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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): October 5, 1998
(September 21, 1998)
HORIZON MEDICAL PRODUCTS, INC.
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(Exact name of Registrant as specified in its charter)
GEORGIA 000-24025 58-1882343
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
One Horizon Way, Post Office Box 627, Manchester, Georgia 31816
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(Address of principal executive offices) (Zip Code)
706-846-3126
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(Registrant's telephone number, including area code)
Not applicable
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(Former name or address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On September 21, 1998 Horizon Medical Products, Inc. ("Horizon")
consummated the acquisition (the "Acquisition") of certain assets used in the
distribution and sale of medical devices (the "Business") by Columbia Vital
Systems, Inc. ("CVS"). CVS is a privately held medical device distribution
company located in Westmont, Illinois. Horizon did not assume any liabilities of
CVS. The following summary of the transaction is qualified in its entirety by
the more detailed information contained in the copy of the Asset Purchase
Agreement included as Exhibit 2 to this Current Report.
The assets acquired by Horizon consist of substantially all of the assets
used by CVS in the Business. Included among the assets are inventory, leasehold
improvements, certain intellectual property and goodwill. Horizon intends to
use the acquired assets in the manner previously used by CVS.
As consideration for the Acquisition, Horizon (i) paid CVS $4.0 million in
cash, and (ii) CVS can earn up to an additional $5.225 million subject to the
terms of the purchase agreement, including the successful achievement of future
sales targets. Horizon funded the cash portion of the Acquisition from its
acquisition line of credit with NationsCredit Commercial Corporation. The
purchase price was determined through arm's-length negotiations between the
owners of CVS and management of Horizon. CVS did not have any material
relationship with Horizon prior to the acquisition. In partial response to this
item, Horizon's press release dated September 21, 1998 is incorporated herein
by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) and (b) It is currently impracticable to provide the CVS financial
statements and pro forma financial information for the Company required by this
item. Such financial statements and pro forma financial information will be
filed on an amendment to this Form 8-K as soon as practicable, but not later
than 60 days after the required filing date hereof.
(c) Exhibits.
2. Asset Purchase Agreement, by and among Horizon Medical Products, Inc.,
Columbia Vital Systems, Inc., William C. Huck and R. Gregory Huck dated
September 21, 1998. Exhibit 5.12 to the Asset Purchase Agreement, Transition
Agreement by and among Horizon Medical Products, Inc. and Columbia Vital
Systems, Inc. Pursuant to Item 601(b) of Regulation S-K, the Company has
omitted certain Schedules and Exhibits to the Asset Purchase Agreement (all of
which are listed therein) from this Exhibit 2. The Company hereby agrees to
furnish supplementally a copy of such omitteds item to the Securities and
Exchange Commission upon its request.
99. Press release dated September 21, 1998.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Horizon Medical Products, Inc.
Dated: October 5, 1998 By: /s/ Mark A. Jewett
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Mark A. Jewett,
Vice President of Finance
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ASSET PURCHASE AGREEMENT
BY AND AMONG
HORIZON MEDICAL PRODUCTS, INC.
AND
COLUMBIA VITAL SYSTEMS, INC.
AND
WILLIAM C. HUCK
AND
R. GREGORY HUCK
AS OF SEPTEMBER 1, 1998
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TABLE OF CONTENTS
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ARTICLE 1. ASSET PURCHASE AND SALE...................................................................1
Section 1.1. Agreement to Sell.............................................................1
Section 1.2. Purchased Assets..............................................................2
Section 1.3. Excluded Assets...............................................................2
Section 1.4. Agreement to Purchase.........................................................3
Section 1.5. The Purchase Price............................................................3
Section 1.6. Inspection of Books and Records...............................................6
Section 1.7. Valuation For Tax Reporting Purposes..........................................6
Section 1.8. Assumption of Assumed Obligations.............................................6
Section 1.9. Excluded Liabilities..........................................................6
ARTICLE 2. CLOSING; ITEMS TO BE DELIVERED; FURTHER ASSURANCES........................................7
Section 2.1. Closing.......................................................................7
Section 2.2. Items to be Delivered at Closing..............................................7
Section 2.3. Further Assurances............................................................8
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE SELLER
AND SHAREHOLDERS..........................................................................8
Section 3.1. Organization..................................................................8
Section 3.2. Authorization.................................................................9
Section 3.3. No Interest in Other Entities.................................................9
Section 3.4. Absence of Restrictions and Conflicts.........................................9
Section 3.5. Ownership of Assets and Related Matters......................................10
Section 3.6. Financial Statements.........................................................11
Section 3.7. No Undisclosed Liabilities...................................................11
Section 3.8. Absence of Certain Changes...................................................11
Section 3.9. Legal Proceedings............................................................12
Section 3.10. Compliance with Law..........................................................12
Section 3.11. Seller Material Contracts....................................................13
Section 3.12. Tax Returns; Taxes...........................................................14
Section 3.13. Officers, Directors and Employees............................................14
Section 3.14. Labor Relations..............................................................14
Section 3.15. Insurance....................................................................15
Section 3.16. Software, Patents, Trademarks, Trade Names...................................15
Section 3.17. Transactions with Affiliates.................................................15
Section 3.18. Brokers, Finders and Investment Bankers......................................16
Section 3.19. Disclosure...................................................................16
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ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER..............................................16
Section 4.1. Organization.................................................................16
Section 4.2. Authorization................................................................16
Section 4.3. Absence of Restrictions and Conflicts........................................17
Section 4.4. Disclosure...................................................................17
ARTICLE 5. CERTAIN COVENANTS AND AGREEMENTS.........................................................17
Section 5.1. Conduct of Business by the Seller............................................17
Section 5.2. Inspection and Access to Information.........................................19
Section 5.3. No Solicitation; Acquisition Proposals.......................................19
Section 5.4. Best Efforts; Further Assurances; Cooperation................................20
Section 5.5. Public Announcements.........................................................21
Section 5.6. Financial Statements.........................................................21
Section 5.7. Supplements to Disclosure Letters............................................21
Section 5.8. Employee Matters.............................................................22
Section 5.9. Books and Records............................................................22
Section 5.10. Noncompetition...............................................................23
Section 5.11. Confidentiality..............................................................24
Section 5.12. Transition Services..........................................................25
ARTICLE 6. CONDITIONS...............................................................................25
Section 6.1. Conditions to Each Party's Obligations.......................................25
Section 6.2. Conditions to Obligations of Purchaser.......................................25
Section 6.3. Conditions to Obligations of the Seller......................................27
ARTICLE 7. TERMINATION..............................................................................28
Section 7.1. Termination and Abandonment..................................................28
Section 7.2. Specific Performance and Other Remedies......................................28
Section 7.3. Effect of Termination........................................................29
ARTICLE 8. INDEMNIFICATION..........................................................................29
Section 8.1. Indemnification Obligations of the Seller and Shareholders...................29
Section 8.2. Indemnification Obligations of Purchaser.....................................30
Section 8.3. Indemnification Procedure....................................................30
Section 8.4. Claims Period................................................................32
Section 8.5. Right of Offset..............................................................32
Section 8.6. Jurisdiction and Forum.......................................................33
Section 8.7. Compliance with Bulk Sales Laws..............................................34
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ARTICLE 9. MISCELLANEOUS PROVISIONS.................................................................35
Section 9.1. Notices......................................................................35
Section 9.2. Disclosure Letters and Exhibits..............................................36
Section 9.3. Time of the Essence; Computation of Time.....................................36
Section 9.4. Assignment; Successors in Interest...........................................36
Section 9.5. Investigations; Representations and Warranties...............................36
Section 9.6. Number; Gender...............................................................37
Section 9.7. Captions.....................................................................37
Section 9.8. Seller Executives; Knowledge.................................................37
Section 9.9. Controlling Law; Integration; Amendment......................................37
Section 9.10. Severability.................................................................38
Section 9.11. Counterparts.................................................................38
Section 9.12. Enforcement of Certain Rights................................................38
Section 9.13. Waiver.......................................................................38
Section 9.14. Fees and Expenses............................................................39
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT, dated as of, and effective as of September 1, 1998 (the
"Agreement"), by and among HORIZON MEDICAL PRODUCTS, INC., a Georgia
corporation, or one or more of its designated affiliates ("Purchaser"), COLUMBIA
VITAL SYSTEMS, INC., an Illinois corporation ("Seller") and William C. Huck, an
Illinois resident and R. Gregory Huck, an Illinois resident (William C. Huck and
R. Gregory Huck hereinafter collectively referred to as the "Shareholders").
W I T N E S S E T H:
WHEREAS, Seller is engaged in the medical device distribution business
called the "CVS Midwest Division" by the Seller, as more fully described in
Schedule 1.5 (the "Business"); and
WHEREAS, Purchaser and Seller desire to enter into this Agreement
pursuant to which (a) Seller proposes to sell to Purchaser substantially all of
its assets relating to the Business and (b) Purchaser proposes to purchase such
assets from Seller and to assume certain liabilities of Seller relating to the
Business.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
ARTICLE 1.
