SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __)<1>
ATS Medical, Inc.
(Name of issuer)
Common Stock, par value $0.01 per share
(Title of class of securities)
002083 10 3
(CUSIP number)
David G. Litt, Esq.
O'Melveny & Myers LLP
555 13th Street, N.W.
Washington, D.C. 20004-1109
(202) 383-5300
(Name, address and telephone number of person
authorized to receive notices and communications)
February 7, 1997
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or
(4), check the following box [ ].
________
[FN]
<1> The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall
not be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 ("Act") or otherwise subject to the
liabilities of that section of the Act but shall be subject to all other
provisions of the Act (however, see the Notes).
[FN]
Note. Six copies of this statement, including all exhibits, should
be filed with the Commission. See Rule 13d-1(a) for other parties to
whom copies are to be sent.
<PAGE>
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
ITOCHU CORPORATION; 98-0053818
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP<1> (A) [ ]
(B) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
WC
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS [ ]
IS REQUIRED PURSUANT TO ITEM 2(D) OR 2(E)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
JAPAN
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING
PERSON WITH:
7 SOLE VOTING POWER
1,568,940 SHARES
8 SHARED VOTING POWER
0 SHARES
9 SOLE DISPOSITIVE POWER
1,568,940 SHARES
10 SHARED DISPOSITIVE POWER
0 SHARES
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,568,940 SHARES
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.3%
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
<PAGE>
ITEM 1. SECURITY AND ISSUER.
This Schedule 13D relates to the common stock ("Common
Stock"), par value $0.01 per share, of ATS Medical, Inc., a
Minnesota corporation ("ATS"). The address of ATS is 3905
Annapolis Lane, Minneapolis, Minnesota 55447.
ITEM 2. IDENTITY AND BACKGROUND.
This Schedule 13D is filed by Itochu Corporation, a
Japanese corporation ("Itochu"). Itochu is a trading company with
its principal business and offices located at 5-1, Kita-Aoyama 2-
chome, Minato-ku, Tokyo 107-77, Japan.
In the last five years, Itochu has not been convicted in
a criminal proceeding (excluding traffic violations and similar
misdemeanors), nor has Itochu been a party to a civil proceeding as
a result of which Itochu was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
The names of the directors of Itochu are set forth in
Schedule A attached hereto. Except as set forth on Schedule A,
each director is a Japanese citizen whose principal occupation is
serving as an officer of Itochu or one of its subsidiaries. Except
as set forth on Schedule A, the business address of each director
is Itochu Corporation, 5-1, Kita-Aoyama 2-chome, Minato-ku, Tokyo
107-77, Japan.
In the last five years, no director of Itochu has been
convicted in a criminal proceeding (excluding traffic violations
and similar misdemeanors), nor has any such director been a party
to a civil proceeding as a result of which such person was or is
subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with
respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Itochu purchased all its shares of Common Stock for an
aggregate of $14,750,000 derived from Itochu's working capital. No
part of the purchase price was represented by funds or other
consideration borrowed or otherwise obtained for the purpose of
acquiring, holding, trading or voting the securities.
ITEM 4. PURPOSE OF TRANSACTION.
Itochu acquired the shares of Common Stock for investment
purposes. Itochu's wholly-owned subsidiary, Century Medical, Inc.
("CMI"), is the exclusive distributor of ATS's product in Japan.
In connection with Itochu's investment, CMI and ATS negotiated an
extension and amendment to the terms of their distribution
agreement, effectiveness of which was conditioned upon closing of
the purchase of the shares by Itochu. Itochu has no plans or
proposals which relate to or would result in the occurrence of any
of the transactions or events described in paragraphs (a) through
(j) of Item 4 of Schedule 13D, except Itochu may transfer a portion
of such shares to CMI.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Itochu beneficially owns an aggregate of 1,568,940 shares
of Common Stock or 9.3% of the outstanding shares of Common Stock.
Itochu retains sole voting and dispositive power with respect to
such shares. On February 7, 1997, Itochu purchased all its
1,568,940 shares of Common Stock from ATS at a purchase price of
$9.40125 per share pursuant to the terms of a Stock Purchase
Agreement attached hereto as Exhibit 1 (the "Stock Purchase
Agreement"). Itochu has no right to purchase additional shares of
Common Stock, and, pursuant to the terms of the Stock Purchase
Agreement, Itochu has agreed that unless ATS has consented, Itochu
and CMI will not purchase additional shares of Common Stock until
February 7, 2000 if such acquisition would result in Itochu or CMI
holding in the aggregate more than 19.9% of the outstanding shares
of Common Stock at the time of such acquisition.
To the best knowledge of Itochu, no director of Itochu
beneficially owns or has the right to acquire any shares of Common
Stock and no director of Itochu has effected any transaction in the
shares of Common Stock in the last sixty days.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.
Itochu and ATS entered into the Stock Purchase Agreement
for the sale and purchase of the 1,568,940 shares of Common Stock
now owned by Itochu. Pursuant to the terms of the Stock Purchase
Agreement, Itochu has agreed that unless ATS has consented, Itochu
and CMI will not purchase additional shares of Common Stock until
February 7, 2000 if such acquisition would result in Itochu or CMI
holding in the aggregate more than 19.9% of the outstanding shares
of Common Stock at the time of such acquisition. Itochu may
transfer all or a portion of its 1,568,940 shares of Common Stock
to CMI.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit No. Exhibit
1 Stock Purchase Agreement dated as of February
3, 1997 between Itochu Corporation and ATS
Medical, Inc.
SIGNATURE
After reasonable inquiry and to the best of my knowledge
and belief, I certify that the information set forth in this
statement is true, complete and correct.
Date: February 18, 1997 ITOCHU CORPORATION
By: /s/ Takashi Yamamura
Name: Takashi Yamamura
Title: Executive Vice President
<PAGE>
SCHEDULE A
DIRECTORS OF ITOCHU
Tadayoshi Nakazawa
Minoru Murofushi
Jay W. Chai
Mr. Chai is a U.S. citizen whose business address is
Itochu International Inc., 335 Madison Avenue, New York,
New York 10017.
