ASSETPURCHASE AGREEMENT byand among DALIANJIKANG MEDICAL SYSTEMS IMPORT & EXPORT CO., LTD, PhotoMedex,Inc. and PHOTOMEDEXTECHNOLOGY, INC.

EX-2.1 2 s101788_ex2-1.htm EXHIBIT 2.1

 

ASSET PURCHASE AGREEMENT

 

by and among

 

DALIAN JIKANG MEDICAL SYSTEMS IMPORT & EXPORT CO., LTD,

 

PhotoMedex, Inc.

 

and

 

PHOTOMEDEX TECHNOLOGY, INC.

 

 

 

TABLE OF CONTENTS

				Page
ARTICLE I DEFINITIONS; INTERPRETATION				1
	Section 1.1	Definitions		1
	Section 1.2	Additional Defined Terms		6
	Section 1.3	Interpretation		7
ARTICLE II PURCHASE AND SALE; CLOSING				7
	Section 2.1	Purchase and Sale		7
	Section 2.2	Purchase Price		8
	Section 2.3	The Closing		8
	Section 2.4	Payment of Purchase Price; Closing Deliverables		8
	Section 2.5	Withholding Tax		9
	Section 2.6	Non-Assignable Asset		9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PHMD				9
	Section 3.1	Organization; Power; Authorization		9
	Section 3.2	Binding Effect; Noncontravention		10
	Section 3.3	Capitalization		10
	Section 3.4	Financial Statements		11
	Section 3.5	No Undisclosed Liabilities		11
	Section 3.6	Absence of Changes		11
	Section 3.7	Title to Assets; Condition; Inventory;		12
	Section 3.8	Compliance with Laws; Permits		12
	Section 3.9	Proceedings; Orders		13
	Section 3.10	Tax Matters		13
	Section 3.11	Environmental Matters		14
	Section 3.12	Intellectual Property		14
	Section 3.13	Contracts		15
	Section 3.14	Labor Matters		16
	Section 3.15	Insurance		17
	Section 3.16	Affiliate Transactions		17
	Section 3.17	Brokerage		17
	Section 3.18	FDA and Regulatory Matters		17
	Section 3.19	Foreign Corrupt Practices; OFAC		18
	Section 3.20	Accounting and Disclosure Controls		18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER				18
	Section 4.1	Organization, Power; Authorization		18
	Section 4.2	Binding Effect; Noncontravention		19
	Section 4.3	Consents		19
	Section 4.4	Brokerage		19
	Section 4.5	Financing		19
	Section 4.6	Proceedings; Orders		19
	Section 4.7	Investment		19

 

 

 

	Section 4.8	Solvency		20
ARTICLE V COVENANTS				20
	Section 5.1	Public Announcements; SEC Filings		20
	Section 5.2	Transaction Expenses; Transfer Taxes		20
	Section 5.3	Further Assurances		21
	Section 5.4	Post-Closing Access		21
	Section 5.5	Non-Compete and Non-Solicitation		21
ARTICLE VI INDEMNIFICATION				22
	Section 6.1	Indemnification		22
	Section 6.2	Procedures for Indemnification		23
	Section 6.3	Limitations on Indemnification		25
	Section 6.4	Adjustments to Purchase Price		26
ARTICLE IX TAX MATTERS				26
	Section 7.1	Cooperation on Tax Matters		26
	Section 7.2	Tax Indemnification		27
	Section 7.3	Straddle Period		27
	Section 7.4	Amended Returns and Retroactive Elections		28
	Section 7.5	Tax Clearance Certificates		28
ARTICLE X MISCELLANEOUS				28
	Section 8.1	Confidentiality		28
	Section 8.2	Consent to Amendments		28
	Section 8.3	Entire Agreement		29
	Section 8.4	Successors and Assigns		29
	Section 8.5	Governing Law; Consent to Jurisdiction; Venue; Waiver of Jury Trial		29
	Section 8.6	No Additional Representations; Disclaimer		29
	Section 8.7	Notices		30
	Section 8.8	Counterparts		32
	Section 8.9	Time is of the Essence		32
	Section 8.10	No Third Party Beneficiaries		32
	Section 8.11	No Strict Construction		32
	Section 8.12	Headings		35

 

 

ASSET PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is made as of September 1, 2015, by and among DaLian Jikang Medical Systems Import & Export Co., LTD., a People’s Republic of China corporation (“Purchaser”), PhotoMedex, Inc., a Nevada corporation (“PHMD”) and PhotoMedex Technology, Inc., a Delaware corporation (“P-Tech” and, together with PHMD, the “Sellers” and each, a “Seller”). Purchaser and the Sellers are each sometimes referred to herein as a “Party” and, collectively, as the “Parties.” Capitalized terms which are used but not otherwise defined herein are defined in Section 1.1 below.

 

A. The Seller Companies, together with one or more direct or indirect wholly-owned Subsidiaries of PHMD, own all of the Business Assets; and

 

B.           The Parties desire to enter into this Agreement pursuant to which (i) the Sellers agree to sell, or cause to be sold, to Purchaser, and Purchaser agrees to purchase from the Sellers, and one or more of PHMD’s Subsidiaries, as the case may be, all of the Transferred Assets, and (ii) Purchaser agrees to assume and become responsible for paying, performing and discharging the Business Liabilities, on the terms and subject to the conditions contained herein.

 

NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements contained herein, intending to be legally bound, the Parties hereby agree as follows:

 

ARTICLE I

DEFINITIONS; INTERPRETATION

 

Section 1.1          Definitions. For the purposes of this Agreement, the following terms have the meanings set forth below:

 

“Affiliate” means, with respect to any Person, any other Person who directly or indirectly controls, is controlled by, or is under common control with, such Person. The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by Contract or otherwise, and the terms “controlled” and “controlling” have meanings correlative thereto.

 

“Business” means the Surgical Laser Technologies (“SLT”) domestic and international lines of business of P-Tech, as described within the descriptions of “Physician Recurring” and “Professional” business segments as described in Form 10-K filed by PHMD with the SEC for the fiscal year ending on December 31, 2014.

 

“Business Assets” means (i) the assets and properties of the Sellers to the extent such assets or properties are primarily used in, or otherwise necessary for, the operation of the Business, including the inventory and all the tooling (i.e. industrial equipment) or (ii) are otherwise listed on Appendix I.

 

“Business Day” means any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of Pennsylvania, USA or is a day on which banking institutions located in New York, NY are authorized or required by Legal Requirement or other governmental action to close.

 

  

 

“Business Employee” means an employee, officer, director or other service provider of P-Tech or another wholly-owned Subsidiary of PHMD who is primarily or exclusively engaged in providing services to the Business.

 

“Business Intellectual Property” means all Intellectual Property of the Sellers to the extent such Intellectual Property is primarily used in, or otherwise necessary for, the operation of the Business, including the Intellectual Property listed on Appendix VI.

 

“Business Liabilities” means the liabilities listed on Appendix II.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Contract” means any agreement or contract or other binding obligation, commitment or undertaking whether written or verbal.

 

“Environmental Laws” means all federal and state statutes or regulations concerning the pollution, protection or cleanup of the environment, including those relating to the treatment, storage, disposal, handling, transportation, discharge, emission or release of Hazardous Substances, including the Clean Air Act, the Clean Water Act, the Solid Waste Disposal Act, the Resource Conservation and Recovery Act, and the Comprehensive Environmental Response, Compensation, Liability Act and any such related Act relevant to Purchasers Country and jurisdiction

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Excluded Liabilities” means all of the liabilities and obligations of the Sellers or their Affiliates other than the Business Liabilities.

 

“Fundamental Representations” means, collectively, the representations and warranties set forth in Section 3.1 (Organization; Power; Authorization), Section 3.2(a) (Binding Effect; Noncontravention), Section 3.3(b) (Capitalization), Section 3.7(a) (Title to Assets), Section 3.10 (Tax Matters), Section 3.11 (Environmental Matters), Section 3.17 (Brokerage), Section 4.1, (Organization; Power; Authorization), Section 4.2(a) (Binding Effect; Noncontravention), and Section 4.4 (Brokerage).

 

“GAAP” means United States generally accepted accounting principles as in effect from time to time.

 

“Governmental Entity” means any transnational, domestic or foreign federal, state, local or other governmental, regulatory or administrative authority, department, court, agency or official, including any political subdivision thereof.

 

“Hazardous Substance” means any waste, pollutant, contaminant, hazardous, radioactive, or toxic substance, petroleum, petroleum-based or petroleum-derived substance or waste or asbestos-containing material, the presence of which requires investigation or remediation under any Environmental Laws.

 

 

 

“Intellectual Property” means (a) United States and foreign patents, patent applications, continuations, continuations-in-part, divisions, reissues, patent disclosures, inventions (whether or not patentable) and improvements thereto, (b) United States and foreign trademarks, service marks, logos, trade dress and trade names or other source-identifying designations or devices, (c) United States and foreign copyrights and design rights, whether registered or unregistered, and pending applications to register the same, (d) Internet domain names and registrations thereof, (e) confidential ideas, trade secrets, computer software, including source code, derivative works, moral rights, know-how, works-in-progress, concepts, methods, processes, inventions, invention disclosures, formulae, reports, data, customer lists, mailing lists, business plans or other proprietary information, and (f) any and all other intellectual property rights throughout the world.

 

“IRS” means the United States Internal Revenue Service.

 

“Lease” means all leases, subleases and other Contracts under which any Seller Company leases, uses or occupies, or has the right to use or occupy, any real property that is primarily used in, or otherwise necessary for, the operation of the Business.

 

“Leased Real Estate” means all real property that any Seller Company leases, subleases or otherwise uses or occupies, or has the right to use or occupy, pursuant to a Lease.

 

“Legal Requirement” means any requirement arising under any action, law, treaty, rule or regulation, determination or direction of a Governmental Entity.

 

“Liens” means any mortgage, pledge, lien, security interest, charge, hypothecation, option, right of first refusal, easement, right of way, restriction on transfer or use, title defect, encroachment or other encumbrance or other adverse claim of any kind.

