficient intellectual property rights (to the extent
transferable) that are owned or licensed to 3M to allow Linvatec to conduct the
Business in the same manner it was conducted by 3M on the Closing Date,
excluding however intellectual property rights relating to components or
materials supplied to the Business by other businesses of 3M. This also means,
however, that if 3M has or is infringing any third party intellectual property
right on or before the Closing Date, Linvatec does not expect to be put into a
better position relative to such third party intellectual property right than 3M
is on the Closing Date, and that Linvatec will be responsible for any
infringement of third party intellectual property rights on products sold after
the Closing Date.
6.02 Purchased Intellectual Property. Subject to the terms and
conditions hereof, 3M agrees to sell, assign, transfer and convey to Linvatec,
and Linvatec agrees to purchase and acquire from 3M, at the Closing on the
Closing Date, all of 3M's right, title and interest, if any, immediately before
the effective time of the Closing in and to the following assets:
(a) The technology and know-how within Purchased Intellectual Property to
the extent transferable by 3M, subject to a worldwide,
non-exclusive, royalty-free, assignable license, with the
right to sublicense, from Linvatec back to 3M of any
technology and know-how within the field of cardiovascular
perfusion products and equipment and cardiovascular surgical
products and equipment;
(b) The patents, applications for patents, utility model registrations and
design patents within Purchased Intellectual Property, subject
to a worldwide, non-exclusive, royalty-free, assignable
license, with the right to sublicense, from Linvatec back to
3M of any such rights within the field of cardiovascular
perfusion products and equipment and cardiovascular surgical
products and equipment, and subject to any agreement listed in
Schedule 1.06 (If any royalties are due to a third party under
an IP Agreement due to 3M's sales under its license provided
herein, however, 3M will pay those royalties to Linvatec so
that they may be passed through to the third party);
(c) Any unregistered trademarks (and the goodwill of the business in which
any such trademarks are used and which is symbolized by said
trademarks), if any, and copyrights within Purchased
Intellectual Property to the extent transferable by 3M,
subject to any agreement listed in Schedule 1.06.
(d) Any IP Agreement to the extent transferable by 3M. 3M's obligation with
respect to transferability of any IP Agreement are provided in
Section 8.03 (Unassignable Contracts) to the extent the
mechanism provided in Section 8.03 would not constitute a
breach of the IP Agreement.
6.03 Licensed Intellectual Property. Effective on the Closing
Date, 3M hereby grants to Linvatec a fully-paid up, non-cancelable, worldwide,
non-exclusive license under Licensed Intellectual Property to use such rights
within the field of orthopedic devices, including without limitation the right
to make, have made, use, sell, offer for sale, lease, import, export or
otherwise dispose of products, and the right to sublicense to customers or
suppliers as part of the manufacture or sale of products, or assign such license
to any assignee or successor of the Business. It is believed that there are no
patents, patent applications, utility model registrations, or design patents
within Licensed Intellectual Property, and thus this Section shall be construed
to grant the described license to the extent that the parties discover that this
belief is incorrect. Various products of the Business are manufactured or
assembled at a common site with 3M's cardiovascular perfusion/surgical products
business, and there may be trade secrets and know-how within Licensed
Intellectual Property that apply or are applicable to both the Business and 3M's
cardiovascular perfusion/surgical products business. This Section will be
construed to allow Linvatec and 3M to use such trade secrets and know-how within
their respective fields without breaching this Agreement or being sued for
misappropriation or infringement by the other party.
6.04 Trade Name and Trademark Restrictions. It is understood
and agreed that this Agreement does not constitute an agreement to transfer to
Linvatec the right to use: (i) the name 3M, (ii) any 3M corporate logo alone, or
(iii) any combination of any other mark or symbol with any of the marks
identified in Sections 6.04(i) or 6.04(ii), except as provided in Section 6.05.
6.05 Removal of 3M Trade Names. Within a reasonable period of
time not to exceed 120 days after expiration or termination of the Supply
Agreement but in no event longer than eighteen months after the Closing Date,
Linvatec shall remove all trade names and trademarks of 3M not included in the
Purchased Assets from all assets transferred to Linvatec hereunder; provided,
however, that it is understood and agreed that with respect to product
literature and other assets where removal of such trade names or trademarks
would result in damage to such asset, Linvatec may instead relabel such assets
to conceal such trade names or trademarks.
6.06 Intellectual Property Agreement Assumptions. Linvatec
agrees to assume all of 3M's obligations, duties, liabilities and commitments
pursuant to the IP Agreements including but not limited to any obligation for 3M
to pay any royalty. Linvatec agrees to forever hold 3M harmless, defend 3M and
indemnify 3M for any damages, penalties or expenses incurred, including
reasonable attorney expenses, with respect to any claim or cause of action of
any description (regardless of the theory of liability) related to the alleged
breach of Linvatec's or 3M's or assumed obligations under the IP Agreements.
Without limiting the generality of the previous portion of this section,
Linvatec agrees to forever hold 3M harmless, defend 3M and indemnify 3M for any
damages with respect to a) any cause of action alleging that any third party is
entitled to a royalty for sales after the Closing Date pursuant to the IP
Agreements, or b) any cause of action for a breach of any of the IP Agreements
arising out of this Agreement or the assignment of any IP Agreement to Linvatec.
The consideration paid by Linvatec for the transfer of the IP Agreements shall
include the assumption by Linvatec of the duties, liabilities, obligations and
commitments relating to the Intellectual Property Agreements as set forth in
this Section of the Agreement.
6.07 Warranties. 3M hereby warrants and represents, to its
knowledge, as follows:
(a) 3M has title to the patents, patent applications, design patents and
utility model registrations listed in Schedule 1.04. In
addition, such title is subject to or encumbered by the
agreements listed in Schedule 1.06;
(b) Neither 3M's Office of Intellectual Property Counsel nor 3M senior
executive management have received any unresolved written
claim since October 1, 1992 from any third party charging 3M
with infringement of any intellectual property right in
connection with 3M's conduct of the Business, except as
provided in Schedule 6.07(b);
(c) Schedule 1.04 represents a complete list of patents, patent
applications, design patents and utility model registrations
for which 3M has title that directly and solely relate to the
Business as conducted on the Closing Date, except for any
patent, patent application, design patent and utility model
registration for which 3M requested an outside counsel or
International patent firm to abandon more than six (6) months
before the Closing Date;
(d) Schedule 1.06 represents a complete list of IP Agreements; and
(e) 3M's Office of Intellectual Property Counsel has not received any
unresolved written claim since October 1, 1996 from any third
party claiming 3M is in breach of any IP Agreement in
connection with 3M's conduct of the Business, except as
provided in Schedule 6.07(e).
