SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
November 29, 1996
Date of Report (Date of earliest event reported)
ST. JUDE MEDICAL, INC.
(Exact name of registrant as specified in charter)
Minnesota 0-8672 41-1276891
- -------------------- ------------------ ---------------------
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
One Lillehei Plaza, St. Paul, MN 55117
(Address of principal executive offices) (Zip Code)
(612) 483-2000
Registrant's telephone number including area code
Not Applicable
(Former name or former address, if changed since last report)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Effective November 29, 1996 St. Jude Medical, Inc. completed the acquisition
from Telectronics Pacing Systems, Inc. of Englewood, Colorado, a wholly owned
subsidiary of Pacific Dunlop, Ltd., substantially all of its cardiac rhythm
management assets and the acquisition of Medtel, an Asia-Pacific medical
products distribution business which is also related to Pacific Dunlop. The
terms of both transactions were announced by the Company on October 23 and filed
in a Form 8-K Current Report dated November 1, 1996.
St. Jude Medical paid $135 million in cash for the assets of Telectronics and
Medtel. The Telectronics agreement also includes an earnout provision tied to
future product sales which could result in additional payments of up to $40
million over six years if certain revenue milestones are achieved. The Company
funded the acquisitions through a combination of $30 million in cash and a $105
million loan under its revolving credit facility. The terms of the acquisitions
were the result of arms-length negotiations between the parties, and the
acquisitions will be accounted for as a purchase. Among the assets St. Jude
Medical is acquiring from Telectronics are extensive intellectual property
assets, patent cross-licensing agreements, advanced bradycardia technology and
global sales and marketing presence.
Products liability for all Telectronics products manufactured prior to November
30, 1996, will not pass to St. Jude Medical. This includes all liability related
to Telectronics' AccufixTM pacemaker leads. Telectronics has opened the Accufix
Research Institute in Englewood, Colorado, to deal with matters related to these
lead products. St. Jude Medical will not manufacture these lead products nor
have any role in the management of the Accufix Research Institute.
The Company expects to incur substantial charges as a result of integrating
Telectronics into its Cardiac Rhythm Management division. Under purchase
accounting, these charges will be reflected as additional goodwill as they
pertain to Telectronics operations and as current period expense as they pertain
to St. Jude Medical operations.
ITEM 7. EXHIBITS
(a) Financial Statements of Business Acquired:
Pursuant to paragraph (a)(4) of Item 7 of Form
8-K, financial statements will be filed with the
Commission, if required, within 60 days
subsequent to the due date of this report on Form
8-K.
(b) Proforma Financial Information:
Pursuant to paragraph (b)(2) of Item 7 of Form
8-K, proforma financial information will be filed
with the Commission, if required, no later than
60 days after the due date of this report on Form
8-K.
(c) Exhibits:
2.1 Coordination and Adjustment Agreement dated September 24,
1996.
2.2 Asset Purchase Agreement dated September 24, 1996.
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ST. JUDE MEDICAL, INC.
Date Dec. 16, 1996 By /s/ STEPHEN L. WILSON
------------------- ---------------------------------
Stephen L. Wilson
Vice President - Finance
and Chief Financial Officer
EXHIBIT INDEX
Exhibit
No. Description
- -------- ------------------------
2.1 COORDINATION AND ADJUSTMENT AGREEMENT ( "Agreement") dated as
of September 24, 1996 by and among O Acquisition, Inc.
("Buyer"), a Delaware corporation and wholly owned subsidiary
of St. Jude Medical, Inc. and each of the parties set forth on
the signature pages under the heading "Sellers", together with
any additional parties executing a counterpart to Agreement
pursuant to Section 3.9.
2.2 ASSET PURCHASE AGREEMENT, dated as of September 24, 1996 (as
amended from time to time, the "Agreement"), by and among O
Acquisition, Inc., a Delaware corporation ("Buyer"),
Telectronics Pacing Systems, Inc., a Delaware corporation
("TPSI") and TPLC, Inc., a Delaware corporation (d/b/a
Telectronics Pacing Systems) ("TPLC," together with TPSI, the
"Sellers").
Pursuant to Item 601(b)(2) of Regulation S-K, the registrant
has omitted the following schedules, exhibits and other
agreements and agrees to furnish supplementally a copy of any
such omitted schedules, exhibits and agreements to the
Commission upon request.
Schedule 1.1(j) - Certain Prepaid Expenses Schedule
Schedule 1.1(m) - Other
Purchased Assets Schedule
Schedule 1.2(h) - Accufix Research Institute Schedule
Schedule 1.2(j) - Affiliated Agreements Schedule
Schedule 2.1(b) - Contingent Payments Schedule
Schedule 3.2(b) - Product Liability Litigation Schedule
Schedule 4.3 - Consents/Conflicts Schedule
Schedule 4.4 - Compliance with Laws Schedule
Schedule 4.6 - Conduct with Domestic Operations Schedule
Schedule 4.8 - Taxes Schedule
Schedule 4.9 - Encumbrances Schedule
Schedule 4.11 - Real Property Schedule
Schedule 4.12 - Inventory Schedule
Schedule 4.13 - Personal Property Schedule
Schedule 4.14 - Governmental Permits Schedule
Schedule 4.15 - Proprietary Rights Schedule
Schedule 4.16 - Employee Benefits Schedule
Schedule 4.17 - Contracts Schedule
Schedule 4.18 Status of Contracts Schedule
Schedule 4.19 Environmental Matters Schedule
Schedule 4.20 Legal Proceedings Schedule
Schedule 7.2 Retained Employees Schedule
Schedule 8.4 Necessary Governmental Approvals Schedule
Schedule 9.5 Guarantees Schedule
Schedule 12.13 "Knowledge" Schedule
Exhibit A Consulting Agreement
Exhibit B Opinion of Counsel to Sellers
Exhibit C Other Conditions
Exhibit D Opinion of Counsel to Buyer
Exhibit E Guaranty
Variation Agreement dated as of 29 November 1996 between O Acquisition, Inc.,
Telectronics Pty, Ltd., and Medical Telectronics Pty, Ltd.
First Amendment to Coordination and Adjustment Agreement dated as of 29 November
1996 between O Acquisition, Inc., Pacesetter, Inc., Telectronics Pacing Systems,
Inc., TPLC, Inc., Medical Telectronics Pty, Ltd., Telectronics Pty, Ltd. and
each of the parties set forth on the signature pages under the heading
"Sellers".
International Purchase Agreements between various St. Jude Medical, Inc.
subsidiaries and Telectronics legal entities in the following countries:
Australia, France, Germany, Canada, U.K., Belgium, Austria, Denmark,
Netherlands, Brazil, Hong Kong, New Zealand, Netherland Antilles, all of which
are substantially in the form of the Asset Purchase Agreement, except as
necessary to comply with local laws and regulations.
EXECUTION COPY
COORDINATION AND ADJUSTMENT AGREEMENT
COORDINATION AND ADJUSTMENT AGREEMENT (this "Agreement") dated as of
September 24, 1996 by and among O Acquisition, Inc., a Delaware corporation
("Buyer") and each of the parties set forth on the signature pages hereto under
the heading "Sellers", together with any additional parties executing a
counterpart to this Agreement pursuant to Section 3.9 (each a "Seller" and
collectively, the "Sellers").
R E C I T A L S
A. Buyer, certain of its Affiliates and the Sellers have entered into,
or will enter into, the individual asset and share purchase agreements described
on Exhibit A hereto (collectively, the "Sale Agreements"), pursuant to which
each of the respective Sellers has agreed to sell, and Buyer has agreed to
purchase, various assets and capital shares owned by each such Seller
(collectively, the "Purchased Assets"), all on the terms and conditions set
forth in such Sale Agreements.
B. In exchange for the Purchased Assets and subject to adjustment
pursuant to this Agreement, Buyer and certain of its Affiliates have agreed to
pay Sellers the Purchase Price provided for in each of the individual Sale
Agreements, and to assume certain of the liabilities and obligations of the
Sellers (collectively, the "Assumed Liabilities"), all on the terms and
conditions set forth in the Sale Agreements.
C. Buyer desires to enter into this Agreement with Sellers so that the
Purchase Price paid pursuant to each of the individual Sale Agreements may be
adjusted as at the closing of the transactions contemplated by the Sale
Agreements (the date upon which the transactions contemplated by all of the Sale
Agreements has been consummated is referred to herein as the "Closing Date"),
with such adjustments to be effected on a combined basis reflecting all of the
Purchased Assets and all of the Assumed Liabilities in order to more efficiently
and expeditiously carry out such adjustments in a fair and equitable manner.
D. In order to avoid unintended conflicts and inconsistencies among the
individual Sale Agreements, Buyer and Seller also desire to provide herein for
the uniform handling and treatment among themselves of certain matters including
cooperation among all of them in defending against certain Litigation and in
administering any indemnity claims made by one against another.
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, and in exchange for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Buyer and Sellers agree as follows:
ARTICLE I. - NET WORTH ADJUSTMENT
1.1. Preparation of Closing Date Balance Sheet. No later than
forty-five (45) days subsequent to the Closing Date, Sellers shall deliver to
Buyer a Closing Date balance sheet audited by KPMG Peat Marwick, Sellers'
independent public accountants, in accordance with United States generally
accepted accounting principles, which reflects only the Purchased Assets and the
Assumed Liabilities as of the opening of business on the Closing Date as
purchased and sold pursuant to each of the Sale Agreements. The Closing Date
balance sheet will be based on a roll forward from the Year End Balance Sheet of
Sellers and shall be prepared on a basis consistent with the Year End Balance
Sheet. Buyer shall cooperate with Sellers and their representatives in the
preparation of the Closing Date balance sheet, and shall furnish such
information as may be reasonably requested in connection therewith. Within
fifteen (15) business days after delivery of the Closing Date balance sheet,
Buyer shall notify Sellers in writing whether or not Buyer disputes any part of
such Closing Date balance sheet. If no notification is received by Sellers
within such fifteen (15) business day period, Buyer shall be deemed to have
accepted such Closing Date balance sheet. If Buyer does dispute any aspect of
the Closing Date balance sheet, Buyer's dispute notice shall include reasonable
detail regarding the nature and reasons for such dispute, and the parties shall
thereafter negotiate in good faith to reach a mutually acceptable resolution as
soon as reasonably possible. If Buyer and Sellers are unable to resolve such
dispute within fifteen (15) business days after receipt by Sellers of Buyer's
written dispute notice, then the determination of the Closing Date balance sheet
shall be promptly submitted to a third party accounting firm of international
standing, which shall resolve any disputes regarding the Closing Date balance
sheet. The terms of appointment and engagement of such third party accounting
firm shall be as agreed upon between the Sellers and Buyer. The determination of
such third party accounting firm regarding the Closing Date balance sheet shall
be final and binding on Buyer and Sellers, and the expenses of such third party
accounting firm in making such determination shall be borne equally by Buyer, on
the one hand, and Sellers, on the other hand. The Closing Date balance sheet as
finally agreed to by the parties or as determined by such third party accounting
firm pursuant to this section is referred to as the "Closing Date Balance
Sheet."
1.2. Calculation/Payment of Adjustment. (a) The aggregate of the
Purchase Price to be paid by Buyer and its affiliates to the Sellers under all
of the Sale Agreements is equal to US$155 million, as adjusted as provided
herein. The allocation of such amount among the various Sellers is as set forth
on Exhibit B hereto. If the Worldwide Net Worth as reflected on the Closing Date
Balance Sheet is greater than the Worldwide Net Worth reflected on the Year End
Balance Sheet, then the amount of such excess shall be paid by Buyer to Sellers
as additional Purchase Price for the Purchased Assets. If the Worldwide Net
Worth as reflected on the Closing Date Balance Sheet is less than the Worldwide
Net Worth reflected on the Year End Balance Sheet, then the amount of such
shortfall shall be paid by Sellers to Buyer, as a reduction in the Purchase
Price already paid. For purposes of this Agreement, "Worldwide Net Worth" shall
mean the difference between the aggregate dollar value of the Purchased Assets,
less the Assumed Liabilities as set forth on the Closing Date Balance Sheet.
(b) All payments to be made pursuant to this section shall be made no
later than the fifth (5th) day after the Closing Date Balance Sheet has been
finalized, and shall be made in U.S. Dollars by wire transfer of immediately
available funds, in such amounts and to such accounts as the receiving party
shall designate to the paying party, together with interest accruing after the
Closing Date up to and including the date of payment at the prevailing prime
rate reported from time to time in the WALL STREET JOURNAL.
1.3. Adjustment of Purchase Price Allocation. The amount of any
adjustment to the Purchase Price payable pursuant to Section 1.2 hereof and due
to an increase or decrease in value of one of the categories of Purchased Assets
or Assumed Liabilities as to which the Purchase Price, as provided in any Sale
Agreements, has been allocated (other than intangible assets) shall be allocated
to or deducted from each such category of Purchased Assets or Assumed
Liabilities in an amount equal to the actual increase or decrease occurring with
respect to that particular category of Purchased Asset or Assumed Liability. Any
difference between the total amount of the adjustment to the Purchase Price and
the amount of such adjustment due to changes in value of the tangible Purchased
Assets or Assumed Liabilities as to which the Purchase Price has been otherwise
allocated, shall be allocated to or deducted from intangible assets. Any such
adjustments to the Purchase Price shall be allocated among the Sale Agreements
covering Sellers' Canadian and French operations in amounts equal to the actual
change in value of any of the Purchased Assets or Assumed Liabilities actually
covered by the particular Sale Agreement covering Sellers' Canadian and French
operations, with the balance allocated to the operations covered by the U.S.
Agreement, as defined below.
ARTICLE II. - SALES AGREEMENT INCONSISTENCIES
2.1. Inconsistencies Among Sales Agreements. The parties recognize and
acknowledge that due to, among other things, variations among local laws and
customs in the jurisdictions in which the Sale Agreements are to apply and
pursuant to which the assignment, transfer and assumption of the Purchased
Assets and Assumed Liabilities are to be effected, there may be inconsistencies
or conflicts among the terms and conditions of the Sale Agreements
(collectively, "Inconsistencies"). Notwithstanding any such Inconsistencies, the
parties acknowledge that the Sale Agreements are intended to provide for an
integrated purchase and sale among the parties hereto of the worldwide Business
described therein and the parties intend that the Sale Agreements, and the
construction, interpretation and enforcement thereof, be uniform and consistent
(except as the Sale Agreements may otherwise expressly provide or as the context
may otherwise require). Accordingly, in order to provide for and assure
consistency among the Sale Agreements, the parties hereby agree that the terms,
provisions, conditions, agreements, covenants, representations and warranties of
the parties contained in the Sale Agreements shall, in the case of any
Inconsistency, be governed, construed, interpreted and enforced solely in
accordance with the Asset Purchase Agreement by and among Buyer, Telectronics
Pacing Systems, Inc. and TPLC, Inc. concerning the purchase and sale of the U.S.
Operations as therein defined (the "U.S. Agreement"), which U.S. Agreement
shall, to such extent, supersede all of the other Sale Agreements; provided,
however, that any such Inconsistency which has arisen on account of any
requirement of law of the jurisdiction in which one of the Sale Agreements is
intended to apply (a "Legally Required Inconsistency") shall not be superseded
to the extent that such Legally Required Inconsistency is necessary for the
lawful consummation of the transactions contemplated by such of the Sale
Agreements. Without limiting the generality of the foregoing, the parties
further agree as follows:
(a) No representation or warranty contained in any Sale Agreement shall
be the basis for any claim, action, cause of action, termination, or rescission
right or other relief by any party against another party unless and to the
extent any such claim, action, cause of action, termination or rescission right
or other relief would be available to such party pursuant to the representations
or warranties of the other parties contained within the U.S. Agreement (as if
the same were applicable to the Business covered by the other Sale Agreements).
(b) The provisions for indemnification contained within Article X of
the U.S. Agreement (including without limitation, those concerning the
definition and extent of Buyer Claims or Seller Claims; those concerning the
time period during which any Buyer Claims or Seller Claims may be brought; the
Buyer Threshold and the Liability Cap applicable to any Buyer Claims; the
procedure for indemnification and the method of the bringing of Buyer Claims or
Seller Claims; Sellers' indemnity obligations with respect to the Litigation;
Buyer's and Sellers' indemnity obligations with respect to the FDA Consent
Decree; and the treatment of any indemnity payments as an adjustment to the
Purchase Price paid for the Purchased Assets) shall be applicable to, and be
considered limitations on, all Claims which may be brought under any of the Sale
Agreements for indemnification or otherwise and, except as provided in the Sale
Agreements, shall be the sole and exclusive remedy (in contract, tort or
otherwise) relating to any and all disputes, legal actions, suits or proceedings
arising out of or related to the Sale Agreements. The overall Liability Cap
applicable to all of the Sale Agreements shall be the sum of the Purchase Prices
paid under each of the Sale Agreements, as adjusted pursuant to this Agreement,
and the Buyer Threshold defined in the U.S. Agreement shall be applicable to all
Buyer Claims which may be brought under any of the Sale Agreements.
(c) The provisions concerning the financial statements, financial
position and financial results of operation relating to the Business contained
in Sections 4.5 and 4.6 of the U.S. Agreement, those concerning litigation
cooperation prior to closing contained in Section 6.5 of the U.S. Agreement and
those concerning the disposition of certain information contained in Section 7.7
of the U.S. Agreement shall be applicable to all of the Sale Agreements and to
the transactions and Business covered by the other Sale Agreements as fully as
if set forth therein in their entirety and shall supersede any similar provision
in any of the other Sale Agreements in case of any Inconsistency.
(d) Attached hereto are various schedules (the "Disclosure Schedules")
which describe certain matters concerning Sellers' worldwide Business. Such
Disclosure Schedules are hereby incorporated in each of the Sale Agreements as
if fully set forth therein in their entirety, and the matters described therein
shall be deemed to supplement and modify the representations, warranties,
covenants and agreement contained in the Sale Agreements to the extent so set
forth in such Disclosure Schedules.
(e) Except as provided in Section 7.4 of the U.S. Agreement, on a
world-wide basis, all Taxes (as defined in the U.S. Agreement), recording fees,
personal property, title application fees, patent and trademark assignment
registration fees, and such other transfer taxes and fees arising by virtue of
the transfer of the Purchased Assets and the Business from Sellers and their
Affiliates to Buyer or its Affiliates pursuant to the Sale Agreements (other
than Taxes based upon the net income or capital gain of Sellers or their
Affiliates arising out of the transactions contemplated thereby) shall be paid
by Buyer, provided that the parties shall cooperate with one another in all
lawful and reasonable arrangements to minimize such Taxes and fees, and further
provided that Sellers or their Affiliates shall reimburse Buyer within 30 days
for one-half of the sales taxes, use taxes or similar transfer taxes imposed on
the transfer of the Purchased Assets to Buyer. Buyer and Seller agree that they
will prepare and agree before Closing a schedule identifying categories of
assets located within each State and Territory of Australia and the agreed sale
value of each such category within each such State and Territory of Australia.
