Exhibit 2.6
ASSET PURCHASE
AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this
“ Agreement ”), dated as of April 9, 2008
(the “ Execution Date ”) is made by and among
DIOMED HOLDINGS, INC., a Delaware corporation
(“Holdings”), DIOMED, INC., a Delaware corporation
(“Sub” and together with Holdings, the “
Sellers ”, and each individually “Seller”)
and ANGIODYNAMICS, INC. a Delaware corporation, or a corporation
formed for the purpose of acquiring the Business and controlled by
ANGIODYNAMICS, INC. (the “ Buyer ”). Capitalized
terms used in this Agreement are defined or cross-referenced in
Exhibit A .
BACKGROUND
INFORMATION
A. On March 14, 2008 (the
“ Petition Date ”), Sellers commenced voluntary
cases for reorganization (the “ Bankruptcy Case
”) under Chapter 11 of the Bankruptcy Code, 11 U.S.C.
§ § 101 et seq. (the “ Bankruptcy
Code ”), in the United States Bankruptcy Court for the
District of Massachusetts (Western Division) (the “
Bankruptcy Court ”) and docketed as case nos.
08-40749-JBR and 08-40750-JBR respectively.
B. Sellers develop and commercialize
minimally invasive medical procedures that employ laser technology,
including associated products, the primary focus of which is
endovenous laser treatment (“ EVLT ”) of
varicose veins (the “ Business ”).
C. Buyer desires to purchase the
Business and assume the Assumed Liabilities from Sellers, and
Sellers desire to sell, convey, assign and transfer to Buyer the
Business, together with the Assumed Liabilities, all in the manner
and subject to the terms and conditions set forth in this Agreement
and in accordance with sections 105, 363 and 365 and other
applicable provisions of the Bankruptcy Code.
D. The Business and Assumed
Liabilities are assets and liabilities of Sellers and are to be
purchased and assumed by Buyer pursuant to an order, in the form
attached as Exhibit B or such other form satisfactory to
Buyer in its sole discretion (the “ Bankruptcy Sale
Order ”), approving such sale pursuant to sections 105,
363 and 365 of the Bankruptcy Code, which order will include the
authorization for the assumption by Sellers and assignment to Buyer
of the Acquired Contracts and liabilities thereunder in accordance
with section 365 of the Bankruptcy Code, all in the manner and
subject to the terms and conditions set forth in this Agreement and
the Bankruptcy Sale Order, and in accordance with other applicable
provisions of the Bankruptcy Code and the Federal Rules of
Bankruptcy Procedure (the “ Bankruptcy Rules
”).
E. The transactions contemplated by
this Agreement are essential and necessary to the confirmation of
the Sellers’ anticipated liquidating plan of
reorganization.
STATEMENT OF
AGREEMENT
NOW, THEREFORE, in consideration of
the foregoing and their respective representations, warranties,
covenants and agreements herein contained, and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Sellers and Buyer hereby agree as
follows:
ARTICLE 1. PURCHASE AND SALE
OF THE ACQUIRED ASSETS
SECTION 1.1 Transfer of Acquired
Assets . At the Closing, and upon the terms and conditions
herein set forth, Sellers shall sell to Buyer, and Buyer shall
acquire from Sellers, all right, title and interest of Sellers in,
to and under the Acquired Assets, free and clear of all Liens.