 

“Losses” means, with respect to any Person, any and all liabilities, costs, damages, deficiencies, penalties, fines or other losses or expenses incurred by such Person (including reasonable out-of-pocket expenses of investigation and reasonable out-of-pocket attorneys’ or consultants’ fees and expenses as a result or arising out of any action, suit or proceeding whether involving a Third Party Claim or a claim solely between the Parties to enforce the provisions hereof), but not including any consequential damages, special damages, incidental damages, indirect damages, punitive damages, diminution in value or lost profits, except to the extent payable by an Indemnified Person to a Person in a Third-Party Claim.

 

 

 

“Material Adverse Effect” means a material adverse effect on (i) the assets, liabilities, results of operations or condition (financial or otherwise) of the Business, but excluding any effect resulting from (a) general economic conditions or general effects on the industry in which the Business is primarily engaged (including as a result of an outbreak or escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war, or the occurrence of any other calamity or crisis (including any act of terrorism) or any change in financial, political or economic conditions in the United States or elsewhere) not having a materially disproportionate effect on P-Tech or the Business relative to other participants in the industry in which the Business is primarily engaged, or (b) any change or amendment to any Legal Requirement or any change in the manner in which any Legal Requirement is enforced generally affecting the industry in which the Business is primarily engaged and not specifically relating to or having a materially disproportionate effect on P-Tech or the Business relative to other participants in the industry in which the Business is primarily engaged, (c) any public announcement of the transactions contemplated by this Agreement in accordance with the terms of this Agreement, or (d) any action taken by Purchaser or its Representatives in accordance with the terms of this Agreement, or (ii) the ability of the Sellers to perform their material obligations hereunder or to consummate the transactions contemplated hereby.

 

“Order” means any award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any Governmental Entity or by any arbitrator.

 

“Ordinary Course of Business” means the ordinary course of the operation of the Business consistent with past practices of the Seller Companies.

 

“Permits” means all permits, licenses, franchises, approvals, authorizations, and consents required to be obtained from Governmental Entities necessary to conduct and operate the Business as currently conducted or operated.

 

“Permitted Liens” means (i) liens for Taxes, which either (a) are not delinquent or (b) are being contested in good faith and by appropriate proceedings and for which an appropriate reserve has been established in accordance with GAAP, (ii) mechanics’, materialmen’s or contractors’ liens or encumbrances for construction in progress and workmen’s, repairmen’s, warehousemen’s and carriers’ liens arising in the Ordinary Course of Business and which do not materially impair the occupancy or use, value or marketability of the property which they encumber, (iii) zoning, entitlement, building and other land use regulations imposed by Governmental Entities having jurisdiction over the real property which do not materially impair the occupancy or use, value or marketability of the property which they encumber, (iv) covenants, conditions, restrictions, easements and other matters affecting the assets or property of the Business which do not materially impair the occupancy or use, value or marketability of the property which they encumber, and (v) any matters set forth on Section 1.1 of the Disclosure Letter.

 

“Person” means an individual, a partnership, a corporation, an association, a limited liability company, a joint stock company, a trust, a joint venture, an unincorporated organization or a Governmental Entity.

 

“Post-Closing Tax Period” means (a) any Taxable Period beginning after the Closing Date and (b) the portion of any Straddle Period beginning after the Closing Date and ending at the end of such Straddle Period.

 

“Pre-Closing Tax Period” means (a) any Taxable Period ending on or before the Closing Date and (b) the portion of any Straddle Period beginning on the first day of such Straddle Period and ending at the close of the Closing Date.

 

 

 

“Proceeding” means any action, audit, arbitration, audit, examination, hearing, litigation, or suit (whether civil, criminal or administrative) commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Entity or arbitrator.

 

“Representatives” means, with respect to any Person, each of the Affiliates, directors, officers, employees, agents and other representatives (including attorneys, accountants and financial advisors) of such Person.

 

“SEC” means the United States Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Seller Companies” means, collectively, PHMD and P-Tech

 

“Sellers’ Knowledge” means the actual knowledge of Dennis McGrath, Dolev Rafaeli and Michele Pupach, after conducting a reasonable inquiry and investigation (consistent with such Person’s title and/or responsibility) concerning the existence of a particular fact or matter.

 

“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which (i) if a corporation or a limited liability company (with voting securities), a majority of the total voting power of shares of stock or interest entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability company (without voting securities), partnership, association or other business entity, a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or control any managing director or general partner of such limited liability company, partnership, association or other business entity.

 

“Taxable Period” means any period prescribed by any Governmental Entity for which a Tax Return is required to be filed or a Tax is required to be paid.

 

“Taxing Authority” means any U.S. or non-U.S. federal, national, state, provincial, county, or municipal or other local government, any subdivision, agency, commission, or authority thereof (or any quasi-governmental body) exercising any taxing authority, or any other authority exercising tax regulatory authority in its capacity as doing such.

 

“Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

 

 

 

“Tax Sharing Agreement” means any Tax allocation or sharing agreement or similar Contract (other than this Agreement) that obligates the Taxpayer to make any payment computed by reference to the Taxes, taxable income or taxable Losses of any other Person, other than the indemnification and gross-up provisions of the Taxpayer’s credit facilities, if any, and similar provisions of any other agreement entered into in the Ordinary Course of Business, the principal purpose of which is not related to Taxes.

 

“Taxes” means (i) any and all taxes, installments, assessments, charges, duties, fees, levies or other governmental charges, including income, franchise, margin, capital stock, real property, personal property, tangible, withholding, employment, payroll, social security, land transfer, employer, health, goods and services, harmonized sales, social contribution, employment insurance premium, unemployment compensation, disability, transfer, sales, use, service, escheat, unclaimed property, license, excise, gross receipts, value-added (ad valorem), add-on or alternative minimum, environmental, severance, stamp, occupation, premium, unclaimed property, escheat and all other taxes of any kind for which a Person may have any liability imposed by any Taxing Authority, whether disputed or not, and any charges, fines, interest or penalties imposed by any Taxing Authority or any additional amounts attributable or imposed with respect to such amounts, (ii) any liability for the payment of any amounts of the type described in clause (i) as a result of being a member of an affiliated, combined, consolidated or unitary group for any Taxable Period; (iii) any liability for the payment of amounts of the type described in clause (i) or clause (ii) as a result of being a transferee of, or a successor in interest to, any Person or as a result of an express or implied obligation to indemnify any Person.

 

“Third Party Claim” means any claim or Proceeding by any Person, other than the Sellers, Purchaser or any of their respective Affiliates.

 

“Transaction Documents” means this Agreement, and the Transfer Documentation.

 

“Transfer Documentation” means the Bill of Sale, Assignment and Assumption Agreement, Patent Assignment, Domain Name Assignment, Trademark Assignment and such other transfer documents as the Parties shall agree, all in form and substance previously agreed by the Parties.

 

“Transferred Assets” means, collectively, the Securities and the Business Assets.

 

 

Section 1.2          Additional Defined Terms

 

Each of the following terms is defined in the Section set forth opposite such term:

 

Agreement	Preamble
Applicable Provisions	5.6(h)
Business Assets	Preamble
Business Contracts	3.15(a)
Closing	2.3
Closing Date	2.3
FFDCA	3.18
Financial Statements	3.4
Health Care Laws	3.18
Indemnified Person	6.2(a)
Indemnifying Person	6.2(b)
Inventory	3.7(c)
Non-Assignable Asset	2.6
Notice of Claim	6.2(a)
P-Tech	Preamble
Party	Preamble
Proskauer	8.7
Purchase Price	2.2
Purchaser	Preamble
Purchaser Indemnified Persons	6.1(a)
SEC Documents	3.4(a)
Securities	Recitals
Sellers	Preamble
Seller Indemnified Persons	6.1(b)
Straddle Period	7.3
Third Party Notice	6.2(b)
Transfer Taxes	5.2(b)

 

Section 1.3          Interpretation. Unless otherwise indicated to the contrary herein by the context or use thereof (i) the words, “herein,” “hereto,” “hereof” and words of similar import refer to this Agreement as a whole and not to any particular Section or paragraph hereof, (ii) the word “including” means “including, but not limited to,” (iii) words importing the singular will also include the plural, and vice versa, and (iv) any reference to any federal, state, local, or foreign statute or law (including within the definition of Legal Requirement) will be deemed also to refer to all rules and regulations promulgated thereunder. References to $ will be references to United States Dollars, and with respect to any Contract, obligation, liability, claim or document that is contemplated by this Agreement but denominated in currency other than United States Dollars, the amounts described in such Contract, obligation, liability, claim or document will be deemed to be converted into United States Dollars for purposes of this Agreement as of the applicable date of determination.

 

ARTICLE II

PURCHASE AND SALE; CLOSING

 

Section 2.1          Purchase and Sale. At the Closing upon the terms and subject to the conditions set forth herein, (i) Purchaser shall purchase from PHMD or its applicable Subsidiaries, and PHMD shall, and shall cause its applicable Subsidiaries to, sell, convey, assign, transfer, and deliver to Purchaser, the Securities, (ii) Purchaser shall purchase from the Sellers, and one or more of their wholly-owned Subsidiaries, and the Sellers shall, or shall cause one or more of their wholly-owned Subsidiaries to, as applicable, sell, convey, assign, transfer and deliver to Purchaser, the Business Assets, and (iii) the Sellers shall, or shall cause one or more of their wholly-owned Subsidiaries, as applicable, to assign, and Purchaser shall assume and become responsible for paying, performing and discharging, the Business Liabilities.

 

 

 

Section 2.2          Purchase Price. At the Closing, Purchaser shall (a) pay to PHMD for the Transferred Assets an aggregate cash purchase price equal to the sum of $1,500,000 as payment for the Business Assets including:

 

o          Technology;

 

o          Patents and Trademarks; and

 

o          Production Processes;

 

and (b) assume the Business Liabilities. The Purchase Price shall be payable at the Closing as described in the Supplemental Agreement.

 

Section 2.3          The Closing. The closing of the transactions contemplated hereby (collectively, the “Closing”) shall take place at the offices of PhotoMedex, Inc. located at 100 Lakeside Drive, Suite 100, Horsham, PA 19044 (or at such other location as the Parties may agree), on the date hereof. The date of the Closing is referred to as the “Closing Date.”

