1
EXHIBIT 2.1
-------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
by and among
EBI MEDICAL SYSTEMS, INC.
and
PERSONAL DIAGNOSTICS, INCORPORATED
-------------------------------------------------------------------------------
Dated as of March 17, 1995
2
ASSET PURCHASE AGREEMENT
THIS AGREEMENT, made and entered into this 17th day of March, 1995, by and
among EBI Medical Systems, Inc. (the "Buyer"), a Delaware corporation having its
principal place of business at 6 Upper Pond Road, Parsippany, New Jersey 07054,
and Personal Diagnostics, Incorporated (the "Seller"), a New Jersey corporation
having its principal place of business at 3 Entin Road, Parsippany, New Jersey
07054.
WITNESSETH:
WHEREAS, the Buyer desires to purchase from the Seller and the Seller
desires to sell to the Buyer, upon the terms and subject to the conditions of
this Agreement, certain assets hereinafter more fully described,
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations, and warranties contained in this Agreement and intending to be
legally bound thereby, the Buyer and the Seller agree as follows:
ARTICLE I
Terms of Purchase
Section 1.01A. Purchased Assets. Upon the terms and subject to the
conditions set forth in this Agreement, the Seller agrees to sell, convey,
transfer, assign, and deliver, or cause to be sold, conveyed, transferred,
assigned, and delivered, to the Buyer, and the Buyer agrees to purchase, all of
the following assets described in this Section 1.01A (the "Purchased Assets"):
(a) All right, title, and interest in and to the real property located at
3 Entin Road, Parsippany, Morris County, New Jersey 07054, Lot 9.04 in Block
202, and more particularly described in Schedule 1.01A(a), including all
buildings, structures and improvements located thereon, fixtures contained
therein, and appurtenances attached thereto in accordance with the terms and
conditions set forth in Schedule 1.01A(a) (the "Real Property") and the
provisions thereof, all of which are a part of this Agreement;
(b) All manufacturing equipment and machinery listed in Schedule 1.01A(b)
as well as related tools, supplies, spare parts, operation and maintenance
manuals and warranties;
(c) All rights in, to and under all leases, licenses or other similar
agreements of tools, furniture, machinery, supplies, equipment, and other items
of personal property entered into prior to the date hereof and listed in
Schedule 1.01(c);
-1-
3
(d) All raw materials owned by Seller;
(e) All prepaid expenses, deposits and other similar items, including
without limitation those items listed in Schedule 1.01A(e),
(f) All computer programs owned by Seller including, but not limited to,
manufacturing, processing and control, and the source code and object code of
all such computer programs; all additions, modifications, updates and
enhancements thereto; detailed design specifications including program
descriptions, system flow charts, file layouts, report layouts, screen layouts,
and all other computer program documentation; and all user's manuals, training
manuals, and other system and operations documentation relating to such computer
programs;
(g) The computer hardware and equipment listed in Schedule 1.01A(g);
Section 1.01B. Additionally Acquired Assets. The Seller agrees to sell,
convey, transfer, assign and deliver, or cause to be sold, conveyed,
transferred, assigned and delivered to Buyer and the Buyer agrees to purchase,
all of the work in process and associated documentation as listed on Schedule
1.01B on the date of settlement separate and apart from the Purchased Assets for
additional consideration equal to the value of the work in process measured as a
percentage of completion against the invoice amount.
Section 1.02. Assumption of Obligations or Liabilities. At the Closing,
the Buyer shall assume and agree to pay only the obligations and liabilities of
the Seller set forth below (the "Assumed Obligations"), and the Buyer expressly
does not assume and will not agree to assume or pay, and shall not be
responsible for, any other obligation or liability of the Seller, direct or
indirect, known or unknown, choate or inchoate, absolute or contingent. The
Assumed Obligations are:
(a) Buyer will complete all outstanding purchase orders of Seller's
customers not complete on the closing date hereof, and as payment for said work
in process as referenced in Section 1.01B, Buyer shall remit to Seller the value
of the work in process relating to such orders as of the Closing Date based on
the value of the work in process measured as a percentage of completion against
the invoice amount in a manner consistent with the valuation methodology
utilized in connection with Section 1.01B hereof (Seller shall provide to Buyer
such production records, engineering reports and supplier and parts lists as may
be required to complete such pending purchase orders);
(b) Buyer will allow the Seller's current customers to continue their
relationship as a customer or, at any customer's option, Buyer will provide them
with a reasonable transition period to locate alternative manufacturing sources;
and
(c) the personal property leases and other agreements set forth on
Schedule 1.02(c) hereto.
-2-
4
Section 1.03. The Purchase Price. The aggregate purchase price to be paid
by the Buyer to the Seller for the Purchased Assets shall be Four Million Four
Hundred Thousand Dollars ($4,400,000) (the "Purchase Price"), Five Hundred
Thousand Dollars ($500,000) (hereinafter referred to as "Earnest Money Payment")
of which has already been paid by the Buyer to the Seller. Subject to the terms
and conditions contained in this Agreement, the entire Earnest Money Payment
shall be credited against the Purchase Price or retained by the Seller as
provided in Section 5.02 or returned to the Buyer as provided in Section 5.01 or
Section 5.02.
Section 1.04. Payment of the Purchase Price. The balance of the Purchase
Price shall be payable by the Buyer to the Seller at the Closing as follows:
The sum of Three Million Nine Hundred Thousand Dollars ($3,900,000) shall
be paid to the Seller by bank cashier's check, certified check or wire transfer
of immediately available funds to such accounts with banks in the United States
of America as directed in writing by the Seller at least three (3) business days
prior to the Closing Date.
Section 1.05. Allocation of the Purchase Price. The Buyer and the Seller
shall prepare and file their Federal and state tax returns reflecting the
transactions contemplated hereby in a manner consistent with the allocation of
the Purchase Price provided in Schedule 1.05. The foregoing allocation is based
upon the parties best estimate of the fair market value as of the Closing Date
of each such item, class and category of Purchased Assets.
Section 1.06. Prorations.
(a) In General. The Buyer and the Seller shall prorate those items
normally subject to proration and reimbursement, such as fuel oil, utilities and
other real property related expenses relating to the Real Property and real
property taxes, on the basis of the number of days of the tax year, calendar
year or service period, as the case may be, which has elapsed as of the Closing
Date.
(b) Wages, Vacation Pay, Severance, Etc. The Seller shall be responsible
for all amounts, including wages, salaries, bonuses, commissions, vacation pay
and severance pay, if any, and all other employee benefits due to all of its
employees; provided, however, the Seller shall not be responsible for any such
amounts accruing solely as a result of the employment of any person, including
former employees of the Seller, by Buyer on, as of or after the Closing Date.
The Seller shall be responsible for any notice required to be given to employees
in respect of their employment by the Seller, but each such notice shall only be
given with the prior express written approval of the Buyer.
(c) Means of Effecting Adjustment. The adjustments and prorations
required by this Section 1.06 shall be made as nearly as possible on the Closing
Date, or other applicable date, and shall be settled in cash when made;
provided, however, that the Seller and the Buyer agree to cooperate with one
another regarding refinements to such adjustments based on information received
after the Closing Date.