“Acquired Assets” shall mean all of the
properties, assets and rights of Sellers, wherever located, whether
personal, tangible or intangible, wherever located and whether now
existing or hereafter acquired or arising relating to or involved
in the Business, excluding only the Excluded Assets, including,
without limitation:
(a) all (i) owned equipment,
machinery, furniture, fixtures and improvements of Sellers (the
“Owned Machinery and Equipment” ), including,
without limitation, all Owned Machinery and Equipment that is being
stored, repaired, refurbished, modified or updated, including
without limitation the Owned Machinery and Equipment listed on
Schedule 1.1(a) and (ii) rights of Sellers to express or
implied warranties and licenses received from manufacturers,
sellers and suppliers of the Owned Machinery and
Equipment;
(b) those Contracts listed on
Schedule 1.1(b) as an Acquired Contract (collectively, the
“Acquired Contracts” ) and all deposits made
under any Acquired Contract;
(c) all Accounts
Receivable;
(d) all Inventory of
Sellers;
(e) all Supplies of Sellers and all
rights of Sellers to express or implied warranties and licenses
received from manufacturers, sellers and suppliers of the
Supplies;
(f) other than the Excluded Asset
set forth Section 1.2(l), all Intellectual Property and
Technology owned by any Seller, assigned to any Seller or licensed
to any Seller (collectively, the “Acquired Intellectual
Property” ), including but not limited to the
Intellectual Property and Technology listed on Schedule 1.1(f) and
intangible personal property associated with the Business,
including customer lists, marketing materials and installed
base;
(g) all computer hardware and
software (including, without limitation, process control software)
owned by any Seller or licensed to any Seller, including but not
limited to the computer hardware and software listed on Schedule
1.1(g);
(h) all permits, authorizations and
licenses (collectively, the “Permits” ) issued
to Sellers by any Government and all pending applications,
including but not limited to the Permits and applications set forth
on Schedule 1.1(h) all to the extent assignable;
(i) except for the Employment
Records or such records as may be subject to the attorney/client
privilege, copies or originals of all books, files, documents and
records owned by Sellers (in whatever format they exist, whether in
hard copy or electronic format), including, without limitation,
customer lists, historical customer files, accounting records, test
results, product specifications, plans, data, studies,
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drawings, diagrams, training
manuals, engineering data, safety and environmental reports and
documents, maintenance schedules and operating and production
records, inventory records, business plans, credit records of
customers, and marketing materials; and
(j) all goodwill of
Sellers.
SECTION 1.2 Excluded Assets .
Notwithstanding anything to the contrary in this Agreement, Sellers
shall retain only the properties and assets of Sellers set forth
below (all such properties and assets not being acquired by Buyer
being herein referred to as the “Excluded
Assets” ):
(a) all Sellers’ Cash held in
the bank accounts on the Closing Date, [and the assets of Sellers
set forth on Schedule 1.2(a) (and any proceeds from the disposition
thereof)];
(b) all of Sellers’ rights to
insurance proceeds or other Contracts of insurance or indemnity (or
similar agreement) recoveries, including, without limitation of any
Sellers’ directors, officers and corporate liability
insurance policies;
(c) all rights to or Claims for
refunds, overpayments or rebates of Taxes, as well as any rights to
drawbacks, rebates or reimbursements, deposits or
retainers;
(d) all Claims of Sellers arising
under the Bankruptcy Code or under similar state law of Sellers,
including but not limited to claims arising from or related to
sections 544 through 550 of the Bankruptcy Code;
(e) all litigation Claims, including
but not limited to (i) judgments in favor of Sub against
Vascular Solutions, Inc.; and (ii) indemnification claims of
Holdings, Sub or Diomed Ltd. or any of their respective directors,
officers, employees, agents or representatives arising under their
respective organization and operating documents or any contract or
agreement to which any of them is a party under any applicable law,
counterclaims under any threatened or pending action (including,
without limitation, pending patent infringement litigation against
Sellers commenced by VNUS Medical Technologies, Inc.);
(f) any asset of Sellers that
otherwise would constitute an Acquired Asset but for the fact that
such asset has been conveyed, leased or otherwise disposed of prior
to or on the Closing Date in accordance with Sellers’
obligations under this Agreement, including, but not limited to,
those obligations set forth in Section 5.1(a);
(g) all Contracts that are not
Acquired Contracts;
(h) all amounts due to Sellers from
any Affiliate of any Seller;
(i) all books, files and records
owned by Sellers that relate to any of the Excluded Assets and
current or former employees and other personnel, including, without
limitation, books, files and records that are related to medical
history, medical insurance or other medical matters and to
workers’
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compensation and to the evaluation,
appraisal or performance of current or former employees and other
personnel of Sellers (collectively, the “Employment
Records” ) and Sellers’ accounting
records;
(j) all shares of capital stock or
equity or other ownership interest in Diomed Limited, Diolaser
Mexico SA DE CV and Lumintex Corporation;
(k) all corporate seals, minute
books, charter documents, stock transfer records, record books,
original Tax and financial records and such other files, books and
records relating solely to the Excluded Assets or to the
organization, existence or capitalization of Sellers or of any
other Person; and
(l) the 777 Patent and the exclusive
license with respect thereto.
SECTION 1.3 Assumption of
Liabilities . At the Closing, Buyer shall assume, and
thereafter pay perform and discharge, when due all of the following
liabilities (the “Assumed Liabilities”), which Assumed
Liabilities are listed by category:
(a) all liabilities and obligations
of Sellers with respect to Acquired Contracts first arising after
the Closing Date, which liabilities and obligations are required to
be paid by Buyer in accordance with section 365(k) of the
Bankruptcy Code;
(b) Buyer will perform warranty work
for warranty claims for Products sold before the Closing Date;
and
(c) Ordinary Course of Business
wage, benefit and/or commission claims of employees of Sellers who
will become employees of Buyer on the Closing Date in the event
that the Closing Date occurs at any time prior to the conclusion of
any pay period of Sellers, up to a maximum of $160,000 with respect
to salaries and up to an additional $160,000 with respect to
commissions.