 

Section 2.4          Payment of Purchase Price; Closing Deliverables. At the Closing, as applicable:

 

(a)          Purchaser shall deliver or cause to be delivered to PHMD or its designees:

 

(i)          an amount equal to the Purchase Price as provided in the Supplemental Agreement ;

 

(ii)          the Transfer Documentation duly executed by Purchaser; and

 

(iii)          a certificate, dated as of the Closing Date and executed on behalf of Purchaser by its secretary, certifying the resolutions of the board of directors of Purchaser approving this Agreement and the transactions contemplated hereby.

 

(b)          PHMD shall deliver or cause to be delivered to Purchaser or its designees:

 

(i)          the Transfer Documentation duly executed by the applicable Seller;

 

(ii)          certificates, dated as of the Closing Date, and executed by the secretary of each Seller, certifying the resolutions of the board of directors of such Seller, as applicable, approving this Agreement and the transactions contemplated hereby;

 

(iii)          a certificate from the Governmental Entity in the state or other jurisdiction in which each Seller is organized, dated within five Business Days prior to the Closing Date, and certifying that the such entity is in good standing;

 

(iv)          a certificate stating that neither Seller is a foreign person within the meaning of Section 1445(f)(3) of the Code, prepared in accordance with Treasury Regulation Section 1.1445-2(b)(2);

 

 

(v)          a mutual release among the Sellers and their Subsidiaries; and

 

(vi)          evidence reasonably satisfactory to Purchaser of the termination and release of all Liens (other than any Permitted Liens) on all Transferred Assets.

 

Section 2.5          Withholding Tax. Purchaser shall be entitled to deduct and withhold from the Purchase Price all Taxes that Purchaser may be required to deduct and withhold under any provision of the Code or any provision of applicable Legal Requirements. To the extent that amounts are so withheld, all such amounts withheld by Purchaser shall be treated for all purposes of this Agreement as having been paid to the Sellers by Purchaser. To the extent that Purchaser becomes aware of any withholding Taxes applicable to the payment of the Purchase, Purchaser shall provide prompt written notice to the Sellers of the amount of such Tax and the reason for such withholding. The Parties will undertake commercially reasonable efforts to minimize withholding Taxes on the payments contemplated by this Agreement.

 

Section 2.6          Non-Assignable Asset  To the extent that any Business Asset is not assignable without the consent of another party, this Agreement shall not constitute an assignment or an attempted assignment thereof if such assignment or attempted assignment would constitute a breach thereof or a default thereunder. The Sellers, on the one hand, and Purchaser, on the other hand, shall use commercially reasonable efforts to obtain the consent of such other party to the assignment of any such Business Asset to Purchaser in all cases in which such consent is or may be required for such assignment. If any such consent shall not be obtained with respect to any such Business Asset (each, a “Non-Assignable Asset”), to the extent permitted by Legal Requirement, (i) the Sellers shall cooperate with Purchaser in any mutually agreeable reasonable arrangement designed to provide to Purchaser substantially equivalent benefits to those that would have been assigned to Purchaser with respect to the relevant Non-Assignable Asset had such consent been obtained, including enforcement thereof and of all rights of the Sellers against any other Person with respect to such Non-Assignable Asset, (ii) the Sellers shall take all such actions and do, or cause to be done, all such things as shall reasonably be necessary and proper in order that the value of any Non-Assignable Assets shall be preserved and shall inure to the benefit of Purchaser, (iii) the Sellers shall pay over to Purchaser promptly following receipt, all monies collected by or paid to the Sellers in respect of such Non-Assignable Assets, and (iv) the Purchaser shall have the sole responsibility for all obligations and liabilities arising out of such Non-Assignable Assets to the extent that the same would have constituted Assumed Liabilities had such consent been obtained.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF PHMD

 

As a material inducement to Purchaser to enter into this Agreement and to purchase the Transferred Assets, PHMD hereby represents and warrants to Purchaser as follows:

 

Section 3.1          Organization; Power; Authorization. Each Seller is a corporation duly organized, validly existing and in good standing under the laws of its state of organization. Each Seller has all necessary corporate power and authority to enter into, deliver and carry out its obligations pursuant to this Agreement and the Transaction Documents to which it is or will be a party. Each Seller’s execution, delivery and performance of this Agreement and the Transaction Documents to which such Seller is or will be a party has been duly authorized by all necessary action on the part of such Seller. Each Seller Company, as the case may be, has all necessary power and authority to operate the applicable portion of the Business as currently conducted by it and to own and use the properties owned and used by it. The Seller Companies are duly authorized to conduct business and are in good standing under the laws of each jurisdiction where such qualification is required, except where the failure to be so qualified would not have a Material Adverse Effect.

 

  

Section 3.2          Binding Effect; Noncontravention.

 

(a)          This Agreement has been, and each other Transaction Document to which a Seller is a party will be, duly executed and delivered by such Seller and (assuming due authorization, execution and delivery by Purchaser) constitutes (or in the case of the other Transaction Documents, will constitute) a valid and binding obligation of such Seller which is enforceable against such Seller in accordance with its terms, except as such enforceability may be limited by (i) applicable insolvency, bankruptcy, reorganization, moratorium or other similar laws affecting creditors’ rights generally, and (ii) general equitable principles (whether considered in a Proceeding at law or in equity).

 

(b)          Except as otherwise might be noted in this Agreement or any associated Transaction Documents, neither the execution and the delivery of this Agreement or the other Transaction Documents by the Sellers nor the consummation of the transactions contemplated hereby, will (i) conflict with or result in a breach of the terms, conditions or provisions of, (ii) constitute a default under (or an event which with notice or lapse of time or both would become a default), give to others any rights of termination, amendment, acceleration or cancellation of or result in a violation of, (iii) result in the creation of any Lien (other than Permitted Liens) upon any Transferred Asset pursuant to, or (iv) require any authorization, consent, approval, exemption or other action by or declaration or notice to any Person or Governmental Entity pursuant to (A) any Business Contract or any material Contract to which any Seller Company is a party, by which it is bound, or to which any of its assets are subject, (B) the certificate of incorporation, bylaws or similar governing documents of any Seller Company, or (C) under any Legal Requirement.

 

Section 3.3          Capitalization.

 

(a)          The authorized capital stock of P-Tech consists of 5,000 shares of common stock, all of which are issued and outstanding. All of the authorized capital stock of P-Tech has been duly authorized, is validly issued, fully paid and nonassessable and is owned of record and beneficially by PHMD, free and clear of all Liens (other than Permitted Liens and restrictions on transfer arising under the Securities Act and state or foreign securities laws).

 

(b)          Except as otherwise might be noted in this Agreement or any associated Transaction Documents, no Seller Company is a party to, and there are no, voting trusts, proxies, or other agreements or understandings with respect to the voting or transfer of any of the Securities.

 

Section 3.4          Financial Statements.

 

(a)          All reports, schedules, forms, statements and other documents that were required to be filed prior to the date hereof by PHMD with the SEC pursuant to the reporting requirements of the Exchange Act, as amended, are referred to herein as the “SEC Documents.” All such SEC Documents are available on the EDGAR system. As of their respective dates, the disclosures and other information within the SEC Documents that related to the Business or the Transferred Assets complied in all material respects with the requirements of the Exchange Act or the Securities Act, as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact related to the Business or the Transferred Assets or omitted to state a material fact related to the Business or the Transferred Assets required to be stated therein or necessary in order to make the statements therein with respect to the Business and/or the Transferred Assets, in light of the circumstances under which they were made, not misleading.

 

Section 3.5          No Undisclosed Liabilities. Except as otherwise might be noted in this Agreement or any associated Transaction Documents, the Business has no liabilities or obligations of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise.

 

Section 3.6          Absence of Changes. Except as otherwise might be noted in this Agreement or any associated Transaction Documents, the Business has been operated in the Ordinary Course of Business in all material respects and there has been, with respect to the Business, no:

 

(a)          event that has had or would reasonably be expected to have a Material Adverse Effect;

 

(b)          damage to or destruction or loss of any asset or property of the Business, whether or not covered by insurance, that materially and adversely affects the properties, assets, business, financial condition, or prospects of the Business or the Transferred Assets, taken as a whole;

 

(c)          entry into, termination of, or receipt of notice of termination of (i) any license, distributorship, dealer, sales representative, joint venture, credit, or similar agreement that is material to the Business, (ii) any Contract included in the Business Assets or transaction involving the Business with a total remaining commitment by or to any Seller Company that is or is reasonably expected to be in excess of $25,000, or (iii) any other Business Contract, in each case, other than in the Ordinary Course of Business;

 

(d)          sale, lease or other disposition of any Business Assets, other than (i) in the Ordinary Course of Business, (ii) assets or property having an aggregate value of less than $25,000, or (iii) payments of cash dividends;

 

(e)          mortgage, pledge, or imposition of any Lien (other than Permitted Liens) on any Business Asset;

 

(f)          cancellation or waiver of any claims or rights with respect to a Business Asset with a value in excess of $25,000;

 

(g)          material change in the accounting methods or policies used by any Seller Company in respect of the Business; or

 

(h)          agreement, whether oral or written, by any Seller Company to do any of the foregoing in respect of the Business.

 

Section 3.7          Title to Assets; Condition; Inventory.

 

(a)          Except as otherwise might be noted in this Agreement or any associated Transaction Documents, the Seller Companies, and one or more of their wholly-owned Subsidiaries, collectively have good and marketable title to, or a valid and binding leasehold interest in or right to use, all of the Business Assets, free and clear of all Liens except for Permitted Liens. The Business Assets comprise all assets that are primarily used in, or otherwise necessary for, the operation of the Business as conducted immediately prior to the Closing. The Business Assets, together with the services to be provided by the Sellers to the Purchaser pursuant to the Transition Services Agreement, are sufficient for the continued conduct of the Business immediately after the Closing in substantially the same manner as conducted immediately prior to the Closing.

 

(b)          To Sellers’ Knowledge, the buildings, plants, structures, and equipment of the Business are (i) structurally sound, (ii) in good operating condition and repair, ordinary wear and tear excepted, and (iii) adequate for the uses to which they are being put, in each case, in all material respects.

