EXHIBIT 10.12
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FORM OF
PURCHASE AGREEMENT
DATED AS OF NOVEMBER 5, 2007
By and Among
BOSTON SCIENTIFIC CORPORATION,
THE SELLERS
And
GETINGE AB
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ARTICLE I DEFINITIONS
SECTION 1.01. Certain Defined Terms............................................................1
SECTION 1.02. Definitions.....................................................................11
ARTICLE II PURCHASE AND SALE
SECTION 2.01. Purchase and Sale of Purchased Assets and Interests.............................13
SECTION 2.02. Assumption and Exclusion of Liabilities.........................................17
SECTION 2.03. Purchase Price; Allocation of Purchase Price....................................19
SECTION 2.04. Purchase Price Adjustment.......................................................21
SECTION 2.05. Closing.........................................................................22
SECTION 2.06. Closing Deliveries by Parent....................................................22
SECTION 2.07. Closing Deliveries by Buyer.....................................................23
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT
SECTION 3.01. Organization, Authority and Qualification.......................................24
SECTION 3.02. Organization, Authority and Qualification of the Transferred Subsidiaries.......25
SECTION 3.03. Capitalization; Ownership of Interests..........................................25
SECTION 3.04. No Conflict.....................................................................26
SECTION 3.05. Governmental Consents and Approvals.............................................26
SECTION 3.06. Financial Statements; Absence of Changes; Absence of Undisclosed Liabilities....27
SECTION 3.07. Litigation......................................................................29
SECTION 3.08. Compliance with Laws............................................................29
SECTION 3.09. Environmental Matters...........................................................30
SECTION 3.10. Intellectual Property...........................................................31
SECTION 3.11. Title; Real Property............................................................33
SECTION 3.12. Employee Benefit Matters........................................................35
SECTION 3.13. Taxes...........................................................................39
SECTION 3.14. Material Contracts..............................................................40
SECTION 3.15. Regulatory and Product Matters..................................................43
SECTION 3.16. Product Warranty; Rebates.......................................................46
SECTION 3.17. Assets; Title to Assets; Sufficiency............................................46
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SECTION 3.18. Brokers.........................................................................48
SECTION 3.19. Books and Records...............................................................48
SECTION 3.20. Customers and Suppliers.........................................................48
SECTION 3.21. Insurance.......................................................................48
SECTION 3.22. Inventories.....................................................................48
SECTION 3.23. Accounts and Notes Receivable and Payable.......................................48
SECTION 3.24. Foreign Corrupt Practices Act...................................................49
SECTION 3.25. Disclaimer......................................................................50
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER
SECTION 4.01. Organization, Authority and Qualification.......................................51
SECTION 4.02. No Conflict.....................................................................51
SECTION 4.03. Governmental Consents and Approvals.............................................51
SECTION 4.04. Brokers.........................................................................51
SECTION 4.05. Availability of Funds...........................................................52
ARTICLE V ADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Businesses...........................................................52
SECTION 5.02. Access to Information; Confidentiality..........................................53
SECTION 5.03. Regulatory and Other Authorizations; Notices and Consents.......................55
SECTION 5.04. Notifications...................................................................57
SECTION 5.05. Release of Indemnity Obligations................................................57
SECTION 5.06. Trademarks; Website.............................................................58
SECTION 5.07. Further Action..................................................................59
SECTION 5.08. Intercompany Arrangements.......................................................61
SECTION 5.09. Restructuring...................................................................61
SECTION 5.10. Books, Records and Files........................................................61
SECTION 5.11. Accounts Receivable that are Excluded Assets....................................62
SECTION 5.12. Non-Solicit.....................................................................62
SECTION 5.13. Covenant Not to Sell Engage in Certain Competitive Activities...................62
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SECTION 5.14. Cooperation with Financing......................................................66
SECTION 5.15. Corporate Integrity Agreement; Notice to FDA....................................66
SECTION 5.16. Non-Assignable or Non-Transferable Licensed Technology Rights...................66
SECTION 5.17. Acquisition Proposals...........................................................67
SECTION 5.18. Bulk Transfer Act...............................................................67
SECTION 5.19. Retained Liabilities............................................................67
SECTION 5.20. Risk of Loss....................................................................67
SECTION 5.21. Discharge of Liens..............................................................68
SECTION 5.22. Transition Services Schedules...................................................68
SECTION 5.23. Certain Payments................................................................69
SECTION 5.24. Embolic Beads/PTFE Supply.......................................................69
SECTION 5.25. Abbott Confidentiality..........................................................70
SECTION 5.26. Rental Rate under Lease.........................................................71
ARTICLE VI EMPLOYEE MATTERS
SECTION 6.01. Employee Matters................................................................71
SECTION 6.02. Employment of Business Employees................................................73
ARTICLE VII TAXES
SECTION 7.01. Transfers of Transferred Subsidiaries...........................................75
SECTION 7.02. Apportionment...................................................................75
SECTION 7.03. Tax Return Filing and Amendment.................................................75
SECTION 7.04. Refunds.........................................................................77
SECTION 7.05. Resolution of Tax Controversies.................................................77
SECTION 7.06. Tax Cooperation.................................................................77
SECTION 7.07. Conveyance Taxes................................................................77
SECTION 7.08. Payments of Property Taxes Relating to Purchased Assets.........................78
ARTICLE VIII CONDITIONS TO CLOSING
SECTION 8.01. Conditions to Obligation of Parent..............................................78
SECTION 8.02. Conditions to Obligation of Buyer...............................................79
ARTICLE IX TERMINATION
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SECTION 9.01. Termination.....................................................................80
SECTION 9.02. Effect of Termination...........................................................81
ARTICLE X INDEMNIFICATION
SECTION 10.01. Survival of Representations and Warranties......................................81
SECTION 10.02. Indemnification by Parent.......................................................81
SECTION 10.03. Indemnification by Buyer........................................................82
SECTION 10.04. Limits on Indemnification.......................................................82
SECTION 10.05. Notice of Loss; Third Party Claims..............................................83
SECTION 10.06. Tax Treatment of Indemnity Payments.............................................84
ARTICLE XI GENERAL PROVISIONS
SECTION 11.01. Expenses........................................................................84
SECTION 11.02. Notices.........................................................................84
SECTION 11.03. Public Announcements............................................................85
SECTION 11.04. Severability....................................................................85
SECTION 11.05. Entire Agreement................................................................86
SECTION 11.06. Assignment......................................................................86
SECTION 11.07. Amendment.......................................................................86
SECTION 11.08. Waiver..........................................................................86
SECTION 11.09. No Third Party Beneficiaries....................................................86
SECTION 11.10. Other Remedies; Specific Performance............................................86
SECTION 11.11. Interpretive Rules..............................................................87
SECTION 11.12. Governing Law...................................................................87
SECTION 11.13. Exchange Rate...................................................................87
SECTION 11.14. Counterparts....................................................................88
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PURCHASE AGREEMENT
This PURCHASE AGREEMENT (this "Agreement"), dated as of November 5,
2007 (the "Agreement Date"), is made by and among (i) BOSTON SCIENTIFIC
CORPORATION, a Delaware corporation ("Parent"), (ii) GETINGE AB, a Swedish
Aktiebolag ("Buyer"), and (iii) each of the SELLERS (as defined herein) by its
execution and delivery of a counterpart signature page hereto, whether as of the
Agreement Date or at anytime prior to the Closing Date.
WHEREAS, Parent, directly and through its various Affiliates,
including the Transferred Subsidiaries and the Asset Sellers, is engaged in,
among other things, the Cardiac Surgery Business and the Vascular Surgery
Business (the Vascular Surgery Business together with the Cardiac Surgery
Business, but not including the Excluded Businesses, collectively, the
"Businesses")) at various locations around the world;
WHEREAS, certain assets of the Transferred Subsidiaries that are not
used in the Businesses will be transferred by the Transferred Subsidiaries to
Parent or one of its Affiliates prior to the Closing, the Excluded Liabilities
will be assumed by Parent or one of its Affiliates prior to the Closing, and the
Interests and the Purchased Assets will be sold by Parent or the applicable
Asset Sellers to Buyer at the Closing, all as more fully set forth herein;
WHEREAS, for purposes of this Agreement, references to the Businesses
shall be deemed to include the Assets and the Interests if the context so
requires;
WHEREAS, in order to effect the transactions contemplated by this
Agreement, prior to the Closing Date, Parent will cause to occur, and the
Transferred Subsidiaries will undertake, conversions of those Transferred
Subsidiaries that are in corporate form each into a limited liability company
(collectively, the "LLC Conversions"); and
WHEREAS, following consummation of the LLC Conversions, Parent and
the Sellers wish to sell, or cause to be sold, to Buyer, and Buyer wishes to
purchase from Parent and the Sellers, the Transferred Subsidiaries and all
right, title and interest in and to all assets of the Businesses, and in
connection therewith Buyer is willing to assume certain liabilities relating
thereto described herein, all upon the terms and subject to the conditions set
forth herein.
NOW, THEREFORE, in consideration of the promises and the mutual
agreements and covenants hereinafter set forth, and intending to be legally
bound, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. For purposes of this Agreement:
"Action" means any claim, written demand, written threat, action,
suit, arbitration, inquiry, proceeding, mediation, litigation or investigation
by any Governmental Authority or third party or before any Governmental
Authority.
"Affiliate" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person. For purposes of this Agreement, "Affiliate" shall include, with respect
to Buyer after the Closing, any Transferred Subsidiary to be acquired pursuant
to this Agreement and (b) with respect to each party hereto, any Person
resulting from any internal reorganization, provided such resulting Person is an
Affiliate.
"Ancillary Agreements" means the Assumption Agreements, the Bill of
Sale, the Transfer Agreements, the Buyer Out-License Agreement, the Seller
Out-License Agreement, the Transition Services Agreement, the Lease Agreement,
the Sublease Agreement any other agreements that the parties may mutually agree
upon prior to the Closing.
"Asset Sellers" means, individually or collectively, those Affiliates
of Parent that own the Purchased Assets, each of which is identified in Section
1.01(a) of the Seller Disclosure Schedule as of the Agreement Date; provided,
that Parent may update Section 1.01(a) of the Seller Disclosure Schedule on or
before the Closing Date to the extent that other Affiliates of Parent are
identified as owning Purchased Assets.
"Assets" means (i) the Purchased Assets, and (ii) the assets, rights,
properties and businesses of every kind and description (wherever located,
whether tangible or intangible, real, personal or mixed) of the Transferred
Subsidiaries (other than the Excluded Assets), as of the Closing Date.
"Assumption Agreements" means, collectively, the Buyer Assumption
Agreement to be executed by Buyer, substantially in the form of Exhibit A-1 and
the Seller Assumption Agreement to be executed by Seller, substantially in the
form of Exhibit A-2.
"Balance Sheet Date" means June 30, 2007.
"Bills of Sale" means the Bills of Sale and Assignment to be executed
by Parent and/or the applicable Asset Sellers at the Closing, substantially in
the form of Exhibit B.
"Books, Records and Files" means any studies, reports, records
(including shipping and personnel records), books of account, invoices,
contracts, instruments, surveys, data (including financial, sales, purchasing
and operating data), computer data, disks, diskettes, tapes, marketing plans,
customer lists, supplier lists, opinions of counsel related to the Businesses
(including patentability opinions and patent clearance opinions, if any),
distributor lists, correspondence and other documents (including legal memoranda
and related documentation) existing as of the Closing Date.
"Business Day" means any day that is not a Saturday, a Sunday or
other day on which banks are required or authorized by Law to be closed in the
City of New York, New York.
"Business Intellectual Property" means, collectively, the Business
Transferred Intellectual Property and Business Licensed Intellectual Property.
"Business Licensed Intellectual Property" means the Intellectual
Property of the Parent and its Affiliates that is listed on Section 1.01-BLIP of
the Seller Disclosure Schedule.
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"Business Transferred Intellectual Property" means the Intellectual
Property of the Parent and its Affiliates that is listed on Section 1.01-BTIP of
the Seller Disclosure Schedule.
"Buyer Out-License Agreement" means a non-exclusive license
agreement, substantially in the form of Exhibit C, by and between Buyer and
Parent, pursuant to which Parent and/or one or more of its Affiliates is
licensed the Business Transferred Intellectual Property on a non-exclusive basis
outside of the Businesses.
"Cardiac Surgery Business" means the business of researching,
inventing, designing, developing, making, having made, using, marketing,
distributing, offering for sale and selling and providing products, devices,
instruments, disposables and accessories or other materials, and providing
services, in all of such matters, for the performance of the following cardiac
procedures by cardiovascular, cardiothoracic, or general surgeons: (a) beating
heart bypass (CABG) surgical procedures, (b) cardiac anastomosis suture support,
(c) surgical cardiac ablation procedures, during which ablation devices are
introduced through an open or other percutaneous surgical access site in the
thorax, and (d) endoscopic vessel harvesting. Notwithstanding the foregoing, the
Cardiac Surgery Business shall not include the Excluded Businesses or Parent
Investments.
"Closing Working Capital" means for the Businesses on a consolidated
basis (after making all Intercompany Adjustments) (a)(i) inventory, net of an
appropriate reserve established for excess and obsolete inventory, (ii) prepaid
expenses, and (iii) other current assets (not including any accounts
receivable), less (b)(i) accounts payable, (ii) accrued expenses, and (iii)
other current liabilities, of each of the Businesses as of the Closing Date
prior to giving effect to the Closing and each of the foregoing determined in
all respects in accordance with GAAP and calculated on a basis consistent with
the equivalent line item set forth in the Business Financial Statements. For the
avoidance of doubt, Closing Working Capital shall not include any Excluded
Assets or Excluded Liabilities, any Tax assets (including deferred Tax assets)
or Tax liabilities (including deferred Tax liabilities).
"Code" means the Internal Revenue Code of 1986, as amended through
the Agreement Date.
"Commonly Controlled Entity" means, as to any Person, any other
Person treated as a single employer with such Person under Section 414(b), (c),
(m) or (o) of the Code.
"Contract" means any loan or credit agreement, bond, debenture, note,
mortgage, indenture, lease, supply agreement, license agreement, development
agreement or other contract, agreement, obligation, commitment or instrument
(whether written or oral) that is legally binding, including all amendments
thereto.
"control" (including the terms "controlled by" and "under common
control with"), with respect to the relationship between or among two or more
Persons, means the possession, directly or indirectly, of the power to direct or
cause the direction of the affairs or management of a Person, whether through
the ownership of voting securities, as trustee, personal representative or
executor, by contract, credit arrangement or otherwise.
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"Embolic Beads Business" means the business of making, having made,
using, offering for sale, selling and providing products, parts or other
materials, processes or services necessary or useful in conducting procedures to
embolize arterial and venous structures.
"Encumbrance" means any mortgage, pledge, deed of trust,
hypothecation, security interest, title defect, voting trust, shareholders'
agreement, proxy, encumbrance, lien, burden, license, charge or other similar
restriction, lease, sublease, title retention agreement, option, easement,
covenant, encroachment or other adverse claim, other than, with respect to
Business Transferred Intellectual Property, any licenses of Intellectual
Property.
"Environmental Laws" means any United States Federal, state or local
or any foreign codes, laws (including, without limitation, the common law),
ordinances, regulations, reporting or licensing requirements, rules or statutes,
Governmental Orders, notices, Permits or binding Contracts issued, promulgated
or entered into by any Governmental Authority, relating in any way to the
environment, preservation or reclamation of natural resources or the presence,
management, Environmental Release of, or exposure to, Hazardous Materials, or to
human health and safety, including, without limitation: (i) the Comprehensive
Environmental Response Compensation and Liability Act, 42 U.S.C. ss.ss.9601 et
seq. ("CERCLA"); (ii) the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act, 42 U.S.C. ss.ss.6901 et seq., ("RCRA"); (iii) the
Emergency Planning and Community Right to Know Act (42 U.S.C. ss.ss.11001 et
seq.); (iv) the Clean Air Act (42 U.S.C. ss.ss. 7401 et seq.); (v) the Federal
Water Pollution Control Act (33 U.S.C. ss.ss.1251 et seq.); (vi) the Toxic
Substances Control Act (15 U.S.C. ss.ss.2601 et seq.); (vii) the Hazardous
Materials Transportation Act (49 U.S.C. ss.ss. 5101 et seq.); (viii) the Safe
Drinking Water Act (41 U.S.C. ss.ss.300f et seq.); (ix) any state, county,
municipal, local or foreign statues, laws or ordinances similar or analogous to
the federal statutes listed in parts (i) - (viii) of this subparagraph; (x) any
amendments existing as of the Closing Date to the statutes, laws or ordinances
listed in parts (i) - (ix) of this subparagraph; (xi) any rules, regulations,
guidelines, directives, orders or the like adopted pursuant to or implementing
the statutes, laws, ordinances and amendments listed in parts (i) - (x) of this
subparagraph; and (xii) any other law, statute, ordinance, amendment, rule,
regulation, guideline, directive, order or the like in effect now relating to
the environment, preservation or reclamation of natural resources or the
presence, management, Environmental Release of, or exposure to, Hazardous
Materials, or the effects of Hazardous Materials on human health and safety.
"Environmental Matters" means any and all matters or circumstances
related to: (i) the material Environmental Release by any Person or the presence
of any Hazardous Materials at, on, in, under or from any of the Real Property
prior to the Closing Date; (ii) the treatment, storage, disposal, recycling,
transportation, or other handling of any Hazardous Materials prior to the
Closing Date at, on, in, under or from any of the Real Property or in connection
with the Businesses; or (iii) any material noncompliance with any Environmental
Laws prior to the Closing Date in connection with the Businesses or their use of
any of the Real Property.
"Environmental Release" means any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping, disposing or migrating into or through the environment or any natural
or man-made structure.
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"EVAR Business" means the business of making, having made, using,
offering for sale, selling and providing products, parts or other materials,
processes or services necessary or useful in conducting procedures to treat
aortic and thoracic aneurysms utilizing a graft-based device delivered through
an endoluminal catheter-based approach.
"FDA" means the United States Food and Drug Administration.
"GAAP" means United States generally accepted accounting principles
and practices in effect from time to time applied consistently throughout the
periods involved.
"Governmental Authority" means any United States federal, state or
local or any non-United States government, governmental, regulatory or
administrative authority, agency or commission, or non-governmental body that
has been authorized by Law to act for a governmental body, or any court,
tribunal, or judicial or arbitral body.
"Governmental Order" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.
"Guidant" means Guidant Corporation, an Indiana corporation.
"Hazardous Materials" means (a) petroleum products and by-products,
asbestos and asbestos-containing materials, urea formaldehyde foam insulation,
medical or infectious wastes, polychlorinated biphenyls, radon gas, radioactive
substances, chlorofluorocarbons and all other ozone-depleting substances, and
(b) any other chemical, material, substance, waste, pollutant or contaminant
that is prohibited, limited or regulated by or pursuant to any Environmental
Law, including, without limitation, RCRA hazardous wastes and CERCLA hazardous
substances.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder.
"Indebtedness" means, with respect to any Person at any date, without
duplication, and including accrued interest, if any, (a) all indebtedness of
such Person for borrowed money, (b) all obligations of such Person for the
deferred purchase price of property or services (other than current trade
payables incurred in the ordinary course of such Person's business), (c) all
obligations of such Person evidenced by notes, bonds, debentures or other
similar instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) all capital lease obligations of such Person, (f)
all obligations of such Person, contingent or otherwise, as an account party or
applicant under or in respect of acceptances, letters of credit, surety bonds or
similar arrangements, (g) all guarantee obligations of such Person in respect of
obligations of the kind referred to in clauses (a) through (f) above and (h) all
obligations of the kind referred to in clauses (a) through (g) above secured by
(or for which the holder of such obligation has an existing right, contingent or
otherwise, to be secured by) any lien on property (including accounts and
contract rights) owned by such Person, whether or not such Person has assumed or
become liable for the payment of such obligation. The Indebtedness of any Person
shall include the Indebtedness of any other entity (including any partnership in
which such Person is a general partner) to the extent such Person is liable
therefor
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as a result of such Person's ownership interest in or other relationship with
such entity, except to the extent the terms of such Indebtedness expressly
provide that such Person is not liable therefor.
"Intellectual Property" means all intellectual property rights of any
kind pending, recognized or granted in any jurisdiction worldwide, including
rights in, to and concerning (a) patents, patent applications, invention
disclosures and statutory invention registrations, including divisionals,
continuations, continuations-in-part, foreign counterparts, re-issues and
re-examinations thereof, (b) Trademarks, (c) published and unpublished works of
authorship and copyrights therein, and copyright registrations and applications
for registration thereof and all renewals, extensions, restorations and
reversions thereof, (d) software, code, data, databases and compilations of
information, and (e) confidential and proprietary information, inventions,
formulas, processes, developments, technology, research, trade secrets and
know-how. The foregoing clauses (c), (d) and (e) of the preceding sentence are
collectively referred to herein as "Know-How".
"Interest Sellers" means, individually or collectively, those
Affiliates of Parent that are identified in Section 1.01(c) of the Seller
Disclosure Schedule.
"Interests" means, as to each Transferred Subsidiary, all the
membership interests and other equity interests in the applicable Transferred
Subsidiary.
"Intercompany Adjustments" means adjustments to accounts and
financial statements (i) to eliminate all accounts between or among Parent and
any of its Affiliates with respect to the Businesses (such as, for example,
intercompany accounts payable and intercompany accounts receivable), (ii) to
eliminate the effect of transactions between or among Parent and any of its
Affiliates with respect to the Businesses (such as, for example, profit on the
provision of services or the transfer of products or other items or any mark-up
of products or other asset as a result of such transfers), and (iii) the
elimination of any other amounts or items between or among Parent and any of its
Affiliates with respect to the Businesses other than direct third party expenses
appropriately allocated or charged to the Businesses. For the avoidance of
doubt, Intercompany Adjustments would have the effect of showing inventory at
cost without regard to any intercompany profit generated or otherwise recorded
by transfers between or among Parent and any of its Affiliates.
"IRS" means the Internal Revenue Service of the United States.
"ISRA" means the New Jersey Industrial Site Recovery Act, N.J.S.A.
13:1K-6 et seq., as amended, and rules promulgated thereunder.
"Knowledge" means, when used in connection with (a) Buyer with
respect to any matter in question, the actual knowledge of Buyer's officers that
are identified on Section 1.01(d) of the Seller Disclosure Schedule attached
hereto, after making due inquiry of, in each case, the current employee of the
Buyer having principal responsibility for such matter, and (b) Parent and
Sellers with respect to any matter in question, the actual knowledge of Parent's
officers that are identified on Section 1.01(e) of the Seller Disclosure
Schedule attached hereto after making due
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inquiry of, in each case, the current employee of the Parent or the Businesses
having principal responsibility for such matter.
"Landlord" means the landlord, sub-landlord or owner under an
Occupancy Agreement.
"Law" means, with respect to any Person, any United States federal,
state, local or any non-United States statute, law, ordinance, treaty,
regulation, rule, code, order, directive, or other requirement or rule of law
that is binding upon or applicable to such Person. For the avoidance of doubt,
the use of foreign Laws or non-United States Laws shall mean laws in
jurisdictions outside of the United States.
"Lease Agreement" means that certain lease agreement, substantially
in the form of Exhibit D hereto, by and between Buyer or its designee (with it
being the intention of the parties that any designee be an entity of sufficient
substance to perform its obligations under such lease agreement), as Tenant, and
Guidant Puerto Rico, B.V., as Landlord.
"Leased Business Real Property" means, collectively, the Leased
Baytech Property and the Leased Dorado Property.
"Leased Baytech Property" means Parent's, any Asset Seller's or any
Transferred Subsidiary's interest as Tenant under the Occupancy Agreement
described on Section 3.11(a)(i) of the Seller Disclosure Schedule.
"Leased Dorado Property" means that portion of Parent's, any Asset
Seller's or any Transferred Subsidiary's right, title or interest of Parent and
Sellers in and to any and all land, together with the buildings and other
structures, facilities or improvements located thereon, and all easements,
licenses, rights and appurtenances relating to the foregoing, located at Dorado,
Puerto Rico that is being leased to Buyer pursuant to the terms of the Lease
Agreement.
"Liabilities" means any and all debts, liabilities and obligations,
whether known or unknown, accrued or fixed, absolute or contingent, matured or
unmatured or determined or determinable, including those arising under any Law,
Action or Governmental Order and those arising under any contract, agreement,
arrangement or undertaking.
"Occupancy Agreement" means any lease, sublease or other occupancy
agreement.
"Owned Business Real Property" means Parent's and Sellers' right,
title or interest in and to any and all land, together with the buildings and
other structures, facilities or improvements located thereon, and all easements,
licenses, rights and appurtenances relating to the foregoing, as described on
Schedule 3.11(a)(ii).
"Parent Plan" means any employee or independent contractor
compensation or benefit plan, program or arrangement that is (i) maintained or
contributed to by Parent or any of its Affiliates and (ii) is not a Subsidiary
Plan.
"Parent Retained Intellectual Property" means all Intellectual
Property of the Parent and its Affiliates other than the Business Transferred
Intellectual Property and Business Licensed Intellectual Property.
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"PCBA Business" means the business of making, having made, using,
offering for sale, selling and providing products, parts or other materials,
processes or services necessary or useful in conducting procedures performed by
the ablation of cardiac tissue utilizing a non-surgical percutaneous or
endoluminal catheter-based approach.
"Peripheral Intervention Business" means the business of making,
having made, using, offering for sale, selling and providing products, parts or
other materials, processes or services necessary or useful in diagnosing and
treating all arterial and venous structures outside of the heart utilizing a
catheter-based, non-surgical percutaneous or endoluminal approach.
"Permitted Encumbrances" means (a) statutory liens for current Taxes
not yet due or delinquent (or which may be paid without interest or penalties)
or the validity or amount of which is being contested in good faith by
appropriate proceedings, (b) those other defects in title, easements,
restrictive covenants and similar encumbrances that individually or in the
aggregate, are not material in amount or significance to the Businesses and, in
the case of this clause (b) relate to or arise from the operation of the
Businesses or otherwise secure liabilities of the Transferred Subsidiaries or
Assumed Liabilities, and do not relate to or arise from the other businesses of
Parent and its Affiliates, or secure Excluded Liabilities, (c) those
encumbrances securing indebtedness for borrowed money that shall be released on
or prior to the Closing, and (d) with respect to the Owned Business Real
Property only, the Permitted Title Encumbrances.
"Permitted Title Encumbrances" means those encumbrances listed on
Section 3.11 of the Seller Disclosure Schedule.
"Person" means any individual, partnership, firm, corporation,
limited liability company, association, trust, unincorporated organization,
joint venture or other entity.
"Post-Closing Tax Period" means any Taxable period (or portion
thereof) commencing on or after the Closing Date, including the portion of any
Straddle Period commencing on the Closing Date.
"Pre-Closing Tax Period" means any Taxable period (or portion
thereof) ending prior to the Closing Date, including the portion of any Straddle
Period up to but not including the Closing Date.
"Real Property" means, collectively, the Owned Business Real Property
and the Leased Business Real Property.
"Registrations" means authorizations and/or approvals issued by any
Governmental Authority (including premarket approval applications, premarket
notifications, investigational device exemptions, clearances and approvals,
establishment registrations, manufacturing approvals or authorizations, CE
markings, pricing and reimbursement approvals, labeling approvals or their
foreign equivalent) held by Parent or its Affiliates as of the Closing, that are
required for the manufacture, distribution, marketing, storage, transportation,
use and sale of the products currently being sold by, or otherwise for the
operation of, the Businesses.
"Restricted Field" means the Cardiac Surgery Business and the
Vascular Surgery Business (other than the Excluded Businesses).
8
"SEC" means the United States Securities and Exchange Commission.
"Seller Disclosure Schedule" means the Seller Disclosure Schedule
attached hereto, dated as of the Agreement Date, delivered by Parent to Buyer in
connection with this Agreement.
"Seller Out-License Agreement" means a license agreement,
substantially in the form of Exhibit E, by and among Buyer, Parent and one or
more of Parent's Affiliates, pursuant to which Buyer is exclusively licensed the
Business Licensed Intellectual Property for use in the Businesses and pursuant
to which Buyer is non-exclusively licensed the Business Licensed Intellectual
Property for use other than in the Businesses.
"Seller Material Adverse Effect" means any change, effect, event,
occurrence, state of facts or development which individually or in the aggregate
has resulted or would reasonably be expected to result in a material adverse
effect to the business, operations, properties, financial condition or results
of operations of the Businesses, taken as a whole; provided, however, that none
of the following shall be deemed, either alone or in combination, to constitute,
and none of the following shall be taken into account in determining whether
there has been or will be, a Seller Material Adverse Effect: (a) the execution,
delivery, announcement or performance of the obligations under this Agreement or
the announcement, pendency or anticipated consummation of the transactions
contemplated by this Agreement (including, but not limited to, any loss of
employees, customers, prospective customers, any cancellation of or delay in
customer orders, any litigation or disruption in supplier, distributor, partner,
licensor/licensee or similar relationships, in any such case to the extent
proximately caused by the announcement, pendency or anticipated consummation of
the transactions contemplated by this Agreement), and (b) any change, effect,
event, occurrence, state of facts or development in the financial or securities
markets or the economy in general or in the industries in which the Businesses
operate in general. In addition, absent other changes, effects, events,
occurrences, state of facts or developments that are substantial contributions
to the occurrence of a Seller Material Adverse Effect any failure, in and of
itself, by the Businesses to meet any internal or published projections,
forecasts or revenue or earnings predictions shall not be deemed to constitute a
Seller Material Adverse Effect, provided, that any such failure may be
considered together with other factors and any or all of the underlying causes
of any such failure may, by themselves, be considered for constituting a Seller
Material Adverse Effect.
"Sellers" means, individually or collectively, the Asset Sellers and
the Interest Sellers.
"Straddle Period" means any Taxable period beginning before the
Closing Date and ending on or after the Closing Date.
"Sublease Agreement" means that certain sublease agreement,
substantially in the form of Exhibit F hereto, by and between Buyer or its
designee (with it being the intention of the parties that any designee be an
entity of sufficient substance to perform its obligations under such lease
agreement) and Parent.
"Subsidiary Plan" means any employee or independent contractor
compensation or benefit plan, program or arrangement that covers exclusively
employees or independent contractors of the Businesses.
9
"Target Closing Working Capital" means $14,000,000.
"Tax" or "Taxes" (and with correlative meaning, "Taxable" and
"Taxing") means any United States federal, state or local, or non-United States,
income, gross receipts, franchise, estimated, alternative minimum, add-on
minimum, sales, use, transfer, registration, value added, excise, natural
resources, severance, stamp, withholding, occupation, premium, windfall profit,
environmental, customs, duties, real property, personal property, capital stock,
net worth, intangibles, social security, unemployment, disability, payroll,
license, employee or other tax or similar levy, of any kind whatsoever,
including any interest, penalties or additions to tax in respect of the
foregoing.
"Tax Return" means any return, declaration, report, claim for refund,
information return or other document (including any related or supporting
estimates, elections, schedules, statements or information) filed or required to
be filed in connection with the determination, assessment or collection of any
Tax or the administration of any laws, regulations or administrative
requirements relating to any Tax.
"Taxation Authority" means any Governmental Authority having any
responsibility for (a) the determination, assessment or collection or payment of
any Tax, or (b) the administration, implementation or enforcement of or
compliance with any law relating to any Tax.
"Tenant" means the tenant, sub-tenant or occupant under an Occupancy
Agreement.
"Trademarks" means trademarks, service marks, trade dress, logos,
trade names, corporate names, domain names and other source identifiers and all
goodwill associated with any of the foregoing, registrations and applications
for registration thereof, including all extensions, modifications and renewals
of same.