SECTION 1.4 Retention of
Liabilities . Buyer is assuming only the Assumed Liabilities
and is not assuming any other liability or obligation of any Seller
of whatever nature, whether presently in existence or arising
hereafter. All such other liabilities and obligations shall be
retained by and remain liabilities and obligations of Sellers (all
such liabilities are, collectively, the ‘Excluded
Liabilities” ). For avoidance of doubt, the Excluded
Liabilities include, without limitation, the following liabilities
and obligations:
(a) all liabilities and obligations
of Sellers relating to Excluded Assets;
(b) any and all liabilities that
arise from the manufacture, distribution or sale of Products prior
to the Closing Date, other than the warranty work referenced in
Section 1.3(b);
(c) all liabilities and obligations
of Sellers arising pursuant to the Massachusetts Workers’
Compensation Act or pursuant to the actions, resolutions, rules or
regulations of the Massachusetts Workers’ Compensation
Commission, including all workers’ compensation claims or
suits of any type, whether state or federal claims, including,
without limitation, actions for employment discrimination, actions
for wrongful opposition to a claim or any other claim or benefits
of any kind, whether now known or unknown, whenever incurred or
filed, which have occurred or arise from work-related
injuries,
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diseases, death, exposures,
intentional torts, acts of discrimination or other incidents, acts,
or injuries prior to the Closing Date, or otherwise arising out of
or related to the employment of persons by the Sellers, and all
premiums, assessments or other obligations related in any way to
workers’ compensation or work-related liabilities arising
prior to the Closing Date or otherwise arising out of or related to
the activities of Sellers;
(d) all of Sellers’ accounts
payable, whether arising before or after each Seller’s
respective Petition Date;
(e) any liability whatsoever arising
out of or relating to any actions taken or not taken by or on
behalf of Sellers on or prior to or subsequent to the Closing Date,
under any notice and other labor requirements of applicable
federal, state, local or other law or regulation in connection with
the transaction contemplated by this Agreement, including, without
limitation, under the Worker Adjustment and Retraining Notification
Act (the “Warn Act”) arising out of or relating to the
Sellers’ termination of any of its employees at any
time;
(f) all liabilities and obligations
of Sellers to employees employed in connection with the Business
arising prior to the Closing Date, including (i) bonus,
severance or similar payments or arrangements or other incentive
compensation, and (ii) liabilities and obligations related to
Sellers’ Employee Benefit Plans; and
(g) all liabilities and obligations
of any Seller of whatever nature whether presently in existence or
hereafter arising, other than the Assumed Liabilities.
ARTICLE 2.
CONSIDERATION
SECTION 2.1 Purchase Price .
The aggregate consideration for the sale, transfer, assignment and
conveyance of the Acquired Assets will be (a) $8,000,000 in
cash (the “Purchase Price” ), and (b) the
assumption by Buyer of the Assumed Liabilities (such assumption,
together with the Purchase Price, the “Total
Consideration” ), less any reduction to Total
Consideration arising out of damage to the Acquired Assets as
provided in Section 8.1(i), so long as Buyer does not
terminate its obligations under this Agreement pursuant to
Section 8.1(i). The Purchase Price shall be payable in
accordance with Section 3.3(a).
SECTION 2.2 Debtor-in-Possession
Financing . Buyer will provide up to $1,300,000 in
debtor-in-possession financing pursuant to Section 364(c) of
the Bankruptcy Code (the “DIP Loan” ) on terms
and conditions set forth in that DIP Loan Term Sheet attached
hereto and incorporated herein by reference as Exhibit C ,
including but not limited to a first priority security interest in
all of Sellers’ assets. The actual principal amount of the
DIP Loan unpaid and outstanding on the Closing Date shall be
credited against the Purchase Price on a dollar for dollar
basis.
SECTION 2.3 Transaction
Deposit . Buyer shall deliver an earnest money deposit of
$800,000 (the “Buyer’s Deposit” ), unless
a different sum is required by order of the Bankruptcy Court, to
counsel for Sellers within three Business Days of the entry of the
Bidding Procedures Order. Such deposit shall be held in escrow in
an interest bearing account, with accrued interest added to the
Buyer’s Deposit, in accordance with the terms of the Bidding
Procedures Order and shall be subject to refund in accordance with
Section 8.2.