(f) Solely for purposes of the Sale Agreements and the transactions
contemplated thereby, each of the parties hereby agrees that any and all
disputes, legal actions, suits, or proceedings arising out of or relating to the
Sale Agreements or the transactions contemplated thereby, whether legal or
equitable in nature, or arising out of contract, tort or otherwise, may be
brought solely in a state or federal court located in the County of New Castle,
State of Delaware. By their signature to this Agreement, the parties, regardless
of their residence, each irrevocably submits to the jurisdiction of the courts
located in the County of New Castle, State of Delaware, in any dispute, legal
action, suit or proceeding arising out of or relating to the Sale Agreements or
the transactions contemplated thereby. Each of the parties acknowledges that it
has freely agreed to so submit to jurisdiction and venue, and that without such
agreement the courts located in the County of New Castle, State of Delaware
might not otherwise have jurisdiction over each of such parties.
(g) Solely for purposes of the Sale Agreements and the transactions
contemplated thereby, each of the parties hereby irrevocably appoints The
Corporation Trust Company, whose address is 1209 Orange Street, Wilmington,
Delaware, 19801, as their designated agent for service of process in the State
of Delaware upon whom may be served any notice, process or pleading in any
dispute, legal action, suit or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby, and each further consents
that service of process on such designated agent shall have the same effect as
if they had lawfully been served personally with process in the State of
Delaware; provided, that such appointment may be terminated after that date
which is 6 years from the Closing Date.
(h) Solely for purposes of the Sale Agreements and the transactions
contemplated thereby, each of the parties hereby irrevocably waives all claims
of immunity from jurisdiction or attachment, and waives all claims of immunity
from jurisdiction, attachment and execution to which it might otherwise be
entitled in any legal action or proceeding brought in any state or federal court
located in the County of New Castle, State of Delaware, and further irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to any dispute, legal action, suit or proceeding arising out
of or relating to the Sale Agreements or the transactions contemplated thereby
being brought in any federal or state court located in the County of New Castle,
State of Delaware, and hereby further irrevocably waives any claim that any such
dispute, legal action, suit, or proceeding brought in any such court has been
brought in an inconvenient forum.
ARTICLE III. - MISCELLANEOUS
3.1. Notices. Any notice, request, instruction or other document to be
given hereunder shall be in writing and delivered personally or sent by United
States registered or certified mail, postage prepaid, or by facsimile, according
to the instructions set forth below. Such notices shall be deemed given: at the
time delivered by hand, if personally delivered; at the time received if sent by
United States registered or certified mail; at the time when receipt is
confirmed by the receiving facsimile machine if sent by facsimile.
If to Buyer, to:
St. Jude Medical, Inc.
One Lillehei Plaza
St. Paul, Minnesota 55117
Attention: General Counsel
Facsimile: 612-490-4333
If to any Seller, to:
Pacific Dunlop Limited
Level 41, 101 Collins Street
Melbourne, Victoria 3000
Attention: Managing Director
Telecopy Number: 011-613-9270-7330
With a copy to:
Gardner, Carton & Douglas
321 N. Clark Street
Suite 3400
Chicago, Illinois 60610
Attention: Messrs. Robert J. Wilczek and Stephen M. Gatlin
Facsimile: 312-644-3381
or to such other address as such party may indicate by a notice delivered to the
other parties hereto.
3.2. Successors and Assigns. The rights of Buyer and Sellers pursuant
to this Agreement shall not be assignable by such party prior to the Closing
Date without the prior written consent of the other parties, except that Buyer
may assign its rights hereunder to one or more of its Affiliates prior to the
Closing Date, PROVIDED THAT Buyer shall not be released from any of its
obligations hereunder by reason of such assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their successors
and assigns.
3.3. Entire Agreement; Amendments. This Agreement and the Sale
Agreements contain the entire understanding of the parties hereto with regard to
the subject matter contained herein, and supersede all prior written or oral
agreements, understandings or letters of intent between or among any of the
parties hereto, with respect to the subject matter hereof. This Agreement shall
not be amended, modified or supplemented except by a written instrument signed
by an authorized representative of each of the parties hereto. In the event of a
dispute or inconsistency between any of the Sale Agreements and this Agreement,
the terms of this Agreement shall prevail. Capitalized terms used herein not
otherwise defined herein shall have the same meanings herein as ascribed to such
terms in the U.S. Agreement.
3.4. Interpretation. Section headings are inserted for convenience of
reference only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement.
3.5. Waivers. Any term or provision of this Agreement may be waived, or
the time for its performance may be extended, pursuant to a written action by
the party or parties entitled to the benefit thereof. The failure of any party
hereto to enforce at any time any provision of this Agreement shall not be
construed to be a waiver of such provision, nor in any way to affect the
validity of this Agreement or any part hereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to constitute a waiver of any other or subsequent
breach.
3.6. Partial Invalidity. Wherever possible, each provision hereof shall
be interpreted in such manner as to be effective and valid under applicable law,
but in case any one or more of the provisions contained herein shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
provision shall be ineffective to the extent, but only to the extent, of such
invalidity, illegality or unenforceability without invalidating the remainder of
such invalid, illegal or unenforceable provision or provisions or any other
provisions hereof, unless such a construction would be unreasonable.
3.7. Execution in Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be considered an original instrument,
but all of which shall be considered one and the same agreement, and shall
become binding when one or more counterparts have been signed by each of the
parties hereto and delivered to each Seller and Buyer.
3.8. Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Delaware, without giving
effect to any choice of laws provisions which may direct the application of the
laws of another jurisdiction.
3.9. Additional Parties. Certain of the Sale Agreements will be
executed subsequent to the date of this Agreement. The parties agree that upon
execution of such Sale Agreements, this Agreement shall be amended to add the
parties to such Sale Agreements as parties hereto and to reference the
additional Sale Agreements on Exhibit A hereto, with such amendments to be
effected and evidenced by the delivery to each party hereto of a revised Exhibit
A together with a counterpart signature page to this Agreement, executed by such
new parties and reflecting such parties as "Sellers" for purposes of this
Agreement.
* * * * * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year set forth on the first page hereto.
BUYER: SELLERS:
O Acquisition, Inc Telectronics Pacing Systems, Inc.
By: /s/ S.L. Wilson By: /s/ James Dennis
----------------------------- --------------------------------
Title: Vice President - Finance and Title: President
Chief Financial Officer --------------------------------
-----------------------------
TPLC, Inc.
By: /s/ James Dennis
--------------------------------
Title: President
--------------------------------
Telectronics Pty. Ltd.
By: /s/ James Dennis
--------------------------------
Title: Attorney-in-Fact
--------------------------------
Medical Telectronics Pty. Ltd.
By: /s/ James Dennis
--------------------------------
Title: Attorney-in-Fact
--------------------------------
EXHIBIT A
SALE AGREEMENTS
Asset Purchase Agreement dated as of even date herewith among Buyer,
Telectronics Pacing Systems, Inc. and TPLC Inc.
Asset Purchase Agreement (Australia) dated as of even date herewith among Buyer,
Telectronics Pty. Ltd. and Medical Telectronics Pty. Ltd.
EXECUTION COPY
ASSET PURCHASE AGREEMENT
(UNITED STATES)
Dated as of September 24, 1996
by and among
O Acquisition, Inc., as Buyer,
and
Telectronics Pacing Systems, Inc.
and
TPLC, Inc., as Sellers
TABLE OF CONTENTS
Page
ARTICLE I. PURCHASE AND SALE...............................................2
1.1. Purchased Assets...............................................2
1.2. Excluded Assets................................................3
1.3. Assignment of Assets...........................................5
ARTICLE II. PURCHASE PRICE AND CLOSING......................................6
2.1. Purchase Price.................................................6
2.2. Allocation of Purchase Price...................................8
2.3. Closing Date...................................................8
ARTICLE III. ASSUMPTION OF LIABILITIES.......................................9
3.1. Assumed Liabilities............................................9
3.2. Excluded Liabilities..........................................10
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF SELLERS......................12
4.1. Organization of Sellers.......................................12
4.2. Corporate Authority...........................................12
4.3. Absence of Seller Conflicts...................................13
4.4. Compliance with Certain Laws, Rules and Regulations...........13
4.5. Financial Matters.............................................13
4.6. Operations Since the Fiscal Year End..........................14
4.7. No Undisclosed Liabilities....................................15
4.8. Taxes.........................................................16
4.9. Title to and Condition of Purchased Assets....................16
4.10. Accounts Receivable...........................................16
4.11. Real Property.................................................17
4.12. Inventory.....................................................17
4.13. Personal Property.............................................17
4.14. Governmental Permits..........................................17
4.15. Proprietary Rights............................................18
4.16. Employees and Related Agreements; ERISA.......................19
4.17. Contracts.....................................................20
4.18. Status of Contracts...........................................22
4.19. Environmental Matters.........................................22
4.20. Legal Proceedings.............................................23
4.21. No Finder.....................................................23
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF BUYER........................23
5.1. Organization of Buyer.........................................23
5.2. Authority of Buyer............................................24
5.3. Absence of Buyer Conflicts....................................24
5.4. No Finder.....................................................24
5.5. Financial Ability.............................................24
ARTICLE VI. ACTIONS PRIOR TO THE CLOSING DATE..............................25
6.1. Buyer's Investigation.........................................25
6.2. Preserve Accuracy of Representations and Warranties...........25
6.3. Operations Prior to the Closing Date..........................25
6.4. Antitrust Law Cooperation.....................................26
6.5. Litigation Cooperation........................................27
ARTICLE VII. ADDITIONAL AGREEMENTS..........................................27
7.1. [Reserved]....................................................27
7.2. Employees and Employee Benefit Plans..........................27
7.3. Post-Closing Remittances......................................29
7.4. Conveyance and Transfer of Owned Real Property................29
7.5. Cooperation in Litigation.....................................29
7.6. Access to Records after Closing...............................31
7.7. Disposition of Certain Information............................31
7.8. Bulk Sales Laws...............................................32
7.9. Certain Disclosures...........................................32
7.10. Certain Ongoing FDA Matters...................................32
7.11. Special Remedies..............................................33
7.12. Noncompetition................................................33
7.13. Forms W-2.....................................................33
7.14. International Purchase Agreements; Other Agreements...........34
7.15. Financial Statement Preparation...............................34
7.16. Corporate Existence...........................................34
7.17. Certain Products..............................................35
7.18. Certain Retention Bonuses.....................................35
ARTICLE VIII. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER...................35
8.1. No Misrepresentation or Breach of Covenants and Warranties....35
8.2. HSR Period....................................................35
8.3. No Restraint..................................................35
8.4. Necessary Governmental Approvals..............................36
8.5. Closing Date Deliveries by Sellers............................36
8.6. Other Transactions............................................37
8.7. Other Conditions..............................................37
ARTICLE IX. CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH SELLER.............37
9.1. No Misrepresentation or Breach of Covenants and Warranties....37
9.2. HSR Period....................................................37
9.3. No Restraint..................................................37
9.4. Necessary Governmental Approvals..............................37
9.5. Release of Guarantees.........................................38
9.6. Buyer's Closing Date Deliveries...............................38
9.7. Other Transactions............................................38
9.8. Other Conditions..............................................38
ARTICLE X. INDEMNIFICATION................................................39
10.1. Indemnification by Sellers....................................39
10.2. Indemnification by Buyer......................................40
10.3. Procedure for Indemnification.................................41
10.4. Certain Benefits..............................................41
10.5. Certain FDA Consent Decree Matters............................42
10.6. Adjustment to Purchase Price..................................42
10.7. Guarantees....................................................42
ARTICLE XI. TERMINATION....................................................42
11.1. Termination...................................................42
11.2. Notice of Termination.........................................43
11.3. Effect of Termination.........................................43
ARTICLE XII. GENERAL PROVISIONS.............................................43
12.1. Survival of Obligations.......................................43
12.2. No Public Announcement........................................43
12.3. Notices.......................................................44
12.4. Successors and Assigns........................................45
12.5. Entire Agreement; Amendments..................................45
12.6. Interpretation................................................45
12.7. Waivers.......................................................46
12.8. Expenses......................................................46
12.9. Partial Invalidity............................................46
12.10. Execution in Counterparts.....................................46
12.11. Best Efforts; Further Assurances..............................46
12.12. Governing Law.................................................46
12.13. "Knowledge"...................................................46
12.14. No Third Party Beneficiaries..................................46
12.15. Disclosure Schedules..........................................47
EXHIBITS
A - Consulting Agreement
B - Opinion of Counsel to Sellers
C - Other Conditions
D - Opinion of Counsel to Buyer
E - Guaranty
LIST OF SCHEDULES
Certain Prepaid Expenses Schedule (1.1(j)) Other Purchased Assets Schedule
(1.1(m)) Accufix Research Institute Schedule (1.2(h)) Affiliated Agreements
Schedule (1.2(j)) Contingent Payments Schedule (2.1(b)) Product Liability
Litigation Schedule (3.2(b)) Consents/Conflicts Schedule (4.3) Compliance with
Laws Schedule (4.4) Conduct of Domestic Operations Schedule (4.6) Taxes Schedule
(4.8) Encumbrances Schedule (4.9) Real Property Schedule (4.11) Inventory
Schedule (4.12) Personal Property Schedule (4.13) Governmental Permits Schedule
(4.14) Proprietary Rights Schedule (4.15) Employee Benefits Schedule (4.16)
Contracts Schedule (4.17) Status of Contracts Schedule (4.18) Environmental
Matters Schedule (4.19) Legal Proceedings Schedule (4.20) Retained Employees
Schedule (7.2) Necessary Governmental Approvals Schedule (8.4) Guarantees
Schedule (9.5) "Knowledge" Schedule (12.13)
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of September 24, 1996 (as
amended from time to time, the "Agreement"), by and among O Acquisition, Inc., a
Delaware corporation ("Buyer"), Telectronics Pacing Systems, Inc., a Delaware
corporation ("TPSI") and TPLC, Inc., a Delaware corporation (d/b/a Telectronics
Pacing Systems) ("TPLC," together with TPSI, the "Sellers").
WHEREAS, Sellers and various affiliated entities are engaged in the
design, manufacture, assembly, distribution and sale of cardiac arrhythmia
devices including, but not limited to, pacemakers, leads, cardiomyoplasty
devices, and their attendant accessories in and from North America, Australia,
Europe, New Zealand, South America and Asia (the "Business," except that the
"Business" shall not include any of the Excluded Assets or Excluded Liabilities
(each as hereinafter defined));
WHEREAS, Sellers engage in certain aspects of the Business from various
locations in the United States (the "U.S. Operations") and their affiliated
entities engage in certain aspects of the Business from various other locations
including Canada, Australia, Europe, New Zealand, South America and Asia, as
well as through independent distributors in other locations throughout the world
(the "International Operations");
WHEREAS, Buyer desires to purchase from Sellers, and Sellers desire to
sell to Buyer, substantially all of the assets and properties relating to the
U.S. Operations and the Business, all on the terms and subject to the conditions
set forth herein;
WHEREAS, affiliates of Buyer also desire to purchase substantially all
of the assets and properties relating to the International Operations and the
Business, including the capital stock of certain of the entities engaged in such
International Operations, according to the terms of certain asset and share
purchase agreements relating thereto (the "International Purchase Agreements");
and
WHEREAS, various matters concerning the Business are described in
certain schedules (the "Disclosure Schedules") which are referred to herein by
certain specific names (e.g., the Real Property Schedule), which Disclosure
Schedules are attached to, and being delivered to Buyer as part of, a
Coordination and Adjustment Agreement of even date herewith (and hereinafter
referred to and defined as the "Adjustment Agreement"), and which Disclosure
Schedules are hereby incorporated by reference in this Agreement as if attached
to and delivered herewith.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, Buyer and Sellers agree as follows:
ARTICLE I.
PURCHASE AND SALE
1.1. PURCHASED ASSETS. On the terms and subject to the
conditions of this Agreement, on the Closing Date (as defined in Section 2.3)
Sellers shall sell, transfer, assign, convey and deliver to Buyer, and Buyer
shall purchase from Sellers, free and clear of all Encumbrances except for
Permitted Encumbrances (as such terms are hereinafter defined), all of Sellers'
rights, title and interest in and to all of the assets and properties owned by
Sellers and used in connection with the Business, of every kind and description,
wherever located, whether tangible or intangible, real, personal or mixed, as
such assets and properties exist on the Closing Date (collectively, the
"Purchased Assets"), other than those assets and properties constituting
Excluded Assets (as defined in Section 1.2). Subject to Section 1.2, the
Purchased Assets shall include, without limitation:
(a) Real Property. All interests of Sellers in the Real
Property (as defined in Section 4.11(a)) described in the Real Property
Schedule, and all interests of Seller in all land, plant, warehouse and office
facilities and other improvements and fixtures attached to said Real Property,
as well as all prepaid rent and security deposits in connection with any Leased
Real Property (as defined in Section 4.11(a)) as described in the Certain
Prepaid Expenses Schedule;
(b) Tangible Assets. All machinery, equipment (including spare
parts), vehicles, furniture, fixtures, capital improvements in process, models,
prototypes and other tangible personal property that is owned or leased by
either Seller and used in the conduct of the Business;
(c) Inventory. All inventories consisting of raw materials,
work in process, finished goods, service parts and supplies owned, produced or
otherwise acquired by either Seller that are used or intended to be used in the
conduct of the Business including, without limitation, inventory on consignment
(the "Inventory");
(d) Receivables. All trade accounts and notes receivable
generated by the conduct of the Business and owing from third parties (but not
from Affiliates (as defined in Section 3.1) of Seller) (collectively, the
"Receivables");
(e) Proprietary Rights. To the extent assignable, all of the
Sellers' Proprietary Rights (as defined in Section 4.15) together with all
goodwill associated therewith, including, without limitation, the right to use
the name "Telectronics" in the conduct of the Business;
(f) Executory Agreements. To the extent assignable, the rights
of each Seller pursuant to (i) any agreement, contract, lease, commitment or
obligation entered into by Seller in the ordinary course of the Business prior
to the Closing Date (not otherwise constituting a Seller Agreement)
(collectively, the "Miscellaneous Agreements"), and (ii) the Seller Agreements
(as defined in Section 4.18);
(g) Governmental Permits. To the extent assignable, all
Governmental Permits (as defined in Section 4.14) listed on the Governmental
Permits Schedule;
(h) Claims and Rights. Except to the extent that they relate
to the Litigation (as defined in Section 3.2(b)), all claims, rights and causes
of action of either Seller with or against any third parties, including any
rights against third parties pursuant to claims for negligence or other tort or
contract actions, or any terms, conditions, guarantees, warranties or
indemnities, whether express or implied, in relation to any Purchased Asset;
(i) Promotional Materials. All sales and promotional
materials, catalogues and advertising literature owned by either Seller and used
in connection with the Business;
(j) Certain Prepaids. All rights in connection with the
deposits and prepaid expenses described on the Certain Prepaid Expenses
Schedule;
(k) Computer Systems. Subject to Sections 7.5, 7.6, and 7.7
hereof, all computer hardware and software used in the operation of the Business
(including user manuals and, in the case of software owned by either Seller,
both object code and source code versions), printers, modems and other related
equipment, except for such hardware located at the Accufix Research Institute
(and subject to Sellers' license to use software described in Section 7.6(a));
(l) Customer and Vendor Lists; Technical Databases. Subject to
Sections 7.5, 7.6, and 7.7 hereof, all customer and vendor lists relating to the
Business, and all files and documents (including credit information) relating to
customers and vendors of the Business, and other business, technical and
financial databases, records, files, books and documents (whether in hard copy
or computer format) relating to the Business, including sales, distribution and
purchase correspondence, personnel and employment records, any information
relating to Taxes (as defined below) imposed on the Purchased Assets and trade
association memberships; and
(m) Other Purchased Assets. The assets described in the Other
Purchased Assets Schedule.
