ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of March 6, 1996, by and among
DEL GLOBAL TECHNOLOGIES CORP. (formerly known as Del Electronics Corp.), a New
York corporation with offices at 1 Commerce Park, Valhalla, New York 10595
("Del"), GENDEX-DEL MEDICAL IMAGING CORP., a Delaware corporation with offices
at 11550 West King Street, Franklin Park, Illinois 60131 and a wholly owned
subsidiary of Del ("Purchaser"), and DENTSPLY INTERNATIONAL INC., a Delaware
corporation with offices at 570 West College Avenue, York, Pennsylvania
17405-0872 ("Seller").
W I T N E S S E T H:
WHEREAS, Del owns all of the issued and outstanding shares of capital
stock of Purchaser;
WHEREAS, Seller desires to sell to Purchaser and Purchaser desires to
purchase certain selected assets of the GENDEX MEDICAL DIVISION OF DENTSPLY
("Gendex Division"); and
WHEREAS, in connection with and as partial consideration for the sale
of the Assets, as hereafter defined, Del and Seller shall enter into a
Non-Compete Agreement with each other in the form of Schedule 1 attached hereto
(the "Non-Compete Agreement") and Del shall guarantee the performance and
obligation of Purchaser under this Agreement and the agreements referenced
herein.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
Section 1. Definitions. For purposes of this Agreement, the words and
terms listed below shall have the following meanings:
(a) "Assets" means certain selected assets of the Gendex
Division, including inventory, equipment, machinery, leasehold improvements,
patents, manufacturing know-how and technology, plans, diagrams and other
intangible assets of the Gendex Division used in the fabrication of parts or
assemblies of the Gendex Division at the Facility, including toolings owned by
the Gendex Division and related to the operation at the Facility and presently
in the possession of third party vendors all as more specifically described in
Section 2.1 hereof.
(b) "Business" means the business presently conducted by the
Gendex Division at the Facility including, but not limited to, the design,
manufacture, repair, marketing, distribution and/or sale of medical imaging
devices and related components, including equipment for veterinary and
chiropractic uses.
(c) "Closing" means the events which take place on the
Closing Date for the purpose of consummating this Agreement.
(d) "Closing Date" means 10:00 A.M. on the date hereof, or
such other date and time selected by Del and Seller for the Closing.
(e) "EBIT" means earnings before interest and taxes as
further defined in Section 2.4.
(f) "Environmental Laws" means all laws, regulations, rules
and ordinances of any relevant State or any political subdivision thereof and
the United States of America respecting the environment, including without
limitation the Resource Conservation and Recovery Act (42 U.S.C. Section 6901
et. seq.), and the Comprehensive Environmental Responsibility Compensation and
Liability Act, as amended (42 U.S.C. ss.9601 et. seq.).
(g) "Fabricated Parts" means certain fabricated and other
parts relating to the Products which are identified in Schedule 7.9.
(h) "Facility" means the business facility used by the Gendex
Division located at 11550 West King Street, Franklin Park, Illinois.
(i) "Federal Government" means the government of the United
States of America and any agency, department, authority, commission, board,
branch, bureau or division thereof.
(j) "Hazardous Substances" means any pollutants and dangerous
substances including without limitation radon and any hazardous waste or
hazardous substances as defined in any of the Environmental Laws.
(k) "PPI " means the United States Bureau of Labor Statistics
Producer Price Index.
(l) "Products" means the products currently manufactured
and/or sold by the Business.
(m) "Transaction Documents" means this Agreement and all of
the agreements referenced herein.
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ARTICLE II
Section 2. Purchase and Sale.
2.1. Subject to the terms and conditions of this Agreement, Seller
hereby agrees to sell, assign, transfer, convey and deliver to Purchaser and
Purchaser hereby agrees to purchase and accept from Seller, on the Closing Date
all of the following Assets of the Gendex Division free and clear of all liens
and encumbrances:
(a) All inventory of the Business, including but not limited
to, work in process, finished goods, stock, packaging and components, as more
specifically described in Schedule 2.1(a) attached hereto (not including raw
materials and input products located at Seller's facilities other than the
Facility);
(b) All books (excluding minute book, stock books and stock
record books and stock ledgers), papers, records, files, including without
limitation, all correspondence, customer lists, credit and sales reports, data
processing records, documents and records relating exclusively to the Business
and the Assets;
(c) All machinery and equipment, tools, dies and related
equipment of the Business, as more specifically described in Schedule 2.1(c)
attached hereto;
(d) All leasehold improvements of the Business, as more
specifically described in Schedule 2.1(d) attached hereto;
(e) All rights of the Business under property, equipment and
other leases, as more specifically described in Schedule 2.1(e) attached hereto;
(f) All trademarks, trade names, copyrights, patents and all
other Business Rights, as hereinafter defined, as more specifically described in
Schedule 2.1(f) attached hereto;
(g) All designs, drawings, specification sheets, test data,
technical literature, manufacturing and process information, manufacturing
know-how, technology, trade secrets, plans, diagrams, schematics, proprietary
data, product development data, related art work including all information
contained on any media (CD-ROM, tape, computer software), supplier lists,
promotional literature, marketing documents, market research, credit
information, open bid and quotation documents and all other intangible property,
including the Gendex Division dealer network and the telephone number of the
Gendex Division and rights to the name "Universal Imaging", which is owned and
used exclusively by or for the Business; and
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(h) Certain contracts and long-term supply agreements of the
Business specifically described in Schedules 5.5 and 7.4, respectively, attached
hereto.
It is hereby expressly understood and agreed that the Gendex Division's
Assets are to be transferred and conveyed to Purchaser as above specified, in
the condition existing at the time of this Agreement, by good and sufficient
bill of sale, and other necessary documents of transfer, free and clear of all
liens, charges, encumbrances, debts, liabilities and obligations whatsoever,
except those which are or arise out of obligations which are expressly assumed
by Purchaser hereunder.
2.2. Assets Not Being Acquired. Excluded from the Assets to be
sold, conveyed, transferred, assigned by Seller, and purchased and accepted by
Purchaser under Section 2 hereof, are the following:
(a) All cash and cash equivalents (such as certificates of
deposit, treasury bills and marketable securities);
(b) All accounts or notes receivable of any type;
(c) The computer software and hardware at the Facility which
is licensed by Seller from a third party or not included on Schedule 2.1(c); and
(d) The names "DENTSPLY" and "GENDEX" whether used as
trademarks, service marks, trade names, logos or in any other manner, except
that Seller and Purchaser shall enter a licensing agreement in accordance with
Section 7.3 of this Agreement.
2.3. Purchase Price. In reliance upon the representations and
warranties of Seller contained herein, and subject to the terms and conditions
of this Agreement, Purchaser hereby agrees to purchase the Assets for the
aggregate purchase price set forth below:
(a) Five Million Seven Hundred Thousand ($5,700,000) Dollars
(the "Cash"), payable on the Closing Date by wire transfer to Seller's account
of immediate funds; and
(b) One Million Eight Hundred Thousand ($1,800,000) Dollars,
payable pursuant to the terms and conditions of a non-negotiable subordinated
promissory note (the "Note") in the form attached hereto as Schedule 2.3(b). The
Cash and the Note are collectively referred to herein as the "Purchase Price".
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2.4. Contingent Consideration.
(a) Purchaser further agrees, in the event that the EBIT of
Purchaser exceeds $2,000,000 in either of (i) the twelve month period
immediately following the Closing Date ("Year One") or (ii) the twelve month
period immediately following Year One ("Year Two"), to pay to Seller the
additional sum of One Million ($1,000,000) Dollars (the "Contingent
Consideration"). The Contingent Consideration shall be paid by Purchaser to
Seller not later than thirty (30) days following the delivery to Seller of
Purchaser's financial statements for Year One or Year Two, as the case may be.
For purposes of verifying Purchaser's calculation of EBIT during Year One and/or
Year Two, Purchaser shall permit Seller or its authorized agents after
reasonable prior written notice to review, at Seller's expense, Purchaser's
books of account during normal business hours; provided that, if Seller's audit
reveals that EBIT was miscalculated by Purchaser and underreported to Seller by
five percent (5%) or more, then Seller's costs and expenses of such audit shall
be reimbursed by Purchaser within ten (10) days of submission from Seller to
Purchaser of any invoices for such costs and expenses.