6.08 Notice, Correction of Schedules. Linvatec will provide 3M
with prompt written notice identifying any item not listed on Schedule 1.04,
1.06, 6.07(b) or 6.07(e) that Linvatec comes to believe belongs on Schedule
1.04, 1.06, 6.07(b) or 6.07(e) along with an explanation as to why such missing
item belongs on Schedule 1.04, 1.06, 6.07(b) or 6.07(e). If 3M and Linvatec
agree that such item should have been listed, then 3M will use its best efforts
to provide a revised Schedule listing the missing item, subject to Section 8.03
(Unassignable Contracts) to the extent Section 8.03 would not constitute a
breach of any agreement that belongs on Schedule 6.07(b). At any time before the
Closing Date, 3M will have the unilateral right to add items to Schedules 1.04,
1.06, 6.07(b) or 6.07(e), although Linvatec will have the right to terminate
this Agreement pursuant to Section 11.01(e) if such addition constitutes an
Adverse Material Change.
6.09 Disclaimers. LINVATEC ACKNOWLEDGES THAT 3M HAS DISCLAIMED
(i) ANY REPRESENTATION OR WARRANTY OF INVENTORSHIP, TRANSFERABILITY, VALIDITY,
ORIGINALITY, ENFORCEABILITY, RELATIONSHIP TO ANY OTHER INTELLECTUAL PROPERTY
(E.G., WHETHER PATENTS ARE COUNTERPARTS OR EQUIVALENTS), NON-INFRINGEMENT,
RIGHT-TO-PRACTICE, SCOPE, STATUS (PENDING OR ISSUED) OR PRIORITY OF ANY
INTELLECTUAL PROPERTY RIGHT AND ANY AGREEMENT RELATING TO INTELLECTUAL PROPERTY;
(ii) ANY REPRESENTATION OR WARRANTY WITH RESPECT TO RIGHT TO PRACTICE AND
WHETHER ANY THIRD PARTY INTELLECTUAL PROPERTY RIGHT IS OR WOULD BE INFRINGED BY
THE BUSINESS, 3M PRODUCTS OR 3M PRODUCT LINE, AND (iii) ANY REPRESENTATION OR
WARRANTY REGARDING THE STATUS OF ANY IP AGREEMENT (FOR EXAMPLE, WHETHER THE
AGREEMENT IS BEING BREACHED).
6.10 Assignment Documents. Linvatec agrees to deliver to 3M at
the Closing assignment or transfer documents consistent with this Agreement and
reasonably acceptable to 3M of patents, patent applications, utility model
registrations, design patents, patent licenses assigned in this Article.
6.11 No Implied IP Transfers. It is expressly understood and
agreed that, other than the intellectual property expressly identified in
Article VI of this Agreement (and related Schedules thereof), this Agreement
does not transfer to Linvatec any interest in any intellectual property rights.
6.12 Dispute Resolution. Any dispute regarding the terms or
conditions of this Article or either party's performance or alleged breach of
any term or condition of this Article will be subject to the dispute resolution
provisions of section 11.02 except that 3M's Medical Markets Group Intellectual
Property Counsel will be substituted for the Medical Markets Group Counsel in
section 11.02(a).
6.13 Indemnity, Notice. This Article will be subject to the
provisions of Article X. In addition, effective eighteen months after the
Closing Date, Linvatec hereby releases 3M from any claim (whether known or
unknown) relating to intellectual property or this Article that is not the
subject of written notice provided to: Chief Intellectual Property Counsel, 3M
Office of Intellectual Property Counsel, P.O. Box. 33427, St. Paul, Minnesota
55133-3427, before eighteen months after the Closing Date.
6.14. Sublicensed Intellectual Property. Effective on the
Closing Date, 3M grants to Linvatec a non-exclusive, fully paid-up sublicense
under the Sublicensed IP Agreement with respect to the 3M Product Line to the
extent permitted in the provisions of such Sublicensed IP Agreement relating to
3M's sale of a product line to a third party. 3M will make the payment due under
section 5.b. of the Sublicensed IP Agreement on or before January 15, 1999.
6.15 Other 3M Patent. Effective on the Closing Date, 3M agrees
and covenants not to sue Linvatec with respect to Linvatec's use (if any) of the
method claimed in US Patent No. 4,806,730 in Linvatec's conduct of the Business.
This covenant will also cover suppliers of Linvatec to the extent they practice
this method to supply Linvatec's needs with respect to the Business. This
covenant will be transferable by Linvatec to any assignee or successor of the
Business.
ARTICLE VII
Conditions to Closing
7.01 Conditions to Linvatec's Obligations. The obligations of
Linvatec to be performed at the Closing shall be subject to the satisfaction or
the waiver in writing by Linvatec at or prior to the Closing of the following
conditions:
(a) Each of the representations and warranties of 3M contained in this
Agreement shall be true in all material respects as of the
Closing with the same effect as though such representations
and warranties have been made as of the Closing, except for
any variations therein resulting from actions contemplated or
permitted by this Agreement, and each of the covenants to be
performed by 3M at or before the Closing pursuant to the terms
hereof shall have been duly performed in all material
respects. Linvatec shall have been furnished with a
certificate of 3M, executed on its behalf by an appropriate
officer of 3M and dated the Closing Date, certifying to the
foregoing effects.
(b) No action, suit or proceeding by any governmental authority shall be
pending against Linvatec or 3M which seeks to prevent the
consummation of the transactions contemplated by this
Agreement, and no injunction or order for any court or
administrative agency of competent jurisdiction shall be in
effect which restricts or prohibits the consummation by
Linvatec or 3M of the transactions contemplated by this
Agreement.