1.2. EXCLUDED ASSETS. Notwithstanding anything else to the
contrary herein, the Purchased Assets shall not include the following as the
same may exist on the Closing Date (collectively, the "Excluded Assets"):
(a) Cash. Except for the Receivables, all cash, cash
equivalents, negotiable instruments, bank accounts (other than accounts
receivable lock boxes for all periods subsequent to the Closing Date),
certificates of deposit, investment securities, commercial paper and any other
marketable securities or similar investments of Sellers;
(b) Corporate Records. All corporate minute books, stock
transfer books, corporate seals and other corporate records and franchises of
either Seller;
(c) Tax Refunds; Tax Attributes. All claims or rights to
refunds of any federal, state, county, local or foreign income, alternative or
add-on minimum, gross income, gross receipts, property, sales, use, transfer,
license, excise, franchise, employment, payroll, withholding, ad valorem,
customs duty, governmental fee or other like tax, assessment or charge of any
kind whatsoever, together with any interest, penalty or fine, addition to tax or
additional amount imposed by any Governmental Body (as defined in Section 4.3)
(collectively, "Taxes") for which either Seller is or may be liable, together
with any net operating losses or future income tax benefits relating thereto
that either Seller is or may be entitled to;
(d) Employee Benefit Assets. Segregated funds and other assets
maintained by or for any employee benefit agreements, plans or arrangements or
otherwise maintained by Seller on behalf of persons now or heretofore employed
or retained by such Seller (except for such funds and assets maintained under
the individual employment contracts described on the Employee Benefits Schedule
under the caption "Deferred Compensation Arrangements") and further indicated as
being assumed by Buyer;
(e) Certain Litigation. All claims, rights and causes of
action whatsoever, whether under product warranties, insurance policies, claims
for contribution, indemnification, tort, contract or otherwise from other
parties to the extent relating to any Excluded Assets or any Excluded
Liabilities (as defined in Section 3.2) (including, but not limited to, the
Litigation);
(f) Certain Records. All records, books, documents, files or
information of any kind to the extent relating to any Excluded Assets or
Excluded Liabilities, including, without limitation, the Litigation and
including in particular all such records, books, documents and files relating to
the manufacture of all products, parts and components prior to the Closing Date
and all regulatory records and design records relating thereto (provided that
Buyer shall be provided with copies of all device master records for currently
produced products and shall also be entitled to possession of a copy of other
device master records);
(g) Prepaids. Except as set forth on the Certain Prepaid
Expenses Schedule, all rights in connection with any deposits and prepaid
expenses made by either Seller;
(h) Research Institute. Each Seller's leasehold rights to the
real property (together with all plant, warehouse and office facilities and
other fixtures and improvements attached to said real property) located at 7307
Revere Parkway, Englewood, Colorado, as well as the assets and records located
at such facility that are used for the purpose of operating the Sellers'
so-called "Accufix Research Institute," including those set forth on the Accufix
Research Institute Schedule;
(i) Certain Reserves. Reserves established by either Seller
for patient monitoring, leads litigation legal expenses, product liability
settlement contingencies, or other expenses associated with the Litigation;
(j) Intercompany Matters. Any receivables, debts or
obligations which are owed to any Seller from any of its Affiliates, together
with any investments of Seller in any of its Affiliates and those intercompany
agreements between Sellers and its Affiliates listed on the Affiliated
Agreements Schedule;
(k) Insurance Rights. All claims, rights or causes of action
whatsoever under any insurance policies maintained by or for the benefit of
either Seller or with respect to any of their businesses, assets, liabilities or
operations, except for property insurance for damage occurring prior to the
Closing Date to property which constitutes a Purchased Asset; and
(l) J-Wire Products. All claims or rights in, to, and relating
to the ownership of the Active Lead Products (as defined in Section 3.2(b)) and
the Passive Lead Products (as defined in Section 3.2(b)) whatsoever, including,
without limitation, (i) the Proprietary Rights and Governmental Permits relating
to such products, (ii) any inventory of such completed products or components
thereof, and (iii) all designs, drawings, processes, records, prototypes,
tooling and machinery used in the development, manufacture, assembly or
processing of such products.
1.3. ASSIGNMENT OF ASSETS. (a) Prior to the Closing (as
defined in Section 2.1), each Seller shall use its reasonable best efforts, and
Buyer shall cooperate with Seller in such efforts, to obtain all
non-governmental approvals, consents or waivers necessary to assign to Buyer all
leases, contracts, licenses, agreements, sales or purchase orders, commitments,
property interests, qualifications or other assets described in Section 1.1
hereof and any claim, right or benefit arising thereunder or resulting therefrom
(collectively, the "Interests") as soon as practicable; provided that neither
Seller nor Buyer shall be obligated to pay any consideration for the foregoing
approvals, consents or waivers to the third party from whom such approval,
consent or waiver is requested.
(b) Except with respect to the matters described on Exhibit C,
to the extent any of the approvals, consents or waivers referred to in Section
1.3(a) hereof have not been obtained by Sellers as of the Closing Date, then the
related Purchased Assets shall not be assigned to Buyer at the Closing, and, if
Buyer so requests, Sellers, for a period of three (3) months after the Closing
Date, shall continue to use their reasonable best efforts, and Buyer shall
cooperate with Sellers in such efforts (without the payment of any consideration
by Sellers or Buyer for such approvals, consents or waivers), to obtain such
approvals, consents or waivers. Upon request by Buyer, for a period of three (3)
months after the Closing Date, Sellers shall use their reasonable best efforts
to, with Buyer reimbursing Sellers for their out-of-pocket expenses and
indemnifying and holding harmless Sellers for any liabilities or obligations
incurred by them: (i) cooperate with Buyer in any reasonable and lawful
arrangements under which Buyer would obtain the benefits of, and assume the
post-Closing obligations under, such Interest, and (ii) enforce for the account
of Buyer any rights of either Seller arising from such Interest against the
issuer thereof or the other party or parties thereto (including the right to
elect to terminate any such Interest in accordance with the terms thereof upon
the written advice of Buyer). Sellers will promptly pay (or cause to be paid) to
Buyer when received all amounts received by Sellers under any Interest. If,
after the foregoing three (3) month period, the necessary consents, approvals or
waivers have not been obtained regarding the Interests, Buyer and Sellers will
cooperate in any commercially reasonable arrangement to obviate the need for
such consent, approval or waiver (such as by prepaying all amounts remaining due
under any property lease), all at Buyer's expense. For purposes of this Section
1.3(b), the matters described on Exhibit C shall not be deemed to be
"Interests".
ARTICLE II.
PURCHASE PRICE AND CLOSING
2.1. PURCHASE PRICE. (a) Upon consummation of the transactions
contemplated hereby (the "Closing"), and in consideration of the sale of the
Purchased Assets, Buyer shall pay to Sellers an aggregate amount equal to
US$120.8 million, and assume the Assumed Liabilities (as defined in Section 3.1)
regarding the Business. The purchase price shall be subject to adjustment
according to the terms of Sections 2.1(b) and 10.6 of this Agreement and the
Adjustment Agreement, and the cash amount ultimately paid by Buyer to Sellers
after any adjustments required by this Agreement or the terms of Adjustment
Agreement shall be referred to herein as the "Purchase Price."
(b) (i) Contingent Payments. As further consideration for the
Purchased Assets, Buyer hereby agrees to pay to the Sellers contingent payments
as a percentage of sales or other dispositions made after the Closing Date by
Buyer and its Affiliates of certain products described below. The products
subject to the foregoing payments shall be (a) the bradycardia pulse generator
models of the Business which currently have appropriate regulatory approvals,
where required, for commercial distribution or which currently have such
appropriate regulatory approvals, where required, for clinical evaluation or
clinical testing, in any country anywhere in the world, all as listed on the
Contingent Payments Schedule (which is represented by Sellers to contain only
those products meeting the foregoing description), as the same may hereafter be
distributed by or under license from Buyer and its Affiliates and regardless of
the name, model number or other designation under which such bradycardia pulse
generator models are hereafter sold or distributed ("TPSI Licensed Pulse
Generators"), (b) any bradycardia pulse generator model, whether or not
appropriate regulatory approvals have currently been obtained for commercial
distribution or clinical evaluation or testing, which incorporates the Business'
rate-responsive algorithm commonly referred to as "minute ventilation" which is
sold or distributed after the Closing Date by or under license (excluding
royalty free cross licenses with third parties) from Buyer and its Affiliates,
but exclusive of TPSI Licensed Pulse Generators ("Minute Ventilation Pulse
Generators") and (c) any pacemaker lead product, whether or not heretofore
manufactured, sold or distributed by the Business, which is sold or distributed
after the Closing Date by Buyer or its Affiliates for use in connection with
TPSI Licensed Pulse Generators that are sold or distributed after the Closing
Date ("Related Leads").
(ii) Contingent Payment Amounts. With respect to any TPSI
Licensed Pulse Generators and any Related Leads, the contingent payments payable
by Buyer and its Affiliates to the Sellers shall be an amount equal to 15% of
the amount by which (a) the annual Net Sales (as hereinafter defined) received
by Buyer and its Affiliates from the sale or other disposition of such TPSI
Licensed Pulse Generators and any Related Leads exceeds (b) US$120 million
during each of the calendar years 1997 through 2002, inclusive. With respect to
any Minute Ventilation Pulse Generators, the contingent payments payable by
Buyer and its Affiliates to the Sellers shall be an amount equal to 2.5% of the
Net Sales received by Buyer and its Affiliates from the sale or other
disposition of such Minute Ventilation Pulse Generators during each of the
calendar years 1997 through 2002, inclusive. "Net Sales" as used herein means
the gross sales of Buyer and its Affiliates, received or receivable from any
place in the world less any returns, allowances, credits, rebates, and when
separately stated on an invoice, shipping and taxes; all as determined in
accordance with United States generally accepted accounting principles
consistently applied with those utilized by Buyer and its Affiliates in
connection with their audited financial statements prepared in the ordinary
course of their respective businesses and published in the annual report to
stockholders of Buyer's parent company, St. Jude Medical, Inc., or any successor
or assign (or, if such annual report to stockholders or audited financial
statements are at any relevant time not prepared, then in any substantially
similar financial statement prepared consistently with the same). If the Closing
occurs in calendar year 1997, contingent payments payable for the remainder of
such calendar year shall be calculated by multiplying the US$120 million base
figure referred to above for calculating contingent payments on Net Sales from
TPSI Licensed Pulse Generators and Related Leads by a fraction, the numerator of
which is the number of days remaining in 1997 after the Closing Date, and the
denominator of which is 365.
(iii) Maximum Contingent Payments. The amount of the
contingent payments to be made by Buyer and its Affiliates to the Sellers shall
not exceed, in the aggregate and calculated on a net present value basis as
hereinafter described, US$25 million. In calculating the net present value of
any contingent payments hereinafter paid, the amount of the contingent payments
actually paid shall be discounted by the following discount factors
(approximating an annual discount factor of 12%):
Calendar Year with Respect to
Which Contingent Payment
Is Payable Discount Factor
----------------------------- ---------------
1997 0.893
1998 0.797
1999 0.712
2000 0.636
2001 0.567
2002 0.507
When the aggregate of all contingent payments hereinafter made by Buyer and its
Affiliates to the Sellers hereunder shall equal US$25 million, calculated on a
net present value basis using the applicable discount factors as aforesaid, then
no further or additional contingent payments or other amounts shall be payable
by Buyer and its Affiliates to the Sellers with respect to the foregoing.
(iv) Payments; Disputes. All contingent payments payable by
Buyer to the Sellers hereunder shall be paid on or before March 1 in each of the
years 1998 through 2003, inclusive, with respect to Net Sales from the products
subject to contingent payments for the prior calendar year. For example, all
contingent payments due with respect to Net Sales from January 1, 1997 through
December 31, 1997 shall be payable on March 1, 1998. Buyer shall pay such
amounts to Sellers within the United States without deduction for any
withholding taxes imposed by any jurisdictions. Buyer shall deliver to the
Sellers on or prior to March 1 in each applicable year, together with its
payment of the applicable amount, a schedule of its Net Sales from each of the
TPSI Licensed Pulse Generators, Related Leads and of the Minute Ventilation
Pulse Generators for the prior calendar year, together with such detailed
supporting documentation as the Sellers may reasonably request. In case the
Sellers disputes any item in such schedule, or the related contingent payments
calculation, the Sellers shall so notify Buyer in writing within 90 days of
their receipt from Buyer of such schedule and supporting detail. If the parties
are unable to resolve any such dispute within 60 days thereafter the parties
shall submit the disputed items to a third party accounting firm of
international standing for final resolution in the same manner referred to in
Section 1.1 of the Adjustment Agreement.
(v) Allocation of Payments. All contingent payments payable
hereunder shall be payable to TPSI and shall be allocated for all United States
and foreign income tax reporting purposes solely to such payee, its successors
or assigns.
(c) The Purchase Price and any other payments to be made
pursuant to this Agreement shall be made in U.S. Dollars by wire transfer of
immediately available funds, in such amounts and to such bank accounts as the
receiving party shall designate to the paying party.
2.2. ALLOCATION OF PURCHASE PRICE. Prior to the Closing, Buyer
and Sellers shall use their best reasonable efforts to reach an agreement
regarding how the Purchase Price, together with the Assumed Liabilities (as
hereinafter defined), shall be allocated among the Purchased Assets. Assuming
the parties reach such an agreement, Buyer and Sellers shall file all tax
returns and statements, forms and schedules in connection therewith consistent
with such allocation and shall take no position contrary thereto unless required
by law. Each of Buyer and the Sellers shall treat the purchase and sale of
assets under this Agreement as an "applicable asset acquisition" within the
meaning of Section 1060 of the Internal Revenue Code of 1986, as amended (the
"Code"), and shall prepare and timely file Internal Revenue Service Form 8594
(and any required exhibits thereto) in a manner consistent with the allocation
of the Purchase Price under this Section 2.2. In the event of any adjustment to
the Purchase Price pursuant to this Agreement or the Adjustment Agreement, the
allocation shall be adjusted in the manner provided for in the Adjustment
Agreement.
2.3. CLOSING DATE. The Closing shall be consummated at 10:00
A.M., local time, on the last business day of the month in which the conditions
to the Closing set forth in Articles VIII and IX have been satisfied, at the
offices of Gardner, Carton & Douglas at 321 North Clark Street, in Chicago,
Illinois, or at such other time or place as shall be agreed upon by Buyer and
each Seller. The time and date on which the Closing is actually held is referred
to herein as the "Closing Date." The Closing shall be effective on and after the
opening of business on the Closing Date and risk of any loss with respect to the
Purchased Assets shall pass to Buyer at such effective time.
ARTICLE III.
ASSUMPTION OF LIABILITIES
3.1. ASSUMED LIABILITIES. Subject to Section 3.2, on the
Closing Date and effective at the Closing, Buyer shall assume and agree to
discharge the following liabilities, obligations and commitments of Sellers, as
the same may exist at the Closing Date:
(a) Balance Sheet Liabilities. All liabilities, obligations
and commitments of the Sellers reserved for or reflected on the audited balance
sheet of Sellers as of June 30, 1996, adjusted, however, to exclude the Excluded
Assets and the Excluded Liabilities (the "Year End Balance Sheet"), as the same
may exist as of the Closing Date;
(b) Ordinary Course. All liabilities, obligations and
commitments incurred by Sellers since June 30, 1996 in the ordinary course of
the conduct of the Business that are of the same type or nature as those
reserved for, or reflected on, the Year End Balance Sheet, as the same may exist
as of the Closing Date (collectively, the "Ordinary Course Liabilities");
(c) Executory Contracts. All liabilities, obligations and
commitments of Sellers to be paid or performed after the Closing Date pursuant
to the Seller Agreements and the Miscellaneous Agreements;
(d) Warranties; Returns. Except as set forth in Section
3.2(d), all ordinary course obligations of Sellers required to be performed
after the Closing Date pursuant to product or service guaranties or warranties
(whether express or implied) or under Sellers' product return policies given in
the ordinary course by a Seller, including, without limitation, all liabilities
and obligations for product returns (regardless of whether such products were
sold before or after the Closing Date);
(e) FDA Consent Decree. Liabilities, obligations or
commitments of Seller for periods from and after the Closing Date pursuant or
related to the Consent Decree entered into by TPLC and James W. Dennis with the
United States Food and Drug Administration (the "FDA") as of May 22, 1995 (as
well as the liabilities, obligations and commitments of Mr. James W. Dennis
pursuant or related thereto) a copy of which has been provided to Buyer (as
amended from time to time, the "FDA Consent Decree"), as such liabilities,
obligations or commitments are interpreted or construed by the FDA or any
appropriate court of law or Governmental Body; and
(f) Vacation Time; Sick Days. Liabilities, obligations or
commitments of either Seller for accrued vacation pay (to the extent accrued on
the Year End Balance Sheet ) or as thereafter accrued in the ordinary course and
reflected on either Seller's financial books and records at the Closing Date; or
holidays, sick days, personal days, pregnancy or family leave or other similar
holiday or other matters for all Transferred Employees (as defined in Section
7.2), regardless of whether any Seller has accrued any liabilities or reserves
for such matters.
All of the foregoing liabilities, obligations and commitments to be assumed by
Buyer hereunder (excluding any Excluded Liabilities) are referred to herein as
the "Assumed Liabilities." In no event shall Buyer assume or otherwise become
responsible for any liabilities of Sellers, or any Persons (as defined in
Section 4.3) which directly or indirectly control, are controlled by, or are
under common control with, Sellers (collectively, "Affiliates"), other than the
Assumed Liabilities.