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SECTION 2.4 Adjustment of
Purchase Price .
(a) As of March 31, 2008, the
Accounts Receivable were valued at [$1,541,739] (the
“Target A/R Value” ) and the Inventory was
valued at [$2,090,792] (the “Target Inventory
Value” ). Buyer acknowledges that Sellers' books and
records value finished goods inventory purchased from Diomed Ltd.
at a transfer price no higher than the price that Diomed Ltd. sells
similar inventory to third party purchasers at volumes
substantially similar to that purchased from Diomed Ltd. by
Sellers.
(b) As soon as practicable, and in
any event within seven (7) days following the Closing, Sellers
shall deliver to Buyer one or more statements, each prepared on the
same basis and using the same principles, policies and practices
that were used by Sellers to prepare the Target A/R Value and the
Target Inventory Value, setting forth the value of (i) the
Accounts Receivable of the Business as of the Closing Date (the
“Closing A/R Value” ) and (ii) the
Inventory of the Business as of the Closing Date (the
“Closing Inventory Value” ).
(c) Buyer shall have fifteen
(15) days from the date it receives the latest of
Seller’s statements described in clause (b) above (the
“Objection Period” ) in which to review such
statement(s). If, in Buyer’s good faith judgment,
Seller’s statement(s) do not fairly present the Closing A/R
Value or the Closing Inventory Value, Buyer shall have the right to
propose an adjustment to the Closing A/R Value and Closing
Inventory Value or any component thereof within the Objection
Period. Any such proposed adjustment shall be in writing (the
“Adjustment Notice” ) and shall specify
(i) the amount of the proposed adjustment, (ii) the item
to which such proposed adjustment relates, and (iii) the facts
and circumstances supporting the reasonableness of such adjustment.
Upon the submission of any Adjustment Notice, Buyer and Sellers
shall work together in good faith after Sellers’ receipt of
such Adjustment Notice in an attempt to agree on the Closing A/R
Value and the Closing Inventory Value.
(d) If such dispute is not resolved
within fifteen (15) days after Sellers’ receipt of the
Adjustment Notice, the dispute shall be submitted for resolution by
a nationally recognized firm of certified public accountants (the
“Accounting Firm” ). Each of Buyer and Sellers
shall propose a firm to be selected as the Accounting Firm, and if
the parties agree on one of such firms, such firm shall be the
Accounting Firm. If the parties are unable to agree on the
selection of the Accounting Firm, then the Accounting Firm shall be
a nationally recognized firm of certified public accountants that
is agreed upon by the two accounting firms previously selected by
Buyer and Sellers. The decision of the Accounting Firm shall as to
the resolution of the dispute shall be conclusive and binding on
the parties. The fees and expenses of the Accounting Firm shall be
borne by the Non-Prevailing Party. “Non-Prevailing
Party” in any controversy, shall mean the party whose
determination of the amount in controversy presented to the
Accounting Firm designated pursuant to the terms of this Agreement
is further from the final determination of the Accounting
Firm.
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(e) If Buyer fails to submit an
Adjustment Notice within the Objection Period, then Buyer shall be
deemed to have accepted Seller’s Closing A/R Value and
Closing Inventory Value.
(f) Based on the Closing A/R Value
and the Closing Inventory Value, the following adjustments to the
Purchase Price shall be made:
(i) if the Closing A/R Value is
greater that the Target A/R Value, then Buyer shall pay Sellers an
amount equal to such difference;
(ii) if the Target A/R Value is
greater than the Closing A/R Value, then Sellers shall pay Buyer an
amount equal to such difference;
(iii) if the Closing Inventory Value
is greater than the Target Inventory Value, then Buyer shall pay
Seller an amount equal to such difference; and
(iv) if the Target Inventory Value
is greater than the Closing Inventory Value, then Seller shall pay
Buyer an amount equal to such difference.
(g) Any net payments required to be
made under clause (f) above, shall be made within five
(5) days of the later of:
(i) the expiration of the Objection
Period,
(ii) the date on which Buyer and
Seller agree on the Closing A/R Value or the Closing Inventory
Value, or
(iii) the date on which the decision
of the Accounting Firm is rendered. All payments required to be
made by Buyer or Seller pursuant to this clause (g) shall be
paid to Buyer or Seller, as the case may be, by wire transfer of
immediately available funds to such bank account as the recipient
shall designate in writing, and shall be deemed to effect an
increase or reduction, as the case may be, in the Purchase
Price.