(b) It is the intent of the parties to develop a method of
calculating EBIT of the Purchaser which will be equitable to both parties and
which will not artificially increase or decrease the annual EBIT amounts. EBIT
shall be computed using the same U.S. generally accepted accounting principles
("GAAP") used by Del in the preparation of its financial statements. For
purposes of calculating EBIT hereunder, EBIT will be costed using the FIFO
method. For purposes of this Section 2.4, EBIT Products shall include any
products sold by Purchaser which are currently sold by the Gendex Division,
products sold under the Distribution Agreement (as herein defined), and any
comparable or similar new products subsequently developed by Purchaser
(hereinafter "EBIT Products"); provided, however, that existing products
transferred to Purchaser from its affiliates shall not be included in
calculating EBIT so long as the revenues and related costs of any such products
transferred to Purchaser shall be determined in a manner consistent with how
Purchaser determines the revenues and related costs of its other products. Sales
of EBIT Products to other business units of Del shall be recorded at the time of
shipment by Purchaser to Del's other business units. The selling price of EBIT
Products sold or transferred by Purchaser to Del's other business units shall be
determined in accordance with third party pricing practices. Purchaser may
include expenses for direct or indirect costs incurred by or on behalf of
Purchaser but shall not include any general overhead or stewardship charges from
Del or its affiliates, including Del's corporate overhead expenses.
2.5. Reliance on the Non-Compete Agreement. Seller hereby
acknowledges that Purchaser would not have entered into this Agreement but for
the execution by it of the Non-Compete Agreement. The terms of the Non-Compete
Agreements are incorporated herein by reference and made a part hereof.
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ARTICLE III
Section 3. Allocation of Purchase Price. The Purchase Price described
in Section 2.3 hereof will be allocated as set forth in Schedule 3. Seller,
Purchaser and Del each agree that it will adopt and utilize the amounts
allocated to each asset or class of assets set forth in Schedule 3 for purposes
of all Federal, state and other income tax returns filed by each of them, file
all such documents and statements required by Section 1060 of the Internal
Revenue Code of 1986 reflecting the allocations set forth in Schedule 3 and that
each of them will not voluntarily take any position inconsistent therewith upon
examination of any such tax return, in any refund claim, in any litigation or
otherwise with respect to such income tax returns.
ARTICLE IV
Section 4. Liabilities.
(a) Except as expressly assumed under this Agreement, Seller
acknowledges and agrees that Purchaser shall not assume, pay perform or
discharge, or, as the case may be, take subject to, any obligations and
liabilities in respect of any agreements and other binding arrangements related
to the Assets or the Business or with respect to claims, actual or contingent,
penalties, interest and fines arising or based on occurrences or events existing
prior to the Closing Date, including but not limited to, liability for the
Facility not being in compliance with Environmental Laws, the claims and actions
described in Schedule 2.1(f) for occurrences or activities prior to the Closing
Date, volume dealer discounts earned and unpaid prior to the Closing Date, bank
or other debt, unemployment liability, commissions, payroll taxes, severance,
vacation, bonus, customer allowances and discounts, intercompany balances,
vendor accounts payable, all other accrued expenses, claims for Federal, state
or local taxes, pending or threatened lawsuits and any claim of any present or
former employee of Seller, whether under any pension, profit sharing, and/or
continuation health coverage, union benefit plan, union contract or otherwise.
(b) Purchaser, in addition to liabilities specifically
identified under this Agreement as assumed by Purchaser, hereby assumes (i)
liabilities relating to the Assets or the Business which arise after the Closing
Date and (ii) any obligations to be performed after the Closing under contracts
assumed by Purchaser, except for liabilities relating to performance or breach
of contracts occurring prior to the Closing Date.
ARTICLE V
Section 5. Representations and Warranties by Seller. Subject to the
Schedules and other agreements in connection with the transactions contemplated
herein or as reflected in the financial information provided by Seller to
Purchaser, Seller represents and warrants to Purchaser and Del as of the date of
this Agreement and Closing, as set forth below:
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5.1. Organization, Existence and Authority of Seller. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Seller has all corporate power and authority to
execute, deliver and perform this Agreement and the other agreements and
instruments to be executed and delivered by Seller pursuant hereto and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement by Seller does not, and the consummation of the
transactions contemplated hereby will not, violate any provisions of Seller's
Certificate of Incorporation or By-Laws or, to Seller's knowledge, of any law or
regulation applicable to Seller or the Gendex Division or of any agreement,
mortgage, license, lease, arrangement, instrument, order, arbitration award,
judgment or decree to which Seller or the Gendex Division is a party or by which
Seller or the Gendex Division is bound or result in the creation of any lien,
charge, security interest or other encumbrance on the Assets other than as
contemplated by this Agreement.
5.2. Power and Authority. All corporate acts and other proceedings
required to be taken by or on the part of Seller to authorize Seller to carry
out this Agreement and such other agreements and instruments to be executed and
delivered by Seller pursuant hereto and the transactions contemplated hereby and
thereby have been duly and properly taken. This Agreement has been duly executed
and delivered by Seller and constitutes, and such other agreements and
instruments when duly executed and delivered by Seller will constitute, legal,
valid and binding obligations enforceable against Seller in accordance with
their respective terms, except as may be limited by bankruptcy, insolvency,
reorganization or other laws relating to or affecting creditors rights or by
general equitable principles under common law. The execution, delivery and
performance by Seller of this Agreement and such other agreements and
instruments and the consummation of the transactions contemplated hereby and
thereby will not violate, conflict with or result in any breach of or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, or result in the creation of a lien or encumbrance on the Assets
under, any agreement by which Seller may be bound or affected.
5.3. Consents. Except as set forth in Schedule 5.3 hereof, no
consent, filing or approval of any Federal, state or local governmental agency
or department or any other person not a party to this Agreement is required or
necessary in connection with the execution, delivery and performance under this
Agreement or Transaction Documents, as defined herein, or to consummate the
transactions contemplated hereby and thereby.
5.4. Properties. Seller has good title to or a leasehold interest
in and to all of the Assets except as to the Patents, which are held by a wholly
owned subsidiary of Seller which has good title in accordance with this
representation. All machinery and equipment will be delivered at Closing in the
same condition as on the date hereof. The Assets are free and clear of all
liens, encumbrances, claims, security interests and charges of any kind
whatsoever, other than as disclosed on Schedule 5.4.
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(a) All Inventory of raw materials, components, work in
process and finished goods of the Gendex Division are as set forth in Schedule
2.1(a). Such inventories consist of items of a quality conforming to current
specifications, usable and saleable and, except as provided in Schedule 2.1(a),
not requiring any rework prior to sale in excess of normal operating levels
consistent with past practices, and all such inventory of finished goods is good
and marketable, on a normal basis and is merchantable and fit for the particular
purpose for which it is intended, except for excess and obsolete items of all
such inventory which have been written down to net realizable market value or
for which an adequate reserve has been provided on the Financial Statements, as
defined in Section 10.1(a) of this Agreement, in accordance with past accounting
practices, policies and procedures of the Gendex Division.
5.5. Compliance with Agreements. To the best of Seller's
knowledge, set forth on Schedule 5.5 is a complete and accurate list of all
Material (as defined herein) contracts and other agreements, oral and written,
to which Seller is a party on behalf of the Gendex Division. The term "Material"
as used herein, means any contract or agreement pursuant to which the Gendex
Division is either entitled to receive or obligated to perform services and/or
monies in an amount in excess of $25,000 per contract or agreement. Seller on
behalf of the Gendex Division is not a party to any contract or other agreement
with respect to which the Federal Government may require a novation agreement as
a result of the transactions contemplated herein. Seller does not know of any
fact, circumstance, or condition amounting to a default under any of such
contracts or other agreements. All such contracts and other agreements will be
in full force and effect at the time of Closing, unless by their terms they
expire prior thereto and except as the result of a default by the other party to
any such contracts and agreements. Other than such enumerated contracts and
other agreements, Seller has no other presently existing Material contract or
agreement, oral or written, relating to the Assets or the operation of the
Business, except as set forth on Schedule 5.5 or as required or contemplated by
this Agreement.
5.6. Trademarks, Licenses, Etc. Seller (or one of its wholly owned
subsidiaries) owns free and clear of any rights or claims of others, the patents
and patent applications, right to use all the trademarks and service marks and
registrations thereof and applications therefor, trade names, brands,
copyrights, copyright applications and copyright registrations, licenses,
patents and patent applications, franchises, permits, processes, formulas, trade
secrets, inventions and royalties, and rights with respect thereto, and all
technical know-how, and non-competition covenants accruing to the benefit of
Seller (collectively "Business Rights") as set forth on Schedule 2.1(f) and
which are used in the Business as currently conducted and, to the knowledge of
Seller, without any conflict or infringement with the right of others, and,
except as set forth on Schedule 2.1(f), Seller has not received or to Seller's
knowledge been threatened with notice of any claim or assertion that any of the
Business Rights infringe or conflict with the rights of others.