-3-
5
ARTICLE II
Warranties and Representations
As a material inducement to the Buyer to enter into this Agreement and to
consummate the transactions contemplated by this Agreement, the Seller
represents and warrants to the Buyer that:
Section 2.01. Organization; Power. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Jersey. The Seller has all the requisite corporate power and authority to
own, lease and operate the Purchased Assets and to enter into this Agreement and
the other agreements and documents contemplated by this Agreement and, subject
to the receipt of the necessary consents and approvals set forth on Schedule
2.02 hereto, to consummate the transaction contemplated hereby. The Seller has
delivered to the Buyer (a) true and complete copies of the Seller's Articles of
Incorporation, including all amendments thereto, certified by the Secretary of
State of the State of New Jersey, (b) a Certificate of Good Standing, and (c)
copies of the Seller's Bylaws, as then currently in effect, certified as true
and complete by the Seller's Secretary, copies of which are attached hereto as
Exhibits 2.01(a), (b) and (c), respectively.
Section 2.02. Authority, No Violation, Etc. The execution and delivery of
this Agreement by the Seller and the consummation by the Seller of the
transactions contemplated by this Agreement, including without limitation the
execution and delivery of the other agreements and documents to be executed and
delivered by the Seller and the consummation of the transactions contemplated by
such other agreements and documents, have been duly and validly authorized by
all necessary action on the part of the Board of Directors and, upon the receipt
of approval of the shareholders of the Seller at its 1995 Annual Meeting of
Shareholders scheduled for Thursday, April 27, 1995, on the part of the
shareholders of the Seller. This Agreement and the other agreements and
documents to be executed and delivered by the Seller pursuant to the terms and
conditions constitute legal, valid and binding obligations of the Seller,
enforceable against the Seller in accordance with their respective terms and
conditions, except as the enforceability thereof may be affected by bankruptcy
or other similar laws affecting the enforcement of creditors' rights generally
or by judicial discretion in connection with the application of equitable
remedies. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby, nor compliance by the
Seller with any of the provisions hereof, will:
(a) conflict with or result in a breach of any provision of the Articles
of Incorporation or Bylaws of the Seller, or result in a default (or give rise
to any right of termination, cancellation or acceleration) under any of the
terms, conditions or provisions of any note, lien, bond, mortgage, indenture,
license, lease, agreement, consent order, or other instrument or obligation to
which the Seller is a party, or by which the Seller or any of the Purchased
Assets
-4-
6
may be bound, except for such conflict, breach or default as to which valid,
binding and enforceable waivers or consents have been obtained; or
(b) violate any judgment, order, writ, injunction, or decree of any court,
administrative agency, or governmental body applicable to the Seller or any of
the Purchased Assets; or
(c) cause, or give any person grounds to cause (with or without notice,
the passage of time, or both), the maturity of any liability or obligation of
the Seller to be accelerated or increased.
All consents and approvals of third parties and governmental authorities
required in connection with the execution and delivery by the Seller of this
Agreement and the other agreements and documents to be executed and delivered by
the Seller and the consummation by the Seller of the transactions contemplated
by this Agreement and such other agreements and documents have been or will be
by settlement hereof obtained, which consents and approvals are specified in
Schedule 2.02.
Section 2.03. Compliance with Laws; No Default or Litigation. Except as
set forth in Schedule 2.03:
(a) The Seller is not in default or violation in any material respect (i)
under any contract, agreement, lease, consent order, or other commitment to
which it is a party or by which the Purchased Assets are subject or bound, (ii)
under any law, rule, regulation, judgement, writ, injunction, order or decree of
any court or any foreign, federal, state, local, or other governmental
department, commission, board, bureau, agency, or instrumentality;
(b) There are no actions, suits, claims, investigations, or legal,
arbitration or administrative proceedings in progress, pending or, to Seller's
knowledge, threatened against the Seller or involving any of the Purchased
Assets, whether at law or in equity, whether civil or criminal in nature, or
whether before or by a Federal, state, county, local, foreign, or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign; the Seller has not received any notice of any violation of
any rule, regulation, ordinance, law, order, judgement, decree, or requirement
relating to the Seller, the Purchased Assets or the transaction contemplated by
this Agreement, and the Seller and its executive officers do not know of and
have no reason to be aware of any basis for the same;
(c) No action, suit or proceeding has been instituted or, to the knowledge
of the Seller or its executive officers threatened to restrain or prohibit or
otherwise challenge the legality or validity of the transactions contemplated by
this Agreement; and
(d) The Seller (without independent investigation or inquiry of any kind)
is not aware of any proposed laws, rules, regulations, ordinances, orders,
judgments, decrees, governmental takings, condemnations or other proceedings
which would have a material adverse affect on the Purchased Assets.
-5-
7
Section 2.04. Personal Property-Owned. Schedule 1.01A(b) contains a true
and complete list and brief description of all manufacturing equipment and
machinery and related items owned by Seller having a unit or individual
replacement value in excess of Two Thousand Five Hundred Dollars ($2,500.00)
(the "Personal Property"). To the best of Seller's knowledge, except as set
forth in Schedule 1.01A(b), each item of the Personal Property conforms in all
respects to applicable Federal, state, county, local, and foreign laws and
regulations. Each item of the Personal Property set forth on Schedule 1.01A(b)
hereto is in good operating condition and repair.
Section 2.05. Personal Property - Leased. Schedule 1.01A(c) contains a
true and complete list and brief description of all leases and other agreements
under which the Seller is a lessee of, or holds or operates any tools,
furniture, machinery, equipment, or other personal property owned by any other
person or other entity and under which payments to such other person or entity
individually exceed Two Thousand Five Hundred Dollars ($2,500.00) per annum (the
"Leased Personal Property"). The Seller has delivered to the Buyer true and
complete copies of the leases listed in Schedule 1.01A(c). The Seller is the
owner and holder of the entire interest in the leasehold estates related to the
Leased Personal Property purported to be granted by the leases or agreements
under which it is a lessee or holds or operates any such items owned by any
force and effect and constitutes a legal, valid and binding obligation of the
respective parties thereto, enforceable in accordance with its terms. No
consent of any lessor of the Leased Personal Property is required in connection
with the transactions provided for in this Agreement, except as set forth in
Schedule 1.01A(c). To the best of Seller's knowledge, each item of the Leased
Personal Property conforms in all respects to applicable Federal, state, county,
local and foreign laws and regulations. Each item of the Leased Personal
Property is in good operating condition and repair.
Section 2.06. Licenses and Permits.
(a) The Seller possesses FDA Establishment Registration and all
franchises, licenses, permits, certificates, approvals, and other authorizations
necessary to own or lease and operate its business and the Purchased Assets as
now conducted (the "Permits").
(b) All of the Permits, including the name of the licensor or grantor of
each of the Permits, a description of the subject matter of each of the Permits,
the termination date, and any renewal options, are listed in Schedule 2.06(b).
The Seller has or will prior to closing deliver to the Buyer true and complete
copies of all of the Permits.
Section 2.07. Rights Under Warranties. Schedule 2.07 contains a list and
brief description of all rights in, to and under all guaranties, warranties and
representations received by the Seller related to the Purchased Assets which
were purchased by the Seller from the owners of the Purchased Assets immediately
previous to the Seller.