ARTICLE 3. CLOSING AND
DELIVERIES
SECTION 3.1
Closing . The consummation of the transactions contemplated
hereby (the “Closing” ) shall take place at the
offices of McGuireWoods LLP, 1345 Avenue of the Americas, 7
th
Floor, New York, NY
10105, at 10:00 a.m. (E.S.T.) on the first Business Day following
the satisfaction or waiver by the appropriate party of all the
conditions contained in Article 7 or on such other date or at such
other place and time as may be mutually agreed to by the parties
(the “Closing Date” ). All proceedings to be
taken and all documents to be executed and delivered by all parties
at the Closing shall be deemed to have been taken and executed
simultaneously and no proceedings shall be deemed to have been
taken nor documents executed or delivered until all have been
taken, executed and delivered.
SECTION 3.2 Sellers’
Deliveries .
At the Closing, Sellers shall
deliver the following to Buyer:
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(a) The sale, transfer, assignment,
conveyance and delivery of the Acquired Assets, including but not
limited to the Acquired Contracts, by bills of sale, endorsements,
assignments and other instruments of transfer and conveyance in
form and substance reasonably acceptable to Buyer;
(b) A certified copy of the
Bankruptcy Sale Order in the form noted in the attached Exhibit B.
For purposes of clarity, the Bankruptcy Sale Order shall contain
the provisions, findings and orders as set forth in the attached
Exhibit B, including, but not limited to, the following:
(i) that the terms and conditions of
the sale of the Acquired Assets to Buyer as set forth herein are
approved;
(ii) that the sale of the Acquired
Assets to Buyer is free and clear, other than for Assumed
Liabilities, of any and all Liens, claims, interests, and
encumbrances of any type or nature whatsoever pursuant to section
363 of the Bankruptcy Code;
(iii) that Sellers hold good and
marketable title to the Acquired Assets;
(iv) that the Total Consideration
constitutes fair value for the Acquired Assets;
(v) that Buyer is acquiring none of
the Excluded Assets;
(vi) that the transactions
contemplated by this Agreement were negotiated at arm’s
length, that the Buyer acted in good faith in all respects and that
Buyer and its assignees and designees are entitled to the
protections of Section 363(m) of the Bankruptcy
Code;
(vii) that notice of the
transactions contemplated hereby was good and sufficient and was
provided timely to all creditors listed in the Debtors’
Schedules filed in their bankruptcy cases and other
parties-in-interest, including, without limitation, any and all
creditors holding Liens or encumbrances on the Acquired Assets or
any of them and to any non-debtor parties, guarantors or obligors,
and to any other party to whom notice was required pursuant to the
Federal Rules of Bankruptcy Procedure;
(viii) that the Sellers are
authorized to assume and assign to Buyer each of the Acquired
Contracts set forth on Schedule 1.1(b); provided , that
Sellers shall have sole responsibility of paying the cure costs
required to be paid in accordance with section 365(b)(1)(A) of the
Bankruptcy Code and Section 7.2(k) of this
Agreement;
(ix) that the Sellers are authorized
and directed to consummate the transactions contemplated by this
Agreement and to comply in all respects with the terms of this
Agreement and to prosecute vigorously, and at the expense of
Sellers’ estates, all necessary judicial
proceedings;
(x) that the sale process conducted
by Sellers and/or its agents (including any auction or bid
solicitation process) was non-collusive, fair and reasonable and
was conducted in good faith;
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(xi) that Buyer and Sellers did not
engage in any conduct which would allow the transactions
contemplated by this Agreement to be set aside pursuant to
Section 363(n) of the Bankruptcy Code;
(xii) that Buyer is not a successor
to, or otherwise liable for, the debts or obligations of the
Sellers, other than as specifically set forth in this Agreement
with respect to the Assumed Liabilities;
(xiii) that, pursuant to
Section 105 of the Bankruptcy Code, any creditors of Sellers
are prohibited from taking any actions against Buyer or the
Acquired Assets except in connection with liabilities expressly
assumed by Buyer herein;
(xiv) that Buyer shall not be deemed
a successor employer to the Sellers for purposes of any liability
arising under the Warn Act, any similar state or local law, or any
collective bargaining agreement or other labor or employment
agreement; and
(xv) that the Order is binding upon
any successors to the Sellers, including any Chapter 7
Trustees;
(e) A certificate, dated as of the
Closing Date, duly executed by each Seller’s President,
certifying the accuracy of the matters set forth in
Section 7.2(a) and 7.2(b), in form and substance reasonably