(c) Any waiting period (and any extension thereof) under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), applicable to the acquisition of the
Purchased Assets contemplated hereby shall have expired or
been terminated.
(d) 3M and Linvatec shall have executed a supply agreement in the form of
Exhibit B ("Supply Agreement") to ensure a smooth transition
during that period between the Closing and the commencement of
manufacturing by Linvatec.
(e) Linvatec shall have received from 3M:
(i) A Bill of Sale in the form of Exhibit C.
(ii) Certificate of Good Standing.
(iii) Certified copies of 3M's corporate resolutions
authorizing the transaction contemplated hereby and
by the Supply Agreement.
(f) 3M shall have completed Schedule 2.02 (Excluded Assets). Any items
added by 3M to Schedule 2.02 between the signing of this
Agreement and the Closing must be approved by Linvatec, which
will not withhold its approval unreasonably.
7.02 Conditions to Obligations of 3M. The obligations of 3M to
be performed at the Closing shall be subject to the satisfaction or the waiver
in writing by 3M at or prior to the Closing of the following conditions:
(a) Each of the representations and warranties of Linvatec contained in
this Agreement shall be true in all material respects as of
the Closing with the same effect as though such
representations and warranties had been made as of the
Closing, except for any variations therein resulting from
actions contemplated or permitted by this Agreement, and each
of the covenants to be performed by Linvatec at or before the
Closing pursuant to the terms hereof shall have been duly
performed in all material respects. 3M shall have been
furnished with a certificate of Linvatec, executed on its
behalf by an appropriate officer of Linvatec and dated the
Closing Date, certifying to the foregoing effects.
(b) No action, suit or proceeding by any governmental authority shall be
pending against Linvatec or 3M which seeks to prevent the
consummation of the transactions contemplated by this
Agreement, and no injunction or order of any court or
administrative agency of competent jurisdiction shall be in
effect which restricts or prohibits the consummation by
Linvatec of 3M of the transactions contemplated by this
Agreement.
(c) Any waiting period (and any extension thereof) under the HSR Act
applicable to the acquisition of the Purchased Assets
contemplated hereby shall have expired or been terminated.
ARTICLE VIII
Certain Agreements
8.01 Linvatec Investigation: No Representations or Warranties:
Exclusivity of Remedies.
(a) LINVATEC HEREBY ACKNOWLEDGES THAT IT HAS EVALUATED AND CONDUCTED
THOROUGH DUE DILIGENCE WITH RESPECT TO THE 3M PRODUCT LINE.
THE PURCHASED ASSETS AND THE BUSINESS (INCLUDING THE
OPERATIONS, CONTRACTS, CUSTOMER FILES, MANUFACTURING PROCESS,
INTELLECTUAL PROPERTY, FINANCIAL INFORMATION AND PROSPECTS OF
THE BUSINESS (INCLUDING BUT NOT LIMITED TO ANY DOCUMENTS
PROVIDED TO LINVATEC BY 3M), AND HAS BEEN REPRESENTED BY, AND
HAD THE ASSISTANCE OF, COUNSEL (INCLUDING BUT NOT LIMITED TO
INTELLECTUAL PROPERTY COUNSEL) IN THE CONDUCT OF SUCH DUE
DILIGENCE, THE PREPARATION AND NEGOTIATION OF THIS AGREEMENT
AND THE TRANSACTION DOCUMENTS, AND THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED HEREBY.
(b) 3M HAS MADE AVAILABLE TO LINVATEC AND ITS REPRESENTATIVES CERTAIN
INFORMATION AND RECORDS RELATING TO THE 3M PRODUCT LINE, THE
PURCHASED ASSETS AND THE BUSINESS. IT IS UNDERSTOOD AND AGREED
BY THE PARTIES THAT NO REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, HAS BEEN MADE BY 3M OR ITS AGENTS REGARDING THE
ACCURACY OR COMPLETENESS OF ANY SUCH INFORMATION OR RECORDS,
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR ANY OF THE
TRANSACTION DOCUMENTS, AND THAT 3M WILL NOT HAVE OR BE SUBJECT
TO ANY LIABILITY TO LINVATEC OR ANY OTHER PERSON RESULTING
FROM THE DISTRIBUTION TO LINVATEC, OR LINVATEC'S USE, OF ANY
SUCH INFORMATION OR RECORDS, EXCEPT AS EXPRESSLY PROVIDED IN
THIS AGREEMENT. FURTHERMORE, LINVATEC AGREES THAT IT IS
ACCEPTING POSSESSION OF THE PURCHASED ASSETS AT THE CLOSING
"AS IS, WHERE IS, WITH ALL FAULTS," WITH NO RESULTING RIGHT OF
SET-OFF OR REDUCTION IN THE PURCHASE PRICE, AND THAT, EXCEPT
AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR ANY OF THE
TRANSACTION DOCUMENTS, THE SALE OF THE PURCHASED ASSETS IS
BEING MADE WITHOUT REPRESENTATION OR WARRANTY OF ANY KIND,
EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF INCOME
POTENTIAL, OPERATION EXPENSE, USE, MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE, ALL OF WHICH REPRESENTATIONS AND
WARRANTIES ARE HEREBY DISCLAIMED AND RENOUNCED BY 3M.
(c) LINVATEC ACKNOWLEDGES AND AGREES THAT, EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED IN SECTION 5, ITS SOLE AND EXCLUSIVE REMEDY WITH
RESPECT TO ANY AND ALL CLAIMS RELATING TO THE SUBJECT MATTER
OF THIS AGREEMENT (INCLUDING CLAIMS FOR BREACHES OF
REPRESENTATIONS, WARRANTIES AND COVENANTS CONTAINED IN THIS
AGREEMENT) SHALL BE PURSUANT TO THE INDEMNIFICATION PROVISIONS
SET FORTH IN ARTICLE XI.
(d) WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, NO CLAIMS RELATING TO
THE SUBJECT MATTER OF THIS AGREEMENT MAY BE BROUGHT BY
LINVATEC AGAINST ANY DIRECTOR, OFFICER OR EMPLOYEE 3M IN HIS
OR HER INDIVIDUAL CAPACITY.