ASSET PURCHASE AND SALE
Section 1.1. Agreement to Sell. At the Closing (as hereinafter defined)
and except as otherwise specifically provided in this Article 1, Seller shall
grant, sell, convey, assign, transfer and deliver to Purchaser, upon and subject
to the terms and conditions of this Agreement, all right, title and interest of
Seller in and to (a) the Business as a going concern and (b) all of the assets,
properties and rights of Seller constituting the Business or used therein, of
every kind and description, personal and mixed, tangible and intangible,
wherever situated (which Business, assets, properties and rights are hereinafter
collectively referred to as the "Purchased Assets"), free and clear of all
mortgages, liens, pledges, security interests, charges, claims, restrictions and
encumbrances of any nature whatsoever except Assumed Obligations (as hereinafter
defined).
Section 1.2. Purchased Assets. Except as otherwise expressly set forth
in Section 1.3 hereof, the Purchased Assets shall include without limitation the
following assets, properties and rights of Seller used in the conduct of, or
generated by, or constituting a part of, the Business:
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(a) all rights in and to all agreements, contracts, and
understandings with sales representatives of Seller, including Jennifer
Riggins at the option of Purchaser and excluding Ted Beatty (the "Sales
Representatives"), if any, as further described on Schedule 1.2(a)
hereto;
(b) all inventory of the Business, which consist of only
finished goods inventory and all sample inventory of the Business;
(c) all warehouse shelving used for the Business inventory at
the end of the Term of the Transition Services Agreement attached as
Exhibit 5.12;
(d) all intellectual property relating to the Business,
including the name "Columbia Vital Systems", copyrights, trademarks,
service marks, and all applications therefor, together with all related
design, know-how, specifications, trade secrets, processes, technology,
goodwill, and other intangible property rights related thereto, if any,
as further described on Schedule 1.2(d) hereto;
(e) all right, title, and interest in and to agreements
between Seller and various manufacturers or suppliers whose products
are distributed by Seller (the "Products"), as agreed to by Purchaser,
to the full extent such agreements are transferable and as further
described on Schedule 1.2(e) hereto;
(f) all product packaging [other than shipping materials],
literature, manuals, customer lists, sales records, and other books,
records, files, and documents relating to the Business;
(g) all licenses, permits, consents, certifications, and
authorizations related to the Business, and all applications therefor,
from any governmental body, authority, or agency, if any, as further
described on Schedule 1.2(g) hereto; and
(h) all agreements, contracts and commitments (whether written
or verbal) pursuant to which Seller provides goods or services to the
clients of the Business, as further described on Schedule 1.2(h)
hereto.
Section 1.3. Excluded Assets. Notwithstanding anything to the contrary
set forth herein, Purchaser, by consummating the transaction described in this
Agreement, shall not acquire any assets of Seller other than the Purchased
Assets, or such other assets as are set forth on Schedule 1.3 hereto.
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Section 1.4. Agreement to Purchase. At the Closing, Purchaser shall
acquire the Purchased Assets from Purchaser, upon and subject to the terms and
conditions of this Agreement and in reliance on the representations, warranties
and covenants of Seller contained herein, in exchange for the Purchase Price (as
hereinafter defined) and the assumption by Purchaser of the Assumed Obligations
as provided in Section 1.8 hereof.
Section 1.5. The Purchase Price.
(a) If Pall Corporation, ("Pall") enters into a distribution
agreement with Purchaser for the distribution by Purchaser in the
Territory of the Pall products that are presently distributed by Seller
with product prices no higher than prices presently paid by Seller for
such products (the "Distribution Agreement") at any time prior to the
period ending 120 days after Pall last delivers all products required
under Palls existing Distributorship Agreement with Seller (the
"Distribution Date"), then the Purchase Price payable by Purchaser for
the Purchased Assets will be that which is described in this Section
1.5(b). If Pall does not enter into the Distribution Agreement with
Purchaser prior to the Distribution Date then the purchase price
payable by Purchaser for the Purchased Assets will be determined under
Section 1.5(d) below (the "Alternate Purchase Price"). In the event
Purchaser and Pall should enter into the Distribution Agreement after
the Closing Date but the parties agree to close the transaction
described herein with the Alternate Purchase Price and then adjust the
amounts previously paid at the Closing in accordance with Section
1.5(b) within fifteen (15) days after the date on which Purchaser and
Pall enter into the Distribution Agreement.
(b) In exchange for the Purchased Assets described above,
Purchaser will pay to Seller a purchase price ("Purchase Price") of
Nine Million Two Hundred Twenty Five Thousand Dollars ($9,225,000),
payable in cash as follows: Four Million Five Hundred Seventy Five
Thousand Dollars ($4,575,000) payable at the Closing, as hereinafter
defined, Two Million Three Hundred Twenty Five Thousand Dollars
($2,325,000) payable on January 31, 2000 ("First Anniversary Payment"),
and Two Million Three Hundred Twenty Five Thousand Dollars ($2,325,000)
payable January 31, 2001 ("Second Anniversary Payment"); provided,
however, that the First Anniversary Payment and Second Anniversary
Payment will be reduced as described below. In the event the Sales
Revenues, as defined below, during Year 1, as hereinafter defined, are
less than Twelve Million Dollars ($12,000,000) or Sales Revenues during
Year 2, as hereinafter defined, are less than Twelve Million Dollars
($12,000,000), the First Anniversary Payment or the Second Anniversary
Payment, as the case may be, will be reduced in the following manner:.
(i) a reduction of twenty five percent (25%) of the
amount of the First Anniversary Payment or the amount of the
Second Anniversary Payment, as the case may be, if Sales
Revenues during Year 1 or Year 2, respectively, are at least
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Ten Million Dollars ($10,000,000), but less than Twelve
Million Dollars ($12,000,000).
(ii) a reduction of fifty percent (50%) of the
amount of the First Anniversary Payment or the amount of the
Second Anniversary Payment, as the case may be, if Sales
Revenues during the year in question are at least Eight
Million Dollars ($8,000,000) but less than Ten Million Dollars
($10,000,000);
(iii) a reduction of seventy five percent (75%) of
the amount of the First Anniversary Payment or the amount of
the Second Anniversary Payment, as the case may be, if Sales
Revenues during the year in question are at least Six Million
Dollars ($6,000,000) but less than Eight Million Dollars
($8,000,000); and
(iv) a reduction to zero for the First Anniversary
Payment or the Second Anniversary Payment, as the case may be,
if Sales Revenues during the applicable year in question are
less than Six Million Dollars ($6,000,000).
(c) For purposes of this Section 1.5, the terms listed
below contain are defined as follows:
(i) "Sales Revenues" is defined as the total
revenue (in accordance with generally accepted accounting
principles) of Purchaser, including shipping and handling
charges billed to customers directly arising from sales of the
products currently distributed by Seller or the Business as
well as any products currently sold by Purchaser in the
Territory and any products sold in the future by Purchaser in
the Territory during Year 1 or Year 2, after deduction for any
applicable sales taxes, returns, and allowances.
(ii) "Year 1" is defined as the period from the
Closing Date through the first anniversary date of the Closing
or calendar year 1999, at the option of Seller. Such option to
be exercised by Seller upon written notice to Purchaser on or
before January 15, 2000.
(iii) "Year 2" is defined as the period from the day
after the first anniversary date of the Closing through the
second anniversary date of the Closing or calendar year 2000,
at the option of Seller as exercised for year 1.
(iv) "Territory" is defined as the geographic area
in which the Sales Representatives presently sell the
Products, as more particularly described in Schedule 1.5
hereto.
(d) Pursuant to Section 1.5(a) above, in the event
Purchaser does not enter into the Distribution Agreement prior to the
Closing Date, as defined below, Purchaser
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will pay to Seller Four Million Two Hundred Twenty-Five Thousand
Dollars ($4,225,000), with Four Million Dollars ($4,000,000) payable in
cash at the Closing and Two Hundred Twenty-Five Thousand Dollars
($225,000) payable in cash on the second anniversary date of the
Closing, plus the amounts, if applicable, described in subparagraphs
(d)(i) and (d)(ii) below.
(i) Purchaser will also pay to Seller the following
payment based upon the Sales Revenues during Year 1:
(1) Five Hundred Thousand Dollars ($500,000)
if Sales Revenues during Year 1 are at least Six
Million ($6,000,000) but less than Seven Million
Dollars ($7,000,000); or
(2) Seven Hundred Fifty Thousand Dollars
($750,000) if Sales Revenues during Year 1 are at
least Seven Million Dollars ($7,000,000), but less
than Eight Million Dollars ($8,000,000); or
(3) One Million Dollars ($1,000,000) if Sales
Revenues during Year 1 are at least Eight Million
Dollars ($8,000,000).
The payment described in this Section 1.5(d)(i) shall be payable
January 31, 2000.
(ii) Purchaser will also pay to Seller the following
payment based upon Sales Revenues during Year 2:
(1) One Million Dollars ($1,000,000) if Sales
Revenues during Year 2 are at least Six Million
Dollars ($6,000,000), but less than Eight Million
Dollars ($8,000,000); or
(2) Two Million Dollars ($2,000,000) if Sales
Revenues during Year 2 are at least Eight Million
Dollars ($8,000,000), but less than Ten Million
Dollars ($10,000,000); or
(3) Three Million Dollars ($3,000,000) if Sales
Revenues during Year 2 are at least Ten Million
Dollars ($10,000,000).
The payment described in this Section 1.5(d)(ii) shall be payable
January 31, 2001.