Takashi Yamamura
Kanji Morisawa
Ichiro Kanade
Noboru Nishikawa
Koji Nojima
Masayoshi Fujiwara
Uichiro Niwa
Fumiaki Fujino
Hiroshi Sumie
Hiroyuki Yamaoka
Katsuyuki Kanezaki
Tetsusaburo Shirai
Seizo Kano
Akira Asami
Nobuhiro Takahashi
Takashi Shiga
Motohiro Matsukura
Takeshi Seino
Takeo Onda
Shogo Homma
Keiichi Wakabayashi
Masahiro Fukumoto
Kiyoaki Imai
Shiro Morita
Nobuo Kobayashi
Makoto Kato
Yushin Okazaki
Kakuichi Saegusa
Sumitaka Fujita
Hiromi Iizuka
Rennjiro Sakashita
Tokuji Kayama
Mitsuo Sakai
Hirotaka Takechi
Tadao Abe
Sinya Takei
Junichi Taniyama
Takeshi Kondo
Mitsuaki Fukuda
Yasuo Itsusima
Kunio Tajiri
Michio Tanabe
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement is entered into as of February 3,
1997, between Itochu Corporation, a Japanese corporation ("Buyer") and
ATS Medical, Inc., a Minnesota corporation ("Company").
WHEREAS, the Company desires to sell, and Buyer desires to
acquire the Company's shares as provided herein.
NOW, THEREFORE, in consideration of the mutual benefits to be
derived from this Agreement and the representations, warranties,
conditions and promises hereinafter contained, the Company and Buyer
hereby represent, warrant and agree as follows:
ARTICLE I
DEFINITIONS/PURCHASE & SALE/CLOSING
1.1 Definitions.
For all purposes of this Agreement, unless otherwise expressly
provided,
(a) the terms defined in this Article I have the meanings
assigned to them in this Article I and include the plural as well as the
singular,
(b) all accounting terms not otherwise defined herein have
the meanings assigned under generally accepted accounting principles,
(c) all references in this Agreement to designated
"Articles," "Sections" and other subdivisions are to the designated
Articles, Sections and other subdivisions of the body of this Agreement,
(d) pronouns of either gender or neuter shall include, as
appropriate, the other pronoun forms, and
(e) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision.
As used in this Agreement and the Exhibits and Schedules
delivered pursuant to this Agreement, the following definitions shall
apply.
"Action" means any action, complaint, petition, investigation,
suit or other proceeding, whether civil or criminal, in law or in equity,
or before any arbitrator or Governmental Entity.
"Affiliate" means a Person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under
common control with, a specified Person.
"Agreement" means this Agreement between Buyer and the Company
as amended or supplemented together with all Exhibits and Schedules
attached or incorporated by reference.
"Approval" means any approval, authorization, consent,
qualification or registration, or any waiver of any of the foregoing,
required to be obtained from, or any notice, statement or other
communication required to be filed with or delivered to, any Governmental
Entity or any other Person.
"Auditors" means Ernst & Young LLP, independent public
accountants to Company.
"Business" means the business of Company and the Subsidiary
taken as a whole, and shall be deemed to include any of the following
incidents of such business: income, operations, condition (financial or
other), assets/properties, anticipated revenues/income, prospects, and
liabilities.
"Buyer Stock" means the shares of Common Stock being acquired
by Buyer hereunder.
"Closing" means the consummation of the purchase and sale of
the Buyer Stock under this Agreement.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" shall mean the Common Stock, $0.01 par value, of
the Company.
"Contract" means any agreement, arrangement, bond, commitment,
franchise, indemnity, indenture, instrument, lease, license or
understanding, whether or not in writing.
"Disclosure Materials" has the meaning set forth in Section
2.3.
"Encumbrance" means any claim, charge, easement, encumbrance,
lease, covenant, security interest, lien, option, pledge, rights of
others, or restriction (whether on voting, sale, transfer, disposition or
otherwise), whether imposed by agreement, understanding, law, equity or
otherwise, except for any restrictions on transfer generally arising
under any applicable federal or state securities law.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles in the
United States, as in effect from time to time.
"Governmental Entity" means any government or any agency,
bureau, board, commission, court, department, official, political
subdivision, tribunal or other instrumentality of any government, whether
federal, state or local, domestic or foreign.
"Intangible Property" means any trade secret, secret process or
other confidential information or know-how and any and all Marks.
"IRS" means the Internal Revenue Service or any successor
entity.
"Law" means any constitutional provision, statute or other law,
rule, regulation, or interpretation of any Governmental Entity and any
Order.
"Loss" means any action, cost, damage, disbursement, expense,
liability, loss, deficiency, diminution in value, obligation, penalty or
settlement of any kind or nature, whether foreseeable or unforeseeable,
including but not limited to, interest or other carrying costs,
penalties, legal, accounting and other professional fees and expenses
incurred in the investigation, collection, prosecution and defense of
claims and amounts paid in settlement, that may be imposed on or
otherwise incurred or suffered by the specified person.
"Optional Closing Date" has the meaning set forth in Section
10.1.
"Order" means any decree, injunction, judgment, order, ruling,
assessment or writ.
"Permit" means any license, permit, franchise, certificate of
authority, or order, or any waiver of the foregoing, required to be
issued by any Governmental Entity.
"Person" means an association, a corporation, an individual, a
partnership, a trust or any other entity or organization, including a
Governmental Entity.
"Purchase Price" has the meaning set forth in Section 1.3.
"SEC" means the Securities and Exchange Commission or any
successor entity.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" means ATS Medical, Ltd., a Scotland Private
Limited Company.
"Tax" means any foreign, federal, state, county or local
income, sales and use, excise, franchise, real and personal property,
gross receipt, capital stock, production, business and occupation,
disability, employment, payroll, severance or withholding tax or charge
imposed by any Governmental Entity, any interest and penalties (civil or
criminal) related thereto or to the nonpayment thereof, and any Loss in
connection with the determination, settlement or litigation of any Tax
liability.
"Tax Return" means a report, return or other information
required to be supplied to a Governmental Entity with respect to Taxes
including, where permitted or required, combined or consolidated returns
for any group of entities that includes Company or any Subsidiary.
1.2 Sale and Purchase of Buyer Stock.
In reliance on the representations, warranties and covenants
contained herein and subject to the terms and conditions hereof, at the
Closing the Company will issue, sell and deliver to the Buyer, and the
Buyer will purchase from the Company, the Buyer Stock, consisting of
1,568,940 shares of Common Stock, and representing in the aggregate 9.3%
of the Company's Common Stock outstanding as of the Closing.
1.3 Purchase Price; Payment.
The purchase price for the Buyer Stock shall be $9.40125 per
share, for an aggregate purchase price of $14,750,000 (the "Purchase
Price"). At the Closing, the Buyer will deliver, by wire transfer to the
Company's account number 160233949082 at First Banks, N.A., Bank Routing
#091000022, Swift #FNBMUS44IMT, an amount equal to the Purchase Price in
immediately available funds and the Company will deliver the
certificate(s) representing the Buyer Stock.
1.4 Closing.
As soon as practicable after the satisfaction or waiver in
writing of the conditions set forth in this Agreement, the Closing will
take place on a date and at a place that is mutually convenient to the
parties.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Buyer as follows:
2.1 Organization and Related Matters.
The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Minnesota and has all
necessary corporate power and authority to execute, deliver and perform
this Agreement and any related agreements to which it is a party. The
Subsidiary is a wholly-owned subsidiary of Company and is duly organized,
validly existing and in good standing under the laws of Scotland.