3.2. EXCLUDED LIABILITIES. Notwithstanding anything to the
contrary contained in Section 3.1, Buyer shall not assume or be obligated to
pay, perform or otherwise discharge any liability, obligation or commitment of
Sellers (whether direct or indirect, matured or unmatured, known or unknown,
absolute, accrued, contingent or otherwise or due and owing or arising prior to,
on or after the Closing Date) not expressly assumed by Buyer pursuant to the
transactions contemplated by this Agreement (all such liabilities, obligations
or commitments not being assumed are collectively referred to herein as the
"Excluded Liabilities"), and none of the following shall be "Assumed
Liabilities" for purposes of this Agreement:
(a) Taxes. Liabilities in respect of any Taxes imposed on
either of the Sellers for all periods prior to the Closing Date;
(b) Litigation. Liabilities for the following (regardless of
whether any such liability is direct, indirect or by reason of indemnification
granted to, or other agreements with third parties prior to the Closing Date, or
based upon theories of successor liability imposed upon Buyer as a result of its
continuation after the Closing of the Business or sale of any product line
thereof) (collectively, the "Litigation"): all claims (whether brought by any
person individually or in a class, derivative or representative capacity,
including a trustee in bankruptcy), proceedings, lawsuits, recalls,
investigations, damages, losses or fines that relate to, or arise out of, any
damage, loss or injury to third parties alleged to be caused by: (x) the "active
lead" product models incorporating the so-called "J wire" (including, without
limitation, those models commonly referred to as the 329-701, 330-801, or
033-812 product models) (the "Active Lead Products") which were manufactured,
sold or distributed by the Business prior to the Closing Date, (y) the "passive
lead" product models incorporating the so-called "J wire" (including, without
limitation, those models commonly referred to as the ENGUARD or the ENCOR
330-854, 033-856, 330-755 or 033-757 product models) (the "Passive Lead
Products") which were manufactured, sold or distributed by the Business prior to
the Closing Date, or (z) defects in, or the negligent design or manufacture of,
any other products sold by or for the Business prior to the Closing Date to
unaffiliated third party purchasers, or which are part of Seller's "finished
goods inventory" as of the Closing Date (provided that for purposes of this
Agreement, any products which the Sellers or the Business are prohibited from
selling under any Requirements of Law (as defined in Section 4.3) by virtue of
the FDA Consent Decree shall not be deemed to be part of the "finished goods
inventory") including, without limitation, those claims and lawsuits set forth
on the Product Liability Litigation Schedule;
(c) Intercompany Liabilities. (1) Liabilities and obligations
owed to any Affiliate of either Seller, including any trade or other accounts
payable by either of the Sellers to any of their Affiliates set forth on the
Year End Balance Sheet under the following headings, as the same may exist at
the Closing: Operating Advances, Intergroup Loans Payable and IG Trade Bills
Payable or any interest due on any intercompany liabilities or obligations, (2)
any liability or other obligation of either of the Sellers under or related to
the Patent Purchase Agreement dated as of May 28, 1996 with Telectronics NV
pursuant to which certain of the Proprietary Rights were transferred from
Telectronics NV to TPSI and, (3) any liability or other obligation arising
pursuant to any agreement listed on the Affiliated Agreements Schedule;
(d) Certain Warranty, Monitoring and Recall Matters.
Liabilities and obligations pursuant to (i) any product warranty matters,
whether express or implied, relating to the Active Lead Products, the Passive
Lead Products or the so-called "Soft-Top Products," including, without
limitation, any recall costs or other costs and expenses incident to any
required monitoring of any person who was implanted with an Active Lead Product,
a Passive Lead Product or a Soft-Top Product, and (ii) any required payments,
reimbursements or repayments pursuant to settlement agreements which have been
or may be reached by Sellers with the Health Care Finance Administration or
similar state, local or foreign agencies concerning payments for any Active Lead
Product, Passive Lead Product or a Soft-Top Product heretofore marketed by
Sellers. Buyer shall sell to Sellers (or their designees), at Buyer's cost and
upon either Seller's request after the Closing, a sufficient number of
comparable replacement products and components (with appropriate warranties
consistent with Buyer's responsibility as described below to further replace
such products and components at Buyer's cost) from products and components then
manufactured by Buyer or its present or future Affiliates, so that Sellers and
their Affiliates can provide such replacement products and components to any
recipients of the Active Lead Products, the Passive Lead Products, the Soft-Top
Products or any other products as to which Sellers or their Affiliates have
retained the liabilities for satisfying such product warranties pursuant to this
Agreement or the International Purchase Agreements, provided that if any such
replacement products or components must themselves be subsequently replaced,
Buyer's sole responsibility shall be to sell such replacements to Sellers (or
their designees) at Buyer's cost;
(e) Excluded Assets. Liabilities and obligations associated
with the Excluded Assets;
(f) Actions. Liabilities and obligations arising in connection
with all actions, suits, claims, investigations or proceedings pending on the
Closing Date;
(g) Employee Benefits. Liabilities or obligations arising from
or relating to the employment or termination of employment of any of Sellers'
employees on or before the Closing Date, including, but not limited to, any
obligations or liabilities arising from or relating to any employee compensation
or benefit plans or arrangements, except as otherwise expressly set forth in
this Agreement;
(h) Borrowed Money. Liabilities and obligations under any
indebtedness for borrowed money;
(i) Sales Representative Retention Bonuses. Liabilities and
obligations pursuant to the "Twenty-Four Month Representative Bonus Plan" (the
"Retention Plan") which are payable within 60 days after November 30, 1996 and
are described on the Employee Benefits Schedule; and
(j) Environmental Liabilities. All Environmental Liabilities
(as defined below) arising from conditions existing or activities occurring on
or prior to the Closing Date. "Environmental Liabilities" means all liabilities
(including tort liabilities to third parties) to the extent relating to the
Purchased Assets, whether contingent or fixed, known or unknown, which arise
under or relate to matters covered by Environmental Laws (as defined in Section
4.19).
(k) China Liabilities. All liabilities to employees or for
leased premises relating to the shutdown of any offices in the People's Republic
of China.
(l) Certain Benefits. All liabilities and obligations retained
by Sellers for certain employee benefits as described on the Employee Benefits
Schedule.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF SELLERS
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, Sellers jointly and severally
represent and warrant to Buyer as follows:
4.1. ORGANIZATION OF SELLERS. Each Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Each Seller is duly qualified to transact business as a
foreign corporation and is in good standing in each of the jurisdictions in
which the U.S. Operations require Sellers to qualify to transact business as a
foreign corporation, except for those jurisdictions where the failure to so
qualify could not reasonably be expected to have a material adverse effect on
the Business, assets, conditions or results of operations of the U.S. Operations
taken as a whole (a "Material Adverse Effect") or the ability of Sellers to
lawfully consummate the transactions contemplated by this Agreement in all
material respects. Each Seller has the corporate power and authority to conduct
the U.S. Operations currently conducted by it.
4.2. CORPORATE AUTHORITY. Each Seller has the corporate power
and authority to execute and deliver this Agreement and the Seller Ancillary
Documents (as defined in Section 8.5(c)) and to perform their respective
obligations hereunder and thereunder. The execution, delivery and performance of
this Agreement and the Seller Ancillary Documents by each Seller has been duly
authorized and approved by their respective boards of directors and by their
respective stockholders. This Agreement has been, and the Seller Ancillary
Documents will be, duly executed and delivered by each Seller, and assuming due
authorization, execution and delivery by Buyer, this Agreement is, and the
Seller Ancillary Documents will be, the legal, valid and binding obligation of
each Seller enforceable in accordance with their terms, subject to general
principles of equity and except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws of general
application relating to creditors' rights.
4.3. ABSENCE OF SELLER CONFLICTS. Except as set forth in the
Consents/Conflicts Schedule, the execution and delivery of this Agreement and
the Seller Ancillary Documents, and the consummation of the transactions
contemplated hereby and thereby, will not:
(i) conflict with, result in a breach of the terms, conditions
or provisions of, or constitute a default, an event of default or an
event creating rights of acceleration, termination or cancellation, or
result in the creation or imposition of any Encumbrance (as defined in
Section 4.9) upon any of the Purchased Assets, under (1) the
Certificate of Incorporation or by-laws of any Seller, (2) any Seller
Agreement, (3) any other material note, instrument, agreement,
mortgage, lease, license, franchise, permit or other authorization,
right, restriction or obligation to which either Seller is a party or
any of the Purchased Assets is subject, (4) any judgment, order, award
or decree of any federal, state, local or other court or tribunal or
any award in any arbitration proceeding (a "Court Order") to which any
Seller is a party or pursuant to which the Purchased Assets are bound,
or (5) any federal, state or local laws, statutes, regulations, rules,
codes or ordinances (collectively, "Requirements of Law") enacted,
adopted, issued or promulgated by any United States, foreign, federal,
state, local or other governmental authority, body or instrumentality
("Governmental Body") affecting any Seller or the Purchased Assets, or
(ii) require the approval, consent, authorization or act of,
or the making by either Seller of any declaration, notification, filing
or registration with, any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or Governmental Body (collectively, a "Person"), except,
in each case, for any of the foregoing, individually or in the
aggregate, which would not reasonably be expected to have a Material
Adverse Effect or materially hinder or impair the consummation of the
transactions contemplated hereby.
4.4. COMPLIANCE WITH CERTAIN LAWS, RULES AND REGULATIONS.
Except as described in the Compliance with Laws Schedule, to each Seller's
knowledge the methods and means employed by the Sellers in the conduct of the
U.S. Operations comply with all Requirements of Law and Court Orders applicable
to the Purchased Assets or the U.S. Operations, except where the failure to so
comply would not reasonably be expected to have a Material Adverse Effect.
Except as described in the Compliance with Laws Schedule, since September 30,
1992, neither Seller has received any written notice of violation, and to each
Seller's knowledge, neither Seller is under investigation with respect to a
violation, of any Requirement of Law or Court Order which has, or would
reasonably be expected to have a Material Adverse Effect.
4.5. FINANCIAL MATTERS. (a) Sellers have provided to Buyer
combined financial statements, including a statement of income and balance sheet
and certain footnotes, in respect of the operations and assets and liabilities
(other than the Excluded Assets and the Excluded Liabilities), which are
encompassed collectively by this Agreement and the International Purchase
Agreements (the "Combined Financial Statements"). The Combined Financial
Statements, as at and for the years ended June 30, 1995 and 1996, have been
derived from the financial statements prepared by the respective Sellers and
their respective affiliated entities referred to in this Agreement and the
International Purchase Agreements (and provided to the Buyer) for purposes of
the consolidated annual report to shareholders by the Pacific Dunlop Limited
group, together with, in the case of the Combined Financial Statements at and
for the year ended June 30, 1996, such adjustments as have been considered
necessary to give, in all material respects, appropriate effect to the treatment
of the Excluded Assets and the Excluded Liabilities and other matters as
specified in and required by this Agreement and the International Purchase
Agreements.
(b) The Combined Financial Statements have been derived from
financial statements prepared for consolidation purposes and in accordance with
Pacific Dunlop Limited group accounting policies in operation at the time (but
adjusted in respect of research and development expenditures), and in accordance
with Australian generally accepted accounting principles ("GAAP"); provided that
the Year End Balance Sheet has been prepared in accordance with United States
generally accepted accounting principles. However, the Combined Financial
Statements do not contain all footnote disclosures nor all statements (such as a
statement of cash flows) which otherwise may be required by GAAP. Certain other
adjustments have been incorporated in the Combined Financial Statements to give
effect to the requirements of GAAP in respect of consolidated financial
statements, together with such other adjustments as specified by this Agreement
and the International Purchase Agreements.
(c) The Combined Financial Statements, due to their basis of
preparation, reflect a different combined financial position than that which is
reflected in the statutory financial statements of the individual entities which
are parties to the Agreements, due to certain jurisdictional differences between
GAAP and financial reporting practices of the country of domicile, and due to
the elimination of certain intercorporate transactions and balances, or
components thereof.
4.6. OPERATIONS SINCE THE FISCAL YEAR END. Except as otherwise
contemplated by this Agreement, or as set forth in the Conduct of Domestic
Operations Schedule, since June 30, 1996:
(a) other than the Litigation and the Excluded Liabilities,
there has been no change in the financial condition, liabilities, operations or
business of the U.S. Operations or the Purchased Assets resulting in a Material
Adverse Effect, and
(b) neither of the Sellers has:
(i) sold, leased (as lessor), transferred or otherwise
disposed of, or mortgaged or pledged, or imposed or suffered to be
imposed any Encumbrance on, any of the material assets utilized in the
U.S. Operations, except for Inventory and minor amounts of personal
property sold or otherwise disposed of in the ordinary course of
business and except for Permitted Encumbrances (as defined in Section
4.9);
(ii) canceled any debts owed to or claims held by it
(including the settlement of any claims or litigation) other than in
the ordinary course of business;
(iii) created, incurred or assumed, or agreed to create, incur
or assume, any indebtedness for borrowed money (other than money
borrowed or advances made by an Affiliate of a Seller in the ordinary
course of business);
(iv) accelerated or delayed collection of notes or accounts
receivable in advance of or beyond their regular due dates or the dates
when the same would have been collected in the ordinary course of
business;
(v) delayed or accelerated payment of any account payable or
other liability beyond or in advance of its due date or the date when
such liability would have been paid in the ordinary course of business;
(vi) made, or agreed to make, any dividend or other
distribution of assets to any of its stockholders or other Affiliates;
(vii) suffered any material casualty, damage, destruction or
loss, or suffered any material interruption or use of any material
assets or property on account of fire, flood, riot, strike or other
hazard or "Act of God";
(viii) made any change in accounting methods or principles;
(ix) other than in the ordinary course of business consistent
with past practice, entered into any employment, deferred compensation
or other similar agreement (or amended any such existing agreement)
with any employee of the Business, increased benefits payable under
existing severance or termination pay policies or employment agreements
or increased compensation, bonus or other benefits payable to any
employee of the Business; or
(x) experienced any labor dispute, other than routine
individual grievances, or any activity or proceeding by a labor union
or representative thereof to organize any employees of the Business, or
any lockouts, strikes, slowdowns, picketing, work stoppages or threats
thereof by or with respect to such employees.
4.7. NO UNDISCLOSED LIABILITIES. As of the date hereof,
neither Seller has any obligation or liability of any nature with respect to the
U.S. Operations (whether direct or indirect, matured or unmatured, known or
unknown, absolute, accrued, contingent or otherwise), of the type required by
GAAP to be reflected or reserved for on a balance sheet prepared consistently
with the Combined Financial Statements, except for (i) liabilities provided for,
or reserved against, in the Year End Balance Sheet, (ii) liabilities which have
been incurred subsequent to the date of the Year End Balance Sheet in the
ordinary course of business and consistent with past practice, (iii) liabilities
under an executory portion of Seller Agreement or a Miscellaneous Agreement,
(iv) liabilities under the executory portion of any Governmental Permits, (v)
liabilities set forth or referred to in any of the Disclosure Schedules, (vi)
liabilities regarding the Litigation or which otherwise constitute Excluded
Liabilities, and (vii) liabilities and obligations which are not material under
GAAP to the operations or financial condition of the U.S. Operations and the
International Operations, taken as a whole.
4.8. TAXES. (a) To each Seller's knowledge, it has accurately
prepared and timely filed (including all extensions) all returns, reports or
similar statements required to be filed with respect to any Taxes (including any
attached schedules), including, without limitation, any information returns,
claims for refund, amended returns and declarations of estimated Tax
(collectively, the "Tax Returns"). Except as set forth on the attached Taxes
Schedule, to each Seller's knowledge, (i) all Tax Returns prepared and filed by
each Seller are true and correct in all material respects and properly reflect
the Taxes due for the periods covered thereby, (ii) all Taxes which are called
for as due by the Tax Returns, or which are otherwise due to any taxing
authority or other Governmental Body from any Seller, have been properly accrued
or paid, and (iii) there are no tax liens on any of the properties or assets of
any Seller, except for liens for current Taxes not yet due and payable.
(b) Except as set forth on the attached Taxes Schedule, there
are no audits currently pending by any taxing authority in connection with Tax
Returns of either of the Sellers.
(c) Neither of the Sellers is a foreign person within the
meaning of Section 1445 of the Code.
(d) Except as set forth on the attached Taxes Schedule, no
property owned by the Sellers (i) is property required to be treated as being
owned by another person pursuant to the provisions of Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986, (ii) constitutes "tax-exempt use
property," within the meaning of Section 168(h)(i) of the Code or (iii) is
tax-exempt bond financed property within the meaning of Section 168(g) of the
Code.
4.9. TITLE TO AND CONDITION OF PURCHASED ASSETS. The Sellers
collectively have, and on the Closing Date will have, good and marketable title
to (or valid and enforceable leasehold, license or similar interests in) all of
the Purchased Assets, free and clear of all liens, claims, charges, security
interests, mortgages, pledges, easements, conditional sales or other title
retention agreements, defects in title, covenants or other restrictions
(collectively, the "Encumbrances"), other than Encumbrances (i) which are set
forth on the Encumbrances Schedule or (ii) which could not reasonably be
expected to materially impair the utility, value or marketability of the
encumbered Purchased Assets (collectively, the "Permitted Encumbrances").
SELLERS MAKE NO REPRESENTATION OR WARRANTY AS TO THE CONDITION OF ANY OF THE
PURCHASED ASSETS, SUCH PURCHASED ASSETS BEING SOLD AS IS AND WHERE IS, EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED HEREIN. The retention of the Excluded Assets by
Buyer will not prevent Buyer from conducting the Business after the Closing in
all material respects in substantially the same manner as heretofore conducted.
4.10. ACCOUNTS RECEIVABLE. The Receivables, net of any
reserves set forth or reflected on the Year End Balance Sheet or accrued
thereafter in the ordinary course consistent with past practice, are good and
valid receivables arising from the sale of goods and services in the ordinary
course, pursuant to bona fide, arm's-length transactions. All of the products or
services to be provided by either Seller that relate to such Receivables have
been, or will be before the Closing Date, substantially provided by Sellers
according to the terms of any agreements or understandings relating thereto. To
Sellers' knowledge, none of the Receivables is subject to any counterclaim or
setoff, except as may be set forth in the Disclosure Schedules. Notwithstanding
anything to the contrary contained herein, Sellers are not guaranteeing the
collection of the Receivables.
4.11. REAL PROPERTY. (a) The Real Property Schedule contains
(i) the address of and a description of each parcel of real property owned by
each Seller that will be sold to Buyer hereunder (collectively, the "Owned Real
Property"), and (ii) a list of each lease or similar agreement under which
either Seller is lessee of, or holds or operates, any real property owned by any
third person which is used in the U.S. Operations, the rights to which will be
transferred to Buyer hereunder (collectively, the "Leased Real Property"). The
Owned Real Property and the Leased Real Property are collectively referred to
herein as the "Real Property" and constitute all of the real property material
to the conduct of the U.S. Operations.
(b) Each Seller has (i) good, valid and marketable title to
the Owned Real Property, free and clear of all Encumbrances except for Permitted
Encumbrances, and (ii) valid and enforceable leasehold interests in the Leased
Real Property. Except as set forth on the Real Property Schedule, the Owned Real
Property is not subject to any leases or tenancies. Each Seller's occupation,
possession and use of the Leased Real Property has not been disturbed and no
claim has been asserted or, to the knowledge of Sellers, threatened, which is
adverse to any Seller's rights to continue the occupation, possession and use of
the Leased Real Property as currently utilized. To each Seller's knowledge, no
material default exists under any of the Leased Real Property leases.
(c) Except as disclosed on the Real Property Schedule, to each
Seller's knowledge, none of the buildings, structures, improvements, or parcels
of real estate comprising the Real Property is in material violation of, or is
the subject of any material complaint or notice of material violation of, any
applicable zoning ordinance, building code or restrictive covenant.
4.12. INVENTORY. Except as described on the Inventory Schedule
and net of any reserves set forth or reflected on the Year End Balance Sheet or
accrued thereafter in the ordinary course, all of the Inventory reflected on the
Year End Balance Sheet was fairly valued at the lower of actual cost, standard
cost (approximating actual cost including an appropriate proportion of overheads
having regard to normal capacity of manufacturing facilities) or market, cost
being determined on a first-in, first-out basis.
4.13. PERSONAL PROPERTY. The Personal Property Schedule
contains (i) a list as of the date of this Agreement of all machinery,
equipment, vehicles, furniture and other personal property owned by Sellers
having an original cost of US$50,000 or more and used in the U.S. Operations,
and (ii) a list of each lease or other agreement or right, whether written or
oral, under which any Seller is lessee of, or holds or operates, any machinery,
equipment, vehicle or other tangible personal property owned by a third person
and used in the conduct of the U.S. Operations, except those which are
terminable by such Seller without penalty on sixty (60) days' or less notice or
which provide for annual rentals of less than US$50,000.