"Transfer Agreements" means (a) with respect to the Purchased Assets
and Assumed Liabilities, the Bills of Sale, the Assumption Agreements, and such
deeds, endorsements, assignments, instruments of assumption, affidavits and
other instruments of sale, conveyance, transfer and assignment for the Asset
Sellers, in form and substance reasonably satisfactory to Buyer and Parent, as
shall be necessary under Law in order to transfer all right, title and interest
of the applicable Asset Sellers in, to and under such Purchased Assets and
Assumed Liabilities in accordance with the terms hereof, and (b) with respect to
the Interests, such instruments of sale, conveyance, transfer and assignment,
and such other agreements or documents, if any, in each case in form and
substance reasonably satisfactory to Buyer and Parent, as shall be necessary
under Law in order to transfer all right, title and interest of the applicable
Interest Seller in the Interests in accordance with the terms hereof.
"Transferred Subsidiaries" means, individually or collectively, the
Affiliates of Parent set forth in Section 1.01(f) of the Seller Disclosure
Schedule.
"Transition Services Agreement" means a transition services
agreement, among Buyer, Parent and certain Affiliates of Parent, substantially
in the form of Exhibit G attached hereto.
"Vascular Surgery Business" means the business of researching,
inventing, designing, developing, making, having made, using, marketing,
distributing, offering for sale and selling
10
and providing products, devices, instruments, disposables and accessories or
other materials, and providing services, in all of such matters, for the
performance of the following vascular procedures by vascular or general
surgeons: (a) textile vascular grafts used for (I) aortic reconstruction, (II)
aortic aneurysmal disease, (III) vascular occlusive disease, and (IV) surgically
implantable valve conduits; (b) textile fabric used for surgical vascular
patching and vascular suture support; and (c) soft PTFE grafts used for (I)
lower extremity vascular repair, (II) vascular occlusive disease, and (III)
dialysis access; provided, however, that all such procedures are performed
through an open or other percutaneous surgical access site. Notwithstanding the
foregoing, the Vascular Surgery Business shall not include stent-grafts used for
any purpose, the Excluded Businesses or Parent Investments.
SECTION 1.02. Definitions. The following terms have the meanings set
forth in the Sections set forth below:
Definition Location
---------- --------
"AAA" 2.04(d)
---
"Acquired Business" 5.13(b)
-----------------
"Acquisition Proposal" 5.16
--------------------
"Aggregate Threshold" 10.04(c)
-------------------
"Agreement" Preamble
---------
"Agreement Date" Preamble
--------------
"Agreed-Upon Allocation" 2.03(c)
----------------------
"Allocation Accounting Firm" 2.03(c)
--------------------------
"Arbiter" 2.04(d)
-------
"Assumed Liabilities" 2.02(a)
-------------------
"Audited Financial Statements" 8.02(g)
----------------------------
"Businesses" Recitals
----------
"Business Employees" 6.02(a)
------------------
"Business Financial Statements" 3.06(a)
-----------------------------
"Buyer" Preamble
-----
"Buyer Indemnified Parties" 10.02
-------------------------
"Cash Purchase Price" 2.03(a)(i)
-------------------
"Cap" 10.04(d)
---
"CIA" 3.14(f)
---
"Closing" 2.05
-------
"Closing Date" 2.05
------------
"Closing Working Capital Statement" 2.04(b)(i)
---------------------------------
"Competitive Portion" 5.13(c)(i)
-------------------
"Confidentiality Agreement" 5.02(b)
-------------------------
"Commitment Letters" 4.05
------------------
"Committed Financing" 4.05
-------------------
"Continuing Employees" 6.01(a)
--------------------
"Conveyance Taxes" 7.07
----------------
"CPA Firm" 7.03(b)
--------
"Deferred Compensation" 3.12(o)
---------------------
"Deferred Employees" 6.02(a)
------------------
"Environmental Permits" 3.09
---------------------
11
"ERISA" 3.08
-----
"EVT" 5.15(b)
---
"Excluded Assets" 2.01(c)
---------------
"Excluded Businesses" 2.01(c)(v)
-------------------
"Excluded Employees" 6.02(a)
------------------
"Excluded Liabilities" 2.02(b)
--------------------
"Exclusive Negotiation Period" 5.13(c)(ii)
----------------------------
"Export Approvals" 3.24(b)(i)
----------------
"FDCA" 3.08(b)
----
"Final Allocation" 2.03(c)
----------------
"Financing" 5.14
---------
"German Competition Act" 5.26
----------------------
"German Operations Agreement" 5.26
---------------------------
"Guidant CIC Plans" 6.01(e)
-----------------
"Inactive Business Employees" 6.02(c)
---------------------------
"ISRA Determination" 5.03(c)
------------------
"Licensed Marks" 5.06(c)
--------------
"LLC Conversions" Recitals
---------------
"Losses" 10.02
------
"Market Rate" 5.26
-----------
"Materials" 5.06(c)(ii)
---------
"Material Contract" 3.14(a)
-----------------
"NFA" 5.03(c)
---
"NJDEP" 5.03(c)
-----
"Non-Seller Licensed Marks" 5.06(b)
-------------------------
"OIG" 5.15(a)
---
"Parent" Preamble
------
"Parent Investments" 2.01(c)(ix)
------------------
"Permits" 3.08(b)
-------
"Proposed Allocation" 2.03(c)
-------------------
"Purchased Assets" 2.01(a)
----------------
"Purchase Price" 2.03(a)(ii)
--------------
"Qualified Appraiser" 5.13(e)
-------------------
"Restricted Period" 5.13(a)
-----------------
"Seller Benefit Plans" 3.12(a)
--------------------
"Seller Licensed Marks" 5.06(c)
---------------------
"Shared Asset(s)" 2.01(c)(iii)
---------------
"Social Security Act" 3.15(h)
-------------------
"Survey" 3.11(i)
------
"Territory" 5.13(e)
---------
"Threshold" 10.04(c)
---------
"Third Party Claim" 10.05(b)
-----------------
"Working Capital True-Up Amount" 2.04(b)(ii)
------------------------------
12
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Purchase and Sale of Purchased Assets and Interests.
(a) Purchased Assets. Upon the terms and subject to the conditions of this
Agreement, at the Closing, Parent shall sell, convey, assign and transfer, and
shall cause each Asset Seller to sell, convey, assign and transfer, to Buyer all
the assets, rights and properties of Parent and its Affiliates, of every kind
and description and wherever located, whether tangible or intangible, real,
personal or mixed, that (except as otherwise expressly set forth in this
Agreement or the Ancillary Agreements) are primarily used in or primarily held
for use by the Businesses as of the Closing Date (not including the Excluded
Assets, the "Purchased Assets"), and Buyer shall purchase the Purchased Assets
free and clear of all Encumbrances other than Permitted Encumbrances (for the
avoidance of doubt, all assets, rights and properties of the Transferred
Subsidiaries (other than any Excluded Assets) shall remain assets, rights and
properties of the Transferred Subsidiaries and not Purchased Assets hereunder).
Without limiting the generality of the foregoing, the Purchased Assets shall
include the following assets, rights and properties of Parent and its Affiliates
as of the Closing Date:
(i) all Sellers', Parent's and its Affiliates' right,
title and interest to Real Property, including, without limitation, leasehold
interests, interests in security deposits and fee simple title in and to the
Owned Business Real Property, subject only to Permitted Title Encumbrances;
(ii) all tangible personal property and interests therein,
including machinery, equipment, training materials and equipment, mechanical and
spare parts, supplies, owned and leased motor vehicles, mobile telephones,
computer equipment, communications equipment, PDA bar code readers, fixtures,
trade fixtures, tools, tooling, dyes, cap and component molds, furniture,
furnishings, office equipment and supplies, production supplies, other
miscellaneous supplies and other tangible property of any kind in each case to
the extent primarily used in or primarily held for use by the Businesses;
(iii) the Business Transferred Intellectual Property not
held by the Transferred Subsidiaries;
(iv) Registrations primarily related to products currently
being manufactured and sold by the Businesses, or primarily related to future
products or product lines being developed primarily by the Businesses, in each
case to the extent assignable with or without requiring the consent of the
issuing Governmental Authority, supported by and including, for such products,
future products or product lines primarily related to the Businesses: (A) the
original documents, to the extent originals are available, under the possession
of Parent or the Asset Sellers (or that are accessible to Parent or the Asset
Sellers using commercially reasonable efforts) evidencing such Registrations
issued to Parent or the Asset Sellers by a Governmental Authority primarily
related to the Businesses; (B) all related Registration applications, clinical
research and trial agreements, data results and records of clinical trials and
marketing research, all other clinical documents required to be kept by Law, all
documents required be kept under the FDA Quality System Regulation or any other
Law regulating the
13
design or manufacture of medical devices, design history files, technical files,
drawings, manufacturing, packaging and labeling specifications, validation
documentation, packaging specifications, quality control standards and other
documentation, research tools, laboratory notebooks, files and correspondence
with regulatory agencies and quality reports and all relevant pricing
information and correspondence with Governmental Authorities with respect to
such pricing matters; and (C) any and all documentation related to the design,
development, manufacture, test, release, distribution, worldwide market
registration and clearance or approval, and post market surveillance and history
of usage of such products and proposed future products, as well as all quality
system documentation primarily related to the Businesses;
(v) all advertising, marketing and promotional materials
and all other printed or written materials, including website content, in each
case to the extent primarily used in the Businesses;
(vi) except as set forth in Sections 2.01(c) and 2.02(b),
any Contract and rights thereunder, to the extent used in the Businesses;
(vii) (A) all inventories of works in process,
semi-finished and finished products, and inventory of finished products on
consignment, in transit or deposited in a warehouse, in each case to the extent
primarily held for use in the Businesses, and (B) all other inventories,
including raw materials, stores, replacement and spare parts, packaging
materials, operating supplies and inventory on consignment, in transit or
deposited in a warehouse, in each case to the extent exclusively held for use in
the Businesses;
(viii) all prepayments, security deposits, rebates,
refunds and prepaid expenses, in each case to the extent related to the
Businesses;
(ix) subject to the terms of the Buyer Out-License
Agreement and the Seller Out-License Agreement, all unpaid or unsatisfied
claims, causes of action, choses in action, rights of recovery and rights of
set-off of any kind (including all unsatisfied damages and payments for past,
present or future infringement or misappropriation of Business Intellectual
Property, the right to recover for past infringements or misappropriations of
Business Intellectual Property, and any and all corresponding rights that have
been, now or hereafter may be secured throughout the world with respect to any
Business Intellectual Property, except to the extent any of the foregoing relate
to (x) Excluded Assets or Excluded Liabilities, (y) intercompany receivables
between Parent and any of its Affiliates, or between any Affiliate of Parent and
any other Affiliate of Parent, or (z) outside the fields of the Businesses, as
to the Business Licensed Intellectual Property;
(x) (A) all unpaid or unsatisfied income, royalties and
payments receivable in respect of any Business Transferred Intellectual
Property, and (B) subject in all cases to the terms of the Seller Out-License,
all unpaid or unsatisfied income, royalties and payments receivable in respect
of any Business Licensed Intellectual Property in the fields of the Businesses,
except for any Excluded Assets;
(xi) all Books, Records and Files (other than income and
similar Tax Returns and related books, records and files), to the extent
primarily used in, primarily held for
14
use by, or primarily related to, the Purchased Assets, the Businesses or the
Business Transferred Intellectual Property and copies of all Books, Records and
Files (other than income and similar Tax Returns and related books, records and
files), redacted at the election of Parent to exclude information to the extent
having no relation to the Businesses, that are primarily used in or primarily
related to the Purchased Assets, the Businesses or the Business Transferred
Intellectual Property;
(xii) all permits, licenses, certifications and approvals
from all permitting, licensing, accrediting and certifying agencies, and the
rights to all data and records held by such permitting, licensing and certifying
agencies, in each case to the extent transferable and primarily used in, or
primarily related to, the Businesses other than permits, licenses,
certifications and approvals which may be retained by Parent during the periods
during which Parent is providing any services, and access to which (or
replacements for which) is contemplated to be provided, under the Transition
Services Agreement for the periods provided therein, and following which periods
such permits, licenses, certifications and approvals shall be transferred to
Buyer;
(xiii) all computer software, data and information, and
all related hardware, in each case to the extent primarily used in, or primarily
related to, the Businesses, other than that computer software, data and
information which may be retained by Parent during the periods during which
Parent is providing any services, and access to which (or replacements for
which) is contemplated to be provided, under the Transition Services Agreement
for the periods provided therein, and following which periods such computer
software, data and information (or copies thereof), and all related hardware,
shall be transferred to Buyer;
(xiv) all claims under insurance policies and claims or
benefits in, to or under any express or implied warranties from suppliers of
goods or services relating to inventory, goods, supplies or other items sold or
delivered to Parent or any Asset Seller prior to the Closing, in each case to
the extent related to the Businesses;
(xv) all goodwill of the Businesses as going concerns
(excluding any goodwill associated with Parent's name or Guidant's name); and
(xvi) all rights of Buyer and its Affiliates arising under
this Agreement, the Ancillary Agreements or from the consummation of the
transactions contemplated hereby.
(b) Books, Records and Files. Notwithstanding anything to the
contrary contained in this Agreement (i) Parent shall have no obligation to
convey any Books, Records and Files and other data and information that Parent
or its Affiliates are contractually or otherwise restricted by a third party
from providing; provided, that at Buyer's request, Parent shall use commercially
reasonable efforts, subject to Buyer's good faith cooperation with Parent
(including executing and delivering any reasonable, relevant and requested
non-disclosure agreements), to obtain the consent of such third party to provide
all such information to Buyer, to the extent access to all such information is
not then being provided pursuant to services contemplated under any of the
Ancillary Agreements, and (ii) Parent may retain copies of any Books, Records
and Files conveyed pursuant to Section 2.01(a) (solely for evidentiary purposes
or for its use with respect to its businesses other than the Businesses),
including any
15
Registrations and related documentation and materials conveyed pursuant to
Section 2.01(a)(iv), and may redact any information not related to the
Businesses from any Books, Records and Files and similar materials conveyed
pursuant to Section 2.01(a); provided, however, that such redaction shall not
impair any information related to the Businesses contained in such Books,
Records and Files and similar materials.
(c) Excluded Assets. Notwithstanding anything in Section
2.01(a) to the contrary, Buyer shall not purchase, and the Assets shall not
include, any right, title and interest in or to any of the following assets (the
"Excluded Assets"):
(i) all cash and cash equivalents, securities (other than
the Interests) and negotiable instruments on hand, in lock boxes, in financial
institutions or elsewhere, including any cash residing in any collateral cash
account securing any obligation or contingent obligation;
(ii) all intercompany receivables between Parent and any
of its Affiliates, or between any Affiliate of Parent and any other Affiliate of
Parent, all accounts, notes and other receivables resulting from sales prior to
the Closing Date by Parent or its Affiliates of products to the extent generated
by the Businesses, whether current or non-current;
(iii) except as otherwise expressly set forth in this
Agreement or the Ancillary Agreements including in Section 2.01(a) hereof, the
ownership right in any property or asset (other than Intellectual Property),
including Contracts, that is used in the Businesses, but is used primarily in
businesses of Parent other than the Businesses (a "Shared Asset(s)");
(iv) all real property of Parent and its Affiliates
(including any of Parent's or its Affiliates' right, title and interest as a
tenant or otherwise and the Real Property contemplated to be leased to Buyer
under the Lease Agreement), other than the Owned Business Real Property;
(v) the EVAR Business, the PCBA Business, the Peripheral
Intervention Business, the Embolic Beads Business and all other businesses of
Parent and its Affiliates other than the Businesses (collectively, the "Excluded
Businesses");
(vi) subject to Section 5.06(c) and any license granted in
accordance therewith, the Licensed Marks;
(vii) all rights or interests of a Transferred Subsidiary
in, and all assets of, any Parent Plans;
(viii) the Parent Retained Intellectual Property;
(ix) all Parent's and its Affiliates' investments in, or
joint ventures or any other partnerships with, other third-party businesses
(equity, debt or otherwise), whether or not related to the Businesses
(collectively, "Parent Investments"), including those listed on Section
2.01(c)(ix) of the Seller Disclosure Schedule;
16
(x) all rights of Parent and its Affiliates (other than
the Transferred Subsidiaries) arising under this Agreement or from the
consummation of the transactions contemplated hereby;
(xi) any claim, right or interest of the Parent and any
Transferred Subsidiary in or to any refund, credit or other recovery for Taxes
with respect to any Pre-Closing Tax Period; and
(xii) any right, title and interest in or to any of the
assets including Contracts related thereto, listed on Section 2.01(c)(xii) of
the Seller Disclosure Schedule.
(d) Interests. Upon the terms and subject to the conditions of
this Agreement, at the Closing, Parent shall sell, convey, assign and transfer,
and shall cause each Interest Seller to sell, convey, assign and transfer, to
Buyer the Interests free and clear of all Encumbrances other than Permitted
Encumbrances.
SECTION 2.02. Assumption and Exclusion of Liabilities. (a) Assumed
Liabilities. Upon the terms and subject to the conditions and exclusions set
forth in this Agreement, at the Closing, Buyer shall assume and agree to pay,
perform and discharge when due, all Liabilities of Parent and its Affiliates,
other than the Excluded Liabilities, related to or arising from the Businesses
or Purchased Assets (for the avoidance of doubt, all Liabilities of the
Transferred Subsidiaries (other than any Excluded Liabilities) shall remain
Liabilities of the Transferred Subsidiaries, and shall not become or remain
Liabilities of Parent or its Affiliates, as a result of Buyer's acquisition of
the Transferred Subsidiaries at the Closing) but only to the extent relating to
or arising out of the Businesses or the Purchased Assets (in the case of those
Liabilities shared by the Businesses and Parent and its Affiliates, only that
portion of such Liabilities of the Businesses attributable to the Businesses
shall be assumed hereby) (the "Assumed Liabilities"), including the following:
(i) all such Liabilities of the Businesses, whether or not
incurred in the ordinary course of business, that are reflected in the Business
Financial Statements;
(ii) all such Liabilities of the Businesses, whether or
not incurred in the ordinary course of business, explicitly set forth on
Sections 3.07(a) (except Items 1, 3, 5 and 6 thereon), 3.10(a)(i), 3.10(a)(ii),
3.10(b), 3.10(c), 3.10(f), 3.10(g), 3.14(a), 3.14(e) and 3.15 (except Item 1 of
Section 3.15(a)) of the Seller Disclosure Schedule;
(iii) all such Liabilities of the Businesses that were
incurred in the ordinary course of business prior to the Closing;
(iv) all such Liabilities and responsibilities (A) that
are outstanding or accrued and unsatisfied as of the Closing under any
Subsidiary Plan identified as such on Section 3.12(a) of the Seller Disclosure
Schedule and which are reflected in the Closing Working Capital, or (B) that are
assumed by Buyer pursuant to Article VI, whether arising prior to, on, or after
the Closing;
(v) all Liabilities arising out of or relating to any
claim, allegation or assertion that the development, manufacture, marketing,
distribution or sale of any products by
17
the Businesses, whether prior to or after the Closing, infringes or violates any
Intellectual Property or other proprietary rights of any third party; and
(vi) all such Liabilities of the Businesses arising out of
or relating to any of the Assets and the Businesses that arise after the Closing
Date, including Tax liabilities relating to Post-Closing Periods.
(b) Excluded Liabilities. As of the Closing, Parent and/or its
Affiliates shall retain and assume, to the extent applicable, and shall be
responsible for paying, performing and discharging when due, and none of Buyer
or its Affiliates shall assume (by succession, transfer or assignment or
otherwise) or have any responsibility for, any of the following Liabilities (the
"Excluded Liabilities"):
(i) notwithstanding any disclosure on the Seller
Disclosure Schedule, all Liabilities to the extent relating to or arising out of
the Excluded Assets or the Excluded Businesses;
(ii) (A) all Liabilities to the extent relating to or
arising out of present or former assets or businesses of Parent or any of its
Affiliates that are not included in the Assets (whether or not such other assets
or businesses were at one time included within the Transferred Subsidiaries or
at one time related to the Businesses), or (B) all Liabilities to the extent not
relating to or arising out of the Businesses or the Purchased Assets (in the
case of those Liabilities shared by the Businesses and Parent and its
Affiliates, only that portion of such Liabilities of the Businesses not
attributable to the Businesses shall be excluded hereby);
(iii) except as provided in Section 6.01 and Section
2.02(a)(iv), all Liabilities to the extent relating to or arising from any
Parent Plan or a Subsidiary Plan and all claims arising out of any death,
accident, disease or injury asserted by or on behalf of employees arising from
events, circumstances or conditions occurring or existing on or before the
Closing, whether asserted before or after the Closing;
(iv) all intercompany payables and loans between Parent
and any of its Affiliates, or between any Affiliate of Parent and any other
Affiliate of Parent;
(v) any and all Liabilities of Parent and its Affiliates
related to consummating the transactions contemplated hereby, including legal,
accounting and other fees and expenses related to preparation of the Business
Financial Statements, this Agreement and the Ancillary Agreements;
(vi) regardless of any disclosures on the Seller
Disclosure Schedule, all Liabilities related to the Real Property or the
Business arising from Environmental Matters to the extent occurring or existing
on or before Closing (whether asserted before or after the Closing);
(vii) all Liabilities (A) arising out of any failure of
Parent or any Seller to have complied with the terms of the CIA or other
corporate integrity programs or compliance plans with Governmental Authorities,
regardless of any disclosures set forth on the Seller Disclosure Schedule; (B)
related to, arising out of, or in connection with the parties' waiver of
compliance with any Bulk Transfer Act or any similar statute as enacted in any
jurisdiction,
18
domestic or foreign (if applicable), including the defenses thereof and
reasonable attorneys' and other professional fees, regardless of any disclosures
set forth on the Seller Disclosure Schedule; (C) in respect of any milestone or
earn-out provision of that certain Agreement of Merger, dated February 9, 2004,
by and between Popcorn Merger Sub, Inc., a California corporation, and AFx Inc.,
a California corporation, as amended, or any transaction contemplated thereby or
agreement, document or instrument entered in connection therewith, regardless of
any disclosures set forth on the Seller Disclosure Schedule; (D) notwithstanding
any disclosures on the Seller Disclosure Schedules, any actual or alleged
Liability for death or injury to person or property as a result of any actual or
alleged defect in or harm caused by any product sold by the Businesses at or
prior to the Closing, including those product liability claims existing as of
the Agreement Date and set forth in any section of the Seller Disclosure
Schedule; and (E) any other Liabilities related to or arising out of the
operation of the Businesses prior to the Closing Date, but only to the extent
that such Liabilities were not incurred in the ordinary course of business, and
provided, that the Excluded Liabilities covered by this clause (E) shall not
include any Liabilities described in subsections (i) through (vi) of Section
2.02(a);
(viii) without limiting the obligations of the Buyer under
Article VI, any Liabilities under the Boston Scientific Corporation 2007
Performance Incentive Plan to employees of the Businesses for the period ending
December 31, 2007, and any Liabilities for periods prior to the Closing to any
employee of the Businesses for any retention or similar bonus arrangements
established by Parent or its Affiliates prior to the Closing related to the
transactions contemplated hereby and any severance or parachute or similar
payment under arrangements established by Parent or its Affiliates that may
become due and owing solely by reason of consummation of the transactions
contemplated hereby (and without any other conditions, including a prior or
subsequent termination of employment of the beneficiary thereof, being required
to be satisfied);
(ix) without limiting the obligations of the Buyer under
Article VI, all Liabilities and responsibilities arising out of or relating to
any Subsidiary Plan not identified as such on Section 3.12(a) of the Seller
Disclosure Schedule; and
(x) without limiting the rights and obligations of the
parties under Article VII, any Liability for Taxes of the Transferred
Subsidiaries with respect to any Pre-Closing Tax Period.
SECTION 2.03. Purchase Price; Allocation of Purchase Price. (a) Subject to the
terms and conditions of this Agreement, the purchase price of the Interests and
the Purchased Assets is payable as follows:
(i) Buyer shall pay to Parent at the Closing, for the
benefit of Parent and Sellers, the amount of $750,000,000 in cash ("Cash
Purchase Price"); and
(ii) Buyer shall assume the Assumed Liabilities at the
Closing.
The Cash Purchase Price and the Assumed Liabilities are collectively referred to
herein as the "Purchase Price."
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(b) The Cash Purchase Price shall be paid at the Closing by
wire transfer in immediately available funds to a bank account designated to
Buyer in writing by Parent no later than three (3) Business Days prior to the
Closing.
(c) As soon as practicable, and in any event not later than one
hundred eighty (180) days after the Closing, Parent shall provide for Buyer's
review and comments a proposed allocation of the Purchase Price, as adjusted for
federal income Tax purposes to take into account the liabilities of the
Transferred Subsidiaries, by country, by Transferred Subsidiary as applicable,
and among the Purchased Assets and the assets of the Transferred Subsidiaries by
asset category in accordance with the principles of Section 1060 of the Code
(the "Proposed Allocation"). Buyer shall have the right to consent or object to
the Proposed Allocation during the thirty (30) day period immediately following
delivery of the Proposed Allocation. If Buyer delivers a notice of objection to
Parent during that thirty (30) day period, Parent and Buyer shall negotiate in
good faith to resolve their differences with respect to the Proposed Allocation.
If Buyer makes no objection during that thirty (30) day period or Parent and
Buyer agree on an allocation within the thirty (30) day period following Buyer's
delivery of such a notice of objection, the Proposed Allocation or the agreed
allocation, as applicable, shall be final and binding on Parent, on behalf of
itself and Sellers, and Buyer (the "Agreed-Upon Allocation"). If Parent and
Buyer are unable to reach agreement on the Proposed Allocation within thirty
(30) days following the delivery to Parent of Buyer's notice of objection to the
Proposed Allocation, the allocation shall be determined by an
internationally-recognized independent accounting firm mutually selected by
Buyer and Parent (the "Allocation Accounting Firm") using customary valuation
methodologies; provided, however, that the Allocation Accounting Firm shall make
its determination within thirty (30) days following the date on which the
Allocation Accounting Firm is selected pursuant to this Section 2.03(c). The
determination made by the Allocation Accounting Firm of the allocation shall be,
absent manifest error, final and binding on Parent, on behalf of itself and
Sellers, and Buyer (the "Final Allocation"). The fees and expenses of the
Allocation Accounting Firm shall be shared equally between Parent and Buyer. The
Agreed-Upon Allocation and the Final Allocation, as applicable, may be revised
by mutual agreement between the Buyer and the Parent, from time to time, prior
to and following the Closing so as to reflect any matters that need updating
(including Purchase Price adjustments, if any). Parent, on behalf of itself and
Sellers, and Buyer shall acknowledge that the allocation shall be done at arm's
length based upon a good faith determination of fair market values, subject to
final determination by the Allocation Accounting Firm, if applicable.
(d) Each of Parent, Buyer and each of their respective
Affiliates shall (i) be bound by the Agreed-Upon Allocation or Final Allocation,
as applicable, for purposes of determining any Taxes, and (ii) prepare and file,
and cause its Affiliates to prepare and file, its Tax Returns on a basis
consistent with the Agreed-Upon Allocation or Final Allocation, as applicable.
None of Parent, Buyer or their respective Affiliates shall take any position
inconsistent with the Agreed-Upon Allocation or Final Allocation, as applicable,
in any Tax Return, in any Tax refund claim, in any Tax litigation or
administrative proceeding, or otherwise unless required by final determination
by an applicable Taxation Authority. In the event that the Agreed-Upon
Allocation or Final Allocation, as applicable, is disputed by any Taxation
Authority, the party receiving notice of the dispute shall promptly notify the
other party hereto, and Buyer and Parent agree to use their best efforts to
defend such Allocation in any audit or similar proceeding.
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SECTION 2.04. Purchase Price Adjustment. (a) Following the Closing,
he Cash Purchase Price shall be adjusted as provided herein to reflect the
difference, if any, between Closing Working Capital and Target Closing Working
Capital.
(b) Promptly following the Closing Date (and in any event
within 180 days of such date), Buyer shall cause to be prepared as of the
Closing Date and shall deliver to Parent the following:
(i) a statement of Closing Working Capital as of the open
of business on the Closing Date (the "Closing Working Capital Statement"),
prepared in accordance with GAAP and consistent with the preparation of the
Business Financial Statements, and shall not include any changes in assets or
liabilities as a result of accounting adjustments arising from or resulting as a
consequence of the transactions contemplated by this Agreement; and
(ii) the "Working Capital True-Up Amount," which shall
mean Closing Working Capital less Target Closing Working Capital.
(c) If the Working Capital True-Up Amount is negative and the
absolute value of the sum is greater than $1,000,000, then, no later than five
(5) Business Days after the final determination of such adjustment in accordance
with Section 2.04(d), Parent shall pay to an account designated by Buyer, by
wire transfer in immediately available funds, an amount equal to the absolute
amount of such difference in excess of $1,000,000, plus interest from the
Closing Date to the date of payment. If the Working Capital True-Up Amount is
positive and the absolute value of the sum is greater than $1,000,000, then, no
later than five (5) Business Days after the final determination of such
adjustment in accordance with Section 2.04(d), Buyer shall pay to an account
designated by Parent, by wire transfer in immediately available funds, an amount
equal to the absolute amount of such difference in excess of $1,000,000, plus
interest from the Closing Date to the date of payment. For the avoidance of
doubt, to the extent the absolute value in either case is less than or equal to
$1,000,000, no payment by any party in respect of such Working Capital True-Up
Amount need be made.
(d) The Closing Working Capital Statement (and the applicable
computation of Closing Working Capital indicated thereon) delivered by Buyer to
Parent shall be conclusive and binding upon the parties unless Parent, within
forty-five (45) days following receipt by Parent of the Closing Working Capital
Statement, notifies Buyer in writing that Parent disputes any of the amounts set
forth therein, specifying the nature and amount of the dispute and the basis
therefor. The parties shall in good faith attempt to resolve any dispute and, if
the parties so resolve all disputes, the Closing Working Capital Statement (and
the applicable computation of the Closing Working Capital indicated thereon), as
amended to the extent necessary to reflect the resolution of the dispute(s),
shall be conclusive and binding on the parties. If the parties do not reach
agreement in resolving the dispute(s) within forty-five (45) days after notice
is given by Parent to Buyer pursuant to the second preceding sentence, the
parties shall submit the remaining dispute(s) to the New York, New York office
of the accounting firm of KPMG LLP or, if no partner at such firm will act, to a
partner at such other internationally recognized independent accounting firm
selected by Buyer and Parent (the "Arbiter") for resolution. If the parties
cannot agree on the selection of a partner at an independent accounting firm to
act as Arbiter, the parties shall request the American Arbitration Association
("AAA") to appoint such a person, and such
21
appointment shall be conclusive and binding on the parties. Promptly, but no
later than sixty (60) days after acceptance of his or her appointment as
Arbiter, the Arbiter shall determine (it being understood that in making such
determination, the Arbiter shall be functioning as an expert and not as an
arbitrator), based solely on written submissions by Buyer and Parent made within
thirty (30) days after selection, and not by independent review, only those
issues in dispute(s) and shall render a written report as to the resolution of
the dispute(s) and the resulting computation of the applicable Closing Working
Capital and any disputed components thereof, which shall be conclusive and
binding on the parties. All proceedings conducted by the Arbiter shall take
place in The City of New York. In resolving any disputed item, the Arbiter (i)
shall be bound by the provisions of this Section 2.04 and (ii) may not assign a
value to any item greater than the greatest value for such items claimed by
either party or less than the smallest value for such items claimed by either
party. The fees, costs and expenses of the Arbiter shall be allocated to and
borne by Buyer and Parent based on the inverse of the percentage that the
Arbiter's determination (before such allocation) bears to the total amount of
the total items in dispute as originally submitted to the Arbiter. For example,
should the items in dispute total in amount to $1,000 and the Arbiter awards
$600 in favor of Parent's position, 60% of the costs of its review would be
borne by Buyer and 40% of the costs would be borne by Parent.
(e) For the purposes of Section 2.04(c), interest will be
payable at the "prime" rate, as published in The Wall Street Journal, Eastern
Edition, from time to time, calculated based on a 365 day year and the actual
number of days elapsed.