Section 2.08. Title to the Purchased Assets and Related Matters. The
Seller has good and marketable title to all the Purchased Assets, free and clear
of all mortgages, liens, pledges,
-6-
8
charges, security interests, encumbrances, easements, encroachments, rights of
third parties, or other interests of any kind or character, except as set forth
in Schedule 2.08, attached hereto and made a part hereof, and except for liens
for taxes not yet due and payable. Subject to the receipt of the consents and
approvals set forth in Schedule 2.02 hereto, the Seller has complete and
unrestricted power and the unqualified right to sell, convey, assign, transfer
and deliver the Purchased Assets, and the deeds and other instruments of
assignment and transfer to be executed and delivered by the Seller to the Buyer
at the Closing will be valid and binding obligations of the Seller, enforceable
in accordance with their respective terms (except as the enforcement thereof may
be affected by bankruptcy or similar laws affecting the enforcement of
creditors' rights generally or by judicial discretion in connection with the
application of equitable remedies), and will effectively vest in the Buyer good
and marketable title to the Purchased Assets. All consents necessary to
consummate the foregoing have been obtained, or will be obtained as of the
Closing Date, and are or will be valid and binding upon the persons giving the
same, and the Seller shall deliver to the Buyer at or prior to the Closing a
duly executed copy of each such consent.
Section 2.09. Environmental Matters.
(a) Except as set forth on Schedule 2.09 hereto, the Real Property and all
operations conducted thereon, including, but not limited to, the Seller's use of
the Purchased Assets are currently in material compliance with all applicable
federal, state and local environmental laws, regulations, and court and
administrative orders, including all consent orders.
(b) With respect to the Real Property, there exists no state of affairs
and there has occurred no event which currently requires, or is currently
expected to require in the future, reporting or disclosure by the owner of the
Purchased Assets or the Owned Real Property to any federal, state or local
agency concerned with environmental protection or management.
(c) There are no pending or, to the Seller's knowledge, threatened claims
by any private parties or governmental agencies, and there are no pending or, to
the Seller's knowledge, threatened judicial or administrative actions, alleging
violations of any federal, state or local environmental laws, regulations, or
court or administrative orders on or connected with the Purchased Assets, or the
operations conducted thereto on or at any time prior to the Closing Date.
(d) Schedule 2.09, attached hereto and made a part hereof, contains a list
and brief description of all written and oral communications between the Seller
and any federal, state or local governmental authority with respect to
environmental matters, including, but not limited to, the Clean Air Act, the
Clean Water Act, the Resource Conservation and Recovery Act, the Toxic
Substances Control Act, and the Comprehensive Environmental Response,
Compensation and Liability Act, and equivalent state, local and foreign laws,
and regulations issued pursuant thereto, since November 10, 1992 relating to the
Real Property.
-7-
9
(e) Seller acknowledges that the Seller's operations being conducted at
the Real Property has a standard Industrial Classification (SIC) Code Number
3842 and that the terms and conditions of this Agreement are subject to
compliance with the New Jersey Industrial Site Recovery Act ("ISRA").
Section 2.10. Brokers' or Finders' Fees. No agent, broker, investment
banker, person or firm acting on behalf of the Seller, its executive officers,
or any shareholder, or under the authority of any of them, is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
directly or indirectly from any of the parties hereto in connection with any of
the transactions contemplated hereby, except for those fees or commissions
listed and described in Schedule 2.10, attached hereto and made a part hereof,
which shall have been paid in full by the Seller prior to or at the Closing, and
evidence of payment for which shall have been delivered to the Buyer at the
Closing.
Section 2.11. Disclosure. No representation or warranty by the Seller
contained in this Agreement and no statement contained in any certificate or
other instrument delivered or to be delivered herewith or in connection with the
transactions contemplated hereby contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact necessary in
order to make the statements contained herein or therein not misleading.
Section 2.12. Absence of Obligations to the Shareholders. The
Shareholders have no claims against the Purchased Assets for money or other
property loaned, services rendered or otherwise, other than for current salary,
bonus, pension benefits, reimbursement of expenses, and fringe benefits payable
in accordance with the Seller's normal practices, which have not been fully paid
and discharged.
Section 2.13. Survival of Representations and Warranties of Seller. The
representations and warranties of Seller made in this Agreement are correct,
true and complete as of the date hereof and will be correct, true and complete
as of the Closing with the same force and effect as those such representations
and warranties had been made at the Closing, and shall survive the Closing for a
period of three years. Each of Seller and Buyer acknowledge and agree that as
long as written notice is given on or prior to the date set for expiration of
the representations and warranties contained herein, the claims for
indemnification pursuant to Article VIII hereof shall survive until such matter
is resolved.
ARTICLE III
Warranties and Representations of the Buyer
As an inducement to the Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, the Buyer represents and
warrants to the Seller that:
-8-
10
Section 3.01. Organization; Power. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Buyer has all the requisite corporate power and authority to own,
lease and operate its business as it is now being conducted and to enter into
this Agreement and the other agreements and documents of transfer contemplated
hereby. The Buyer has or will by Closing deliver to the Seller (a) true and
complete copies of the Buyer's Articles of Incorporation, including all
amendments thereto, certified by the Secretary of State of the State of
Delaware, (b) a Certificate of Good Standing of the Buyer issued by the
Secretary of State of the State of Delaware, and (c) a copy of the Buyer's
By-Laws, as then currently in effect, certified as true and complete by the
Buyer's Secretary.
Section 3.02. Authority, No Violation, Etc. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by all necessary action on the part of the
Board of Directors of the Buyer. This Agreement and the other agreements and
documents contemplated hereby are valid and binding obligations of the Buyer,
enforceable in accordance with their respective terms and conditions, except as
the enforcement thereof may be affected by bankruptcy or other similar laws
affecting the enforcement of creditors' rights generally or by judicial
discretion in connection with the application of equitable remedies. Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby, nor compliance by the Buyer with any of the
provisions hereof, will (a) conflict with or result in a breach of any provision
of the Articles of Incorporation or By-Laws of the Buyer, or result in a default
(or give rise to any right of termination, cancellation or acceleration) under
any of the terms, conditions, or provisions of any note, lien, bond, mortgage,
indenture, license, lease, agreement, or other instrument or obligation to which
the Buyer is a party, or by which the Buyer or any of its properties or assets
may be bound, except for such conflict, breach, or default as to which requisite
waivers or consents have been obtained, (b) violate any judgment, order, writ,
injunction, or decree of any court, administrative agency, or governmental body
applicable to the Buyer, or any of its properties or assets, or (c) cause, or
give any person grounds to cause (with or without notice, the passage of time,
or both), the maturity of any liability or obligation of the Buyer to be
accelerated or increased. All consents and approvals of third parties and
governmental authorities required in connection with the execution and delivery
by the Buyer of this Agreement and the consummation by the Buyer of the
transactions contemplated hereby have been or will be obtained by closing.
Section 3.03. Brokers' or Finders' Fees. No agent, broker, investment
banker, person, or firm acting on behalf of the Buyer or under the Buyer's
authority is or will be entitled to any broker's or finder's fee or any other
commission or similar fee directly or indirectly from any of the parties hereto
in connection with any of the transactions contemplated hereby, except for those
fees or commissions listed and described in Schedule 3.03, which shall have been
paid in full by the Buyer prior to or at the Closing, and evidence of payment
for which shall have been delivered to the Seller at the Closing.
-9-
11
Section 3.04. Disclosure. No representation or warranty by the Buyer
contained in this Agreement and no statement contained in any certificate or
other instrument delivered or to be delivered hereto or in connection with the
transactions contemplated hereby contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact necessary in
order to make the statements contained herein or therein not misleading.