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5.7. Insurance. Attached as Schedule 5.7 is a summary of insurance
which lists all insurance policies and fidelity bonds covering the Assets and
the Business. Except as set forth on Schedule 5.7 or Schedule 5.9, there are no
claims against the Assets or the Gendex Division pending under any of such
policies or bonds as to which coverage has been questioned or denied or disputed
with underwriters, and all premiums due and payable thereunder have been paid.
Except as set forth on Schedule 5.7, there are no pending or threatened
terminations with respect to any of such policies and bonds (other than pursuant
to the terms thereof). All such policies and bonds are, and will be until the
time of the Closing, in full force and effect.
5.8. Taxes. Except as set forth on Schedule 5.8, (i) Seller has
timely paid or made provision for all Federal, state and local income, real
estate, manufacturer's excise, Federal and state withholding, FICA, FUTA, state
unemployment taxes, state and municipal sales and use taxes, license fees and
other taxes, fees, or charges levied or imposed upon Seller that are payable or
have accrued prior to the Closing Date with respect to the Gendex Division or
the Assets, (ii) Seller has not incurred any tax liability, including interest,
penalties or assessments which may result in the imposition of any lien, claim,
security interest or any other encumbrance on the Gendex Division or the Assets
other than as to property taxes not yet due and payable, and (iii) there are no
outstanding fines, liens or disputes between Seller and any taxing authority
which relate to the Gendex Division or the Assets other than as to property
taxes not yet due and payable. Seller is responsible for real property taxes
which are related to the period up to the Closing Date and an adjustment for
such taxes shall be made at Closing. Such real property taxes are set forth on
Schedule 5.8. Seller shall be liable for all taxes, fees or charges levied or
imposed upon Seller with respect to the Gendex Division or the Assets, before or
after the Closing Date, for any tax periods prior to the Closing Date.
5.9. Litigation, Proceedings and Disputes. Except as set forth in
Schedule 5.9, to the best of Seller's knowledge after due inquiry, there are no
suits, actions, judgments, administrative, arbitration or other proceedings
(including proceedings concerning product liability, municipal or other
governmental laws or regulations, labor disputes or grievances or union
recognition) or, to Seller's knowledge, governmental investigations by any
Federal, state, or local agency or prosecutor's office or of any other kind
(collectively "Claims") pending or threatened against the Gendex Division or the
Assets. Except as set forth in Schedule 5.9, there are no unsatisfied judgments,
orders, stipulations, injunctions, decrees or awards (whether by a court,
administrative agency, arbitration, grievance procedure) against Seller with
regard to the Gendex Division or which relate to the Assets. Seller acknowledges
that, notwithstanding the inclusion of any Claims on Schedule 5.9, it shall
indemnify and hold harmless Purchaser against all such Claims.
5.10. Employees. Subject to the exceptions set forth in the
following sentence, Schedule 5.10 hereto lists all employees and consultants of
the Gendex Division and indicates their salaries, fees and most recent bonuses,
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if any, their rights to future bonuses (or deferred portions of prior bonuses),
if any, vacation, severance, insurance and other benefits and their respective
ages, job titles, dates of hire and social security numbers. Except as disclosed
on Schedule 5.10 and as provided in the employee manuals which have been
delivered to Del, there are no written or oral commitments by Seller to any of
the Gendex Division's employees relating to employment, compensation, wages,
bonuses, raises, vacations, severance pay, benefits or similar matters. Seller
will pay, through the Closing Date, all salary, wages, bonuses, severance,
commissions, accrued vacation and sick days. Purchaser agrees that it shall
employ substantially all of the employees of the Gendex Division after Closing,
provided that to the extent Purchaser does not continue the employment of
certain employees of the Gendex Division, Seller shall pay, within a reasonable
time after Closing, the severance benefits, if any, to such employees. Seller
has paid all unemployment insurance payments due and payable through the Closing
Date and does not have a negative account balance with any unemployment taxing
authority with respect to the Gendex Division. Except as disclosed in Schedule
5.10, there are no union plans or collective bargaining agreements.
5.11. Employee Plans.
(a) For purposes of this Agreement, the term "Employee Plan"
means each employee benefit plan as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and each other
bonus, incentive compensation, deferred compensation, severance or similar plan,
policy or payroll practice providing compensation or employee benefits
maintained by Seller on behalf of or for the benefit of the Gendex Division or
to which Seller is a participating employer or is obligated to contribute or has
any legally enforceable liability and under which any person presently employed
by Seller as an employee or consultant of the Gendex Division (an "Employee") or
formerly employed by Seller or its predecessors as an employee or consultant of
the Gendex Division (a "Former Employee") participates or has accrued any rights
or under which Seller is liable in respect of an Employee or Former Employee.
The terms "Employee" and "Former Employees, will include, where applicable, the
beneficiaries, spouses and dependents of an Employee or Former Employee.
Schedule 5.11 lists or describes all Employee Plans of Seller or its
subsidiaries or affiliates regarding the Gendex Division. Each Employee Plan has
been maintained in all respects in accordance with its terms and with applicable
law. Except as set forth on Schedule 5.11, each Employee Plan (including the
related trust) which is intended to qualify under Section 401(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), or comparable foreign law, does
so qualify and is exempt from taxation pursuant to Section 501(a) of the Code.
None of the Employee Plans listed on Schedule 5.11 are Multi-employer Plans (as
defined within the meaning of Section 3(37) of ERISA) and Seller has no
liability under or with respect to, and does not contribute to, any
Multi-employer Plan.
(b) As of the Closing Date, Seller will have made or will
make full payment by direct contributions of all amounts which Seller is
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required to make under the terms of each Employee Plan regarding the Gendex
Division in respect of periods ending on or prior to the Closing Date.
(c) There is no accumulated funding deficiency (as defined in
Section 412 of the Code), waived funding deficiency (as defined in Section 412
of the Code), or failure to make any payment on or before a required installment
due date (as defined in Section 412(m) of the Code) with respect to any defined
benefit plan (as defined in Section 3(35) of ERISA) maintained by Seller or any
member of the controlled group (within the meaning of Sections 414(b), (c), (m),
(n) and (o) of the Code ("Controlled Group") of which Seller is a member, that
is or could after the Closing Date become a liability of Del or Purchaser.
(d) Neither Seller nor any member of Seller's Controlled
Group has incurred or reasonably expects to incur any liability under Title IV
of ERISA (or comparable foreign law) arising in connection with the termination
of, or withdrawal from, any plan covered or previously covered by Title IV of
ERISA (or comparable foreign law) that is or could become a liability of Del or
Purchaser after the Closing Date.
(e) No event has occurred that could subject Seller, Del or
Purchaser to an excise tax under Section 4975 of the Code or a civil penalty
under Section 502(i) of ERISA or any comparable section under any foreign law.
(f) There exists no condition or set of circumstances which
could result in the imposition of any liability under ERISA (including, without
limitation, Title I or Title IV thereof), the Code or other applicable law with
respect to the Employee Plans. From and after the Closing, Seller shall, subject
to Section 12 hereof, indemnify and hold Del and Purchaser harmless from, all
liabilities and obligations arising at any time with respect to Employees or
Former Employees of Seller under Employee Plans (and all related reporting
requirements), and any other employee benefits mandated by law, regardless of
the applicable funding arrangements, attributable to periods of employment by
Seller of its Gendex Division employees prior to the Closing Date.
5.12. Compliance with Laws. Seller is not in violation of any
material applicable Federal, state, local or foreign law, regulation or order or
requirement of any governmental, regulatory or administrative agency or
authority or court or other tribunal relating to the Gendex Division ("Laws").
Except as set forth in Schedule 5.9, Seller is not now charged with, nor is
Seller now to its knowledge under investigation with respect to, any possible
violation of any Law and Seller has filed all material reports required to be
filed with regard to the Gendex Division with any governmental authority and
taken all other actions required by any Law.
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5.13. Facility.
(a) The Facility is presently leased to Seller.