SECTION 2.05. Closing. Subject to the terms and conditions of this
Agreement, the sale and purchase of the Interests and the Purchased Assets and
the assumption of the Assumed Liabilities contemplated by this Agreement shall
take place at a closing (the "Closing") to be held at the offices of Bingham
McCutchen LLP, 150 Federal Street, Boston, MA 02110 at 10:00 a.m., local Boston
time, on the second (2nd) Business Day following the satisfaction or waiver of
the conditions to the obligations of the parties hereto set forth in Article
VIII, or at such other place or at such other time or on such other date as
Parent and Buyer may mutually agree upon in writing (the date of the Closing,
the "Closing Date").
SECTION 2.06. Closing Deliveries by Parent. At the Closing, Parent
shall deliver, or cause to be delivered, to Buyer:
(a) other than with respect to uncertificated Interests (with
respect to which such notarial deeds or other instruments of transfer duly
executed by the applicable Interest Seller will be delivered as required under
applicable Law to give effect to the transfer of such uncertificated Interests),
certificates evidencing the Interests duly endorsed in blank, or accompanied by
stock powers duly executed in blank and with all required stock transfer Tax
stamps affixed, in all cases free and clear of any Encumbrances;
(b) copies of the resolutions (or local equivalent) of the
board of directors (or local equivalent) and, where required, the stockholders
or other equity holders of each Seller, authorizing and approving the
transactions contemplated by this Agreement and the applicable Ancillary
Agreements, to the extent applicable to such Seller, certified by the respective
corporate secretary (or local equivalent) or a director to be true and complete
and in full force and effect and unmodified as of the Closing;
22
(c) executed counterparts of the Transition Services Agreement
and each other Ancillary Agreement to which Parent or a Seller is a party and
such other instruments, in form and substance reasonably satisfactory to Buyer,
as may be reasonably requested by Buyer or necessary under applicable Law to
effect the transfer of the Purchased Assets and the Interests to Buyer and to
evidence such transfer in the public records, and to assume the Excluded
Liabilities, to the extent applicable, in each case duly executed by Parent or
the applicable Seller;
(d) a receipt for the Purchase Price;
(e) with respect to the Leased Baytech Property, Parent shall
have furnished to Buyer a fully executed landlord consent to the transactions
contemplated by this Agreement in form reasonably acceptable to Buyer;
(f) with respect to the Leased Baytech Property, an estoppel
certificate from the Landlord under the Occupancy Agreement relating to the
Leased Baytech Property certifying (i) that such Occupancy Agreement is
unmodified and in full force and effect (or, if there have been modifications,
that the lease is in full force and effect, as modified, and stating the
modifications), (ii) the dates, if any, to which all rental due under such
Occupancy Agreement has been paid, (iii) whether there are any existing charges,
offsets or defenses against the enforcement by the Landlord or any agreement,
covenant or condition of the Occupancy Agreement on the part of the Tenant to be
performed or observed (and, if so, specifying the same), and (iv) whether there
are any existing defaults by the Tenant in the performance or observance by the
Tenant of any agreement, covenant or condition of the Occupancy Agreement on the
part of the Tenant to be performed or observed and whether any notice has been
given to the Tenant of any default under such Occupancy Agreement that has not
been cured (and, if so, specifying the same);
(g) the certificate required by Section 8.02(a);
(h) the certificate required by Section 8.02(f);
(i) with respect to the Owned Business Real Property, a special
warranty deed conveying fee simple title to the Owned Business Real Property,
subject only to the Permitted Title Encumbrances;
(j) with respect to the Owned Business Real Property, an
affidavit of title in the form reasonably required by the Buyer's title insurer
(or the title insurer of any financier of Buyer) in order to issue its extended
coverage owner's (or, if applicable, lender's) policy of title insurance without
exception for material mechanic's, materialmen's or other statutory liens or for
other rights of parties in possession; and
(k) such other documents as may be reasonably required by
Buyer, any financier of Buyer or title insurer to consummate the transfer of the
Owned Business Real Property to Buyer in accordance with this Agreement.
SECTION 2.07. Closing Deliveries by Buyer. At the Closing, Buyer
shall deliver, or cause to be delivered, to Parent or the applicable Seller:
23
(a) the Cash Purchase Price, by wire transfer in immediately
available funds to an account or accounts designated in writing by Parent not
fewer than three (3) Business Days prior to the Closing;
(b) copies of the resolutions of the board of directors and, if
required, the stockholders of Buyer, authorizing and approving the transactions
contemplated by this Agreement and the applicable Ancillary Agreements to the
extent applicable to Buyer, certified by the corporate secretary to be true and
complete and in full force and effect and unmodified as of the Closing;
(c) executed counterparts of the Transition Services Agreement
and each other Ancillary Agreement to which Buyer is a party and such other
instruments, in form and substance reasonably satisfactory to Parent, as may be
reasonably requested by Parent or necessary under applicable Law to effect the
assumption by Buyer of the Assumed Liabilities and to evidence such assumption
in the public records; and
(d) the certificate required by Section 8.01(a).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent and Sellers hereby, jointly and severally, represent and
warrant to Buyer as follows:
SECTION 3.01. Organization, Authority and Qualification. (a) Parent
is a corporation duly incorporated, validly existing and in good standing under
the Laws of the State of Delaware and has all necessary corporate power and
authority to enter into, execute and deliver this Agreement, the Ancillary
Agreements to which it is a party and any document, instrument or certificate
specifically contemplated by this Agreement or the Ancillary Agreements to which
it is a party, to carry out its obligations hereunder and thereunder and to
consummate the transactions contemplated by this Agreement and the Ancillary
Agreements to which it is a party. The execution and delivery by Parent of this
Agreement and the Ancillary Agreements to which it is a party, the performance
by Parent of its obligations hereunder and thereunder and the consummation by
Parent of the transactions contemplated hereby and thereby have been duly
authorized by all requisite corporate action on the part of Parent. This
Agreement has been, and upon their execution each of the Ancillary Agreements to
which Parent is a party will be, duly and validly executed and delivered by
Parent, and, assuming due authorization, execution and delivery by each of the
other parties hereto and thereto (other than Affiliates of Parent), this
Agreement is, and each of the Ancillary Agreements to which Parent is a party
will be, a legal, valid and binding obligation of Parent, enforceable against it
in accordance with its terms.
(b) Each Seller has been duly incorporated, is a validly
existing legal entity and, where applicable, is in good standing (or its local
equivalent) under the Laws of the jurisdiction of its incorporation, and has all
necessary corporate power and authority to enter into, execute and deliver each
Ancillary Agreement to which it is a party, to carry out its obligations
thereunder and to consummate the transactions contemplated thereby. Each of the
24
Sellers is a wholly owned, direct or indirect, subsidiary of Parent. The
execution and delivery by each Seller of each Ancillary Agreement to which it is
a party, the performance by such Seller of its obligations thereunder and the
consummation by such Seller of the transactions contemplated hereby and thereby
will be, when executed as provided in this Agreement, duly authorized by all
requisite corporate action on the part of such Seller. Each Ancillary Agreement
to which a Seller is a party will be, when executed as provided in this
Agreement, duly and validly executed and delivered by such Seller and, assuming
due authorization, execution and delivery by each of the other parties thereto
(other than Parent or any Affiliates of Parent), will constitute, when executed
as provided in this Agreement, a legal, valid and binding obligation of such
Seller enforceable against it in accordance with its terms.
SECTION 3.02. Organization, Authority and Qualification of the
Transferred Subsidiaries. Each Transferred Subsidiary is either (i) a
corporation duly incorporated, validly existing and in good standing (excluding
tax (other than franchise tax) good standing) under the Laws of the jurisdiction
of its incorporation and has all necessary corporate power and authority to own,
operate or lease the properties and assets now owned, operated or leased by it
and to carry on the Businesses as they have been and are currently conducted or
(ii) a limited liability company duly formed, validly existing under the Laws of
the jurisdiction of its formation and has all necessary power and authority to
own, operate or lease the properties and assets now owned, operated or leased by
it and to carry on the Businesses as they have been and are currently conducted
or proposed to be conducted. Each Transferred Subsidiary is duly authorized,
licensed or qualified to do business and is in good standing (or its local
equivalent) under the Laws in each jurisdiction in which it, the properties
owned or leased by it or the operation of its business makes such authorization,
licensing or qualification necessary or desirable, except to the extent that the
failure to be so licensed, qualified or in good standing individually or in the
aggregate has not had and would not reasonably be expected to have a Seller
Material Adverse Effect. The execution and delivery by a Transferred Subsidiary
of the Ancillary Agreements to which it is a party, the performance by such
Transferred Subsidiary of its obligations thereunder and the consummation by
such Transferred Subsidiary of the transactions contemplated thereby have been
duly authorized by all requisite corporate action on the part of such
Transferred Subsidiary. True and correct copies of the certificate of
incorporation and bylaws (or similar organizational documents) of each
Transferred Subsidiary have been delivered by Parent to Buyer. The Cardiac
Surgery Business is and has been the principal business engaged in by the
Transferred Subsidiaries.
SECTION 3.03. Capitalization; Ownership of Interests. Section 3.03 of
Seller Disclosure Schedule sets forth a list of the Transferred Subsidiaries,
and sets forth, for each Transferred Subsidiary, the name, type of entity,
jurisdiction and date of its incorporation, its authorized capital stock or
similar ownership interests, the number and type of its issued and outstanding
shares of capital stock or similar ownership interests of each Transferred
Subsidiary and all of the Persons owning all the issued and outstanding shares
of capital stock or similar ownership interests of each Transferred Subsidiary.
All the issued and outstanding shares of capital stock or similar ownership
interests of each Transferred Subsidiary were duly authorized for issuance and
are validly issued, fully paid and nonassessable and are owned directly by the
applicable Interest Seller or by a Transferred Subsidiary free and clear of all
Encumbrances and free of any restriction on the right to vote, sell or otherwise
dispose of such issued and outstanding shares of capital stock or similar
ownership interests of each Transferred Subsidiary.
25
Except as set forth in Section 3.03 of Seller Disclosure Schedule and except for
this Agreement, there are no options, warrants, calls, subscriptions,
convertible securities or other rights, securities, agreements, arrangements,
commitments or Contracts relating to the issued and outstanding shares of
capital stock or similar ownership interests of each Transferred Subsidiary or
obligating Parent, its Affiliates or any Transferred Subsidiary or Seller to
issue, transfer or sell, or cause to be issued, transferred or sold, any shares
of capital stock or similar ownership interests of any Transferred Subsidiary or
other equity security of any Transferred Subsidiary or other security
convertible into, exchangeable for or evidencing the right to subscribe for or
purchase shares of capital stock or other equity securities of any Transferred
Subsidiary, or grant, extend or enter into any such agreement, arrangement,
commitment or Contract. Upon the Closing, the Interests will constitute all the
issued and outstanding capital stock or similar ownership interests of the
Transferred Subsidiaries. There are no outstanding contractual obligations of
Parent or its Affiliates to repurchase, redeem or otherwise acquire any
Interests or any other interest in the Transferred Subsidiaries.
SECTION 3.04. No Conflict. Assuming that all consents, waivers,
approvals, orders, authorizations and other actions described in Section 3.05
have been obtained, all filings and notifications listed in Section 3.04 of
Seller Disclosure Schedule have been made and any applicable waiting period has
expired or been terminated, the execution, delivery and performance by Parent of
this Agreement, and the execution, delivery and performance by each of Parent
and each Seller of the Ancillary Agreements to which it is a party, do not and
will not (a) violate, conflict with or result in the breach of the certificate
of incorporation or by-laws (or similar organizational documents) of Parent,
Sellers or the Transferred Subsidiaries, (b) conflict with or violate any Law or
Governmental Order applicable to Parent, Sellers or the Transferred
Subsidiaries, as applicable, or their respective properties or other assets, or
(c) except as set forth in Section 3.04(c) of Seller Disclosure Schedule,
conflict with, result in any violation or breach of, constitute a default (or
event which with the giving of notice or lapse of time, or both, would become a
default) under, or give to others any rights of, or result in, termination,
cancellation or acceleration of any obligation or to the loss of a benefit
under, or give rise to any obligation of Parent or any Transferred Subsidiary to
make any payment under, or to increased, additional, accelerated or guaranteed
rights or entitlements of any Person, or result in the creation of any
Encumbrance (other than Permitted Encumbrances) upon any of the properties or
other assets of the Businesses or any Transferred Subsidiary under, any Material
Contract to which Parent, a Seller or a Transferred Subsidiary is a party, or to
which any of the material Assets is subject.
SECTION 3.05. Governmental Consents and Approvals. Except as set
forth in Section 3.05 of Seller Disclosure Schedule, the execution, delivery and
performance by Parent of this Agreement, and the execution, delivery and
performance by Parent and each Seller of each Ancillary Agreement to which it is
a party, do not and will not require any material consent, waiver, approval or
other order or authorization of, action by or in respect to, or registration,
declaration or filing with or notification to, any Governmental Authority,
except (a) to the extent applicable, the requirements of the HSR Act and the
antitrust Laws of any other relevant jurisdiction, (b) pursuant to ISRA, (c)
assignment of product approval applications or regulatory clearances, (d) the
amendment of medical device Establishment Registrations and Product Listings
under the applicable regulations of the FDA as set forth in 21 C.F.R. Parts 207
and 807, or (e) as may be necessary as a result of any facts or circumstances
relating solely to Buyer or any of its Affiliates (other than simply the change
of the owner or operator of the Businesses).
26
SECTION 3.06. Financial Statements; Absence of Changes; Absence of
Undisclosed Liabilities.
(a) Parent has delivered to Buyer copies of (i) unaudited
combined balance sheets of the Businesses as at June 30, 2007, December 31, 2006
and December 31, 2005 and the related unaudited combined statements of
operations of the Businesses for the six- and twelve-month periods then ended,
as applicable, in each case excluding the Excluded Businesses, the Excluded
Assets and the Excluded Liabilities (collectively, the "Business Financial
Statements"). Each of the Business Financial Statements has been prepared in
accordance with GAAP consistently applied, taking into account SEC Staff
Accounting Bulletin No. 55, reflects all Intercompany Adjustments and presents
fairly in all material respects the financial position and results of operation
of the Businesses (excluding the Excluded Businesses, the Excluded Assets and
the Excluded Liabilities) as at the dates and for the periods indicated. Except
as set forth in Section 3.06(a) of Seller Disclosure Schedule, the balance
sheets included in the Business Financial Statements do not include any material
assets or liabilities not intended to constitute a part of the Businesses after
giving effect to the transactions contemplated hereby. The statements of
operations and financial condition included in the Business Financial Statements
do not reflect the operations of any material entity or business not intended to
constitute a part of the Businesses after giving effect to all such transactions
and reflect all material direct and indirect costs and expenses that
historically have been incurred by the Businesses (other than the Excluded
Businesses, the Excluded Assets and the Excluded Liabilities, other than, in the
case of Excluded Liabilities, Excluded Liabilities that are Tax liabilities),
including all material expenses or costs incurred by Parent and its Affiliates
on behalf or for the benefit of the Businesses, in each case through allocations
using reasonable methods.
(b) Except as set forth in Section 3.06(b) of Seller Disclosure
Schedule or as explicitly contemplated by this Agreement, since the Balance
Sheet Date there has not been any damage, destruction or loss, whether or not
covered by insurance, with respect to the Businesses or Purchased Assets or the
properties or assets of any Transferred Subsidiary having a replacement cost of
more than $2,000,000 for any single loss or $5,000,000 for all such losses.
Except as set forth in Section 3.06(b) of Seller Disclosure Schedule, since the
Balance Sheet Date, the Businesses have been conducted in all material respects
in the ordinary course of business consistent with past practices and none of
the following has occurred or arisen with respect to any of the Businesses or
the Purchased Assets:
(i) To the Knowledge of Parent and the Sellers, any event,
occurrence or development which, individually or in the aggregate, has had or
would reasonably be expected to have a Seller Material Adverse Effect;
(ii) To the Knowledge of Parent and the Sellers, any
Liability of any nature (other than items incurred in the ordinary course of
business consistent with past practices and that do not exceed in the aggregate
$2,000,000);
(iii) Any material increase in (or experience of any
change in the assumptions underlying or the methods of calculating) any bad
debt, contingency, or other reserve, other than in the ordinary course of
business consistent with past practices;
27
(iv) Any material payment, discharge or satisfaction of
any Encumbrance or Liability other than in the ordinary course of business
consistent with past practices;
(v) The writing off as uncollectible of any account
receivable in excess of $2,000,000 other than in the ordinary course of business
consistent with past practices;
(vi) Any material compromise with respect to debts, claims
or rights or disposal of any of its rights, properties or assets which comprise
the Purchased Assets other than in the ordinary course of business consistent
with past practices;
(vii) Any commitment, agreement or transactions other than
in the ordinary course of business consistent with past practices, involving
aggregate value in excess of $2,000,000 or made aggregate capital commitments in
excess of $2,000,000;
(viii) Any sale, assignment, transfer or other disposal or
Encumbrance of any material Purchased Asset (other than the Business Licensed
Intellectual Property outside of the Businesses), except sales of inventory in
the ordinary course of business consistent with past practices;
(ix) Any sale, license, assignment or transfer of any
Business Transferred Intellectual Property to any other person other than Buyer,
or any abandonment, lapse or Encumbrance of any material Business Transferred
Intellectual Property;
(x) Any material increase in salaries, wages or employee
benefits, or any arrangement for payment of any bonus or special compensation
for any employee or consultant other than in the ordinary course of business
consistent with past practices;
(xi) Any hiring, commitment to hiring or termination any
employee other than in the ordinary course of business consistent with past
practices;
(xii) Any material change in any method of accounting or
accounting principle, practice, or policy;
(xiii) Any act that could reasonably be expected to
subject any of the material Purchased Assets to any Encumbrance other than a
Permitted Encumbrance;
(xiv) Any termination or amendment of any Material
Contract (other than by the termination or expiration of such Material Contract
in accordance with its terms) or suffered any loss or termination or threatened
loss or termination of any Material Contract;
(xv) Any sale or other transfer, whether direct or
indirect, of any interest in the Businesses or any assets, rights and properties
of the Businesses (that would be Purchased Assets if the Closing occurred on the
Agreement Date) except sales of inventory in the ordinary course of business
consistent with past practices; or
(xvi) Any agreement, commitment or offer, whether in
writing or otherwise, to take any action described in this Section 3.06(b).
28
(c) To the Knowledge of Parent and the Sellers and except (i)
as set forth in any section of the Seller Disclosure Schedule, (ii) as may have
been incurred in the ordinary course of business, or (iii) as will be included
in the calculation of the Closing Working Capital, there are no material
Liabilities or Indebtedness affecting the Businesses or the Purchased Assets
that are not reflected in or reserved against in the most recent Business
Financial Statements (including the notes thereto).
SECTION 3.07. Litigation. (a) Except as set forth in Section 3.07 of
Seller Disclosure Schedule, and except with respect to Taxes, which are the
subject of Section 3.13, there is no material Action pending or, to the
Knowledge of Parent and Sellers, threatened, against or affecting a Transferred
Subsidiary, the Businesses or the Purchased Assets, including any material
Action relating to any injury or alleged injury to person or property, or
economic damages, as a result of any product manufactured, distributed or sold
by the Businesses, nor is there any material written demand or letter of any
Governmental Authority or any Governmental Order outstanding against, or, to the
Knowledge of Parent and Sellers, investigation by any Governmental Authority
involving, a Transferred Subsidiary, the Businesses or the Purchased Assets. As
of the Agreement Date, no Action by or against Parent or any of its Affiliates
is pending, or to the Knowledge of Parent and Sellers, threatened in writing,
that would reasonably be expected to affect the legality, validity or
enforceability of this Agreement or the Ancillary Agreements or prevent the
consummation of the transactions contemplated hereby or thereby.
(b) Section 3.07(b) of the Seller Disclosure Schedule sets
forth an accurate, correct and complete list and summary description of all
material threatened (in writing) or existing claims, lawsuits or charges of
discrimination arising from or alleged to arise from the employment of any
Business Employees.
SECTION 3.08. Compliance with Laws. (a) Except with respect to
Environmental Laws, the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), Taxes and regulatory compliance, which are the subjects of
Sections 3.09, 3.12, 3.13, and 3.15, respectively, each of the Transferred
Subsidiaries and the Businesses is in compliance in all material respects with
all Laws and Governmental Orders applicable to it, its properties or other
assets or its business or operations.
(b) Each of the Transferred Subsidiaries and the Businesses has
in effect all material approvals, clearances, authorizations, certificates,
filings, franchises, licenses, notices, permits, and Registrations of or with
all Governmental Authorities (collectively, "Permits"), including all Permits
under the Federal Food, Drug and Cosmetic Act of 1938, as amended (including the
rules and regulations promulgated thereunder, and the FDA's published policies
and guidelines, the "FDCA") or any foreign counterpart thereof, necessary in any
material respect for the Transferred Subsidiaries and the Businesses to own,
lease or operate its properties and other assets and to carry on its activities
and operations as currently conducted in each jurisdiction in which the
Businesses currently manufacture, promote, distribute, sell or otherwise market
products. To the Knowledge of Parent and Sellers, all material Permits are in
full force and effect, and no such Permit contains or relies upon any untrue
statement of material fact. Except as set forth on Section 3.08(b) of the Seller
Disclosure Schedule, since January 1, 2006, there has not occurred any material
default under, or material violation of, any such Permit (or, if the Permit is
newly issued to a Subsidiary, the predecessor permit held by an Affiliate of the
29
Subsidiary). The consummation of the transactions contemplated by this
Agreement, in and of itself, will not require the approval of any Governmental
Authority that has issued or authorized any material Permit and would not cause
or could not reasonably be expected to create grounds for the revocation or
cancellation of any material Permit.
SECTION 3.09. Environmental Matters. Except as set forth on Section
3.09 of the Seller Disclosure Schedule: (i) to the Knowledge of Parent and
Sellers each of the Transferred Subsidiaries and the Businesses is in material
compliance with all Environmental Laws, which compliance includes obtaining,
maintaining and materially complying with all material Permits required by
applicable Environmental Laws for the Transferred Subsidiaries and the
Businesses to own, lease or operate its Owned Business Real Property or Leased
Business Real Property and to carry on its activities and operations as
currently conducted (collectively, "Environmental Permits") and all of such
Environmental Permits are in full force and effect, (ii) there is no material
Action pending or, to the Knowledge of Parent and Sellers, threatened in
writing, against or affecting a Transferred Subsidiary, the Businesses or the
Purchased Assets alleging noncompliance with or liability under Environmental
Laws, nor is there any Governmental Order outstanding against, or, to the
Knowledge of Parent and Sellers, investigation by any Governmental Authority
involving, a Transferred Subsidiary, the Businesses or the Purchased Assets that
relates to or arises under Environmental Laws; (iii) during the period of
ownership or operation by Parent and its Affiliates of any of their current or
former Owned Business Real Property or Leased Business Real Property, there have
been no material Environmental Releases of Hazardous Materials in, on, under or
affecting any properties that would subject the Businesses or the Transferred
Subsidiaries to any material Liability under any Environmental Law or require
any material expenditure by the Transferred Subsidiaries or the Businesses for
remediation to meet applicable standards thereunder; (iv) prior to and after, as
applicable, the period of ownership or operation by Parent, and its Affiliates
of any of their current or former Owned Business Real Property or Leased
Business Real Property, to the Knowledge of Parent and Sellers, there were no
Environmental Releases of Hazardous Materials in, on, under or affecting any
properties that would subject the Transferred Subsidiaries or the Businesses to
any Liability under any Environmental Law or require any expenditure by the
Transferred Subsidiaries or the Businesses for remediation to meet applicable
standards thereunder; (v) none of the Businesses are subject to any indemnity
obligation or other contract with any Person relating to obligations or
Liabilities under Environmental Laws; and (vi) to the Knowledge of Parent and
Sellers, there are no facts, circumstances or conditions that would reasonably
be expected to form the basis for any material investigation, suit, claim,
action, proceeding or liability against or affecting a Transferred Subsidiary or
the Businesses relating to or arising under Environmental Laws. Parent has
provided to or otherwise made available to Buyer copies of all material
environmental, health or safety assessments, audits, investigations or reports
relating to any real property currently or formerly owned, operated or leased by
or for the Businesses or the Transferred Subsidiaries or the Businesses or the
Transferred Subsidiaries' compliance with or Liability under Environmental Laws
within the possession or control of Parent or any of its Affiliates. This
Section 3.09 constitutes all of the Parent's and Sellers' representations and
warranties with respect to Environmental Laws, Environmental Permits, Hazardous
Materials and other environmental matters and no other representations or
warranties by Parent or Sellers in this Agreement will be construed to apply to
any matter relating to Environmental Laws, Environmental Permits, Hazardous
Materials and other environmental matters.
30
SECTION 3.10. Intellectual Property. (a) Section 3.10(a) of the
Seller Disclosure Schedule sets forth, as of the Agreement Date, a complete and
accurate list (in all material respects) of all patents and applications
therefor, invention disclosures (as to the Cardiac Surgery Business only),
registered trademarks and applications therefor, domain name registrations and
copyright registrations (if any) that are included in the Business Intellectual
Property and are used in the conduct of the Businesses as currently conducted.
Except as set forth on Section 3.10(a) of the Seller Disclosure Schedule, all
material Business Intellectual Property is either (i) owned by Parent, a
Transferred Subsidiary or an Asset Seller free and clear of all Encumbrances
(other than Permitted Encumbrances), or (ii) licensed to Parent, a Transferred
Subsidiary or an Asset Seller with the right to grant or transfer a license of
substantially equivalent scope to Buyer and the Transferred Subsidiaries free
and clear (to the Knowledge of Parent) of all Encumbrances (other than Permitted
Encumbrances). Except as set forth on Section 3.10(a) of the Seller Disclosure
Schedule, all material Business Transferred Intellectual Property is owned by
Parent, a Transferred Subsidiary or an Asset Seller free and clear of all
Encumbrances (other than Permitted Encumbrances). Except as set forth on Section
3.10(a) of the Seller Disclosure Schedule, there are no material claims pending
or, to the Knowledge of Parent, threatened with regard to the ownership or
licensing by Parent, the Transferred Subsidiaries or the Asset Sellers of the
Business Intellectual Property. Except as set forth on Section 3.10(a) of the
Seller Disclosure Schedule, Parent, a Transferred Subsidiary or an Asset Seller
(i) owns, has valid title to, is validly licensed or otherwise has the right to
use all Business Intellectual Property, and (ii) has a right to freely transfer
the Business Transferred Intellectual Property (including by way of transfer of
the Transferred Subsidiaries) and freely license the Business Licensed
Intellectual Property as contemplated hereby without the consent of any third
party. Section 3.10(a)(i) of the Seller Disclosure Schedule sets forth, as of
the Agreement Date, all Contracts under which Parent, the Transferred
Subsidiaries or the Asset Sellers is obligated to make payments to third parties
for use of any Business Intellectual Property and for which such payments have
been in excess of $1,000,000 for any fiscal year of the Businesses for any
single product. The aggregate amount of all such payments that the Businesses
are obligated to make under any Contract of the type described in the
immediately preceding sentence that are not required to be disclosed pursuant to
such sentence did not exceed $5,000,000 for the year ended December 31, 2006.
Section 3.10(a)(ii) of the Seller Disclosure Schedule sets forth all material
contracts by which Business Intellectual Property is licensed to third parties
and by which Business Licensed Intellectual Property is licensed from third
parties, if any, and other than (A) standard customer or end-user licenses
granted by Parent or its Affiliates for use of the Businesses' products, (B)
commercial off-the-shelf software, and (C) licenses to distributors for sale by
them of the Businesses' products.
(b) Except as set forth in Section 3.10(b) of Seller Disclosure
Schedule, there are no pending or, to the Knowledge of Parent and Sellers,
material claims or Actions threatened in writing that the operation of the
Businesses has infringed or misappropriated or is infringing or misappropriating
(including with respect to the manufacture, use or sale by the Businesses of any
products or to the operations of the Businesses) any valid and enforceable
intellectual property rights of any Person that would be material to the
Businesses and to the Knowledge of Parent, there is no such infringement or
misappropriation of such rights. To the Knowledge of Parent and Sellers and
except as set forth in Section 3.10(b) of Seller Disclosure Schedule, as of the
Agreement Date, no Person has notified Parent or any of its Affiliates in
writing of any facts, circumstances or conditions that would reasonably be
expected to form the basis for any material
31
claim by such Person to exclude or prevent the Businesses from freely using its
material Business Intellectual Property.
(c) Except as set forth on Section 3.10(c) of the Seller
Disclosure Schedule, all patents required to be listed in Section 3.10(a) of the
Seller Disclosure Schedule that are owned by Parent or its Affiliates and are
material to or used in the operation of the Businesses as of the Agreement Date
have been duly registered and/or filed with or issued by the relevant
Governmental Authority, all necessary affidavits of continuing use have been
timely filed, all necessary maintenance fees have been timely paid to continue
all such rights in effect, and, to the Knowledge of Parent and Sellers, were not
procured improperly, have not been misused and are valid and enforceable. Except
as set forth in Section 3.10(c) of the Seller Disclosure Schedule, none of the
material patents required to be listed in Section 3.10(a) of the Seller
Disclosure Schedule that are owned by Parent or its Affiliates has expired or,
to the Knowledge of Parent and Sellers, been declared invalid or unenforceable,
in whole or in part, by any Governmental Authority. Except as set forth on
Section 3.10(c) of the Seller Disclosure Schedule, there are no material ongoing
interferences, oppositions, reissues, reexaminations or other proceedings
challenging any of the material patents or patent applications required to be
listed in Section 3.10(a) of the Seller Disclosure Schedule and owned by Parent
or its Affiliates for the benefit of the Businesses (or, to the Knowledge of
Parent and Sellers, challenging any such patents or patent applications owned by
third parties and licensed to the Businesses), including ex parte, inter partes,
or other post-grant proceedings, in the United States Patent and Trademark
Office or in any foreign patent office or similar administrative agency.
(d) To the Knowledge of Parent, Parent and its Affiliates have
used commercially reasonable efforts to maintain as confidential the material
trade secrets included in the Business Intellectual Property.
(e) The Business Intellectual Property includes all the
Intellectual Property of Parent and its Affiliates or licensed to Parent and its
Affiliates, in each case, that covers products sold by the Businesses as of the
Closing Date and there is no other material Intellectual Property owned by or
licensed to Parent or its Affiliates that is used in the operation of the
Businesses as currently conducted.
(f) Except as disclosed in Section 3.10(f) of the Seller
Disclosure Schedule, to the Knowledge of Parent and Sellers, no third party is
infringing upon or misappropriating any of the material Business Intellectual
Property in the Restricted Field in a way that could give rise to a material
claim for value.
(g) Parent has a policy requiring each employee who has or may
be expected to contribute to the creation of any Business Intellectual Property
owned by Parent or the Sellers to execute invention assignment agreements.
Except as disclosed in Section 3.10(g) of the Seller Disclosure Schedule, to the
Knowledge of Parent and the Sellers, all employees who have contributed to the
creation of any patents or patent applications within the Business Intellectual
Property owned by Parent or the Sellers have executed an invention assignment
agreement with Parent or the Sellers and also either: (i) are or were employees
of the Parent or the Sellers and created such item within the scope of their
employment; or (ii) have executed an assignment or an agreement to assign in
favor of Parent or the Sellers of all of their right, title, and interest in
32
their rights in and to such patents or patent applications within the Business
Intellectual Property. To the Knowledge of Parent and Sellers, no employee of
the Parent or the Sellers who has contributed to the creation of any Business
Intellectual Property is bound by any contractual obligation that restricts or
limits in any way the scope of the Business Intellectual Property or requires
the employee to transfer, assign, or disclose information concerning his work or
contribution in such intellectual property to anyone other than Parent or the
Sellers.