4.14. GOVERNMENTAL PERMITS. (a) The Governmental Permits
Schedule sets forth a list of all material licenses, franchises, permits,
approvals and other authorizations from a Governmental Body which are necessary
for Sellers to own, lease, operate and use the Purchased Assets and to conduct
the U.S. Operations in material compliance with all Requirements of Law, except
for such incidental licenses, permits and other authorizations which would be
obtainable by any qualified applicant without undue burden in the event of any
lapse, termination, cancellation or forfeiture thereof (collectively, the
"Governmental Permits").
(b) Except as set forth in the Governmental Permits Schedule,
(i) each Seller is in material compliance with its obligations pursuant to each
of the Governmental Permits; (ii) no notice of cancellation, default, or of any
dispute concerning any Governmental Permit, or of any event, condition or state
of facts described in the preceding clause, has been received by any Seller; and
(iii) each of the Governmental Permits is valid, subsisting and in full force
and effect.
4.15. PROPRIETARY RIGHTS. (a) The Proprietary Rights Schedule
contains as of the date of this Agreement a list of (i) all United States and
foreign patents and patent applications, trademarks, service marks, logos and
trade names for which United States, state or foreign registrations have been
issued or applied for, all other registered trademarks, service marks and trade
names, owned by either Seller and used in the U.S. Operations, including,
without limitation, all business names used by Sellers in the U.S. Operations
during the past five years, whether or not registered (collectively, the
"Proprietary Rights"), and (ii) any licenses or other agreements pursuant to
which Seller has obtained or granted any rights regarding such Proprietary
Rights. Regardless of whether they are listed on the Proprietary Rights
Schedule, all trade secrets, including, but not limited to, ideas, inventions,
(whether or not patentable), invention disclosures, formulae, compositions,
copyrights, processes, designs, developments and other confidential business
information, developed, acquired, used or possessed by or for either Seller in
connection with the Business, shall be considered "Proprietary Rights" for
purposes of this Agreement.
(b) Since January 1, 1993, except as set forth in the
Proprietary Rights Schedule, no Seller has received written notice of any claim
contesting the ownership, validity, license or use of the subject matter of the
Proprietary Rights by Sellers or the sale of products and services in connection
with the U.S. Operations, or of any claim that any of the foregoing infringe,
misappropriate or conflict with the intellectual property rights of a third
party.
(c) Neither Seller has made any written claim of any
continuing infringement, misappropriation or unfair competition by any person of
or with respect to any Proprietary Rights. Except as disclosed in the
Proprietary Rights Schedule, to each Seller's knowledge, no Proprietary Right is
subject to any outstanding order, judgment, decree, stipulation or agreement
restricting the use thereof by either Seller with respect to the Business or
restricting the licensing thereof by either Seller to any person which
restriction has had, or would reasonably be expected to have, a Material Adverse
Effect.
(d) Upon consummation of the transactions contemplated by this
Agreement and the International Purchase Agreements, Buyer will have the rights,
subject to the obligations, of the "Telectronics Group" to make, have made, use,
sell and have sold "Cardiac Stimulation Devices" under that License Agreement,
dated February 14, 1994, between the "Telectronics Group" and the "Lilly Group",
without the need for any consent from any member of the "Lilly Group" or any of
its successors or permitted assigns thereunder (as all of the aforementioned
terms are defined in such License Agreement.)
4.16. EMPLOYEES AND RELATED AGREEMENTS; ERISA. (a) Except as
described in the Employee Benefits Schedule, no Seller is a party to or bound by
any oral or written employee collective bargaining agreement, employment
agreement (other than employment agreements terminable by any Seller without
penalty on notice of 30 days or less under which the only monetary obligation of
such Seller is to make current wage or salary payments and provide current
fringe benefits), consulting, advisory or service agreement, deferred
compensation agreement, confidentiality agreement or covenant not to compete
(other than confidentiality agreements and covenants not to compete entered in
the ordinary course with employees, agents and representatives). There are no
material controversies pending or, to any Seller's knowledge, threatened between
any Seller and its employees or any labor union or other organization
representing or claiming to represent such employees' interests.
(b) For purposes of this Agreement, (i) "ERISA" means the
Employee Retirement Income Security Act of 1974, as amended, and (ii) the term
"Employee Plan" includes any pension, retirement, savings, disability, medical,
dental, health, life (including, without limitation, any individual life
insurance policy under which an employee of any Seller is the named insured and
as to which Seller makes premium payments, whether or not such Seller is the
owner, beneficiary or both of such policy), death benefit, group insurance,
profit-sharing, deferred compensation, stock option, stock purchase, bonus,
incentive, vacation pay, severance pay, or other employee benefit plan, trust,
arrangement, contract, agreement, policy or commitment (including, without
limitation, any pension plan as defined in Section 3(2) of ERISA ("Pension
Plan"), and any welfare plan as defined in Section 3(1) of ERISA ("Welfare
Plan")), whether or not any of the foregoing is funded or insured and whether
written or oral, which is intended to provide or does in fact provide benefits
to any employees of any Seller, and to which any Seller is a party or by which
any Seller (or any of the rights, properties or assets of any Seller) is bound.
Except as described in the Employee Benefits Schedule, (i) none of the Sellers
maintain, nor are they required to contribute to, any Employee Plan on behalf of
its employees; (ii) no employees of any Seller are covered under any Employee
Plan; and (iii) each Employee Plan that is intended to be qualified under
Section 401(a) of the Code, has received a favorable determination letter of the
Internal Revenue Service stating that the plan meets the requirements of the
Code and that the trust associated with the plan is tax-exempt under Section
501(a) of the Code, copies of which have been furnished to Buyer.
(c) None of the Sellers has ever contributed, or been
obligated to contribute, to any multiemployer plan (within the meaning of
Section 4001 of ERISA) with respect to the employees of any Seller.
(d) To each Seller's knowledge, each Welfare Plan which is a
group health plan (within the meaning of Section 5000(b)(1) of the Code)
complies with, and has been maintained and operated in accordance with, each of
the health care continuation requirements of Section 162(k) of the Code as in
effect for years beginning prior to 1989, Section 4980B of the Code for years
beginning after December 31, 1988, and Part 6 of Title I, Subtitle B of ERISA.
(e) Except as disclosed on the Employee Benefits Schedule, no
Seller has any liabilities for post-retirement welfare benefits, including
retiree medical benefits.
(f) To each Seller's knowledge, (i) each Employee Plan, the
administrator and fiduciaries of each Employee Plan, and each Seller have at all
times complied in all material respects with the applicable requirements of
ERISA (including, but not limited to, the fiduciary responsibilities imposed by
Part 4 of Title I, Subtitle B of ERISA), the Code and any other applicable
Requirements of Law (including regulations and rulings thereunder) governing
each Employee Plan, and (ii) each Employee Plan has at all times been properly
administered in all material respects in accordance with all such Requirements
of Law, and in accordance with its terms to the extent consistent with all such
Requirements of Law.
(g) Except as disclosed on the Employee Benefits Schedule, no
Seller is delinquent as to contributions or payments to or in respect of any
Employee Plan as to which such Seller is in any way obligated to make
contributions or payments, nor has any Seller failed to pay any assessments made
with respect to any such Employee Plan. All contributions and payments with
respect to Employee Plans that are required to be made by Sellers with respect
to periods ending on or before the Closing Date (including periods from the
first day of the then-current plan or policy year to and including the Closing
Date) have been made or will be accrued before the Closing Date by Sellers in
accordance with the appropriate actuarial valuation report or insurance
contracts or arrangements.
(h) To each Seller's knowledge, with respect to each Employee
Plan, there has not occurred, nor is any person contractually bound to enter
into, any non-exempt "prohibited transaction" within the meaning of Section 4975
of the Code or Section 406 of ERISA.
(i) No "employee pension benefit plan" (within the meaning of
Section 3(2) of ERISA) subject to Title IV of ERISA, maintained by any Seller
and covering current or former employees of such Seller, has been completely or
partially terminated or has been the subject of a "reportable event" (within the
meaning of Section 4043 of ERISA) as to which notices would be required to be
filed with the Pension Benefit Guaranty Corporation, other than events
reportable on Form 5310 of the Internal Revenue Service.
(j) No proceeding by the Pension Benefit Guaranty Corporation
to terminate any Pension Plan in accordance with Subtitle 1 of Title IV of ERISA
has been instituted, is, to the Sellers' knowledge, currently threatened or
could reasonably be expected to be threatened.
4.17. CONTRACTS. Except as set forth in the Contracts
Schedule, no Seller is a party to or bound by:
(i) any consignment, distributor, dealer, manufacturer's
representative, sales agency, advertising representative or advertising
or public relations contract, agreement or commitment which such Seller
reasonably anticipates will involve the payment after the date hereof
of more than US$50,000 during the next succeeding fiscal year of a
Seller, or which extends beyond June 30, 1997;
(ii) any contract, agreement or commitment regarding the
clinical testing of any product designed or manufactured by, or the
rights to which are held by, a Seller, which such Seller reasonably
anticipates will involve the payment after the date hereof of more than
US$50,000 during the next succeeding fiscal year of a Seller, or which
extends beyond June 30, 1997;
(iii) any contract, agreement or commitment regarding the sale
or other disposition of products or services by any Seller, or for the
purchase of raw materials, products or services by any Seller, which
such Seller reasonably anticipates will involve the receipt or payment
after the date hereof of more than US$50,000 during the next succeeding
fiscal year of a Seller, or which extends beyond June 30, 1997;
(iv) any guarantee or indemnification agreement for the
benefit of any third party;
(v) any written employment contracts, agreements, arrangements
and commitments applicable to any employees of a Seller, excluding any
noncompetition, confidentiality or secrecy agreements, invention
disclosure or assignment agreements entered into in the ordinary course
with employees, agents and representatives and also excluding any
employment contracts, agreements or arrangement disclosed in the
Employee Benefits Schedule;
(vi) any contract, agreement or commitment which provides for
the incurrence by a Seller of indebtedness for borrowed money;
(vii) any non-compete agreement with any Persons (other than
non-compete agreements with sales representatives or distributors
entered into in the ordinary course and confidentiality agreements with
employees, agents and others entered into in the ordinary course);
(viii) any partnership or joint venture agreement;
(ix) any collective bargaining or other union agreement;
(x) any contract, agreement or commitment pursuant to which
any person is granted a general or special power of attorney by any of
the Sellers; or
(xi) any other contract, agreement, commitment, understanding
or instrument involving payment or receipt after the date hereof of
more than US$50,000 in the aggregate in the next succeeding fiscal year
of a Seller and not terminable without penalty by a Seller on sixty
(60) days' or less notice, or which is otherwise material to the U.S.
Operations.
4.18. STATUS OF CONTRACTS. Except as set forth in the Status
of Contracts Schedule:
(a) each of the leases, contracts and other agreements of
Sellers listed in the Real Property Schedule, the Personal Property Schedule,
the Proprietary Rights Schedule, the Employee Benefits Schedule and the
Contracts Schedule (collectively, the "Seller Agreements," including therein the
license agreements between Sellers or their Affiliates and Intermedics Inc. and
Cardiac Pacemakers, Inc. or their affiliates) constitutes a valid obligation of
such Seller and, to each Seller's knowledge, the other parties thereto and is in
full force and effect;
(b) no Seller has been declared to be in material breach or
material default under any of the Seller Agreements and, to each Seller's
knowledge, no other party to any of the Seller Agreements is in material breach
or material default thereunder; and
(c) true and complete copies of all Seller Agreements,
including any amendments thereto, have been made available to Buyer.
4.19. ENVIRONMENTAL MATTERS.
Except as set forth on the Environmental Matters Schedule:
(a) the operations of the Business are in compliance with
applicable Environmental Laws, except for such matters that would not reasonably
be expected to result in a Material Adverse Effect;
(b) Sellers have obtained all permits required under all
applicable Environmental Laws (as herein defined) necessary to operate the
Business as currently conducted, except where the failure to obtain such permits
would not reasonably be expected to result in a Material Adverse Effect;
(c) neither Seller is the subject of any outstanding written
order or contract with any Governmental Body regarding any release or threatened
release of a Hazardous Substance (as defined below) or any remediation thereof;
(d) neither Seller has received any written communication from
a Governmental Body or any third party alleging that such Seller is in violation
of any Environmental Law, or any permit issued pursuant to Environmental Laws,
or has any liability under any Environmental Law, except for such violations or
liabilities which would not result in a Material Adverse Effect;
(e) to each Seller's knowledge, the U.S. Operations are not a
treatment, storage or disposal facility of hazardous waste, as defined under 40
C.F.R. Parts 260-270 or any state equivalent;
(f) to each Seller's knowledge, there are no investigations of
the U.S. Operations, pending or threatened, which would reasonably be expected
to lead to the imposition of any liability pursuant to any Environmental Law
which would result in a Material Adverse Effect;
(g) to each Seller's knowledge, there is not located at any of
the Real Property any (i) underground storage tanks, (ii) asbestos-containing
material, or (iii) equipment containing polychlorinated biphenyls in violation
of any Environmental Law;
(h) to each Seller's knowledge, Sellers have provided to Buyer
all written environmentally related audits, studies, reports, analyses, and
results of investigations prepared by, or on behalf of, either Seller or their
Affiliates since January 1, 1991 that have been performed with respect to
Seller's currently or previously owned, leased or operated properties;
(i) As used in this Agreement, (i) "Environmental Laws" means
any federal, state or local statute, regulation, ordinance, or rule of common
law in any way relating to the protection of the environment including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. ss. 9601 et seq.) ("CERCLA"), the Hazardous Materials
Transportation Act (49 U.S.C. App. ss. 1801 et seq.), the Resource Conservation
and Recovery Act (42 U.S.C. ss. 9601 et seq.), the Clean Water Act (33 U.S.C.
ss. 1251 et seq.), the Clean Air Act (42 U.S.C. ss. 7401 et seq.), the Toxic
Substance Control Act (15 U.S.C. ss. 2601 et seq.), the Federal Insecticide,
Fungicide and Rodenticide Act (7 U.S.C. ss. 136 et seq.), and the Occupational
Safety and Health Act (29 U.S.C. ss. 651 et seq.), and the regulations
promulgated thereto, and (ii) "Hazardous Substance" shall have the meaning
assigned in CERCLA.
4.20. LEGAL PROCEEDINGS. Except for the Litigation, the FDA
Consent Decree and as set forth on the Legal Proceedings Schedule, there are no
legal, administrative, arbitration or other proceedings or governmental
investigations pending, or, to each Seller's knowledge, threatened, against any
of the Sellers or relating to the U.S. Operations.
4.21. NO FINDER. None of the Sellers, nor any person acting on
their behalf, has retained any broker, finder, investment banker or financial
advisor in connection with this Agreement or any transaction contemplated hereby
for which the Buyer may be liable.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Sellers to enter into this Agreement and to
consummate the transactions contemplated hereby, Buyer hereby represents and
warrants to Seller as follows:
5.1. ORGANIZATION OF BUYER. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer is duly qualified to transact business as a foreign corporation
and is in good standing in each of the jurisdictions in which Buyer's operations
require that it qualify to transact business as a foreign corporation, except
for those jurisdictions where the failure to so qualify is not likely to have a
material adverse effect on Buyer's business or financial condition, or the
ability of Buyer to lawfully consummate the transactions contemplated by this
Agreement in all material respects. Buyer has the corporate power and authority
to conduct its operations as currently conducted.
5.2. AUTHORITY OF BUYER. Buyer has the corporate power and
authority to execute and deliver this Agreement and the Buyer Ancillary
Documents (as defined in Section 9.6(c)) and to perform its obligations
hereunder and thereunder. Buyer's execution, delivery and performance of this
Agreement and the Buyer Ancillary Documents has been duly authorized and
approved by Buyer's board of directors. This Agreement has been, and the Buyer
Ancillary Documents will be, duly executed and delivered by Buyer, and assuming
due authorization, execution and delivery by each Seller, this Agreement is, and
the Buyer Ancillary Documents will be, the legal, valid and binding obligation
of Buyer enforceable in accordance with their terms, subject to general
principles of equity and except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws of general
application relating to creditor's rights.
5.3. ABSENCE OF BUYER CONFLICTS. The execution and delivery of
this Agreement and the Buyer Ancillary Documents, and the consummation of the
transactions contemplated hereby and thereby, will not:
(i) conflict with, result in a breach of the terms, conditions
or provisions of, or constitute a default, an event of default or an
event creating rights of acceleration, termination or cancellation, or
result in the creation or imposition of any Encumbrance upon Buyer's
assets under (1) the charter or by-laws of Buyer, (2) any material
note, instrument, agreement, mortgage, lease, license, franchise,
permit or other authorization, right, restriction or obligation to
which Buyer is a party or any of its properties is subject, (3) any
Court Order to which Buyer is a party or by which it is bound, or (4)
any Requirements of Law affecting Buyer; or
(ii) require the approval, consent, authorization or act of,
or the making by Buyer of any declaration, filing or registration with,
any Person, except in each case, for any of the foregoing individually
or in the aggregate which would not be reasonably expected to have a
material adverse effect on Buyer or its business taken as a whole or
materially hinder or impair the consummation of the transactions
contemplated hereby.
5.4. NO FINDER. Neither Buyer nor any person acting on its
behalf has retained any broker, finder, investment banker or financial advisor
in connection with this Agreement, or any transaction contemplated hereby, for
which Sellers may be directly or indirectly liable.
5.5. FINANCIAL ABILITY. Buyer has the financial ability to
consummate the transactions contemplated by this Agreement, the Buyer Ancillary
Documents and the International Purchase Agreements and has furnished, or will
furnish, Sellers with satisfactory written evidence thereof.
ARTICLE VI.
ACTIONS PRIOR TO THE CLOSING DATE
Buyer and Sellers covenant and agree to take the following actions
between the date hereof and the Closing Date:
6.1. BUYER'S INVESTIGATION. Each Seller shall provide Buyer
and its representatives with reasonable access during normal business hours to
the offices, properties, employees and business and financial records of
Sellers, and shall furnish to Buyer or its representatives such additional
information concerning the Purchased Assets and the U.S. Operations as shall be
reasonably requested; PROVIDED, HOWEVER, that no Seller shall be required to
violate any obligation of confidentiality to which it is subject in discharging
its obligations pursuant to this Section 6.1. Buyer agrees that it will conduct
such investigation in a manner which does not unreasonably interfere with the
operations of the Business.
6.2. PRESERVE ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each
of the parties hereto shall use its best efforts to refrain from taking any
action which would render any representation or warranty contained in this
Agreement inaccurate as of the Closing Date. Each party shall promptly notify
the other of any action, suit or proceeding that is instituted or threatened
against such party to restrain, prohibit or otherwise challenge the legality of
any transaction contemplated by this Agreement. Sellers shall promptly notify
Buyer of any lawsuit, claim, proceeding or investigation that may be threatened,
brought, asserted or commenced against any Seller which would have been required
to be listed in the Legal Proceedings Schedule if such lawsuit, claim,
proceeding or investigation had arisen prior to the date hereof.