Section 3.05. Survival of Representations and Warranties of Buyer. The
representations and warranties of Buyer made in this Agreement are correct, true
and complete as of the date hereof and will be correct, true and complete as of
the Closing with the same force and effect as those such representations and
warranties had been made at the Closing, and shall survive the Closing for a
period of three years. Buyer and Seller acknowledge and agree that as long as
written notice is given on or prior to the date set for expiration of the
representations and warranties provided herein, any claims for indemnification
pursuant to Article VIII hereof shall survive until such matter is resolved.
ARTICLE IV
Certain Pre-Closing Covenants of the Seller
The Seller covenants and agrees that between the date hereof and the
Closing:
Section 4.01. Maintenance of Corporate Status. The Seller shall be
maintained at all times as a corporation validly existing and in good standing
under the laws of the State of New Jersey.
Section 4.02. Operation of Purchased Assets. The Seller shall (a)
continue and preserve good relationships with suppliers; (b) maintain in full
force and effect all licenses and permits required for the operation of the
Purchased Assets; (c) maintain and keep in good order, consistent with past
practice, all of the Seller's buildings, offices, shops and other structures,
and, consistent with past practice, keep all machinery, tools, equipment,
fixtures and other property in good condition, repair and working order; and (d)
comply with its obligations contained in this Agreement.
Section 4.03. Access to the Purchased Assets. The Seller shall supply the
Buyer with all information concerning the Purchased Assets that the Buyer
reasonably requests. In addition and without limiting the generality of the
foregoing, the Seller shall permit the Buyer and its accountants, attorneys and
other authorized representatives, to enter upon its offices and plant sites in
order to inspect the books and other records pertaining to of the Purchased
Assets and operations generally, to consult with and receive assistance from
officers, employees, attorneys, and agents of the Seller, to examine the
Purchased Assets, and to carry out any tests and examinations of the Purchased
Assets deemed necessary by the Buyer, provided that such tests and examinations
are conducted in a manner which does not interfere with the operations of the
-10-
12
Seller's business any more than reasonably necessary. The Seller shall deliver
to the Buyer all internal reports relating to the operations of the Purchased
Assets as such reports are made available to the management of the Seller. No
investigation, test, examination or inquiry by the Buyer shall affect the
representations and warranties contained in this Agreement or their survival at
the Closing.
Section 4.04. Insurance. The Seller shall maintain insurance as is
currently in effect in respect of the Purchased Assets and against the risk of
loss or damage attributable to casualty, storm, fire, theft, burglary or riot,
and except to the extent that the Buyer receives the insurance proceeds on any
casualty loss with respect to any of the Purchased Assets pursuant to this
Agreement, the Seller shall have the risk of loss of or damage to the Purchased
Assets from all causes from the date hereof to the Closing.
Section 4.05. Notices. The Seller shall give all notices to governmental
authorities and other third parties and take such other action required to be
given or taken by it under any authorization, lease, note, mortgage, indenture,
agreement, or other instrument in connection with the transactions contemplated
by this Agreement.
Section 4.06. Governmental Approvals. Promptly after the execution of
this Agreement, the Seller shall file all applications and reports and take such
other action which is required in connection with the transactions contemplated
by this Agreement.
Section 4.07. Consents to Transfer of Contracts and Leases. The Seller
shall use its best efforts to obtain all consents and approvals set forth in
Schedule 2.02 hereto.
Section 4.08. Fire or Casualty. In the event that any of the Purchased
Assets are damaged or destroyed as a result of fire, casualty or other
occurrence, no settlement shall be made with any insurance company and no
decision with regard to restoration or rebuilding of any such assets shall be
made without prior consent of the Buyer, which consent shall not be reasonably
withheld.
Section 4.09. Seller's Actions; Supplements to Representations and
Warranties. From the date of this Agreement through the Closing Date, Seller
shall not take any action or omit to take any action within its control to the
extent such action or omission might result in a breach of any term or condition
of this Agreement or in any representation or warranty contained in this
Agreement being inaccurate or incorrect in any material respect on and as of the
date of Closing. The Seller shall deliver to the Buyer, as soon as possible
after any change or discovery thereof, but not later than at the Closing,
supplemental information updating the information set forth in the schedules,
representations and warranties of the Seller set forth in this Agreement to
reflect subsequent occurrences, if any, (along with a notice stating the
representations and warranties, including the schedules referred to therein, to
which such supplemental information relates) so that such schedules,
representations and warranties as supplemented by such information will be true
and correct as of the Closing as if then made; provided, however, that the
foregoing shall
-11-
13
not be deemed to permit any transaction between the date hereof and the Closing
not otherwise permitted by this Agreement.
Section 4.10. General. The Seller will (a) not sell, transfer or
otherwise convey any of the Purchased Assets (other than in the ordinary course
of business), (b) not subject any of the Purchased Assets to any mortgage,
security interest, encumbrance or other lien (other than in the ordinary course
of business), (c) file when due all required tax returns and other reports, (d)
comply in all respects with the New Jersey tax requirements and the New Jersey
Bulk Sales Act, and (e) continue to operate its business in all respects in
accordance with past practices.
Section 4.11. Cooperation. The Seller shall generally cooperate with the
Buyer and its officers, employees, attorneys, accountants and other agents, and,
generally, do such other acts and things in good faith as may be reasonable,
necessary or appropriate to timely effectuate the intents and purposes of this
Agreement and the consummation of the transactions contemplated hereby.
ARTICLE V
Termination and Break-up Fee
Section 5.01. Termination by Mutual Agreement. This Agreement may be
terminated by the mutual agreement in writing of the parties hereto at any time
prior to the Closing, in which case the Earnest Money Payment shall be promptly
returned to the Buyer.
Section 5.02. Termination and Break-up Fee.
(A) This Agreement and any obligations of the Buyer hereunder may be terminated
by the Buyer at any time prior to or at Closing if any of the following should
occur: (a) the approvals and consents set forth on Schedule 2.02 hereto shall
not have been obtained on or prior to Closing or should a governmental agency
prohibit the transaction contemplated by the Agreement (exclusive of the use or
operation of the Purchased Assets beyond or outside the scope of the existing
use or occupancy permit) for any reason beyond the control of Buyer or Seller;
(b) failure to obtain clearance reasonably acceptable to Buyer from the NJDEP
under ISRA as required pursuant to Paragraph 4(b)(vii) of Schedule 1.01A(a)
hereto; (c) there is a material adverse change in the Purchased Assets other
than consumption of inventory and normal wear and tear experienced in the
ordinary course of the Seller's business; and (d) the Seller's Shareholders have
failed to authorize the completion of the transaction contemplated by this
Agreement on or before May 11, 1995. In such event, Seller will immediately
return the Buyer's Earnest Money Payment.
(B) In the event (a) the consents and approvals set forth in Schedule 2.02
hereto have been obtained, (b) a governmental agency has not prohibited the
transfer or acceptance of title to the Purchased Assets, (c) Seller has obtained
clearance reasonably acceptable to Buyer from the NJDEP under ISRA, (d) there is
no material change in the Purchased Assets from the date
-12-
14
hereof other than as permitted in Section 5.02(A)(c) hereof, and (e) the
Seller's Shareholders have authorized the completion of the transaction
contemplated by this Agreement on or before May 11, 1995, and Seller
nevertheless refuses to close, Buyer will be entitled to receive back its
Earnest Money Payment plus a break-up fee of $250,000 from the Seller.