SECTION 3.11. Title; Real Property. (a) With respect to the Leased
Baytech Property, Section 3.11(a)(i) of the Seller Disclosure Schedule lists the
name of the Landlord, the date of the Occupancy Agreement and each amendment
thereto, the date of termination of the Occupancy Agreement and the aggregate
annual rental and other fees payable under the Occupancy Agreement. Section
3.11(a)(ii) of the Seller Disclosure Schedule contains an accurate and complete
list and description of the Owned Business Real Property.
(b) Each of Parent and each Asset Seller and Transferred
Subsidiary has valid fee simple title (subject to Permitted Title Encumbrances)
to, or valid leasehold or sublease interests or other comparable contract rights
in or relating to, all of its Owned Business Real Property or Leased Business
Real Property, as applicable, and other material tangible Assets necessary for
the conduct of the Businesses as currently conducted (subject to Permitted
Encumbrances).
(c) Each of Parent and each Asset Seller and Transferred
Subsidiary has complied in all material respects with the terms of all Occupancy
Agreements relating to Leased Business Real Property to which it is a party and
all Occupancy Agreements relating to Leased Business Real Property to which
Parent or any Asset Seller or Transferred Subsidiary is a party are in full
force and effect and to the Knowledge of Parent and the Sellers no default has
occurred under any such Occupancy Agreement. None of Parent or any Asset Seller
or Transferred Subsidiary has received any written notice of any event or
occurrence that has resulted or could result (with or without the giving of
notice, the lapse of time or both) in a material default with respect to any
Occupancy Agreement regarding the Leased Business Real Property.
(d) Parent has delivered or made available (or will promptly
after the Agreement Date make available) to Buyer for Buyer's inspection at the
Owned Business Real Property copies of all material documents in any Seller's
possession relating to the Owned Business Real Property: (i) all surveys and
appraisals; (ii) real and personal property tax bills for the previous three (3)
years; (iii) mechanical, electrical and structural plans and specifications,
including as-builts; (iv) warranties; (v) service contracts; (vi) reports of any
engineer's inspection of the structural aspects and mechanical systems of the
improvements; (vii) soils and geotechnical reports; (viii) reports, studies, and
assessments, test results or other documents relating to the environmental
condition; and (ix) audits, inspections or reports determining compliance (or
non-compliance) with applicable laws, including the Americans with Disabilities
Act.
(e) Parent has delivered or made available to Buyer complete
and accurate copies of each of the Occupancy Agreements relating to the Leased
Business Real Property or the Owned Business Real Property, including all
amendments and modifications thereto. None
33
of Parent or any Asset Seller or Transferred Subsidiary has assigned, leased,
subleased, licensed, transferred, conveyed, mortgaged, or encumbered its
interest (other than Permitted Title Encumbrances) in any of the Leased Business
Real Property or the Owned Business Real Property, except as set forth on
Section 3.11(e) of the Seller Disclosure Schedule. Except as set forth on
Section 3.11(e) of the Seller Disclosure Schedule, the transactions contemplated
by this Agreement do not require the consent of any party relating to the Leased
Business Real Property or the Owned Business Real Property.
(f) Except as set forth on Section 3.11(f) of the Seller
Disclosure Schedule, to the Knowledge of Parent and the Sellers, as of the
Agreement Date none of Parent or any Asset Seller or Transferred Subsidiary has
received written notice from any Governmental Authority that the Owned Business
Real Property or the Leased Business Real Property fails to comply with any Law
(including zoning, planning, and building code requirements) that remains
uncured as of the Agreement Date. There are no pending or, to the Knowledge of
Parent, threatened, condemnation proceedings against any of the Owned Business
Real Property or the Leased Business Real Property.
(g) To the Knowledge of Parent and the Sellers: (i) there are
no material structural or other defects in any of the improvements located on
the Owned Business Real Property; (ii) the heating, ventilation, air
conditioning, electrical, plumbing, water, storm drainage and sanitary sewer
systems that are servicing the Owned Business Real Property are in good
condition and in working order, and (iii) neither Parent nor any Seller has
received any notice alleging any material defect or deficiencies therein.
(h) To the Knowledge of Parent and the Sellers, there are no
material defaults under or with respect to any management, real estate, leasing
or rental commission, service, maintenance or other contracts of any kind or
description in existence relating to the Owned Business Real Property and no
conditions or facts which, with the passage of time or the giving of notice, or
both, would constitute such a material default on the part of any party thereto.
(i) To the Knowledge of Parent and the Sellers, the Owned
Business Real Property and all improvements thereon conform to and comply with
all easements, deed restrictions, restrictive covenants, building codes, zoning
restrictions and environmental laws, and any other law, ordinance, covenant,
restriction or regulation affecting the real property or improvements thereon in
all material respects; neither Parent nor any Seller has received any
notification from any governmental or public authority that any portion of the
Real Property is not in compliance with any existing fire, health, building,
handicapped persons, sanitation, use and occupancy or zoning laws to the extent
such laws are applicable to the Real Property in any material respect, or that
any material work is required to be done upon or in connection with the Owned
Business Real Property; the Owned Business Real Property is not dependent upon
any other parcel of real property for parking or open space in compliance with
any code, law, ordinance, statute, rule or regulation; the paved parking area
constructed on the Owned Business Real Property currently contains sufficient
number of spaces for parking of automobiles as required by applicable Law and
such area meets all requirements of any Governmental Authority having
jurisdiction over the Owned Business Real Property.
34
(j) The Owned Business Real Property is separately assessed for
real property tax assessment purposes and is not combined with any other real
property for such tax assessment purposes. Except as set forth on Schedule
3.11(j) to the Seller Disclosure Schedule, the Owned Business Real Property is
not subject to or affected by, and no Seller Party has received notice of any
contemplated or actual, re-assessments of the Owned Business Real Property or
any part thereof for general real estate tax purposes or special assessment
purposes. No assessments for public improvements, impact fees, contributions in
lieu of assessments or similar exactions have been made against the Owned
Business Real Property which remain unpaid.
(k) All public utilities (including, without limitation,
sanitary sewer, storm sewer, electricity, cable television, gas, water and
telephone) required for the operation of the Owned Business Real Property
(including any required to be provided by a Landlord under an Occupancy
Agreement), or any part thereof, are installed and operating.
(l) Parent will allow Buyer the right to obtain, at Buyer's
sole expense, an ALTA/ASCM survey of the Owned Business Real Property certified
to Parent or any Seller, Buyer and a title insurance company of Buyer's choosing
(the "Survey"). Prior to Closing, Buyer may elect to have the Survey recertified
in order to cause the certification date to be closer to the Closing Date and to
add any additional parties that may require a survey certification.
(m) There are no material management, leasing or rental
commission contracts of any kind or description in existence relating to the
Owned Business Real Property, except as set forth on Section 3.11(m) of the
Seller Disclosure Schedule, the terms of which will survive the Closing or would
constitute an obligation upon Buyer after the Closing.
(n) To the Knowledge of Parent and the Sellers, the Owned
Business Real Property is separately assessed for real property tax assessment
purposes and is not combined with any other real property for such tax
assessment purposes; the Owned Business Real Property is not subject to or
affected by, and no Seller has received notice of, any contemplated or actual,
re assessments of the Owned Business Real Property or any part thereof for
general real estate tax purposes or special assessment purposes; no assessments
for public improvements, impact fees, contributions in lieu of assessments or
similar exactions have been made against the Owned Business Real Property which
are delinquent; as of the date hereof, except as will be reflected in the
Closing Working Capital, all due and payable assessments, water charges, and
sewer charges affecting the Owned Business Real Property, are not delinquent,
nor are any assessments, payments and fees due under any of the Permitted Title
Encumbrances.
SECTION 3.12. Employee Benefit Matters. (a) Section 3.12(a) of the
Seller Disclosure Schedule contains a complete and accurate list, as of the
Agreement Date, of each bonus, pension, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock appreciation,
restricted stock, stock option, "phantom" stock, performance, retirement,
thrift, savings, stock bonus, paid time off, perquisite, fringe benefit,
vacation, severance, disability, death benefit, hospitalization, medical,
welfare or other benefit plan, program or policy maintained, contributed to or
required to be maintained or contributed to by Parent or any of the Asset
Sellers or Transferred Subsidiaries or any Commonly Controlled Entity of Parent
or any of the Asset Sellers or Transferred Subsidiaries (exclusive of any such
35
plan, program or policy mandated by and maintained solely pursuant to applicable
Law), in each case providing benefits to any current or former Business
Employee, officer, director, or independent contractor or any spouse, dependent
or beneficiary thereof (collectively, but exclusive of individual option and
restricted award agreements issued under the Company Stock Plans, the "Seller
Benefit Plans"). Section 3.12(a) of the Seller Disclosure Schedule identifies
the Seller Benefit Plans that are, respectively, Parent Plans or Subsidiary
Plans. Parent has caused to be made available to Buyer a true and complete copy
of (i) each Seller Benefit Plan or, with respect to any unwritten Seller Benefit
Plans, descriptions thereof), (ii) the two most recent annual reports on Form
5500 required to be filed with the IRS with respect to each Subsidiary Plan (if
any such report was required), (iii) the most recent summary plan description
for each Seller Benefit Plan for which such summary plan description is
required, (iv) each trust and insurance or group annuity contract relating to
any Subsidiary Plan and (v) the most recent determination letter issued by the
Internal Revenue Service relating to each Seller Benefit Plan (if applicable).
(b) Each Seller Benefit Plan has been administered in all
material respects in accordance with its terms and the requirements of all
applicable Laws. Each of Parent, a Transferred Subsidiary or an Asset Seller, as
the case may be, has performed all material obligations required to be performed
by it under, is not in any material respect in default under or in material
violation of, and Parent has no Knowledge of any material default or violation
by any other party to, any Seller Benefit Plan. No Action is pending or, to the
Knowledge of Parent, threatened with respect to any Seller Benefit Plan (other
than claims for benefits in the ordinary course) and, to the Knowledge of
Parent, no fact or event exists that could give rise to any such Action.
(c) All Seller Benefit Plans intended to be tax-qualified have
received favorable determination letters from the IRS to the effect that such
Seller Benefit Plans are qualified and exempt from Federal income taxes under
Sections 401(a) and 501(a), respectively, of the Code, no such determination
letter has been revoked (nor, to the Knowledge of Parent, has revocation been
threatened) and to the Knowledge of Parent, no event has occurred since the date
of the most recent determination letter or application therefor relating to any
such Seller Benefit Plan that would reasonably be expected to adversely affect
the qualification of such Seller Benefit Plan.
(d) Except as set forth on Section 3.12(d) of the Seller
Disclosure Schedule, neither Parent nor any Commonly Controlled Entity has,
during the six-year period ending on the Agreement Date, maintained, contributed
to or been required to contribute to any "defined benefit plan" (as defined in
ERISA Section 3(35) that is subject to Title IV of ERISA or Section 412 of the
Code. Neither Parent nor any Commonly Controlled Entity has at any time
maintained, contributed to or been required to contribute to any "multiemployer
plan" as defined in Section 3(37) or 4001(a)(3) of ERISA. Except as set forth on
Section 3.12(d) of the Seller Disclosure Schedule, neither Parent, nor any
Commonly Controlled Entity, has any liability under Title IV of ERISA. No
benefit plan sponsored or contributed to by Parent or any Commonly Controlled
Entity that is subject to minimum funding standards of Code Section 412 has an
"accumulated funding deficiency" as described in Code Section 412 and Section
302 of ERISA, whether or not waived. No benefit plan sponsored or contributed to
by Parent or any Commonly Controlled Entity has a "liquidity: shortfall," as
defined in Code Section 412. No
36
Lien exists or can be expected to exist under Code Section 412(n) or Section
302(f) of ERISA and no Tax has been imposed or can reasonably be expected to be
imposed under Code Section 4971 with respect to any Employee Benefit Plan
sponsored or contributed to by Parent or any Commonly Controlled Entity of
Parent. To the Knowledge of Parent, no condition exists that presents a material
risk to Parent, a Transferred Subsidiary or an Asset Seller of incurring a
material liability under Title IV of ERISA. The Pension Benefit Guaranty
Corporation has not instituted proceedings under Section 4042 of ERISA to
terminate any Seller Benefit Plan and, to the Knowledge of Parent, no condition
exists that presents a material risk that such proceedings will be instituted.
(e) All reports, returns and similar documents with respect to
all Seller Benefit Plans required to be filed with any Governmental Authority or
distributed to any Seller Benefit Plan participant have been duly and timely
filed or distributed in all material respects. None of Parent or any of the
Transferred Subsidiaries has received notice of, and to the Knowledge of Parent,
there are no investigations by any Governmental Authority with respect to,
termination proceedings or other claims (except claims for benefits payable in
the normal operation of Seller Benefit Plans), suits or proceedings against or
involving any Seller Benefit Plan or asserting any rights or claims to benefits
under any Seller Benefit Plan, and (iii) to the Knowledge of Parent, there are
not any facts that could give rise to any material liability in the event of any
such investigation, claim, suit or proceeding.
(f) All material contributions, premiums and benefit payments
under or in connection with any Seller Benefit Plans that are required to have
been made as of the Agreement Date in accordance with the terms of Seller
Benefit Plans and applicable Laws have been timely made or will be made in
accordance with applicable Law.
(g) There has not occurred any prohibited transaction (within
the meaning of Section 406 of ERISA or Section 4975 of the Code) in which
Parent, any Transferred Subsidiary or Asset Seller, or, to the Knowledge of
Parent, any trustee, administrator or other fiduciary of such Seller Benefit
Plan, or any agent of the foregoing, has engaged that could reasonably be
expected to subject any Transferred Subsidiary or Asset Seller to any material
tax or penalty on prohibited transactions imposed by Section 4975 of the Code or
the sanctions imposed under Title I of ERISA. None of the Parent, Transferred
Subsidiaries or Asset Sellers or, to the Knowledge of Parent, trustees,
administrators or other fiduciaries of any Seller Benefit Plan nor any agent of
any of the foregoing, has engaged in any transaction or acted in a manner, or
failed to act in a manner, that could reasonably be expected to subject any
Transferred Subsidiary or Asset Seller to any liability for breach of fiduciary
duty under ERISA or any other applicable Law.
(h) By its terms, each Seller Benefit Plan that is an "employee
welfare benefit plan" (as defined in Section 3(1) of ERISA) may be amended or
terminated (including with respect to benefits provided to retirees and other
former employees) at any time. Each of Parent and the Commonly Controlled
Entities complies in all material respects with the applicable requirements of
Section 4980B(f) of the Code, Sections 601-609 of ERISA or any similar state or
local Law with respect to each Seller Benefit Plan that is a group health plan,
as such term is defined in Section 5000(b)(1) of the Code or such state Law.
Except as set forth in Section 3.12(h) of the Seller Disclosure Schedule, none
of Parent, any Transferred Subsidiary or any
37
Asset Seller has any obligations for health or life insurance benefits following
termination of employment under any Seller Benefit Plan (other than for
continuation coverage required under Section 4980B of the Code or other
applicable Law). No Subsidiary Plan provides for health or life insurance
benefits following termination of employment (other than for continuation
coverage required under Section 4980B of the Code or other applicable Law).
(i) Except as set forth on Section 3.12(i) of the Seller
Disclosure Schedule, none of the execution and delivery of this Agreement or the
consummation of any transaction contemplated by this Agreement (alone or in
conjunction with any other event, including as a result of any termination of
employment on or following the Closing) will (i) entitle any current or former
Business Employee to severance or termination pay, (ii) accelerate the time of
payment or vesting, or trigger any payment or funding (through a grantor trust
or otherwise) of, compensation or benefits under, increase the amount payable or
trigger any other material obligation pursuant to, any Seller Benefit Plan, or
(iii) result in any breach or violation of, or a default under, any Seller
Benefit Plan.
(j) Neither Parent nor any of the Transferred Subsidiaries or
Asset Sellers has any material liability or obligations, including under or on
account of a Seller Benefit Plan, arising out of the hiring of persons to
provide services to the Businesses and treating such persons as consultants or
independent contractors and not as employees of the Businesses. No current or
former independent contractor that provides or provided personal services to the
Businesses (other than a current or former director) is entitled to any material
fringe or other benefits (other than cash consulting fees) pursuant to any plan,
program, policy or contract to which Parent, any Transferred Subsidiary or any
Asset Seller is a party or which is maintained, sponsored or contributed to by
Parent, any Transferred Subsidiary or any Asset Seller.
(k) Since January 1, 2004, to the Knowledge of Parent and the
Sellers, the Businesses have not experienced any union organization attempts by
one or more of its employees and/or by agents of a labor union. From the date of
the Balance Sheet through the Agreement Date, there has not been any adoption,
material amendment or termination by Parent or any of its Affiliates of any
collective bargaining or other labor union contract to which Parent or any of
its Affiliates is a party or by which Parent or any of its Affiliates is bound
and affecting the Business Employees or the Transferred Subsidiaries. As of the
Agreement Date, none of the Business Employees are represented by any union with
respect to their employment by Parent, a Transferred Subsidiary or an Asset
Seller. Except as set forth in Section 3.12(k) of the Seller Disclosure
Schedule, there are no collective bargaining agreements or other labor union
contracts to which Parent or any of its Subsidiaries is a party or by which
Parent or any of its Subsidiaries is bound relating to the employment of
Business Employees. Since January 1, 2004, with respect to the Businesses, none
of Parent, a Transferred Subsidiary or an Asset Seller has experienced any
material labor disputes, union organization attempts or work stoppages,
slowdowns or lockouts due to labor disagreements.
(l) Except as set forth in Section 3.12(l) of the Seller
Disclosure Schedule, none of the Business Employees has suffered an "employment
loss" (as defined in WARN and any similar Law) during the ninety (90) days prior
to the Agreement Date.
38
(m) As of the Agreement Date, none of the Business Employees
are represented by any labor organization, and to the Knowledge of Parent, there
are no representation proceedings or petitions seeking a representation
proceeding with the National Labor Relations Board or other labor relations
tribunal or other organizing activity presently pending or, to the Knowledge of
Parent, formally threatened to be brought or filed with respect to Business
Employees.
(n) Except as set forth in Section 3.12(n) of the Seller
Disclosure Schedule, to the Knowledge of Parent, none of the Business Employees
is restricted or otherwise limited in any material respect by reason of the
Immigration Reform and Control Act or his or her status thereunder from being
employed by the Buyer and any Transferred Subsidiary as of and after the
Agreement Date.
(o) Except as set forth in Section 3.12(o) of the Seller
Disclosure Schedule, no Subsidiary Benefit Plan is subject to Section 409A of
the Code (each such plan required to listed in Section 3.12(o) of the Seller
Disclosure Schedule, a "Deferred Compensation Plan"). Each Deferred Compensation
Plan materially complies in good faith with Section 409A of the Code and the
regulations issued thereunder as of the time of this Agreement. Neither the
Parent nor the Sellers have, since October 3, 2004, (i) granted to any person an
interest in any Deferred Compensation Plan which interest has been or, upon the
lapse of a substantial risk of forfeiture with respect to such interest, will be
subject to the tax imposed by Section 409A(a)(1)(B) or (b)(4)(A) of the Code, or
(ii) materially modified the terms of any Deferred Compensation Plan in a manner
that could cause an interest previously granted under such plan to become
subject to the tax imposed by Section 409A(a)(1)(B) or (b)(4) of the Code.
(p) Assuming the transfers contemplated by Section 6.02(b) are
effected prior to the Closing Date, Parent believes that the transactions
contemplated by this Agreement, in and of themselves, will not trigger any
severance obligations, or post-termination benefits, payable under the Guidant
CIC Plans solely as a result of consummation of the transactions contemplated
hereby absent a subsequent termination of employment of any Continuing Employee
following the Closing Date.
SECTION 3.13. Taxes. Except as set forth in Section 3.13 of the
Seller Disclosure Schedule:
(a) all income and other material Tax Returns required by
applicable Law to have been filed with any Taxation Authority by, or with
respect to, the Transferred Subsidiaries and the Purchased Assets have been
filed in a timely manner (taking into account any valid extension) in accordance
with all applicable Laws, and all such Tax Returns are true, correct and
complete in all material respects, and all Taxes shown to be due thereon have
been paid;
(b) the Sellers have made available all income Tax Returns of
the Transferred Subsidiaries for all Tax periods ending on or after December 31,
2005;
(c) immediately prior to the Closing, each Transferred
Subsidiary will be properly treated, for United States federal income tax
purposes, as a partnership or as an entity disregarded as separate from its
owner pursuant to Treasury Regulations Section 301.7701-3;
39
(d) there are no Encumbrances for Taxes on any of the Interests
or the Purchased Assets other than for Taxes not yet due and payable;
(e) Sellers (with respect to the Purchased Assets and the
Businesses) and the Transferred Subsidiaries have complied with all applicable
Laws relating to the withholding and payment over of Taxes;
(f) no written notification has been received by Parent or its
Affiliates that any audit, examination or similar proceeding is pending,
proposed or asserted with regard to any Taxes or Tax Returns of any Transferred
Subsidiary; no Seller has received any written claim by a Taxation Authority in
a jurisdiction where a Transferred Subsidiary does not file Tax Returns to the
effect that that Transferred Subsidiary is or may be subject to taxation in that
jurisdiction (it being understood that a "nexus questionnaire" or similar
inquiry by a Taxation Authority shall not constitute a written claim described
in this representation);
(g) none of the Transferred Subsidiaries is a party to or bound
by any Tax sharing agreement or Tax indemnity agreement, arrangement or practice
(including any advance pricing agreement, closing agreement or other agreement
relating to Taxes with any Taxation Authority, but excluding contracts with
vendors, landlords, and other non-Affiliates whose principal purpose is not to
address Tax matters);
(h) none of the Transferred Subsidiaries is subject to any
private letter ruling of the IRS or comparable rulings of other taxing
authorities that, in either such case, will be in effect following the Closing
Date; and
(i) none of the Transferred Subsidiaries has entered into a
"reportable transaction" within the meaning of Treasury Regulations Section
1.6011-4(b)(1).
Except as expressly set forth in Section 3.12, this Section 3.13 constitutes all
of Parent's representations and warranties with respect to Taxes, and no other
representation or warranty in this Agreement shall be construed to apply to any
matter relating to Taxes.
SECTION 3.14. Material Contracts. (a) Except as set forth in Section
3.14(a) of the Seller Disclosure Schedule and except for Contracts relating to
the sale of products and services to customers in the ordinary course of the
Businesses, neither Parent nor any of its Affiliates is a party to, and none of
the Assets are subject to, any written Contract (or to the Knowledge of Parent
and the Sellers, any oral Contract) related to the Businesses that is in any of
the following categories (each contract identified in clauses (i) through
(xvii), a "Material Contract"):
(i) Contracts with Parent or any Affiliate thereof or any
current or former officer or director of Parent or any of its Affiliates, other
than such Contracts that will be terminated prior to Closing without liability
or that are otherwise immaterial in amount or significance;
(ii) Contracts with any labor union or association
representing any employee of the Businesses or any of the Transferred
Subsidiaries;
40
(iii) Contracts (A) for the sale of any of the Assets
having a value greater than $2,000,000, other than in the ordinary course of
business consistent with past practices or (B) for the grant to any Person of
any preferential rights to purchase any of the Assets;
(iv) Contracts for (A) joint ventures or partnerships or
(B) the sharing of profits (other than royalty or other licensing payments)
other than those that are immaterial in amount or significance;
(v) Contracts containing covenants not to compete with
respect to sale of products in any line of business or with any Person in any
geographical area other than (i) any Contracts with licenses in which the
license rights provided to or by the Business or Businesses are restricted
(whether limited to a particular field or jurisdiction or otherwise) and (ii)
any distributor, reseller or other similar Contracts that grants any exclusivity
provision or prohibits sales by the relevant manufacturer in particular
territories or markets served by the distributor or reseller;
(vi) Contracts relating to the acquisition (by merger, purchase of stock or
assets or otherwise) by the Businesses of any operating business or material
assets or the capital stock of any other Person;
(vii) Contracts relating to the incurrence, assumption or
guarantee of any Indebtedness for borrowed money (A) in excess of $1,000,000 for
any fiscal year or giving rise to the imposition of an Encumbrance (other than
Permitted Encumbrance) on any of the Assets or (B) in excess of $50,000 to which
any employee or consultant is party;
(viii) purchase Contracts giving rise to Liabilities of
the Businesses or any of the Transferred Subsidiaries in excess of $2,000,000
for any fiscal year;
(ix) Contracts (A) providing for payments by or to the
Businesses or any of the Transferred Subsidiaries in excess of $1,000,000 for
any fiscal year during the term thereof, or (B) under which Intellectual
Property is licensed by, to or on behalf of the Businesses, the termination of
which would reasonably be expected to have a Seller Material Adverse Effect;
(x) Contracts obligating the Businesses or any of the
Transferred Subsidiaries to (A) supply or purchase products or services for a
period of one year or more or (B) requiring the Businesses or any of the
Transferred Subsidiaries to purchase or sell a stated portion of requirements or
outputs, in each case in excess of $500,000 for any fiscal year, in each case,
and that are not cancelable without penalty or further payment and without more
than 60 days' notice (other than further payments during or for such 60-day
notice period);
(xi) Contracts under which the Businesses or any of the
Transferred Subsidiaries have made material advances or loans to any other
Person outside of the ordinary course of business;
(xii) Contracts for the employment of any individual on a
full-time, part-time or consulting or other basis providing annual base and
targeted bonus compensation in
41
excess of $200,000 and that are not cancelable without penalty or further
payment and without more than 60 days' notice (other than further payments
during or for such 60-day notice period);
(xiii) material management Contracts and Contracts with
independent contractors or consultants (or similar arrangements) that are not
cancelable without penalty or further payment and without more than 60 days'
notice (other than further payments during the 60-day notice period);
(xiv) outstanding stand-alone Contracts solely for
purposes of guaranty, surety or indemnification (i.e., not including Contracts
with such provisions ancillary to the principal purposes of such Contract),
direct or indirect, by the Businesses or any of the Transferred Subsidiaries,
other than any such Contracts entered into in connection with the entry into
customer Contracts in the ordinary course of business consistent with past
practices;
(xv) Contracts (or a group of Contracts related to such
Contract, as in the case of a master Contract structure) which (A) involve the
committed expenditure by the Businesses of more than $2,000,000 in the aggregate
for any fiscal year or (B) require performance by the Businesses more than two
years from the Agreement Date, in each case that are not cancelable without
penalty or further payment and without more than 60 days' notice (other than
further payments during the 60-day notice period); and
(xvi) Contracts set forth on Section 3.10(a)(i) and
Section 3.10(a)(ii) of the Seller Disclosure Schedule.
(b) Each of the Material Contracts is in full force and effect
and is the legal, valid and binding obligation of Parent or any of its
Affiliates which is party thereto, and, to the Knowledge of Parent and the
Sellers, of the other parties thereto enforceable against each of them in
accordance with its terms and, upon consummation of the transactions
contemplated by this Agreement, shall, except as otherwise stated in Section
3.14(b) of the Seller Disclosure Schedule, continue in full force and effect
without material penalty or other material adverse consequence.
(c) Parent has delivered or made available to the Buyer
complete and correct copies of all Material Contracts, together with all
amendments, modifications or supplements thereto.
(d) Except as set forth in Section 3.14(d) of the Seller
Disclosure Schedule, no consent of any third party is required under any
Material Contract as a result of or in connection with, and the enforceability
of any Material Contract will not be affected in any material manner by, the
execution, delivery and performance of this Agreement, any of the Ancillary
Agreements or the consummation of the transactions contemplated hereby or
thereby.
(e) Except as set forth in Section 3.14(e) of the Seller
Disclosure Schedule, none of Parent or any of its Affiliates is in default in
any material respect under any Material Contract, nor, to the Knowledge of the
Parent, is any other party to any Material Contract in breach of or default in
any material respect thereunder, and no event has occurred that with the lapse
of time or the giving of notice or both would constitute a breach or default in
any material respect of Parent or any of its Affiliates or any other party
thereunder. No party to any of the
42
Material Contracts has exercised any termination rights with respect thereto,
and no party has given notice of any material dispute with respect to any
Material Contract.
(f) Parent represents that (i) the provisions of that certain
Corporate Integrity Agreement, dated June 30, 2003, between the Office of the
Inspector General of the Department of Health and Human Services and
Endovascular Technologies, Inc. (the "CIA"), that pertain to Endovascular
Technologies, Inc. ("EVT") do not apply to Buyer or the Businesses and Buyer is
not responsible for any such provisions of the CIA, and (ii) the CIA does not
apply to the Vascular Surgery Business as currently conducted.
SECTION 3.15. Regulatory and Product Matters. Except as set forth in
Section 3.15 of the Seller Disclosure Schedule:
(a) Each product of the Businesses is being is being developed,
designed, manufactured, tested, distributed, marketed and/or sold in material
compliance with all applicable requirements under the FDCA, and all applicable
rules and regulations of the FDA and similar Law of any foreign, federal, state
or local Governmental Authority performing functions similar to those performed
by the FDA, including, without limitation, any Law relating to establishment
registration, device listing, investigational use, premarket clearance or
marketing approval, quality systems regulation, good manufacturing practices,
labeling, advertising, promotion, continuing medical education, record keeping,
training, medical device reporting, adverse event reporting, filing of other
reports and security. Except as set forth in Section 3.15(a) of the Seller
Disclosure Schedule, none of Parent or its Affiliates has received any written
notice or other written communication from the FDA or any other Governmental
Authority (i) contesting or objecting to the premarket clearance or approval of,
the uses of or the labeling and promotion of any products of the Businesses in
any material respect, or (ii) otherwise alleging any material violation of any
Law applicable to any product of the Businesses, except for such matters as have
been resolved to the satisfaction of the applicable Governmental Authority. A
copy of all corporate warning letters related to the Businesses received by
Parent or its Affiliates, and all correspondence to or from the FDA regarding
the same, has been provided to Buyer and is set forth on Section 3.15(a) of the
Seller Disclosure Schedule. No corporate warning letter that Parent or any of
its Affiliates has received, or to which Parent or any of its Affiliates is
subject, has had or would reasonably be likely to have a Seller Material Adverse
Effect. All corporate warning letters, including without limitation, FDA Warning
Letters, Notices of Violation, Notices of Inspectional Observation (Form FDA
483), Notices of Adverse Findings, Section 305 Notices, subpoenas, Unacceptable
Determinations under the Government-Wide Quality Assurance Program (GWQAP), or
other similar communication or correspondence related to the Businesses,
including correspondence from any Governmental Authority, received by Parent or
its Affiliates or to which Parent or any of its Affiliates is subject, are set
forth on Section 3.15(a) of the Seller Disclosure Schedule, and copies of all
such communications have been provided or made available to Buyer. All such
communications have been responded to by Parent and the Sellers to the extent
required to date, and none would, individually or in the aggregate, be
reasonably likely to have a Seller Material Adverse Effect.
(b) Except as set forth in Section 3.15(b) of the Seller
Disclosure Schedule, while no product of the Businesses is currently subject to,
or under consideration by management
43
of Parent or its Affiliates for recall, recovery, withdrawal, suspension,
seizure or discontinuance, or has been recalled, recovered, been subject to a
product advisory notice, withdrawn, suspended, seized or discontinued (other
than for commercial or other business reasons) by, Parent, a Transferred
Subsidiary or an Asset Seller in the United States or outside the United States
(whether voluntarily or otherwise), in each case since January 1, 2004, Parent
is continuously engaged in monitoring and trending its Medical Device Reports
(MDRs) and tracking and evaluating these products with regard to such matters.
Parent and the Sellers have not received written notice or written communication
of any ongoing proceedings of any Governmental Authority that seek the recall,
recovery, withdrawal, suspension, seizure or discontinuance of any product of
the Businesses against Parent, a Transferred Subsidiary or an Asset Seller or
any licensee of any products of the Businesses, and, to the Knowledge of Parent
and Sellers, no such proceedings are under consideration by any Government
Authority.