Company and Subsidiary have all necessary corporate power and authority
to own their respective properties and assets and to carry on their
respective businesses as now conducted and are duly qualified or licensed
to do business as foreign corporations in good standing in all
jurisdictions in which the character or the location of the assets owned
or leased by any of them or the nature of the business conducted by any
of them requires licensing or qualification. Schedule 2.1 correctly
lists the current directors and executive officers of Company and of
Subsidiary. True, correct and complete copies of the respective charter
documents of Company and the Subsidiary as in effect on the date hereof
have been delivered to Buyer.
2.2 Stock.
(a) The Company's authorized capital stock consists of
40,000,000 authorized shares of Common Stock, of which as of the date
hereof, 15,214,601 shares are issued and outstanding. All of the
outstanding Common Stock has been duly authorized and is validly issued,
fully paid and nonassessable. Except as described on Schedule 2.2, there
are no outstanding securities convertible into or exchangeable for Common
Stock or any outstanding options, calls or other commitments for the
issuance, sale or delivery of any shares of Common Stock or of any
securities so convertible or exchangeable.
(b) Upon consummation of the transactions contemplated by
this Agreement, Buyer will acquire good and marketable title to and
complete ownership of the Buyer Stock, free and clear of any Encumbrance.
The Buyer Stock will, upon such consummation, be duly authorized, validly
issued, fully-paid and nonassessable.
(c) Except as disclosed in Schedule 2.2 attached hereto,
neither the Company nor Subsidiary has any legal obligation, absolute or
contingent, to, nor is engaged in any ongoing negotiations or discussions
with, any person or firm to sell the assets of the Company or Subsidiary
(other than sales in the ordinary course of the Company's or Subsidiary's
business), or to issue or sell any shares of voting stock (or securities
convertible into, or granting a right to purchase, such stock) (other
than with the Buyer), or to effect any merger, consolidation, or other
reorganization of the Company or Subsidiary, or to enter into any
agreement with respect to any of the above.
2.3 Financial Statements; Changes; Contingencies.
(a) The Company has furnished to Buyer all of its periodic
reports to, and other filings with, the SEC since its annual report on
Form 10-K for the fiscal year ended December 31, 1994 (collectively, the
"Disclosure Materials"). The Disclosure Materials fairly present the
information purported to be set forth therein and do not contain any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading. All of the
audited consolidated financial statements and unaudited consolidated
interim financial statements of the Company included in the Disclosure
Materials have been prepared in accordance with GAAP applied on a
consistent basis for the dates and during the periods involved (except as
otherwise stated in such financial statements or, in the case of
unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements), and fairly present
the consolidated financial position, results of operations and changes in
financial position of the Company as of the dates thereof and for the
periods indicated therein (subject, in the case of any unaudited interim
financial statements, to normal year end audit adjustments). Neither the
Company nor Subsidiary has any liability or obligation, secured or
unsecured (whether absolute, accrued, contingent or otherwise, and
whether due or to become due), which is of a nature required under
generally accepted accounting principles applied on a consistent basis to
be included in a consolidated corporate balance sheet or disclosed in the
notes thereto, except such liabilities and obligations which (i) are
recorded in the September 30, 1996 balance sheet included in the
Disclosure Materials, or (ii) were incurred after the date of such
balance sheet in the ordinary course of business, or (iii) are disclosed
in Schedule 2.3.
(b) Except as disclosed in the Company's financial
statements contained in its Quarterly Report on Form 10-Q for the quarter
ended September 30, 1996 filed with the SEC, and the items mentioned in
Schedule 2.3, since December 31, 1995:
(i) there has been no material adverse change in the
Business; and
(ii) there has not been any Loss, (whether or not covered
by insurance) adversely affecting any assets material to the
Business.
2.4 Tax and Other Returns and Reports.
The Company and Subsidiary have timely filed all required Tax
Returns and have paid all Taxes due for all periods ending on or before
December 31, 1995. Adequate provision has been made in the books and
records of Company and Subsidiary, and to the extent required by GAAP in
the financial statements referred to in Section 2.3 above or delivered to
Buyer, for all Taxes whether or not due and payable and whether or not
disputed. Neither Company nor Subsidiary has elected to be treated as a
consenting corporation under Section 341(f) of the Code. Schedule 2.4
lists the date or dates through which the IRS and any other Governmental
Entity have examined the United States federal income tax returns and any
other Tax Returns of Company and Subsidiary. All required Tax Returns,
including amendments to date, have been prepared in good faith without
negligence or willful misrepresentation and are complete and accurate in
all material respects. Except as set forth in the Schedule 2.4, no
Governmental Entity has, during the past three years, examined or is in
the process of examining any Tax Returns of Company or Subsidiary.
Except as set forth on Schedule 2.4, no Governmental Entity has proposed
(tentatively or definitively), asserted or assessed or, to the best
knowledge of Company, threatened to propose or assert, any deficiency,
assessment or claim for Taxes and the Company knows of no basis for any
such delinquency assessment or claim.
2.5 Intangible Property.
Schedule 2.5 lists any and all material items of Intangible
Property in which Company or Subsidiary have an interest and the nature
of such interest. Such assets include all Permits or other rights with
respect to any of the foregoing. Company and Subsidiary have complete
rights to and ownership of all Intangible Property required for use in
connection with the Business, the absence of which would have a material
adverse effect on the Business. Except as disclosed on Schedule 2.5,
Company and Subsidiary do not use any Intangible Property by consent of
any other person and are not required to and do not make any payments to
others with respect thereto. Company and Subsidiary have in all material
respects performed all obligations required to be performed by them, and
none of such entities is in default in any material respect under any
Contract relating to any of the foregoing. Neither Company nor
Subsidiary has received any notice to the effect (or is otherwise aware)
that the Intangible Property or any use by Company or Subsidiary of any
such property conflicts with or allegedly conflicts with or infringes the
rights of any Person.
2.6 Authorization; No Conflicts.
The execution, delivery and performance of this Agreement and
any related agreements by the Company has been duly and validly
authorized by the Board of Directors of Company and by all other
necessary corporate action on the part of Company. This Agreement and
any related agreements constitute the legally valid and binding
obligation of Company, enforceable against Company in accordance with its
terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws and
equitable principles relating to or limiting creditors rights generally.
The execution, delivery and performance of this Agreement by Company and
the execution, delivery and performance of any related agreements or
contemplated transactions by Company will not violate, or constitute a
breach or default (whether upon lapse of time and/or the occurrence of
any act or event or otherwise) under, the charter documents or by- laws
or any Contract of Company, result in the imposition of any Encumbrance
against any asset or properties of Company or violate any Law.