(C) Should Buyer refuse to Purchase the Purchased Assets for any reason other
than those items listed in Section 5.02(A), Buyer will forfeit its Earnest Money
Payment to the Seller, and the Seller shall have no further claim against the
Buyer, whether law or in equity, on account of each refusal.
ARTICLE VI
The Closing
Section 6.01. Time and Place. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall be held at 9:00 a.m. (local
time) at the offices of Wolff & Sampson, 280 Corporate Center, 5 Becker Farm
Road, Roseland, New Jersey 07068-1776 no later than five business days from the
last to occur; (a) receipt of clearance from the NJDEP under ISRA as required
pursuant to Paragraph 4(b)(vii) of Schedule 1.01A(a) hereto and (b) receipt of
Shareholder approval for Seller to authorize the consummation of the subject
transaction.
Section 6.02. Deliveries to the Buyer at the Closing. At the Closing, and
simultaneously with the deliveries to the Seller specified in Section 6.03, the
Seller shall deliver or cause to be delivered to the Buyer the following:
(a) A duly executed Bill of Sale and Assignment in the form of Exhibit
6.02(a);
(b) The production records described in Section 1.03(a).
(c) Certificates of the Seller as to the accuracy of its representations
and warranties contained in this Agreement and as to its compliance with and
fulfillment of all covenants, agreements, obligations and conditions required by
this Agreement.
(d) Copies of all resolutions adopted by the Board of Directors and
shareholders of the Seller authorizing the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, together
with a certificate, duly executed by the Secretary of the Seller, stating that
such copies are true, complete and correct, and that the resolutions have been
duly adopted by the Board of Directors or shareholders and remain in full force
and effect.
(e) Copies of all UCC-3 Termination Statements which evidence the
termination of any liens or encumbrances affecting the Purchased Assets as well
as evidence of receipt of the consents and approvals described in Schedule 2.02
hereto.
-13-
15
(f) An opinion of Seller's counsel, to the Buyer, dated the Closing Date,
in the form of Schedule 6.02(f).
(g) A certificate of good standing for the Seller from the New Jersey
Secretary of State dated within thirty (30) days of the Closing, and evidence
that the New Jersey tax requirements have been complied with.
(h) Any other documents or instruments of conveyance and transfer as the
Buyer may reasonably request for the purpose of assigning, transferring,
granting, conveying, and confirming the Purchased Assets or any part of the
Purchased Assets to the Buyer.
Simultaneously with the foregoing deliveries, the Seller, through its respective
officers, agents and employees, shall put the Buyer into full possession and
enjoyment of all the Purchased Assets.
Section 6.03. Deliveries to the Seller at the Closing. At the Closing,
and simultaneously with the deliveries to the Buyer specified in Section 6.02,
the Buyer shall deliver or cause to be delivered to the Seller the following:
(a) The payment specified in Section 1.05;
(b) A certificate of the Buyer as to the accuracy of its representations
and warranties contained in this Agreement and as to its compliance with and
fulfillment of all covenants, agreements, obligations and conditions required by
this Agreement.
(c) Copies of all consents, approvals, orders, and authorizations
necessary to the consummation by the Buyer of the purchase of the Purchased
Assets and to the transactions contemplated by the Agreement upon terms and
conditions satisfactory to the Seller.
(d) An opinion of the Buyer's counsel, to the Seller, dated the Closing
Date, in the form of Schedule 6.03(d) hereto.
(e) Such instruments of assumption, satisfactory in form and substance to
Seller and its counsel, as shall be reasonably necessary to meet the obligations
of the buyer pursuant to Section 1.02 hereof.
(f) Certified copies of the resolutions of the Board of Directors of the
Buyer authorizing the execution and delivery of this Agreement and the
transactions contemplated hereby.
-14-
16
ARTICLE VII
Additional Covenants of the Parties
Section 7.01. Arbitration. No civil action concerning any dispute arising
under this Agreement shall be instituted before any court and all such disputes
shall be submitted to final and binding arbitration under the auspices of the
American Arbitration Association. Such arbitration shall be conducted in Morris
County, New Jersey in accordance with the rules of such Association before a
panel of three (3) arbitrators. One (1) arbitrator shall be selected by the
Seller and one (1) arbitrator shall be selected by the Buyer; the two (2)
arbitrators so selected shall select the third arbitrator. All costs and
expenses of the arbitration, including attorneys' fees, shall be allocated among
the parties according to the arbitrators' discretion. The arbitrators' award
resulting from such arbitration may be confirmed and entered as a final judgment
in any court of competent jurisdiction and enforced accordingly.
Section 7.02. Bulk Sales. The Seller and John H. Michael shall jointly
and severally indemnify, defend and hold the Buyer harmless against and in
respect of any loss, expense or liability incurred by the Buyer by virtue of the
provisions of any state bulk sales laws that might be applicable to the
transactions contemplated in this Agreement as if such loss, expense or
liability was an Indemnity Loss covered by the Seller's indemnity in Article
VIII hereof, whether or not the Seller or the Buyer attempt to comply with such
bulk sales law provisions. Nothing in this Section 7.02 shall estop or prevent
either the Seller or the Buyer from asserting as a bar or defense to any action
or proceeding brought under any state bulk sales law that such law is not
applicable to the transactions contemplated in this Agreement.
Section 7.03. Further Assurances. The Seller, after the Closing, without
further consideration shall execute, acknowledge, and deliver any further deeds,
assignments, conveyances, and other assurances, documents, and instruments of
transfer, reasonably requested by the Buyer, and will take any other action
consistent with the terms of this Agreement that may reasonably be requested by
the Buyer, for the purpose of assigning, transferring, granting, conveying, and
confirming the Purchased Assets or any part of the Purchased Assets to the
Buyer. If requested by the Buyer, the Seller shall prosecute or otherwise
enforce in its own name for the benefit of the Buyer any claims, rights, or
benefits that are transferred to the Buyer by this Agreement and that require
prosecution and enforcement in the Seller's name. Any prosecution or
enforcement of claims, rights, or benefits under this Section shall be solely at
the Buyer's expense, unless such prosecution or enforcement is made necessary by
a breach of this Agreement by the Seller.
-15-
17
ARTICLE VIII
Indemnification
Section 8.01. Indemnification by the Seller. The Seller hereby agrees to
indemnify, defend and hold the Buyer, and its officers, directors, employees and
shareholders (collectively, "Buyer's Indemnified Persons") harmless from and
against all demands, suits, claims, actions or causes of action, assessments,
losses, damages, liabilities, settlements, penalties, and forfeitures, and costs
and expenses incident thereto (including but not limited to attorneys' and
accountants' fees, legal expenses, consultants' fees and court costs) of any
kind or character (collectively, "Indemnity Losses" and individually, an
"Indemnity Loss") asserted against, suffered or incurred by the Buyer's
Indemnified Persons as a direct or indirect result of:
(a) any material misrepresentation in or breach of the representations and
warranties of the Seller, or the failure of the Seller to perform any of its
respective covenants or obligations contained in this Agreement or in any
exhibit, schedule, certificate or other instrument or document furnished or to
be furnished by the Seller, pursuant to this Agreement or in connection with the
transactions contemplated hereby;
(b) The use of the Purchased Assets prior to the Closing or the operations
of the Seller subsequent to the Closing;
(c) any liabilities, obligations, or expenses of the Seller not assumed by
the Buyer at the Closing; and
(d) liabilities for (i) wages, salaries, bonuses, commissions, vacation
pay and severance pay, if any, and all other employee benefits due to any of
Seller's employees (exclusive of such amounts accruing solely as a result of the
employment of any such person, including former employees of the Seller, by
Buyer on, as of or after the Closing Date), (ii) failure to comply with all
federal, state, local and foreign laws, ordinances and regulations dealing with
employment and employment practices, (iii) all wages and hours requirements and
regulations, (iv) claims for unfair labor practices, safety or health
violations, discrimination or wage claims; or (v) obligations of Seller under
any collective bargaining agreement currently in existence, being negotiated or
subject to negotiation or renegotiation by the Seller, as each of the foregoing
may exist on or before the Closing.