(c) As to each product of the Businesses for which a premarket
approval application, premarket notification, investigational device exemption
or similar state or foreign regulatory application has been cleared or approved,
the Businesses are in material compliance with 21 U.S.C. ss.ss. 360, 360e and
306j and 21 C.F.R. Parts 807, 812, and 814, and all similar Laws and all terms
and conditions of such licenses or applications. In addition, with respect to
the Businesses, Parent, Sellers and their respective Affiliates are in material
compliance with all applicable registration and listing requirements set forth
in 21 U.S.C. ss. 360 and 21 C.F.R. Part 807, Medical Device Reporting
requirements set forth in 21 C.F.R. 803 and all similar Laws. None of Parent, a
Transferred Subsidiary, the Asset Sellers or their respective Affiliates have
failed to file with the applicable Government Authorities in respect of the
products of the Businesses any material required filing, declaration, listing,
registration, report or submission; all such filings, declarations, listings,
registrations, reports or submissions were in material compliance with all
applicable Laws when filed, and no deficiencies have been asserted by any
Governmental Authority with respect to such filings, declarations, listings,
registrations, reports and submissions that have not been resolved.
(d) To the Knowledge of Parent and the Sellers, any clinical,
pre-clinical and other studies and tests conducted by or on behalf of or
sponsored by Parent or its Affiliates related to the Businesses were and, if
still pending, are being conducted in accordance in all material respects with
Good Clinical Practices and applicable Laws. To the Knowledge of Parent and the
Sellers, there are no other studies or tests the results of which contain any
significant or material inconsistencies with Parent's or its Affiliates' studies
or tests or otherwise call into question the safety or efficacy of any of the
products of the Businesses. None of Parent or its Affiliates have received any
written notices or other written correspondence from any Governmental Authority
performing functions similar to those performed by the FDA with respect to any
of these ongoing clinical or per-clinical studies requiring the termination,
suspension or material modification of such studies or tests.
(e) To the Knowledge of Parent and the Sellers, no article of
any product of the Businesses is (i) adulterated within the meaning of 21 U.S.C.
ss. 351 (or similar Law) in any material respect, (ii) misbranded within the
meaning of 21 U.S.C. ss. 352 (or similar Law) in any material respect, or (iii)
a product that is in material violation of the FDCA, including 21 U.S.C. ss. 360
or ss. 360e (or similar Law), nor would any such product be considered so under
any similar Law in any foreign jurisdiction. No product of the Business is a
"banned device" within the
44
meaning of the FDCA Act, 21 U.S.C. ss. 360f (or similar Law), nor, to the
Knowledge of the Seller, any similar Law in any foreign jurisdiction.
(f) Each product of the Businesses that has been introduced,
imported, or otherwise introduced into commerce, in any jurisdiction other than
the U.S., or is being developed by the Businesses with the intent that it be so
introduced, satisfies, in all material respects, the statutory definition of
"device" under the applicable jurisdiction. To the extent that any product of
the Businesses does not meet the statutory definition of "device," and such
product is otherwise subject to regulation under Law similar to the FDCA in any
foreign jurisdiction, such product is being developed, manufactured, tested,
distributed, marketed and/or sold in material compliance with all applicable Law
similar to the FDCA in any foreign jurisdiction. Each product introduced into a
jurisdiction outside the U.S. not as a "device" is identified on Section 3.15(f)
of the Seller Disclosure Schedule and the status of such product under all
applicable Law similar to the FDCA in such foreign jurisdiction is set forth
therein.
(g) With respect to the Businesses, none of Parent or its
Affiliates, nor, to the Knowledge of Parent and the Sellers, any officer,
employee or agent of Parent or any of its Affiliates, has made an untrue
statement of a material fact or fraudulent statement to the FDA or any other
Governmental Authority, failed to disclose a material fact required to be
disclosed to the FDA or any other Governmental Authority, or committed an act,
made a statement, or failed to make a statement that could reasonably be
expected to provide a basis for the FDA or any other Governmental Authority to
invoke its policy respecting "Fraud, Untrue Statements of Material Facts,
Bribery, and Illegal Gratuities," set forth in 56 Fed. Reg. 46191 (September 10,
1991) or any similar policy.
(h) With respect to the Businesses, none of Parent or its
Affiliates, nor, to the Knowledge of Parent and Sellers, any officer, employee
or agent of Parent or any of its Affiliates, has been convicted of any crime or
engaged in any conduct for which debarment is mandated by 21 U.S.C. ss. 335a(a)
or any similar Law or authorized by 21 U.S.C. ss. 335a(b) or any similar Law.
With respect to the Businesses, none of Parent or its Affiliates, nor, to the
Knowledge of Parent and Sellers, any officer, employee or agent of Parent or its
Affiliates has been convicted of any crime or engaged in any conduct for which
such Person or entity could be excluded from participating in the federal health
care programs under Section 1128 of the Social Security Act of 1935, as amended
(the "Social Security Act") or any similar Law.
(i) With respect to the Businesses, since January 1, 2004, none
of Parent or its Affiliates has received any written notice that the FDA or any
other Governmental Authority has (i) commenced, or threatened to initiate, any
action to withdraw its approval or request the recall of any product of the
Businesses, (ii) commenced, or threatened to initiate, any action to enjoin
manufacture of any such product, or (iii) commenced, or threatened to initiate,
any action to enjoin the manufacture of any such product made at any facility
where any product of the Businesses is manufactured, tested or packaged. Except
as set forth in Section 3.15(i) of the Seller Disclosure Schedule, with respect
to the Businesses, to the Knowledge of Parent and Sellers, neither FDA nor any
other Governmental Authority has withheld or delayed, clearance processing or
approval of any premarket notification or premarket approval application, or any
amendment or supplement thereto, for any product of the Businesses, nor has FDA
nor any other
45
Governmental Authority failed to process requests for clearance or approval for
foreign governments for any such product.
(j) With respect to the Businesses, none of Parent or its
Affiliates, nor to the Knowledge of Parent and the Sellers, any officer,
employee or agent of Parent or any of its Affiliates, has engaged in any
activities that are prohibited under 42 U.S.C. ss. 1320a-7b, or 31 U.S.C. ss.ss.
3729-3733 (or other Laws related to false or fraudulent claims) or similar Laws
related to soliciting or receiving any remuneration (including any kickback,
bribe or rebate), directly or indirectly, overtly or covertly, in cash or in
kind or offering to pay or receive such remuneration (i) in return for referring
an individual to a person for the furnishing, or arranging for the furnishing
of, any item or service for which payment may be made in whole or in part by
Medicare or Medicaid or other federal healthcare programs, or (ii) in return for
purchasing, leasing, or ordering or arranging for or recommending purchasing,
leasing, or ordering any good, facility, service or item for which payment may
be made in whole or in part by Medicare or Medicaid or other federal healthcare
programs, or similar Laws of any country in which the Businesses sell their
products or transact any business.
(k) With respect to the Businesses, Parent or its Affiliates
have all material Permits necessary to the conduct of the Businesses consistent
with past practices in all jurisdictions where the Businesses are currently
conducted.
(l) Except as set forth in Section 3.15(l) of the Seller
Disclosure Schedule, to the Knowledge of Parent and Sellers, there are no facts,
circumstances or conditions that would reasonably be expected to form the basis
for any investigation, suit, claim, action or proceeding against or affecting
the Businesses relating to or arising under (i) the FDCA or (ii) the Social
Security Act or regulations of the Office of the Inspector General of the
Department of Health and Human Services, or similar Governmental Authorities of
any foreign jurisdiction.
SECTION 3.16. Product Warranty; Rebates. (a) Parent has furnished or
made available to Buyer complete and correct copies of the standard terms and
conditions of sale for each of the products or services of the Businesses
(containing applicable guaranty, warranty and indemnity provisions). All
products developed, licensed, distributed, shipped or sold in the Businesses by
Parent or the Sellers, and any services rendered by them, have been in material
conformity with all express warranties made by the Parent and Sellers. To the
Knowledge of Parent and the Sellers, no material liability exists or will arise
for repair, replacement or damage in connection with such sales or deliveries,
in excess of the reserve therefor reflected in the Business Financial
Statements. Except for the written warranties set forth in the agreements
furnished or made available to Buyer, there are no legally binding warranties
(written or oral) granted by the Parent or any Seller with respect to the
products or services sold, licensed or provided in the Businesses.
(a) Parent has furnished or made available to Buyer complete
and correct copies of the standard rebate form for each of the products or
services of the Businesses.
SECTION 3.17. Assets; Title to Assets; Sufficiency.
46
(a) The Asset Sellers represent all of the Affiliates of
Parent, other than a Transferred Subsidiary, that own, lease, control or hold a
license or otherwise have a right to use the Purchased Assets.
(b) The Asset Sellers own and have good title to each of the
Purchased Assets, free and clear of all Encumbrances other than Permitted
Encumbrances.
(c) Except as set forth in Section 3.17 of the Seller
Disclosure Schedule, assuming sufficient liquidity is available to Buyer and its
Affiliates, and the availability of a sufficient workforce of Continuing
Employees, to the Knowledge of Parent, the Assets, together with the Lease
Agreement, the Sublease Agreement and the services offered by Parent as set
forth on Section 3.17(c) of the Seller Disclosure Schedule (it being
acknowledged that Buyer has elected not to contract with Parent to act as its
international distributor) to be provided under the Ancillary Agreements (and
assuming performance by Buyer and its Affiliates of their responsibilities under
such Ancillary Agreements), are sufficient for Buyer to continue to conduct the
Businesses immediately after the Closing Date in all material respects in the
ordinary course of business, as such Businesses are being conducted by Parent
and its Affiliates as of the Agreement Date (except for such changes in the
operation of such Businesses as are contemplated by the Ancillary Agreements).
This section is not intended to provide any representations, warranties or
assurances about the Assets included in the Closing Working Capital or regarding
Intellectual Property (which is addressed in Section 3.10), or the availability
or sufficiency of any insurance that may be held or maintained by the Parent and
its Affiliates for the benefit of the Businesses. Without otherwise limiting the
foregoing, no representations, warranties or assurances are given regarding any
future results or success of the Businesses following the Closing, and the
representations set forth in this Section 3.17 shall not be deemed to represent
a representation, warranty or other assurance of any anticipated or actual
future operating or financial performance of the Company for any period
following the Closing, including as a result of events, facts or circumstances
occurring after the Closing, whether or not anticipated prior to the Closing,
the operation of the Businesses in any manner other than the manner in which
such Businesses are operated by Parent as of the Agreement Date or the
sufficiency of any Assets for any period following the moment immediately
following the Closing.
(d) Except as set forth in Section 3.17(d) of the Seller
Disclosure Schedule, none of the Shared Assets is, individually or in the
aggregate, material to the operation of the Businesses as currently conducted
consistent with past practice.
(e) None of the Parent Investments is primarily used in, or
primarily held for use by, the Businesses. Except as set forth on Section
3.17(e) of the Seller Disclosure Schedule, no entity in which Parent or any of
its Affiliates owns a Parent Investment has any material operational
relationship with the Businesses or, to the Knowledge of Parent and the Sellers,
engages in any competing business with the Businesses. All of the Parent
Investments are minority interests constituting not more than 20% of the voting
power with respect to any entity constituting a Parent Investment (other than
Cardica Inc.) and no such entity constituting a Parent Investment (including
Cardica Inc.) is an Affiliate of Parent or of any of Parent's Affiliates.
47
SECTION 3.18. Brokers. Parent will be solely responsible for the fees
and expenses of any broker, finder or investment banker entitled to any
brokerage, finder's or other fee or commission and all fees and disbursements of
attorneys and other advisors in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Parent, and in no
way will such fee or expense be deemed an Asset or Assumed Liability or be a
liability of the Businesses.
SECTION 3.19. Books and Records. The Books, Records and Files of the
Businesses within the Assets to be conveyed to Buyer are true and correct in all
material respects and have been maintained in accordance with reasonable
business practice given the structure and contractual relationships involving
Parent's business and taking into account the relative size and scope of the
Businesses as compared to Parent's business taken in the aggregate.
SECTION 3.20. Customers and Suppliers. To the Knowledge of Parent and
Sellers, none of Parent or any of its Affiliates has received any notice since
January 1, 2006 that any significant customer or supplier of the Businesses,
taken as a whole, (i) has terminated, or will terminate its relationship with
the Businesses, (ii) has substantially reduced or will substantially reduce, the
use of products, goods or services of the Businesses, including in each case
after the consummation of the transactions contemplated hereby, or (iii) in the
case of any supplier, has materially adversely changed the pricing of its
products, goods or services used by the Businesses.
SECTION 3.21. Insurance. Set forth in Section 3.21 of the Seller
Disclosure Schedule is a list of all material third-party insurance policies
(other than any Parent Plans or Subsidiary Plans) held by or applicable to the
Businesses or the Transferred Subsidiaries setting forth, in respect of each
such policy, the policy name carrier, term, type and amount of coverage and
annual premium. Excluding insurance policies that have expired and been replaced
in the ordinary course of business consistent with past practices, to the
Knowledge of Parent (i) no insurance policy of the Businesses has been cancelled
within the last two years and (ii) no threat has been made to cancel any
insurance policy of the Businesses or any of the Transferred Subsidiaries during
such period.
SECTION 3.22. Inventories. Substantially all of the inventories of
the Businesses and the Transferred Subsidiaries are in good and marketable
condition, and are saleable in the ordinary course of business consistent with
past practices, except for obsolete, excess, damaged, slow-moving or otherwise
unusable inventory, which to the extent existing at the date thereof, have been
written off or written down in the Business Financial Statements in a manner
consistent with past practice and in accordance with GAAP consistently applied.
The inventories of the Businesses and the Transferred Subsidiaries set forth in
the Business Financial Statements were valued at the lower of cost (on a FIFO
basis) or market and were properly stated therein in accordance with GAAP
consistently applied.
SECTION 3.23. Accounts and Notes Receivable and Payable. (a) All
accounts and notes receivable of the Businesses and the Transferred Subsidiaries
included in the Assets have arisen from bona fide transactions in the ordinary
course of business consistent with past practices, are payable on ordinary trade
terms.
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(b) All material accounts payable of the Businesses and the
Transferred Subsidiaries reflected in the latest balance sheet included in the
Business Financial Statements or arising after the date thereof are the result
of bona fide transactions in the ordinary course of business consistent with
past practices.
SECTION 3.24. Foreign Corrupt Practices Act.
(a) Except as set forth in Section 3.24 of the Seller
Disclosure Schedule, to the Knowledge of Parent and the Sellers, neither Parent
nor any Seller (including any of their respective offices, directors, agents,
distributors, or employees) has, directly or indirectly, with respect to the
Businesses, taken any action which would cause it to be in material violation of
the Foreign Corrupt Practices Act of 1977, as amended, or any rules or
regulations thereunder or any similar anti-corruption or anti-bribery Law
applicable to Parent or any Seller in any jurisdiction other than the United
States (in each case, as in effect at the time of such action) (collectively,
the "FCPA") or, to the Knowledge of Parent and the Sellers, in violation of the
FCPA, with respect to the Businesses (i) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity, (ii) made, offered or authorized any unlawful payment to
foreign or domestic government officials or employees, whether directly or
indirectly, or (iii) made, offered or authorized any unlawful bribe, rebate,
payoff, influence payment, kickback or other similar unlawful payment, whether
directly or indirectly, except for any of the foregoing which is no longer
subject to potential claims of violation as a result of the expiration of the
applicable statute of limitations.
(b) To the Knowledge of Parent and the Sellers, Parent and the
Sellers have at all times as to which the applicable statute of limitations has
not yet expired, conducted their import and export transactions with respect to
the Businesses materially in accordance with (x) all applicable United States
import, export and re-export controls, including the United States Export
Administration Act and Regulations and Foreign Assets Control Regulations and
(y) all other applicable import/export controls in other countries in which the
Parent or any Seller conducts business. Without limiting the foregoing and
solely with respect to the Businesses and except as set forth in Section 3.24 of
the Seller Disclosure Schedule:
(i) Parent and the Sellers have obtained, and are in
material compliance with, all export licenses, license exceptions and other
consents, notices, waivers, approvals, orders, authorizations, registrations,
declarations, classifications and filings with any Governmental Authority
required for (A) the export and re-export of products, services, software and
technologies and (B) releases of technologies and software to foreign nationals
located in the United States and abroad ("Export Approvals");
(ii) there are no pending or, to the Knowledge of Parent
and Sellers, threatened (in writing) claims against Parent or any Seller with
respect to such Export Approvals;
(iii) to the Knowledge of Parent and Sellers, there are no
actions, conditions or circumstances pertaining to Parent's or any Seller's
import or export transactions that may give rise to any future claims;
49
(iv) no Export Approvals with respect to the transactions
contemplated by this Agreement are required, or such Export Approvals can be
obtained in a reasonably timely manner without material cost;
(v) none of Parent, Sellers or any of their respective
Affiliates is a party to any Material Contract or bid with, or has conducted
business with (directly or indirectly), a third party located in, or otherwise
has any operations in, or sales to, Cuba, Iran, Syria or Sudan;
(vi) since January 1, 2003, neither Parent nor any Seller
has received written notice from a Governmental Authority making a claim or
allegation that has not otherwise been discharged, satisfied or properly
addressed, that Parent or any Seller was not in compliance with any applicable
Law relating to the export of goods and services to any foreign jurisdiction
against which the United States or the United Nations maintains sanctions or
export controls, including applicable regulations of the United States
Department of Commerce and the United States Department of State;
(vii) none of Parent, Sellers or any of their respective
Affiliates has made any voluntary disclosures to, or has been subject to any
fines, penalties or sanctions from, any Governmental Authority regarding any
past import or export control violations; and
(viii) Section 3.24(b)(viii) of the Seller Disclosure
Schedule sets forth the countries in which the Parent and the Sellers directly
derived revenue during the twelve (12) months ended December 31, 2006.
SECTION 3.25. Disclaimer. EXCEPT AS SET FORTH IN THIS AGREEMENT OR AS
MAY BE SET FORTH IN ANY ANCILLARY AGREEMENT OR THOSE CERTIFICATES AND
INSTRUMENTS DELIVERED BY PARENT OR ANY SELLER PURSUANT TO SECTIONS 2.06(a),
2.06(b), 2.06(d), 2.06(g), 2.06(h), 2.06(i), 2.06(j) and 2.06(k). NONE OF
PARENT, ITS AFFILIATES OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES
OR REPRESENTATIVES MAKE OR HAVE MADE ANY OTHER REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF PARENT, ITS AFFILIATES OR
THE BUSINESSES. ANY SUCH OTHER REPRESENTATION OR WARRANTY IS HEREBY EXPRESSLY
DISCLAIMED. IN PARTICULAR, NONE OF PARENT, ITS AFFILIATES OR ANY OF THEIR
RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES MAKE OR HAVE MADE
ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY,
IN RESPECT OF ANY INTERNAL OR PUBLISHED PROJECTIONS, FORECASTS OR REVENUE OR
EARNINGS PREDICTIONS FOR THE BUSINESSES.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Parent as follows:
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SECTION 4.01. Organization, Authority and Qualification. Buyer is a
corporation duly incorporated, validly existing and in good standing under the
Laws of the State of Delaware and has all necessary corporate power and
authority to enter into, execute and deliver this Agreement, the Ancillary
Agreements to which it is a party and any document, instrument or certificate
specifically contemplated by this Agreement or the Ancillary Agreements to which
it is a party, to carry out its obligations hereunder and to consummate the
transactions contemplated by this Agreement and the Ancillary Agreements to
which it is a party. The execution and delivery by Buyer of this Agreement and
the Ancillary Agreements to which it is a party, the performance by Buyer of its
obligations hereunder and thereunder and the consummation by Buyer of the
transactions contemplated hereby and thereby have been duly authorized by all
requisite corporate action on the part of Buyer. This Agreement has been, and
upon their execution each of the Ancillary Agreements to which Buyer is a party
will be, duly and validly executed and delivered by Buyer, and, assuming due
authorization, execution and delivery by each of the other parties hereto and
thereto, this Agreement is, and each of the Ancillary Agreements to which Buyer
is a party will be, a legal, valid and binding obligation of Buyer, enforceable
against it in accordance with its terms.
SECTION 4.02. No Conflict. Assuming that all consents, waivers,
approvals, orders, authorizations and other actions described in Section 4.02
have been obtained, all filings and notifications have been made and any
applicable waiting period has expired or been terminated, the execution,
delivery and performance by Buyer of this Agreement, and the execution, delivery
and performance by Buyer of the Ancillary Agreements to which it is a party, do
not and will not (a) violate, conflict with or result in the breach of the
certificate of incorporation or by-laws (or similar organizational documents) of
Buyer, (b) conflict with or violate any Law or Governmental Order applicable to
Buyer, (c) conflict with, result in any violation or breach of, constitute a
default (or event which with the giving of notice or lapse of time, or both,
would become a default) under, or give to others any rights of, or result in,
termination, cancellation or acceleration of any obligation or to the loss of a
material benefit under, or result in the creation of any Encumbrance in or upon
the properties or other assets of the Buyer's business under, any Contract to
which Buyer is a party, or to which any of its properties or other assets is
subject.
SECTION 4.03. Governmental Consents and Approvals. The execution,
delivery and performance by Buyer of this Agreement, and the execution, delivery
and performance by Buyer does not and will not require any consent, waiver,
approval or other order or authorization of, action by or in respect of, or
registration, declaration or filing with or notification to, any Governmental
Authority, except (a) to the extent applicable, the requirements of the HSR Act
and the antitrust Laws of any other relevant jurisdiction, (b) pursuant to ISRA,
or (c) any consent, approval or other order or authorization of, action by or in
respect of, or registration, declaration or filing with or notification to, any
Governmental Authority that are the responsibility of Parent, Transferred
Subsidiaries or Asset Sellers.
SECTION 4.04. Brokers. Buyer will be solely responsible for the fees
and expenses of any broker, finder or investment banker entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Buyer, and in no way will such fee or expense be deemed an Excluded
Asset or Excluded Liability.
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SECTION 4.05. Availability of Funds. Attached as Exhibit H hereto are
complete and accurate copies, as amended to date (including all attachments,
annexes and cover correspondence), of all commitment letters issued to Buyer in
connection with financing the transactions contemplated by this Agreement
(collectively, the "Commitment Letters"). As of the Agreement Date, the
Commitment Letters have not been amended or modified in any way and are in full
force and subject to no conditions (whether written or oral) other than as
specifically set forth in the Commitment Letters. The Commitment Letters do not
contain a condition to the Buyer obtaining financing relating to satisfactory
completion of due diligence by the lenders named therein. The Buyer has no
Knowledge that the lenders named in the Commitment Letters do not intend to
provide the financing covered by such Commitment Letters on the terms specified
therein (the "Committed Financing"). The Committed Financing will provide Buyer
with sufficient immediately available funds, in cash (when combined with Buyer's
existing cash, if any), to pay the Cash Purchase Price at the Closing. Buyer
will have sufficient immediately available funds, in cash, to pay the Cash
Purchase Price.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Businesses.
(a) Parent's Conduct. From the Agreement Date until the
Closing, Parent shall, and shall cause each of its Affiliates related to the
Businesses to, comply with the terms of this Agreement to the extent applicable
to them and to conduct the Businesses in the ordinary course consistent with
past practice and use its commercially reasonable efforts to:
(i) preserve intact the Businesses, the Purchased Assets
and Business Intellectual Property;
(ii) maintain in effect all of the material Permits;
(iii) keep substantially available the services of all of
the material Business Employees;
(iv) provide, and cause its officers, directors,
employees, and agents to provide to Buyer and its advisors reasonable access to
facilities and information in accordance with this Agreement;
(v) continue to make appropriate capital expenditures with
respect to the Businesses in the ordinary course of business consistent with
past practice;
(vi) maintain the material Purchased Assets in good and
useable condition and repair (ordinary wear and tear excepted), maintain
insurance reasonably comparable to that in effect on the Agreement Date,
maintain the inventory at customary operating levels consistent with past
practices, replace in accordance with past practices any inoperable, worn out or
obsolete material Purchased Assets with assets of comparable quality and, in the
event of a casualty, loss or damage to any material Purchased Assets prior to
the Closing, either fully repair or replace such Purchased Assets with assets of
comparable quality
52
and quantity or, if Buyer agrees, transfer any insurance proceeds with respect
thereto to Buyer at the Closing;
(vii) maintain the books and records of the Businesses in
all material respects accordance with past custom and practice as used in the
preparation of the Business Financial Statements;
(viii) maintain in full force and effect the existence of
and Parent's and/or any Seller's rights to any material Business Intellectual
Property;
(ix) comply in all material respects with all requirements
of Law and all material contractual obligations applicable to the Businesses and
pay all Taxes related to the Businesses as and when the same become due and
payable;
(x) give all required notices and seek all required
authorizations, approvals and consents, and seek or maintain all material
Permits, licenses and Registrations necessary or desirable to consummate the
transactions contemplated hereby and to permit Buyer to operate the Businesses
after the Closing;
(xi) maintain satisfactory relationships with the
customers, lenders, suppliers, licensors, licensees and distributors of the
Businesses; and
(xii) promptly inform Buyer in writing of any material
breach of the representations and warranties contained in Article III hereof of
which Parent and the Sellers become aware or any material breach of any covenant
hereunder by Parent or any Seller.
(b) Subject to applicable competition laws and, except for
matters expressly permitted or contemplated by this Agreement, any other
agreement or instrument being entered into in connection with this Agreement or
as set forth on Section 5.01 of the Seller Disclosure Schedule or required by
Law, Parent shall not, nor shall it permit any of its Affiliates to, do any of
the following in the conduct of the Businesses without the prior written consent
of Buyer, not to be unreasonably withheld, conditioned, or delayed:
(i) take any action, or permit any action to be taken, or
allow to occur any event or circumstance, listed in Section 3.06(b)(i) through
(xvi); and
(ii) acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof that are material,
individually or in the aggregate, to the Businesses, taken as a whole and that
would give rise to material continuing obligations on the part of the Businesses
following the Closing.
SECTION 5.02. Access to Information; Confidentiality. (a) From the
Agreement Date until the Closing, upon reasonable notice, Parent shall: (i)
afford Buyer and its authorized representatives (including financing sources
bound in writing to maintain the confidence of such information) reasonable
access to the Owned Real Property and the Leased Real Property and the offices,
properties and books and records of the Businesses, and (ii) furnish to the
officers, employees, and authorized agents and representatives of Buyer such
additional financial and
53
operating data, information pertaining to the Business Transferred Intellectual
Property and Business Licensed Intellectual Property (to the extent related to
the Businesses) including, but not limited to, all assignment records,
assignment agreements and prosecution histories of the Intellectual Property for
U.S. and foreign filings (but excluding access to any patent clearance
opinions), and other information regarding the Businesses (or copies thereof) as
Buyer may from time to time reasonably request; provided, however, that any such
access or furnishing of information shall be conducted at Buyer's expense,
during normal business hours, under the supervision of Parent's or its
Affiliates' personnel and in such a manner as not to interfere with the normal
operations of the Businesses. Notwithstanding anything to the contrary in this
Agreement, Parent shall not be required to disclose any information to Buyer if
such disclosure would be reasonably likely to (x) cause material competitive
harm to the Businesses if the transactions contemplated hereby are not
consummated, (y) jeopardize any attorney-client or other legal privilege or (z)
contravene any applicable Laws, fiduciary duty or binding agreement entered into
prior to the Agreement Date; provided, however, that Parent shall provide Buyer
with a confidential summary of the general nature and substance of any
information not disclosed to Buyer pursuant to the preceding clause (x) of this
sentence. In any such case, Parent will reasonably cooperate with Buyer to
develop a process by means of which as much of such information as possible can
be made available to Buyer without causing or being likely to cause any of the
consequences enumerated in the previous sentence; provided, that Parent is in no
way guaranteeing or assuring any level of success in developing or carrying out
any such process or that such information actually provided shall be complete or
will not fail to include such information as required to make the information
contained therein, in light of the circumstances, not misleading.
(b) The terms of the Confidentiality Agreement, dated as of
June 29, 2007, among Parent and Buyer (the "Confidentiality Agreement") are
hereby incorporated herein by reference and shall continue in full force and
effect until the Closing, at which time such Confidentiality Agreement and the
obligations of Buyer under this Section 5.02(b) shall terminate; provided,
however, that, from and after the Closing, except as would have been permitted
under the terms of the Confidentiality Agreement, (i) Buyer shall, and shall
cause its officers, directors, employees, representatives and Affiliates to,
treat and hold as confidential, and not disclose to any Person, information
related to the discussions and negotiations between the parties regarding this
Agreement and the transactions contemplated hereby and all confidential
information relating to Parent and the Excluded Businesses, and (ii) Parent
shall, and shall cause its officers, directors, employees, representatives and
Affiliates to, treat and hold as confidential, and not disclose to any Person,
information related to the discussions and negotiations between the parties
regarding this Agreement and the transactions contemplated hereby and all
confidential information relating to the Purchased Assets and the Businesses. If
this Agreement is, for any reason, terminated prior to the Closing, the
Confidentiality Agreement shall nonetheless continue in full force and effect in
accordance with its terms.
(c) Nothing provided to Buyer pursuant to Section 5.02(a) shall
in any way amend or diminish Buyer's obligations under the Confidentiality
Agreement. Buyer acknowledges and agrees that any Confidential Information (as
defined in the Confidentiality Agreement) provided to Buyer pursuant to Section
5.02(a) or otherwise by or on behalf of Parent or any officer, director,
employee, agent, representative, accountant or counsel thereof related to this
Agreement shall be subject to the terms and conditions of the Confidentiality
Agreement.
54
(d) After the Closing Date, Buyer shall (and shall cause its
Affiliates to) afford to Parent and its advisors, upon reasonable notice,
reasonable access, during normal business hours, to the Books, Records and Files
(including accountants' work papers) transferred by Parent or its Affiliates
pursuant hereto and relating to the Businesses for periods up to and including
the Closing Date that are conveyed to, and held by, Buyer and its Affiliates on
and after the Closing Date pursuant to the terms of this Agreement (and shall
permit such Persons to examine and copy such books and records to the extent
reasonably requested by such party). Buyer shall cause its advisors to furnish
such information described in the preceding sentence as may be reasonably
requested by Parent or its advisors solely for the determination of the Closing
Working Capital Statement and Working Capital True-Up Amounts pursuant to
Sections 2.04(b), (c), (d) and (e), and the resolution of any indemnification
obligations under Article X hereof; provided, that nothing in this Section
5.02(e) shall require Buyer or any of its Affiliates or advisors to furnish to
Parent or its advisors any materials prepared by Buyer's financial or legal
advisors or that were prepared by Buyer or its advisors prior to the Closing or
which may not be disclosed pursuant to a protective Order; and provided further,
that nothing in this Section 5.02(e) shall require Buyer or any of its
Affiliates or advisors to afford access to Books, Records and Files or provide
information if Buyer or its Affiliates are contractually or otherwise restricted
by a third party from doing so. Buyer shall, and shall cause its Affiliates to,
maintain all such Books, Records and Files, and shall not destroy or dispose of
any such Books, Records and Files, until the fourth (4th) anniversary of the
Closing Date.
SECTION 5.03. Regulatory and Other Authorizations; Notices and
Consents. (a) Each of Parent and Buyer shall (and each shall cause it respective
Affiliates to) use commercially reasonable efforts to obtain promptly all
authorizations, consents, orders and approvals of all Governmental Authorities
that may be or become necessary for the performance of its obligations pursuant
to, and the consummation of the transactions contemplated by, this Agreement.