8.02 Conduct of Business. Except as expressly contemplated by
this Agreement, from the date hereof until the Closing, 3M will conduct the
Business in the usual and ordinary course. 3M specifically agrees that it will
not (i) enter into any agreements with respect to the Business that are less
favorable than contracts currently in place, (ii) enter into new contracts
without the prior written consent of Linvatec, (iii) give away any products or
services associated with the Business without the prior written consent of
Linvatec (iv) offer or provide its products to customers, distributors or others
in any special incentive pricing packages, including any bundled sales of the
Products with other medical or other products, except as may be necessary to
meet competitive pricing in the markets for the Product being sold as part of
the Business and only then after receiving proof of approval from Linvatec; and
(v) offer discounted pricing or free products in connection with any effort to
sell other 3M products.
8.03 Unassignable Contracts. Notwithstanding anything to the
contrary stated in this Agreement, but subject to Article VI (Intellectual
Property), if any Contract cannot be assigned to or assumed by Linvatec without
the approval, consent or waiver of another party thereto, and such approval,
consent or waiver has not been obtained at or prior to the Closing, then (i)
such Contract shall not be assigned to or assumed by Linvatec at the Closing,
(ii) 3M and Linvatec shall, if such approval, consent or waiver is obtained
following the Closing, promptly thereafter execute all documents necessary to
complete the assignment and assumption of such Contract (at Linvatec's expense),
and (iii) unless and until such approval, consent or waiver is obtained and such
assignment and assumption occurs, 3M shall hold the benefits and privileges of
such Contract arising after the Closing Date in trust for Linvatec and Linvatec
will indemnify and hold harmless 3M against and with respect to all obligations
of 3M payable or performable after the Closing Date under such Contract. Each of
3M and Linvatec agrees to use reasonable efforts to promptly obtain all
approvals, consents and waivers from third parties to the Contracts which are
necessary to permit the Contracts to be assigned to and assumed by Linvatec,
provided that neither 3M nor Linvatec shall be obligated to make any payment or
offer or grant any accommodation (financial or otherwise) in exchange for any
such approval, consent or waiver.
8.04 Bulk Transfer Laws. 3M and Linvatec mutually waive
compliance with the provisions of any applicable state bulk transfer laws,
including any state tax laws relating to the obligations of buyers of assets in
bulk transfers.
8.05 Removal of Assets. Linvatec agrees to assume
responsibility for, and pay all expenses in connection with transporting and
relocating those Purchased Assets which at the Closing are located at any of
3M's facilities. Such removal shall be completed within thirty (30) days after
the termination of the Supply Agreement. 3M agrees to give Linvatec, its agents
and employees access to such facilities at reasonable times and upon reasonable
notice, and reasonable assistance for purposes of removing such Purchased
Assets. 3M shall have no liability to Linvatec in connection with the removal
from, such facilities of the Purchased Assets after the Closing, and risk of
loss with respect to such Purchased Assets shall pass to Linvatec on the
Closing. Linvatec shall be responsible for the costs of repairing any damage to
such facilities resulting from the removal of the Purchased Assets therefrom.
8.06 [Intentionally omitted]
8.07 Record Retention. Linvatec shall retain all business
files and documents included in the Purchased Assets and so specified in
Schedule 8.07 (Record Retention) for a period of ten years after the Closing
Date, and Linvatec shall make available to 3M any such records for inspection
and copying, upon reasonable notice from 3M.
8.08 Governmental Filings. Unless such Notification and Report
Form has already been filed, Linvatec and 3M agree to make or cause their
affiliates to make an appropriate filing of a Notification and Report Form
pursuant to the HSR Act with respect to the transactions contemplated hereby
within five business days of the date hereof, to supply promptly any additional
information and documentary material that may be requested pursuant to the HSR
Act, and to use all reasonable efforts to obtain an early termination of any
applicable waiting period under the HSR Act.
8.09 Further Assurances. For a period of one (1) year
following the Closing Date, 3M shall promptly execute, acknowledge and deliver
any further assignments, conveyances and other instruments of transfer
reasonably requested by Linvatec and necessary to effectuate the transfer of
title to the Purchased Assets to Linvatec and, at Linvatec's expense, will take
any other action consistent with the terms of this Agreement that may be
reasonably be requested by Linvatec for the purpose of assigning, transferring,
granting, and confirming ownership in or to Linvatec, or reducing to Linvatec's
possession, any or all of the Purchased Assets.
8.10 Further Assistance. For a period of one (1) year, 3M
agrees to complete any documents necessary to show that Linvatec did not assume
assets with liens or outstanding tax obligations.
8.11 No Adverse Material Change. 3M agrees that it will make
all commercially reasonable efforts to maintain the Business at its current
levels up to and through Closing, and that there will be no Adverse Material
Change in the Business prior to and up to the Closing.
8.12 Product Liability Assistance. 3M will assist Linvatec
with the defense of any and all future product liability actions brought within
one (1) year after Closing, and will make reasonably available any retained
employees to assist in the defense of any such actions, with Linvatec being
responsible only for out-of-pocket travel expenses, if any, incurred by such 3M
employees therewith. Linvatec will similarly assist 3M with the defense of any
and all product liability actions brought prior to Closing or against which 3M
is obligated to defend according to Section 10.02(b).
8.13 Non-Competition Agreement. For a period of five (5) years
following the Closing Date, neither 3M, nor any of the Affiliates of 3M shall
sell directly or indirectly anywhere within the United States or U.S. territory
and any foreign country any 3M Products being sold in this Agreement. If at the
time of enforcement of this Section 8.13, the court shall hold that the
duration, scope or area restrictions stated herein are unreasonable under
circumstances then existing, the parties agree that the maximum duration, scope
or area reasonable under such circumstances shall be substituted for the stated
duration, scope or area, but in no event in excess of the stated duration, scope
or area. In an action in law or in equity for breach or enforcement of this
Section 8.13 brought in any court having competent jurisdiction over the parties
to such an action, the prevailing party shall be entitled to recover from the
other party or parties its reasonable attorneys fees, costs and expenses
associated with prosecuting or defending such an action to its final disposition
(including final dispositions by summary adjudication, judge or jury verdict or
final appeal).