Section 1.6. Inspection of Books and Records. Seller shall have the
right, after prior written notice of at least three (3) business days, to review
the books and records of Purchaser that pertain to Sales Revenues, provided,
however that Seller's right to review may not be exercised more than once for
Year and 1 and once for Year 2. Purchaser will provide to Seller
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within thirty (30) days after the end of each quarter during Year 1 and Year 2,
a written report on Sales Revenues for such quarter.
Section 1.7. Valuation For Tax Reporting Purposes. Seller and Purchaser
agree that Exhibit 1.7, in which the parties have allocated the Purchase Price
and Alternate Purchase Price among the Purchased Assets, has been jointly
prepared by the parties hereto. The parties agree that the allocation set forth
in Exhibit 1.7 is in accordance with ss.1060 of the Internal Revenue Code of
1986, as amended (the "Code"), and each party will use the Exhibit 1.7 in
preparing and filing its respective Form 8594 with the Internal Revenue Service,
determining Purchaser's cost basis and Seller's amount realized, and for all
other relevant federal and state income tax purposes. Each party will provide a
copy of the Form 8594 to the other party prior to filing.
Section 1.8. Assumption of Assumed Obligations. At the Closing and
except as otherwise specifically provided in Section 1.9 hereof, Purchaser shall
assume and agree to pay, discharge or perform, as appropriate, the following
liabilities and obligations of Seller (hereinafter collectively referred to as
the "Assumed Obligations"):
(a) All liabilities and obligations arising on or after the
Closing Date with respect to the items set forth on Schedules 1.2(a),
1.2(d) and 1.2(e) hereto; and
(b) All liabilities and obligations with respect to the
Business products sold by Purchaser on or after the Closing Date or
received into inventory on or after the Closing Date.
Section 1.9. Excluded Liabilities. Notwithstanding anything to the
contrary set forth herein, except for the liabilities and obligations
specifically identified in Section 1.8, in no event shall Purchaser assume or
incur or otherwise become responsible for any liability or obligation of Seller
of any nature whatsoever, whether express or implied, fixed or contingent,
liquidated or unliquidated, known or unknown, accrued, due or to become due.
ARTICLE 2.
CLOSING; ITEMS TO BE DELIVERED;
FURTHER ASSURANCES
Section 2.1. Closing. The consummation of the transactions contemplated
by this Agreement is herein referred to as the "Closing." The "Closing Date"
shall be the date on which the Closing occurs. The Closing shall take place on
or before September 15, 1998 at the offices of Purchaser, or at such other time
and location as the Purchaser and Seller shall mutually agree upon. In the sole
discretion of Purchaser, the Closing Date will be retroactive to the opening of
business on September 1, 1998, with an appropriate accounting and settlement
from September 1, 1998 to the Closing Date. In the case of such election, all
references to Closing Date in this
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Agreement, including but not limited to those contained within Section 1.5,
shall refer to September 1, 1998.
Section 2.2. Items to be Delivered at Closing. At the Closing and
subject to the terms and conditions herein contained:
(a) Seller shall deliver to Purchaser the following:
(i) Such bills of sale with covenants of warranty,
assignments, endorsements, and other good and sufficient
instruments and documents of conveyance and transfer, in form
reasonably satisfactory to Purchaser and its counsel, as shall
be necessary and effective to transfer and assign to, and vest
in Purchaser all of Seller's right, title and interest in and
to the Purchased Assets, including, without limitation, (A)
good, valid and marketable title in and to all of the
Purchased Assets owned by Seller and (B) all of Seller's
rights under all agreements, contracts, commitments, leases,
plans, bids, quotations, proposals, instruments and other
documents included in the Purchased Assets to which Seller is
a party or by which it has rights on the Closing Date; and
(ii) All of the agreements, contracts, commitments,
leases, plans, bids, quotations, proposals, instruments, data
bases whether in the form of computer tapes or otherwise,
related object and source codes, manuals and guidebooks, price
books and price lists, customer and subscriber lists, supplier
lists, sales records, files, correspondence, legal opinions,
rulings issued by governmental entities, and other documents,
books, records, files, and data, if any, belonging to Seller
which are part of the Purchased Assets;
and simultaneously with such delivery, all such reasonable steps will
be taken as may be required to place Purchaser in actual possession and
operating control of the Purchased Assets.
(b) Purchaser shall deliver to Seller the following:
(i) The Purchase Price or the Alternate Purchase
Price, as the case may be; and
(ii) An undertaking in a form reasonably satisfactory
to Seller and its counsel pursuant to which Purchaser will
assume and agree to pay, discharge or perform, as appropriate,
the Assumed Obligations.
(c) The parties hereto also shall deliver to each other
the documents and instruments referred to in Article 6 hereof.
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Section 2.3. Further Assurances. The Seller from time to time after the
Closing, at Purchaser's request, will execute, acknowledge and deliver to
Purchaser such other instruments of conveyance and transfer and will take such
other actions and execute and deliver such other documents, certifications and
further assurances as Purchaser may reasonably request in order to vest more
effectively in Purchaser, or to put Purchaser more fully in possession of, any
of the Purchased Assets, or to better enable Purchaser to complete, perform or
discharge any of the Assumed Obligations. Each of the parties hereto will
cooperate with the other and execute and deliver to the other such other
instruments and documents and take such other actions as may be reasonably
requested from time to time by any party hereto as necessary to carry out,
evidence and confirm the intended purposes of this Agreement.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE SELLER
With such exceptions as are set forth in a letter (the "Seller's
Disclosure Letter") delivered by the Seller to Purchaser prior to the execution
hereof, the Seller hereby represent and warrant to Purchaser:
Section 3.1. Organization. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Illinois
and has all requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as is now being conducted. Seller is
duly qualified to transact business, and is in good standing, as a foreign
corporation in each jurisdiction where the character of its activities requires
such qualification, except where the failure to so qualify would not have a
material adverse effect on the assets, liabilities, results of operations,
financial condition, business or prospects of the Business. Seller has
heretofore made available to Purchaser accurate and complete copies of the
Articles of Incorporation, and Bylaws, as currently in effect, of Seller, and
has made available to Purchaser the minute books and stock transfer records of
Seller. The Seller's Disclosure Letter contains a true and correct list of the
jurisdictions in which Seller is qualified to transact business as a foreign
corporation.
Section 3.2. Authorization. Seller has full corporate power and
authority to execute and deliver this Agreement and to perform its obligations
under this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by Seller and the performance by Seller
of its obligations hereunder and the consummation of the transactions provided
for herein by Seller has been duly and validly authorized by all necessary
corporate action on the part of Seller. The Board of Directors and the
Shareholders of Seller have approved the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby in
accordance with the requirements of the Illinois Business Corporation Act and
the Articles of Incorporation and Bylaws of Seller. Each of the Shareholders has
full power and capacity to execute and deliver this Agreement and perform his
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obligations hereunder and to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by the Seller and
Shareholders constitutes the valid and binding agreement of the Seller and
Shareholders, enforceable against the Seller and Shareholders in accordance with
its terms, subject to applicable bankruptcy, insolvency and other similar laws
affecting the enforcement of creditors' rights generally, general equitable
principles and the discretion of courts in granting equitable remedies.
Section 3.3. No Interest in Other Entities. The Purchased Assets do not
include any shares of capital stock or any other ownership interests or
securities of any corporation, association, partnership, joint venture or other
legal entity.
Section 3.4. Absence of Restrictions and Conflicts. The execution,
delivery and performance of this Agreement, the consummation of the transactions
contemplated by this Agreement and the fulfillment of and compliance with the
terms and conditions of this Agreement do not and will not, with the passing of
time or the giving of notice or both, violate or conflict with, constitute a
breach of or default under, result in the loss of any material benefit under, or
permit the acceleration of any obligation under, (i) any term or provision of
the Articles of Incorporation or Bylaws of Seller , (ii) any Seller Material
Contract (as hereinafter defined), (iii) any judgment, decree or order of any
court or governmental authority or agency to which the Seller is a party or by
which the Seller or any of its properties is bound, or (iv) any statute, law,
regulation or rule applicable to the Seller so as to have in the case of
subsections (ii) through (iv) above, a material adverse effect on the assets,
liabilities, results of operations, financial condition, business or prospects
of the Business. No consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental agency or public or
regulatory unit, agency, body or authority with respect to the Seller is
required in connection with the execution, delivery or performance of this
Agreement by the Seller or the consummation of the transactions contemplated by
this Agreement by the Seller, the failure of which to obtain would have a
material adverse effect upon the assets, liabilities, results of operations,
financial condition, business or prospects of the Business.
Section 3.5. Ownership of Assets and Related Matters.
(a) Personal Property. Seller has good and marketable title to
all of the items of personal property owned by Seller and included in
the Purchased Assets, and Seller owns such assets free and clear of all
liens, pledges, security interests, charges, claims, restrictions and
encumbrances of any nature whatsoever, except such defects in title
which in the aggregate are not substantial in amount or do not detract
from the value of the Purchased Assets subject thereto or interfere
with the present use thereof.
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(b) No Third Party Options. There are no existing agreements,
options, commitments or rights with, of or to any person to acquire any
of the assets, properties or rights included in the Purchased Assets or
any interest therein.