Parent and Buyer will cooperate with one another in promptly seeking to obtain
all such authorizations, consents, orders and approvals. Neither Parent nor
Buyer shall knowingly take any action that would have the effect of materially
delaying, impairing or impeding the receipt of any authorizations, consents,
orders and approvals of any Governmental Authority; provided, however, that in
no way shall reasonable and timely negotiations in good faith by Buyer or Parent
with any applicable Governmental Authority in order to obtain such
authorization, consent, order or approval be deemed to constitute an act
materially delaying, impairing, or impeding the receipt of authorizations,
consents, orders and approvals of such Governmental Authority. Parent and Buyer
each agree to make, or to cause to be made, (i) an appropriate filing of a
notification and report form pursuant to the HSR Act and the antitrust Laws of
any other relevant jurisdiction and, where not prohibited by applicable Law
order of a Governmental Authority, seek early termination of any waiting period
thereunder, and (ii) any other filing or notification required by any other
applicable Law, in each case, with respect to the transactions contemplated by
this Agreement as promptly as practicable after the Agreement Date in the case
of the HSR Act, and in the case of the antitrust Laws of any other relevant
jurisdiction as promptly as reasonably practicable, and to supply promptly any
additional information and documentary material that may be requested pursuant
to the HSR Act and the antitrust Laws of any other relevant jurisdiction or any
other applicable Law. Notwithstanding anything to the contrary contained in this
Agreement (including pursuant to this Section 5.03(a)), in connection with any
filing or submission or action to be taken by either Parent or Buyer to effect
the transactions contemplated hereby, neither Parent, Buyer or any of their
respective
55
Affiliates shall be required pursuant to a Governmental Order of an antitrust or
competition nature to (x) divest or hold separate or otherwise take or commit to
take any action that materially limits its freedom of action with respect to, or
its ability to retain in all material respects, the Businesses (including the
Purchased Assets and the Transferred Subsidiaries) or any of the material
businesses, product lines or assets of Parent, Buyer or any of their respective
Affiliates, or (y) materially alter or restrict the material business or
commercial practices of the Businesses. From the Agreement Date until the
Closing, Buyer and each of its Affiliates shall not take any actions (other than
consummation of the transactions contemplated hereby) which could reasonably be
expected to result in Buyer or its Affiliates being required pursuant to a
Governmental Order of an antitrust or competition nature to (x) divest or hold
separate or otherwise take or commit to take any action that materially limits
its freedom of action with respect to, or its ability to retain in all material
respects, the Businesses (including the Purchased Assets and the Transferred
Subsidiaries) or any of the material businesses, product lines or assets of
Buyer or any of its Affiliates or (y) materially alter or restrict the material
business or commercial practices of the Businesses.
(b) Each party to this Agreement shall promptly notify the
other party of any material communication it or any of its Affiliates receives
from any Governmental Authority relating to the matters that are the subject of
this Agreement and permit the other party to review in advance any proposed
communication by such party to any Governmental Authority. Neither party to this
Agreement shall agree to participate in any meeting with any Governmental
Authority in respect of any filings, investigation or other inquiry related to
the transactions contemplated by this Agreement unless it consults with the
other party in advance and, to the extent permitted by such Governmental
Authority, gives the other party the opportunity to attend and participate at
such meeting. Subject to the Confidentiality Agreement, the parties to this
Agreement will coordinate and cooperate fully with each other in exchanging such
information and providing such assistance as the other party may reasonably
request in connection with the foregoing and in seeking early termination of any
applicable waiting periods including under the HSR Act and the antitrust Laws of
any other relevant jurisdiction. Subject to the Confidentiality Agreement, the
parties to this Agreement will provide each other with copies of all
correspondence, filings or communications between them or any of their
representatives, on the one hand, and any Governmental Authority or members of
its staff, on the other hand, with respect to this Agreement and the
transactions contemplated by this Agreement.
(c) With respect to the Owned Business Real Property, Parent
hereby agrees, at its sole cost and expense, to comply with all necessary
provisions of the ISRA with regard to the transfer of the Owned Business Real
Property to Buyer, and to use commercially reasonable efforts to either: (i)
file all necessary documentation (e.g., General Information Notice and
Preliminary Assessment Report) and to obtain from the New Jersey Department of
Environmental Protection ("NJDEP") prior to Closing, with respect to the Owned
Business Real Property, a written determination that no further action ("NFA")
is required under ISRA or, if applicable, approval by NJDEP of an ISRA Negative
Declaration submitted by Parent; or (ii) execute a Remediation Agreement with
and acceptable to NJDEP prior to Closing and, thereafter, to fully comply with
and perform under such Remediation Agreement (such NFA, Negative Declaration, or
Remediation Agreement shall be referred to herein as the "ISRA Determination").
56
(d) It is recognized by the parties hereto that certain
Environmental Permits listed in Section 3.05 of the Seller Disclosure Schedule
(Items 5(a) and (b)) useful or necessary for Buyer to operate the Businesses and
Real Property in its own name may or may not be transferred or reissued to and
in the name of Buyer prior to the Closing. The parties hereto agree to use
commercially reasonable efforts to effectuate a transfer of the material
Environmental Permits listed in Section 3.05of the Seller Disclosure Schedule
(Items 5(a) and (b)) to Buyer, to the extent allowed by applicable Environmental
Law, and in furtherance of such, Parent and Buyer agree to make written requests
for transfer or reissuance of such Environmental Permits, including, without
limitation, operating permits and plant establishment numbers, to the
appropriate Governmental Authorities prior to the Closing Date, in accordance
with all Environmental Laws or requirements of such Governmental Authorities.
Until the effective date of the transfer or reissuance of the material
Environmental Permits listed in Section 3.05 of the Seller Disclosure Schedule
(Items 5(a) and (b)) to Buyer, to the extent allowable under the Environmental
Laws or by the appropriate Governmental Authority, Parent hereby grants
permission to Buyer to use such Environmental Permits to carry out the
Businesses and own and operate the Real Property. The parties hereto acknowledge
that Parent and/or the Sellers will retain the Environmental Permits listed in
Section 3.05 of the Seller Disclosure Schedule (Item 5(c).
SECTION 5.04. Notifications. Each party hereto shall promptly notify
the other party in writing of any fact, change, condition, circumstance or
occurrence or nonoccurrence of any event of which it is aware that will or is
reasonably likely to result in (a) any representation or warranty made by such
party to be untrue or inaccurate in any material respect at any time after the
Agreement Date and prior to the Closing, (b) any material failure on such
party's part to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder, and (c) the failure of any
condition precedent set forth in Article VIII of this Agreement; provided,
however, that the delivery of any notice pursuant to this Section 5.04 shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
SECTION 5.05. Release of Indemnity Obligations. (a) Parent and Buyer
will cooperate with each other with a view to entering into arrangements
effective as of the Closing whereby (i) Buyer would be substituted for Parent or
its Affiliates (other than the Transferred Subsidiaries) in any guarantees,
letters of comfort, indemnities or similar arrangements entered into by Parent
or its Affiliates (other than the Transferred Subsidiaries) in favor of third
parties in respect of the Businesses (but only to the extent such guarantees,
letters of comfort, indemnities or arrangements constitute Assumed Liabilities)
and (ii) Parent or its Affiliates (other than the Transferred Subsidiaries)
would be substituted for the applicable Transferred Subsidiary in any
guarantees, letters of comfort, indemnities or similar arrangements entered into
by Parent or its Affiliates in respect of any other businesses of Parent (but
only to the extent such guarantees, letters of comfort, indemnities or
arrangements constitute Excluded Liabilities). If such substitution cannot be
effected in accordance with this Section 5.05, the guaranteeing party shall not
terminate such guaranty arrangements without the consent of the other party;
provided, however, that such party shall enter into a separate guaranty with the
other party or its Affiliates to guarantee the performance of the obligations of
the relevant Person pursuant to the contract underlying such guaranty
arrangements.
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(b) After the Closing, each of Parent and Buyer, at the request
of the other party, shall use, and shall cause their respective Affiliates to
use, commercially reasonable efforts to obtain any consent, substitution or
amendment required to novate or assign all Assumed Liabilities to Buyer and any
Excluded Liabilities to Parent or its Affiliates (other than the Transferred
Subsidiaries), and obtain in writing the unconditional release of Parent and its
Affiliates (other than the Transferred Subsidiaries) with respect to the Assumed
Liabilities and the unconditional release of Buyer and its Affiliates with
respect to the Excluded Liabilities.
SECTION 5.06. Trademarks; Website. (a) All Trademarks that are used
primarily in, or related primarily to, the Businesses and do not include the
name Boston Scientific Corporation or Guidant (i) to the extent that they are
owned by Parent and its Affiliates as of the Closing, shall constitute Assets to
be assigned to Buyer at the Closing, and (ii) to the extent that they are
licensed (with a right to sublicense) to Parent and its Affiliates by third
parties as of the Closing, shall be sublicensed or assigned, as permitted by
terms of the applicable master license, to Buyer at the Closing.
(b) Parent shall retain the ownership of any Trademarks that
are used both in the Businesses and any other business of Parent, that are not
used primarily in, or related primarily to, the Businesses and that do not
include the name Boston Scientific Corporation or Guidant (the "Non-Seller
Licensed Marks"), all of which are set forth on Section 5.06(b) of the Seller
Disclosure Schedule. At the Closing, Parent shall grant to Buyer and its
Affiliates, effective as of the Closing, a perpetual, non-terminable,
non-exclusive, worldwide and royalty free right, license and privilege to use
the Non-Seller Licensed Marks solely within the field of the Businesses. Except
as expressly provided in this Section 5.06, Buyer and its Affiliates shall have
no right to use in any way the Non-Seller Licensed Marks.
(c) Parent shall retain the ownership of the trade name Boston
Scientific Corporation and Guidant and any Trademarks that include the name
Boston Scientific Corporation or Guidant used in the Businesses as of the
Closing (the "Seller Licensed Marks" and, together with the Non-Seller Licensed
Marks, the "Licensed Marks"), all of which are set forth on Section 5.06(c) of
the Seller Disclosure Schedule, and, except as expressly provided in this
Section 5.06, Buyer and its Affiliates shall have no right to use in any way
Seller Licensed Marks.
(i) As soon as reasonably practicable after the Closing,
but in no event later than 180 days after the Closing, Buyer shall cease to use
and remove or cover the name Boston Scientific Corporation or Guidant from all
signs, billboards, telephone listings, stationary, office forms or other similar
materials of the Businesses, unless such use is required by a Governmental
Authority.
(ii) Subject to the terms and conditions contained herein,
Parent hereby grants to Buyer and its Affiliates, for a period of one (1) year
after the Closing, a non-exclusive, non-assignable, worldwide and royalty-free
license, right and privilege to use Seller Licensed Marks on any packages and
labels of the products of the Businesses ("Materials") used in the Businesses as
of the Closing for use solely within the Restricted Field by Buyer and its
Affiliates after the Closing.
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(d) Buyer, on behalf of itself and its Affiliates, acknowledges
and agrees that Parent is the owner of all right, title, and interest in and to
the Licensed Marks, and all such right, title, and interest shall remain with
Parent and its Affiliates. All rights to Licensed Marks not expressly granted to
Buyer and/or its Affiliates under this Agreement shall remain the exclusive
property of Parent and its Affiliates. Buyer shall not (and shall ensure its
Affiliates do not) otherwise contest, dispute, or challenge the right, title,
and interest of Parent and its Affiliates in and to the Licensed Marks. Buyer
shall not (and shall ensure its Affiliates do not) file applications to register
any Trademarks or apply for any domain names in any jurisdiction worldwide that
are (i) confusingly similar to any of the Licensed Marks or (ii) consist of, in
whole or part, any of the Licensed Marks. All goodwill and improved reputation
generated by Buyer's or its Affiliates' use of the Licensed Marks shall inure to
the benefit of Parent.
(e) Parent hereby agrees and acknowledges that its and its
Affiliates' use of the Licensed Marks immediately prior to the Closing on the
Materials fully complies with Parent's standard of quality for the use of the
Licensed Marks. If, after the Closing, Buyer changes the use of the Licensed
Marks on the Materials used in the Businesses, Buyer must submit samples of its
and its Affiliates' proposed use of the Licensed Marks to Parent prior to such
proposed use so Parent may review such use in accordance with the terms and
conditions of this Section 5.06. Parent may not unreasonably withhold, delay or
condition its consent to any changes in the use of the Licensed Marks on the
Materials by Buyer. If Parent does not provide any comments to Buyer within 15
Business Days of receiving such samples, Parent shall be deemed to have accepted
the changes proposed by Buyer.
(f) Effective upon the third (3rd) anniversary of the Closing,
Buyer and its Affiliates shall not use Seller Licensed Marks in connection with
the Businesses or otherwise.
(g) In connection with its acquisition of any website content
included in the Purchased Assets, Buyer hereby agrees to redesign such website
content to avoid any confusing similarity with Parent's and its Affiliates'
websites or website content.
SECTION 5.07. Further Action. (a) Each of Parent and Buyer shall (and
each shall cause each of its respective Affiliates to) use its commercially
reasonable efforts to take, or cause to be taken, all appropriate action, to do
or cause to be done all things necessary, proper or advisable under applicable
Law and the agreements included in the Assets, and to execute and deliver such
documents and other papers and any other agreements, as may be necessary to
carry out the provisions of this Agreement and consummate and make effective the
transactions contemplated by this Agreement, including, without limitation, to
effect the separation of the Businesses and the Assets from other assets or
other businesses of Parent and its Affiliates, including, to the extent
practicable, reasonable steps to divide Shared Assets that are divisible.
Notwithstanding the generality of the foregoing, Parent and its Affiliates shall
use its commercially reasonable efforts to give any notices to third-parties and
Governmental Authorities and exercise commercially reasonable efforts to obtain
all consents from Governmental Authorities and third parties with respect to
Contracts that constitute Assets, including all notices and consents listed on
Section 3.04 of the Seller Disclosure Schedule.
(b) To the extent that any of the transfers, distributions,
deliveries and the assumptions required to be made in connection with the
transactions contemplated by this
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Agreement shall not have been so consummated at Closing, and subject to the
terms of the Ancillary Agreements to the extent addressed thereby, the parties
shall cooperate and use their reasonable best efforts to effect such
consummation as promptly thereafter as reasonably practicable, including
executing and delivering such further instruments of transfer and taking such
other actions as the parties may reasonably request in order to effectuate the
purposes of this Agreement or to more effectively transfer to Buyer or confirm
Buyer's right, title to or interest in, the Businesses and all of the Assets, to
put Buyer in actual possession and operating control thereof and to permit Buyer
to exercise all rights with respect thereto (including rights under contracts,
Permits and other arrangements as to which the consent of any third party to the
transfer thereof shall not have previously been obtained). In the event and to
the extent that Parent or Buyer is unable to obtain any required consents with
respect to any Governmental Authorities or Contracts that constitute Purchased
Assets, Parent or the applicable Seller shall (i) continue to be bound thereby
pending assignment to Buyer, (ii) at the direction and expense of Buyer, pay,
perform and discharge fully all of its obligations thereunder from and after the
Closing and prior to assignment to Buyer, (iii) exercise or exploit its rights
and options under all such Contracts, leases, licenses and other rights and
commitments when and only as reasonably directed by Buyer, and (iv) without
further consideration therefor, pay, assign and remit to Buyer promptly all
monies, rights and other consideration received in respect of such Contracts or
otherwise make available to Buyer the benefit of such agreements as contemplated
by this Agreement, and subject in each case to the terms of the Ancillary
Agreements to the extent the same may apply; provided, however, that, without
limiting the representations and warranties made by Parent in Article III, none
of Parent nor any of its Affiliates shall be obligated to transfer or license to
Buyer any Business Intellectual Property licensed from third parties that,
despite the use by Parent and its Affiliates of such efforts, is incapable of
being transferred or licensed. If and when any such consent shall be obtained or
such agreement, lease, license or other right shall otherwise become assignable,
Parent or the applicable Seller shall promptly assign all its rights and
obligations thereunder to Buyer without payment of further consideration and
Buyer shall, without the payment of any further consideration therefor, assume
such rights and obligations.
(c) In the event that Buyer can demonstrate that certain
assets, rights or properties which properly constitute Assets were not
transferred to Buyer at Closing, then Parent shall promptly take all steps
reasonably necessary to transfer and deliver any and all of such Assets to Buyer
without the payment by Buyer of any further consideration therefor. In the event
that Parent can demonstrate that certain assets which do not properly constitute
Assets were transferred to Buyer at Closing (including, without limitation, by
way of transfer of the Transferred Subsidiaries), then Buyer shall promptly take
all steps reasonably necessary to transfer and deliver any and all of such
assets to Parent without the payment by Parent of any further consideration
therefor.
(d) Buyer shall use its best efforts to take, or cause to be
taken, all appropriate action, to do or cause to be done all things necessary,
proper or advisable to obtain financing (whether debt, equity or a combination
thereof) to provide Buyer with sufficient immediately available funds, in cash
(when combined with Buyer's existing cash, if any), to pay the Cash Purchase
Price at the Closing.
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SECTION 5.08. Intercompany Arrangements. (a) Prior to the Closing,
Parent shall, and shall cause its Affiliates to, terminate effective as of the
Closing all agreements or arrangements, written or unwritten, of any kind (other
than any Ancillary Agreements), between Parent or any of its Affiliates (other
than the Transferred Subsidiaries), on the one hand, and a Transferred
Subsidiary, on the other hand.
(b) Prior to the Closing, all intercompany receivables,
payables and loans between Parent or any of its Affiliates (other than the
Transferred Subsidiaries), on the one hand, and a Transferred Subsidiary, on the
other hand, shall be settled, capitalized, distributed or otherwise terminated,
with the result that there will not be intercompany receivables, payables and
loans between Parent or any of its Affiliates (other than the Transferred
Subsidiaries), on the one hand, and a Transferred Subsidiary, on the other hand,
after the Closing.
SECTION 5.09. Restructuring. (a) Prior to the Closing Date, Parent
shall, or shall cause the Transferred Subsidiaries to, (i) use commercially
reasonable efforts to take the actions described in Section 5.09 of the Seller
Disclosure Schedule for the purposes of distributing or otherwise transferring
from the Transferred Subsidiaries to Parent any Excluded Assets, Excluded
Liabilities and other assets which are not Assets. Notwithstanding the
provisions of Section 5.01(a) to the contrary, prior to or after the Agreement
Date and before the Closing Date, Parent shall be free to distribute or
otherwise transfer from the Transferred Subsidiaries to Parent or any of its
Affiliates any Parent Retained Intellectual Property.
(b) Prior to the Closing Date, Parent shall effect the LLC
Conversions with respect to all of the Transferred Subsidiaries, following which
each Transferred Subsidiary will be a limited liability company, treated, for
United States federal, state and local income Tax purposes, as a partnership or
as an entity disregarded as separate from its owner, pursuant to Treasury
Regulations Section 301.7701-3, and neither any party hereto nor any of its
Affiliates shall take any contrary position for any federal, state or local
income Tax purposes.
SECTION 5.10. Books, Records and Files. (a) Subject to Section
2.01(b) and the terms, if any, of the Ancillary Agreements relating to Books,
Records and Files, Parent shall transfer all Books, Records and Files, to the
extent primarily related to the Businesses and unless Parent or any of its
Affiliates is contractually or otherwise restricted by a third party from doing
so, to Buyer or its Affiliates at the Closing or as soon as practicable
thereafter, but may redact any information relating to the Excluded Businesses
or Excluded Assets from such Books, Records and Files. Subject to Section
2.01(b) and the terms, if any, of the Ancillary Agreements relating to Books,
Records and Files, to the extent that Books, Records and Files related to the
Businesses include information not primarily related to the Businesses, Parent
shall provide copies (but may retain the originals) to Buyer of such Books,
Records and Files at the Closing or as soon as practicable thereafter.
(b) Buyer shall return all Books, Records and Files of the
Transferred Subsidiaries to the extent exclusively or primarily used in, or
exclusively or primarily related to, the Excluded Businesses, to Parent or its
Affiliates at the Closing or as soon as practicable thereafter. Buyer may retain
copies of any Books, Records and Files returned to Parent pursuant to this
Section 5.10(b) to the extent used in, or related to, the Businesses (for its
use with respect to the Businesses). Buyer may redact any information used in,
or related to, the Businesses from
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any Books, Records and Files returned to Parent pursuant to this Section
5.10(b); provided, however, that such redaction shall not impair any information
related to the Excluded Businesses contained in such Books, Records and Files
and similar materials.
(c) Each party shall only be obligated to provide Books,
Records and Files pursuant to Section 5.10(a) in the form, condition and format
in which they exist as of the Closing, and in no event shall either party be
required to perform any improvement, modification, conversion, updating or
reformatting of any such Books, Records and Files.
SECTION 5.11. Accounts Receivable that are Excluded Assets. With
respect to all accounts receivable and other items of the Businesses that are
Excluded Assets, Buyer agrees to deliver promptly to Parent all cash, checks or
other funds or property received directly or indirectly by Buyer with respect to
such receivables and other items, including any amounts payable as interest.
SECTION 5.12. Non-Solicit. For a period of twenty-four (24) months
following the Closing Date, neither Parent and its Affiliates nor Buyer and its
Affiliates shall directly or indirectly recruit, solicit, induce, or attempt to
induce any of the employees or independent contractors of the other or the
other's Affiliates to terminate their employment or contractual relationship
with the other or the other's Affiliates; and shall not assist any other person
or entity to do so, or be a proprietor, owner, equityholder, member, investor
(except as a passive investor holding not more than 1% of the capital stock of a
publicly held company), lender, partner, director, manager, officer, employee,
consultant, or representative of any person or entity who does or attempts to do
so; provided, that the foregoing shall not preclude any party from hiring any
such employee or independent contractor who responds to any general
advertisements or solicitations that are not targeted specifically at employees
or independent contractors of the other party; provided further, that Buyer
shall be permitted during such twenty-four (24) month period to solicit for
employment with the Businesses following the Closing those of Parent's (or its
Affiliates') employees listed on Section 5.12 of the Seller Disclosure Schedule.
SECTION 5.13. Covenant Not to Sell Engage in Certain Competitive
Activities. (a) Except as otherwise provided in this Section 5.13 or unless
otherwise agreed to in writing by the Buyer, for a period commencing at and
contingent upon the occurrence of the Closing Date and ending on the fourth
(4th) anniversary of the Closing Date (the "Restricted Period"), none of Parent,
Sellers and their respective Affiliates shall, anywhere in the Territory, (i)
engage, directly or indirectly, as owner, manager, agent, licensor or joint
venturer in the ownership, management, operation or control of, any business or
entity that engages in the Businesses, (ii) acquire, develop or own any business
or entity engaged in the Businesses, or (iii) be a shareholder, holder of a
partnership interest in, member or equity holder of, exercise management control
over, or acquire or maintain any material interest in, any entity that engages
in the Businesses. Notwithstanding anything to the contrary in this Section
5.13, for purposes of clarification and without limiting Buyer's rights under
the Business Transferred Intellectual Property or its rights in the Business
Licensed Intellectual Property under the Seller Out-License Agreement, nothing
herein shall restrict the Parent, the Sellers and their respective Affiliates
from designing, developing, offering for sale and selling (or having any of the
same activities undertaken on their behalf) any medical devices intended for the
same or similar indications as are addressed by
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products being designed, developed, manufactured or sold by the Businesses to
the extent that such activities do not constitute engaging in the Businesses.
(b) Notwithstanding the provisions of paragraph (a) above,
during the Restricted Period, Parent, Sellers and their respective Affiliates
shall not be prohibited from (w) acquiring shares of capital stock or assets of
any other Person (an "Acquired Business") that has operations that would
otherwise be restricted under paragraph (a) or from continuing to operate such
Acquired Business (including within the Businesses) if the primary purpose or
effect of such acquisition transaction shall not be for Parent, the Sellers or
their respective Affiliates to engage in the Businesses, and the Parent and its
Affiliates comply with their obligations under paragraph (c) below; (x) holding
or maintaining or making any Parent Investments existing as of the Closing Date,
or making additional investments in the issuers of any Parent Investments
(whether pursuant to the exercise of pre-emptive rights or otherwise) to the
extent that such investments in such issuers of such Parent Investments do not
materially increase (individually or in the aggregate) the percentage ownership
of Parent and its Affiliates in the voting capital stock or other equity of such
issuer, or materially increase (individually or in the aggregate) the ability of
Parent or its Affiliates to control the operations or activities of such issuer;
(y) licensing, assigning or otherwise transferring any Intellectual Property to
which it has any rights to any Person (subject to its obligations under the
Buyer Out-License Agreement and Seller Out-License Agreement), outside the
Businesses, provided, that during the Restricted Period, Parent and its
Affiliates may license any Intellectual Property within the field of the
Businesses to any third party as may reasonably be required solely in connection
with the settlement or other disposition of a dispute involving Intellectual
Property or products of the Parent or its Affiliates or such third party, or (z)
acquiring or owning, directly or indirectly, not more than an aggregate of five
percent (5%) of any class of stock listed on a national securities exchange or
traded in any established over-the-counter market. Furthermore, the provisions
of paragraph (a) shall not apply to any operations or activities of an entity
that acquires, or otherwise combines with, Parent or any of its Affiliates in a
transaction, including the purchase of assets or capital stock, in which the
security holders of Parent or such Affiliate before such transaction do not own
a majority of the outstanding voting capital stock of the acquiring or resulting
entity in such transaction.
(c) In the event of an acquisition of an Acquired Business that
complies with the provisions of paragraph (b) above, the following provisions
shall apply:
(i) Parent shall promptly notify Buyer in writing of such
transaction and Buyer shall have a period of sixty (60) days from receipt of
such notice to notify Parent in writing of its election to make a written offer
to purchase the assets of that portion of the Acquired Business that is engaged
primarily in the Businesses (the "Competitive Portion"), provided that the
Competitive Portion shall not include, and the Buyer shall not be entitled to
make an offer to purchase, any assets of the Acquired Business that are
reasonably necessary to the operation of the balance of the Acquired Business.
During such sixty (60) day period Parent shall provide Buyer with reasonable
access to relevant materials, records and personnel and shall provide reasonable
assistance Buyer to facilitate Buyer's customary due diligence, provided, that
Buyer has entered into a confidentiality agreement with Parent in form
reasonably satisfactory to Parent relating to such materials and records, and
that Parent shall not be required to share with
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Buyer any information prepared or compiled by its legal or financial advisors or
that would otherwise be subject to privilege,
(ii) In the event that Buyer makes an offer to purchase
the Competitive Portion, then the Buyer and Parent shall negotiate in good faith
the terms of a purchase of the Competitive Portion by the Buyer for a period of
thirty (30) days (the "Exclusive Negotiation Period").
(iii) In the event that the Buyer and Parent are unable to
agreed on the terms of a purchase of the Acquired Business during the Exclusive
Negotiation Period, then the Buyer shall be entitled, at any time during the ten
(10) day period following the conclusion of the Exclusive Negotiation Period, to
request that the terms of the purchase of the Competitive Portion be submitted
to a Qualified Appraiser (as defined below) for resolution. The Qualified
Appraiser shall be required to determine the terms of the purchase of the
Acquired Business, which determination shall be required to submitted to Buyer
and Parent within thirty (30) days of the submission of such matter to the
Qualified Appraiser and, if within ten (10) days thereafter Buyer elects in
writing to proceed with the transaction, such determination shall be binding on
the Parent and the Buyer, and the Parent and the Buyer shall be required, to the
extent permitted by applicable law, to consummate the purchase and sale of the
Competitive Portion on the terms so determined in accordance therewith. In
making such determination, the Qualified Appraiser shall be required to (i)
adopt all of the terms and conditions of the definitive purchase agreement
relating to the purchase of the Acquired Business by Parent or its Affiliates,
except for the purchase price and for such terms and conditions that are clearly
inapplicable to the sale of the Competitive Portion, and (ii) determine the
purchase price for the Competitive Portion based on the value of such
Competitive Portion as an on-going concern, and shall be entitled to give
appropriate consideration to the purchase price paid by Parent for the Acquired
Business as a whole and the contribution of the Competitive Portion to the
business, assets and results of operations of the Acquired Business as a whole.
The fees and expenses of any Qualified Appraiser shall be paid by the Buyer.
(iv) In the event that the Buyer fails to give notice of
its election to make an offer to purchase the Competitive Portion of any
Acquired Business within sixty (60) days receipt of notice thereof, or to give
notice of its intention to have the terms of a purchase of the Competitive
Portion determined by a Qualified Appraiser within thirty (30) days of the
conclusion of an Exclusive Negotiating Period, or to give notice of its election
to go forward with the purchase of the Competitive Portion within ten (10) days
of any determination by a Qualified Appraiser, then the Parent and its
Affiliates shall have no further obligations under this paragraph (c) with
respect to such Acquired Business and Competitive Portion. Notwithstanding any
contrary determination by a Qualified Appraiser, unless otherwise agreed to by
the Parent and the Buyer, to the extent that the purchase of a Competitive
Portion requires any authorizations, consents, order and approvals of any
Governmental Authorities, or is otherwise subject to the review of any
Governmental Authority under applicable Law (including the HSR Act and any
antitrust, anticompetition or similar laws or regulations applicable to any
foreign Governmental Authority), each of the Parent and the Buyer shall be
required to use commercially reasonable efforts to obtain promptly all such
authorizations, consents, order and approvals. To the extent that Parent and
Buyer are not able to obtain all necessary authorizations, consents, order and
approvals of such Governmental Authorities within ninety
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(90) days following the execution of a definitive agreement relating to such
purchase of the Competitive Portion, despite the exercise of commercially
reasonable efforts in accordance with the preceding sentence, the Buyer's right
to purchase such Competitive Portion (including any definitive agreements
entered into in connection therewith) shall immediately terminate and Parent and
its Affiliates shall have no further obligation to sell such Competitive Portion
or any portion thereof to the Buyer.
(d) Parent, on behalf of itself and its Affiliates, and the
Sellers, on the one hand, and the Buyer, on behalf of itself and its Affiliates,
on the other hand, agree that it could be impossible or inadequate to measure
and calculate the damages from any breach of the covenants set forth in this
Section 5.13, and that Buyer and its Affiliates, on the one hand, or Parent, the
Sellers and their respective Affiliates, on the other hand, could be irreparably
harmed by any such breach. Accordingly, each of such parties hereby agrees that
if such party or any of their respective Affiliates breaches any provision of
this Section 5.13, the other parties hereto may seek, in addition to any other
right or remedy otherwise available under applicable law (including, but not
limited to, monetary damages), to obtain an injunction from a court of competent
jurisdiction restraining such breach or threatened breach and specific
performance of any such provision contained herein.
(e) For purposes of this Section 5.13, the following
definitions apply:
"Qualified Appraiser" shall mean, with respect to the purchase and
sale of a Competitive Portion, an investment bank of national standing with
extensive, recent experience in representing buyers and sellers of businesses in
the medical device industry of similar size and scope to the Competitive
Portion, and in the evaluation of the value of such businesses, that has been
mutually selected by the Buyer and Parent within thirty (30) days of delivery of
notice from the Buyer to the Parent of the Buyer's election to have the terms
and conditions of a purchase of a Competitive Portion determined by such entity,
provided, that to the extent that Buyer and Parent are unable to mutually agree
on such an investment bank within such thirty (30) day period, the Qualified
Appraiser with respect to such Competitive Portion shall be an investment bank
meeting the other qualifications specified in this paragraph that has been
selected pursuant to the following process. First, within three (3) business
days of the end of such thirty (30) day period, each of Buyer and Parent shall
nominate ten (10) investment banks also meeting such qualifications. To the
extent that one investment bank has been nominated by both of Buyer and Parent,
then such investment bank shall be the Qualified Appraiser. To the extent that
more than one investment bank has been nominated by both of Buyer and Parent,
then the investment bank whose name would appear first in an alphabetical
ordering of such investment banks by name shall be the Qualified Appraiser. In
the event that no investment bank has been nominated by both of Buyer and
Parent, then the parties shall immediately and, in an event within five (5) days
of delivery of their respective nominations, apply to the American Arbitration
Association for the designation of an investment bank meeting those
qualifications to serve as the Qualified Appraiser in accordance with the rules
of such organization.
"Territory" means any country in the world where the Parent and its
Affiliates are engaged in any respect in the Businesses on the Closing Date.