satisfactory to Buyer;
(f) Good standing certificates of
Sellers issued by the Secretary of State of Delaware and the
Secretary of State of Massachusetts issued within ten
(10) days of the Closing Date;
(g) A settlement statement in form
and substance satisfactory to the parties hereto, regarding certain
Closing matters, including any adjustments to the Purchase Price,
executed by Sellers;
(h) Any Consents to assignments from
third parties relating to the Acquired Contracts that require such
consents, as shown on Schedule 4.1(e), as well as any other
Consents that Seller is legally obligated to obtain to the extent
that the failure to obtain any such Consent would cause a Material
Adverse Effect with respect to the Business;
(i) Legal, valid and binding UCC-3
termination statements (in form and substance reasonably
satisfactory to Sellers, Buyer and their counsel), in recordable
form, for which a UCC financing statement is of record with respect
to any of the Acquired Assets;
(j) An opinion of counsel for
Sellers, in the form attached as Exhibit E;
(k) An agreement executed by Sellers
in form and substance reasonably satisfactory to the parties:
(i) granting Buyer a right of first refusal with respect to
the sale or transfer of the 777 Patent and the exclusive license
with respect thereto, and (ii) a release and agreement not to
sue or otherwise file legal actions against Buyer for infringement
of the 777 Patent, which shall be binding upon Sellers’
successors and assigns; and
(l) Such other bills of sale,
certificates of title, documents and other instruments of transfer
and such other instruments of conveyance as Buyer may reasonably
request in
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order to effect the sale, transfer,
conveyance and assignment to Buyer of valid ownership of the
Acquired Assets and such other documents as Seller may reasonably
be requested by Buyer, each in form and substance reasonably
satisfactory to Buyer;
SECTION 3.3 Buyer’s
Deliveries .
At the Closing, Buyer shall deliver
the following to Sellers:
(a) Payment of the Purchase Price,
less the Buyer’s Deposit, the unpaid principal balance of the
DIP Financing as of the Closing date and the Holdback, by Federal
Funds wire transfer;
(b) An instrument of assignment and
assumption of liabilities with respect to the Assumed Liabilities,
reasonably satisfactory in form and substance to counsel for
Sellers;
(c) A certificate, dated the Closing
Date, duly executed by its President, certifying the accuracy of
the matters set forth in Section 7.1(a) and
Section 7.1(b); and
(d) A settlement statement in form
and substance satisfactory to the parties hereto, regarding certain
Closing matters, including any adjustments to the Purchase Price.
Executed by Buyer.
ARTICLE 4. REPRESENTATIONS AND
WARRANTIES
SECTION 4.1 Representations and
Warranties of Sellers . Sellers hereby represent and warrant to
Buyer as follows:
(a) Corporate Organization .
Each Seller is duly organized, validly existing and in good
standing under the laws of the State of Delaware. Each Seller has
all requisite corporate power and authority to own its properties
and assets and to conduct its businesses as now
conducted.
(b) Qualification to Conduct
Business . Each Seller is duly qualified to do business and is
in good standing in every jurisdiction in which the character of
the properties owned or leased by it or the nature of the
businesses conducted by it makes such qualification
necessary.
(c) Authorization and Validity. Each
Seller has, or on the Closing Date will have, as applicable, all
requisite corporate power and authority to enter into this
Agreement to which such Seller is or will become a party and,
subject to the (i) Bankruptcy Court’s entry of the Orders,
and (ii) receipt of all Consents, to perform its obligations
hereunder and thereunder, the execution and delivery of this
Agreement and the performance of such Sellers’ obligations
hereunder and thereunder, has been, or on the Closing Date will be,
duly authorized by all necessary corporate action of such Seller,
and no other corporate proceedings on the part of such Seller are
necessary to authorize such execution, delivery and performance.
This Agreement has been or on the Closing Date will be, duly
executed by each Seller, and, subject to the Bankruptcy
Court’s entry of the Orders, constitutes or will, when
executed and delivered, constitute each Seller’s valid and
binding obligation, enforceable against each Seller in accordance
with their respective terms. The boards of directors of Holdings
and Sub have each resolved to
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request that the Bankruptcy Court
approve this Agreement and the transactions contemplated hereby.
Subject to the entry of the Bidding Procedures Order, each Seller
has full power and authority to grant the Break-Up Fee and the
Expense Reimbursement.