(c) Authorized Capital Stock. The authorized capital stock of
Seller consists of ten thousand (10,000) shares of common stock, no par
value per share (the "Seller's Stock") and there are ten thousand
(10,000) shares of Seller's Stock issued and outstanding. Each share of
Seller's Stock issued and outstanding is duly authorized, validly
issued, fully paid and nonassessable. The Shareholders are the
shareholders of all of the issued and outstanding shares of Seller's
Stock and there are no subscriptions, warrants, convertible securities,
calls, rights, warrants or other agreements, claims or commitments of
any nature whatsoever with respect to the ownership of the issued and
outstanding Seller's Stock by either the Shareholders obligating Seller
to issue, transfer, deliver or sell additional shares of capital stock
or other securities of Seller. The Shareholders are the owners of all
the issued and outstanding shares of Seller's Stock free and clear of
all liens, pledges, security interests, charges, claims, restrictions
and encumbrances of any nature whatsoever.
Section 3.6. Financial Statements. Seller has delivered to Purchaser:
(a) the compiled unaudited balance sheet of Seller as of 1996 and the related
statements of revenues and expenses for the fiscal year then ended; (b) the
audited balance sheet for 1997; and (c) the unaudited balance sheet of Seller
(the "1998 Balance Sheet") through June 30, 1998 (the "1998 Balance Sheet Date")
and the related unaudited statements of revenues and expenses for the six month
period then ended. All of the foregoing financial statements are hereinafter
collectively referred to as the "Seller's Financial Statements." The Seller's
Financial Statements have been prepared from, and are in accordance with, the
books and records of Seller and present fairly the financial position and
results of operations as of the dates and for the periods indicated, in each
case in conformity with consistent accounting policies, procedures, and
estimates for the Business ("Consistent Practices"), except as otherwise stated
in the Seller's Financial Statements.
Section 3.7. No Undisclosed Liabilities. Seller has no liabilities or
obligations relating to, involving or affecting the Business or the Purchased
Assets which are not adequately reflected or provided for in the 1998 Balance
Sheet, except liabilities and obligations incurred since the 1998 Balance Sheet
Date in the ordinary course of business and consistent with past practices of
the Business and which in the aggregate will not have a material adverse effect
upon the assets, liabilities, results of operations, financial conditions,
business or prospects of the Business.
Section 3.8. Absence of Certain Changes.
(a) Since the 1998 Balance Sheet Date, there has not been (i)
any adverse change in the assets, liabilities, business, financial
condition, results of operations or prospects of the Business, or (ii)
any damage, destruction, loss or casualty to property or assets of the
Business, whether or not covered by insurance, which property or assets
are
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material to the Business, except for receipt of notice of cancellation
of distributorship agreement from Pall Biomedical and another Vendor
has received an offer to purchase which could effect its
distributorship relationship.
(b) Since the 1998 Balance Sheet Date, there have not been
with respect to the Business (i) any extraordinary losses suffered,
(ii) any material assets mortgaged, pledged or made subject to any
lien, charge or other encumbrance, (iii) any liability or obligation
(absolute, accrued or contingent) incurred or any bad debt, contingency
or other reserve increase suffered, except, in each such case, in the
ordinary course of business and consistent with past practice, (iv) any
claims, liabilities or obligations (absolute, accrued or contingent)
paid, discharged or satisfied, other than the payment, discharge or
satisfaction, in the ordinary course of business and consistent with
past practice of claims, liabilities and obligations reflected or
reserved against in the Seller's Financial Statements or incurred in
the ordinary course of business and consistent with past practice since
the 1998 Balance Sheet Date, (v) any guaranteed checks, notes or
accounts receivable which have been written off as uncollectible,
except write-offs in the ordinary course of business and consistent
with past practice, (vi) any write down of the value of any asset or
investment on the books or records of Seller, except for depreciation
and amortization taken in the ordinary course of business and
consistent with past practices, (vii) any cancellation of any debts or
waiver of any claims or rights of substantial value, or sale, transfer
or other disposition of any properties or assets (real, personal or
mixed, tangible or intangible) of substantial value, except, in each
such case, in transactions in the ordinary course of business and
consistent with past practice and which in any event do not exceed
$5,000 in the aggregate, (viii) any single capital expenditure or
commitment in excess of $5,000 for additions to property or equipment,
or aggregate capital expenditures and commitments in excess of $5,000
for additions to property or equipment, (ix) any transactions entered
into other than in the ordinary course of business, (x) any agreements
to do any of the foregoing or (xi) any other events, developments or
conditions of any character that have had or are reasonably likely to
have a material adverse effect on the assets, liabilities, results of
operations, financial condition, business or prospects of the Business.
Section 3.9. Legal Proceedings. There are no suits, actions, claims,
proceedings or investigations pending, or, to the best knowledge of the Seller's
Executives (as hereinafter defined), threatened against, relating to or
involving Seller, the Business or the Purchased Assets before any court,
arbitrator or administrative or governmental body. The Business is not subject
to any judgment, decree, injunction, rule or order of any court, nor is it
subject to any governmental restriction, which is reasonably likely (i) to have
an adverse effect on the assets, liabilities, results of operations, financial
condition, business or prospects of the Business or (ii) to cause a material
limitation on Purchaser's ability to operate the Business after the Closing,
assuming operation of business by Purchaser consistent with Seller's past
practices.
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Section 3.10. Compliance with Law.
(a) Seller has all material authorizations, approvals,
licenses and orders of and from all governmental and regulatory
offices, agencies, officers and bodies necessary to carry on the
Business as it is currently being conducted, to own or hold under lease
the properties and assets it owns or holds under lease and to perform
all of its obligations under all agreements to which it is a party
(collectively, the "Material Licenses") and Seller has been and is in
compliance with all applicable laws, regulations and administrative
orders of any country, state or municipality or of any subdivision
thereof to which its business and its employment of labor or its use or
occupancy of properties or any part thereof are subject, the failure to
obtain or the violation of which would have a material adverse effect
upon the assets, liabilities, results of operations, financial
condition, business or prospects of the Business. The Seller's
Disclosure Letter sets forth a true and complete list of all Material
Licenses. The Seller previously has delivered to purchaser all reports
and filings made or filed by the Seller pursuant to the Occupational
Safety and Health Act and related to the Business.
(b) Seller has been and is in compliance with all current and
otherwise applicable statutes, rules, regulations, standards, guides or
orders administered or issued by the Federal Food and Drug
Administration ("FDA") and all other Federal, state, local or foreign
governmental departments, regulatory agencies, authorities,
commissions, boards or courts or other law, rule or regulation-making
entities having regulatory authority over Seller or the Business (the
"Authorities"). Seller has not received any Notice of Adverse Findings,
Warning Letters, Section 305 notices, subpoenas or other similar
communications by any Authorities with respect to the Business, and
there have been no recalls, field notifications, alerts or seizures
requested or threatened relating to the Business.
Section 3.11. Seller Material Contracts. All seller material contracts,
including all amendments thereto (the "Seller Material Contracts") are listed on
Schedules 1.2(a), 1.2(d) 1.2(e) and 1.2(h) and have been made available to
Purchaser. The Seller Material Contracts are valid and enforceable in accordance
with their respective terms with respect to Seller, and are valid and
enforceable in accordance with their respective terms with respect to each other
party thereto, in each case to the extent material to the business and
operations of the Business. Except for events or occurrences, the consequences
of which, individually or in the aggregate, would not have a material adverse
effect on the assets, liabilities, results of operations, financial condition,
business or prospects of the Business, there is not under any of the Seller
Material Contracts any existing breach, default or event of default by Seller or
event that with notice or lapse of time or both would constitute a breach,
default or event of default by Seller, nor does the Seller or the Shareholders
know of, and Seller and Shareholders have not received notice of, or made a
claim with respect to, any breach or default by any other party thereto.
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Section 3.12. Tax Returns; Taxes. Seller has duly filed all federal,
state, local and foreign tax returns required to be filed by them, all such
returns are accurate in all material respects, and Seller has duly paid or made
adequate provisions for the payment of all taxes (including any interest,
penalties and additions to tax) which are due or payable pursuant to such
returns or which otherwise are due and payable in any jurisdiction, whether or
not in connection with such returns. The liability for taxes reflected in the
1998 Balance Sheet is sufficient for the payment of all unpaid taxes of Seller,
whether or not disputed, that are accrued or applicable for the period ended
June 30, 1998 and for all years and periods ended prior thereto. All
deficiencies asserted as a result of any examinations by the Internal Revenue
Service or any other taxing authority have been paid, fully settled or
adequately provided for in the Seller Financial Statements. There are no pending
claims asserted for taxes of Seller or outstanding agreements or waivers
extending the statutory period of limitation applicable to any tax return of
Seller or outstanding agreements or waivers extending the statutory period of
limitation applicable to any tax return of Seller for any period. Seller has
made all estimated income tax deposits and all other required tax payments or
deposits and have complied for all prior periods in all material respects with
the tax withholding provisions of all applicable federal, state, local and other
laws. From and after the date hereof and prior to Closing, Seller shall make
available to Purchaser true, complete and correct copies of such federal income
tax returns, state and local income tax returns and sales tax returns and such
other tax returns concerning the Business or the Purchased Assets as Purchaser
shall reasonably request.
Section 3.13. Officers, Directors and Employees. Seller has provided
Purchaser with a true and complete list of all of the employees of Seller
involved in the operation of the Business setting forth their compensation for
the six month period ending June 30, 1998 and will provide Purchaser with a
complete list of officers and directors at Closing. Seller has no written
employment agreements and has made no verbal commitments to any employee which
are not terminable at will.