(b) To Seller's knowledge, the Facility is in compliance with
all, and is not in violation of any, applicable Federal, state or local statute,
ordinance, order, requirement, law, rule or regulation (including without
limitation any applicable covenant, condition, restrictions or easement), nor
has any notice of violation of any applicable Federal, state or local statute,
law, ordinance, rule, regulation, order or requirement, or of any covenant,
condition, restriction or easement affecting the Facility been given to Seller
by any governmental authority or by any person entitled to enforce same.
(c) The Facility is not subject to zoning, use or building
code restrictions which prohibits, and, no state of facts relating to the
actions or inaction of Seller exists which prevents, the continued effective
leasing or use of such Facility property for the Business consistent with the
manner in which the Gendex Division has conducted its business.
(d) No permit, approval, certificate or consent of any
governmental authority or public or private utility is required by Purchaser to
occupy and utilize the Facility as presently utilized by Seller consistent with
the past conduct of the Business.
5.14. Licenses and Registrations. Seller has all material
registrations, licenses, permits, approvals or other authorizations or
exemptions ("Licenses and Registrations") of or by government authorities
required by it in the conduct of the Gendex Division Business. All such Licenses
and Registrations are listed in Schedule 5.14 hereof. All Licenses and
Registrations listed in Schedule 5.14 will be in full force and effect on the
Closing Date.
5.15. Relationships. The Gendex Division will use commercially
reasonable efforts to maintain all relationships with suppliers, subcontractors
and customers and will not enter into any new material contractual obligations
prior to the Closing Date without the consent of Del, such consent not to be
unreasonably withheld.
5.16. Customers and Suppliers. Set forth on Schedule 5.16 is an
accurate list of each customer and of each supplier which was responsible for,
respectively, at least 5% of the gross revenues or 5% of the gross purchases of
the Gendex Division in connection with the Products, during the calendar years
ended December 31, 1995 and 1994.
5.17. Environmental Matters. Except as set forth on Schedule 5.17,
Seller has not and has no knowledge that there has been generated, stored,
treated, discharged, handled, refined, spilled, released or disposed any
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Hazardous Substances in violation of any applicable law or regulation at or on
the Facility. Except as set forth on Schedule 5.17, to Seller's knowledge, no
underground storage tanks exist or have existed at the Facility. Seller has no
knowledge of any Hazardous Substances on or in the Facility in violation of any
applicable law or regulation and has received no notice, nor is it on notice of,
any claim, investigation, litigation or administrative proceeding, actual or
threatened, or any order, writ or judgment that relates to any discharge, spill,
handling, refining, release, emission, leaching or disposal of pollutants of any
kind (including any Hazardous Substances) at the Facility.
5.18. Representations and Warranties. Neither the representations
and warranties of Seller contained (i) herein nor (ii) in any certificate,
Exhibit, Schedule or other writing required by the terms hereof to be delivered
by Seller (and so delivered) contain any untrue statement of a material fact or
taken together omit to state a material fact necessary in order to make the
statements herein and therein not misleading, in light of the circumstances in
which made.
ARTICLE VI
Section 6. Representations and Warranties by Del and Purchaser. Each of
Del and Purchaser represents and warrants to Seller as of the date of this
Agreement and Closing, as set forth below:
6.1. Organization, Existence and Authority of Del and Purchaser.
Each of Del and Purchaser is a corporation duly organized, validly existing and
in good standing under the laws of the State of New York and Delaware,
respectively, and has and will have at the time of Closing, all corporate power
and authority to execute, deliver and perform this Agreement and the other
agreements and instruments to be executed and delivered by each of Del and
Purchaser pursuant hereto and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement by each of Del and
Purchaser does not, and the consummation of the transactions contemplated hereby
will not, violate any provision of Del's or Purchaser's respective Certificate
of Incorporation or By-Laws or, to Del and Purchaser's knowledge, of any law or
regulation applicable to Del or Purchaser or of any agreement, mortgage,
license, lease, arrangement, instrument, order, arbitration award, judgment or
decree to which Del or Purchaser is a party or by which Del or Purchaser is
bound.
6.2. Power and Authority. On or prior to the Closing Date all
corporate acts and other proceedings required to be taken by or on the part of
each of Del and Purchaser to authorize each of them to carry out this Agreement
and such other agreements and instruments to be executed and delivered by each
of them pursuant hereto and the transactions contemplated hereby and thereby
will have been duly and properly taken. This Agreement has been duly executed
and delivered by each of Del and Purchaser and constitutes, and such other
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agreements and instruments when duly executed and delivered by each of Del and
Purchaser will constitute, legal, valid and binding obligations of each of them
enforceable against them in accordance with their respective terms, except as
may be limited by bankruptcy, insolvency, reorganization or other laws relating
to or affecting creditors rights or by general equitable principles under common
law. The execution, delivery and performance by each of Del and Purchaser of
this Agreement and such other agreements and instruments and the consummation of
the transactions contemplated hereby and thereby will not violate, conflict with
or result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or result in the
creation of a lien or encumbrance under, any agreement by which Del or Purchaser
may be bound or affected.
6.3. Consents. Subject to Section 10.1(b), no consent, filing or
approval of any Federal, state or local governmental agency or department or any
other person not a party to this Agreement is required or necessary in
connection with the execution, delivery and performance under this Agreement or
the Transaction Documents or to consummate the transactions contemplated hereby
and thereby.
6.4. Representations and Warranties. Neither the representations
and warranties of Del or Purchaser contained (i) herein nor (ii) in any
certificate, Exhibit, Schedule or other writing required by the terms hereof to
be delivered by Del or Purchaser (and so delivered) contain any untrue statement
of a material fact or taken together omit to state a material fact necessary in
order to make the statements herein and therein not misleading in light of the
circumstances in which made.
ARTICLE VII
Section 7. Additional Covenants and Agreements.
7.1. Plant Closing Law. Seller and Purchaser shall comply, to the
extent applicable, with The Worker Adjustment and Retraining Notification Act
and the rules and regulations promulgated thereunder. Subject to Section 12
hereof, each party shall indemnify the other party for all Indemnified Amounts,
as hereinafter defined, incurred or suffered by such other party arising out of
the indemnitor's failure to comply with such Act, its rules or regulations.
7.2. "Universal Imaging". Seller shall assign and transfer to
Purchaser all of its right, title and interest in and to the trademark/trade
name "Universal Imaging".
7.3. "Gendex" License. Seller shall grant to Purchaser an
exclusive license and right to use the trademark/trade name "Gendex" (in
conjunction with the word "medical" and "Del" if used in any corporate name) for
a period of five (5) years following the Closing Date in connection with the
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manufacture and sale of (i) the Products; and (ii) all other new medical imaging
products that may be developed by Purchaser in accordance with the Trademark
License Agreement attached as Schedule 7.3.
7.4. Long Term Supply Contracts. Seller shall assign to Purchaser,
and Purchaser shall assume from Seller, the outstanding long term supply
contracts listed on Schedule 7.4 attached hereto ("Long Term Supply Contracts")
of the Gendex Division which have been entered into in the ordinary course of
business on commercially reasonable terms. Seller shall use commercially
reasonable efforts to obtain each supplier's consent, if so required, to such
assignment. Such assignment and assumption shall be evidenced by the assignment
and assumption agreement (the "Assignment and Assumption Agreement") in the form
attached hereto as Schedule 7.4A.
7.5. Gendex Division Accounts Receivable. Purchaser shall use
commercially reasonable efforts (including follow-up phone calls made to account
debtors) to request from account debtors the accounts receivable of the Gendex
Division for a period of twelve (12) months following the Closing Date. Within
two (2) weeks following collection thereof, Purchaser shall pay all such
collected amounts to Seller and in addition shall notify Seller of all disputed
invoices for action by Seller. Purchaser shall prepare and transmit to Seller
monthly statements of account within two (2) weeks of the end of the month with
respect to such accounts receivable. Purchaser shall in addition promptly advise
Seller in the event that any account debtor shall pay its invoices out of
sequence. Purchaser shall not disparage Seller or the Gendex Division with
respect to such accounts receivable of the Gendex Division or advise any account
debtor not to pay an invoice of Seller. Purchaser shall cooperate with Seller in
connection with the collection of such accounts receivable. Except as set forth
above, Purchaser shall have no obligation for uncollected receivables and no
obligation to undertake collection efforts on behalf of Seller.
7.6. The Facility Lease. Subject to the provisions of Section 13
hereof, on the Closing Date, Seller shall assign to Purchaser the lease for the
Facility where the Gendex Division currently conducts its operations, and
Purchaser shall assume Seller's obligations thereunder. Seller represents that
there are no existing tax abatements or pending assessments in connection with
the premises upon which the Facility is located which affect the Business.