6.3. OPERATIONS PRIOR TO THE CLOSING DATE. (a) Each Seller
shall operate and carry on the U.S. Operations only in the ordinary course and
substantially as presently operated or as proposed to be operated (as previously
discussed with Buyer), or as hereafter agreed to by Buyer. Consistent with the
foregoing, each Seller shall use its reasonable efforts consistent with good
business practice to: preserve the goodwill of the suppliers, contractors,
licensors, employees, customers, sales representatives, distributors and others
having business relations with the U.S. Operations; continue in effect all
material existing policies of insurance (or comparable insurance) with
third-party carriers of or relating to the Business; keep available the services
of the present officers, employees and agents of the Business; continue
production and promotional and sales efforts in accordance with existing plans
and forecasts; and comply in all material respects with its obligations pursuant
to the FDA Consent Decree.
(b) Notwithstanding Section 6.3(a), except as expressly
contemplated by this Agreement or as required pursuant to the FDA Consent
Decree, no Seller shall take any of the following actions, other than in the
ordinary course of the conduct of the Business, as now conducted or as proposed
to be conducted (as previously discussed with Buyer), or as hereafter agreed to
by Buyer, without the prior written approval of Buyer:
(i) make any material change in the conduct of the U.S.
Operations;
(ii) enter into any contract, agreement, undertaking or
commitment which would have been required to be set forth in the
Contracts Schedule if in effect on the date hereof, or enter into any
contract which cannot be assigned to Buyer or a permitted assignee of
Buyer;
(iii) enter into any contract for the purchase of real
property or for the sale of any Owned Real Property;
(iv) sell, lease (as lessor), transfer or otherwise dispose
of, mortgage or pledge, or impose or suffer to be imposed any
Encumbrance on, any of the Purchased Assets, other than Inventory and
minor amounts of personal property sold or otherwise disposed of in the
ordinary course of business, and other than Permitted Encumbrances;
(v) cancel any debts owed to or claims held by it, other than
in the ordinary course of business or to the extent that such debts or
claims constitute Excluded Assets or Excluded Liabilities;
(vi) create, incur or assume any indebtedness for borrowed
money or enter into, as lessee, any capitalized lease obligation;
(vii) accelerate or delay collection of any notes or accounts
receivable generated by the U.S. Operations in advance of or beyond
their regular due dates or the dates when the same would have been
collected in the ordinary course of the business;
(viii) delay or accelerate payment of any account payable or
other liability of the U.S. Operations beyond or in advance of its due
date or the date when such liability would have been paid in the
ordinary course of business;
(ix) amend, terminate or give notice of termination with
respect to any existing agreement, contract or commitment to which
Seller is a party, or waive any material rights thereunder; or
(x) agree to do any of the foregoing.
6.4. ANTITRUST LAW COOPERATION. Buyer and Sellers shall
diligently and in good faith cooperate with each other and with the Federal
Trade Commission (the "FTC") and the Antitrust Division of the Department of
Justice (the "DOJ") to file the notifications and further information required
to be filed under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, or any rules and regulations promulgated thereunder (collectively, the
"HSR Act"), with respect to the transactions contemplated hereby and to seek
early termination and expiration of the waiting period thereunder. Buyer and
Sellers agree that each will make their initial filing regarding the
transactions contemplated by this Agreement with the FTC and the DOJ no later
than October 3, 1996. Buyer and Sellers agree to make available to the other,
such information as each of them have provided to any Governmental Body pursuant
to the HSR Act and any such rules and regulations thereunder.
6.5. LITIGATION COOPERATION. Buyer and each Seller shall
diligently and in good faith cooperate with each other in order to defeat any
efforts by parties to the Litigation (or others) to obtain the issuance of any
order, decree or ruling, restraining, enjoining or otherwise prohibiting or
delaying the lawful consummation of the transactions contemplated hereby. Buyer
and Sellers shall take any and all actions reasonably necessary to prevent the
entry of any order, preliminary or permanent injunction, or other legal
restraint or prohibition preventing consummation of the transactions
contemplated hereby and to lift, mitigate or rescind the effect of any
litigation or administrative proceeding adversely affecting the consummation of
the transactions contemplated hereby.
ARTICLE VII.
ADDITIONAL AGREEMENTS
7.1. [RESERVED].
7.2. EMPLOYEES AND EMPLOYEE BENEFIT PLANS. (a) The Retained
Employee Schedule contains a list of all employees that Sellers expect to retain
as employees after the Closing Date (collectively, the "Retained Employees").
Buyer and its affiliates shall not hire any of the Retained Employees for a
period of two (2) years following the Closing Date (except that the foregoing
shall not apply to any Retained Employee whose employment has been terminated by
a Seller, or any Affiliate of a Seller), nor induce, solicit or encourage any
such Retained Employees to terminate their employment with Sellers. Buyer shall
offer employment on an "at will" basis to all employees of Sellers (other than
Retained Employees) who are actively employed on the Closing Date, and such
persons who accept such offer shall be hereafter referred to as "Transferred
Employees." Each such offer of employment shall be on substantially the same
terms and conditions of employment and which are, in the aggregate,
substantially as favorable as those under which such person is employed
immediately prior to the Closing Date. Buyer shall also offer employment on an
"at will" basis to each employee of Sellers who is temporarily absent from
active employment on the Closing Date (the "Inactive Employees") upon
termination of such temporary absence, provided such employee is able to perform
the essential functions of the position he or she previously held with Sellers
prior to such absence, and any such employee shall be treated as a Transferred
Employee from and after his or her date of employment with Buyer. At the
Closing, Sellers shall deliver a schedule of such Inactive Employees to Buyer.
Buyer may, on account of a reduction in force program and subject to applicable
laws, elect not to offer employment to any Inactive Employee in accordance with
the foregoing sentence, and instead make payments to Sellers regarding such
Inactive Employees equal to the amounts payable to such Inactive Employees under
(x) the applicable Seller's severance plan, and (y) all other benefits, programs
or laws applicable to such Inactive Employees (to the extent Buyer would be
required hereunder to make such payments if such employee were a Transferred
Employee). After the Closing, and subject to applicable laws and existing
employment terms (to the extent such employment terms are Buyer's responsibility
with respect to Transferred Employees), Buyer shall have the right, at any time,
to dismiss any or all Transferred Employees at any time, with or without cause,
and to change the terms and conditions of their employment (including
compensation and employee benefits provided to them).
(b) Each Seller shall be responsible for the payment of any
severance pay and other benefits or amounts due to any Retained Employee (but
only to the extent Seller is legally obligated to provide any such benefits to
such employee through the Closing Date). Buyer shall be responsible for the
payment of any wages, severance pay, benefits, or any other obligation to any
person who is a Transferred Employee to the extent set forth on the Employee
Benefits Schedule and the letter agreement between Buyer and Sellers of even
date herewith covering certain Enhanced Benefit Programs (as defined therein.)
In addition, if any employee chooses not to accept employment with Buyer, then
such employee shall be entitled to receive from Buyer severance payments, if any
are due, under existing severance arrangements, provided that if Sellers have
explicitly promised any of their employees that such employees would be entitled
to severance payments upon rejection of an offer of employment from Buyer, then
such severance payments shall be Sellers' responsibility.
(c) Each Seller shall retain liability for any health care
continuation coverage required to be provided under Section 4980 of the Code and
Part 6 of Title I, Subtitle B of ERISA to employees (and their spouses and
dependents) terminated at or prior to the Closing Date.
(d) Each Seller shall retain all liability otherwise borne by
the employer for any Transferred Employee (or dependent of a Transferred
Employee) who is hospitalized or otherwise receiving inpatient care as of the
Closing Date, until such employee or dependent is discharged.
(e) Buyer shall only be responsible and liable for any claim
of any Transferred Employee arising under any state workers' compensation or
similar law or any health, short-term disability, long-term disability or other
policy or benefit which is based upon any occurrence after the Closing Date.
(f) Buyer shall cover all Transferred Employees under benefit
and welfare plans which provide benefits that, at a minimum, are substantially
comparable in the aggregate to those benefits provided under plans heretofore
maintained by the Sellers. In addition, effective as of the Closing Date, Buyer
shall cause each Transferred Employee to be covered under a group health plan,
as defined in Section 607(1) of ERISA, which does not contain any exclusion or
limitation with respect to any preexisting condition for which the Sellers'
group health plans provide benefits. A Transferred Employee's service with a
Seller (either as actually performed or as credited to such employee under a
prior written agreement) which is credited under Sellers' welfare benefit plans
shall be taken into account for the purpose of determining eligibility for
participation and vesting under any similar benefit or welfare plan maintained
by Buyer in which such Transferred Employee may become eligible to participate.
Any eligible health and dental expenses incurred by a Transferred Employee
between January 1, 1996 and the Closing Date shall be taken into account by
Buyer's health and dental plans, if any, for the purposes of satisfying such
employee's individual or family deductible or coinsurance requirements and
satisfaction of maximum out-of-pocket provisions for the Buyer's first plan year
ending after the Closing Date to the same extent as if they had been incurred
after the Closing Date under Buyer's health and dental plans.
(g) Prior to the Closing, except to the extent required by
law, Sellers shall not pay any Transferred Employees their accrued and unpaid
vacation, and Buyer shall provide, without duplication of benefits, all
Transferred Employees with vacation time rather than cash in lieu of vacation
time for all vacation earned and unpaid through the Closing Date, but only to
the extent properly accrued or otherwise reserved for in the Year End Balance
Sheet or accrued thereafter in the ordinary course of business and set forth in
the financial books and records of Sellers as at the Closing Date.
7.3. POST-CLOSING REMITTANCES. If, after the Closing Date, any
Seller receives any remittance from any account debtors with respect to any
accounts or Receivables included in the Purchased Assets, such Seller shall
promptly endorse and forward such remittance to Buyer. Conversely, if, after the
Closing Date, Buyer or its Affiliates shall receive any remittance from any
account debtors in payment of any accounts or receivables included in the
Excluded Assets, or not otherwise payable to Buyer or its Affiliates, then Buyer
or its Affiliates, as applicable, shall promptly endorse and forward such
remittance to the order of the applicable Seller.
7.4. CONVEYANCE AND TRANSFER OF OWNED REAL PROPERTY.
(a) Not less than ten (10) days prior to Closing, Sellers
shall deliver (i) a current binding commitment for the issuance of a standard
fee owner's title insurance policy (the "Title Commitment") from a reputable
title insurance company reasonably acceptable to Buyer, insuring title to each
parcel of the Owned Real Property in Buyer as prospective fee owner, in an
amount equal to the amount of the Purchase Price allocated to the Owned Real
Property, and (ii) surveys (the "Surveys") of the Owned Real Property made by a
registered land surveyor bearing a certificate addressed to Buyer and Buyer's
title insurance company, signed by the surveyor, certifying that the Survey was
actually made on the ground and that there are no encumbrances except as shown.
At Closing, Sellers shall cause to be delivered to Buyer the final title
insurance policy for the Owned Real Property dated as of the Closing Date issued
in favor of Buyer. If a title policy cannot be issued at Closing, Sellers shall
deliver to Buyer a marked-up unconditional binder for such insurance dated as of
the Closing Date, in a form reasonably acceptable to Buyer. Sellers shall pay
(i) all premiums and other expenses relating to such Title Commitment, Survey
and title insurance policy including, without limitation, the title insurance
premium, and (ii) all transfer taxes and recording fees payable by reason of the
delivery or recording of the warranty deeds to the Owned Real Property.
(b) At the Closing, Sellers shall deliver warranty deeds to
the Owned Real Property sufficient to convey to Buyer good and marketable title
to such Owned Real Property, free and clear of all Encumbrances except for
Permitted Encumbrances.
7.5. COOPERATION IN LITIGATION. (a) For so long as any Seller
or an Affiliate is contesting, pursuing, defending or attempting to settle any
pending or threatened charge, complaint, action, suit, proceeding, hearing,
investigation, claim or demand (whether within the United States or elsewhere),
or pursuing any claim in connection with any fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction on or prior to the Closing Date involving
the Business, including, but not limited to, the Litigation, Buyer and its
Affiliates shall cooperate with Sellers, their Affiliates and their
representatives in such contest, pursuit, defense or settlement, including, but
not limited to, the following:
(i) allowing and accommodating the Consultants (as defined
below) to perform their obligations pursuant to the Consulting
Agreements (as defined below); and
(ii) providing any of the Sellers' advisors (including,
without limitation, lawyers, accountants, doctors, researchers and
other experts or consultants retained, employed or otherwise
compensated by Seller), full access to Transferred Employees, Purchased
Assets, books, records (including, without limitation, manufacturing,
design and compliance records related to regulatory compliance matters
concerning the manufacture or sale of any products), documents, data,
equipment, facilities, products, parts, prototypes and other
information regarding the Business as Seller or any of its Affiliates
or representatives may request in connection with the Litigation, to
the extent maintained in or under the possession or control of Buyer or
its Affiliates.
Sellers shall reimburse Buyer and its Affiliates for their reasonable
out-of-pocket expenses paid to third parties in performing their obligations
pursuant to this Section 7.5(a), but otherwise at no expense to Sellers or their
Affiliates. Notwithstanding the foregoing, if Buyer notifies either Seller that
the performance by it of such obligations is anticipated to involve
substantially all of one or more of its employees full time efforts for more
than two (2) consecutive days, Sellers shall engage other personnel to assist in
performing such obligations at Sellers' expense.
(b) Buyer acknowledges and agrees that the Sellers or one of
their Affiliates may enter into consulting agreements substantially in the form
attached as Exhibit A (collectively, the "Consulting Agreements") with James
Dennis, Tom Brown, Gary Pehrson, Larry Wettlaufer, Robert Musmano, Steve Webb,
Vincent Doerr, Michael Skalsky, Catherine Livingstone, Peter Crosby, David
White, Alan Rebell, Keith Daniel, Colleen Sutton, Judith Nagey, Angel Cuesta,
David Goslee, Jose Besada, Alex Lamm, Vince Cutulo, Larry Cutulo, Ken Collins,
Dr. David Macgregor, Mike Andrews, Joanne Fee, Jim Fortino, Lucille Zwanzig, Sue
Sutton Jones, Mark Happ, Brian Starling, Stuart McConchie, Susan Almon, Mary
Overland and Cheryl Schwisow and such others as Sellers may determine
(collectively, the "Consultants"). Buyer shall take no action to prevent or
discourage the Consultants from entering into such Consulting Agreements or in
performing their duties thereunder. Buyer also acknowledges and agrees that
Sellers shall retain those records relating to or which may relate to the
Litigation, the Excluded Assets and Excluded Liabilities as referred to in
Section 1.2(f), and that Sellers may remove such records, at Sellers' expense,
from their present location; provided that Buyer shall have access thereto as
provided in Section 7.6(b) below.
(c) Except as may be provided by the indemnification
provisions of Section 10.1, Buyer and its Affiliates shall be responsible for
the fees and costs of any legal counsel or other consultants it or they may
retain in connection with the Litigation.
(d) In connection with the matters referenced in this section,
Sellers and their Affiliates shall use commercially reasonable efforts,
consistent with their desire to vigorously defend any litigation, not to
unreasonably interfere with the ongoing conduct of the Business by Buyer. The
obligations of each party pursuant to this Section 7.5 shall survive the
Closing.
7.6. ACCESS TO RECORDS AFTER CLOSING. (a) After the Closing
Date, Buyer agrees that it will give, or cause to be given, to Sellers, their
Affiliates, their successors and their representatives, such access to the
facilities, equipment, data, employees, properties, titles, contracts, books,
records, files, documents and affairs of the Business as is reasonably necessary
to allow Sellers or their successors to obtain information in the Buyer's
possession with respect to the Litigation, the matters described in Section
7.10, any other Excluded Liabilities or any claims, demands, audits, suits, Tax
matters, regulatory matters or other matters, relating to either of the Sellers
as the previous owner and operator of the Business, and (at Sellers' or their
successors' expense) to make copies of such information to the extent reasonably
necessary. To the extent that the Purchased Assets include either Seller's
rights, title or interest in or to any software (whether object or service code)
used by the Accufix Research Institute, Buyer hereby grants to Sellers, the
Accufix Research Institute and their Affiliates, a perpetual, non-exclusive,
irrevocable, royalty-free, paid-up license to use such software, provided that
Sellers shall not have the right to sub-license such rights to any person other
than any present or future Affiliate of either Seller.
(b) After the Closing Date, Sellers agree that they will give,
or cause to be given, to Buyer, its successors and its representatives, such
access to the facilities, equipment, data, employees, properties, titles,
contracts, books, records, files, documents and affairs of Sellers associated
with the Business as is reasonably necessary to allow Buyer or Buyer's
successors to obtain information with respect to the matters described in
Section 7.10, any claims, demands, audits, suits, Tax matters, regulatory
matters or other matters relating to Buyer as the new owner and operator of the
Business, and (at Buyer's or its successors' expense) to make copies of such
information to the extent reasonably necessary.
(c) The obligations of each party pursuant to this Section 7.6
shall survive the Closing.
7.7. DISPOSITION OF CERTAIN INFORMATION. No party shall
dispose of any of the contracts, books, records, materials, files or documents
referred to in Sections 7.5 or 7.6 during the seven (7) year period subsequent
to the Closing Date. Upon the expiration of such seven (7) year period, if at
any time following the Closing, Buyer or any Seller wishes to dispose of any of
the contracts, books, records, materials, files or documents referred to in
Sections 7.5 or 7.6 of this Agreement, such party (the "Disposing Party") shall
notify the other party hereto (the "Nondisposing Party") in writing (with
reasonable specification of the contracts, books, records, materials, files or
documents to be disposed of) of its intentions with respect thereto. The
Nondisposing Party shall, if it wishes to obtain possession of any of the
contracts, books, records, materials, files or documents to which said notice
applies, notify the Disposing Party in writing within ninety (90) days of the
date of the Disposing Party's notice to the Nondisposing Party, to ship said
contracts, books, records, materials, files or documents (at the Nondisposing
Party's expense and pursuant to the Nondisposing Party's reasonable
instructions) to the Nondisposing Party, or to a location designated in the
Nondisposing Party's notice. If the Nondisposing Party fails to so notify the
Disposing Party, the Disposing Party shall be free to dispose of the contracts,
books, records, materials, files or documents referred to in the Disposing
Party's notice in any manner, including destruction thereof, not otherwise
inconsistent with the terms of the Agreement. The obligations of each party
pursuant to this Section 7.7 shall survive the Closing.
7.8. BULK SALES LAWS. Buyer waives compliance by Sellers with
the provisions of any "bulk sales laws" or similar codification of Article 6 of
the Uniform Commercial Code, which may be applicable to the transactions
contemplated by this Agreement.
7.9. CERTAIN DISCLOSURES. Buyer agrees that neither it nor its
Affiliates shall make any press release or other public announcement which
disparages the manner in which the Business was conducted by Sellers or their
Affiliates, the design, methods of manufacture or any other aspect or component
of the Active Lead Products, the Passive Lead Products or any other product of
the Business, or which admits any wrongdoing, negligence or other improper act
or omission by Sellers or their Affiliates in their conduct of the Business or
the Litigation (or any Sellers' role in any of the foregoing), without the prior
written approval of Sellers, which shall not be unreasonably withheld. The
obligations of Buyer pursuant to this Section 7.9 shall survive the Closing.