Section 3.14. Labor Relations. The Business is in compliance in all
material respects with all federal and state laws respecting employment and
employment practices, terms and conditions of employment, wages and hours, and
Seller is not engaged in any unfair labor or unlawful employment practice
involving the Business. There is no unlawful employment practice or
discrimination charge involving the Business pending before the Equal Employment
Opportunity Commission ("EEOC"), EEOC recognized state "referral agency" or any
other governmental agency. There is no unfair labor practice charge or complaint
against Seller involving the Business pending before the National Labor
Relations Board ("NLRB"). There is no labor strike, dispute, slowdown or
stoppage actually pending or, to the best knowledge of the Seller Executives,
threatened against or involving or affecting the Business, and no NLRB
representation question exists respecting the employees of the Business. No
grievance or arbitration proceeding relating to the employees of the Business is
pending, and no written claim therefor exists with respect to any such
employees. There is no collective bargaining agreement that is binding on Seller
and relates to the Business.
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Section 3.15. Insurance. Seller has heretofore provided to Purchaser a
true and complete list of current insurance policies and coverages relating to
the Purchased Assets and/or the Business, including names of carriers, amounts
of coverage and premiums thereof. The Purchased Assets and the Business have
been and are insured and Seller will use their reasonable efforts to maintain
such insurance at least through the Closing Date. Seller has made available to
Purchaser true and complete copies of all insurance policies covering the
Purchased Assets and/or the Business.
Section 3.16. Software, Patents, Trademarks, Trade Names. The Seller's
Disclosure Letter sets forth a true and complete list of (i) all computer
software, patents, trademarks, trade names and registered copyrights owned by
Seller and used in connection with the Business (collectively, the "Proprietary
Intellectual Property") and (ii) all computer software, patents, trademarks,
trade names, copyrights, technology and processes used by Seller in connection
with the Business which are used pursuant to a license or other right granted by
a third party (collectively, the "Licensed Intellectual Property", and together
with the Proprietary Intellectual Property herein referred to as "Intellectual
Property"). Seller owns, or has the right to use pursuant to valid and effective
agreements set forth in the Seller's Disclosure Letter, all Intellectual
Property, and, all such rights shall be assigned and transferred to Purchaser in
connection with the consummation of the transactions contemplated hereby. No
claims are pending against Seller or either of the Shareholders by any person
with respect to the use of any Intellectual Property or challenging or
questioning the validity or effectiveness of any license or agreement relating
to the same, and to Seller's knowledge the current use by Seller of the
Intellectual Property does not infringe on the rights of any third party. The
Seller's Disclosure Letter sets forth a list of all jurisdictions in which the
Business is operating under a trade name, and each jurisdiction in which any
such trade name is registered.
Section 3.17. Transactions with Affiliates. No officer, director,
shareholder or significant employee of Seller, or any person with whom any such
officer, director, shareholder or significant employee has any direct or
indirect relation by blood, marriage or adoption, or any entity in which any
such person, owns any beneficial interest (other than a publicly held
corporation whose stock is traded on a national securities exchange or in the
over-the-counter market and less than 1% of the stock of which is beneficially
owned by all such persons) has any interest in: (i) any contract, arrangement or
understanding with, or relating to, the Business, the Purchased Assets or the
Assumed Obligations; (ii) any loan, arrangement, understanding, agreement or
contract for or relating to the Business or the Purchased Assets; or (iii) any
property (real, personal or mixed), tangible or intangible, used or currently
intended to be used in the Business, except that William C. Huck and Barbara A.
Huck beneficially own the real property and office and warehouse facility
currently utilized by the Business.
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Section 3.18. Brokers, Finders and Investment Bankers. Except as set
forth in the Seller's Disclosure Letter (which shall be the Sellers' sole
responsibility), neither the Seller nor any of its respective officers,
directors, shareholders or employees has employed any broker, finder or
investment banker or incurred any liability for any investment banking fees,
financial advisory fees, brokerage fees or finders' fees in connection with the
transactions contemplated hereby.
Section 3.19. Disclosure. No representation, warranty or covenant made
by any of the Seller or Shareholders in this Agreement, the Seller's Disclosure
Letter or the Exhibits attached hereto contains an untrue statement of a
material fact or omits to state a material fact required to be stated herein or
therein or necessary to make the statements contained herein or therein not
misleading.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
With such exceptions as are set forth in a letter (the "Purchaser
Disclosure Letter") delivered by Purchaser to the Seller prior to the execution
hereof, Purchaser hereby represents and warrants to the Seller as follows:
Section 4.1. Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
Section 4.2. Authorization. Purchaser has full corporate power and
authority to execute and deliver this Agreement and to perform its obligations
under this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by Purchaser, the performance by
Purchaser of their obligations hereunder and the consummation by Purchaser of
the transactions provided for herein have been duly and validly authorized by
all necessary corporate action on the part of Purchaser. This Agreement has been
duly executed and delivered by Purchaser and constitutes the valid and binding
agreement of Purchaser, enforceable against Purchaser in accordance with its
terms, subject to applicable bankruptcy, insolvency and other similar laws
affecting the enforcement of creditors' rights generally, general equitable
principles and the discretion of courts in granting equitable remedies.
Section 4.3. Absence of Restrictions and Conflicts. The execution,
delivery and performance of this Agreement, the consummation of the transactions
contemplated by this Agreement, and the fulfillment of and compliance with the
terms and conditions of this Agreement do not and will not, with the passing of
time or the giving of notice or both, violate or conflict with, constitute a
breach of or default under, result in the loss of any material benefit under, or
permit the acceleration of any obligation under, (i) any term or provision of
the Articles of
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Incorporation or Bylaws of Purchaser, (ii) any contract, agreement, commitment
or understanding to which Purchaser is a party or to which Purchaser or any of
its respective properties is subject, (iii) any judgment, decree or order of any
court or governmental authority or agency to which Purchaser is a party or by
which Purchaser or any of its respective properties is bound, or (iv) any
statute, law, regulation or rule applicable to Purchaser, so as to have, in the
case of subsections (ii) through (iv) above, a material adverse effect on the
assets, liabilities, results of operations, financial condition, business or
prospects of Purchaser. No consent, approval, order or authorization of, or
registration, declaration or filing with, any government agency or public or
regulatory unit, agency, body or authority with respect to Purchaser is required
in connection with the execution, delivery or performance of this Agreement by
Purchaser or the consummation of the transactions contemplated by this Agreement
by Purchaser, the failure to obtain which would have a material adverse effect
upon Purchaser and its subsidiaries taken as a whole.
Section 4.4. Disclosure. No representation, warranty or covenant made
by Purchaser in this Agreement, the Purchaser Disclosure Letter or the Exhibits
hereto contains an untrue statement of a material fact or omits to state a
material fact required to be stated herein or therein or necessary to make the
statements contained herein or therein not misleading.
ARTICLE 5.
CERTAIN COVENANTS AND AGREEMENTS
Section 5.1. Conduct of Business by the Seller. From the date hereof to
the Closing Date, the Seller will, except as required in connection with the
transactions contemplated by this Agreement and except as otherwise disclosed in
the Seller's Disclosure Letter or consented to in writing by Purchaser:
(a) Carry on the Business in the ordinary and regular course
in substantially the same manner as heretofore conducted and, with
respect to the Business, not engage in any new line of business or
enter into any agreement, transaction or activity or make any
commitment, except those in the ordinary and regular course of business
and not otherwise prohibited under this Section 5.1;
(b) Exercise reasonable efforts to preserve intact the
goodwill and business organization of the Business, to keep the
officers and employees of the Business available to Purchaser and to
preserve the relationships of the Business with customers, suppliers
and others having business relations with the Business;
(c) Not (i) sell any of the Purchased Assets other than sales
of Purchased Assets in the ordinary course of business consistent with
past practice, (ii) create, incur or assume any indebtedness secured by
the Purchased Assets, (iii) grant, create, incur, or suffer to exist
any liens or encumbrances on the Purchased Assets which did not exist
on
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the date hereof other than Permitted Liens or (iv) make any capital
expenditure involving the Business in excess of $5,000.00 in the case
of any single expenditure or $10,000.00 in the case of all capital
expenditures;
(d) Other than in the ordinary course of business and
consistent with past practices, not enter into, modify or extend in any
manner the terms of any employment, severance or similar agreements
with officers, directors or key employees associated with the Business
nor grant or agree to grant (either in writing or verbally) any
increase in the compensation of officers, directors or employees
involved in the Business, whether now or hereafter payable, including
any such increase pursuant to any option, bonus, stock purchase,
pension, profit-sharing, deferred compensation, retirement or other
plan, arrangement, contract or commitment;
(e) Perform in all material respects all of its obligations
under all Seller Material Contracts, (except those being contested in
good faith) and not enter into, assume or amend any contract or
commitment that would be a Seller Material Contract;
(f) Not distribute any Purchased Assets, including dividends
to any employee, consultant, contractor or shareholder.
(g) Use its reasonable efforts to maintain in full force and
effect and in the same amounts policies of insurance comparable in
amount and scope of coverage to that now maintained by Seller with
respect to the Business and the Purchased Assets;
(h) Use its reasonable efforts to continue to collect its
accounts receivable and pay all accounts payable and similar
obligations in the ordinary course of business and consistent with past
practices;
(i) Use its reasonable efforts to maintain the supplies and
inventory maintained by the Business at levels which are consistent
with the past practices of the Business;
(j) Prepare and file all federal, state, local and foreign
returns for taxes and other tax reports, filings and amendments thereto
required to be filed by Seller, and allow Purchaser, at its request, to
review all such returns, reports, filings and amendments at the
Seller's offices prior to the filing thereof, which review shall not
interfere with the timely filing of such returns;
(k) Use its reasonable efforts to continue to maintain and
service the Purchased Assets used in the conduct of the Business in the
same manner as has been its consistent past practice.