8.14 [Intentionally omitted]
8.15 Misdirected Payments. The parties anticipate that certain
third parties, including customers and vendors, may misdirect payments or goods
to 3M rather than to Linvatec, or to Linvatec rather than 3M. 3M and Linvatec
agree to notify and to forward to the other promptly any such misdirected
payments or goods.
8.16 Transition Agreement. 3M will assist Linvatec in the
transition of the business. 3M and Linvatec will send a joint letter to
customers of the Business informing them that Linvatec has purchased the
Business. 3M will introduce the appropriate Linvatec represesentative to the
customers. If, at any time within eighteen (18) months after Closing, customers
contact 3M to purchase 3M Products sold through this Agreement, 3M will notify
those customers that the 3M Products are available from Linvatec.
8.17 Vendor Assignments or Assistance. 3M shall assist
Linvatec in transferring or assigning, or entering into supply agreements with
vendors or with 3M or its affiliates, as Linvatec may require.
8.18 Independent Sales Representatives. Linvatec will pay 50%
of all commissions and incentive payments that 3M is obligated to pay to
independent sales representatives for sales of 3M Products occurring from
Closing through December 31, 1998. 3M will pay the full amount of the
commissions and incentive payments to the independent sales representatives and
deduct the amount owed by Linvatec from the prepayment stated in the Supply
Agreement.
8.19 3M Materials and Components. "3M Materials and
Components" are materials and components that 3M uses in the 3M Products but are
not included in the Purchased Assetsand for which there are no substitutes
available from another supplier. 3M will supply 3M Materials and Components to
Linvatec for the manufacture of 3M Products by Linvatec for one year from the
end of the Supply Agreement at prices it charges to similar customers who
purchase like quantities of the 3M Materials and Components.
ARTICLE VIIIA
Employees
8A.1 In the event Buyer offers employment to 3M employees and
3M employees accept this offer of employment at the time of closing, they shall
be referred to as "Transferred Employees".
8A.2 Benefits. Buyer will provide coverage and benefits to the
Transferred Employees under same pension and welfare benefit plans covering its
salaried employees, and 3M will have no responsibility therefor on and after
such date. 3M shall remain responsible to the Transferred Employees for all
benefits accrued pursuant to 3M benefit plans prior to the closing date and
payable under the provisions of such plans. Buyer assumes no liability or
obligation therefor.
8A.3 Service Credit. Buyer shall cause each of its pension and
welfare benefit plans to recognize all of the service that the Transferred
Employees completed with 3M for purposes of determining their eligibility to
participate in, eligibility for benefits under, vesting in accrued benefits, and
accrual of benefits under such plans (except for Buyer's Defined Benefit Pension
Plan.)
8A.4 Group Health Plans. Buyer will cause its group health
benefit plans to (i) waive any exclusions for pre-existing conditions affecting
Transferred Employees and their eligible family members, and (ii) recognize any
out of pocket medical and dental expenses incurred by Transferred Employees and
their eligible family members during 1998, but prior to the Closing Date, for
purposes of determining their deductibles and out of pocket maximums under
Buyer's plans.
8A.5 Vacation Benefits. Transferred Employees will be covered
by and begin accruing benefits under Buyer's vacation plan covering its salaried
employees. Buyer's vacation plan shall recognize all of the Transferred
Employees' years of service with 3M for the purpose of determining their future
vacation benefits.
ARTICLE IX
Closing
9.01 Closing Date. The closing of the purchase and sale of the
Purchased Assets and the assumption of the Assumed Liabilities pursuant to this
Agreement (the "Closing") shall take place on November 5, 1998, at the offices
of 3M, at 10:00 a.m., or, if the conditions to Closing set forth in Article V
shall not have been satisfied or waived by the appropriate party by such time of
day on such date, at the same time of day on the first business day to occur
following the date on which all of the conditions to Closing set forth in
Article VII shall have been satisfied or waived as provided therein (subject to
the provisions of Section 11.01), or at such other date, place or time as
Linvatec and 3M may agree upon in writing. The date on which the Closing shall
be required to occur, as determined in accordance with this Section 9.01, is
herein referred to as the "Closing Date". The Closing shall be deemed to have
become effective as of the start of business on the Closing Date.
9.02 Closing Deliveries.
(a) 3M agrees to deliver to Linvatec at the Closing such bills of
sale, assignments and other instruments of transfer (excluding
transfer of Intellectual Property or IP Agreements), in form
and substance reasonably satisfactory to Linvatec, as shall be
necessary or appropriate to effect the conveyance to Linvatec
of the Purchased Assets (without representation or warranty
except as expressly provided in this Agreement), duly executed
by 3M.
(b) Linvatec agrees to pay or deliver, as the case may be, to 3M at the Closing
the following:
(i) An assumption agreement, in form of Exhibit D, effecting the
assumption by Linvatec of the Assumed Liabilities, duly
executed by Linvatec;
(ii) The Purchase Price paid in the manner provided in Section
3.01; and
(iii) Intellectual property assignment or transfer documents as
provided in Article VI.
(c) The certificates, instruments and documents executed and delivered by
the parties at the Closing pursuant to this Agreement are
herein collectively referred to as the "Transaction
Documents".
9.03 Post-Closing Deliveries. Each of Linvatec and 3M will, at
the request and sole cost and expense of the other such party, do, make,
execute, acknowledge and deliver after the Closing all such other and further
acts and instruments of conveyance, assignment, transfer, consent and assumption
as Linvatec may reasonably require to confirm conveyance and transfer to
Linvatec of any of the Purchased Assets or as 3M may reasonably required to
confirm assumption by Linvatec of any of the Assumed Liabilities. Nothing
contained herein shall be construed to require 3M to acquire any intellectual
property license from any third party.
ARTICLE X
Indemnity
10.01 Survival. The representations and warranties of Linvatec
and 3M herein or in any of the Transaction Documents shall survive the Closing,
but, as to any claim, only for so long as the indemnification obligations under
this Agreement with respect to such claim remain in force as provided in
Sections 8.09, 8.10, 8.12, 8.13, 8.16, , 10.02(d) or 10.03(b), as the case may
be.