2.7 Permits.
Except for matters identified in Schedule 2.7, the execution
and delivery of this Agreement and the performance of this Agreement and
any related or contemplated transactions by Company will not require
filing or registration with, or the issuance of any Permit by, any other
third party or Governmental Entity.
2.8 Legal Matters.
Except as disclosed in the Disclosure Materials or in Schedule
2.8, (i) there is no Order or Action pending, or, to the best knowledge
of Company, threatened, against or affecting Company or Subsidiary or any
of their respective properties or assets that individually or when
aggregated with one or more other Orders or Actions has or if determined
adversely to the interest of the Company might reasonably be expected to
have a material adverse effect on Company, the Business, on Company's
ability to perform this Agreement, or on any aspect of the transactions
contemplated by this Agreement, and (ii) to the best knowledge of the
Company, the Company is not in violation of any Laws, the effect of which
violation would be materially adverse to the Business.
2.9 Insurance.
There is in full force and effect insurance coverage on the
assets, properties, premises, operations and personnel of Company and
Subsidiary in such amounts and against such risks and losses as in the
opinion of Company is adequate in all material respects for the business
engaged in by Company and Subsidiary. The Company has delivered or made
available to Buyer true copies of all of the insurance policies
maintained by or for the benefit of the Company or the Subsidiary which
are in effect. All such insurance policies are in full force and effect,
and the Company has not received a notification with respect to any
material policies of their cancellation or that they will not be renewed
or that the insurance carrier insuring same has placed by condition on
renewal or cancellation which would make the renewal or cancellation
onerous.
2.10 Permits.
Company and Subsidiary hold all Permits that are required by
any Governmental Entity to permit each of them to conduct their
respective businesses as now conducted, and all such Permits are valid
and in full force and effect and will remain so upon consummation of the
transactions contemplated by this Agreement. No suspension, cancellation
or ter- mination of any of such Permits is threatened or, to the best
knowledge of Company, imminent.
2.11 No Brokers or Finders.
No agent, broker, finder, or investment or commercial banker,
or other Person or firm engaged by or acting on behalf of Company or any
Affiliates in connection with the negotiation, execution or performance
of this Agreement or the transactions contemplated by this Agreement, is
or will be entitled to any brokerage or finder's or similar fee or other
commission as a result of this Agreement or such transactions.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Company as follows:
3.1 Organization and Related Matters.
Buyer is a corporation duly organized, validly existing and in
good standing under the laws of Japan. Buyer has the necessary corporate
power and authority to execute, deliver and perform this Agreement and
any related agreements to which it is a party.
3.2 Authorization.
The execution, delivery and performance of this Agreement and
any related agreements by Buyer has been duly and validly authorized by
the Board of Directors of Buyer and by all other necessary corporate
action on the part of Buyer. This Agreement constitutes the legal, valid
and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws
and equitable principles relating to or limiting creditors' rights
generally.
3.3 No Conflicts.
The execution, delivery and performance of this Agreement and
any related agreements by Buyer will not violate the provisions of, or
constitute a breach or default whether upon lapse of time and/or the
occurrence of any act or event or otherwise under (a) the charter
documents of Buyer, (b) any Law to which Buyer is subject or (c) any
Contract to which Buyer is a party that is material to the financial
condition, results of operations or conduct of the business of Buyer.
3.4 No Brokers or Finders.
No agent, broker, finder or investment or commercial banker, or
other Person or firms engaged by or acting on behalf of Buyer or its
Affiliates in connection with the negotiation, execution or performance
of this Agreement or the transactions contemplated by this Agreement, is
or will be entitled to any broker's or finder's or similar fees or other
commissions as a result of this Agreement or such transactions, other
than Nomura Wasserstein Perella, whose fees will be paid by Buyer.
ARTICLE IV
COVENANTS OF THE COMPANY
4.1 Other Agreements.
On or prior to the earlier of the date of Closing and the
Optional Termination Date (as defined in Section 10.1), the Company will
not enter into any agreement or understanding with any person or entity
other than the Buyer or a representative thereof with respect to the
issuance or sale of any Common Stock or other capital stock of the
Company (or securities convertible into, or granting a right to purchase,
such stock), the merger or acquisition of the Company or the acquisition
of the capital stock of any Subsidiary, or any or all of their material
assets, or effect any such transactions. On or prior to the earlier of
the Closing and the Optional Termination Date, should Company or
Subsidiary receive an unsolicited offer for such transaction, or obtain
information that such an offer is likely to be made, Company will provide
Buyer with any information which Company provides to its Board of
Directors with respect thereto, approximately at the same time such
information is provided to its Board of Directors.
4.2 Advice of Changes.
On or before the earlier of the Optional Termination Date and
the Closing, the Company will promptly advise the Buyer in writing of (i)
any event known to the Company occurring subsequent to the date of this
Agreement which would render any representation or warranty of the
Company contained in this Agreement, if made on or as of the date of such
event or the date of the Closing, untrue or inaccurate in any material
respect (other than an event so affecting a representation or warranty
which is expressly limited to a state of facts existing at a time prior
to the occurrence of such event) or (ii) any material adverse change in
the Company's Business.
4.3 Access to Books and Records.
Until the earlier of the Optional Termination Date and the
Closing, the Company will afford to the Buyer and its accountants,
attorneys and agents such information regarding the Company and the
Subsidiary and access to their books and records and other documents as
Buyer may reasonably request, subject to mutually acceptable
confidentiality requirements.
4.4 Distribution Agreement.
The Company agrees to execute a Distribution Agreement in the
form of Exhibit I hereto (the "Distribution Agreement"), to be entered
into with Century Medical, Inc., a Japanese corporation and an Affiliate
of Buyer ("CMI"), granting CMI the exclusive right to distribute certain
products of Company in the territory of Japan for a period of seven (7)
years following the Closing.
4.5 Registration Rights.
(a) Registration. No later than six months from the Closing
Date, the Company shall file with the SEC a Registration Statement
covering the Buyer Stock so as to permit the resale by the Buyer of all
such shares of Buyer Stock. The Company shall use its best efforts to
cause the SEC to declare such Registration Statement effective as
expeditiously as possible and shall thereafter take such action as shall
be required by the rules of the SEC to cause such Registration Statement
(or a successor thereto) to remain effective until the earlier of three
years from the Closing Date or the resale of all of the shares of Common
Stock covered by such Registration Statement. The Company will use its
best efforts to cause the Common Stock to remain designated on the
National Market System of the National Association of Securities Dealers
Automated Quotation System.