In connection with the continued operation of the Business between the
date of this Agreement and the Closing Date, Seller shall at Purchaser's request
confer in good faith on a
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regular and frequent basis with one or more designated representatives of
Purchaser with respect to material matters affecting or impacting the operations
of the Business and to consult in general with respect to the ongoing operations
of the Business. Seller acknowledges that Purchaser does not and will not waive
any rights they may have under this Agreement as a result of such consultations
nor shall Purchaser be responsible for any decisions made by the officers,
directors or shareholders of Seller with respect to matters which are the
subject of such consultation.
Section 5.2. Inspection and Access to Information. Between the date of
this Agreement and the Closing Date, Seller will provide Purchaser and its
accountants, lenders, counsel and other authorized representatives full access,
during reasonable business hours and under reasonable circumstances to any and
all of its premises, properties, contracts, commitments, books, records and
other information (including tax returns filed and those in preparation)
relating to the Business and will cause its officers to furnish to Purchaser and
its authorized representatives any and all financial, technical and operating
data and other information pertaining to the Business, as Purchaser shall from
time to time reasonably request. Seller specifically agrees to permit Price
Waterhouse Coopers, L.L.P., or other auditors selected by Purchaser, to audit
the books and records of Seller as necessary for purposes of Purchaser's
compliance with securities law reporting requirements.
Section 5.3. No Solicitation; Acquisition Proposals. From the date
hereof until the Closing or until this Agreement is terminated or abandoned as
provided in Article 7, Seller shall not directly or indirectly (i) solicit or
initiate (including by way of furnishing any information) discussions with or
(ii) enter into negotiations or agreements with, or furnish any information to,
any corporation, partnership, person or other entity or group (other than
Purchaser or its authorized representatives pursuant to this Agreement)
concerning any proposal for a merger, sale of substantial assets, sale of shares
of stock or securities or other takeover or business combination transaction
(the "Acquisition Proposal") involving the Business or the Purchased Assets, and
Seller will instruct its officers, directors, advisors and other financial and
legal representatives and consultants not to take any action contrary to the
foregoing provisions of this Section 5.3. Seller will notify Purchaser promptly
in writing if any of them shall become aware that any inquiries or proposals are
received by, any information is requested from, or any negotiations or
discussions are sought to be initiated with Seller or its representatives with
respect to an Acquisition Proposal.
Section 5.4. Best Efforts; Further Assurances; Cooperation. Subject to
the other provisions of this Agreement, the parties hereto shall each use their
reasonable, good faith efforts to perform their obligations herein and to take,
or cause to be taken or do, or cause to be done, all things necessary, proper or
advisable under applicable law to obtain all regulatory approvals and satisfy
all conditions to the obligations of the parties under this Agreement and to
cause the transactions contemplated herein to be effected on or prior to October
1, 1998 in accordance with the terms hereof and shall cooperate fully with each
other and their respective officers, directors, shareholders, employees, agents,
counsel, accountants and other designees in connection with any
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<PAGE> 23
steps required to be taken as a part of their respective obligations under this
Agreement, including without limitation:
(a) Seller and Purchaser shall promptly make their respective
filings and submissions and shall take, or cause to be taken, all
actions and do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to obtain any required
approval of any federal, state, or local governmental agency or
regulatory body with jurisdiction over the transactions contemplated by
this Agreement.
(b) In the event any claim, action, suit, investigation or
other proceeding by any governmental body or other person is commenced
which questions the validity or legality of any of the transactions
contemplated hereby or seeks damages in connection therewith, the
parties agree to cooperate and use all reasonable efforts to defend
against such claim, action, suit, investigation or other proceeding
and, if an injunction or other order is issued in any such action, suit
or other proceeding, to use all reasonable efforts to have such
injunction or other order lifted, and to cooperate reasonably regarding
any other impediment to the consummation of the transactions
contemplated by this Agreement.
(c) Seller shall give prompt written notice to the Purchaser
of (i) the occurrence, or failure to occur, of any event which
occurrence or failure would be likely to cause any representation or
warranty of the Seller contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to
the Closing Date or that will or may result in the failure to satisfy
any of the conditions specified in Article 6 hereof and (ii) any
failure of any of the Seller, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by any of them
hereunder.
(d) Each of the parties hereto agree that with respect to each
item appearing on the Seller's Disclosure Letter and the Purchaser
Disclosure Letter, Seller and Purchaser, as the case may be, shall
specifically reference the Section or Sections of this Agreement as to
which such item relates.
(e) Seller shall exercise reasonable efforts and shall
cooperate in good faith with Purchaser to secure all necessary consents
of third parties to the assignment to Purchaser of all Seller Material
Contracts included in the Purchased Assets. Seller further agree to
exercise reasonable efforts and cooperate in good faith with Purchaser
to enforce all rights of Seller for the benefit of Purchaser under
Seller's distributionship agreement with Pall, and to supply Purchaser
with all inventory required to satisfy the requirements contracts with
Pall clients subject to terms and conditions of Pall distributorship
agreement.
(f) Without the prior written consent of Purchaser, Seller
will not terminate any employee involved in the operations of the
Business if such termination shall result in
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the payments of any amounts pursuant to "change in control" provisions
of any employment agreement of arrangement.
Section 5.5. Public Announcements. The timing and content of all
announcements regarding any aspect of this Agreement or the transactions
contemplated hereby to the financial community, government agencies, employees
or the general public shall be mutually agreed upon in advance (unless Seller or
Purchaser is advised by counsel that any such announcement or other disclosure
not mutually agreed upon in advance is required to be made by law or applicable
rule of the NASDAQ and then only after making a reasonable attempt to comply
with the provisions of this Section giving other party reasonable opportunity to
propose alternative means to comply).
Section 5.6. Financial Statements. Prior to the Closing Date, Seller
shall deliver to Purchaser, as soon as available but in no event later than 30
days after the end of each month, an unaudited balance sheet as of the last day
of such month and the related unaudited statements of revenue and expenses of
Seller for the applicable year to date period then ended prepared in accordance
with Consistent Practices.
Section 5.7. Supplements to Disclosure Letters. From time to time up to
the Closing Date, the Seller and Purchaser shall promptly supplement or amend
their respective disclosure letters which they have delivered pursuant to this
Agreement with respect to any matters arising after the execution hereof and
prior to Closing which, if existing or occurring at the date hereof, would have
been required to be set forth or described in any such disclosure letter or
which is necessary to correct any information in any such disclosure letter
which has been rendered inaccurate thereby. No supplement or amendment to any
such disclosure letter shall have any effect for the purpose of determining
satisfaction of the conditions set forth in Sections 6.2 or 6.3 of this
Agreement unless such supplement or amendment is accepted by Purchaser in its
absolute and sole discretion in the case of any supplement or amendment to the
Seller's Disclosure Letter, and by Seller in its sole and absolute discretion in
the case of any supplement or amendment to the Purchaser Disclosure Letter.
Section 5.8. Employee Matters.
(a) It is Purchaser's current intention to extend offers of
employment to certain of the employees employed in connection with the
Business. As promptly as practicable following the date hereof, Seller
shall provide Purchaser with a list setting forth the names, addresses
and such other information as Purchaser shall reasonably request
concerning the employees of Seller employed in connection with the
Business (the "Employees"). Purchaser will inform Seller no later than
two (2) days prior to the Closing of the names of any Employees who
will not be offered employment with Purchaser (the "Remaining Seller
Employees") and such other information concerning the terms of
employment to be offered by Purchaser to the other Employees as Seller
shall reasonably request. Any offer of employment pursuant to this
Section 5.8(a) shall be within the sole discretion of Purchaser and
shall be on such terms and conditions as Purchaser, in its sole
discretion,
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may determine. Nothing herein contained shall obligate Purchaser to
employ or offer to employ any current or former employee of Seller, or
to employ or offer to employ any such individual at any specific wage
or benefit level.
(b) On or immediately after the Closing Date, Seller shall
notify all Employees other than the Remaining Seller Employees that
their employment with Seller shall terminate at the Closing and Seller
shall validly terminate such Employees as of the Closing Date.
(c) After the Closing, Seller shall deliver to Purchaser as
part of the Purchased Assets conveyed hereunder the applicable
personnel file for each Employee who Purchaser hires subject to
employee executing written consent for transfer of the file.
(d) Purchaser and Seller agree that Seller shall be
responsible for providing any notice required by the Worker Adjustment
and Retraining Notification Act of 1988, as amended (the "WARN Act") or
any comparable state or local statutes, rules or regulations as a
result of the transactions contemplated hereunder.
Section 5.9. Books and Records. Purchaser agrees to exercise
reasonable efforts to maintain and not to destroy the various books and records
associated with the operation of the Business prior to Closing which are
delivered by Seller to Purchaser at Closing as part of the Purchased Assets for
such period of time as is reasonably consistent with Purchaser's record
retention policies or as may be required by applicable governmental rules,
regulations or directives and to grant Seller and its agents and representatives
reasonable access to such books and records on or after the Closing Date as they
shall reasonably request for bona fide purposes and for so long as such books
and records are maintained pursuant to the provisions hereof; provided, however,
that Purchaser shall be entitled to receive a confidentiality and use agreement
from the Seller in form and substance reasonably satisfactory to Purchaser prior
to providing the Seller with access to such books and records.