10.02 Indemnity by 3M.
(a) 3M hereby agrees to indemnify and hold harmless Linvatec against and
with respect to any and all claims, losses, injuries, damages,
deficiencies, liabilities, obligations, assessments,
judgments, costs and expenses, including (except as otherwise
expressly provided in this Agreement) costs and expenses of
litigation and reasonable attorneys' fees ("Losses"), suffered
or incurred by Linvatec to the extent caused proximately by:
(i) any material breach of any representation or warranty
of 3M contained in this Agreement;
(ii) any material non-fulfillment of any covenant or
agreement of 3M contained in this Agreement;
(iii) any failure of the parties, in connection with the
transactions contemplated hereby, to comply fully
with the provisions of any applicable state bulk
transfer laws, including any state tax laws relating
to the obligations of Linvatecs of assets in bulk
transfers (provided that in no event shall 3M be
required to indemnify Linvatec hereunder with respect
to any liability for which Linvatec would have been
obligated even had such laws been fully complied
with, including any Assumed Liabilities or any other
liabilities or obligations that Linvatec has
expressly agreed to pay or be responsible for
pursuant to this Agreement);
(iv) with respect to any claim of infringement of third
party intellectual property rights, any sales of 3M
Products by 3M before the Closing Date.
(b) 3M hereby agrees to indemnify and defend Linvatec against any and all
claims, suits, actions or proceedings for personal injuries
alleged to have been caused by 3M Products prior to Closing.
(c) 3M hereby agrees to pay Linvatec's actual expenses incurred in
recalling 3M Products sold prior to Closing if a recall is
required within six months after Closing. `Actual expenses'
include Linvatec's actual costs of collecting the recalled
product (if required), repairing or replacing the recalled
product, or refunding the appropriate proportional amount of
the purchase price. Linvatec will give 3M prompt notice of any
recall for which 3M is obligated to pay the actual expenses.
Linvatec will choose the least costly among repairing,
replacing or refunding the appropriate proportional amount of
the purchase price of the recalled products. 3M is not
obligated to pay for expenses associated with identifying the
cause of the problem creating the need to recall or with
developing the appropriate correction.
(d) Notwithstanding anything to the contrary provided elsewhere in this
Agreement, the obligations of 3M under this Agreement to
indemnify Linvatec with respect to any claim pursuant to
clause (i) of Section 10.02(a) shall be of no force unless
Linvatec has given 3M written notice of such claim prior to
the eighteen (18) months after the Closing Date.
(e) Notwithstanding anything to the contrary provided elsewhere in this
Agreement, in no event shall 3M be liable to Linvatec for
amounts payable under clause (i) of Section 10.02(a) until
such amounts exceed in the aggregate $50,000.
(f) Notwithstanding anything to the contrary provided in this Agreement, in
no event shall 3M be liable to Linvatec for amounts payable
under clauses (i) and (ii) of Section 10.02(a) and Section
10.02(c) to the extent such amounts exceed in the aggregate
fifty percent (50%) of the Purchase Price.
10.03 Indemnity by Linvatec.
(a) Linvatec hereby agrees to indemnify and hold harmless 3M against and
with respect to any and all Losses suffered or incurred by 3M
to the extent caused proximately by:
(i) Any material breach of any representation or warranty
of Linvatec contained in this Agreement or in any of
the Transaction Documents; or
(ii) Any material non-fulfillment of any covenant or
agreement of Linvatec contained in this Agreement or
in any of the Transaction Documents; or
(iii) Any claims which are brought against 3M as a result
of the retention by Linvatec after the Closing on any
assets transferred to Linvatec hereunder of any trade
names or trademarks of 3M not included in the
Purchased Assets, as permitted by Article VI
(Intellectual Property); or
(iv) The Assumed Liabilities; or
(v) With respect to any claim of infringement of third
party intellectual property rights, any sales of
products by Linvatec after the Closing Date.
(b) Notwithstanding anything to the contrary provided elsewhere in this
Agreement the obligation of Linvatec under this Agreement to
indemnify 3M with respect to any claim pursuant to Section
10.03(a) shall be of no force unless 3M has given Linvatec
written notice of such claim within eighteen (18) months after
the Closing Date.
(c) Notwithstanding anything to the contrary provided elsewhere in this
Agreement, in no event shall Linvatec be liable for amounts
payable under Section 10.03(a) until such amounts exceed
$50,000.
10.04 Third Party Claims. In order for a party (the
"indemnified party") to be entitled to any indemnification provided for under
this Agreement in respect of, arising out of or involving a claim or demand made
by any third party against the indemnified party (a "Third Party Claim"), such
indemnified party shall notify the other party (the "indemnifying party") in
writing of the Third Party Claim, and deliver to the indemnifying party copies
of all notices and documents accompanying or constituting the Third Party Claim,
within ten business days after obtaining notice thereof; provided, however, that
failure to give such notification shall not affect the indemnification provided
hereunder, except to the extent the indemnifying party shall have been actually
prejudiced as a result of such failure and except that the indemnifying party
shall have been actually prejudiced as a result of such failure and except that
the indemnifying party shall not be liable for any expenses incurred during the
period in which the indemnified party failed to give such notice. Thereafter,
the indemnified party shall deliver to the indemnifying party, within five
business days after the indemnified party's receipt thereof, copies of all
notices and documents (including court papers) received by the indemnified party
relating to the Third Party Claim; provided, however that failure to deliver
such copies shall not affect the indemnification provided hereunder except to
the extent the indemnifying party shall have been actually prejudiced as a
result of such failure. If a Third Party Claim is made against an indemnified
party, the indemnifying party will be entitled to participate in the defense
thereof and, if it so chooses, to assume the defense thereof with counsel
selected by the indemnifying party and reasonably satisfactory to the
indemnified party. Should the indemnifying party so elect to assume the defense
of a Third Party Claim, which election must be made within 30 days after the
indemnifying party receives notice of the Third Party Claim from the indemnified
party, the indemnifying party will not be liable to the indemnified party for
legal expenses incurred by the indemnified party in connection with the defense
thereof. If the indemnifying party assumes such defense, the indemnified party
shall have the right, but not the obligation, to participate in the defense
thereof and to employ counsel, at its own expense, separate from the counsel
employed by the indemnifying party, it being understood that the indemnifying
party shall control such defense. If the indemnifying party has not assumed the
defense of a Third Party Claim, the indemnifying party shall be liable for the
fees and expenses of counsel employed by the indemnified party. If the
indemnifying party chooses to defend or prosecute any Third Party Claim, the
indemnified party shall cooperate in the defense or prosecution thereof with
reimbursement by the indemnifying party only of reasonable out-of-pocket
expenses of the indemnified party incurred in connection therewith. Such
cooperation shall include the retention and (upon the indemnifying party's
request) the provision to the indemnifying party of records and information
which are reasonably relevant to such Third Party Claim, and making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. Whether or not the indemnifying
party shall have assumed the defense of a Third Party Claim, the indemnified
party shall not admit any liability with respect to, or settle, compromise or
discharge, such Third Party Claim without the indemnifying party's prior written
consent, which consent shall not be unreasonably withheld.