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SECTION 5.14. Cooperation with Financing. Parent shall (and shall
cause each of its Affiliates to) provide Buyer, upon reasonable notice, all
cooperation reasonably requested by Buyer, at Buyer's sole cost and expense and
subject to appropriate coverage through confidentiality agreements reasonably
acceptable to Parent in order to protect its and its Affiliates information, in
connection with the arrangement of financing of the Cash Purchase Price (the
"Financing") including by providing assistance in gathering information to be
used in connection with obtaining such Financing and by: (a) arranging direct
contact between prospective lenders and the key personnel of the Businesses; (b)
providing assistance in preparation of materials for rating agency
presentations, offering documents, confidential information memoranda, bank
information memoranda, prospectuses and other materials to be used in connection
with obtaining the Financing; (c) providing access and assistance to prospective
lenders in performing any audits or appraisals of assets in connection with the
Financing; and (d) furnishing Buyer as promptly as reasonably practicable with
financial and other pertinent information regarding the Businesses as may be
reasonably requested by Buyer in connection with the Financing. With respect to
any information and materials provided Parent and its Affiliates pursuant to
this Section 5.14, neither Parent nor any of its Affiliates makes any
representations or warranties (express or implied) as to the accuracy or
completeness of such information and materials disclosed hereunder; nor shall
Parent or any of its Affiliates be liable to any recipient of such material or
information for damages arising from the use of any such material or
information, whether from errors or omissions or otherwise.
SECTION 5.15. Corporate Integrity Agreement; Notice to FDA.
(a) Parent authorizes Buyer to seek the agreement of the Office
of Inspector General of the Department of Health and Human Services (the "OIG")
that, as of the Closing, the Business (Cardiac Surgery) shall no longer be
subject to the terms and provisions of the CIA; it being acknowledged that the
expectation of the parties hereto is that the OIG is unlikely to provide such an
agreement given the scheduled termination date of the CIA, June 30, 2008. Upon
Buyer's reasonable request, Parent shall consult with Buyer about such effort.
(b) From and after the Closing, with respect to its conduct and
operation of the Business , Buyer shall cause the Business to comply with the
terms and provisions of the CIA to the same extent as if it were a party thereto
unless and until such time as the Business are no longer subject to the CIA. For
the remaining term of the CIA, Parent shall consult with Buyer about existing
tools and training used by Parent and its Affiliates to comply with the terms of
the CIA.
(c) Promptly after the Agreement Date, the Parent shall notify
the New England Division of the FDA of the execution and delivery of this
Agreement and the pendency of the Transaction. In addition, promptly after the
Agreement Date, and in any event prior to the Closing Date, the Buyer shall
schedule a meeting with the New Jersey Division of the FDA to present the
Buyer's proposed quality systems and demonstrate the Buyer's ability to comply
with Quality Systems Regulations. Parent shall provide reasonable cooperation to
the Buyer in connection with its meetings with the New Jersey Division of the
FDA.
SECTION 5.16. Non-Assignable or Non-Transferable Licensed Technology
Rights. Certain non-assignable, non-transferable licensed technology rights are
listed on Section 5.16 of
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the Seller Disclosure Schedule. Buyer acknowledges that the licensed technology
rights listed on Section 5.16 of the Seller Disclosure Schedule are not freely
assignable without the permission of the respective licensor or vendor. Without
limitation of the obligations of Parent and its Affiliates pursuant to Section
5.07 of this Agreement, at the written request of Buyer, Parent agrees to
contact (or cause its Affiliates to contact) the licensor or vendor and use
commercially reasonable efforts to obtain a permitted transfer of the licensed
technology rights or obtain, in consultation with Buyer, a new, non-transferable
license for use by Buyer in the operation of the Businesses on such terms as are
reasonably satisfactory to Buyer. In that event, all fees and costs necessary to
transfer the licensed technology rights or to acquire a new license commensurate
therewith to Buyer, shall be paid by Buyer. Upon such transfer, Parent agrees
that all royalties, licensing fees and similar cost payable up to the effective
time for such licensed technology rights listed on Section 5.16 of the Seller
Disclosure Schedule shall be fully paid for use by Buyer in the operation of the
Businesses, it being understood that Buyer shall be responsible for any such
royalties, licensing fees and similar costs payable after the effective time
under the terms of the applicable licenses.
SECTION 5.17. Acquisition Proposals. Parent agrees that, from the
Agreement Date through the Closing Date (or the earlier termination of this
Agreement), neither it nor any Seller, nor any of their respective Affiliates
(including, for the avoidance of doubt, any of Parent's, any Seller's or any of
their respective Affiliates' officers or directors), shall, and shall cause
their respective employees, agents and representatives not to (and shall not
authorize any of them to) directly or indirectly: (i) solicit, initiate,
encourage, knowingly facilitate or induce any inquiry with respect to, or the
making, submission or announcement of, any Acquisition Proposal, (ii)
participate in any discussions or negotiations regarding, or furnish to any
Person any nonpublic information with respect to, or take any other action to
knowingly facilitate any inquiries or the making of any proposal that
constitutes or may reasonably be expected to lead to, any Acquisition Proposal,
(iii) approve, endorse or recommend any Acquisition Proposal, or (iv) enter into
any letter of intent or similar document or any contract, agreement or
commitment contemplating or otherwise relating to any Acquisition Proposal or
transaction contemplated thereby. Parent, Sellers, and their respective
Affiliates and their respective officers, directors, employees, agents and
representatives shall immediately cease any and all existing activities,
discussions or negotiations with any third parties conducted heretofore with
respect to any Acquisition Proposal. For purposes of this Section 5.17, an
"Acquisition Proposal" shall include any offer or proposal, relating to any
transaction or series of related transactions regarding the sale or other
disposition of the Businesses, whether by sale of assets, sale of equity,
merger, liquidation or otherwise.
SECTION 5.18. Bulk Transfer Act. Subject to Article VII and Sections
10.02(e) and 10.03(e), the parties hereby waive compliance with the any state
"Bulk Transfer Act," to the extent applicable to the transactions contemplated
hereby. Parent and Sellers shall indemnify Buyer with respect to such waiver as
an Excluded Liability.
SECTION 5.19. Retained Liabilities. Parent and Sellers covenant and
agree to pay or otherwise satisfy all Excluded Liabilities, as and when due.
SECTION 5.20. Risk of Loss. Parent and Sellers shall maintain all
risk of condemnation, destruction, loss or damage due to fire or other casualty
from the date of this
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Agreement until the Closing. If Buyer nonetheless elects to close, Sellers shall
remit all net condemnation proceeds or third party insurance proceeds to Buyer.
SECTION 5.21. Discharge of Liens. As soon as practicable after the
date hereof, but in no event later than the Closing, Parent and Sellers shall
use commercially reasonable efforts to ascertain (solely with respect to the
Transferred Subsidiaries in California and Boston Scientific Wayne Corporation
in New Jersey) and discharge all Encumbrances (other than Permitted
Encumbrances), if any, to which any of the Purchased Assets is subject with
respect to which Buyer has notified Parent in writing of the nature and extent
thereof.
SECTION 5.22. Transition Services Schedules. (a) The parties agree to
negotiate in good faith, in the period between the Agreement Date and the
Closing (and thereafter as required), the schedule of services to be provided
pursuant to the Transition Services Agreement. Subject to the terms of this
Agreement and the Transition Services Agreement, the parties agree it is their
mutual intent that Parent and its Affiliates continue to provide certain
transition services that are currently being provided to the Businesses by or
through Parent or its Affiliates (which may include, if necessary, the use of
Shared Assets or Excluded Assets) and that will be reasonably necessary to
continue to operate the Businesses, as they are currently conducted after the
Closing (the "Transition Services"), and that the offer of the provision of the
Transition Services was a material inducement to the Buyer to enter into this
Agreement and that the Buyer would not have entered into this Agreement absent
the offer of such Transition Services, provided, that the parties acknowledge
that it is the further intention of such parties that (i) such Transition
Services will only include services that are currently being provided by or
through Parent or its Affiliates to the Businesses (including the use of Shared
Assets or Excluded Assets which are currently used by the Businesses), (ii) the
necessity of the Transition Services will be determined with regard to the
reasonable ability of the Buyer to provide such services using its internal
resources in the United States (to the extent applicable), and the reasonable
availability of replacement services (and time and cost required to secure and
implement replacement services), (iii) Buyer replace all of such Transition
Services with its own internal services, or services provided by third parties,
as soon as reasonably practicable after the Closing; (iv) such Transition
Services shall be provided on the basis of Parent's cost for such items plus a
reasonable mark-up to be mutually agreed by the parties with reference to
similar arrangements regarding transitional services to facilitate a
transaction, and (v) the provision of such Transition Services not cause
unreasonable disruption of the remainder of Parent's businesses. Notwithstanding
the foregoing, the Transition Services shall not include any legal or marketing
services currently being provided to the Businesses.
(b) Each the Parent and Buyer shall appoint one individual who
shall serve as the contact person for the purpose of negotiating the schedules
of services to the Transition Services Agreement. Initially, the Parent
representative shall be Barry Allison and the Buyer representative shall be
Heribert Ballhaus. To the extent that the exact Transition Services, their
duration or pricing cannot be determined by a working group of the appropriate
persons and such representatives within thirty (30) days after the Agreement
Date, either Parent or Buyer may initiate a process under which Ulf Grunander
and Jim Gilbert would meet to discuss resolution of the discrete points referred
to them for a period of ten (10) days in an attempt to reach a joint resolution.
Such meetings may be in person or by telephone.
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(c) To the extent that Mr. Grunander and Mr. Gilbert are unable
to resolve any of the specific Transition Services, duration or pricing within
such thirty (30) day period, the determination of such dispute shall be resolved
by binding arbitration conducted by a single arbitrator with relevant experience
in transactions comparable to the transactions contemplated by this Agreement
and similar transition services, provided that if the parties cannot agree on an
arbitrator within fifteen (15) days after the end of such thirty (30) day
period, each party would nominate a single arbitrator with such qualifications
within five (5) days of the end of such fifteen (15) day period and those two
potential arbitrators would be required, within a further ten (10) day period,
to select a third arbitrator to make the determination. Such arbitration may
occur before or after the Closing, and the Closing would not be delayed in the
event of any dispute over the services, regardless of whether or not a dispute
resolution has commenced, provided, that any such arbitrator would be required
to resolve such dispute within a forty-five (45) day period following its
appointment. In resolving any dispute, the arbitrator shall take into account
the parties' intent regarding the Transition Services set forth in Section
5.20(a) above. Notwithstanding the foregoing, if the dispute between the parties
is regarding duration, pricing or other issues not impacting the scope of the
Transition Services to be provided, then the Parent shall continue to provide
the requested Transition Services on and after the Closing Date while such
dispute is being resolved pursuant to arbitration at the price previously
determined, unless the pricing is in dispute, in which case the Buyer shall
promptly pay the amount required to be paid for such services for such period
once finally determined. Similarly, if the dispute is regarding the scope of the
Transition Services to be provided, Parent shall provided all Transition
Services that are reasonably required by the Buyer to continue to operate the
Businesses on and after the Closing Date while such dispute is being resolved
pursuant to arbitration.
SECTION 5.23. Certain Payments. Parent shall pay the following
amounts to Buyer on the corresponding dates set forth in the table below:
AMOUNT PAYMENT DUE DATE
- -------------------------------- -----------------------------------------------
$22,200,000 On or before 30 days after the Closing Date
$9,250,000 On or before 60 days after the Closing Date
$5,550,000 On or before 90 days after the Closing Date
- -------------------------------- -----------------------------------------------
TOTAL: $37,000,000
SECTION 5.24. Embolic Beads/PTFE Supply.
(a) The parties agree to negotiate in good faith, in the period
between the Agreement Date and the Closing (and thereafter as required), an
agreement pursuant to which the Buyer would continue to provide to the Parent,
on an OEM basis substantially consistent with prior practices to the extent
performed by the Business Employees prior to the Closing, certain embolic bead
products currently used in the Embolic Beads Business, and ePTFE used in
Parent's Symbiot-related research and development projects, as such products are
more particularly described in Section 5.24 of the Seller Disclosure Schedule
(the "Supplied Products"). The parties agree it is their mutual intent that (i)
Buyer continue to provide such Supplied Products to the Parent after the Closing
on a basis substantially consistent with prior practice, and that Buyer's
willingness to continue to provide such Supplied Products after the Closing was
a material inducement to the Parent to enter into this Agreement and that the
Parent
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would not have entered into this Agreement absent Buyer's willingness to
continue to provide such Supplied Products, (ii) in manufacturing such Supplied
Products for Parent, Buyer shall adhere to the practices (including with respect
to quality standards) employed by Parent with respect to the Supplied Products
as of the Closing Date; (iii) such Supplied Products shall be provided to Parent
at a transfer price that reflects Buyer's cost plus a reasonable mark-up to be
mutually agreed by the Parties with reference to similar arrangements in the
market place, and (iv) the other terms of such manufacturing relationship shall
be commercially reasonable and based on custom in the medical device industry,
except to the extent inconsistent with any of the terms and provisions of this
Agreement.
(b) Each the Parent and Buyer shall appoint one individual who
shall serve as the contact person for the purpose of negotiating the definitive
agreement for the supply of the Supplied Products (the "Buyer Supply
Agreement"). Initially, the Parent representative shall be John Pedersen, and
the Buyer representative shall be Heribert Ballhaus. To the extent that the
Buyer Supply Agreement cannot be finalized by a working group of the appropriate
persons and such representatives within 30 days after the Agreement Date, either
Parent or Buyer may initiate a process under which Ulf Grunander and Jim Gilbert
would meet to discuss resolution of a set of discrete points referred to them by
the working group for a period of 10 days in an attempt to reach a joint
resolution of such points and completion of such definitive agreement. Such
meetings may be in person or by telephone.
(c) To the extent that Mr. Grunander and Mr. Gilbert are unable
to resolve any of the specific points referred to them within such thirty (30)
day period, the determination of such dispute shall be resolved by binding
arbitration conducted a single arbitrator with relevant experience in
transactions comparable to the transactions contemplated by this Agreement and
the manufacture and sale of medical devices on an OEM basis, provided that if
the parties cannot agree on an arbitrator within fifteen (15) days after the end
of such thirty (30) day period, each party would nominate a single arbitrator
with such qualifications within five (5) days of the end of such fifteen (15)
day period and those two potential arbitrators would be required, within a
further ten (10) day period, to select a third arbitrator to make the
determination. Such arbitration may occur before or after the Closing, and the
Closing would not be delayed in the event of any dispute over the terms and
conditions of the Buyer Supply Agreement, regardless of whether or not a dispute
resolution has commenced, provided, that any such arbitrator would be required
to resolve such dispute within a forty-five (45) day period following its
appointment. In resolving any dispute, the arbitrator shall take into account
the parties' intent regarding the supply of the Supplied Products set forth in
Section 5.24(a) above. Notwithstanding the foregoing, if the terms and
provisions of the Buyer Supply Agreement have not been finalized prior to the
Closing, then the Buyer shall continue to provide the Supplied Products to the
Parent on and after the Closing Date while such dispute is being resolved.
SECTION 5.25. Abbott Confidentiality. In order to enable access to
certain IT systems and applications and to allow Abbott Laboratories to provide
certain services, if necessary, directly to Buyer, which systems, applications
and services may be necessary for the ongoing operation of the Cardiac Surgery
Business following the Closing, Parent has negotiated that certain Agreement
Regarding Certain Transition Services, dated as of September 7, 2007, with
Abbott Laboratories. In order to avail itself of the benefits under that certain
Agreement Regarding Certain Transition Services and to enable Parent to deliver
certain of the Purchased
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Assets hereunder, Buyer is required to execute and deliver the form of Agreement
Regarding Buyer Direct Services attached as Exhibit A to that certain Agreement
Regarding Certain Transition Services, which provides among other things, for
the protection of confidential information of Abbott Laboratories. Buyer hereby
agrees to execute and deliver prior to or on the Closing Date the Agreement
Regarding Buyer Direct Services in the form previously made available to Buyer.
SECTION 5.26. Rental Rate under Lease. The parties agree that during
the period between the Agreement Date and the Closing the Buyer shall be
entitled to engage one or more third party real estate professionals who have
extensive current experience in the relevant real estate market to review the
lease rate set forth in the Lease and deliver an opinion of whether such rate is
comparable to what the Buyer would be able to obtain generally from a third
party, on an arms-length basis, for a comparable property, in comparable
condition and in a comparable location, for a comparable term (the "Market
Rate"). To the extent that the Buyer obtains an opinion that the lease rate set
forth in the Lease is more than twenty-five percent (25%) greater than the
Market Rate, then the Buyer and the Parent shall negotiate, in good faith, a
modification of the lease rate, based on all available and relevant information
relating to the Market Rate.
ARTICLE VI
EMPLOYEE MATTERS
SECTION 6.01. Employee Matters.
(a) For a period of twelve (12) months following the Closing,
the employees of the Businesses who are employed by the Buyer or any of its
Affiliates (the "Continuing Employees") shall receive employee benefits and base
salary and incentive or bonus cash compensation that in the aggregate are
substantially comparable to the employee benefits provided to such employees
immediately prior to the Closing (including ordinary-course severance benefits
but disregarding all change in control bonuses or compensation, retention
bonuses and equity-based awards). For a period of not less than eighteen (18)
months following the Closing, the Continuing Employees shall receive base salary
or wage rates that are not less than those in effect for such Continuing
Employees immediately prior to the Closing.
(b) Except as provided in Section 6.01(e), nothing contained
herein shall be construed as requiring, and Parent shall take no action that
would have the effect of requiring Buyer to continue any specific employee
benefit plans or to continue the employment of any specific person. Nothing in
this Agreement shall constitute a plan amendment or is intended to create any
obligations of the parties with respect to any Seller Benefit Plan and, subject
to Buyer's obligations set forth in Section 6.01(a), it is understood that Buyer
is not assuming any Seller Benefit Plans directly although is assuming certain
Liabilities pursuant to Section 2.02(a)(v).
(c) Subject to Section 6.01(e), Buyer shall recognize the
service of each Continuing Employee as if such service had been performed with
Buyer (i) for purposes of
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vesting (but not benefit accrual) under Buyer's employee benefit plans, (ii) for
purposes of eligibility for vacation under Buyer's vacation program, (iii) for
purposes of eligibility and participation under any health or welfare plan
maintained by Buyer (other than any post-employment health or post-employment
welfare plan), (iv) for purposes of eligibility vesting under Buyer's 401(k)
savings plan and (v) unless covered under another arrangement with or of Parent,
for benefit accrual purposes under Buyer's severance plan (in the case of each
of clauses (i), (ii), (iii), (iv) and (v), solely to the extent that Buyer makes
such plan or program available to the Continuing Employees, it being Buyer's
current intention to do so), but not for purposes of any other employee benefit
plan of Buyer.
(d) With respect to any welfare plan maintained by Buyer in
which Continuing Employees are eligible to participate after the Closing, Buyer
shall, and shall cause its Affiliates to, (i) waive (unless prohibited by
applicable Law or the terms of the applicable plan) all limitations as to
preexisting conditions and exclusions with respect to participation and coverage
requirements applicable to such employees to the extent such conditions and
exclusions were satisfied or did not apply to such employees under the welfare
plans maintained by Parent and its Affiliates prior to the Closing (or at the
close of any subsequent period during which the benefits of such plan are
extended to employees of Buyer and its Affiliates after the Closing pursuant to
the Transition Services Agreement) and (ii) provide (unless prohibited by Law or
by the terms of such welfare plan) each Continuing Employee with credit for any
co-payments and deductibles paid under the welfare plans maintained by Parent
and its Affiliates prior to the Closing (or at the close of any subsequent
period during which the benefits of such plan are extended to employees of Buyer
and its Affiliates after the Closing pursuant to the Transition Services
Agreement) in satisfying any analogous deductible or out-of-pocket requirements
to the extent applicable under any such plan.
(e) Buyer shall assume all obligations under and honor in
accordance with their terms (such obligations to Continuing Employees to be
determined as if the transactions contemplated by this Agreement had not
occurred and the Continuing Employees had remained employed by Parent and its
Affiliates for the additional period and on the same terms and conditions as
employed by Buyer and its Affiliates after the Closing), and shall cause its
Affiliates to honor in accordance with their terms in respect of Continuing
Employees (other than Excluded Employees) the Guidant Corporation Change in
Control Severance Pay Plan for Employees and the Special Legacy Guidant
Corporation Severance Pay Plan (collectively, the "Guidant CIC Plans");
provided, that after their respective termination dates the Guidant CIC Plans
may be disregarded in its entirety in respect of individuals who have not then
qualified for the benefits thereof and Buyer and its Affiliates shall not be
obligated to take into account the severance benefits under such plan in
determining the severance benefits to Continuing Employees after such date for
purposes of Buyer's obligations under Section 6.01(a).
(f) Notwithstanding the foregoing provisions of Section 6.01,
the provisions of Section 6.01(a), (c) and (d) shall apply only with respect to
Continuing Employees who are covered under the Seller Benefit Plans that are
maintained primarily for the benefit of employees employed in the United States
(including Continuing Employees regularly employed outside the United States to
the extent they participate in such Seller Benefit Plans). With respect to
Continuing Employees not described in the preceding sentence, Buyer shall, and
shall cause its Affiliates to, comply with all applicable laws, directives and
regulations relating to employees.
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(g) Prior to but effective as of the Closing Date, Parent will
take such action as it determines may be necessary or appropriate to cause each
Transferred Subsidiary to cease to maintain or participate in each Parent
Benefit Plan and terminate any Subsidiary Plan (effective as of the Closing) at
the request of Buyer; provided, that any such termination shall not relieve
Buyer of any Liabilities assumed pursuant to Section 2.02(a)(v). Following the
Closing Date, each Continuing Employee shall be permitted to elect to take
distribution (subject to applicable law) of his or her vested accounts under
Parent's tax-qualified defined contribution plan or plans and, if such
Continuing Employees so elect, to roll them over, directly or otherwise, in
accordance with applicable law and regulations, to an individual retirement
account or to one or more defined contribution retirement plans qualified under
Section 401(a) of the Code established or maintained by Buyer or a Transferred
Subsidiary (the "Buyer Defined Contribution Plans"). Buyer and Parent shall
reasonably cooperate to facilitate the direct rollover of distributions,
including loan balances, due the Continuing Employees to the Buyer Defined
Contribution Plans where elected by Continuing Employees.
(h) Notwithstanding any other provision of this Section 6.01,
the parties acknowledge and agree that nothing in this Article VI is intended to
grant, and nothing shall be deemed or construed to establish, rights of any kind
in any third party as a beneficiary of this Agreement.
SECTION 6.02. Employment of Business Employees.
(a) All employees of Parent or any of its Affiliates who have
been performing services primarily for the Businesses are referred to herein as
the "Business Employees." Section 6.02(a) of the Seller Disclosure Schedule sets
forth the Business Employees as of the Agreement Date. Section 6.02(a)(i) of the
Seller Disclosure Schedule sets forth those Business Employees who have been
notified of their expected termination as of the Agreement Date, or who will not
be retained by or offered employment by Buyer and its Affiliates (the "Excluded
Employees"). Section 6.02(a)(ii) of the Seller Disclosure Schedule sets forth
those Business Employees who are not eligible as of the Agreement Date for
immediate employment by Buyer and its Affiliates (the "Deferred Employees").
(b) Prior to the Closing Date, Parent shall cause to be
transferred to employment with a Transferred Subsidiary (provided that it is a
participating employer under the Guidant CIC Plans) designated by the Buyer
those Business Employees who are eligible to receive benefits under the Guidant
CIC Plans who (i) are not employed by a Transferred Subsidiary and (ii) are not
Deferred Employees. Prior to the Closing Date, Parent shall cause to be
transferred to employment with an Affiliate which is a participating employer
under the Guidant CIC Plans any Deferred Employee or Excluded Employee who is
employed by a Transferred Subsidiary.
(c) At the Closing, Buyer shall, or shall cause its Affiliates
to, offer employment, consistent with Buyer's obligations under Section 6.01(a),
immediately following the Closing to each Business Employee who (i) is not
employed by a Transferred Subsidiary, (ii) is neither an Excluded Employee nor a
Deferred Employee and (iii) who is actively employed immediately prior to the
Closing, including any such employees who are absent by reason of vacation,
holiday, jury duty or other similar absence immediately prior to the Closing
Date.
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Upon notification by Parent that a Deferred Employee is eligible for employment,
Buyer also shall, or shall cause its Affiliates to, offer employment commencing
promptly to such Deferred Employee. Parent shall not interfere with, or
otherwise take any action to impair, Buyer's ability to hire any employee in
connection with Buyer's offers of employment pursuant to the foregoing
provisions of this Section 6.02(c); provided, that Parent shall have no
obligation to terminate any Business Employee or Deferred Employee unless Buyer
fully indemnifies Parent for any Liabilities arising from a termination. The
Buyer also shall, or shall cause its Affiliates to, offer re-instatement or
employment as a successor employer, as the case may be, to each Business
Employee of the Vascular Surgery Business who is not actively employed
immediately prior to the Closing and who has a right of re-instatement per the
Sellers' policy or applicable Law (collectively, "Inactive Business Employees"),
in each case promptly upon his or her return from any leave or other absence.
The Business Employees who are employed by a Transferred Subsidiary or who
accept an employment offer from the Buyer or any of its Affiliates as of the
Closing Date are Continuing Employees, and any Deferred Employee and Inactive
Business Employee shall be treated as a Continuing Employee upon commencement of
employment with Buyer or any of its Affiliates. All such offers of employment
shall comply with the provisions of this Article VI to the extent and for the
period then applicable and be subject to only such standard employment
requirements and forms as Buyer and Parent may mutually approve. Neither the
Buyer nor any of its Affiliates shall be obligated, however, to continue to
employ any Continuing Employee for any specific period of time following
employment, subject to applicable Law. None of the Business Employees has been
transferred into or out of the Businesses since December 31, 2006, except as
disclosed in Section 6.02(b) of the Seller Disclosure Schedule.
(d) Effective as of the Closing Date, or from the employment
date of any Continuing Employee hired pursuant to an offer required by this
Section 6.02, the Buyer shall, or shall cause its Affiliates to, assume or
retain, as the case may be, all obligations of the Parent and its Affiliates for
the accrued, unused vacation of the Continuing Employees (but solely to the
extent accrued in the Closing Working Capital Statement in the case of
Continuing Employees employed as of the Closing Date), and shall reimburse, to
the extent not assumed or retained, Parent and its Affiliates for any such
accrued and unused vacation required to be paid by any of them to any Business
Employees.
(e) Parent shall (or shall cause one or more of its Affiliates
to) have exclusive responsibility for all severance obligations, including
post-termination benefits, if any, and obligations under the Guidant CIC Plans,
to the Excluded Employees for which it is identified as responsible in Section
6.02(a)(i) of the Seller Disclosure Schedule. Parent shall have exclusive
responsibility for all severance obligations, including post-termination
benefits, if any, and obligations under the Guidant CIC Plans, to those Business
Employees, including Deferred Employees, required to receive but declining
Buyer's (or its Affiliate's) offer of employment.
(f) Parent shall provide notice and an opportunity to exercise
all outstanding equity awards of Continuing Employees prior to the Closing (or
their respective termination of employment with Parent and its Affiliates, if
later), but only to the extent then vested. There shall be no acceleration of
any outstanding equity awards of Continuing Employees prior to the Closing
relating to the transactions contemplated hereby.
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(g) Effective at the Closing, Parent and Sellers (i) shall, to
the extent permitted by Law, assign to Buyer any confidentiality agreement or
covenants not to compete previously entered into between Parent or such Sellers
and all Continuing Employees (except to the extent running in favor of the
Transferred Subsidiaries and except to the extent relating to the other
businesses of Parent), and (ii) to the extent such confidentiality agreements or
covenants not to compete are not assignable, shall (solely for the benefit of
Buyer and its Affiliates) release all Continuing Employees from confidentiality
agreements and covenants not to compete previously entered into between Parent
or such Sellers and such employees relating to the Businesses (but not the
Excluded Businesses or other businesses of Parent).
(h) Notwithstanding any other provision of this Section 6.02,
the parties acknowledge and agree that nothing in this Article VI is intended to
grant, and nothing shall be deemed or construed to establish, rights of any kind
in any third party as a beneficiary of this Agreement.
ARTICLE VII
TAXES
SECTION 7.01. Transfers of Transferred Subsidiaries. Parent, Buyer,
and their respective Affiliates shall each treat the transfers of the Interests
as transfers by the Interest Sellers of the applicable Transferred Subsidiaries'
assets, subject to their liabilities, for all U.S. federal and applicable state
and local income Tax purposes. The parties and their respective Affiliates shall
not file any Tax Return or take any position for any U.S. federal, state or
local income tax purposes inconsistent with such treatment.
SECTION 7.02. Apportionment. With respect to any Tax Return for any
Straddle Period of a Transferred Subsidiary, each party will, to the extent
permitted by Law, elect to treat the Closing as the last day of the Taxable year
or period and will apportion any Taxes arising out of or relating to a Straddle
Period to the Pre-Closing Tax Period and the Post-Closing Tax Period based upon
a "closing-of-the-books" immediately prior to the opening of business on the
Closing Date. In any case where applicable Law does not permit a Transferred
Subsidiary to treat the Closing as the last day of the Taxable year or period,
any Taxes arising out of or relating to a Straddle Period will be apportioned to
the Pre-Closing Tax Period and the Post-Closing Tax Period based on a closing of
the books consistent with the preceding sentence; provided, however, that real
and personal property Taxes and similar Taxes and Taxes based on net worth,
capital, intangibles, or similar items, shall be allocated on a per diem basis.
SECTION 7.03. Tax Return Filing and Amendment.
(a) Parent will prepare and timely file, or cause to be
prepared and timely filed, all Tax Returns of each Transferred Subsidiary with
respect to periods ending on or before the Closing Date to the extent such Tax
Returns have not been filed prior to Closing, and Parent will timely pay, or
cause to be paid, all Taxes shown as due thereon. Buyer will prepare and timely
file, or cause to be prepared and timely filed, all Tax Returns of each
Transferred Subsidiary with respect to any Straddle Period to the extent such
Tax Returns have not been filed prior to the Closing Date, and Buyer will timely
pay, or cause to be paid, all Taxes shown as due
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thereon; provided that nothing in this Section 7.03 shall affect the rights of
Buyer to indemnification under Section 10.02(e). Buyer shall deliver, at least
thirty (30) days prior to the due date (taking into account extensions) for the
filing of each such Tax Return for any Straddle Period in the case of income
Taxes, and at least five (5) days prior to the due date (taking into account
extensions) for the filing of each such Tax Return for any Straddle Period in
the case of non-income Taxes, to Parent a statement setting forth the amount of
Tax for which Parent is responsible pursuant to Section 10.02(e) and a copy of
such proposed Tax Return. Parent shall have the right to review such proposed
Tax Return and the statement prior to the filing of such Tax Return. Parent and
Buyer agree to consult and resolve in good faith any issue arising as a result
of the review of such Tax Return and statement and mutually consent to the
filing of such Tax Return. Parent shall pay to Buyer the amount, if any, of the
Tax shown on the Tax Return for which Parent is responsible pursuant to Section
10.02(e) unless and to the extent that Buyer's failure to comply with its
obligations under this Section 7.03 with respect to the preparation and review
of a Tax Return adversely affects Parent (for the avoidance of doubt, the amount
so payable by Parent shall be determined by taking into account any prior
estimated or other payments of the applicable Taxes) no later than one (1) day
before the due date (taking into account extensions) of the applicable Tax
Return, and any such payment shall be treated as a payment by Parent under
Section 10.02(e) with respect to the applicable Tax Return. Neither Buyer nor
any of its Affiliates shall file any amended Tax Returns for any periods for or
in respect of any Transferred Subsidiary with respect to which Parent is
obligated to prepare, or cause to be prepared, the original such Tax Returns
pursuant to this Section 7.03 or for which Parent has a right of review and
consent pursuant to this Section 7.03 without the prior written consent of
Parent (which consent shall not be unreasonably withheld).