Section 5.10. Noncompetition.
(a) Definitions. The following terms shall have the meanings
set forth opposite each such term below:
(i) "Seller Activities" shall mean the Business as
defined on page one of this Agreement and Schedule 1.5.
(ii) "Noncompete Period" shall mean the period
commencing on the Closing Date and ending on the fifth (5th)
anniversary of the Closing Date. However, Seller shall not be
prohibited from selling products in states in which the Seller
was not the authorized distributor of such products as of the
date of Closing.
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(iii) "Territory" shall mean the entire geographic
area of the United States of America.
(b) Noncompetition.
(i) Coverage. The parties hereto acknowledge and
agree that the Seller is currently engaged in the Seller
Activities throughout the Territory and that each of the
Shareholders plays an integral part in the Seller Activities.
The Seller acknowledges that, to adequately protect the
interests of Purchaser in the Business, it is essential that
any noncompete covenant with respect to the Business cover
Seller, the Shareholders and any company or organization in
which Seller has a controlling equity interest (each such
company or organization hereinafter referred to as a Related
Party), all of the Seller Activities and the entire Territory.
(ii) Seller's and Shareholders' Covenants. The
Seller and Shareholders hereby covenant and agree that the
Seller, Shareholders and any Related Party shall not, in any
manner during the Noncompete Period, directly or indirectly,
engage in, have any equity or profit interest in, make any
loan to or for the benefit of, or render services (of any
advertising, marketing, sales, administrative, supervisory,
consulting or any other nature) to, any business which engages
in the Seller Activities in the Territory without the prior
written consent of Purchaser and shall not employ or solicit
to employ any of the Sales Representatives. Notwithstanding
the foregoing, Seller may distribute or sell during the
Noncompete Period products that compete with any of the
products that are presently distributed by Seller and
manufactured by Pall (the "Competing Products"), but only if
prior to such distribution or sale by Seller, Seller grants to
Purchaser the right to be the exclusive distributor of the
Competing Products within the United States for the entire
period of time that Seller has the right to distribute or sell
the Competing Products.
(c) Severability. If a judicial determination is made that any
of the provisions of this Section 5.10 constitutes an unreasonable or
otherwise unenforceable restriction against any of the parties hereto,
the provisions of this Section 5.10 shall be rendered void only to the
extent that such judicial determination finds such provisions to be
unreasonable or otherwise unenforceable. In this regard, each of the
parties hereto hereby agrees that any judicial authority construing
this Agreement shall be empowered to sever any portion of the
Territory, any prohibited business activity or any time period from the
coverage of this Section 5.10 and to apply the provisions of this
Section 5.10 to the remaining portion of the Territory, the remaining
business activities or the remaining time period not so severed by such
judicial authority. Moreover, notwithstanding the fact that any
provision of this Section 5.10 is determined not to be specifically
enforceable, each of the parties hereto shall nevertheless be entitled
to recover monetary damages as a result of any breach
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of any such provision. The time period during which the prohibitions
set forth in this Section 5.10 shall apply shall be tolled and
suspended as to each applicable party for a period equal to the
aggregate quantity of time during which such party violates such
prohibitions in any respect.
(d) Injunctive Relief. Seller and Shareholders hereby agree
that any remedy at law for any breach of the provisions contained in
Section 5.10(b) hereof shall be inadequate and that Purchaser shall be
entitled to injunctive relief in addition to any other remedy Purchaser
might have under this Agreement.
Section 5.11. Confidentiality. For a period of five (5) years after the
Closing Date, the Seller and Shareholders hereby agree that Seller, the
Shareholders and any Related Party shall hold in confidence all Confidential
Information and will not disclose or publish such Confidential Information
without the prior written consent of Purchaser. Seller and Shareholders further
agree that the Seller, Shareholders and any Related Party shall not use any such
Confidential Information in a manner adverse to the Business, Purchaser, or any
of their respective affiliates, without the prior written consent of Purchaser.
For purposes of this Section 5.11, "Confidential Information" shall mean any
data or information which is valuable to the Business, which the Business has
taken reasonable efforts to protect the confidentiality of, and which is not
generally known to competitors of the Business. To the fullest extent consistent
with the foregoing and permitted by law, Confidential Information shall include,
without limitation, the customer lists, marketing techniques, business plans,
financial statements and projections of the Business.
Section 5.12. Transition Services. On or prior to the Closing Date,
Purchaser and Seller shall have entered into a mutually satisfactory transition
agreement substantially in the form attached hereto as Exhibit 5.12 (the
"Transition Agreement"), pursuant to which Seller shall allow Purchaser to
utilize Seller's existing office (including furniture and equipment) located at
100 East Chestnut Drive, Westmont, IL 60559-1137 and warehouse facility located
at 100 East Chestnut Drive, Westmont, IL 60559-1137 for the purpose of
warehousing products and operating a distribution operation for a period of two
(2) years following the Closing Date. The Transition Agreement also shall
provide that Seller shall assist in moving its distribution business to
Purchaser's manufacturing facility located in Manchester, Georgia within thirty
(30) days following the end of such two year period. The Transition Agreement
shall further provide that during the two year period in which Purchaser
occupies Seller's office and warehouse facility, Purchaser shall regularly
reimburse Seller an amount equal to the sum of the following costs: telephone
costs for the telephones used by Purchaser, shipping expenses for Purchaser's
operations, office supplies used by Purchaser, and all compensation and benefits
for Seller's employees performing services for Purchaser.
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ARTICLE 6.
CONDITIONS
Section 6.1. Conditions to Each Party's Obligations. The respective
obligations of each party to effect the transactions contemplated hereby shall
be subject to the absence at the Closing of any (a) effective injunction, writ
or preliminary restraining order or any order of any nature issued by a court or
governmental agency of competent jurisdiction to the effect that the purchase
and sale of the Business and the Purchased Assets may not be consummated as
herein provided, (b) proceeding or lawsuit by any governmental or regulatory
agency for the purpose of obtaining any such injunction, writ or preliminary
restraining order and (c) written notice from any such agency indicating an
intent to restrain, prevent, materially delay or restructure the transactions
contemplated by this Agreement.
Section 6.2. Conditions to Obligations of Purchaser. The obligations of
Purchaser to effect the acquisition of the Business and the Purchased Assets and
to assume the Assumed Obligations shall be subject to the fulfillment at or
prior to the Closing of each of the following additional conditions:
(a) Representations and Warranties. The representations and
warranties of the Sellers set forth in Article 3 of this Agreement
shall be true and correct as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date.
(b) Performance of Obligations of Seller. Seller shall have
performed in all material respects all covenants and agreements
required to be performed by him, her or it under this Agreement.
(c) Opinion of Seller's Counsel. Purchaser shall have received
an opinion of DeFrees & Fiske dated the Closing Date, substantially in
the form attached hereto as Exhibit 6.2(c).
(d) Authorization of Transaction. All corporate action
necessary by the Seller to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby shall have been duly and validly taken.
(e) Consents. All consents, authorizations, orders and
approvals of (or filings or registrations with) any governmental
commission, board or other regulatory body required in connection with
the execution, delivery and performance of this Agreement shall have
been obtained or made, except where the failure to have obtained or
made any such consent, authorization, order, approval, filing or
registration would not have a material adverse effect on the business
of Purchaser or the Business following the Closing.
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(f) Certificates. The Seller shall furnish Purchaser with a
certificate as to compliance with the conditions set forth in Sections
6.2(a), (b) and (d).
(g) Material Contracts. Unless waived by Purchaser, Purchaser
shall have received consents to assignment of all Seller Material
Contracts and other documents and agreements included in the Purchased
Assets or written waivers of the provisions of any Seller Material
Contracts, or other documents or agreements included in the Purchased
Assets requiring the consents of third parties as set forth in the
Seller's Disclosure Letter.
(h) Due Diligence. Purchaser shall be satisfied, in its sole
discretion, with the examination and review of the business,
properties, affairs, books, records, plans and other information of
Seller, the Business and the Purchased Assets.
(i) Transition Agreement. Seller shall have executed the
Transition Agreement in the form attached hereto as Exhibit 5.12.
(j) Lender Approval. Purchaser shall have received approval of
the transaction contemplated in this Agreement from its lender,
NationsCredit Commercial Corporation.
(k) Board Approval. The Board of Directors of Purchaser shall
have approved the transaction contemplated in this Agreement, the
Agreement and such related matters as it deems necessary and
appropriate.
Section 6.3. Conditions to Obligations of the Seller. The obligations
of the Seller to effect the sale of the Business and the Purchased Assets and
the assignment of the Assumed Obligations shall be subject to the fulfillment at
or prior to the Closing of each of the following additional conditions:
(a) Representations and Warranties. The representations and
warranties of Purchaser set forth in Article 4 of this Agreement shall
be true and correct as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date.
(b) Performance of Obligations of Purchaser. Purchaser shall
have performed in all material respects all covenants and agreements
required to be performed by it under this Agreement.