ARTICLE XI
Miscellaneous
11.01 Termination. This Agreement may be terminated and the
transactions contemplated hereby abandoned prior to the Closing:
(a) By Linvatec giving written notice to 3M, if 3M shall be in breach in
any material respect of any representation, warranty or
covenant contained in this Agreement (provided that no such
termination shall occur unless Linvatec shall have given
notice to 3M of such breach, specifying in reasonable detail
the nature of such breach, and such breach shall not have been
cured in all material respects within 30 days after such
notice is given), or if the conditions set forth in Section
7.01 shall become impossible to fulfill other than for reasons
totally within the control Linvatec and shall not have been
waived in writing by Linvatec;
(b) By 3M giving written notice to Linvatec, if Linvatec shall be in breach
in any material respect of any representation, warranty or
covenant contained in this Agreement (provided that no such
termination shall occur unless 3M shall have given notice to
Linvatec of such breach, specifying in reasonable detail the
nature of such breach, and such breach shall not have been
cured in all material respects within 30 days after such
notice is given), or in the conditions set forth in Section
7.02 shall have become impossible to fulfill other than for
reasons totally within the control of 3M and shall not have
been waived in writing by 3M;
(c) By mutual agreement of 3M and Linvatec; and
(d) By Linvatec or 3M giving written notice to the other such party, if the
purchase and sale of the Purchased Assets and the assumption
of the Assumed Liabilities contemplated hereby shall not have
been consummated by December 15, 1998, unless such failure
shall be due to the failure of the party seeking to terminate
this Agreement to perform or observe any covenants contained
in this Agreement required to be performed or observed by such
party at or before the Closing.
(e) By Linvatec, if there is any Adverse Material Change in the Business.
(f) If this Agreement is terminated pursuant to any of the provisions
hereof, each of the parties hereto shall thereupon be released from all
liabilities hereunder, except:
(i) Liabilities for any default under this Agreement which shall
have occurred prior to the effective date of such termination,
(ii) All confidentiality obligations pursuant to the Agreement
dated July 27, 1998, and
(iii) Obligations set forth in Sections 11.03 and 11.13.
11.02 Dispute Resolution
(a) Any disagreement or dispute between the parties arising out of or
related to this Agreement or the breach or making hereof (a
"Dispute") shall be resolved in the manner provided in this
Section 11.02. Should there develop any Dispute, either party
may, by written notice to the other party, request that such
Dispute be referred to the Medical Markets Group Counsel of 3M
or Medical Markets Intellectual Property Counsel (for
intellectual property issues) and the General Counsel of
Linvatec (the "Principals"), who shall negotiate in good faith
to attempt to resolve the Dispute. No settlement reached under
this Section 11.02(a) shall be binding on the parties until
reduced to a writing signed on behalf of the parties by the
Principals.
(b) Should the procedure outlined in Section 11.02(a) fail to bring about a
resolution of each outstanding Dispute within 30 days
following the giving of the notice referred to therein, then
the parties shall promptly initiate a voluntary, non-binding
mediation conducted by a mutually-agreed mediator. Should the
parties for any reason be unable to agree upon a mediator,
they shall request the clerk of court of the Hennepin County
District Court in the State of Minnesota to appoint a capable
mediator for them. Linvatec and 3M shall each bear one-half of
the costs and expenses of the mediation and shall endeavor in
good faith to resolve therein each outstanding Dispute. No
settlement reached under this Section 11.02(b) shall be
binding on the parties until reduced to a writing signed on
behalf of the parties by the Principals.
(c) In the event the parties are unable to resolve any outstanding
Dispute as provided above within 60 days following
commencement of mediation, then either party may initiate
legal action as provided in Section 11.09.
(d) Notwithstanding anything to the contrary provided in this
Section 11.02, and without prejudice to the above procedures,
either party may at any time, in connection with any Dispute,
apply to a court of competent jurisdiction for temporary
injunctive or other provisional judicial relief if in such
party's sole judgment such action is necessary to avoid
irreparable damage or to preserve the status quo until such
time as the arbitration award is rendered or the Dispute is
otherwise resolved in accordance with this Section 11.02.
11.03 Expenses. Except as otherwise expressly provided herein,
each party hereto shall pay its own legal, accounting and other expenses
incident to the preparation of, and consummation of the transactions
contemplated by, this Agreement. Each party shall pay its own filing fees under
the HSR Act.
11.04 Titles. The titles of the Articles and Sections of this
Agreement are for convenience of reference only and are not to be considered in
construing this Agreement.
11.05 Entire Agreement. This Agreement constitutes the entire
understanding between the parties with respect to the subject matter hereof,
superseding all negotiations, prior discussions and preliminary agreements.
11.06 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be considered an original and all of
which shall constitute one and the same instrument.
11.07 Waivers, Consents and Amendments. Any failure of either
of the parties to comply with any obligation, covenant, agreement or condition
herein may be waived by the other party only by a written instrument signed by
such other party, but such waiver or failure to insist upon strict compliance
with such obligation, covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.
Whenever this Agreement requires or permits consent by or on behalf of either
party hereto, such consent shall be given in writing in a manner consistent with
the requirements for a waiver of compliance as set forth herein. This Agreement
may be amended only by an agreement, in writing, signed by the parties hereto.