 

(c)          All inventory, finished goods, raw materials, work in progress, supplies, and other inventories of the Business (“Inventory”), consists of a quality and quantity usable and salable in the Ordinary Course of Business, except for obsolete, damaged, defective or slow-moving items that have been written off or written down to fair market value or for which adequate reserves have been established. All Inventory is owned by the Seller Companies free and clear of all Liens, except for Permitted Liens, and no Inventory is held on a consignment basis. The quantities of each item of Inventory (whether raw materials, work-in-process or finished goods) are not excessive, but are reasonable in the present circumstances of the Business.

 

Section 3.8          Compliance with Laws; Permits. Except as otherwise might be noted in this Agreement or any associated documentation, Appendix A correctly lists each Permit that is material to the operation of the Business as conducted immediately prior to the Closing, together with the name of the Governmental Entity issuing such Permit. Each Permit is held by a Seller Company and is valid and in full force and effect, no Seller Company is in default in any material respect under, and, to Sellers’ Knowledge, no condition exists that with notice or lapse of time or both would constitute a default under, any such Permit and none of such Permits will be terminated, become terminable or otherwise be materially and adversely affected solely as a result of the transactions contemplated hereby. The Seller Companies have made all material filings with Governmental Entities necessary to conduct and operate the Business as currently conducted or operated. The Seller Companies are in material compliance with all applicable Legal Requirements relating to the operation of the Business.

 

  

Section 3.9          Proceedings; Orders. Except as otherwise might be noted in this Agreement or any associated Transaction Documents, there is no pending or, to Sellers’ Knowledge, threatened Proceeding (or any reasonable basis therefor) (i) that challenges the validity of this Agreement or any action taken or to be taken by the Sellers in connection herewith or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement, or (ii) that has been commenced by or against any Seller Company or any of their respective assets, officers or directors that would adversely affect the Business or the Transferred Assets. Except as otherwise might be noted in this Agreement or any associated Transaction Documents, (x) there is no Order to which the Business or the Transferred Assets is subject, and (y) neither Seller is subject to any Order that relates to the Business or the Transferred Assets.

 

Section 3.10          Tax Matters. Except as otherwise might be noted in this Agreement or any associated Transaction Documents:

 

(a)          All income, franchise and material Tax Returns required to be filed by or with respect to the Business, the Transferred Assets have been timely filed (taking into account all validly-obtained extensions). All such Tax Returns are true, correct, and complete in all material respects and all material Taxes due and owing (whether or not shown on such Tax Returns) have been paid. Solely with respect to the Business and the Transferred Assets, the Seller Companies have complied with all material Legal Requirements relating to the withholding of Taxes and have withheld and paid on a timely basis all material Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, company clinician, independent contractor, creditor, stockholder, or other third party. No Seller Company has received any notice that any Taxing Authority has threatened that it is in the process of imposing any lien for Taxes (other than a Permitted Lien) on the Transferred Assets for the failure to pay any Taxes. No material deficiencies or assessments for any Taxes have been or are being asserted, or to Seller’s Knowledge, proposed or threatened against the Business, Transferred Assets.

 

(b)          No material Proceedings before any Taxing Authority are currently pending with regard to any Taxes or Tax Returns of the Sellers or their Affiliates or with respect to the Transferred Assets or the Business. No Seller Company has received any written notice (or to Sellers’ Knowledge, any threat) of any such audits or Proceedings as described in this Section 3.10(b).

 

(c)          Neither Seller is a “foreign person” as that term is defined in Section 1445 of the Code;

 

(d)          Notwithstanding anything in this Agreement to the contrary, (i) the representations and warranties in this Section 3.10 are the sole and exclusive representations and warranties of the Sellers concerning Tax matters, and (ii) cannot be relied upon with respect to Tax liabilities to the extent attributable to a Post-Closing Tax Period (using the methodology of Section 7.3 for the purpose of allocating Straddle Period Taxes).

 

  

Section 3.11          Environmental Matters.

 

(a)          Except for such matters as would not, individually or in the aggregate, have a Material Adverse Effect:

 

(i)          The operation of the Business by the Seller Companies is, and has been, in compliance with all Environmental Laws, which compliance includes the possession, maintenance of, compliance with, or application for, all Permits required under applicable Environmental Laws for the operation of the Business as currently conducted.

 

(ii)          With respect to the operation of the Business, the Seller Companies have not (i) produced, processed, manufactured, generated, transported, treated, handled, used, stored, disposed of or released any Hazardous Substances, except in compliance with Environmental Laws, at any Leased Real Estate, or (ii) exposed any employee or any third party to any Hazardous Substances.

 

(iii)          The Seller Companies have not received written notice of and there is no Proceeding pending, or to Sellers’ Knowledge, threatened against any of the Seller Companies, alleging any liability or responsibility under or non-compliance with any Environmental Law or seeking to impose any financial responsibility for any investigation, cleanup, removal, containment or any other remediation or compliance under any Environmental Law. None of the Seller Companies is subject to any Order or written agreement by or with any Governmental Entity imposing any liability or obligation with respect to any of the foregoing.

 

(iv)          The Seller Companies have all Permits necessary for the conduct of the Business that are required under applicable Environmental Laws and are in compliance with the terms and conditions of all such Permits.

 

(v)          The Seller Companies have provided or made available to Purchaser all environmental reports, assessments, audits, studies, investigations and data in its custody or possession concerning the Business.

 

(vi)          None of the transactions contemplated by this Agreement or the Transaction Documents will trigger any filing requirement or other action under any applicable Environmental Law, including any environmental “transfer law.”

 

(b)          The representations and warranties in this Section 3.11 are the sole and exclusive representations of the Seller Companies concerning the environmental matters addressed in this Section 3.11, including, without limitation, any matters arising under Environmental Laws.

 

Section 3.12          Intellectual Property.

 

(a)          Except as otherwise might be noted in this Agreement or any associated Transaction Documents, the Business Intellectual Property constitutes all material Intellectual Property that is necessary for the operation of the Business as conducted immediately prior to the Closing. The Seller Companies, or one or more of their wholly owned Subsidiaries, have good title to, or a valid and binding license to, all of the Business Intellectual Property, free and clear of all Liens except for Permitted Liens.

 

  

(b)          Except as otherwise might be noted in this Agreement or any associated Transaction Documents, there is no pending or, to Sellers’ Knowledge, threatened Proceeding by any Person: (i) challenging the applicable Seller Company’s rights in or to any Business Intellectual Property; (ii) challenging the validity, enforceability or scope of any Business Intellectual Property; or (iii) asserting that any Business Intellectual Property infringes, misappropriates or otherwise violates, or would upon the commercialization of any product or service under development violate, the Intellectual Property of any Person. This Section 3.12(b) constitutes the sole representation and warranty of the Seller Companies under this Agreement with respect to any actual or alleged infringement, misappropriation or other violation by the Seller Companies of the Intellectual Property of any other Person.

 

(c)          Except as otherwise might be noted in this Agreement or any associated Transaction Documents, no third Person has rights to any Business Intellectual Property. No Person is infringing, misappropriating or otherwise violating any Business Intellectual Property. The Seller Companies, or one or more of their wholly owned Subsidiaries, as applicable, have taken all steps reasonably necessary to secure their interest in Business Intellectual Property, including obtaining all necessary assignments from each of its employees, consultants and contractors pursuant to a written agreement containing a present tense assignment of all Intellectual Property created by such employee, consultant or contractor. The Seller Companies, or one or more of their wholly owned Subsidiaries, as applicable, have taken commercially reasonable steps to protect and maintain all Business Intellectual Property, including without limitation to preserve the confidentiality of any trade secrets.

 

Section 3.13          Contracts.

 

(a)          Appendix B of this Agreement provides an accurate list of the following Contracts to which any Seller Company is a party or by which any Seller Company is bound that is primarily used in, or otherwise necessary for, the operation of the Business (collectively, the “Business Contracts”):

 

(i)          each Contract (other than purchase orders for Inventory) that involves performance of services or delivery of goods or materials by any Seller Company of an amount or value in excess of $50,000; provided, that Seller shall not be required to list any customer Contract;

 

(ii)          each Contract (other than purchase orders for Inventory) that involves performance of services or delivery of goods or materials to any Seller Company of an amount or value in excess of $25,000;

 

(iii)          each Contract in respect of Business Intellectual Property (other than licenses for shrinkwrap, clickwrap or other similar commercially available off-the-shelf software that has not been modified or customized by a third party for the Business);

 

(iv)          each joint venture, partnership, and other Contract (however named) involving a sharing of profits, losses, costs, or liabilities by any Seller Company with any other Person;

 

(v)          any agreement relating to indebtedness for borrowed money or extensions of credit;

 

(vi)          each Contract containing covenants that restrict the business activity of any Seller Company, including, but not limited to, any exclusivity covenants, or limit the freedom of any Seller Company to engage in any line of business or to compete with any Person;

 

(vii)          any agreement providing for indemnification by any Seller Company, other than indemnification provided to customers or vendors in the Ordinary Course of Business;

 

(viii)          any consultant or contractor of the Business, other than at-will arrangements that do not include severance or “change of control” provisions; and

 

(ix)          each amendment, supplement, and modification (whether oral or written) in respect of any of the foregoing.

 

(b)          Except as otherwise might be noted in this Agreement or any associated Transaction Documents, as of the date hereof, all of the Business Contracts are in full force and effect and are enforceable in accordance with their terms except to the extent that such enforceability (i) may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to creditors’ rights generally, and (ii) is subject to general principles of equity.

 

(c)          Except as otherwise might be noted in this Agreement or any associated Transaction Documents, as of the date hereof, no Seller Company is in breach in any material respect of or default under (and to Sellers’ Knowledge, no event has occurred which with notice or the passage of time or both would constitute a breach in any material respect of or default under) any Business Contract nor, to Sellers’ Knowledge, is any other party to any such Business Contract in breach in any material respect of or default under such Business Contract.