7.10. CERTAIN ONGOING FDA MATTERS. Following the Closing,
Buyer shall assume, discharge and hold Sellers harmless from and against all
obligations, undertakings and other responsibilities with respect to all pending
regulatory matters and regulatory compliance responsibilities relating to the
Purchased Assets or the Business or with respect to monitoring and reporting
requirements concerning medical devices, parts or components previously sold by
Sellers which arise after the Closing Date, including, without limitation, those
arising pursuant to the Federal Food, Drug and Cosmetic Act 21 U.S.C. ss. 321
et. seq., as amended, and the regulations promulgated thereunder (collectively,
the "FDC Act") excepting, however, any such obligations, undertakings or other
responsibilities concerning the Active Lead Products or the Passive Lead
Products. Such obligations, undertakings and other responsibilities to be so
assumed by Buyer shall include, without limitation: (a) all registration and
listing requirements pursuant to the FDC Act concerning manufacturing
establishments of medical device manufacturers or marketed medical devices or
the repair or reconditioning of medical devices; (b) all failure investigation,
reporting and record retention requirements required by FDA Requirements of Law
concerning good manufacturing practices; (c) all medical device reporting
requirements applicable to manufacturers of medical devices; (d) all device
tracking requirements; (e) notification (limited to giving notice to physicians
or their patients or retrieving unimplanted product, specifically excluding,
however, any repair, replacement or recall obligations which may be required
pursuant to the FDC Act for products sold by or for the Business prior to the
Closing Date to unaffiliated third party purchasers, or which are part of
Seller's "finished goods inventory" as of the Closing Date (provided that for
purposes of this Agreement, any products which the Sellers or the Business are
prohibited from selling under any Requirements of Law by virtue of the FDA
Consent Decree shall not be deemed to be part of the "finished goods
inventory")), repair, replacement, refund and mandatory recall obligations under
the FDC Act; (f) any post-market surveillance studies of medical devices; and
(g) any post-approval requirements imposed by the FDA on any medical device.
Notwithstanding the foregoing assumption by Buyer, to the extent that any Seller
remains obligated to take any action under the foregoing regulatory
requirements, then Buyer shall fully cooperate with and assist Seller in all
reasonable respects as requested by such Seller in complying with such
regulatory requirements. On the Closing Date, Buyer shall notify the FDA in
writing that Buyer has assumed the regulatory responsibilities of the Sellers
and the Business described in this section. The obligations of each party
pursuant to this Section 7.10 shall survive the Closing.
7.11. SPECIAL REMEDIES. Notwithstanding anything to the
contrary contained herein, the parties agree that irreparable harm would result
from any breach of Sections 7.5, 7.6, 7.7, 7.9 or 7.10, and that in the event of
such actual, purported or threatened breach, specific performance or other
injunctive relief shall be an appropriate remedy. The obligations of each party
pursuant to this Section 7.11 shall survive the Closing.
7.12. NONCOMPETITION. (a) Each Seller agrees that for a period
of five full years after the Closing Date, neither it nor any of its Affiliates
shall engage anywhere in the world, either directly or indirectly, as a
principal or for its own account or solely or jointly with others, or as a
stockholder in any corporation or joint stock association, in the manufacture
and/or sale or cardiac arrhythmia devices in competition with the products of
the Business (a "Competing Business"); provided that nothing herein shall
prohibit (x) the acquisition or ownership of up to 5% of the outstanding voting
securities of any corporation or other person which is publicly owned or (y) the
ownership and disposition of the Excluded Assets.
(b) Each Seller agrees that for a period of two years after
the Closing Date, it will not employ any Transferred Employee without Buyer's
written consent, except that this section shall not apply to any such employee
whose employment has been terminated by Buyer (or any affiliate of Buyer), or to
the retention of the Consultants pursuant to the Consulting Agreements.
(c) If any provision contained in this section shall for any
reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Section, but this section shall be construed as if such invalid, illegal
or unenforceable provision had never been contained herein. It is the intention
of the parties that if any of the restrictions or covenants contained herein is
held to cover a geographic area or to be for a length of time which is not
permitted by applicable law, or in any way construed to be too broad or to any
extent invalid, such provision shall not be construed to be null, void and of no
effect, but to the extent such provision would be valid or enforceable under
applicable law, a court of competent jurisdiction shall construe and interpret
or reform this section to provide for a covenant having the maximum enforceable
geographic area, time period and other provisions (not greater than those
contained herein) as shall be valid and enforceable under such applicable law.
Each Seller acknowledges that Buyer would be irreparably harmed by any breach of
this section and that there would be no adequate remedy at law or in damages to
compensate Buyer for any such breach. Each Seller agrees that Buyer shall be
entitled to injunctive relief requiring specific performance by it of this
section, and each Seller consents to the entry thereof.
7.13. FORMS W-2. If the Closing occurs prior to January 1,
1997, Buyer shall use the "Alternative Procedure" provided in Section 5 of
Revenue Procedure 84-77 with respect to filing and furnishing Internal Revenue
Service Forms W-2, W-3 and 941 for the 1996 calendar year. Under such
"Alternative Procedure," (i) Sellers and Buyer each shall report on a
predecessor-successor basis as set forth in such Revenue Procedure, (ii) Sellers
shall be relieved from furnishing Forms W-2 to Transferred Employees, and (iii)
Buyer shall assume the obligations of Sellers to furnish such Forms W-2 to such
Transferred Employees for the full 1996 calendar year. Buyer also shall use such
similar procedures and make similar elections under state or local tax laws.
Buyer shall be responsible for filing and furnishing Internal Revenue Service
Forms W-2, W-3 and 941 for the 1996 calendar year.
7.14. INTERNATIONAL PURCHASE AGREEMENTS; OTHER AGREEMENTS. On
or before 30 days following the date hereof, (i) Buyer and its Affiliates shall
enter into the International Purchase Agreements with Sellers and their
Affiliates to the extent not executed simultaneous with the execution of this
Agreement (such International Purchase Agreements to be substantially in the
form as those heretofore delivered to Buyer, except as modified to provide for
the same terms and provisions as are contained in this Agreement, and except as
necessary or desirable to comply with local laws and regulations or unique
aspects of the Business there conducted; such agreements shall provide that (a)
Buyer assumes Sellers' "Retirement/Pension Obligations" listed on the Employee
Benefits Schedule, (b) Sellers shall do all things necessary to accomplish the
assumption of such obligations by Buyer and (c) Sellers will transfer to Buyer
insurance contracts or other assets to fully fund the assumed Retirement/Pension
Obligations of Sellers as of the Closing; "Retirement/Pension Obligations" means
the actual liability to provide all retirement benefits to Transferred Employees
on a fully funded basis as of the Closing Date, calculated based upon the
applicable actuarial rules of the governing jurisdiction regardless of whether
an amount less than such actual liability is reported on the Seller's financial
statements under financial statements under applicable tax or accounting rules;
(notwithstanding the foregoing, Buyer shall pay its own costs and expenses in
establishing any retirement or pension program covering Transferred Employees),
(ii) Sellers, Buyer and their Affiliates shall amend the Adjustment Agreement to
add as parties thereto any signatories to the International Purchase Agreements
which are executed after the date hereof, and (iii) Sellers, Buyer and their
Affiliates shall enter into a mutually acceptable shared services agreement
regarding management information services and administrative matters regarding
the operation of the Accufix Research Institute after the Closing Date.
7.15. FINANCIAL STATEMENT PREPARATION. Sellers and their
Affiliates shall use their best reasonable efforts to assist Buyer in the timely
preparation of any financial statements required to be filed by Buyer or its
Affiliates with respect to the Business pursuant to the United States federal
securities laws (on a United States GAAP basis), provided that Buyer agrees to
bear all incremental expenses incurred by Sellers or their representatives
(including, without limitation, any auditor's fees) in connection with the
preparation of such financial statements.
7.16. CORPORATE EXISTENCE. For the period of time commencing
on the date hereof and ending on the second (2nd) anniversary of the Closing
Date, neither Seller shall be liquidated, dissolved, merged with or into any
third party, reorganized or otherwise be the subject of any transaction or
action that would alter its corporate existence and ownership as they exist on
the date hereof. In addition, during such two (2) year period, the Purchase
Price shall not be distributed or transferred to any Affiliate of Sellers for
any reason, and shall be expended only to pay the debts and obligations of
Sellers to unaffiliated third parties (including any obligations due and owing
to Buyer and its Affiliates hereunder).
7.17. CERTAIN PRODUCTS. The parties acknowledge that certain
products previously manufactured by the Business which contain plutonium are
currently located at the Miami Lakes, Florida facility. The parties agree that
such products may remain in their current location (and Sellers and their
Affiliates will have access to such products during normal business hours),
until the later to occur of eighteen (18) months after the Closing Date, or
Buyer selling or otherwise transferring its ownership interest in the facility
where such products are currently located. Upon the expiration of such period,
Sellers or their Affiliates shall remove, store and be responsible for such
products and any future returns of other such products at their own expense.
7.18. CERTAIN RETENTION BONUSES. If either Seller has paid any
amounts to sales representatives pursuant to the Retention Plan (as defined in
Section 3.2(i)) prior to the Closing Date, Buyer shall reimburse Sellers for
thirty-two and one-half percent (32.5%) of such amounts at the Closing. If Buyer
pays any amounts to sales representatives pursuant to the Retention Plan after
the Closing Date, Sellers shall reimburse Buyer for thirty-two and one-half
percent (32.5%) of such amounts within 30 days after such payments are made. All
reimbursements pursuant to this section shall be accompanied by interest on the
actual amount of the reimbursement due, with interest accruing after the date
payment is made pursuant to the Retention Plan up to and including the date of
reimbursement pursuant to this section, at the prevailing prime rate reported
from time to time in the WALL STREET JOURNAL.
ARTICLE VIII.
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
Buyer's obligations pursuant to this Agreement shall be contingent on
the satisfaction of the following conditions, at or prior to the Closing Date:
8.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND
WARRANTIES. The representations and warranties made by Sellers in this Agreement
which are qualified by a reference to materiality or Material Adverse Effect
shall be true and correct, and such other representations and warranties made by
Sellers in this Agreement shall be true and correct in all material respects, on
and as of the Closing Date as if made on such date (except to the extent that
such representations and warranties speak as of an earlier date, in which case
such representations and warranties shall be true and correct as of such date);
each Seller shall have performed in all material respects all of its agreements
and covenants that were to be performed at or prior to the Closing in accordance
with the terms hereof; and each Seller shall have delivered to Buyer a
certificate, dated the Closing Date and signed by its President or any Vice
President, to such effect.
8.2. HSR PERIOD. The waiting period under the HSR Act shall
have expired or been terminated.
8.3. NO RESTRAINT. No statute, rule, regulation, temporary,
preliminary or permanent injunction or other order, decree or ruling shall have
been issued or promulgated by a Governmental Body which remains in effect and
which prevents, nor shall any Governmental Body have indicated in writing that
it will, or intends to, oppose or attempt to enjoin, the consummation of the
transactions contemplated by this Agreement or the International Purchase
Agreements, or the operation by Buyer of the U.S. Operations after the Closing
Date.
8.4. NECESSARY GOVERNMENTAL APPROVALS. The authorizations,
consents, waivers, orders or approvals of, or declarations or filings with, all
Governmental Bodies as set forth on the Necessary Governmental Approvals
Schedule shall have been obtained or filed or have occurred.
8.5. CLOSING DATE DELIVERIES BY SELLERS. Each Seller shall
have delivered to Buyer the following:
(a) Copies of its Certificate of Incorporation, certified as
of a recent date by the Secretary of State of the State of Delaware;
(b) Certificates of good standing or existence issued as of a
recent date by the Secretaries of State of the State of Delaware and the other
states where the Sellers are qualified to do business as a foreign corporation;
(c) A certificate of its secretary or assistant secretary
dated the Closing Date, in form and substance reasonably satisfactory to Buyer,
as to (i) the absence of any amendments to its Certificate of Incorporation
since a specified date; (ii) its by-laws; (iii) the resolutions of its Board of
Directors and stockholders authorizing the execution and performance of this
Agreement and the transactions contemplated hereby; and (iv) the incumbency and
signatures of its officers executing any document or instrument in connection
herewith (collectively, the "Seller Ancillary Documents");
(d) The officer's certificate required by Section 8.1;
(e) An opinion of counsel to Sellers substantially in the form
attached as Exhibit B;
(f) The title insurance policies or unconditional binders
required by Section 7.4 hereof;
(g) A warranty deed as required by Section 7.4 with respect to
each of the parcels of Owned Real Property duly executed by each Seller and in
form and substance reasonably satisfactory to Buyer, together with all required
real estate transfer declaration or exemption certificates and any other
documents as may be otherwise necessary to transfer title of the Owned Real
Property to Buyer;
(h) Such documents as Buyer deems reasonably necessary to
effectuate the transfer of the Proprietary Rights from Sellers to Buyer,
including, without limitation, such corporate name change documents as may be
required to effectuate a change in the name of both Sellers so as not to include
the name "Telectronics." Notwithstanding the foregoing, Sellers shall be
permitted after the Closing to use the name "Telectronics" for purposes of
defending the Litigation or in discharging the other Excluded Liabilities, but
not otherwise in conducting any business; and
(i) Such other bills of sale, assignments and other
instruments of transfer or conveyance as Buyer may reasonably request or as may
be otherwise necessary to evidence and effect the sale, assignment, transfer,
conveyance and delivery of the Purchased Assets to Buyer.
8.6. OTHER TRANSACTIONS. The transactions contemplated by the
International Purchase Agreement among Buyer, Telectronics Pty. Ltd. (A.C.N. 000
440 602) and Medical Telectronics Pty. Ltd. (A.C.N. 000 510 887), shall have
been consummated prior to, or simultaneous with, the Closing.
8.7. OTHER CONDITIONS. The conditions set forth on Exhibit C
shall have been satisfied.
Notwithstanding the failure of any one or more of the foregoing conditions,
Buyer may proceed with the Closing without satisfaction, in whole or in part, of
any one or more of such conditions and without written waiver.
ARTICLE IX.
CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH SELLER
The obligations of each Seller pursuant to this Agreement shall be
contingent on the satisfaction of the following conditions, at or prior to the
Closing Date:
9.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND
WARRANTIES. The representations and warranties made by Buyer in this Agreement
which are qualified by a reference to materiality shall be true and correct, and
such other representations and warranties made by Buyer in this Agreement shall
be true and correct in all material respects, on and as of the Closing Date as
if made on such date; Buyer shall have performed in all material respects all of
its agreements and covenants that were to be performed at or prior to the
Closing in accordance with the terms hereof, and Buyer shall have delivered to
each Seller a certificate, dated the Closing Date and signed by its President or
any Vice President, to such effects.
9.2. HSR PERIOD. The waiting period under the HSR Act shall
have expired or been terminated.
9.3. NO RESTRAINT. No statute, rule, regulation, temporary,
preliminary or permanent injunction or other order, decree or ruling shall have
been issued or promulgated by a Governmental Body which remains in effect and
which prevents, nor shall any Governmental Body have indicated in writing that
it will, or intends to, oppose or attempt to enjoin, the consummation of the
transactions contemplated by this Agreement or the International Purchase
Agreements.
9.4. NECESSARY GOVERNMENTAL APPROVALS. The authorizations,
consents, waivers, orders or approvals of, or declarations or filings with, all
Governmental Bodies as set forth on the Necessary Governmental Approvals
Schedule shall have been obtained or filed or have occurred.
9.5. RELEASE OF GUARANTEES. Each Seller and their Affiliates
shall have been unconditionally released from the guaranties, letters of comfort
or support and indemnification or "hold harmless" agreements listed on the
Guarantees Schedule, or Buyer shall have made arrangements satisfactory to
Sellers and such Affiliates, in their discretion, to indemnify them from any
loss, liability or expense incurred in connection with such guaranties, letters
or agreements.
9.6. BUYER'S CLOSING DATE DELIVERIES. Buyer shall have
delivered to Sellers the following:
(a) A copy of Buyer's charter certified as of a recent date by
the Secretary of State of the State of Delaware;
(b) Certificates of good standing or existence of Buyer issued
as of a recent date by the Secretaries of State of the State of Delaware and the
other states where the Buyer is qualified to do business as a foreign
corporation;
(c) Certificate of the secretary or an assistant secretary of
Buyer, dated the Closing Date, in form and substance reasonably satisfactory to
Sellers, as to (i) the absence of any amendments to Buyer's charter since a
specified date; (ii) the by-laws of Buyer; (iii) the resolutions of the Board of
Directors of Buyer authorizing the execution and performance of this Agreement
and the transactions contemplated hereby; and (iv) the incumbency and signatures
of the officers executing this Agreement and any document or instrument in
connection herewith (the "Buyer Ancillary Documents");
(d) Opinion of counsel to Buyer substantially in the form
attached as Exhibit D;
(e) An executed Assumption Agreement, pursuant to which Buyer
agrees to assume and discharge the Assumed Liabilities in a form reasonably
acceptable to Sellers and their counsel;
(f) Such other documents and instruments of assumption as
Sellers may reasonably request to evidence and effect Buyer's performance of its
obligations hereunder.
9.7. OTHER TRANSACTIONS. The transactions contemplated by the
International Purchase Agreement among Buyer, Telectronics Pty. Ltd. (A.C.N. 000
440 602), and Medical Telectronics Pty. Ltd. (A.C.N. 000 510 887), shall have
been consummated prior to, or simultaneous with, the Closing.
9.8. OTHER CONDITIONS. The conditions set forth on Exhibit C
shall have been satisfied.
Notwithstanding the failure of any one or more of the foregoing conditions,
Sellers may proceed with the Closing without satisfaction, in whole or in part,
of any one or more of such conditions and without written waiver.
ARTICLE X.
INDEMNIFICATION
10.1. INDEMNIFICATION BY SELLERS. (a) Subject to the terms and
conditions of this Article X, and as Buyer's sole and exclusive remedy (in
contract, tort or otherwise) in connection with the transactions contemplated by
this Agreement, Sellers jointly and severally agree to reimburse, indemnify and
hold Buyer, its present and future Affiliates and their respective directors,
officers, agents and representatives (each a "Buyer Indemnified Party") harmless
from, against and in respect of any and all damage, loss, liability, claim,
deficiency or expense (including reasonable legal expenses and costs) resulting
from, or which exist or arise due to, any of the following (collectively, the
"Buyer Claims"):
(i) any untruth, inaccuracy, breach or omission of, from or in
the representations and warranties made by Sellers in this Agreement,
other than those representations and warranties contained in Sections
4.2 and 4.9;
(ii) any untruth, inaccuracy, breach or omission of, from or
in the representations and warranties made by Sellers in Section 4.2 of
this Agreement;
(iii) any untruth, inaccuracy, breach or omission of, from or
in the representations and warranties made by Sellers in Section 4.9 of
this Agreement;
(iv) the nonfulfillment of any covenant or agreement of
Sellers pursuant to this Agreement;
(v) noncompliance by Sellers with any "bulk sales laws" or
similar codification of Article 6 of the Uniform Commercial Code;
(vi) any claims made by third parties against Buyer relating
to the Excluded Liabilities described in Sections 3.2(c), 3.2(e), and
3.2(h); and
(vii) any claims made by third parties against Buyer relating
to Taxes or the Litigation as described in Sections 3.2(a) or 3.2(b);
and
(viii) any claims made by third parties against Buyer relating
to Excluded Liabilities other than those described in (vi) and (vii)
above;
together with any and all actions, suits, claims, proceedings, investigations,
audits, demands, assessments, fines, judgments, costs and other expenses
(including, without limitation, reasonable audit and legal fees) incurred by a
Buyer Indemnified Party in connection therewith. Notwithstanding the first
sentence of this Section 10.1(a) regarding the sole and exclusive nature of the
remedy provided by this Section 10.1, if any third party files suit against a
Buyer Indemnified Party seeking payment of any Excluded Liability, such Buyer
Indemnified Party may join the responsible Seller as a third party defendant in
such suit, or if such joinder is not possible, may take any other legal action
that it deems appropriate regarding such Excluded Liability.