(d) No Conflict or Violation
. Subject to the (i) receipt of all Consents and (ii) the
Bankruptcy Court’s entry of the Orders, the execution,
delivery and performance by each Seller of this Agreement to which
any of them is or will become a party do not and will not
(a) violate or conflict with any provision of the Certificate
of Incorporation or By-laws of any Seller, (b) violate any
provision of law, or any order, judgment or decree of any
Government applicable to any Seller, (c) result in or require
the creation or imposition of any Liens on any of the Acquired
Assets; or (d) violate or result in a breach of or constitute
(with due notice or lapse of time or both) a default under any
Contract entered into by any Seller after such Seller’s
respective Petition Date, by which the applicable Seller is bound
or to which the assets of the applicable Seller are
subject.
(e) Consents and Approvals .
Schedule 4.1(e) sets forth a true and complete list of each
consent, waiver, authorization or approval of any Person and each
material declaration to or filing or registration with any
Government that is required to be obtained by any Seller in
connection with the execution and delivery by it of this Agreement
or the performance by it of its obligations hereunder or
thereunder, including, without limitation, any and all material
consents and approvals that are required to be obtained, or rights
of first refusal, first offer or other similar preferential rights
to purchase that are required to be complied with, in connection
with the assignment or transfer of any Acquired Assets to Buyer in
accordance with the terms of this Agreement (collectively, the
“Consents” ).
(f) Compliance with Laws .
Each Seller is in compliance with all applicable laws, regulations,
orders or other legal requirements to which such Seller is subject.
No Seller has received written notice of any violation of any law,
regulation, order or other legal requirement and no Seller is in
default with respect to any order, writ, judgment, award,
injunction or decree of any Government.
(g) Title to Acquired Assets
. Subject to the entry of the Bankruptcy Sale Order, at the
Closing, Sellers has or will obtain good and marketable title to or
a valid and enforceable right by Contract to use the Acquired
Assets which shall be transferred to Buyer free and clear of all
Liens. Except for the Excluded Assets, the Acquired Assets
constitute all of the assets of Sellers and are adequate to conduct
the Business as currently conducted.
(h) Accounts Receivable . All
Accounts Receivable of Sellers have been properly recorded on the
books and records of Sellers in accordance with GAAP consistently
applied by Sellers in accordance with past practices of Sellers.
Schedule 4.1(h) contains a true and complete list of Sellers’
Accounts Receivable as of March 31, 2008.
(i) Inventory . All Inventory
of Sellers has been properly recorded on the books and records of
Sellers in accordance with GAAP in accordance with past practices
of Sellers. Schedule 4.1(i) contains a true and complete list of
Sellers’ Inventory as of March 31, 2008.
(j) Absence of Certain Infirmities.
Other than having filed the Bankruptcy Cases and operating the
Business subject to protection under chapter 11 of the Bankruptcy
Code,
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since January 1, 2008, the
Sellers have conducted the Business in all respects in the Ordinary
Course of Business, and there has not been:
(i) any material damage, destruction
or other casualty or loss (whether or not covered by insurance)
affecting any of the Acquired Assets or any portion thereof that
has not been repaired: or
(ii) any sale or other disposition
of any assets (including, without limitation, discounting of
accounts receivable) used or useful in the Business, other than
sales of inventory in the Ordinary Course of Business consistent
with Sellers’ past practice.
(k) Collective Bargaining
Agreements . The Sellers are not parties to any collective
bargaining agreement or similar labor or employment
agreement.
(l) Financial Data . Seller
has delivered to Buyer: (i) the unaudited consolidated
financial statements for the fiscal year ending December 31,
2007; and (ii) the unaudited consolidated financial statements
for the two months ended February 28, 2008 (all such financial
data being hereinafter collectively referred to as the
“Financial Data”). To the Knowledge of Sellers, the
Financial Data is true, complete and accurate in all material
respects, has been prepared in accordance with GAAP, is not
misleading and fairly reflects to the extent applicable
(i) the consistent application of such accounting principles
throughout the periods involved, if any, and (ii) the
financial positions, results, operations and changes in the
financial position of the Business as of such dates and for the
periods then ended. The Financial Data has been prepared from, and
are in accordance with, the Sellers’ accounting
records.