(b) Demand Rights. In the event that the Company is not able to
effect or maintain the registration described in paragraph (a) above, the
Buyer shall have the right to make written requests of the Company to
register under the Securities Act the Buyer Stock or any other shares of
voting stock of the Company (or securities convertible to voting stock)
purchased or received from the Company then owned by the Buyer and
specified in such request (the shares subject to such request being
referred to as the "Subject Stock"). Promptly upon receipt of such
request, the Company shall file a registration statement to become
effective as soon as reasonably practicable to permit the sale of the
Subject Stock, provided, (i) that the Company shall not be obligated to
effect any registration in connection with a request by Buyer that
relates to less than 750,000 shares of Subject Stock; (ii) that one such
registration shall be effected at the expense of the Company, with any
additional registration hereunder to be effected at the expense of Buyer,
as further set forth in paragraph (e) hereof; and (iii) that prior to
filing a registration statement or prospectus or any amendments or
supplements thereto required hereby, the Company will furnish to counsel
selected by Buyer copies of all documents proposed to be filed, which
documents will be subject to the timely review of such counsel. In
connection therewith, the Company shall prepare and file, on Form S-3 if
permitted, otherwise on such appropriate form as the Company in its
discretion shall determine, a registration statement under the Securities
Act to effect such registration. The Buyer agrees to provide all such
information and materials and take all such action as may be reasonably
required in order to permit the Company to comply with all applicable
requirements of the SEC and to obtain any desired acceleration of the
effective date of such registration statement.
4.6 Right to Maintain Percentage.
(a) The percentage of outstanding capital stock of the
Company (calculated based upon voting rights) which the Buyer holds at
any given time shall be referred to as the "Buyer Percentage". The Buyer
shall have the right to purchase or subscribe for up to the Buyer
Percentage of any issuance of voting stock of the Company of any class,
or bonds, certificates of indebtedness, debentures or other securities
convertible into voting stock of the Company, or carrying any rights to
purchase voting stock of any class, whether said securities shall be
issued for cash, property, or any other lawful consideration, and,
without limitation of the foregoing, shall have such rights with respect
to shares or other securities offered for sale if they are issued or
optioned by the Company's board of directors to effect a merger or
consolidation or for a consideration other than cash. Buyer shall have
the right to exercise such rights upon the same terms and conditions as
those offered to other offerees of the stock or securities in question;
provided, however, that in the event such stock or securities shall be
issued to other offerees for consideration other than solely cash, the
Buyer shall have the option to exercise its rights hereunder at a
purchase price per share (or similar unit) in cash equal to the fair
value of the consideration given by such other offerees (as determined by
the Company, or if the Buyer disagrees with the Company's valuation, by
an appraiser mutually selected by the Company and the Buyer) divided by
the number of shares (or similar unit) of stock or securities so issued
to such other offerees. The fees of such appraiser shall be borne by the
Buyer.
(b) If the Company wishes to issue securities of the type
included in subsection (a) above, the Company shall provide the Buyer
with prior notice thereof and shall not conclude the sale of such
securities without complying with terms thereof. The Company and the
Buyer shall use their best efforts to agree on an appraiser if one is
required within 10 calendar days of such notice. The appraiser chosen
shall forthwith value the average per unit consideration proposed to be
paid for such securities and notify the parties thereof, and such
determination shall be binding on the parties. Within 30 days of receipt
of such notice from the appraiser, or if there is no appraiser, notice
from the Company of the price per share, the Buyer shall notify the
Company of the percentage it intends to purchase of such securities at
the per unit price so determined. If the Buyer gives notice of its
intention to purchase, the Buyer shall pay the aggregate purchase price
(based upon such per unit price) for all of the securities it wishes to
purchase in cash on the same date such securities are sold to the other
buyer(s).
(c) The Buyer's rights under this Section 4.6 shall continue
for a period of three (3) years following the Closing Date.
(d) The Buyer's rights under this Section 4.6 shall not
apply to (i) securities issued upon the exercise of convertible
securities; or (ii) securities issued pursuant to the Company's 1987
Stock Option and Stock Award Plan or any successor plan.
4.7 Distributions, Etc.
The Company agrees that it will not declare or pay any dividend
or make any other distribution as of a record date prior to the Closing
in respect of its capital stock or prior to the Closing change its or
Subsidiary's capital structure.
4.8 Operations in Ordinary Course.
Until the earlier of the Optional Termination Date or the
Closing, the Company agrees to conduct its operations and those of
Subsidiary in a prudent manner and in the ordinary course of business,
consistent with its past practices.
ARTICLE V
COVENANTS OF THE BUYER
5.1 Advice of Changes.
On or before the earlier of the Optional Termination Date and
the Closing, the Buyer will promptly advise the Company in writing of any
event known to the Buyer occurring subsequent to the date of this
Agreement which would render any representation or warranty of the Buyer
contained in this Agreement, if made on or as of the date of such event
or the date of the Closing, untrue or inaccurate in any material respect
(other than an event so affecting a representation or warranty which is
expressly limited to a state of facts existing at a time prior to the
occurrence of such event).
5.2 Standstill.
The Buyer agrees that for a period of three years commencing on
the Closing Date, neither it nor CMI will acquire additional shares of
Common Stock if such acquisition would result in the Buyer and CMI
holding (in the aggregate) more than 19.9% of the Common Stock
outstanding at the time of such proposed acquisition, without the prior
written consent of the Company.
ARTICLE VI
OTHER AGREEMENTS
6.1 Payment of Certain Expenses.
Except as provided in Section 4.5, with respect to registration
rights, the Company and Buyer shall be liable for their own costs and
expenses incurred in connection with this Agreement including the fees of
their respective advisors.
6.2 Public Announcements.
The Buyer and the Company agree that they will advise and
confer with each other prior to the issuance of any reports, statements
or releases pertaining to this Agreement or any transaction contemplated
hereby.
6.3 Confidentiality.
The Buyer and the Company will, and will cause each of their
respective affiliates to, maintain the confidentiality of any and all
confidential information received from the other in connection with the
transactions contemplated by this Agreement, except as may otherwise be
required by any applicable law or any court or governmental agency. If
this Agreement is terminated (as provided in Section 10.1), then upon
notice by the Company to the Buyer of those confidential documents of the
Company which it wishes returned, the Buyer shall within 30 days of such
notice return such documents and any copies thereof to the Company.
6.4 Necessary Consents; Preparation of Certain Filings and
Documents.
(a) Each party will use its best efforts to obtain as soon
as practicable any approvals or consents of any governmental agencies or
third parties necessary in order to consummate the transactions
contemplated by this Agreement.