Seller has obtained and delivered to Purchaser the landlord's consent to such
assignment, a copy of which is attached as Schedule 7.6, including the options
for the renewal of the Facility lease (the "Landlord Consent"). Purchaser's
obligations in connection with the assumption of the Facility lease are
expressly contingent upon (i) the receipt by Purchaser of a satisfactory
engineer's report, and (ii) the receipt by Purchaser of a satisfactory Phase I
environmental audit. The cost of such audit shall be allocated in accordance
with the Environmental Due Diligence Agreement, a copy of which is attached as
Schedule 7.6A.
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7.7. Confidentiality Agreement. Del and Seller shall enter into a
confidentiality agreement (the "Confidentiality Agreement") in the form attached
hereto as Schedule 7.7, pursuant to which each company shall agree to hold in
strict confidence all confidential information of the other.
7.8. Distribution Agreement. On the Closing Date Seller shall
enter into a distribution agreement (the "Distribution Agreement") with
Purchaser in the form attached hereto as Schedule 7.8, whereby Purchaser shall
have the right to sell to hospitals and medical clinics (not including clinics
that primarily provide dental services) Seller's intra-oral and panoramic dental
systems as set forth in the Distribution Agreement for a period of five (5)
years following the Closing Date. During Year One, Seller shall sell such dental
systems to Purchaser at prices equal to Seller's intra-company transfer prices
charged to the Gendex Division during calendar year 1995 (which shall include a
three (3%) percent increase over the current transfer prices) plus seven (7%)
percent ("Dental Systems Base Prices"). During Year Two and each of the three
consecutive twelve month periods immediately following Year Two, Seller shall
sell such dental systems to Purchaser at prices equal to the Dental Systems Base
Prices, plus or minus for each of such twelve month periods, an adjustment equal
to the cumulative percentage increase or decrease, as the case may be, in the
PPI during the immediately prior twelve, twenty-four, thirty-six and forty-eight
month periods, respectively.
7.9. Fabricated Parts. On the Closing Date, Seller shall enter
into a supply agreement (the "Supply Agreement") with Purchaser in the form
attached hereto as Schedule 7.9, pursuant to which, during the six month period
after Closing, Seller shall sell to Purchaser, and Purchaser shall purchase from
Seller, selected Fabricated Parts in the aggregate amount of Two Million Five
Hundred Thousand ($2,500,000). The price of such Fabricated Parts shall be equal
to Seller's intra-company transfer prices ("Base Prices") charged to the Gendex
Division during calendar year 1995 (the "Base Year") (a complete list of
Fabricated Parts and Base Prices is specifically attached to Schedule 7.9) plus
an increase not to exceed three (3%) percent.
7.10. MIS and Data Processing Services. Seller shall provide
Purchaser with MIS and data processing services as set forth in the Data
Processing Agreement attached as Schedule 7.10, for a period not to exceed three
(3) years following the Closing Date. Purchaser shall provide Seller with not
less than ninety (90) days prior written notice of its intent to terminate such
MIS and Data processing services at any time prior to the expiration of such
three (3) year period. During Year One, in payment for such services Purchaser
shall pay to Seller a sum not to exceed $100,000 (the "Base Service Fee").
During the second and third twelve (12) month periods ("Year Two" and "Year
Three"), in payment for such services Purchaser shall pay to Seller a sum equal
to the Base Service Fee actually paid by Purchaser during Year One, plus or
minus for each of Year Two and Year Three, an adjustment equal to the cumulative
percentage increase or decrease, as the case may be, in the PPI during the
immediately prior twelve and twenty-four month periods, respectively.
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Seller shall use good faith efforts to provide accurate and timely services,
provided however, that Seller does not guarantee the accuracy of data and
information from such services and assumes no liability for direct or
consequential damages arising from any alleged inaccuracies of such information
unless caused by the knowing and intentional act of Seller.
7.11. Reasonable Access By Del and Purchaser Pending Closing. In
accordance with the provisions of a Confidentiality Agreement entered into
between Seller and Del dated November 1, 1995, Seller will give to Del and
Purchaser, their counsel, accountants, engineers and other representatives,
after reasonable notice, reasonable access during normal business hours
throughout the period prior to the Closing, to all of the properties, books,
contracts, commitments and records relating to the Gendex Division Business.
7.12. Taxes. The parties hereto will cooperate with each other in
connection with any audit by the Internal Revenue Service or any other tax
authority of any tax return to the extent relevant to the operations of the
Gendex Division prior or subsequent to the Closing Date. From and after the
Closing Date, Seller shall file when due all tax returns relating to the
Business for all periods up to the Closing Date, and shall pay the taxes shown
to be due on any such returns. Purchaser shall file and pay when due all tax
returns and taxes relating to the Business for periods after the Closing Date.
Any and all sales, use and transfer taxes of any kind or nature required to be
paid in connection with the sale of the Assets to Purchaser shall be paid by
Seller.
7.13. Books and Records. Until the expiration of the applicable
statutory period of limitations, or for such longer period if such statutory
period is extended, each of the parties hereto will to the extent necessary in
connection with any tax or other matters relating to the Gendex Division
Business (i) retain and, as each may reasonably request, permit the other and
their agents to inspect and copy, all books and records relating to the Gendex
Division Business and provide access to such information from such books and
records as may be reasonably requested and (ii) furnish to the other party
access to the information necessary to file required returns with respect to
Taxes.
7.14. Financial Condition. Since December 31, 1995 and through the
Closing Date:
(a) There has been and will be no material adverse change in
the financial condition, results of operations, business, properties, Assets or
liabilities of the Gendex Division.
(b) The operations and business of the Gendex Division have
been and will be conducted only in the ordinary course.
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(c) There has been and will be no accepted purchase order or
quotation, arrangement or understanding for future sale of the products or
services of the Gendex Division which is not in the ordinary course of business
and consistent with past practices.
(d) The Gendex Division has not suffered and will not suffer
an extraordinary loss (whether or not covered by insurance) or waived any right
of substantial value.
There is no fact known to Seller which materially adversely
affects the financial condition, results of operations, business, properties,
Assets or liabilities of the Gendex Division other than as set forth in this
Agreement.
7.15. Conduct of Business Pending the Closing. From the date
hereof until the Closing Date, Seller shall conduct the Business only in the
ordinary course and will use reasonable commercial efforts to:
(a) preserve intact the Assets and the current business
operations and properties of the Gendex Division;
(b) take no action or fail to take such action the
consequence of which will cause a breach of or default in any contract,
agreement, commitment or obligation to which it is a party or by which it may be
bound;
(c) keep at all times full and complete books and records,
consistent with past practices for the Gendex Division.
7.16. Access to Books and Records. Prior to Closing, Purchaser and
Del shall have access to all books and records of Seller which contain
information regarding the Business and the Assets.
7.17. Supplemental Disclosure. Seller, on the one hand and
Purchaser and Del, on the other hand, shall have the right from time to time
prior to the Closing to supplement the Schedules hereto with respect to any
matter hereafter arising which, if existing or known as of the date of this
Agreement, would have been required to be set forth or described in such
Schedule. Any such supplemental disclosure will be deemed not to have cured any
breach of any representation or warranty made in this Agreement for purposes of
the indemnification obligations set forth in Articles XI and XII hereof.
7.18. Employees. Del and Purchaser, on the one hand, and Seller on
the other hand, agree that for a period of two (2) years after the Closing they
shall not contact, solicit or hire any employees of the other, except for those
employees of the Gendex Division hired at Closing as part of the transaction
contemplated herein.
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7.19. License Back. From and after the Closing, Seller shall have
a non-exclusive, paid-up license to use, sell, make or have made under the
Patents and business and technical information to the extent that such Patents
and business and technical information apply to the design, manufacture, sale or
service of any non-medical x-ray product or business of Seller (or upgrade
thereof) and with respect to products produced under the Supply Agreement.
Seller shall have no right to sublicense or assign the Patents.
ARTICLE VIII
Section 8. Bulk Sales. The parties agree that compliance with the bulk
sales laws of the State of Illinois is waived and Seller hereby indemnifies,
subject to the provisions of Section 12, and holds Del and Purchaser harmless
from any and all Indemnified Amounts arising from any creditor claims as a
result of such bulk transfer which were not disclosed pursuant to any Schedule
or Exhibit to this Agreement.
ARTICLE IX
Section 9. Closing.
9.1. Location of The Closing. The Closing shall be held at the
offices of Tashlik, Kreutzer & Goldwyn P.C., 833 Northern Boulevard, Great Neck,
New York 11021.