 

Section 3.14          Labor Matters. Since January 1, 2012, neither Seller with respect to the Business has been nor is a party to any collective bargaining agreement. There is no material strike, work stoppage, walkout, slowdown or picketing by any Business Employees, nor is any material grievance proceeding in progress or pending, or to Sellers’ Knowledge, threatened, between any Seller Company, on the one hand, and any Business Employee or any union or collective bargaining unit, on the other hand. Since January 1, 2012, (i) the Sellers with respect to the Business have complied in all material respects with all Legal Requirements relating to employment, equal employment opportunity, nondiscrimination, immigration, wages, hours, worker classification, benefits, collective bargaining, the payment of social security and similar taxes, occupational safety and health and plant closings and (ii) there has not been, there is not presently pending or existing, and, to Sellers’ Knowledge, there is not threatened, any complaint, charge or Proceeding against the Sellers with respect to the Business relating to an alleged material violation of any Legal Requirement pertaining to labor relations or employment matters.

 

  

Section 3.15          Insurance. All policies of insurance existing on the date hereof relating to the Business, the Business Assets and the Business Employees are in full force and effect, and no Seller Company is in default in any material respect with respect to its obligations under any such insurance policies. All premiums and other payments due from any Seller Company prior to the date of this Agreement under or on account of any such insurance policies have been paid as of the date hereof. Except as otherwise might be noted in this Agreement or any associated Transaction Documents, there is no material insurance claim by any Seller Company pending under any of the policies in respect of the Business.

 

Section 3.16          Affiliate Transactions. Except as otherwise might be noted in this Agreement or any associated Transaction Documents, no director or executive officer of a Seller Company owns directly or indirectly on an individual or joint basis any interest (other than passive investments in publicly traded securities) in, or serves as an executive officer or director of, any supplier or other Person (other than the other Seller Companies or PHMD’s Subsidiaries) which has a material business relationship with a Seller Company.

 

Section 3.17          Brokerage. Except as otherwise might be noted in this Agreement or any associated Transaction Documents, no Seller Company has any liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement for which Purchaser could become liable or obligated.

 

Section 3.18          FDA and Regulatory Matters. Except as otherwise might be noted in this Agreement or any associated Transaction Documents: (i) no Seller Company has received, in respect of the Business, any written notice of adverse filing, warning letter, untitled letter or other written correspondence or written notice from the U.S. Food and Drug Administration, or any other Governmental Entity, alleging or asserting noncompliance with the Federal Food, Drug and Cosmetic Act (21 U.S.C. § 301 et seq.) (the “FFDCA”); (ii) each Seller Company is in compliance in all material respects with applicable health care laws, including without limitation, the FFDCA, and the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), and the regulations promulgated pursuant to such laws, and comparable state laws (collectively, “Health Care Laws”); (iii) no Seller Company has received written notice that any Governmental Entity has taken, is taking or intends to take action to limit, suspend, modify or revoke any Permits required by the Health Care Laws that are applicable to the Business, which has not been resolved in such Seller Company’s favor; and (iv) no Seller Company has, in respect of the Business, either voluntarily or involuntarily, initiated, conducted, issued or caused to be initiated, any recall, market withdrawal, safety alert, post-sale warning, “dear doctor” letter, or other notice or action material to the Business relating to the alleged lack of safety or efficacy of any product or any alleged product defect or violation and, to Sellers’ Knowledge, no Person has initiated or conducted any such notice or action against any Seller Company. To Sellers’ Knowledge, the research, studies and tests conducted by or on behalf of each Seller Company in respect of the Business have been conducted with reasonable care and in accordance in all material respects with experimental protocols, procedures and controls adopted by such Seller Company pursuant to all Health Care Laws and Permits required by the Health Care Laws that are applicable to such Seller Company or the Business.

 

  

Section 3.19          Foreign Corrupt Practices; OFAC. No Seller Company nor, to Sellers’ Knowledge, any director, officer, agent, employee or other person acting on behalf of any Seller Company, has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds, (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, or (iv) made any bribe, unlawful rebate, payoff, influence payment, kickback or other unlawful payment. No Seller Company nor, to Sellers’ Knowledge, any director, officer, agent, employee or Affiliate of any Seller Company is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department; and the Sellers will not use the Purchase Price, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person, for the purpose of financing the activities of any Person currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department.

 

Section 3.20          Accounting and Disclosure Controls. Each applicable Seller Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions related to the Business are executed in accordance with management’s general or specific authorizations, (ii) transactions related to the Business are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any difference. PHMD maintains disclosure controls and procedures (as such term is defined in Rule 13a-15 under the Exchange Act) that are effective in ensuring that information required to be disclosed by PHMD in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC, including, without limitation, controls and procedures designed to ensure that information required to be disclosed by PHMD in the reports that it files or submits under the Exchange Act is accumulated and communicated to PHMD’s management, including its principal executive officer or officers and its principal financial officer or officers, as appropriate, to allow timely decisions regarding required disclosure. During the twelve (12) months prior to the date hereof, PHMD has not received any notice or correspondence from any accountant relating to any material weakness in any part of the system of internal accounting controls of PHMD.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

As a material inducement to the Sellers to enter into this Agreement and to sell the Transferred Assets, Purchaser hereby represents and warrants to the Sellers as follows:

 

Section 4.1          Organization, Power; Authorization. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of ____________________. Purchaser has the requisite corporate power and authority and all material Permits necessary to enter into, deliver and carry out its obligations pursuant to this Agreement and the Transaction Documents to which it is or will be a party. Purchaser’s execution, delivery and performance of this Agreement and the Transaction Documents to which it is or will be a party has been duly authorized by Purchaser.

 

  

Section 4.2           Binding Effect; Noncontravention.

 

(a)          This Agreement has been duly executed and delivered by Purchaser and (assuming due authorization, execution and delivery by the Sellers) constitutes a valid and binding obligation of Purchaser which is enforceable against Purchaser in accordance with its terms, except as such enforceability may be limited by (i) applicable insolvency, bankruptcy, reorganization, moratorium or other similar laws affecting creditors’ rights generally, and (ii) general equitable principles (whether considered in a Proceeding at law or in equity).

 

(b)          The execution, delivery and performance by Purchaser of this Agreement do not and shall not: (i) conflict with or result in a breach of the terms, conditions or provisions of, (ii) constitute a default under or result in a violation of, (iii) result in the creation of any Lien upon the assets of Purchaser pursuant to, or (iv) require any Permit or authorization, consent, approval, exemption or other action by or declaration or notice to any Person pursuant to (A) any material Contract to which Purchaser is a party, by which it is bound, or to which any of its assets are subject, or (B) the certificate of incorporation, bylaws or similar governing documents of Purchaser.

 

Section 4.3          Consents. No notice to, filing with, or Permit, or consent or approval of any Person (including any Person which provides financing to Purchaser or its Affiliates) is necessary for the execution, delivery or performance of this Agreement or the consummation of the transactions contemplated hereby by Purchaser.

 

Section 4.4          Brokerage. Purchaser has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which the Sellers could become liable or obligated.

 

Section 4.5          Financing. As of the date hereof and as of the Closing Date, Purchaser has and will have sufficient unrestricted funds on hand or committed financing sources to pay the Purchase Price and to pay all fees and expenses incurred by it in connection with the transactions contemplated hereunder.

 

Section 4.6          Proceedings; Orders. There is no Proceeding or investigation pending or, to the knowledge of Purchaser, threatened against Purchaser, its properties or businesses, that (i) challenges the validity of this Agreement or any action taken or to be taken by Purchaser in connection herewith, or (ii) seeks to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement, or which, individually or in the aggregate, would impair or delay the ability of Purchaser to effect the Closing. Purchaser is not subject to any Order that, individually or in the aggregate, would impair or delay the ability of Purchaser to affect the Closing.

 

 

Section 4.7          Investment. Purchaser is acquiring the Securities for its own account, for investment only, and not with a view to any resale or public distribution thereof. Purchaser shall not offer to sell or otherwise dispose of the Securities in violation of any Legal Requirement applicable to any such offer, sale or other disposition. Purchaser acknowledges that (i) the Securities have not been registered under the Securities Act, or any state or foreign securities laws, (ii) there is no public market for the Securities and there can be no assurance that a public market shall develop, and (iii) it must bear the economic risk of its investment in the Securities for an indefinite period of time. Purchaser has all requisite legal power and authority to acquire the Securities in accordance with the terms of this Agreement and is an “Accredited Investor” within the meaning of the Securities and Exchange Commission Rule 501 of Regulation D of the Securities Act, as presently in effect.

 

Section 4.8          Solvency. Immediately after giving effect to the Closing, Purchaser will be able to pay its debts as they become due and will own property which has a fair saleable value greater than the amounts required to pay its probable liability on its debts as they mature. Immediately after giving effect to the transactions contemplated by this Agreement, Purchaser will not have unreasonably small capital with which to carry on its business. No transfer of property is being made and no obligation is being incurred by Purchaser in connection with the transactions contemplated by this Agreement with the intent to hinder, delay or defraud creditors of Purchaser.

 

ARTICLE V

COVENANTS

 

Section 5.1          Public Announcements; SEC Filings. Neither the Sellers, nor Purchaser, nor any of their respective Affiliates, shall issue or cause the publication of any press release or other public announcement with respect to this Agreement or the transactions contemplated hereby without the prior consent of the other Parties, except as may be required by listing requirements or Legal Requirements. Notwithstanding the foregoing, the Parties have prepared a joint press release to be issued by the Parties immediately following the execution of this Agreement. The Parties shall cooperate with each other and use their reasonable best efforts to promptly prepare and file all reports, including current reports on Form 8-K and comments thereto, in connection with this Agreement and the transactions contemplated hereby.

 

Section 5.2          Transaction Expenses; Transfer Taxes.

 

(a)          Purchaser shall bear all fees and expenses incurred by Purchaser and its Representatives in connection with the negotiation and execution of this Agreement and each other Transaction Document and the consummation of the transactions contemplated hereby and thereby. The Sellers shall bear all fees and expenses incurred by the Sellers in connection with the negotiation and execution of this Agreement and each other Transaction Document and the consummation of the transactions contemplated hereby and thereby.