(b) The obligations of Sellers pursuant to this Section 10.1
(x) shall terminate on the one year anniversary of the Closing Date, (y) shall
not apply to any Buyer Claims, or the costs of defense thereof, until the
aggregate of all losses, liabilities, damages and expenses actually incurred by
all Buyer Indemnified Parties resulting therefrom total an aggregate of
US$2,000,000 (the "Buyer Threshold"), in which event this indemnity shall apply
to all subsequent Buyer Claims in excess of the Buyer Threshold, and (z) shall
be limited to, and shall not exceed, the aggregate amount of the Purchase Price
actually received by Sellers pursuant to this Agreement (the "Liability Cap"),
EXCEPT THAT:
(i) any Buyer Claim pursuant to Section 10.1(a)(iii) shall
survive the Closing indefinitely;
(ii) any Buyer Claim pursuant to Sections 10.1(a)(ii) or
10.1(a)(vi) shall survive the Closing indefinitely and shall not be
subject to the Buyer Threshold;
(iii) any Buyer Claim pursuant to Section 10.1(a)(vii) shall
survive the Closing indefinitely, shall not be subject to the Buyer
Threshold, and shall not be subject to the Liability Cap; and
(iv) any Buyer Claim made in accordance with Section 10.3
prior to the expiration of any applicable survival period shall survive
until resolved.
10.2. INDEMNIFICATION BY BUYER. (a) Subject to the terms and
conditions of this Article X, and as each Seller's sole and exclusive remedy (in
contract, tort or otherwise) in connection with the transactions contemplated by
this Agreement, Buyer agrees to reimburse, indemnify and hold each Seller, its
present and future Affiliates and their respective directors, officers, agents
and representatives (each a "Seller Indemnified Party") harmless from, against
and in respect of any and all damage, loss, liability, claim, deficiency or
expenses (including reasonable legal expenses and costs) resulting from, or
which exist or arise due to, any of the following (collectively, the "Seller
Claims," and together with the Buyer Claims, the "Claims"):
(i) any untruth, inaccuracy, breach or omission of, from or in
the representations and warranties made by Buyer in this Agreement;
(ii) the nonfulfillment of any of Buyer's covenants or
agreements pursuant to this Agreement (including, without limitation,
Sections 7.5, 7.6, 7.7, 7.9 and 7.10);
(iii) any claims made against a Seller Indemnified Party
relating to the Assumed Liabilities; and
(iv) Buyer's ownership, use and operation of the U.S.
Operations and the Purchased Assets after the Closing Date, except for
matters covered by Section 10.1 hereof;
together with any and all actions, suits, claims, proceedings, investigations,
audits, demands, assessments, fines, judgments, costs and other expenses
(including, without limitation, reasonable audit and legal fees) incurred by a
Seller Indemnified Party resulting therefrom. Notwithstanding the first sentence
of this Section 10.2(a) regarding the sole and exclusive nature of the remedy
provided by this Section 10.2, if any third party files suit against a Seller
Indemnified Party seeking payment of any Assumed Liability, such Seller
Indemnified Party may join the Buyer as a third party defendant in such suit, or
if such joinder is not possible, may take any other legal action that it deems
appropriate regarding such Assumed Liability.
(b) Buyer's obligations pursuant to this Section 10.2 shall
terminate on the one year anniversary of the Closing Date, PROVIDED THAT any
claims for indemnification related to Section 5.2, and Buyer's use and operation
of the Purchased Assets and the U.S. Operations after the Closing Date, shall
survive indefinitely. Notwithstanding the preceding sentence, but subject to the
remainder of Section 10.2, any Seller Claim made in accordance with Section 10.3
prior to the expiration of such survival period shall survive until resolved.
10.3. PROCEDURE FOR INDEMNIFICATION. No party hereto shall be
liable for any Claim for indemnification under this Article X unless written
notice of a Claim for indemnification is delivered by the party seeking
indemnification (the "Indemnitee") to the party from whom indemnification is
sought (the "Indemnitor") prior to the expiration of the applicable survival
period, if any, set forth in Sections 10.1 and 10.2. All notices given pursuant
to this section shall set forth with reasonable specificity the basis of the
Claim for indemnification. In case of any claim by a third party, any suit, any
claim by any Governmental Body, or any legal, administrative or arbitration
proceeding with respect to which Sellers or Buyer may have liability under the
indemnity agreements contained in this Article X, the Indemnitor shall be
entitled to participate therein, and, to the extent desired, to assume the
defense thereof, and after notice of its election to assume the defense thereof,
the Indemnitor will not be liable to the Indemnitee for any legal or other
expenses subsequently incurred by the Indemnitee in connection with the defense
thereof, other than reasonable costs of investigation, unless the Indemnitor
does not actually assume the defense thereof following notice of such election.
The Indemnitee and the Indemnitor shall make available to each other and their
attorneys and representatives, at all reasonable times, all books and records
relating to such suit, claim or proceeding, and will render to each other such
assistance as may reasonably be required in order to insure proper and adequate
defense of any such suit, claim or proceeding. Neither the Indemnitee nor the
Indemnitor will make any settlement of any Claim which might give rise to
liability of the other under the indemnity agreements contained in this Article
X without the consent of the other, which shall not be unreasonably withheld. If
the Indemnitor elects to settle any such Claim and the Indemnitee refuses to
consent to such compromise or settlement, then the liability of the Indemnitor
to the Indemnitee shall be limited to the amount offered by the Indemnitor in
compromise or settlement. Nothing contained in Sections 10.1 or 10.2 shall be
deemed to limit, expand or otherwise modify the provisions of Sections 3.1 or
3.2 with respect to what constitutes either an Assumed Liability or an Excluded
Liability.
10.4. CERTAIN BENEFITS. The amount of any indemnification
payable under this Article X shall be net of (i) any federal, state or local tax
benefits for which the receiving party actually receives a benefit (all parties
being obligated to take reasonable actions to receive such benefits, PROVIDED
THAT no party shall be obligated to take any actions which may otherwise
adversely affect such party or its Affiliates) by reason of the Claim giving
rise to the indemnification payment, and (ii) the receipt of any insurance
proceeds paid or payable to the Indemnitee under any policy or policies of
insurance covering the loss giving rise to the Claim. The Indemnitee will use
reasonable efforts to collect any such insurance and will account to the other
parties therefor. The parties agree to respond within a reasonable time to any
inquiry by the other parties as to the status of any such insurance payment.
10.5. CERTAIN FDA CONSENT DECREE MATTERS. Notwithstanding
anything to the contrary contained herein, (i) Buyer agrees to reimburse,
indemnify and hold harmless all Seller Indemnified Parties (including, without
limitation, James W. Dennis) harmless from, against and in respect of any and
all damage, loss, liability, claim, deficiency or expense (including reasonable
legal expenses and costs) which result from, or are related to, Buyer's failure
to comply with all requirements, terms and conditions of the FDA Consent Decree
subsequent to the Closing Date, as those requirements, terms and conditions are
interpreted or construed by the FDA or any appropriate court of law or
Governmental Body, and (ii) each Seller agrees to reimburse, indemnify and hold
harmless all Buyer Indemnified Parties harmless from, against and in respect of
any and all damage, loss, liability, claim, deficiency or expense (including
reasonable legal expenses and costs) which result from, or are related to,
either Seller's failure to comply with all requirements, terms and conditions of
the FDA Consent Decree prior to the Closing Date, as those requirements, terms
and conditions are interpreted or construed by the FDA or any appropriate court
of law or Governmental Body. Each party's obligations pursuant to this Section
10.5 shall survive the Closing.
10.6. ADJUSTMENT TO PURCHASE PRICE. If Buyer or any Seller
make any payment to a Seller Indemnified Party or a Buyer Indemnified Party
pursuant to this Article X, then such amount shall be treated as an adjustment
to the Purchase Price paid for the Purchased Assets.
10.7. GUARANTEES. The indemnification obligations of Sellers
under Section 10.1 with respect to the Litigation and all obligations of Buyer
under this Agreement shall be guaranteed by Sellers' Affiliate, Pacific Dunlop
Limited, and by Buyer's affiliate, St. Jude Medical Inc., respectively, pursuant
to unconditional and irrevocable guaranty agreements substantially in the forms
attached as Exhibit E.
ARTICLE XI.
TERMINATION
11.1. TERMINATION. Notwithstanding anything contained in this
Agreement to the contrary, this Agreement may only be terminated prior to the
Closing Date:
(a) by the mutual written consent of Buyer and each Seller;
(b) by Buyer, PROVIDED THAT Buyer is not then in breach of any
representation, warranty, covenant or other agreement contained herein, if
either (i) the Closing shall not have occurred on or before February 10, 1997
despite Buyer's best efforts to cause the Closing to occur in accordance with
the terms hereof, or (ii) either Seller shall have materially breached (and
failed to subsequently cure such breach in a timely manner prior to the
scheduled Closing Date) any of its representations, warranties, covenants or
agreements set forth in this Agreement, which breach is reasonably likely to
result in a Material Adverse Effect; FURTHER PROVIDED THAT prior to terminating
this Agreement pursuant to (ii) above, Buyer agrees to negotiate in good faith
with Sellers for a reasonable period of time to resolve any purported breach in
a manner reasonably satisfactory to all parties;
(c) by either Seller, PROVIDED THAT such Seller is not then in
breach of any representation, warranty, covenant or other agreement contained
herein, if either (i) the Closing shall not have occurred on or before February
10, 1997 despite such Seller's best efforts to cause the Closing to occur in
accordance with the terms hereof; or (ii) Buyer shall have materially breached
(and failed to subsequently cure such breach in a timely manner prior to the
scheduled Closing Date) any of its representations, warranties, covenants or
agreements set forth in this Agreement, which breach is reasonably likely to
result in a material adverse effect on Buyer's business, or the ability of Buyer
to lawfully consummate the transactions contemplated by this Agreement in all
material respects; FURTHER PROVIDED THAT prior to terminating this Agreement
pursuant to (ii) above, Sellers agree to negotiate in good faith with Buyer for
a reasonable period of time to resolve any purported breach in a manner
reasonably satisfactory to all parties; or
(d) by Buyer or either Seller, if any Governmental Body shall
have issued a final, nonappealable order, decree or ruling permanently
restraining, enjoining or otherwise prohibiting the lawful consummation of the
transactions contemplated hereby.
11.2. NOTICE OF TERMINATION. Any party desiring to terminate
this Agreement pursuant to Section 11.1 shall give written notice of such
termination to the other parties to this Agreement.
11.3. EFFECT OF TERMINATION. In the event that this Agreement
shall be terminated pursuant to this Article XI, this Agreement shall become
void and have no effect and all further obligations of the parties under this
Agreement (other than Sections 12.2 and 12.8) shall be terminated without
further liability of any party to the other, PROVIDED THAT nothing herein shall
relieve any party from liability for any breach of this Agreement.
ARTICLE XII.
GENERAL PROVISIONS
12.1. SURVIVAL OF OBLIGATIONS. The representations and
warranties of the parties contained in this Agreement shall survive until the
first anniversary of the Closing Date. The covenants or agreements of the
parties which by their terms are to be performed or observed for longer periods
shall survive for the period necessary for their performance or observation, and
the parties may make claims against one another for breaches of such covenants
or agreements until such time as those agreements or covenants have been
performed.
12.2. NO PUBLIC ANNOUNCEMENT. Buyer and Sellers agree that
none of them shall, without the prior written approval of the other parties,
make any press release or other public announcement concerning the transactions
contemplated by this Agreement, except as and to the extent that any such party
shall be so obligated by law or by the rules and regulations of any competent
regulatory body or any securities exchange on which its securities, or the
securities of its ultimate parent, are traded, in which case the other party
shall be advised in writing at least three (3) days in advance, and the parties
shall use their best efforts to cause a mutually agreeable release or
announcement to be issued. Notwithstanding the preceding sentence, the parties
shall be allowed to make timely disclosures of all matters required by law or by
the rules and regulations of any competent regulatory body or any securities
exchange on which the securities of such party (or its ultimate parent) are
traded, without providing such three (3) days notice to the other party,
PROVIDED THAT the disclosing party is advised in writing by its counsel that
such disclosure is required to comply with the requirements of such laws, rules
and regulations. Notwithstanding anything to the contrary contained in this
Agreement, no party shall make publicly available to any person copies of this
Agreement or the International Purchase Agreements, nor make any other public
announcement of the transactions contemplated hereby and thereby, prior to
October 31, 1996 without the prior written consent of the other parties.
12.3. NOTICES. Any notice, request, instruction or other
document to be given hereunder shall be in writing and delivered personally or
sent by registered or certified mail, postage prepaid, or by facsimile,
cablegram or telex, according to the instructions set forth below. Such notices
shall be deemed given: at the time delivered by hand, if personally delivered;
at the time received if sent by registered or certified mail; at the time when
receipt is confirmed by the receiving facsimile machine if sent by facsimile;
and when answered back if sent by cablegram or telexed.
If to Buyer, to:
St. Jude Medical, Inc.
One Lillehei Plaza
St. Paul. MN 55117
Attention: General Counsel
Facsimile: (612) 490-4333
with a copy to:
Weil, Gotshal & Manges L.L.P
767 Fifth Avenue
New York, New York 10153
Attention: Mr. Dennis J. Block
Facsimile: 212-310-8774
If to either Seller, to:
Telectronics Pacing Systems, Inc.
7400 S. Tucson Way
Englewood, CO 80112
Attention: Stuart McConchie/William Nealon
Facsimile: 303-790-0850
with a copy to:
Gardner, Carton & Douglas
321 N. Clark Street
Suite 3400
Chicago, Illinois 60610
Attention: Messrs. Robert J. Wilczek
and Stephen M. Gatlin
Facsimile: 312-644-3381
or to such other address as such party may indicate by a notice delivered to the
other parties hereto.
12.4. SUCCESSORS AND ASSIGNS. The rights of Buyer and Sellers
pursuant to this Agreement shall not be assignable by such party prior to the
Closing without the prior written consent of the other parties, except that
Buyer may assign its rights hereunder to one or more of its Affiliates prior to
the Closing, PROVIDED THAT Buyer shall not be released from any of its
obligations hereunder by reason of such assignment. This Agreement, including,
but not limited to, Sections 7.5 7.6, 7.7, 7.9 and 7.10 and Article X, shall be
binding upon and inure to the benefit of the parties hereto and their successors
and assigns.
12.5. ENTIRE AGREEMENT; AMENDMENTS. This Agreement, the letter
agreement referred to in Section 7.2, and the Exhibits and Schedules referred to
herein, and the documents and agreements delivered pursuant hereto (including,
without limitation, the International Purchase Agreements and the Adjustment
Agreement) contain the entire understanding of the parties hereto with regard to
the subject matter contained herein or therein, and supersede all prior written
or oral agreements, understandings or letters of intent between or among any of
the parties hereto, with the exception of the Confidentiality Agreement entered
into between Buyer and Zilkha & Company (on behalf of Sellers and certain other
parties) dated April, 1996. This Agreement shall not be amended, modified or
supplemented except by a written instrument signed by an authorized
representative of each of the parties hereto.
12.6. INTERPRETATION. (a) Article titles and section titles
herein are inserted for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this Agreement. The
Schedules and Exhibits referred to herein shall be construed with and as an
integral part of this Agreement to the same extent as if they were set forth
herein.
(b) This Agreement and the Buyer and Seller Ancillary
Documents have been mutually prepared, negotiated and drafted by each of the
parties hereto and thereto. The parties agree that the terms of this Agreement
and such other documents shall be construed and interpreted against each party
in the same manner; no such provisions shall be construed or interpreted more
strictly against one party on the assumption that an instrument is to be
construed more strictly against the party which drafted the agreement.
12.7. WAIVERS. Any term or provision of this Agreement may be
waived, or the time for its performance may be extended, pursuant to a written
action by the party or parties entitled to the benefit thereof. The failure of
any party hereto to enforce at any time any provision of this Agreement shall
not be construed to be a waiver of such provision, nor in any way to affect the
validity of this Agreement or any part hereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to constitute a waiver of any other or subsequent
breach.
12.8. EXPENSES. Regardless of whether the transactions
provided for in this Agreement are consummated, each party hereto will pay its
own costs and expenses incident to the negotiation, preparation and performance
of this Agreement, including the fees, expenses and disbursements of its counsel
and accountants.
12.9. PARTIAL INVALIDITY. Wherever possible, each provision
hereof shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such provision shall be ineffective to the extent, but only to the
extent, of such invalidity, illegality or unenforceability without invalidating
the remainder of such invalid, illegal or unenforceable provision or provisions
or any other provisions hereof, unless such a construction would be
unreasonable.
12.10. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in one or more counterparts, each of which shall be considered an
original instrument, but all of which shall be considered one and the same
agreement, and shall become binding when one or more counterparts have been
signed by each of the parties hereto and delivered to each Seller and Buyer.
12.11. BEST EFFORTS; FURTHER ASSURANCES. Subject to the terms
and conditions contained herein, each party agrees to use its best efforts to
take, or cause to be taken, all action, and to do, or cause to be done, all
things reasonably necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement. If any further action is necessary to carry out the purposes of
this Agreement after the Closing Date, the proper officers and/or directors of
each party shall take all such action without any further consideration
therefor.
12.12. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware, without
giving effect to any choice of laws provisions which may direct the application
of the laws of another jurisdiction.
12.13. "KNOWLEDGE". As used in this Agreement, "knowledge" of
any Seller, or variants thereof, shall mean the actual knowledge of the
individuals set forth on the Knowledge Schedule.
12.14. NO THIRD PARTY BENEFICIARIES. Except as expressly
provided for in Article X, the provisions of this Agreement are intended for the
sole benefit of Buyer and the Sellers and shall not inure to the benefit of any
other Person, other than successors and permitted assigns of the parties,
whether as a third party beneficiary or otherwise.
12.15. DISCLOSURE SCHEDULES. If a matter is disclosed on one
disclosure schedule to this Agreement, and the disclosure of such matter is
responsive to the disclosure required to be set forth in another disclosure
schedule, such disclosure shall suffice (without specific repetition and
regardless of whether any cross reference is made), as a response disclosing the
existence of such matter in such other schedule. Disclosure of any item in any
disclosure schedule shall not be deemed to be an admission of any Seller that
such item is material to the U.S. Operations, the Business or otherwise; nor
shall any such disclosure be deemed an assumption by Buyer of any liability
relating to such disclosure unless otherwise expressly provided for in this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.
BUYER:
O Acquisition, Inc.
By: /s/ R. A. Matricaria
------------------------------------
Name: R.A. Matricaria
Title: Chairman, President and
Chief Executive Officer
SELLERS:
Telectronics Pacing Systems, Inc.
By: /s/ James Dennis
-----------------------------------
Name: James Dennis
Title: President
TPLC, Inc.
By: /s/ James Dennis
-----------------------------------
Name: James Dennis
Title: President