9.2. Documents to be Delivered by Seller. On the Closing Date,
Seller shall deliver to Del and Purchaser:
(a) Executed copies of:
(i) the Non-Compete Agreement;
(ii) the Assignment and Assumption Agreement;
(iii) the Lease Assignment;
(iv) the Confidentiality Agreement;
(v) the Distribution Agreement;
(vi) the Supply Agreement;
(vii) the Trademark License Agreement; and
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(viii) the Data Processing Agreement.
(b) a certificate of the Secretary of Seller as to the
resolutions duly adopted by the Board of Directors of Seller authorizing the
execution, delivery and performance of this Agreement by Seller; the incumbency
and signatures of officers of Seller; and a certificate stating that the
resolutions authorizing the execution, delivery and performance of this
Agreement are in full force and effect;
(c) a Bill of Sale;
(d) an opinion of counsel for Seller, reasonably satisfactory
to Purchaser's counsel, dated as of the Closing Date;
(e) a cross receipt evidencing receipt by Seller of the
Purchase Price;
(f) Any other document or instrument of conveyance and
transfer necessary to implement and consummate this Agreement or any other
documents which may be reasonably requested by Del or Purchaser to consummate
the transactions contemplated herein.
9.3. Documents to be Delivered by Del and Purchaser. On the
Closing Date, Del and Purchaser shall deliver to the Seller:
(a) The Cash and executed original Note;
(b) Executed copies of each of the Transaction Documents;
(c) The opinion of counsel for Del and Purchaser, reasonably
satisfactory to Seller's counsel, dated as of the Closing Date;
(d) The Guaranty of Del with respect to the performance of
Purchaser under the Transaction Documents and any other documents necessary to
consummate the transactions contemplated herein.
(e) The resolutions duly adopted by the Board of Directors of
Del and Purchaser authorizing the execution, delivery and performance of this
Agreement by Del and Purchaser, certified by the Secretary of Del and Purchaser;
a certificate of the Secretary of Del and Purchaser as to the incumbency and
signatures of officers of Del and Purchaser; and a certificate stating that the
resolutions authorizing the execution, delivery and performance of this
Agreement are in full force and effect;
(f) A cross receipt evidencing delivery of the Assets to
Purchaser; and
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(g) Any other documents which may be reasonably required to
consummate the transactions contemplated herein or any other documents
reasonably requested by Seller in connection with the transactions contemplated
herein.
Unless otherwise provided in this Agreement, all documents
and instruments delivered shall be dated the Closing Date and shall be
reasonably satisfactory as to form and content to each party and its respective
counsel.
9.4. Real Estate Taxes. Purchaser shall forward any tax bills to
Seller for periods prior to Closing promptly upon receipt and Seller shall be
responsible for the payment of any such bills.
9.5. Adjustments for Rental Payments. At Closing, there shall be
an adjustment to the Purchase Price regarding the rental payments in connection
with the Facility.
ARTICLE X
Section 10. Conditions to Closing.
10.1. Conditions to Purchaser's Obligations. All the obligations
of Purchaser and Del under this Agreement are subject to the fulfillment, prior
to or at the Closing, of each of the following conditions, any or all of which
Purchaser may waive in writing:
(a) As a condition precedent to the obligation of Purchaser
and Del to consummate the transaction contemplated by this Agreement, Seller has
delivered to Purchaser and Del certified financial statements (the "Financial
Statements") for the Gendex Division for the last two fiscal years ending
December 31, 1994 and December 31, 1995, respectively. Such certified financial
statements shall include a statement of net assets to be acquired by Purchaser
and a statement of revenues less expenses for such years. Such certified
financial statements shall be prepared in accordance with generally accepted
accounting principles consistently applied throughout the years involved, shall
be acceptable to the U.S. Securities and Exchange Commission ("SEC") and shall
be in accordance with the books and records of Seller and the Gendex Division.
In the event either (i) the above referenced financial statements are not
acceptable to the SEC for any reason whatsoever (other than as to matters or
items prepared by Purchaser or Del) or (ii) such financial statements are not
filed with the SEC as a result of the unwillingness of the auditors of Seller to
consent to the inclusion of such statements in any securities filing of Del or
the Purchaser, then in either of such events, Seller shall be responsible to use
its best efforts to assist Del and Purchaser in the accomplishment of such
events, including the payment of all additional costs and expenses of Seller's
21
or Purchaser's and Del's independent certified public accountants to prepare
such financial statements and consent to their inclusion in any securities
filing of Del.
(b) As a condition precedent to the obligation of Purchaser
and Del to consummate the transaction contemplated by this Agreement, Del's
institutional Lender shall grant its consent thereto, the status of which Del
shall keep Seller advised.
(c) Seller shall have performed in all material respects all
of its obligations under this Agreement required to be performed at or before
the Closing, and there shall have been delivered to Purchaser and Del a
certificate of an officer of Seller, dated the Closing Date, to such effect.
(d) The representations and warranties of Seller contained in
Section 5 of this Agreement shall be true and correct in all material respects
as of the date hereof and as of the Closing Date with the same force and effect
as though such representations and warranties had been made as of the Closing
Date and there shall have been delivered to Purchaser and Del a certificate of
an officer of Seller, dated the Closing Date, to such effect.
(e) No action or proceeding to enjoin any transaction
contemplated by this Agreement shall have been instituted, and no injunction or
restraining order in any action or proceeding against any such transaction shall
then be in effect.
10.2. Conditions to Seller's Obligations. All the obligations of
Seller under this Agreement are subject to the fulfillment, prior to or at the
Closing, of each of the following conditions, any or all of which Seller may
waive in writing:
(a) Purchaser and Del shall have performed in all material
respects all of its obligations under this Agreement required to be performed at
or before the Closing, and there shall have been delivered to Seller a
certificate of an officer of Purchaser and Del, dated the Closing Date, to such
effect.
(b) The representations and warranties of Purchaser and Del
contained in Section 6 of this Agreement shall be true and correct in all
material respects as of the date hereof and as of the Closing Date with the same
force and effect as though such representations and warranties had been made as
of the Closing Date, and there shall have been delivered to Seller a certificate
of an officer of Purchaser and Del, dated the Closing Date, to such effect.
(c) No action or proceeding to enjoin any transaction
contemplated by this Agreement shall have been instituted, and no injunction or
restraining order in any action or proceeding against any such transaction shall
then be in effect.
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ARTICLE XI
Section 11. Product Liability Responsibility and Environmental
Indemnification.
11.1. Product Liability Responsibility.
(a) Except as set forth below, Seller shall have sole
responsibility for all warranty expense, product liability or other obligation
with respect to the sale and manufacture of all products prior to the Closing
Date and indemnifies Del and Purchaser and holds each of them harmless from any
and all demands, actions, claims, losses, damages and costs and expenses
(including, without limitation, attorneys' fees) ("Del Liability Claim") arising
from or in connection with all products manufactured and sold (shipped) by
Seller and/or the Gendex Division prior to the Closing Date, whether such claims
are based on negligence, breach of warranty or strict liability, regardless of
when such Liability Claim is brought or incurred. The indemnification obligation
hereunder shall be governed by the provisions of Section 12 hereof.
(b) Notwithstanding the foregoing, following the Closing Date
Purchaser shall perform support services for products invoiced and sold by the
Gendex Division prior to the Closing Date and, in Purchaser's sole discretion,
the handling and accepting of returned products by customers of Seller. For
non-warranty work, Purchaser may bill or charge the customer at rates Purchaser
deems appropriate, and for in-warranty work, Purchaser shall from time to time
invoice Seller at Manufacturing Cost (as defined herein) for such in-warranty
support services and Seller shall promptly reimburse Purchaser for such amount
minus any actual realized salvage value, if any. Purchaser agrees to use
reasonable efforts to seek reimbursement for defective parts and components from
the suppliers thereof. The term "Manufacturing Costs" as used herein shall mean
Purchaser's costs of direct material, direct labor and manufacturing overhead,
including freight in applied to labor plus 5% on such aggregate costs, excluding
sales and marketing costs and interest expense. In the event Purchaser, in its
discretion, has elected to accept a returned product originally sold by Seller,
Purchaser shall reimburse Seller for the value of such returned products. The
value of any returned product shall be deemed to be the standard cost of the
product minus the manufacturing cost of any rework and 10% of standard cost. If
Purchaser has, in its discretion, authorized a customer to return a product,
Seller shall have no liability for such returned product.