 

  

(b)          Notwithstanding anything to the contrary in this Agreement, all stamp, transfer, documentary, sales, use, registration and other such Taxes, levies and fees (including any penalties and interest) incurred in connection with this Agreement and the transactions contemplated hereby (collectively, “Transfer Taxes”), and the reasonable costs of preparing and filing the Tax Returns associated therewith, will be borne solely by Sellers. All Tax Returns with respect to Transfer Taxes shall be prepared and filed by the Person that customarily is responsible for the filing of such Tax Returns. The Parties shall reasonably cooperate with one another to lawfully minimize Transfer Taxes and Sellers shall, if Purchaser is the filing party of a particular Transfer Tax Return, pay to Purchaser the associated Transfer Taxes (and costs) to the Purchaser within three (3) Business Days prior to the payment due date of such Transfer Taxes and Purchaser shall duly remit such Taxes to the appropriate Taxing Authority.

 

Section 5.3          Further Assurances. The Parties agree (a) to furnish upon request to each other such further information, (b) to execute and deliver to each other such other documents, and (c) to do such other acts and things not inconsistent with this Agreement, all as the other Party may reasonably request for the purpose of carrying out the intent of this Agreement and the Transaction Documents. In addition, and without limitation of the foregoing, in the event that either Seller shall, following the Closing, come into possession of any of the Business Assets, such Seller shall promptly cause the transfer of such Business Assets to Purchaser and shall take such actions reasonably requested by Purchaser to memorialize such transfer.

 

Section 5.4          Post-Closing Access. Following the Closing, Purchaser shall provide to PHMD and its Representatives reasonable access to the personnel, representatives, attorneys, accountants, properties, books and records of the Business upon reasonable advance written notice during regular business hours, and will permit PHMD to make copies of any such information in each case to the extent necessary for PHMD to comply with its obligations to the SEC or otherwise under the Exchange Act.

 

Section 5.5          Non-Compete and Non-Solicitation.

 

(a)          PHMD agrees that for a period of three (3) years after the Closing Date neither it nor any of its Affiliates shall, either directly or indirectly, alone or with others, engage in, own, manage, operate, finance, control, or provide services to, any Person that sells, distributes or otherwise provides, for use in a medical practice, surgical laser equipment; provided, that nothing in this Section 5.5(a) shall preclude PHMD or any of its Affiliates from owning, solely as an investment, up to 5% of any Person engaged in any such business.

 

(b)          PHMD agrees that for a period of two (2) years after the Closing Date neither it nor any of its directors or Affiliates shall, without the prior written consent of Purchaser, directly or indirectly solicit the employment or services of, or retain, any Continuing Employee; provided, that the restrictions contained in this Section 5.5(b) shall not apply to solicitations through job fairs or general solicitations or advertisements not directed at any particular individual.

 

(c)          PHMD agrees that for a period of two (2) years after the Closing Date neither it nor any of its Affiliates shall, without the prior written consent of Purchaser, knowingly cause or attempt to cause any customer of the Business to reduce or terminate its business relationship with Purchaser.

 

 

(d)          Purchaser agrees that for a period of two (2) years after the Closing Date neither it nor any of its directors or Affiliates shall, without the prior written consent of the Sellers, directly or indirectly solicit the employment or services of, or retain any employee of either Seller (other than any Business Employee) as of the Closing; provided, that the restrictions contained in this Section 5.5(d) shall not apply to solicitations through job fairs or general solicitations or advertisements not directed at any particular individual.

 

(e)          Purchaser agrees that for a period of two (2) years after the Closing Date neither it nor any of its Affiliates shall, without the prior written consent of the Sellers, knowingly cause or attempt to cause any customer of any Seller or any of their Affiliates to reduce or terminate its business relationship with such Seller or such Affiliate.

 

(f)          If a final judgment of a court or tribunal of competent jurisdiction determines that any term or provision contained in Section 5.5(a), (b), (c), (d) or (e) is invalid or unenforceable, then the Parties agree that the court or tribunal will have the power to reduce the scope, duration or geographic area of the term or provision, to delete specific words or phrases or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision. This Section 5.5 will be enforceable as so modified after the expiration of the time within which the judgment may be appealed.

 

(g)          In the event of any breach or attempted breach of any provision contained in Section 5.5(a), (b), (c), (d) or (e), the aggrieved Party shall be entitled to injunctive and other temporary relief without the need to post a bond and, subject to the other limitations herein, to such other and further legal and equitable relief and damages as may be proper.

 

(h)          PHMD agrees that, for the shorter of the period ending on (i) the date that is two (2) years after the Closing Date, or (ii) the date that the restrictions of each of the agreements listed in Appendix B (the “Applicable Provisions”) would otherwise expire in accordance with their terms, PHMD shall, and shall cause its Affiliates to, enforce, including by way of seeking equitable remedies and/or damages, the restrictions set forth in the Applicable Provisions for the benefit of Purchaser and its Affiliates with respect to the Business. In no event shall PHMD consent to any amendment or waive any of its rights under such agreements to the extent that the same would (x) shorten the duration of the Applicable Provisions, or (y) permit the executives restricted by the Applicable Provisions to either directly or indirectly, alone or with others, engage in, own, manage, operate, finance, control, or provide services to, any Person that sells, distributes or otherwise provides, for use in a surgical laser equipment.

 

(i)          PHMD agrees that, in respect of the Non-Compete and Non-Solicitation responsibility for the Seller’s corporation, affiliates, shareholders, directors, executives and technical staff contained in this Section 5.5, the applicable regions shall be increased to include any countries in the world.

 

 

ARTICLE VI

INDEMNIFICATION

 

Section 6.1          Indemnification.

 

(a)          Subject to the limitations set forth in Section 6.3, PHMD agrees from and after the Closing Date to indemnify, defend and hold harmless Purchaser and all of its officers, managers, directors, shareholders, members, Affiliates, employees and agents (the “Purchaser Indemnified Persons”) from and against any Losses actually incurred by such Purchaser Indemnified Persons arising out of or resulting from (i) any breach by any Seller Company of any representation or warranty of such Seller Company contained in this Agreement or any other Transaction Document, (ii) any breach by any Seller Company of any covenant or other obligation or agreement contained in this Agreement or any other Transaction Document, and (iii) the Excluded Liabilities; provided, in each case, that the relevant Purchaser Indemnified Person has submitted to PHMD a Notice of Claim or Third Party Notice, as applicable, in respect thereof prior to the date of expiration of any applicable survival period specified in Section 6.3.

 

(b)          Subject to the limitations set forth in Section 6.3, Purchaser agrees from and after the Closing Date to indemnify, defend and hold harmless PHMD and all of its and its Affiliates’ respective officers, managers, directors, shareholders, members, Affiliates, employees and agents (the “Seller Indemnified Persons”) from and against any Losses actually incurred by the Seller Indemnified Persons arising out of or resulting from (i) any breach by Purchaser of any representation or warranty of Purchaser contained in this Agreement or any other Transaction Document, (ii) any breach by Purchaser of any covenant or other obligation or agreement of Purchaser contained in this Agreement or any other Transaction Document, and (iii) the Business Liabilities; provided, in each case, that the relevant Seller Indemnified Person has submitted to Purchaser a Notice of Claim or Third Party Notice, as applicable, in respect thereof prior to the date of expiration of any applicable survival period specified in Section 6.3.

 

Section 6.2          Procedures for Indemnification.

 

(a)          If any Purchaser Indemnified Person or Seller Indemnified Person (each, an “Indemnified Person”) shall claim indemnification hereunder for any matter (other than a Third Party Claim) for which indemnification is provided in Section 6.1, the Indemnified Person shall promptly after it first obtains knowledge of facts which could reasonably be expected to give rise to Losses that will serve the basis for such claim, give written notice (a “Notice of Claim”) to PHMD or Purchaser, as applicable, setting forth the basis for such claim and the nature and estimated amount of the claim to the extent then feasible (which estimate shall not be conclusive of the final amount of the claim), all in reasonable detail; provided, that the failure of any Indemnified Person to give timely notice thereof shall not affect any of its rights to indemnification hereunder nor relieve PHMD or Purchaser, as the case may be, from any of its indemnification obligations hereunder, except to the extent that it is actually prejudiced by such failure. If PHMD or Purchaser, as applicable, disputes any claim set forth in the Notice of Claim, it may, at any time deliver to the Indemnified Person that has given the Notice of Claim a written notice indicating its dispute of such Notice of Claim, and the Parties shall attempt in good faith for a period of thirty (30) days after delivery of the dispute notice to agree upon the rights of the Parties with respect to such Notice of Claim. If no such agreement can be reached after good faith negotiation, the Parties shall have the rights and remedies, if any, available to them under this Agreement or applicable Legal Requirements.

 

 