Section 8.02. Indemnification by the Buyer. The Buyer hereby agrees to
indemnify, defend and hold the Seller, and its officers, directors, employees
and shareholders (collectively "Seller's Indemnified Persons") and the
Shareholders harmless from and against any Indemnity Loss asserted against,
suffered or incurred by such the Seller's Indemnified Person as a direct or
indirect result of:
(a) any material misrepresentation in or breach of the representations and
warranties of the Buyer or the failure of the Buyer to perform any of its
covenants or obligations contained
-16-
18
in this Agreement or in any exhibit, schedule, certificate or other instrument
or document furnished or to be furnished by the Buyer pursuant to this Agreement
or in connection with the transactions contemplated hereby;
(b) the use of the Purchased Assets or the business operations of the
Buyer after the Closing; or
(c) the obligations and liabilities of the Seller assumed by the Buyer in
accordance with Section 1.02 hereof.
Section 8.03. Notice. If an indemnified party believes that it has
suffered or incurred any Indemnity Loss, it shall promptly notify the
indemnifying party promptly in writing describing such loss or expense, the
amount thereof, if known, and the method of computation of such loss or expense,
all with reasonable particularity. If any action at law, suit in equity or
administrative action is instituted by or against a third party with respect to
which an indemnified party intends to claim any liability or expense as an
Indemnity Loss under this Article VIII, it shall promptly notify the
indemnifying party of such action or suit.
Section 8.04. Defense of Claims. The indemnifying party shall have 15
days after receipt of either notice referred to in Section 8.03 hereof to notify
the indemnified party that it elects to conduct and control any legal or
administrative action or suit with respect to an indemnifiable claim. If the
indemnifying party does not give such notice, the indemnified party shall have
the right to defend, contest, and, upon the prior written consent of the
indemnifying party, which shall not be unreasonably withheld, settle or
compromise such action or suit in the exercise of its exclusive discretion, and
the indemnifying party shall, upon request from the indemnified party, promptly
pay the indemnified party in accordance with the other terms of this Article
VIII the amount of any Indemnity Loss resulting from its liability to the third
party claimant. If the indemnifying party gives such notice, it shall have the
right to undertake, conduct and control, through counsel of its own choosing and
at its sole expense, the conduct and settlement of such action or suit, and the
indemnified party shall cooperate with the indemnifying party in connection
therewith; provided, however, that (i) the indemnifying party shall not thereby
permit to exist any lien, encumbrance or other adverse charge securing the
claims indemnified hereunder upon any asset of the indemnified party, (ii) the
indemnifying party shall not thereby consent to the imposition of any injunction
against the indemnified party without the written consent of the indemnified
party, (iii) the indemnifying party shall permit the indemnified party to
participate in such conduct or settlement through counsel chosen by the
indemnified party, but the fees and expenses of such counsel shall be borne by
the indemnified party except as provided in clause (iv) below, and (iv) upon a
final determination of such action or suit, the indemnifying party shall agree
promptly to reimburse to the extent required under this Article VIII the
indemnified party for the full amount of any Indemnity Loss resulting from such
action or suit and all reasonable and related expenses incurred by the
indemnified party, except fees and expenses of counsel for the indemnified party
incurred after the assumption of the conduct and control of such action or suit
by the indemnifying party. So long as the indemnifying party is contesting any
such action in good faith, the indemnified party shall not
-17-
19
pay or settle any such action or suit. Notwithstanding the foregoing, the
indemnified party shall have the right to pay or settle any such action or suit,
provided that in such event the indemnified party shall waive any right to
indemnity therefor from the indemnifying party and no amount in respect thereof
shall be claimed as an Indemnity Loss under this Article VIII.
Section 8.05. Cooperation. If requested by the indemnifying party, the
indemnified party agrees to cooperate with the indemnifying party and its
counsel in contesting any claim which the indemnifying party elects to contest
or, if appropriate, in making any counterclaim against the person asserting the
claim, or any cross-complaint against any person and further agrees to take such
other action as reasonably may be requested by an indemnifying party to reduce
or eliminate any loss or expense for which the indemnifying party would have
responsibility, but the indemnifying party will reimburse the indemnified party
for any expenses incurred by it in so cooperating or acting at the request of
the indemnifying party.
Section 8.06. Right to Participate. The indemnified party agrees to
afford the indemnifying party and its counsel the opportunity to be present at,
and to participate in, conferences with all persons, including governmental
authorities, asserting any claim against the indemnified party or conferences
with representatives of or counsel for such persons.
Section 8.07. Payment of Losses. The indemnifying party shall pay to the
indemnified party in cash the amount of any loss to which the indemnified party
may become entitled by reason of the provisions of this Agreement, such payment
to be made within 15 business days after any such amount of losses is finally
determined either by mutual agreement of the parties hereto or pursuant to the
final unappealable judgment of a court of competent jurisdiction. Any claim for
which indemnification occurs hereunder shall be, to the extent appropriate,
assigned (without recourse) to the indemnifying party.
Section 8.08. Designation of Roles in Joint Liability. For purposes of
interpretation of this Agreement only, in the event that any claim alleges joint
responsibility and liability of the Seller and the Buyer, the Seller shall be
deemed to be the indemnifying party and the Buyer shall be deemed to be the
indemnified party for purposes of determining which party has the right to
defend any claim; provided, however, that such deemed designation shall in no
way affect any determination regarding the relative liabilities of the parties.
ARTICLE IX
Environmental Claims
Section 9.01. Reimbursement by Seller.
(a) Notwithstanding the obligation of Seller to indemnify Buyer pursuant
to Article VIII of this Agreement, Seller shall, upon demand of Buyer, and at
its sole cost and expense, promptly take all actions to remediate any Release
present at the Real Property in accordance
-18-
20
with all requirements of the applicable governmental agency or agencies with
jurisdiction over the matter. Promptly upon completion of such remediation,
Seller shall close and seal all walls, borings or pits in compliance with
applicable law, remove all associated equipment and restore the Real Property
to the condition it was in prior to Remediation.
(b) In addition to Buyer's indemnity obligations to Seller pursuant to
Article VIII of this Agreement, Buyer shall indemnify, defend and hold the
Seller harmless from and against any Indemnity Loss resulting from a Subsequent
Release.