(c) Except as set forth above, Purchaser shall have sole
responsibility for all warranty expense, product liability or other obligation
with respect to the sale and manufacture of all products after the Closing Date
and indemnifies Seller and holds it harmless from any and all demands, actions,
claims, losses, damages, costs and expenses (including, without limitation,
attorneys' fees) ("Seller Liability Claim") arising from or in connection with
all products manufactured and sold (shipped) by Purchaser after the Closing
23
Date, whether such claims are based on negligence, breach of warranty or strict
liability, regardless of when such Seller Liability Claim is brought or
incurred. The indemnification obligation hereunder shall be governed by the
provisions of Section 12 hereof.
11.2. Environmental Indemnification. Seller shall indemnify,
defend and save harmless Purchaser and Del from all damages, costs, penalties,
fines, suits, procedures, claims, liabilities and actions of any kind ("Del
Environmental Liability Claim") arising out of or in any way connected with any
spills or discharges of Hazardous Materials or wastes at the Facility which
occurred prior to the Closing Date and during Seller's possession of the
Facility; and from all fines, suits, procedures, claims and actions of any kind
including, but not limited to, reasonable attorney fees incurred by Purchaser or
Del arising out of Seller's failure to provide all information, make all
submissions and take all actions required by any governmental entity or agency
thereof prior to the Closing Date and during Seller's possession of the
Facility.
ARTICLE XII
Section 12. Indemnification; Survival.
12.1. Survival. The representations and warranties of the parties
hereto contained herein or in any certificate, Schedule or other writing
attached hereto, or required by the terms hereof to be delivered (and so
delivered), by the parties or communicated in writing as of the Closing Date
shall survive the Closing Date for a period of two (2) years, except as to tax
matters as set forth in Sections 5.8 and 7.12, product liability claims as set
forth in Section 11.1, litigation matters as set forth in Section 5.9,
environmental matters as set forth in Sections 5.17 and 11.2 and pension matters
as set forth in Section 5.11, all of which shall survive for a period equal to
the applicable statute of limitations. Notwithstanding the preceding sentence,
the right to indemnity with respect to any representation or warranty in respect
of which indemnity may be sought under Sections 11 and 12 hereof shall survive
the time at which it would otherwise terminate if notice of the inaccuracy or
breach thereof, which shall include with reasonable specificity the elements of
such claim, shall have been given to the party against whom such indemnity may
be sought prior to such time.
12.2. Indemnification by Seller.
(a) Seller hereby indemnifies Del and Purchaser and their
respective officers, directors, controlling persons (if any), employees,
attorneys, agents and stockholders (the "Indemnitees") against and agree to hold
each of them harmless from any and all damage, loss, liability, expense
(including, without limitation, reasonable out-of-pocket expense of
investigation and reasonable attorneys' fees and expenses in connection with any
action, suit or proceeding brought by, against or involving any Indemnitee) and
cost (collectively, "Del Indemnified Amounts") incurred or suffered by any
Indemnitee arising out of (i) any misrepresentation or breach of warranty,
covenant or agreement made or to be performed by Seller pursuant to this
24
Agreement or any of the Transaction Documents, (ii) any Del Liability Claim; and
(iii) any Del Environmental Liability Claim.
(b) The Indemnitees each agree to give notice within the time
periods specified in Section 12.1 to Seller within sixty (60) days of having
knowledge of such claim after learning of the assertion of or having specific
knowledge as to any claim, or the commencement of any suit, action or
proceeding, in respect of which indemnity may be sought hereunder. The failure
of an Indemnitee to give such notice within sixty (60) days and in sufficient
time thereafter to prevent Seller from being materially prejudiced in the
defense of such claim, suit, action or proceeding shall constitute a waiver of
its rights hereunder in respect of the claim, suit, action or proceeding with
respect to which such notice was required to have been given hereunder.
(c) Seller shall not be liable under this Section 12.2 for
any settlement effected without its consent of any claim, litigation or
proceeding in respect of which indemnity may be sought hereunder.
(d) The amount required to be paid to an Indemnitee by Seller
for any Del Indemnified Amounts hereunder shall be the amount which, after
taking into account the effect of Federal, state and local tax laws, places the
Indemnitee in the same position as if the matter giving rise to the
indemnification had not occurred and such payment had not been received. Such
amounts shall be paid not later than thirty (30) days after receipt by Seller of
written notice from the Indemnitee stating that such Indemnified Amounts have
been incurred and the amount thereof and of the related indemnity payment;
provided, however, that any disputed amounts shall be due and payable within
thirty (30) days after such amounts are finally determined by mutual agreement
or by a court of competent jurisdiction to be owing by Seller to Del and/or
Purchaser.
12.3. Indemnification by Purchaser and Del.
(a) Each of Purchaser and Del hereby indemnifies Seller and
its respective officers, directors, shareholders, employees, attorneys and
agents against and agrees to hold each of them harmless from any and all damage,
loss, liability, expense (including, without limitation, reasonable
out-of-pocket expense of investigation and reasonable attorneys' fees and
expenses in connection with any action, suit or proceeding brought by, against
or involving Seller) incurred or suffered by Seller and cost (collectively,
"Seller Indemnified Amounts") incurred or suffered by Seller arising out of (i)
any misrepresentation or breach of warranty, covenant or agreement made or to be
performed by Del or Purchaser pursuant to this Agreement or any Transaction
Document; and (ii) any Seller Liability Claim.
(b) Seller agrees to give notice within the time periods
specified in Section 12.1, to Purchaser and Del within sixty (60) days of having
knowledge of such claim after learning of the assertion of or having specific
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knowledge as to any claim, or the commencement of any suit, action or
proceeding, in respect of which indemnity may be sought hereunder. The failure
of Seller to give such notice within such sixty (60) days and in sufficient time
thereafter to prevent Purchaser and Del from being materially prejudiced in the
defense of such claim, suit, action or proceeding shall constitute a waiver of
its rights hereunder in respect of the claim, suit, action or proceeding with
respect to which such notice was required to have been given hereunder.
(c) Purchaser and Del shall not be liable under this Section
12.3 for any settlement effected without their consent for any claim, litigation
or proceeding in respect of which indemnity may be sought hereunder.
(d) The amount required to be paid to Seller by Purchaser or
Del for any Seller Indemnified Amounts hereunder shall be the amount which,
after taking into account the effect of Federal, state and local tax laws,
places the Seller in the same position as if the matter giving rise to the
indemnification had not occurred and such payment had not been received. Such
amounts shall be paid not later than thirty (30) days after receipt by Purchaser
and Del of written notice from Seller stating that such Indemnified Amounts have
been incurred and the amount thereof and of the related indemnity payment;
provided, however, that any disputed amounts shall be due and payable within
thirty (30) days after such amounts are finally determined by mutual agreement
or by a court of competent jurisdiction to be owing by Purchaser and/or Del to
Seller.
12.4. Limitations on Indemnification.
(a) Notwithstanding anything to the contrary contained
herein, the Seller shall be obligated to indemnify Del and the Purchaser, and
Del and the Purchaser shall be obligated to indemnify the Seller, for the
applicable Indemnified Amounts hereunder only up to a maximum aggregate amount
equal to the Purchase Price plus the Contingent Consideration.
(b) Notwithstanding anything to the contrary contained
herein, neither Seller nor Del or Purchaser shall be entitled to any recovery
from the other with respect to any breach of warranty or representation set
forth herein or the indemnification provided for in Sections 5.17, 11 or 12
hereof unless and until the aggregate amount of the applicable Indemnified
Amounts suffered, sustained or incurred by the asserting party, or to which such
party becomes subject, by reason of such breach or indemnity, shall exceed in
the aggregate Fifty Thousand ($50,000) Dollars (the "Cushion Amount"). In the
event that the sum of the applicable Indemnified Amounts for which no
indemnification has been made hereunder (the "Aggregate Indemnified Amount")
shall exceed the Cushion Amount, the indemnification obligations imposed herein
shall apply to all amounts from the first dollar of such claims.
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(c) Notwithstanding anything to the contrary contained
herein, the indemnification limitation and Cushion Amount set forth herein and
in Section 12.1 shall not apply in the event that the Seller, Del or Purchaser,
as the case may be, fraudulently (i) omitted a material fact or (ii)
misrepresented or breached any representation or warranty in this Agreement or
in any agreement or schedule required to be delivered by Seller or by Del or
Purchaser, as the case may be.