(b)          If an Indemnified Person shall claim indemnification hereunder arising from any Third Party Claim for which indemnification is provided in Section 6.1, the Indemnified Person shall promptly after it first obtains knowledge of such Third Party Claim, give written notice (a “Third Party Notice”) to PHMD or Purchaser, as applicable (each, an “Indemnifying Person”), of the basis for such claim, setting forth the nature of the claim or demand in reasonable detail to the extent known by the Indemnified Person; provided, that the failure of any Indemnified Person to give timely notice thereof shall not affect any of its rights to indemnification hereunder nor relieve PHMD or Purchaser, as the case may be, from any of its indemnification obligations hereunder, except to the extent that it is actually prejudiced by such failure. The Indemnifying Person, upon notice to the Indemnified Person, may at any time within thirty (30) days after receiving a Third Party Notice, at its own cost and through counsel of its choosing and reasonably acceptable to the Indemnified Person, defend any claim or demand set forth in a Third Party Notice. The Indemnifying Person shall have the right to compromise and settle all indemnifiable matters related to Third Party Claims which are susceptible to being settled and as to which it shall have properly assumed the defense; provided, that the Indemnifying Party shall not, without the prior written consent of the Indemnified Person settle or compromise any Third Party Claim or consent to the entry of any final judgment that does not include as an unconditional term thereof the delivery by the claimant or plaintiff of a written release or releases from all liability in respect of such Third Party Claim of all Indemnified Persons named in such Third Party Claim and the sole relief for which are monetary damages that are paid in full by the Indemnifying Party. In the event that a particular Third Party Claim is subject to the limitations set forth in Section 6.3(b) and the aggregate amount of such Third Party Claim exceeds the Indemnifying Person’s applicable maximum aggregate liability, the Indemnifying Person shall not reject any settlement or compromise offer without the prior consent of the Indemnified Person. The Indemnifying Person shall from time to time and otherwise at the Indemnified Person’s request apprise the Indemnified Person of the status of the claim, liability or expense and any resulting Proceeding and shall furnish the Indemnified Person with such documents and information filed or delivered in connection with such claim, liability or expense or otherwise thereto as the Indemnified Person may reasonably request, and shall diligently defend the applicable Third-Party Claim. The Indemnified Person shall not admit any liability to any third party in connection with any matter which is the subject of a Notice of Claim as to which the Indemnifying Party shall have properly assumed the defense and shall cooperate fully in the manner requested by the Indemnifying Party in the defense of such claim. Notwithstanding anything herein stated, the Indemnified Person shall at all times have the right to fully participate in such defense at its own expense directly or through counsel; provided, however, that if there exists a material conflict of interest between the Indemnified Person, on the one hand, and the Indemnifying Party, on the other hand, or if the Indemnified Person has been advised by counsel that there may be one or more legal or equitable defenses available to it that are different from or additional to those available to the Indemnifying Party, which, in either case, would make it inappropriate for the same counsel to represent both the Indemnifying Party and the Indemnified Person, then the Indemnified Person shall be entitled to retain its own counsel at the cost and expense of the Indemnifying Person (except that the Indemnifying Party shall not be obligated to pay the fees and expenses of more than one separate counsel for all Indemnified Persons, taken together). Until such time as the Indemnifying Person has timely delivered a notice of intent to defend a Third Party Claim to the Indemnified Person, the Indemnified Person shall, at the expense of the Indemnifying Person, undertake the defense of (with counsel selected by the Indemnified Person and reasonably acceptable to the Indemnifying Person) such claim, liability or expense, and shall have the right to compromise or settle such claim, liability or expense exercising reasonable business judgment; provided, that, such compromise or settlement shall not be effected within the first thirty (30) days after Indemnifying Party’s receipt of such Third Party Notice without the prior written consent of the Indemnifying Person (such consent not to be unreasonably withheld, conditioned or delayed).

 

 

Section 6.3           Limitations on Indemnification.

 

(a)          The representations and warranties made in this Agreement shall terminate upon the twelve (12) month anniversary of the Closing Date, except for the Fundamental Representations, which shall survive as follows: the representations and warranties in Section 3.10 (Tax Matters), and Section 3.11 (Environmental Matters) shall survive until sixty (60) days following the expiration of the statute of limitations applicable thereto (giving effect to any waiver, mitigation or extension thereof) and all other Fundamental Representations shall survive in perpetuity.

 

(b)          Subject to Section 6.3(d), PHMD’s maximum aggregate liability to Purchaser Indemnified Persons for indemnification (including costs incurred in the defense of such claim) under (i) Section 6.1(a)(i) (other than with respect to Fundamental Representations) shall not exceed $500,000; and (ii) Section 6.1 and Section 7.2, in the aggregate, shall not exceed the Purchase Price. Subject to Section 6.3(d), Purchaser’s maximum aggregate liability to Seller Indemnified Persons for indemnification (including costs incurred in the defense of such claim) under Section 6.1 shall not exceed the Purchase Price.

 

(c)          No Purchaser Indemnified Person shall be entitled to indemnification pursuant to Section 6.1(a)(i) (other than with respect to Fundamental Representations which shall not be subject to the limitations of this Section 6.3(c)) unless and until the aggregate Losses incurred by all Purchaser Indemnified Persons in respect of all claims under Section 6.1(a)(i) (other than with respect to Fundamental Representations) collectively exceeds $250,000 whereupon Purchaser Indemnified Persons shall only be entitled to indemnification hereunder (subject to the other provisions of this Article VI) from PHMD for all such Losses incurred by Purchaser Indemnified Persons in excess of such $250,000 threshold.

 

(d)          The amount of any Losses for which indemnification is provided under this Agreement shall be reduced by (i) any amounts realized by the Indemnified Person as a result of any indemnification, contribution or other payment by any third party, (ii) any insurance proceeds actually recovered by any Indemnified Person (which amount shall be reduced by the amount by which insurance premiums for the Indemnified Person are increased as a direct result of the Losses for which such insurance proceeds were received by the Indemnified Person) or any amounts actually recovered by any Indemnified Person pursuant to any indemnification agreement with any Person and (iii) any Tax savings actually realized by the Indemnified Person (or its Affiliate) in the taxable year in which the Loss is incurred. The Indemnified Persons shall use their commercially reasonable efforts to pursue any claims for insurance, Tax benefits, indemnification, contribution and/or other payments available from third parties with respect to Losses for which it will seek, or has sought, indemnification hereunder. 

 

(e)          Notwithstanding anything to the contrary in this Agreement, the limitations, thresholds and qualifications set forth in this Article VI: (i) shall not apply in the case of fraud or willful breach, or (ii) in any manner preclude an Indemnified Person from seeking any non-monetary equitable remedy, including specific performance or a preliminary or permanent injunction.

 

 

(f)          No claim for indemnification may be made by a Purchaser Indemnified Person and no indemnification shall be required to the extent that the Losses sustained or incurred by such Purchaser Indemnified Person for which indemnification is sought were treated and taken into account as a liability in the Working Capital.

 

(g)          Subject to Section 6.3(f), the indemnification provided in this Article VI and in Section 7.2 (including all limitations contained herein) shall be the sole and exclusive remedy for all matters relating to this Agreement, the transactions contemplated hereby, and for the breach of any representation, warranty, covenant or agreement contained herein, and Purchaser and PHMD each expressly waive any and all claims which it may have with respect to the foregoing, other than any Indemnification Claims to the extent provided for in this Article VI and in Section 7.2.

 

(h)          The representations, warranties, covenants and obligations of a Party and the rights and remedies that may be exercised by the Indemnified Persons based on such representations, warranties, covenants and obligations, will survive and not be limited or affected by any investigation conducted by any Indemnified Person with respect to, or any knowledge acquired (or capable of being acquired) by such Indemnified Person at any time, whether before or after the execution and delivery of this Agreement or the Closing, with respect to the accuracy or inaccuracy of, or compliance with or performance of, any such representation, warranty, covenant or obligation, and no Indemnified Person shall be required to show that it relied on any such representation, warranty, covenant or obligation of a Party in order to be entitled to indemnification pursuant to this Article VI.

 

(i)          Solely for the purpose of calculating Losses arising under this Article VI in respect of a breach of any representation or warranty (but, for the avoidance of doubt, not for the purpose of determining whether any such breach occurred), any Material Adverse Effect, materiality, material or similar limitation set forth in such representation or warranty shall be disregarded.

 

Section 6.4          Adjustments to Purchase Price. All payments under this Article VIII shall be treated as adjustments to the Purchase Price, unless otherwise required by applicable Legal Requirement.

 

ARTICLE VII

TAX MATTERS

 

Section 7.1          Cooperation on Tax Matters.

 

(a)          The Parties shall reasonably cooperate with each other and with each other’s agents, including accounting firms and legal counsel, in connection with: (i) the preparation and filing of Tax Returns pursuant to this Article VII; and (ii) Tax Proceedings. Further, each Party shall provide to the other reasonable access to the books and records in such Party’s possession in connection with the preparation and filing of Tax Returns of or relating to the conduct of a Tax Proceeding. Any information or documents provided under this Section 7.1 shall be kept confidential by the Party receiving the information or documents, except as may otherwise be necessary in connection with the filing of Tax Returns or in connection with any Proceedings relating to Taxes.

 

 

(b)          Purchaser shall promptly notify PHMD in writing upon receipt by Purchaser or any of their Affiliates of notice of any Proceeding with respect to Taxes of a Foreign Subsidiary which could result in any Tax liability for which a Seller may be liable to a Purchaser Indemnified Person hereunder (“Tax Proceedings”), provided, that the failure of Purchaser to give prompt notice thereof shall not affect any of its rights to indemnification hereunder nor relieve PHMD from any of its indemnification obligations hereunder, except to the extent that Purchaser is materially prejudiced by such failure. The disposition of such Tax Proceedings shall be governed by the procedures of Section 6.2; provided, however, that, notwithstanding any other provision of this Agreement, PHMD shall have sole control over all Tax Proceedings that are disclosed on the Disclosure Letter hereto and neither Purchaser nor any of its Affiliates shall have participation rights, or the ability to approve settlements of, such Tax Proceedings, and Purchaser shall promptly cause PHMD to receive all authorizations necessary to conduct and dispose of such Tax Proceedings, provided however, that no settlement of such Tax Proceedings shall entered into without the prior written consent of the Purchaser (not to be unreasonably withheld or delayed) if the settlement has an adverse tax effect on Purchaser or its Affiliates for taxable periods (or portions thereof) beginning after the Closing Date or results in a Tax liability for which Purchaser would not be fully indemnified by PHMD under this Agreement.

 

Section 7.2          Tax Indemnification. PHMD shall indemnify the Purchaser Indemnified Persons and hold them harmless from and against (i)  all Taxes of Seller Companies or any Affiliates thereof, including any liability for Taxes allocable to or arising out of the Business or ownership of the Transferred Assets for any Pre-Closing Tax Period and including all Taxes incurred by the Seller Companies or any Affiliates thereof due to the conveyance by PHMD and its Affiliates of the Transferred Assets under this Agreement); and (ii) all Taxes that are the responsibility of Sellers pursuant to Section 5.5(b); provided PHMD’s obligation to indemnify and hold harmless Purchaser and each Purchaser Affiliate under this Section 7.2 shall survive until sixty (60) days following the expiration of the statute of limitations applicable to the underlying Tax (giving effect to any waiver, mitigation or extension of the subject statute of limitations); provided, however, that if notice of a claim shall have been timely given to PHMD under Section 6.2 or Section 7.1(b) on or prior to such survival termination date, PHMD’s obligation to indemnify and hold harmless the Purchaser Indemnified Persons in respect of such claim shall survive beyond such date until such claim for indemnification has been satisfied or otherwise resolved. Any amounts paid or payable under this Section 7.2 shall be without duplication with amounts otherwise payable under this Agreement.