(b) Each party agrees to cooperate with the other with
respect to any governmental proceedings relating to this Agreement.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE BUYER
The obligation of the Buyer to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment, or
the waiver by the Buyer, on or prior to the Closing Date, of the
following conditions:
7.1 Representations and Warranties True
at the Closing Date.
The representations and warranties of the Company contained in
this Agreement shall be deemed to have been made again on and as of the
Closing Date and shall then be true and correct in all material respects,
except for changes thereto agreed to in writing by the Buyer.
7.2 Performance of Covenants.
The Company shall have performed all covenants required to be
performed by it under this Agreement prior to the Closing.
7.3 Approvals and Consents.
Any and all approvals, authorizations and requirements of
governmental and regulatory authorities required prior to Closing in
order to consummate the transactions contemplated herein shall have been
obtained or completed, no such approvals or consents shall have imposed a
condition which in the reasonable judgment of the Buyer is unduly
burdensome, and all waiting periods specified by applicable law shall
have expired.
7.4 Financial Statements.
The Buyer shall have received the most recent available (as of
the date of Closing) quarterly unaudited consolidated interim financial
statements of the Company.
7.5 Certificate.
The Company shall have furnished the Buyer with a certificate
of the Company signed by its Chief Executive Officer, and its Secretary
or an Assistant Secretary to the effect that (i) the Company's
representations and warranties contained in this Agreement are true and
correct in all material respects at and as of the Closing Date, (ii) the
Company has performed or complied in all material respects with all
terms, covenants and provisions of this Agreement required to be
performed or complied with by it prior to or at the Closing and (iii) the
Buyer Stock represents 9.3% of the shares of Common Stock outstanding as
of the Closing Date.
7.6 Articles/Certificate of Incorporation and Bylaws.
(a) The Company shall have delivered to the Buyer (i) a
copy of its Articles of Incorporation and all amendments thereto
certified by the Secretary or an Assistant Secretary of the Company as of
the date of Closing and (ii) a copy of the Company's By-Laws (certified
as of the date of Closing by the Secretary or an Assistant Secretary of
the Company).
(b) The Subsidiary shall have delivered to the Buyer (i) a
copy of its Articles or Certificate of Incorporation and all amendments
thereto certified by the Secretary or an Assistant Secretary of such
Subsidiary as of the date of Closing and (ii) a copy of such Subsidiary's
By-Laws (certified as of the date of Closing by the Secretary or an
Assistant Secretary of such Subsidiary).
7.7 No Governmental or Other Proceeding.
No order of any court or administrative agency shall be in
effect which restrains or prohibits any transaction contemplated hereby
or which would limit or otherwise affect in a material respect the
Buyer's ownership of the Buyer Stock; no suit, action, or proceeding by
any governmental body or other person or entity, or investigation or
inquiry by any governmental body, shall be pending or, in the case of a
governmental body, threatened, which challenges the validity or legality,
or seeks to restrain the consummation, of any transaction contemplated
hereby or which seeks to limit or otherwise affect the Buyer's ownership
of the Buyer Stock; and no written advice shall have been received by the
Buyer, the Company or their respective counsel from any governmental
body, and remain in effect, stating that an action or proceeding will, if
the issuance of the Buyer Stock is consummated or sought to be
consummated, be filed seeking to invalidate or restrain the issuance of
the Buyer Stock or limit or otherwise affect the Buyer's ownership of the
Buyer Stock.
7.8 Ownership.
Mr. Villafana and Mr. Kramp shall own, directly or indirectly,
at least 10 % of the Common Stock outstanding and shall continue to be
the Chairman and Chief Executive Officer, and President and Chief
Operating Officer, respectively, of the Company.
7.9 Distribution Agreement.
The Company shall have executed and delivered to CMI the
Distribution Agreement, in form and substance satisfactory to Buyer.
7.10 Due Diligence.
Buyer shall not, in the course of its on-going business
investigation, have discovered information not previously disclosed by
Company, which Buyer reasonably believes has [or is likely to have a
materially adverse effect on the Business or is materially inconsistent
with information disclosed to Buyer prior to the date hereof.
7.11 Market Condition.
There shall not have occurred any decline in the Dow Jones
Industrial Average or Standard & Poors Index of 400 Companies by an
amount in excess of 10%, measured from the close of business on the date
of this Agreement to the anticipated Closing Date.
7.12 No Regulatory Changes. No action shall have been
taken by any Governmental Entity, and no Law shall have been proposed or
enacted, which would (or, in the case of a proposed Law, if enacted
would) materially and adversely affect the financial condition,
operations or prospects of Buyer, the Business, or the regulatory
compliance status of Company.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligations of the Company to consummate the transaction
contemplated by this Agreement shall be subject to the fulfillment, or
the waiver by the Company, on or prior to the Closing Date, of the
following conditions:
8.1 Representations and Warranties True
at the Closing Date.
The representations and warranties of the Buyer contained in
this Agreement shall be deemed to have been made again on and as of the
Closing Date and shall then be true and correct in all material respects,
except for changes thereto agreed to in writing by the Company.
8.2 Performance of Covenants.
The Buyer shall have performed all covenants required to be
performed by it under this Agreement prior to the Closing.
8.3 Approvals and Consents.
Any and all approvals, authorizations or requirements of
governmental and regulatory authorities required prior to the Closing in
order to consummate the transactions contemplated herein shall have been
obtained or completed, no such approvals or consents shall have imposed a
condition which in the reasonable judgment of Company is unduly
burdensome and all waiting periods specified by applicable law shall have
expired.
8.4 Certificate.
The Buyer shall have furnished the Company with a certificate
of the Buyer signed by its Chief Executive Officer, its President or any
General Manager to the effect that the Buyer's representations and
warranties contained in this Agreement are true and correct in all
material respects at and as of the Closing Date and that the Buyer has
performed or complied in all material respects with all terms, covenants
and provisions of this Agreement required to be performed or complied
with by it prior to or at the Closing.
8.5 No Governmental or Other Proceeding.
No order of any court or administrative agency shall be in
effect which restrains or prohibits any transaction contemplated hereby
or which would limit or otherwise affect in a material respect the
Buyer's ownership of the Buyer Stock; no suit, action, or proceeding by
any governmental body or other person or entity, or investigation or
inquiry by any governmental body, shall be pending or, in the case of a
governmental body, threatened, which challenges the validity or legality,
or seeks to restrain the consummation, of any transaction contemplated
hereby or which seeks to limit or otherwise affect the Buyer's ownership
of the Buyer Stock; and no written advice shall have been received by the
Buyer, the Company or their respective counsel from any governmental
body, and remain in effect, stating that an action or proceeding will, if
the issuance of the Buyer Stock is consummated or sought to be
consummated, be filed seeking to invalidate or restrain the issuance of
the Buyer Stock or limit or otherwise affect the Buyer's ownership of the
Buyer Stock.