12.5. Conduct of Litigation. Each indemnifying party shall be
entitled at its own expense to conduct the defense of any claim or action to be
indemnified hereunder in which event such defense shall be conducted by counsel
chosen by such indemnifying party, which counsel may be any counsel reasonably
satisfactory to the indemnitees, and the indemnified party shall bear all fees
and expenses of any additional counsel retained by them; provided, however, that
if counsel for the indemnified party reasonably determines that there is a
conflict between the positions of the indemnified party and the indemnifying
party in conducting the defense of such action or that there are legal defenses
available to such indemnified party different from or in addition to those
available to the indemnifying party, then counsel for the indemnified party
shall be entitled, if the indemnified party so elects, to conduct the defense to
the extent reasonably determined by such counsel to protect the interests of the
indemnified party, at the expense of the indemnifying party. If the indemnifying
party shall elect not to assume the defense of such claim or action, and such
action is finally determined by a court of competent jurisdiction and such
indemnifying party is determined to be liable for the indemnification
obligations hereunder, then the indemnifying party will reimburse the
indemnitees for the reasonable fees and expenses of any counsel retained by them
in such action and/or in any action brought by the indemnified party to
determine the indemnification obligations of the indemnifying party and all
court costs, interest, and fees and disbursements as permitted by statute, and
the indemnifying party shall be bound by the results obtained by the
indemnitees; provided, however, that no such claim or action shall be settled
without the written consent of the indemnifying party.
12.6. Exclusivity of Remedies. Except (i) for any equitable
remedies to which the parties may be entitled and (ii) as otherwise expressly
provided in this Agreement, the parties' remedies for breach of the
representations, warranties and agreements herein contained and all other rights
and remedies of the parties for breach of this Agreement or in connection with
any dispute arising under this Agreement or the transactions contemplated hereby
or arising out of or relating to the Assets or the Business as heretofore or
hereafter conducted or as existing on the Effective Date shall be exclusively
governed by this Section 12.
12.7. No Implied Representations. Purchaser, Del and Seller
acknowledge that, except as expressly set forth in this Agreement, the
Schedules, or in the agreements referenced herein, neither Purchaser, Del nor
Seller has made or is making any oral or written representation or warranty to
the other, implied or otherwise.
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ARTICLE XIII
Section 13. Termination Fee. In the event for any reason either party
shall breach this Agreement ("Breach") or shall notify the other ("Notice") of
its decision not to proceed with this transaction on the terms provided herein,
except if such breach or Notice is due to a material breach by the other party
of this Agreement, the breaching or notifying party shall pay to the other party
in certified funds, within thirty (30) days of the Breach or the Notice, a
termination fee equal to $500,000; provided, however, that Del shall not be
obligated to pay a termination fee to Seller in the event that Del, in the
course of its due diligence investigation with respect to the Gendex Division
discovers one or more facts and/or circumstances that may adversely and
materially effect the business operations or financial condition of the Gendex
Division (as compared to the financial condition reflected in the audited
financial statements of the Gendex Division for the twelve months ended December
31, 1995 or the Assets; provided, further, however, that neither Del nor Seller
shall be obligated to pay a termination fee to the other in the event that (i)
Del's institutional lender declines to finance the acquisition of the Assets or
(ii) Seller shall have failed to obtain and keep in full force and effect the
Landlord Consent and Del elects not to proceed for such reason. The parties
hereto agree that the termination fee shall not preclude either party from
pursuing any other remedies in equity.
ARTICLE XIV
Section 14. Miscellaneous.
14.1. Notices. Any notices or other communications required or
permitted hereunder shall be in writing and sufficiently given if sent by
confirmed telefax, overnight delivery or by registered or certified mail,
postage prepaid, addressed to the parties hereto as follows:
To Seller:
Dentsply International Inc.
570 West College Avenue
York, PA 17405-0872
Attention: Secretary
Facsimile: (717) 843-6357
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To Del:
Del Global Technologies Corp.
11550 West King Street
Franklin Park, Illinois 60131
Attention: Mr. Leonard A. Trugman
To Purchaser:
Gendex- Del Medical Imaging Corp.
c/o Del Global Technologies Corp.
1 Commerce Park
Valhalla, NY 10595
Attention: Mr. Leonard A. Trugman
Copy to:
Tashlik, Kreutzer & Goldwyn P.C.
833 Northern Blvd.
Great Neck, NY 11021
Attention: Martin M. Goldwyn, Esq.
or such other addresses as shall be furnished by like notice by such party.
14.2. Brokers. Seller, Purchaser and Del each represents to the
other that it has not dealt with any broker for this transaction and has not
employed any investment banker, broker, finder or intermediary in connection
with the transactions contemplated hereby who might be entitled to a fee or any
commission upon consummation of the transactions contemplated hereby. Purchaser
and Del, on one hand, and Seller, on the other hand, agree to indemnify and hold
each other harmless from and against any and all loss, damage, liability, cost
or expense (including reasonable attorneys' fees) suffered or incurred as a
result of any breach of the foregoing representations.
14.3. Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties and their respective successors.
The parties may not assign this Agreement.
14.4. Entire Agreement; Amendment. This Agreement including the
Schedules, documents delivered hereunder and any agreements referenced herein,
embodies the entire agreement of the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements, representations and
understandings with respect thereto. This Agreement may be amended, and any
provision hereof waived, but only in writing signed by the party against whom
such amendment or waiver is sought to be enforced.
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14.5. Counterparts. This Agreement may be executed in
counterparts, including telefax pages which shall be deemed originals with the
originals to be provided within a reasonable time, all of which shall together
constitute one and the same instrument.
14.6. Agreement to Take Necessary and Desirable Actions. Seller,
Del and Purchaser each agree to execute and deliver such other documents,
certificates, agreements and other writings and to take such other actions as
may be reasonably necessary or desirable in order to consummate or implement
expeditiously the transactions contemplated by this Agreement.
14.7. Headings. The headings of Articles and Sections herein are
inserted for convenience of reference only and shall be ignored in the
construction or interpretation hereof.
14.8. Governing Law. This Agreement shall be governed by and
interpreted under the laws of the State of Delaware applicable to contracts made
and to be performed therein without giving effect to the principles of conflict
of laws thereof. Except in respect of any action commenced by a third party in
another jurisdiction, the parties hereto agree that any legal suit, action, or
proceeding against them arising out of or relating to this Agreement may be
brought in the United States Federal Courts in the State of Delaware or the
Courts of Chancery, in the State of Delaware. The parties hereto hereby accept
the jurisdictions of such courts for the purpose of any such action or
proceeding, and agree that venue for any action or proceeding brought in the
State of Delaware shall lie in the United States Federal Courts or the Courts of
Chancery located in New Castle County, Delaware, as the case may be. Each of the
parties hereto hereby irrevocably consents to the service of process in any
action or proceeding in such courts by the mailing thereof by United States
registered or certified mail postage prepaid at its address set forth herein.
14.9. No Implied Waiver. No failure or delay on the part of the
parties hereto to exercise any right, power or privilege hereunder or under any
instrument executed pursuant hereto shall operate as a waiver; nor shall any
single or partial exercise of any right, power or privilege preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege. All rights and remedies granted herein shall be in addition to other
rights and remedies to which the parties may be entitled at law or in equity
except or otherwise expressly provided herein.
14.10. No Third Party Beneficiaries. This Agreement is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.
14.11. Nondisclosure of Agreement. Prior to Closing, Purchaser,
Del and Seller shall make no public disclosure regarding the negotiations
between the parties, the existence of this Agreement or the specific financial
and other terms and conditions of this Agreement, unless such disclosure is (i)
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agreed upon by prior written approval of the parties hereto, (ii) required by
law (in which case the disclosing party shall, prior to disclosure, advise and
consult with the other party and its counsel concerning such disclosure), or
(iii) if in the opinion of counsel to either party such disclosure is necessary
or appropriate by reason of Federal securities laws. Subsequent to Closing, the
parties hereto shall not be prohibited from disclosing the consummation of the
transaction contemplated by this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed on behalf of
each of the parties hereto by their duly authorized officers as of the day and
year first above written.
DENTSPLY INTERNATIONAL INC.
By: /s/Edward Yates
----------------------------------
Edward D. Yates
Senior Vice President and CFO
DEL GLOBAL TECHNOLOGIES CORP.
By: /s/David Engel
----------------------------------
David Engel
Executive Vice President and CFO
GENDEX-DEL MEDICAL IMAGING CORP.
By: /s/David Engel
----------------------------------
David Engel
Executive Vice President and CFO
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