(m) No Material Adverse
Change. Other than the filing of the Bankruptcy Cases and the
resulting implications therefrom (i.e., reduced access to cash,
reduced sales, change in manner in which Business is conducted
between Sellers and Diomed Ltd.), since the respective dates of the
Financial Data, there has not been or occurred any event or
circumstance with respect to the Business, or any other operations,
prospects, assets, results of operations or condition (financial or
other) of Sellers, which has had or could have a Material Adverse
Effect on the Business, and no event has occurred or circumstance
exists that may result in such a Material Adverse
Effect.
(n) Schedule 1.1(b) is a true and
complete list of the Acquired Contracts that relate to the
Business.
(o) Legal Proceedings. Other than
filing of the Bankruptcy Cases, and except as set forth on Schedule
4.1(o), (i) neither Seller is subject to any order of, or written
agreement or memorandum or understanding with the Government
relating to the Business, (ii) there exists no litigation, action,
suit, claim, investigation or other legal proceeding pending, or,
to the Knowledge of Sellers, any litigation, action, suit,
investigation, claim, investigation or other legal proceeding
threatened against or affecting the Business or the Acquired
Assets, or which could prohibit or impede the transactions
contemplated by this Agreement, (iii) in the past three years there
have been no claims, actions, proceedings, or investigations
against the Business or any of the Acquired Assets, and (iv) there
are no pending or
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threatened warranty claims relating
to Products at any time manufactured, distributed or sold or
services at any time performed by Seller, and there have been no
such claims during the Seller’s current fiscal
year.
(p) Permits . Sellers have
obtained all Permits necessary for the operation of the Business,
and Sellers have complied with all of the Permits. All Permits
necessary for the operation of the Business are listed on Schedule
1.1(h).
(q) Taxes . Seller have
prepared and duly filed or caused to be duly filed all Tax Returns
and reports relating to the Business and the Acquired Assets and
required to be filed with any Government prior to the Closing Date.
Except as described in Schedule 4.1(q), Sellers have paid, or
withheld and remitted, in full, all Taxes due and owing and all
claims, demands, assessments, judgments, costs, and expenses
connected therewith. Except as described in Schedule 4.1(q),
Sellers are not a party to any action or proceeding, nor to the
Knowledge of Sellers, is any such action or proceeding contemplated
or threatened, for the assessment or collection of any Taxes
relating to the Business or the Acquired Assets, and no deficiency
notices or reports have been received by Sellers in respect of any
Tax relating to the Business or the Acquired Assets.
(r) Schedule 1.1(f) is a true and
complete list of the Intellectual Property that relates to the
Business, including Intellectual Property in which Diomed Ltd. has
an interest, as designated on Schedule 1.1(f).
(s) Disclosure . No
representation or warranty or other statement made by Sellers in
this Agreement or the certificate delivered pursuant to
Section 3.2(e), or otherwise in connection with the
transactions contemplated by this Agreement contains or will
contain any materially untrue statement of fact or omits to state
or will omit to state a material fact necessary to make any of
them, in light of the circumstances in which it was made, not
misleading. To the Knowledge of Sellers, other than the filing of
the Bankruptcy Cases and the resulting implications therefrom,
there is no fact that has specific application to the Business
(other than general economic or industry conditions) and that may
materially adversely affect the Acquired Assets or the prospects,
financial condition, or results of operations of the Business that
has not been set forth in this Agreement. Notwithstanding the
foregoing provisions of this Section 4.1(s), Buyer
acknowledges that Buyer's direct or indirect acquisition of the
assets of Diomed Ltd. consistent with Section 7.2(h) and
continuing ownership of substantially all assets of Diomed Ltd.
concurrently with the Acquired Assets will be required for Buyer to
operate the Business after Closing.
SECTION 4.2 Representations and
Warranties of Buyer . Buyer hereby represents and warrants to
Sellers as follows:
(a) Corporate Organization .
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all
requisite corporate power and authority to own its properties and
assets and to conduct its businesses as now conducted.
(b) Qualification to Conduct
Business. Buyer is duly qualified to do business as a domestic
corporation and is in good standing in every jurisdiction in which
the character of the properties owned or leased by it or the nature
of the businesses conducted by it makes such qualification
necessary.
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(c) Authorization and
Validity . Buyer has, or on the Closing Date will have, all
requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder and thereunder.
The execution and delivery of this Agreement and the performance of
Buyer’s obligations hereunder and thereunder have been, or on
the Closing Date will be, duly authorized by all necessary
corporate action by the Board of Directors of Buyer, and no other
corporate proceedings on the part of Buyer are necessary to
authorize such execution, delivery and performance. This Agreement
has been or on the Closing Date will be, duly executed by Buyer and
constitute, or will constitute, when executed and