(c) The following definitions shall apply for purposes of this Article IX:
(i) "CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended to the
date hereof, 42 U.S.C. Section 9601, et seq., and the
regulations adopted thereunder;
(ii) "Cleanup Costs" shall mean the reasonable costs incurred by
or assessed against Buyer in effecting the cleanup or removal
of Hazardous Materials from a Release to the extent required
by (a) CERCLA, RCRA, Spill Act or any other existing federal,
state, or local environmental statute, or regulation, (b) a
final administrative or judicial order relating to matters
prior to the Closing Date, and (c) the related disposal or
removed material, (d) in its monitoring, assessing and
evaluation of the cleanup or removal, and (e) in taking other
actions necessary or appropriate to prevent, minimize or
mitigate damage to the public health or welfare or to the
environment which would otherwise result from a Release;
(iii) "Facility" shall mean the building and improvements located
at the Real Property;
(iv) "Hazardous Material" shall mean any substance which is or
becomes defined as a "hazardous substance," "pollutant" or
"contaminant" under any Environmental Requirements of CERCLA,
a "solid waste" under RCRA, petroleum products under the
Spill Act, or a substance defined similarly under any other
existing federal, state, or local environmental statute or
regulation";
(v) "Matured Claim" shall mean a claim which is finally
adjudicated by a court of competent jurisdiction, a claim
which is settled by the parties prior to final adjudication
with Seller's consent, which shall not be unreasonably
withheld, or a claim which Seller has expressly acknowledged
in writing as a Matured Claim for purposes of this Agreement;
-19-
21
(vi) "RCRA" shall mean the Resource Conservation and Recovery Act,
as amended to the date hereof, 42 U.S.C. Section 6901 et
seq., and the regulations thereunder; and
(vii) "Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing of a Hazardous Material into
the environment by Seller or any predecessor in interest of
Seller at or from the Facility or Real Property before the
Closing Date, or into or on the soil, subsoil, groundwater,
surface water, or surface water sediment at the Facility or
Real Property by any third party before the Closing Date.
(viii) "Spill Act" shall mean the New Jersey Spill Compensation and
Control Act, as amended to the date hereof, N.J.S.A.
58:10-23.11 et seq. and the regulations thereunder.
(ix) "Subsequent Release" shall mean any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leeching, dumping or disposing of a Hazardous
Material into the environment caused by Buyer and not merely
a continuing Release at or from the Facility or Real Property
after the Closing, or into or on the soil, subsoil,
groundwater, surface water or surface water sediment at the
Facility by any third party after the Closing.
Section 9.02. Limitations on Seller's Obligations. Seller shall have no
obligation to reimburse Buyer to the extent Buyer receives or is entitled to
receive proceeds of insurance or other payments by any third person in payment
of Cleanup Costs or Matured Claims, or to the extent Buyer reasonably could have
mitigated any costs it incurred. Notwithstanding, while Buyer is not entitled to
a "double recovery" from Seller if it has received payment form third parties,
it is under no obligation to sue anyone.
Notwithstanding anything to the contrary contained in this Agreement,
including, without limitation, this Article IX, Article VIII hereof, or in
Schedule 1.01A(a) hereto, the Seller shall have no liability to the Buyer for
any Cleanup Costs or Matured Claim arising on or after the fifth anniversary of
this Agreement, whether relating to a Release or otherwise.
Section 9.03. Causation. If any contamination of air, soil, subsoil,
groundwater, surface water, or surface water sediment, or exposure of persons or
property to Hazardous Materials results partly from a Release and partly from
any other cause, the amount of the Cleanup Costs or Matured Claim attributable
to the Release shall be determined equitably on the basis of all the facts and
circumstances, including the relative amounts of contamination by Seller (and
its predecessors in interest), Buyer, and any third persons and the time period
in which any contamination by any third party occurred. Seller shall be
obligated to reimburse Buyer only for such proportion of the Cleanup Costs or
the Matured Claim, if any, which is attributable to
-20-
22
the Release. In the event of such joint responsibility, Seller and Buyer shall
jointly hire and share equally the costs of an investigation by an environmental
consulting firm acceptable to Seller and Buyer ("Consultant"). The Consultant
shall review all relevant technical data and information available and shall
take all such other investigative and evaluative steps necessary to determine
the amount of the Cleanup Costs or Matured Claim attributable to the Release on
the basis of all the facts and circumstances. The Consultant's determination
shall be fully and finally binding between Seller and Buyer.
Section 9.04. New Laws Retroactively Applied. In the event of the
adoption of any federal, state, or local statutes, ordinances, rules,
regulations, or executive, administrative, or judicial orders after the closing
(collectively "New Laws") that create expanded or additional liability for any
environmental condition at the Real Property created by the Seller, its
predecessors in interest, or a third party prior to the Closing, or to which
Seller, its predecessors in interest, or a third party contributed prior to the
Closing, the liability under the New Laws shall be treated as Cleanup Costs or
as a Matured Claim hereunder, as the case may be (respectively, "Extended
Cleanup Costs" and "Extended Matured Claim"), and the environmental condition
shall be treated as a Release hereunder.
The Seller's liability under this Section 9.04 shall be limited as follows:
(a) no claim for reimbursement shall be payable unless a written request for
reimbursement is submitted on or before the fifth anniversary of the Closing
Date, (b) with respect to any Extended Cleanup Cost or Extended Matured Claim
under a New Law arising out of or under any state or local statute, ordinance,
rule, regulation, or executive, administrative, or judicial order, Seller and
Buyer shall share equally in paying for any such Extended Buyer Cleanup Cost of
Extended Matured Claim; and (c) the rights of Buyer to reimbursement under this
Section 9.04 shall not be assignable and shall terminate upon transfer by Buyer
of all or substantially all of the Purchased Assets or the Real Property to
another.
Section 9.05. Procedures.
(a) The provisions of Article VIII of this Agreement shall apply to any
matters for which Buyer or Seller may have a reimbursable claim hereunder,
including the provision of Section 8.04 hereof, except to the extent such
provisions are inconsistent with this Section 9.05.
(b) Buyer shall give Seller prompt written notice of any Claim relating to
any matter to which it may be entitled to reimbursement under this Article IX,
together with a statement of any available related information. Upon receipt of
such notice, Seller shall have the right to defend any claim relating to such
Release in accordance with the provision of Section 8.04 hereof. Buyer shall
give Seller written notice of any Release, and of any contamination of air,
soil, subsoil, groundwater, surface water, or surface water sediment, which may
have been caused in whole or in part by a Release, promptly after it reports the
same to the relevant governmental authorities.
-21-
23
(c) Seller and Buyer shall each be entitled to participate in any judicial
or administrative proceedings relating to any potential liability under this
Article IX, whether or not such party is otherwise a party to such proceedings,
and to be represented therein at its expense by counsel of its choice. Although
either party may be an indemnified person under Article VIII with respect to any
third party claim and the other party would therefore otherwise have full
authority to determine the action in any such proceeding, both parties reserve
the right to contest independently of the other any matters relating to the
allocation of responsibility for any such claim or the necessity for or extent
of remedial action as a result of any such claim. Each party agrees to afford
the other party and its counsel the opportunity to be present at, and to
participate in, conferences with all persons (including governmental
authorities) asserting any claim relating to any such matter, or with
representatives of or counsel for such persons.