ARTICLE IX
NATURE AND SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNITIES
9.1 Nature of Representations and Warranties.
All statements contained in the Schedules hereto or in any
certificate or instrument of conveyance delivered by or on behalf of the
parties pursuant to this Agreement or in connection with the transactions
contemplated hereby shall be deemed representations and warranties by the
parties hereunder.
9.2 Survival of Representations, Warranties, etc.
All representations and warranties of the parties made in this
Agreement or as provided herein shall survive the Closing Date for a
period of five (5) years.
9.3 Indemnification .
(a) The Company will indemnify, to the extent permitted by
Law, the Buyer, its officers and directors and each Person who controls
the Buyer (within the meaning of the Securities Act or the Exchange Act)
against any Losses caused by, resulting from or arising from (i) any
inaccuracy in or breach or nonperformance of any of the representations,
warranties, covenants or agreements made by the Company in or pursuant to
this Agreement; or (ii) any untrue or alleged untrue statement of
material fact contained in any registration statement or prospectus (or
any amendment or supplement thereto) of the Company, or any exhibits or
materials incorporated by reference therein, filed with the SEC, or any
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by the Buyer expressly
for use therein.
(b) In connection with the registration statements or
prospectuses referred to in Section 4.5, the Buyer will furnish to the
Company in writing such information and affidavits as the Company
reasonably requests for use in connection with any such registration.
The Buyer will indemnify the Company, its directors and officers and each
Person who controls the Company within the meaning of the Securities Act
or the Exchange Act) against any Losses caused by, resulting from or
arising from (i) any inaccuracy in or breach or nonperformance of any of
the representations, warranties, covenants or agreements made by the
Buyer in or pursuant to this Agreement; or (ii) any untrue or alleged
untrue statement of material fact or any omission or alleged omission of
a material fact required to be stated in such registration statements or
prospectuses or necessary to make the statements therein not misleading,
but only to the extent that such untrue statement or omission is caused
by or contained in any information or affidavit so furnished in writing
by the Buyer.
9.4 Procedure.
Any person entitled to indemnification under Section 9.3 will
(i) give prompt written notice to the indemnifying party of any claim
with respect to which it seeks indemnification and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between
such indemnified and indemnifying parties may exist with respect to such
claim, permit such indemnifying party to assume the defense of such claim
with counsel reasonably satisfactory to the indemnified party. If such
defense is assumed, the indemnifying party will not be subject to any
liability for any settlement made by the indemnified party without its
consent (but such consent will not be unreasonably withheld). An
indemnifying party who is not entitled to, or elects not to, assume the
defense of a claim will not be obligated to pay the fees and expenses of
more than one counsel for all parties indemnified by such indemnifying
party with respect to such claim, unless in the reasonable judgment of
any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect
to such claim.
9.5 Survival.
The indemnifications set forth in Section 9.3 shall survive the
Closing Date.
ARTICLE X
TERMINATION AND ABANDONMENT
10.1 Termination and Abandonment.
This Agreement may be terminated (i) by the mutual consent of
the Buyer and the Company; (ii) by the Buyer or by the Company at any
time after February 7, 1997 or such later date as shall have been agreed
to in writing by them (the "Optional Termination Date") if for any reason
the purchase by the Buyer of the Buyer Stock shall not by such date have
been consummated; (iii) by the Buyer if there has been a material
misrepresentation or material breach on the part of the Company in the
representations, warranties and covenants of the Company set forth
herein, or if there has been any material failure on the part of the
Company to comply with its obligations hereunder; (iv) by the Company if
there has been a material misrepresentation or material breach on the
part of the Buyer in the representations, warranties and covenants of the
Buyer set forth herein, or if there has been any material failure on the
part of the Buyer to comply with its obligations hereunder; (v) by the
Buyer if it should reasonably conclude that the approvals contemplated in
Section 7.3 will not be forthcoming or (vi) by the Company if it should
reasonably conclude that the approvals contemplated in Section 8.3 will
not be forthcoming.
The power of termination provided for by this Section 10.1 may
be exercised by the Buyer or the Company by written notice thereof, given
to the other. If this Agreement is terminated in accordance with this
Section 10.1, the transactions contemplated by this Agreement shall be
abandoned without further action by the Buyer or the Company.
10.2 Liability Upon Termination.
In the event of termination and abandonment of the transactions
contemplated by this Agreement pursuant to Section 10.1 (i), 10.1 (ii),
10.1 (v) or 10.1 (vi), neither the Buyer nor the Company shall have any
liability or further obligation to the other except as provided in
Sections 6.1 and 6.3.
ARTICLE XI
GENERAL
11.1 Amendments; Waivers.
This Agreement and any schedule or exhibit attached hereto may
be amended only by agreement in writing of all parties. No waiver of any
provision nor consent to any exception to the terms of this Agreement or
any agreement contemplated hereby shall be effective unless in writing
and signed by the party to be bound and then only to the specific
purpose, extent and instance so provided.
11.2 Schedules; Exhibits; Integration.
Each schedule and exhibit delivered pursuant to the terms of
this Agreement shall be in writing and shall constitute a part of this
Agreement, although schedules need not be attached to each copy of this
Agreement. This Agreement, together with such schedules and exhibits,
constitutes the entire agreement among the parties pertaining to the
subject matter hereof and supersedes all prior agreements and
understandings of the parties in connection therewith.
11.3 Best Efforts; Further Assurances.
Each party will use its best efforts to cause all conditions to
its obligations and hereunder to be timely satisfied and to perform and
fulfill all obligations on its part to be performed and fulfilled under
this Agreement, to the end that the transactions contemplated by this
Agreement shall be effected substantially in accordance with its terms as
soon as practicable. The parties shall cooperate with each other in such
actions and in securing requisite Approvals. Each party shall execute
and deliver such further certificates, agreements and other documents and
take such other actions as may be necessary or appropriate to consummate
or implement the transactions contemplated hereby or to evidence such
events or matters.
11.4 Governing Law and Forum.
This Agreement shall be deemed to have been executed and
entered into in the State of Minnesota, U.S.A., and this Agreement, and
its formation, operation and performance shall be governed, construed,
performed and enforced in accordance with the substantive laws of the
State of Minnesota, U.S.A. In the event there arises a dispute between
the parties as to the performance or interpretation of any of the
provisions of this Agreement, or as to matters related to but not covered
by this Agreement, the parties shall first attempt to find a mutually
agreeable solution by consultation in good faith. If the matter has not
been resolved within thirty (30) days of their first meeting to resolve a
dispute, then any such dispute shall be determined finally by arbitration
in accordance with the International Arbitration Rules of the American
Arbitration Association. The place of arbitration shall be Minneapolis,
Minnesota U.S.A. if initiated and brought by Buyer or Tokyo, Japan if
initiated and brought by Company and the language of the arbitration
shall be English. The arbitral tribunal shall consist of a single
arbitrator. If the parties shall not have agreed upon an arbitrator
within thirty (30) days of the notice of arbitration, then the
Administrator of the American Arbitration Association shall appoint one.