 

Section 7.3          Straddle Period. In the case of any Taxable Period that includes (but does not end on) the Closing Date (a “Straddle Period”), the amount of any Taxes for the Pre-Closing Tax Period shall be determined as follows:

 

(a)          In the case of Taxes based upon income, gross receipts (such as sales taxes) or specific transactions such as the sale or other transfer of property, the amount of Taxes attributable to any Pre-Closing Tax Period shall be determined by closing the books of the relevant Seller Company as of the end of the Closing Date.

 

 

(b)          In the case of Taxes imposed on a periodic basis (such as real or personal property Taxes), the amount of Taxes attributable to any Pre-Closing Tax Period shall be equal to the amount of Taxes for such Straddle Period multiplied by a fraction, the numerator of which is the number of days in the Pre-Closing Tax Period included in the Straddle Period and the denominator of which is the total number of days in the Straddle Period.

 

Section 7.4          Amended Returns and Retroactive Elections. Under otherwise required under applicable Legal Requirements, Purchaser shall not (i) amend or revoke any Tax Returns filed with respect to any Taxable Period ending on or before the Closing Date or with respect to any Straddle Period, or (ii) make any Tax election that has retroactive effect to any such Taxable Period or Straddle Period, in each such case without the prior written consent of PHMD (not to be unreasonably withheld or delayed).

 

Section 7.5          Tax Clearance Certificates. Purchaser acknowledges that the Seller Companies and their Affiliates have not taken, and do not intend to take, any action required to comply with any applicable bulk sale or bulk transfer laws or similar laws and hereby waives compliance therewith; it being understood that any liabilities arising out of the failure of the Sellers to comply with the requirements and provisions of any such Laws in any jurisdiction shall not limit Purchaser’s rights under Section 7.2.

 

ARTICLE VIII

MISCELLANEOUS

 

Section 8.1          Confidentiality. On and after the Closing, Purchaser shall (and shall cause its Affiliates to) maintain the confidentiality of all confidential or proprietary information of the Sellers and agrees not to, directly or indirectly, disclose any such confidential or proprietary information except to the extent that disclosure of any portion thereof is required by Legal Requirement or determined to be necessary to comply with any Legal Requirement or to the extent the information becomes generally available to the public other than as a result of disclosure by Purchaser or its Affiliates. On and after the Closing, PHMD shall (and shall cause its Affiliates to) maintain the confidentiality of all confidential or proprietary information of Purchaser and agree not to, directly or indirectly, disclose any such confidential or proprietary information except to the extent that disclosure of any portion thereof is required by Legal Requirement or determined to be necessary to comply with any Legal Requirement or to the extent the information becomes generally available to the public other than as a result of disclosure by PHMD or its Affiliates. For the avoidance of doubt, upon the Closing, information relating to the Business is not confidential or proprietary information of the Sellers.

 

Section 8.2          Consent to Amendments. This Agreement may be amended or modified, and any provisions of this Agreement may be waived, in each case upon the approval, in writing, executed by, each of the Parties. No other course of dealing between the Parties or any delay in exercising any rights pursuant to this Agreement shall operate as a waiver of any rights of any Party.

 

 

Section 8.3          Entire Agreement. This Agreement and any other Transaction Documents constitute the entire agreement among the Parties with respect to the matters covered hereby and supersedes all previous written, oral or implied understandings among them with respect to such matters.

 

Section 8.4          Successors and Assigns. Except as otherwise expressly provided in this Agreement, all covenants and agreements set forth in this Agreement by or on behalf of the Parties shall bind and inure to the benefit of the respective successors and permitted assigns of the Parties, whether so expressed or not, except that neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by Purchaser (on the one hand), or PHMD (on the other hand) without the prior written consent of PHMD or the Purchaser, as applicable. Any attempted assignment without such consent shall be null and void.

 

Section 8.5          Governing Law; Consent to Jurisdiction; Venue; Waiver of Jury Trial. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK FOR CONTRACTS ENTERED INTO AND TO BE PERFORMED IN SUCH STATE WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN THE COUNTY OF NEW YORK, STATE OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 8.6          No Additional Representations; Disclaimer.

 

(a)          Purchaser acknowledges and agrees that neither Seller nor any of their respective Representatives, or any other Person acting on behalf of either Seller, or any of their respective Representatives, has made any representation or warranty, express or implied, as to the accuracy or completeness of any information regarding the Business or the Transferred Assets, except as expressly set forth in this Agreement or as and to the extent required by this Agreement to be set forth in the Disclosure Letter. Purchaser further agrees that neither Seller, nor any of their direct or indirect Representatives (or any of their directors, officers, employees, members, managers, partners, agents or otherwise), will have or be subject to any liability to Purchaser resulting from the distribution to Purchaser, or Purchaser’s use of, any such information, and any information, document or material made available to Purchaser or its Representatives in certain “data rooms” and online “data sites,” management presentations, management interviews, or any other form in expectation or anticipation of the transactions contemplated by this Agreement.

 

 

(b)          Purchaser acknowledges and agrees that, except for the representations and warranties of PHMD expressly set forth in Article III hereof, the Transferred Assets are being acquired AS IS WITHOUT ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR INTENDED USE OR ANY OTHER EXPRESSED OR IMPLIED WARRANTY. Purchaser acknowledges and agrees that it is consummating the transactions contemplated by this Agreement and the other Transaction Documents without relying on any representation or warranty, express or implied, whatsoever by the Sellers or any of their Representatives, except for the representations and warranties of PHMD expressly set forth in Article III hereof.

 

(c)          In connection with Purchaser’s investigation of the Business, Purchaser has received, directly or indirectly, through its Representatives, from or on behalf of the Sellers or their Representatives, certain projections, including projected statements of operating revenues, income from operations, and cash flows of the Business (and the business transactions and events underlying such statements) and certain business plan information, projections, presentations, predictions, calculations, estimates and forecasts of the Business and other similar data. Purchaser acknowledges that there are uncertainties inherent in attempting to make such estimates, projections, forecasts, plans, statements, predictions, presentations, calculations and other similar data, that Purchaser is well aware of such uncertainties, that Purchaser is making its own evaluation of the adequacy and accuracy of all estimates, projections, forecasts, plans, statements, calculations, presentations, predictions and other similar data so furnished to it (including the reasonableness of the assumptions underlying such estimates, projections, forecasts, plans, statements, calculations, predictions and other similar data), and that neither Purchaser, nor any Purchaser Indemnified Person, shall have any claim under any circumstances against either Seller or any other Person with respect thereto or arising therefrom. Accordingly, the Sellers make no representations or warranties whatsoever, to Purchaser or any other Person, with respect to such estimates, projections, forecasts, plans, statements, calculations, presentations, predictions and other similar data (including the reasonableness of the assumptions underlying such projections, forecasts, plans, statements, calculations, presentations, predictions and other similar data) and no such Person shall be entitled to rely on such estimates, projections, forecasts, plans, statements, calculations, presentations, predictions and other similar data for any purpose, including in connection with the transactions contemplated by this Agreement or the financing thereof.

 

(d)          In no event shall any of the provisions of Section 8.6(a) through Section 8.6(c) be deemed to modify, qualify amend or otherwise affect in any manner any of the representations and warranties of PHMD in Article III of this Agreement, and Purchaser hereby reserves any and all rights that it may have with respect the breach or inaccuracy thereof, subject to the other limitations set forth in this Agreement.

 

 

Section 8.7          Notices. All notices, consents, waivers, and other communications under this Agreement must be in writing and will be deemed to have been duly given when (a) delivered by hand, (b) sent by facsimile, or (c) sent by mail, certified or registered mail with postage prepaid or by a nationally recognized next-day or overnight delivery service, in each case to the appropriate addresses and facsimile numbers set forth below (or to such other addresses or facsimile numbers as a Party may designate by notice to the other Parties). All such notices, consents, waivers and other communications shall be deemed to have been given as follows: (x) if delivered by hand, on the day of such delivery, if prior to 5:00 p.m., (y) if by mail, certified or registered mail, next-day or overnight delivery, on the day delivered, and (z) if by facsimile, on the Business Day on which confirmation of successful transmission is received by the sender.

 

If to the Sellers to:

 

PhotoMedex, Inc.

100 Lakeside Drive, Suite 100

Horsham, Pennsylvania 19044

Facsimile: (215) 619-3209

Attention: President

  

with a copy, which shall not constitute notice to the Sellers, to:

  

Proskauer Rose LLP
Eleven Times Square
New York, New York 10036
Facsimile: (212) 969-2900
Attention: Paul I. Rachlin, Esq.
                   Michael E. Callahan, Esq.

 

If to Purchaser, to:

  

with a copy, which shall not constitute notice to Purchaser, to:

 

 

Section 8.8          Counterparts. The Parties may execute this Agreement in two or more counterparts (no one of which need contain the signatures of all Parties), each of which shall be an original and all of which together shall constitute one and the same instrument.

 

Section 8.9          Time is of the Essence. Purchaser and the Sellers hereby expressly acknowledge and agree that time is of the essence for each and every provision of this Agreement.

 

Section 8.10        No Third Party Beneficiaries. Except as otherwise expressly provided in this Agreement, no Person which is not a party shall have any right or obligation pursuant to this Agreement.

 

Section 8.11        No Strict Construction. Each Party acknowledges that this Agreement has been prepared jointly by the Parties, and shall not be strictly construed against any Party.

 

Section 8.12        Headings. The headings used in this Agreement are for the purpose of reference only and shall not affect the meaning or interpretation of any provision of this Agreement.

 

* * * * *

 

 

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.

 

	PURCHASER:
	DALIAN JIKANG MEDICAL SYSTEMS IMPORT & EXPORT CO., LTD.
	By:	/s/ Lin Yoshida
		Name: Lin Yoshida Title: President

 

	SELLERS:
	PHOTOMEDEX, INC.
	By:	/s/ Dennis McGrath
		Name: Dennis McGrath Title: President

 

	PhotoMedex TECHNOLOGY, Inc.
	By:	/s/ Dennis McGrath
		Name: Dennis McGrath Title: President