(b) If a dispute arises following the review of any Tax Return
by either party pursuant to Section 7.03(a), and such dispute is not resolved by
the parties within ten (10) days prior to the due date of such Tax Return
(taking into account any applicable extensions of time), such dispute will be
settled by an internationally recognized independent accounting firm mutually
appointed by the Buyer and Parent ("CPA Firm"), which shall submit its final
determination within seven (7) days. The CPA Firm's determination shall be
final, binding and conclusive on the parties hereto. Any and all costs arising
from, and expenses incurred in connection with, the CPA Firm shall be borne
equally by Buyer and Parent. Following the CPA Firm determination, the party
responsible for filing the applicable Tax Returns shall file or cause the
Transferred Subsidiaries to file those Tax Returns on or prior to the applicable
due date. In the event the CPA Firm has not made a final determination by the
date that is three (3) days before the date on which such Tax Return is required
to be filed (including any available extensions), then the party responsible for
filing the Tax Return pursuant to Section 7.03(a) shall timely file it as it
shall determine in good faith, taking into account the deliberations to date and
Parent shall pay the Buyer or the Taxation Authority, as applicable, the amount
that Parent has calculated in good faith to be due and owing by it in accordance
with Section 7.03(a). Within five (5) days following resolution of the dispute
by the CPA Firm, any amounts determined to be due upon final resolution of the
dispute (including interest and penalties with respect to any underpayment of
Tax shown on the Tax Return as filed compared to the Tax shown on the Tax Return
prepared in accordance with the CPA Firm's determination), taking into account
amounts already paid under this subsection (b), shall be promptly paid by the
relevant party to the other party and, where applicable, the party responsible
for filing such Tax Returns shall file amended Tax Returns.
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SECTION 7.04. Refunds. Parent shall be entitled to retain or, to the
extent actually received by or otherwise available to Buyer or its Affiliates,
receive prompt payment from Buyer or any of its Affiliates (including the
Transferred Subsidiaries) of, any refund or any credit with respect to Taxes
(including without limitation refunds arising by reason of amended Tax Returns
filed after the Closing Date or otherwise) with respect to any Pre-Closing Tax
Period relating to the Transferred Subsidiaries or any Asset Sellers. Buyer
shall be entitled to retain or, to the extent actually received by Parent or its
Affiliates, receive prompt payment from Parent or any of its Affiliates of, any
refund or credit with respect to Taxes (including without limitation refunds
arising by reason of amended Tax Returns filed after the Closing or otherwise)
with respect to any Post-Closing Tax Period relating to the Transferred
Subsidiaries. Any refunds or credits of Taxes with respect to Straddle Periods
shall be apportioned between Pre-Closing Tax Periods and Post-Closing Tax
Periods pursuant to the principles set forth in Section 7.02.
SECTION 7.05. Resolution of Tax Controversies. If a claim shall be
made by any Taxation Authority that might result in an indemnity payment to the
Buyer or any of its Affiliates pursuant to Section 10.02(e), Buyer shall
promptly notify Parent of such claim. In the event that a Taxation Authority
determines a deficiency in any Tax, the party ultimately responsible for such
Tax under this Agreement, whether by indemnity or otherwise, shall have
authority to determine whether to dispute such deficiency determination and to
control the prosecution or settlement of such dispute; provided that with
respect to Straddle Periods, Parent and Buyer shall jointly control the dispute
and both Parent and Buyer shall have the right to consent to any proposed
settlement thereof, such consent not to be unreasonably withheld, delayed or
conditioned. The provisions of this Section 7.05 shall be applied in lieu of the
provisions of Section 10.05 where applicable.
SECTION 7.06. Tax Cooperation. Each of the parties and their
Affiliates shall provide the other party with such information and records and
make such of its officers, directors, employees and agents available as may
reasonably be requested by such other party in connection with the preparation
of any Tax Return or any audit or other proceeding that relates to the
Transferred Subsidiaries or the Purchased Assets.
SECTION 7.07. Conveyance Taxes. Notwithstanding any other provisions
of this Agreement to the contrary, all transfer, documentary, recording, sales,
use, registration, stamp and other similar Taxes (including all applicable real
estate transfer Taxes, but excluding any Taxes based on or attributable to
income or capital gains) together with any notarial and registry fees and
recording costs imposed by any Taxing Authority or other Governmental Authority
in connection with the transfer of the Interests and the Purchased Assets
hereunder ("Conveyance Taxes") will be shared equally by the Buyer, on the one
hand, and Parent or the applicable Seller, on the other hand, regardless of
which Person is obligated to pay such Conveyance Taxes under applicable Law;
provided, however, that the Buyer shall pay and be solely responsible for all
value added, goods and services and any other similar taxes that are recoupable
by Buyer or any Affiliate. To the extent that one party claims any exemptions
from any Conveyance Taxes (it being understood that each party shall claim any
such exemptions available to it), such party shall provide to the other party
the appropriate exemption certificates. The parties and their respective
Affiliates will cooperate in timely preparing and filing all Tax Returns that
may be required to comply with Law relating to Conveyance Taxes.
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SECTION 7.08. Payments of Property Taxes Relating to Purchased
Assets. The parties will make payments to each other to the extent necessary so
that Parent shall bear the cost of real property, personal property, and other
similar Taxes imposed on the Purchased Assets for the Pre-Closing Tax Period and
Buyer shall bear the cost of real property, personal property, and other similar
Taxes imposed on the Purchased Assets for the Post-Closing Tax Period, such
payments to be made as soon as practicable after the Closing in each case after
the amount of such Taxes has been determined. For this purpose, real property,
personal property, and other similar Tax obligations for the Purchased Assets
for any Straddle Period shall be allocated between the Pre-Closing Tax Period
and the Post-Closing Tax Period on a per diem basis.
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.01. Conditions to Obligation of Parent. The obligation of
Parent to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment or written waiver, at or prior to the Closing, of
each of the following conditions:
(a) Representations, Warranties and Covenants. Each of the
representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects as of the Closing, with the same force
and effect as if made as of the Closing (other than such representations and
warranties as are made as of another date, which shall be true and correct in
all material respects as of such date), except where any failure of such
representations and warranties to be so true and correct, individually or in the
aggregate, would not materially delay or prevent the consummation of the
transactions contemplated hereby in accordance with the terms hereof, and the
covenants and agreements contained in this Agreement to be complied with by
Buyer on or before the Closing shall have been complied with in all material
respects, and Parent shall have received a certificate signed on behalf of Buyer
by an officer of Buyer to such effect; provided, however, that where a
representation or warranty is qualified by reference to the phrases "material,"
"materially," "Material Adverse Effect," "in all material respects," or
substantial compliance or similar qualification, such qualification shall for
the purposes of this Section 8.01(a) be ignored such that no representation or
warranty shall be deemed to be qualified more than once with respect to
materiality;
(b) Governmental Approvals Any waiting period (and any
extension thereof) under the HSR Act and the antitrust Laws of any other
relevant material jurisdiction applicable to the purchase of the Businesses
contemplated by this Agreement, and any agreement with a Governmental Authority
not to consummate the transactions contemplated by this Agreement, shall have
expired or shall have been terminated, and Parent or Buyer, as the case may be,
shall have obtained all authorizations, consents, orders and approvals of all
Governmental Authorities that, if not received, would make any of the
transactions contemplated by this Agreement or any of the other Ancillary
Agreements illegal or otherwise prohibit the consummation of such transactions;
(c) No Order. No Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any Law or Governmental Order (whether
temporary,
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preliminary or permanent) that has the effect of making the transactions
contemplated by this Agreement illegal or otherwise prohibiting the consummation
of such transactions; and
(d) Certain Agreements. The Buyer shall have executed and
delivered to Parent: (i) the Buyer Out-License Agreement, (ii) the Transition
Services Agreement, (iii) the Seller Out-License Agreement, (iv) the Lease
Agreement, (v) the Sublease Agreement and (vi) the other applicable Ancillary
Agreements to which it is a party.
SECTION 8.02. Conditions to Obligation of Buyer. The obligation of
Buyer to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment or written waiver, at or prior to the Closing, of
each of the following conditions:
(a) Representations, Warranties and Covenants. (i) Each of the
representations and warranties of Parent contained in this Agreement shall be
true and correct as of the Closing, with the same force and effect as if made as
of the Closing (other than such representations and warranties as are made as of
another date, which shall be true and correct as of such date), except where any
failure of such representations and warranties to be so true and correct,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Seller Material Adverse Effect, (ii) the covenants and
agreements contained in this Agreement to be complied with by Parent on or
before the Closing shall have been complied with in all material respects, and
(iii) Buyer shall have received a certificate signed on behalf of Parent by an
officer of Parent to the effect that clauses (i) and (ii) shall have been
satisfied; provided, however, that where a representation or warranty is
qualified by reference to the phrases "material," "materially," "Seller Material
Adverse Effect," "in all material respects," or substantial compliance or
similar qualification, such qualification shall for the purposes of this Section
8.02(a) be ignored such that no representation or warranty shall be deemed to be
qualified more than once with respect to materiality;
(b) Governmental Approvals. Any waiting period (and any
extension thereof) under the HSR Act and the antitrust Laws of any other
relevant material jurisdiction applicable to the purchase of the Businesses
contemplated by this Agreement, and any agreement with a Governmental Authority
not to consummate the transactions contemplated by this Agreement, shall have
expired or shall have been terminated, and Parent or Buyer, as the case may be,
shall have obtained the ISRA Determination and all authorizations, consents,
orders and approvals of all Governmental Authorities that, if not received,
would make any of the transactions contemplated by this Agreement illegal or
otherwise prohibit the consummation of such transactions;
(c) No Order. No Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any Law or Governmental Order (whether
temporary, preliminary or permanent) that has the effect of making the
transactions contemplated by this Agreement illegal or otherwise prohibiting the
consummation of such transactions;
(d) Certain Agreements. Parent, and any of its applicable
Affiliates, shall have executed and delivered to Buyer: (i) the Buyer
Out-License Agreement, (ii) the Transition Services Agreement, (iii) the Seller
Out-License Agreement, (iv) the Lease Agreement, (v) the Sublease Agreement and
(vi) the other applicable Ancillary Agreements to which each is a party;
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(e) Material Adverse Effect. Since June 30, 2007, there shall
have been no Seller Material Adverse Effect that has not been cured, other than
any Seller Material Adverse Effect represented by any event, fact or
circumstance set forth in the Seller Disclosure Schedule to the extent that such
event, fact or circumstance, could reasonably have been expected to constitute
or result in a Seller Material Adverse Effect; and
(f) FIRPTA. Each Seller that is treated for federal income Tax
purposes as transferring Real Property in the United States shall have delivered
a properly executed statement, dated as of the Closing Date, in a form
reasonably acceptable to Buyer conforming to the requirements of Treasury
Regulations Section 1.1445-2(b)(2).
(g) Audited/Reviewed Revenue. The Audited/Reviewed Financial
Statements shall have been delivered to Buyer and the combined net sales of the
Businesses as set forth in the Audited/Reviewed Statements for each of the
year-end December 31, 2006, and the six-month period ended June 30, 2007, shall
be equal to or greater than $245,385,900 and $123,100,200, respectively. For
purposes of the foregoing, the term "Audited/Reviewed Financial Statements"
shall mean the "Statement of Revenues and Direct Expenses" of the Businesses, on
a combined basis, for the twelve-month period ending December 31, 2006, prepared
in accordance with GAAP and audited by Ernst & Young, LLP, including their
report thereon, and the "Statement of Revenues and Direct Expenses" of the
Businesses on a combined basis for the six-month period ending June 30, 2007,
prepared in accordance with GAAP and reviewed by Ernst & Young, LLP, including
their report thereon. The Audited/Reviewed Financial Statements shall be
prepared in a manner consistent with the preparation of the Business Financial
Statements and include all Intercompany Adjustments.
(h) Contractual Consents and Approvals. Parent and Sellers
shall have obtained and made available to Buyer a true and correct copy of each
approval or consent required in connection with the consummation of the
transactions contemplated by this Agreement pursuant to those Material
Contracts, if any, listed on Section 8.02 of the Seller Disclosure Schedule.
ARTICLE IX
TERMINATION
SECTION 9.01. Termination. This Agreement may be terminated at any
time prior to the Closing in the following circumstances:
(a) by the mutual written consent of Parent and Buyer;
(b) by either Parent or Buyer, if the Closing shall not have
occurred by March 31, 2008; provided, however, that the right to terminate this
Agreement under this Section 9.01(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement shall have been the cause
of, or shall have resulted in, the failure of the Closing to occur on or prior
to such date; or
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(c) by either Parent or Buyer in the event that any
Governmental Order restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement shall have become final and
non-appealable.
SECTION 9.02. Effect of Termination. (a) In the event of termination
of this Agreement as provided in Section 9.01, this Agreement shall forthwith
become void and there shall be no liability on the part of either party hereto
except (a) as set forth in Section 5.02 and Article X and (b) that nothing
herein shall relieve either party from liability for any breach of this
Agreement occurring prior to such termination; provided, that no party shall be
liable for any punitive, incidental, consequential or special or indirect
damages.
ARTICLE X
INDEMNIFICATION
SECTION 10.01. Survival of Representations and Warranties. The
representations and warranties of the parties hereto contained in this Agreement
survive the Closing and shall terminate on, and no indemnifying party will be
liable for any Losses hereunder with respect to a breach of such representations
and warranties unless a written claim for indemnification is given by the
indemnified party to the indemnifying party with respect thereto prior to the
day eighteen (18) months following the Closing Date; provided, that the
representations and warranties set forth in (a) Sections 3.10 (Intellectual
Property) and 3.15 (Regulatory and Product Matters) shall survive until the day
twenty-four (24) months following the Closing Date; and provided, further that
the representations and warranties set forth in (a) Sections 3.01 (Organization,
Authority and Qualification), 3.02 (Organization, Authority and Qualification of
the Transferred Subsidiaries)), 3.03 (Capitalization; Ownership of Interests),
3.20 (Brokers), 4.01 (Organization, Authority and Qualification) and 4.04
(Brokers) shall survive indefinitely, and (b) Sections 3.09 (Environmental
Matters), 3.12 (Employee Benefit Matters) and 3.13 (Taxes) shall survive until
ninety (90) days after the expiration of the applicable statutes of limitations.
SECTION 10.02. Indemnification by Parent. Subject to the limitation
set forth in Sections 10.04 and 10.06 below, from and after the Closing, Buyer
and its Affiliates, officers, directors, agents, successors and assigns (the
"Buyer Indemnified Parties") shall be indemnified and held harmless by Parent
and Sellers, jointly and severally, for and against all losses, damages, claims,
costs and expenses, interest, awards, judgments and penalties (including
reasonable attorneys' and consultants' fees and expenses) actually suffered or
incurred by them (hereinafter, "Losses") to the extent arising directly out of
or related directly to:
(a) the failure of any representation or warranty of Parent or
Sellers set forth herein (including the Seller Disclosure Schedule) or in any
certificate delivered pursuant to or in connection with this Agreement to be
true and correct as of the Agreement Date and as of the Closing (after giving
effect to qualifications contained in such representation or warranty as to
materiality, lack of a Material Adverse Effect or similar qualification
expressly contained therein);
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(b) any failure by Parent to fully perform, fulfill or comply
with any covenant set forth herein or in any certificate, document or other
instrument delivered pursuant to or in connection with this Agreement;
(c) the Excluded Assets;
(d) the Excluded Liabilities; and
(e) Without duplication of Parent's obligations under Section
7.03, Taxes of any Transferred Subsidiary (including any Taxes arising under
Treasury Regulations Section 1.1502-6 or similar Law) or (subject to Section
7.08) any Purchased Assets attributable to any Pre-Closing Tax Period and Taxes
of Parent and the Sellers.
SECTION 10.03. Indemnification by Buyer. From and after the Closing,
Parent and its Affiliates, officers, directors, agents, successors and assigns
shall be indemnified and held harmless by Buyer for and against any and all
Losses to the extent arising out of or related to:
(a) the failure of any representation or warranty of Buyer set
forth herein or in any certificate delivered pursuant to or in connection with
this Agreement to be true and correct as of the Agreement Date and as of the
Closing (after giving effect to qualifications contained in such representation
or warranty as to materiality or similar qualification expressly contained
therein);
(b) any failure by Buyer to fully perform, fulfill or comply
with any covenant set forth herein or in any certificate, document or other
instrument delivered pursuant to or in connection with this Agreement;
(c) events occurring on or after the Closing Date arising out
of or related to the Businesses (other than the Excluded Assets or Excluded
Liabilities);
(d) the Assumed Liabilities; and
(e) Without duplication of Buyer's obligations under Section
7.03(b), Taxes of any Transferred Subsidiary or (subject to Section 7.08)
relating to any Purchased Assets attributable to any Post-Closing Tax Period and
Taxes of the Buyer.
SECTION 10.04. Limits on Indemnification.
(a) General. Notwithstanding anything to the contrary contained
in this Agreement, neither party hereto shall have any Liability under Sections
10.02 or 10.03 for any punitive, incidental, consequential or special or
indirect damages.
(b) Losses. For all purposes of this Article X, "Losses" shall
be net of (i) any insurance or other recoveries actually paid to an indemnified
party or its Affiliates in connection with the facts giving rise to the right of
indemnification, and (ii) the amount of any Tax benefit actually realized by an
indemnified party or any of its Affiliates attributable to such Losses.
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(c) Threshold. No indemnifying party will be required to
indemnify an indemnified party pursuant to Sections 10.02(a) or 10.03(a) until
such time as the aggregate amount of Losses for all matters for which such
indemnified party is otherwise entitled to indemnification pursuant to this
Article X exceeds $4,000,000 (the "Aggregate Threshold"), at which time the
indemnifying party shall be obligated to indemnify the indemnified party for the
full amount of such Losses for all such matters subject to the other limitations
of this Article X; provided, that indemnifiable Losses related to or arising out
of breaches of representations and warranties contained in Sections 3.01
(Organization, Authority and Qualification), 3.02 (Organization, Authority and
Qualification of the Transferred Subsidiaries), 3.03 (Capitalization; Ownership
of Interests), 3.13 (Taxes) and 3.19 (Brokers), and Sections 4.01 (Organization,
Authority and Qualification), 4.04 (Brokers) and 4.05 (Availability of Funds)
shall not be subject to the Aggregate Threshold.
(d) Maximum Liability. Except in the case of intentional or
willful breaches of this Agreement or fraud, the maximum aggregate liability of
Parent or Buyer for indemnification under Section 10.02(a) or 10.03(a) will not
exceed an amount equal to five percent (5%) of the Cash Purchase Price (the
"Cap"); provided, that indemnifiable Losses related to or arising out of any
breaches of representations and warranties contained in Sections 3.01
(Organization, Authority and Qualification), 3.02 (Organization, Authority and
Qualification of the Transferred Subsidiaries), 3.03 (Capitalization; Ownership
of Interests), 3.13 (Taxes) and 3.19 (Brokers), and Sections 4.01 (Organization,
Authority and Qualification), 4.04 (Brokers) and 4.05 (Availability of Funds)
shall not be subject to the Cap.
(e) Sole Remedy. Except as otherwise set forth in this
Agreement, from and after the Closing the respective rights of the parties under
this Article X shall be the sole and exclusive rights and remedies available to
such parties with respect to the subject matter of this Agreement, and each of
the parties hereby absolutely agrees and covenants not to seek any remedy at law
or equity other than pursuant to this Article X except in the case of actual
fraud or willful misconduct.
SECTION 10.05. Notice of Loss; Third Party Claims. (a) An indemnified
party shall give the indemnifying party notice of any matter that an indemnified
party has determined has given or could give rise to a right of indemnification
under this Agreement, within 90 days of such determination, stating the amount
of the Loss, if known, and method of computation thereof, and containing a
reference to the provisions of this Agreement in respect of which such right of
indemnification is claimed or arises.
(b) If an indemnified party shall receive notice of any Action
from or involving any third party that the indemnified party believes is
reasonably likely to give rise to a right of indemnification under this Article
X (each, a "Third Party Claim"), then, as promptly as practicable after the
receipt of such notice, the indemnified party shall give the indemnifying party
notice of such Third Party Claim, stating the amount of the Loss, if known, and
method of computation thereof and containing a reference to the provisions of
this Agreement in respect of which such right of indemnification is claimed or
arises; provided, however, that the failure to provide such notice shall not
release the indemnifying party from any of its obligations under this Article X
except to the extent that such failure actually results in a detriment to the
indemnifying party and shall not relieve the indemnifying party from any other
Liability that it
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may have to any indemnified party other than under this Article X. The
indemnifying party shall be entitled to assume and control the defense of such
Third Party Claim at its expense and through counsel reasonably satisfactory to
the indemnified person if it gives notice of its intention to do so to the
indemnified party within 30 days of the receipt of such notice from the
indemnified party. If the indemnifying party elects to undertake any such
defense against a Third Party Claim, the indemnified party may participate in
such defense at its own expense; provided, however, that such indemnified party
shall be entitled to participate in any such defense with separate counsel at
the expense of the indemnifying party if, (i) requested by the indemnifying
party to employ separate counsel or (ii) in the opinion of counsel to the
indemnified party there are potential defenses available to the indemnified
party that are materially in conflict with those available to the indemnifying
party. The indemnified party shall reasonably cooperate with the indemnifying
party in such defense and make available to the indemnifying party, at the
indemnifying party's expense, all witnesses, pertinent records, materials and
information in the indemnified party's possession or under the indemnified
party's control relating thereto as is reasonably required by the indemnifying
party. If the indemnifying party elects to direct the defense of any such claim
or proceeding, it shall not consent to the entry of any judgment or enter into
any settlement with respect to such Third Party Claim without the prior written
consent of the indemnified party, which consent shall not be unreasonably
withheld or delayed. No indemnifying party shall be liable for any settlement of
a Third Party Claim effected without such indemnifying party's prior written
consent, which consent shall not be unreasonably withheld or delayed.
SECTION 10.06. Tax Treatment of Indemnity Payments. For all Tax
purposes, the parties agree to treat all payments made under any indemnity
provisions contained in this Agreement as adjustments to the Purchase Price (and
not to take a contrary position in any Tax Return, audit, or subsequent
proceeding or contest), except to the extent a change in any applicable Law
after the Agreement Date requires otherwise.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01. Expenses. Except as otherwise specified in this
Agreement, all costs and expenses, including fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with this Agreement
and the other Ancillary Agreements and the transactions contemplated hereby and
thereby shall be borne by the party incurring such costs and expenses, whether
or not the Closing shall have occurred.
SECTION 11.02. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by an internationally recognized overnight courier service, by
facsimile, by e-mail or by registered or certified mail (postage prepaid, return
receipt requested) to the respective parties hereto at the following addresses
(or at such other address for a party as shall be specified in a notice given in
accordance with this Section 11.02):
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(a) if to Parent or Sellers:
Boston Scientific Corporation
One Boston Scientific Place
Natick, Massachusetts 01760
Attention: Chief Financial Officer
Facsimile: 508-650-8956
with a copy (which shall not constitute notice) to:
Boston Scientific Corporation
One Boston Scientific Place
Natick, Massachusetts 01760
Attention: Senior Vice President and Deputy General Counsel
Facsimile: 508-650-8956
(b) if to Buyer:
Getinge AB
P O Box 69
SE-310 44 Getinge
Sweden
Attention: Ulf Grunander
Fax: + 46 35-15 56 40
with a copy (which shall not constitute notice) to:
Alston & Bird LLP
1201 W. Peachtree St.
Atlanta GA, 30309
Attention: Steven L. Pottle, Esq.
Fax: 404-881-7777
SECTION 11.03. Public Announcements. Each party to this Agreement
shall consult with the other party before issuing, and shall provide the other
party the opportunity to review and comment upon, any press release or other
public announcement in respect of this Agreement or the transactions
contemplated hereby and shall not issue any press release or other public
statements or otherwise communicate with any news media regarding this Agreement
and/or the transactions contemplated hereby without the consultation and prior
written consent of the other party unless otherwise required by Law or
applicable stock exchange regulation. The parties to this Agreement shall
cooperate as to the timing and contents of any such press release, public
announcement or communication. The parties agree that they shall each issue a
press release announcing the execution of this Agreement, the timing and
contents of which shall be reasonably satisfactory to the other party.
SECTION 11.04. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect for so long as the economic or
legal substance of the transactions contemplated by this Agreement is not
affected
85
in any manner materially adverse to either party hereto. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated by
this Agreement are consummated as originally contemplated to the greatest extent
possible.
SECTION 11.05. Entire Agreement. This Agreement, the Confidentiality
Agreement and the Ancillary Agreements constitute the entire agreement of the
parties hereto with respect to the subject matter hereof and thereof and
supersede all prior agreements and undertakings, both written and oral, between
Parent and Buyer with respect to the subject matter hereof and thereof.
SECTION 11.06. Assignment. This Agreement may not be assigned without
the express written consent of Parent and Buyer (which consent may be granted or
withheld in the sole discretion of Parent or Buyer), as the case may be;
provided, however, that either party may, without the consent of the other
party, assign its rights and obligations, in whole or in part, under this
Agreement to one or more of its controlled Affiliates, except that no such
assignment shall relieve the assigning party from the performance of its
obligations hereunder.
SECTION 11.07. Amendment. This Agreement may not be amended or
modified except (a) by an instrument in writing signed by, or on behalf of,
Buyer and Parent or (b) by a waiver in accordance with Section 11.08.
SECTION 11.08. Waiver. Either party to this Agreement may (a) extend
the time for the performance of any of the obligations or other acts of the
other party, (b) waive any inaccuracies in the representations and warranties of
the other party contained herein or in any document delivered by the other party
pursuant hereto or (c) to the extent permitted by applicable Law, waive
compliance with any of the agreements of the other party or conditions to such
party's obligations contained herein. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the party to be
bound thereby. Any waiver of any term or condition shall not be construed as a
waiver of any subsequent breach or a subsequent waiver of the same term or
condition, or a waiver of any other term or condition of this Agreement. The
failure of either party hereto to assert any of its rights hereunder shall not
constitute a waiver of any of such rights.
SECTION 11.09. No Third Party Beneficiaries. This Agreement shall be
binding upon and inure solely to the benefit of the parties hereto and their
respective successors and permitted assigns and nothing herein is intended to or
shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever, including any rights of employment for any
specified period, under or by reason of this Agreement.
SECTION 11.10. Other Remedies; Specific Performance. Except as
otherwise provided herein, any and all remedies herein expressly conferred upon
a party will be deemed cumulative with and not exclusive of any other remedy
conferred hereby, or by Law or equity upon such party, and the exercise by a
party of any one remedy will not preclude the exercise of any other remedy. The
parties hereto agree that irreparable damage would occur in the event that any
provision of this Agreement is not performed in accordance with its specific
terms or is otherwise breached. It is accordingly agreed that the parties shall
be entitled to seek an
86
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at Law or in equity.
SECTION 11.11. Interpretive Rules. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement refer to
this Agreement as a whole and not to any particular provision of this Agreement,
and all Article and Section references are to this Agreement unless otherwise
specified. The words "include," "includes" and "including" will be deemed to be
followed by the phrase "without limitation." The word "days" means calendar days
unless otherwise specified herein. The table of contents and headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. No provision of this
Agreement shall be construed to require either party or their respective
officers, directors, subsidiaries or Affiliates to take any action which would
violate or conflict with any applicable Law. The word "or" shall not be
exclusive. The meanings given to terms defined herein will be equally applicable
to both the singular and plural forms of such terms. Whenever the context may
require, any pronoun includes the corresponding masculine, feminine and neuter
forms. Except as otherwise expressly provided herein, all references to
"dollars" or "$" will be deemed references to the lawful money of the United
States of America.
SECTION 11.12. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York, without
regard to conflicts of laws principles that would provide for the application of
the laws of another jurisdiction. All Actions arising out of or relating to this
Agreement shall be heard and determined exclusively in any New York federal
court located in New York, New York; provided, however, that if such federal
court does not have jurisdiction over such Action, such Action shall be heard
and determined exclusively in any state court sitting in New York County, New
York. Consistent with the preceding sentence, the parties hereto hereby (a)
submit to the exclusive jurisdiction of any federal or state court sitting in
New York County for the purpose of any Action arising out of or relating to this
Agreement brought by either party hereto and (b) irrevocably waive, and agree
not to assert by way of motion, defense, or otherwise, in any such Action, any
claim that it is not subject personally to the jurisdiction of the above-named
courts, that its property is exempt or immune from attachment or execution, that
the Action is brought in an inconvenient forum, that the venue of the Action is
improper, or that this Agreement or the transactions contemplated by this
Agreement may not be enforced in or by any of the above-named courts. Each party
further irrevocably consents to the service of process out of any of the
aforementioned courts in any such Action by the mailing of copies thereof by
mail to such party at its address set forth in Section 11.02 of this Agreement,
such service of process to be effective upon acknowledgment of receipt by
registered mail; provided, however, that nothing in this Section 11.12 shall
affect the right of any party to serve legal process in any other manner
permitted by law. The consent to jurisdiction set forth in this Section 11.12
shall not constitute a general consent to service of process in the State of New
York and shall have no effect for any purpose except as provided in this Section
11.12.
SECTION 11.13. Exchange Rate. If applicable Law requires that any
payment pursuant to this Agreement be made in local currency, the parties shall
use the applicable exchange rate
87
published in the Wall Street Journal, Eastern Edition, three (3) Business Days
prior to the Closing.
SECTION 11.14. Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
88
IN WITNESS WHEREOF, each of Parent, Sellers and Buyer has caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
BUYER:
------
GETINGE AB
By: /s/ Johan Malmquist
--------------------------------------
Name: Johan Malmquist
------------------------------------
Title: President and CEO
-----------------------------------
IN WITNESS WHEREOF, each of Parent, Sellers and Buyer has caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
PARENT:
-------
BOSTON SCIENTIFIC CORPORATION
By: /s/ Jim Gilbert
--------------------------------------
Name: Jim Gilbert
------------------------------------
Title: Executive Vice President
-----------------------------------
IN WITNESS WHEREOF, each of Parent, Sellers and Buyer has caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
SELLER: BOSTON SCIENTIFIC LIMITED
-------
By: /s/ Lawrence J. Knopf
--------------------------------------
Name: Lawrence J. Knopf
------------------------------------
Title: Vice President, Legal
-----------------------------------
IN WITNESS WHEREOF, each of Parent, Sellers and Buyer has caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
SELLER: BOSTON SCIENTIFIC SCIMED INC.
-------
By: /s/ Lawrence J. Knopf
--------------------------------------
Name: Lawrence J. Knopf
------------------------------------
Title: Assistant Secretary
-----------------------------------
IN WITNESS WHEREOF, each of Parent, Sellers and Buyer has caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
SELLER: CORVITA CORP.
-------
By: /s/ Lawrence J. Knopf
--------------------------------------
Name: Lawrence J. Knopf
------------------------------------
Title: Vice President, Legal and Secretary
-----------------------------------
IN WITNESS WHEREOF, each of Parent, Sellers and Buyer has caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
SELLER: GUIDANT CORP.
-------
By: /s/ Lawrence J. Knopf
--------------------------------------
Name: Lawrence J. Knopf
------------------------------------
Title: Vice President, Legal and Secretary
-----------------------------------
IN WITNESS WHEREOF, each of Parent, Sellers and Buyer has caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
SELLER: GUIDANT INVESTMENT CORP.
-------
By: /s/ Lawrence J. Knopf
--------------------------------------
Name: Lawrence J. Knopf
------------------------------------
Title: Vice President, Legal and Secretary
-----------------------------------
IN WITNESS WHEREOF, each of Parent, Sellers and Buyer has caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
SELLER: BOSTON SCIENTIFIC WAYNE CORPORATION
------
By: /s/ Lawrence J. Knopf
--------------------------------------
Name: Lawrence J. Knopf
------------------------------------
Title: Vice President, Legal and Secretary
-----------------------------------
IN WITNESS WHEREOF, each of Parent, Sellers and Buyer has caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
SELLER: BOSTON SCIENTIFIC PUERTO RICO, B.V.
-------
By: /s/ Lawrence J. Knopf
--------------------------------------
Name: Lawrence J. Knopf
------------------------------------
Title: Authorized Signatory
-----------------------------------