The unsuccessful party in an arbitration shall pay and discharge all
reasonable costs and expenses (including reasonable attorneys' fees)
which are incurred by the other party in enforcing this Agreement.
Judgment upon the award of the arbitrator may be entered in any court
having jurisdiction thereof. The parties acknowledge that this Agreement
and any award rendered pursuant to it shall be governed by the 1958
United Nations Convention on the Recognition and Enforcement of Foreign
Arbitral Awards. Pending the submission to the arbitrator and thereafter
until the single arbitrator renders the award, the parties shall, except
in the event of termination, continue to perform all their obligations
under this Agreement without prejudice to a final adjustment in
accordance with the award. Nothing herein shall prevent any party from
seeking injunctive relief from any court of competent jurisdiction, in
order to preserve assets, prevent irreparable harm or as otherwise
appropriate.
11.5 No Assignment.
Except in connection with a transfer of all or a portion of the
Buyer Stock to CMI, or as otherwise agreed, neither this Agreement nor
any rights or obligations under it are assignable.
11.6 Headings.
The descriptive headings of the Articles, Sections and
subsections of this Agreement are for convenience only and do not
constitute a part of this Agreement.
11.7 Counterparts.
This Agreement and any amendment hereto or any other agreement
(or document) delivered pursuant hereto may be executed in one or more
counterparts and by different parties in separate counterparts. All of
such counterparts shall constitute one and the same agreement (or other
document) and shall become effective (unless otherwise provided therein)
when one or more counterparts have been signed by each party and
delivered (by telecopier, mail or otherwise) to the other party.
11.8 Notices.
Any notice or other communication hereunder must be given in
writing and (a) delivered in person, (b) transmitted by telex, telefax or
telecommunications mechanism provided that any notice so given is also
mailed as provided in clause (c) or (c) mailed by certified or registered
mail, postage prepaid, receipt requested as follows:
If to Buyer, addressed to:
Itochu Corporation
5-1, Kita-Aoyama 2-chome
Minato-ku, Tokyo 107-77
Japan
Attn.: Mr. Moritake Onuki
General Manager
Medical Project Division
Tel: 81-3-3497-2544
Fax: 81-3-3497-2345
With a copy to:
Century Medical, Inc.
1-6-4, Osaki
Shinagawa-ku, Tokyo 141
Japan
Attn.: Mr. Shunzo Saegusa
Sr. Officer
Medical Products Division
Tel: 81-3-3491-1131
Fax: 81-3-3491-1857
If to Company, addressed to:
ATS Medical, Inc.
3905 Annapolis Lane
Minneapolis, MN 55447
U.S.A.
Attn.: Mr. Manuel A. Villafana
Chief Executive Officer
Tel: 612-553-7736
Fax: 612-553-1492
or to such other address or to such other person as either party shall
have last designated by such notice to the other party. Each such notice
or other communication shall be effective (i) if given by
telecommunication, when transmitted to the applicable number so specified
in (or pursuant to) this Section 10.8 and an appropriate answerback is
received, (ii) if given by mail, three days after such communication is
deposited in the mails with first class postage prepaid, addressed as
aforesaid or (iii) if given by any other means, when actually received at
such address.
11.10 Remedies; Waiver.
To the extent permitted by Law, all rights and remedies
existing under this Agreement and any related agreements or documents are
cumulative to and not exclusive of, any rights or remedies otherwise
available under applicable Law. No failure on the part of any party to
exercise or delay in exercising any right hereunder shall be deemed a
waiver thereof, nor shall any single or partial exercise preclude any
further or other exercise of such or any other right.
11.11 Attorney's Fees.
In the event of any Action by any party arising under or out
of, in connection with or in respect of, including any participation in
bankruptcy proceedings to enforce against a party a right or claim in
such proceedings, the prevailing party shall be entitled to reasonable
attorney's fees, costs and expenses incurred in such Action. Attorney's
fees incurred in enforcing any judgement in respect of this Agreement are
recoverable as a separate item. The preceding parties intend that the
sentence be severable from the other provisions of this Agreement,
survive any judgment and, to the maximum extent permitted by law, not be
deemed merged into such judgment.
11.12 Knowledge Convention.
Whenever any statement herein or in any schedule, exhibit,
certificate or other documents delivered to any party pursuant to this
Agreement is made "to [its] knowledge" or "to [its] best knowledge" or
words of similar intent or effect of any party or its representative,
such person shall make such statement only after conducting a diligent
investigation of the subject matter thereof, and each statement shall be
deemed to include a representation that such investigation has been
conducted.
11.13 Representation By Counsel; Interpretation.
Buyer and Company each acknowledge that each party to this
Agreement has been represented by counsel in connection with this
Agreement and the transactions contemplated by this Agreement.
Accordingly, any rule of Law, or any legal decision that would require
interpretation of any claimed ambiguities in this Agreement against the
party that drafted it has no application and is expressly waived. The
provisions of this Agreement shall be interpreted in a reasonable manner
to effect the intent of Buyer and Company.
11.14 Specific Performance.
Buyer and Company each acknowledge that, in view of the
uniqueness of the Business and the transactions contemplated by this
Agreement and related agreements, each party would not have an adequate
remedy at law for money damages in the event that this Agreement has not
been performed in accordance with its terms, and therefore agrees that
the other party shall be entitled to specific enforcement of the terms
hereof in addition to any other remedy to which it may be entitled, at
law or in equity.
11.15 Severability.
If any provision of this Agreement is determined to be invalid,
illegal or unenforceable by any Governmental Entity, the remaining
provisions of this Agreement to the extent permitted by Law shall remain
in full force and effect provided that the essential terms and conditions
of this Agreement for both parties remain valid, binding and
enforceable/provided that the economic and legal substance of the
transactions contemplated is not affected in any manner materially
adverse to any party. In event of any such determination, the parties
agree to negotiate in good faith to modify this Agreement to fulfill as
closely as possible the original intents and purposes hereof. To the
extent permitted by Law, the parties hereby to the same extent waive any
provision of Law that renders any provision hereof prohibited or
unenforceable in any respect.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized officers as of the day
and year first above written.
ITOCHU CORPORATION
By: /s/ M. Onuki
Its: General Manager, Medical Project Division
ATS MEDICAL, INC.
By: /s/ Manuel A. Villafana
Its: Chairman and CEO
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