11.08 Governing Law. This Agreement shall be governed in all
respects by, and construed under, the laws of the State of Minnesota.
11.09 Jurisdiction. Subject to the provisions of Section
11.02, each of 3M and Linvatec (i) irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in Minnesota for the
purposes of any suit, action or other proceeding arising out of this Agreement
or the transactions contemplated hereby (and agrees not to commence any action,
suit or proceeding relating hereto except in any such court), (ii) agrees that
service of any process, summons, notice or document by United States registered
mail to such party's respective address set forth in Section 11.12 shall be
effective service of process for any action, suit or proceeding in Minnesota
with respect to which it has submitted to jurisdiction as set forth above, and
(iii) irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby in any state or federal courts sitting in
Minnesota and agrees not to plead or claim in any such court that any such
action, suit or proceeding brought therein has been brought in an inconvenient
forum. Each of 3M and Linvatec acknowledges that the time and expense required
for trial by jury exceed the time and expense required for a bench trial and
hereby waive, to the extent permitted by law, trial by jury.
11.10 SPECIAL DAMAGES. LINVATEC AND 3M HAVE EACH AGREED TO
WAIVE ANY RIGHT TO RECEIVE PUNITIVE, CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES
RELATING IN ANY WAY TO THIS AGREEMENT OR THE PURCHASE/SALE OF THE BUSINESS
AND/OR THE PURCHASED ASSETS, IRRESPECTIVE OF THE LEGAL THEORY ASSERTED.
11.11 Severability of this Agreement. In case any provision of
this Agreement shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
11.12 Assignment. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of the parties hereto, provided
that this Agreement may not be assigned by either party without the prior
written consent of the other party. Except as expressly provided herein, this
Agreement is for the sole benefit of the parties hereto and nothing herein shall
give or be construed to give to any person other than the parties any legal or
equitable rights under this Agreement.
11.13 Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given upon delivery in person, or one day after the same shall have been
sent by overnight messenger service, or three days after the same shall have
been mailed by registered or certified mail, postage prepaid, return receipt
requested, to the respective parties at the following addresses:
If to Linvatec: Linvatec Corporation
11311 Concept Boulevard
Largo, Florida 33773
Attention: President
with a copy: CONMED Corporation
310 Broad St.
Utica, New York 13501
Attention: President
If to 3M: Minnesota Mining and Manufacturing Company
Post Office Box 33428
Saint Paul, Minnesota 55133
Attention: John Ursu
11.14 Public Announcements. No press releases or public
announcements regarding the terms of this Agreement shall be made by either
party without the prior written approval of the other party (which approval
shall not be unreasonably withheld), except as may be necessary, in the opinion
of counsel for such party, to meet the requirements of any law or governmental
regulation or any applicable exchange regulation (in which event the other party
will be notified before, if practical under the circumstances, and after any
action is taken thereon).
11.15 Tax Treatment. It is expressly understood and agreed
that none of 3M, Linvatec or any of their respective officers or agents have
made any warranty or agreement, express or implied, as to the tax consequences
of the transactions contemplated hereby.
11.16 Specific Performance. Each of the parties hereto
acknowledges and agrees that the other party would be damaged irreparably in the
event any of the covenants contained in this Agreement are not performed in
accordance with their specific terms or otherwise are breached. Accordingly,
each of the parties hereto agrees that the other party shall be entitled to an
injunction or injunctions to prevent breaches of the covenants contained in this
Agreement and to enforce specifically this Agreement and the covenants contained
herein in any action properly instituted, in addition to any other remedy to
which such other party may be entitled under this Agreement or at law or in
equity.
11.17 Disclosures.
(a) Matters disclosed by 3M to Linvatec in this Agreement or the Schedules
hereto are not necessarily limited to matters required to be
disclosed by this Agreement. Any such additional matters are
set forth for informational purposes and do not necessarily
include other matters of a similar nature. Matters disclosed
by 3M to Linvatec in any provision of this Agreement or any
Schedule hereto shall be deemed to be disclosed with respect
to each provision of this Agreement to the extent such
provision requires such disclosure.
(b) From time to time prior to the Closing, 3M will promptly supplement or
amend the Schedules hereto with respect to any matter
hereafter arising which would make any representation or
warranty set forth in Sections 5.01 or 6.07 inaccurate if not
updated as of the Closing, or as is otherwise necessary to
correct any information in such Schedules or in any
representation or warranty of 3M made in Sections 5.01 or 6.07
(subject to Section 6.08). For purposes of determining the
satisfaction of the condition set forth in Section 7.01(a) at
or prior to the Closing and the accuracy of the
representations and warranties contained in Sections 5.01 or
6.07 if the Closing does not occur, the Schedules hereto shall
be deemed to include boththat information contained therein on
the date of this Agreement and any information contained in
any subsequent supplement or amendment thereto. Moreover, for
purposes of determining the accuracy of the representations or
warranties of 3M contained in Sections 5.01 or 6.07 or the
liability of 3M with respect thereto under Section 11.02(a)
should the Closing occur, the Schedules hereto shall be deemed
to include all information contained in any subsequent
supplement or amendment thereto.
11.18 Interpretation. In this Agreement:
(a) words denoting the singular include the plural and vice versa and words
denoting any gender include all genders;
(b) the word "including" shall mean "including without limitation";
(c) the word "affiliate" shall have the meaning set forth in Rule 12b-2 of
the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended;
(d) the word "person" shall mean and include an individual, a partnership,
a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency
thereof;
(e) the word "business day" shall mean any day other than a Saturday,
Sunday or a day which is a statutory holiday under the laws of
the United States or the State of Minnesota;
(f) when calculating the period of time within which or following which any
act is to be done or step taken, the date which is the
reference day in calculating such period shall be excluded
and, if the last day of such period is not a business day, the
period shall end on the next day which is a business day; and
(g) all dollar amounts are expressed in United States funds.
[Remainder of page intentionally left blank].
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above written.
ATTEST: MINNESOTA MINING AND
MANUFACTURING COMPANY
________________________ By:
Its
ATTEST: LINVATEC CORPORATION
________________________ By:
Its