(d) Provided the procedural elements and notice requirements of Section
8.04 have been met, Seller shall pay to Buyer in cash any amount to which Buyer
may become entitled under this Article VIII within 15 business days after Buyer
notifies Seller in writing that Buyer has paid the Cleanup Costs or Matured
Claim, or any portion thereof, which is payable by Seller, provided that Seller
shall not be obligated to reimburse Buyer for Cleanup Costs or Matured Claims
more often than once each calendar quarter.
Section 9.06. Creditors. None of the provisions of this Article IX shall
be for the benefit of, or shall be enforceable by, any creditor of Buyer or
Seller.
Section 9.07. Assignment of Article VIII Rights. None of the rights
granted any party under the provisions of this Article IX shall be assignable
except as specifically provided for hereafter. Except for the rights specified
in Section 8.03, each of Seller and Buyer may assign any or all of its rights
under this Article IX to an Affiliate of such party or successor entity by
merger or other reorganization at any time and from time to time.
Section 9.08. Nonexclusive Remedy. In all matters governed by this
Article IX the remedies and right to indemnification given to Buyer in this
Article IX shall be nonexclusive and shall not preclude the indemnified party
from exercising its remedies under any other provision of any applicable law or
this Agreement, including, without limitation, Buyer's remedies and right to
indemnification under Article VIII.
Section 9.09. Survival of Obligations. Except as otherwise specifically
provided in Section 8.03, Seller's and Buyer's obligations under this Article IX
shall survive the Closing for a period of five (5) years.
-22-
24
ARTICLE X
Miscellaneous Provisions
Section 10.01. Confidential Nature of Information. Each party agrees that
it will treat in confidence all documents, materials and other information which
it shall have obtained regarding the other party during the course of the
negotiations leading to the consummation of the transactions contemplated herein
(whether obtained before or after the date hereof), the investigation provided
for herein, and the preparation of this Agreement and other related documents.
The obligation of each party to treat such documents, materials and other
information in confidence shall not apply to any information which (i) such
party can demonstrate was already lawfully in its possession prior to the
disclosure thereof by the other party, (ii) is known to the public and did not
become so known through any violation of a legal obligation, (iii) became known
to the public through no fault of such party, (iv) is later lawfully acquired by
such party from other sources, (v) is required to be disclosed under the
provisions of any state or United States statute or regulation issued by a duly
authorized agency, board or commission thereof, or (vi) is required to be
disclosed by a rule or order of any court of competent jurisdiction.
In the event of the termination of this Agreement, Buyer and Seller shall
use all reasonable efforts to return upon request to the other (or destroy) all
documents (and reproductions thereof) received from the other (and, in the case
of reproductions, all such reproductions made by the receiving party) that
include information not within the exceptions contained in this Section 10.01.
Section 10.02. Expenses. Each of the parties shall pay all costs and
expenses incurred or to be incurred by it in negotiating and preparing this
Agreement and in closing and carrying out the transactions contemplated by this
Agreement, except as otherwise expressly provided for herein.
Section 10.03. Headings. The subject headings of the sections of this
Agreement are included for purposes of convenience only, and shall not affect
the construction or interpretation of any of its provisions.
Section 10.04. Entire Agreement. This Agreement constitutes the entire
agreement between the parties pertaining to the subject matter contained in it
and supersedes all prior and contemporaneous agreements, representations, and
understandings of the parties.
Section 10.05. Modification and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by all
the parties. The party for whose benefit a warranty, representation, covenant
or condition is intended may in writing waive any inaccuracies in the warranties
and representations contained in this Agreement or waive compliance with any of
the covenants or conditions contained herein and so waive performance of any of
the obligations of the other party hereto, and any defaults hereunder; provided,
-23-
25
however, that such waiver shall not affect or impair the waiving party's rights
with respect to any other warranty, representation or covenant or any default
hereunder, nor shall any waiver constitute a continuing waiver. The foregoing
notwithstanding, if the Buyer has knowledge of the existence of any breach of or
inaccuracies in any of the representations and warranties of the Seller
contained in this Agreement or any breach of or noncompliance with any of the
covenants of the Seller to be performed by the Sellers prior to the Closing, but
nonetheless the Buyer proceeds to closing, the Buyer shall be deemed to have
waived any such breach, inaccuracy or noncompliance. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute a waiver of
any other provision, whether or not similar, nor shall any waiver constitute a
continuing waiver. No waiver shall be binding unless executed in writing by the
party making the waiver.
Section 10.06. Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
Section 10.07. Exhibits and Schedules. All exhibits and schedules
attached to this Agreement are incorporated herein and made a part hereof in the
same manner as if such exhibits and schedules were set forth at length.
Section 10.08. Rights of Parties. Nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than the parties to it and their
respective successors and assigns, nor is anything in this Agreement intended to
relieve or discharge the obligation or liability of any third person to any
party to this Agreement, nor shall any provision give any third person any right
of subrogation or action over or against any party to this Agreement.
Section 10.09. Successors. This Agreement shall be binding on, and shall
inure to the benefit of, the parties and their respective successors and
assigns.
Section 10.10. Risk of Loss. Any loss or damage from fire, theft or other
casualty or cause, reasonable wear and tear excepted, prior to the Closing,
shall be the responsibility of the Seller.
Section 10.11. Sales and Transfer Taxes. Any federal, state or local
conveyance, sales or transfer taxes owing on account of the transfer of the
Purchased Assets to the Buyer shall be paid by the Seller.
Section 10.12. Notices. All notices, requests, demands, and other
communications required to be given under this Agreement shall be in writing and
shall be deemed to have been duly given on the date of service if served
personally on the party to whom notice is to be given, or on the third day after
mailing if mailed to the party to whom notice is to be given by certified mail,
return receipt requested, and properly addressed as follows:
-24-
26
If to the Buyer: James R. Pastena, President
EBI Medical Systems, Inc.
6 Upper Pond Road
Parsippany, New Jersey 07054
201-299-9300
With a copy to: Nicholas L. Gounaris
Division General Counsel
c/o Kirschner Medical Corporation
9690 Deereco Road
Timonium, Maryland 21093
410-560-3333
410-560-3376 (Fax)
If to the Seller: John Michael
Chairman of the Board and
Chief Executive Officer
Personal Diagnostics, Inc.
3 Entin Road
Parsippany, New Jersey 07054
201-952-9000
With a copy to: John P. Reilly
Robinson, St. John & Wayne
Two Penn Plaza East
Newark, New Jersey
201-491-3300
201-491-3333 (Fax)
Section 10.13. Gender. Any reference to the masculine gender shall be
deemed to include the feminine and neuter genders unless the context otherwise
requires.
Section 10.14. Waivers. Any party to this Agreement may, by written
notice to the other parties, waive any provision of this Agreement. The waiver
by any party of a breach of any provision of this Agreement shall not operate or
be construed as a waiver of any subsequent breach.
Section 10.15. Governing Law. This Agreement and all transactions
contemplated hereby shall be governed, construed and enforced in accordance with
the laws of the State of New Jersey.
-25-
27
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first above written.
THE "SELLER"
Personal Diagnostics, Incorporated
By: /s/ John H. Michael
-------------------------------
(signature)
John H. Michael
Chairman of the Board and
Chief Executive Officer
THE "BUYER"
EBI Medical Systems, Inc.
By: /s/ James R. Pastena
-------------------------------
(signature)
James R. Pastena
President
SOLELY AS TO THE PROVISIONS OF SECTION 7.02 HEREOF:
/s/ John H. Michael
----------------------------------
John H. Michael
-26-