(c) Opinion of Purchaser Counsel. Seller shall have received
an opinion of King & Spalding, Counsel for Purchaser, dated the Closing
Date, substantially in the form attached hereto as Exhibit 6.3(c).
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(d) Authorization of Transaction. All corporate action
necessary by Purchaser to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby shall have been duly and validly taken.
(e) Consents. All consents, authorizations, orders and
approvals of (or filings or registrations with) any governmental
commission, board or other regulatory body required in connection with
the execution, delivery and performance of this Agreement shall have
been obtained or made, except where the failure to have obtained or
made any such consent, authorization, order, approval, filing or
registration would not have a material adverse effect on the business
of Seller following the Closing.
(f) Certificates. Purchaser shall furnish Seller with a
certificate of their appropriate officers as to compliance with the
conditions set forth in Sections 6.3(a), (b) and (d).
(g) Transition Agreement. Purchaser shall have executed the
Transition Agreement in the form attached hereto as Exhibit 5.12.
ARTICLE 7.
TERMINATION
Section 7.1. Termination and Abandonment. This Agreement may be
terminated at any time prior to the Closing:
(a) by mutual agreement of the Boards of Directors of the
Purchaser and Seller;
(b) by Seller, if the conditions set forth in Sections 6.1 and
6.3 hereof shall not have been complied with or performed and such
noncompliance or nonperformance shall not have been cured or eliminated
(or by its nature cannot be cured or eliminated) by Purchaser on or
before October 1, 1998; and
(c) by Purchaser, if the conditions set forth in Sections 6.1
and 6.2 hereof shall not have been complied with or performed and such
noncompliance or nonperformance shall not have been cured or eliminated
(or by its nature cannot be cured or eliminated) by the Seller on or
before October 1, 1998.
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Section 7.2. Specific Performance and Other Remedies. The parties
hereto each acknowledge that the rights of each party to consummate the
transactions contemplated hereby are special, unique and of extraordinary
character, and that, in the event that any party violates or fails or refuses to
perform any covenant or agreement made by it herein, the non- breaching party
may be without an adequate remedy at law. The parties each agree, therefore,
that in the event that either party violates or fails or refuses to perform any
covenant or agreement made by such party herein, the non-breaching party or
parties may, subject to the terms of this Agreement and in addition to any
remedies at law for damages or other relief, institute and prosecute an action
in any court of competent jurisdiction to enforce specific performance of such
covenant or agreement or seek any other equitable relief.
Section 7.3. Effect of Termination. In the event of termination of this
Agreement pursuant to this Article 7, this Agreement shall forthwith become void
and there shall be no liability on the part of any party or its respective
officers, directors, partners or stockholders, except for obligations under
Section 5.5, Section 9.14 and this Section, all of which shall survive the
termination. Notwithstanding the foregoing, nothing contained herein shall
relieve any party from liability for any breach of any covenant or agreement in
this Agreement prior to termination.
ARTICLE 8.
INDEMNIFICATION
Section 8.1. Indemnification Obligations of the Seller. From and after
the Closing, the Seller and shall indemnify and hold harmless Purchaser, each of
its officers, directors, employees, agents and representatives and each of the
heirs, executors, successors and assigns of any of the foregoing (collectively,
the "Purchaser Indemnified Parties") from, against and in respect of any and all
claims, liabilities, obligations, losses, costs, expenses, penalties, fines and
other judgments (at equity or at law) and damages whenever arising or incurred
(including, without limitation, amounts paid in settlement, costs of
investigation and reasonable attorneys' fees and expenses) arising out of or
relating to: (a) any Excluded Liability or any and all other liabilities and
obligations of the Seller of any nature whatsoever, except the Assumed
Obligations; (b) any and all actions, suits, claims, or legal, administrative,
arbitration, governmental or other Proceedings or investigations against any
Purchaser Indemnified Party that relate to the Seller or the Business to the
extent the principal event giving rise thereto occurred prior to the Closing
Date or which result from or arise out of any action or inaction prior to the
Closing Date of the Seller or any affiliate, officer, director, partner,
employee, agent, representative or subcontractor of the Seller; (c) any breach
of any representation, warranty, covenant, agreement or undertaking made by the
Seller or in this Agreement or in any certificate, agreement, exhibit, schedule
or other writing delivered by the Seller to Purchaser in connection with the
matters contemplated hereby or pursuant to the provisions hereof (collectively,
the "Seller's Ancillary Documents"); or (d) any fraud, willful misconduct, bad
faith or any intentional breach of any representation, warranty, covenant,
agreement or undertaking made by Seller in this Agreement or the Seller's
Ancillary
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Documents. The claims, liabilities, obligations, losses, costs, expenses,
penalties, fines and damages of the Purchaser Indemnified Parties described in
this Section 8.1 as to which the Purchaser Indemnified Parties are entitled to
indemnification are hereinafter collectively referred to as "Purchaser Losses."
Section 8.2. Indemnification Obligations of Purchaser. From and after
the Closing, Purchaser shall indemnify and hold harmless the Seller and its
officers, directors, employees, agents and representatives and each of the
heirs, executors, successors and assigns of any of the foregoing (collectively,
the "Seller Indemnified Parties") from, against and in respect of any and all
claims, liabilities, obligations, losses, costs, expenses, penalties, fines and
other judgments (at equity or at law) and damages whenever arising or incurred
(including, without limitation, amounts paid in settlement, costs of
investigation and reasonable attorneys' fees and expenses) arising out of or
relating to: (a) the Assumed Obligations; (b) any and all actions, suits,
claims, or legal, administrative, arbitration, governmental or other Proceedings
or investigations against any Seller Indemnified Party that relate to the
Purchaser or the Business to the extent the principal event giving rise thereto
occurred after the Closing Date or which result from or arise out of any action
or inaction after the Closing Date of the Purchaser or any affiliate, officer,
director, partner, employee, agent, representative or subcontractor of
Purchaser; (c) any breach of any representation, warranty, covenant, agreement
or undertaking made by Purchaser in this Agreement or in any certificate,
agreement, exhibit, schedule or other writing delivered by Purchaser to the
Seller in connection with the matters contemplated hereby or pursuant to the
provisions hereof (the "Purchaser Ancillary Documents"); or (d) any fraud,
willful misconduct, bad faith or any intentional breach of any representation,
warranty, covenant, agreement or undertaking made by Purchaser in this Agreement
or the Purchaser Ancillary Documents. The claims, liabilities, obligations,
losses, costs, expenses, penalties, fines and damages of the Seller Indemnified
Parties described in this Section 8.2 as to which the Seller Indemnified Parties
are entitled to indemnification are hereinafter collectively referred to as
"Seller Losses."
Section 8.3. Indemnification Procedure.
(a) Promptly after receipt by a Purchaser Indemnified Party or
a Seller Indemnified Party (hereinafter collectively referred to as an
"Indemnified Party") of notice by a third party of any complaint or the
commencement of any action or proceeding with respect to which
indemnification is being sought hereunder, such Indemnified Party shall
notify Purchaser or Seller, whoever is the appropriate indemnifying
party hereunder (the "Indemnifying Party"), of such complaint or of the
commencement of such action or proceeding; provided, however, that the
failure to so notify the Indemnifying Party shall not relieve the
Indemnifying Party from liability for such claim arising otherwise than
under this Agreement and such failure to so notify the Indemnifying
Party shall relieve the Indemnifying Party from liability which the
Indemnifying Party may have hereunder with respect to such claim if,
but only if, and only to the extent that, such failure to notify the
Indemnifying Party results in the forfeiture by the Indemnifying Party
of rights and defenses otherwise available to the Indemnifying Party
with respect to such claim. The
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Indemnifying Party shall have the right, upon written notice to the
Indemnified Party, to assume the defense of such action or proceeding,
including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of the fees and disbursements of such
counsel. In the event, however, that the Indemnifying Party declines or
fails to assume the defense of the action or proceeding or to employ
counsel reasonably satisfactory to the Indemnified Party, in either
case in a timely manner, then such Indemnified Party may employ counsel
to represent or defend it in any such action or proceeding and the
Indemnifying Party shall pay the reasonable fees and disbursements of
such counsel as incurred; provided, however, that the Indemnifying
Party shall not be required to pay the fees and disbursements of more
than one counsel for all Indemnified Parties in any jurisdiction in any
single action or proceeding. In any action or proceeding with respect
to which indemnification is being sought hereunder, the Indemnified
Party or the Indemnifying Party, whichever is not assuming the defense
of such action, shall have the right to participate in such litigation
and to retain its own counsel at such party's own expense. The
Indemnifying Party or the Indemnified Party, as the case may be, shall
at all times use reasonable efforts to keep the Indemnifying Party or
the Indemnified Party, as the case may be, reasonably apprised of the
status of the defense of any action the defense of which they are
maintaining and to cooperate in good faith with each other with respect
to the defense of any such action.
(b) No Indemnified Party may settle or compromise any claim or
consent to the entry of any judgment with respect to which
indemnification is being sought hereunder without the prior written
consent of the Indemnifying Party, unless such settlement, compromise
or consent includes an unconditional release of the Indemnifying Party
from all liability arising out of such claim. An Indemnifying Party may
not, without the prior written consent of the Indemnified Party, settle
or compromise any claim or consent to the entry of any judgment with
respect to which indemnification is being sought hereunder unless such
settlement, compromise or consent includes an unconditional release of
the Indemnified Party from all liability arising out of such claim and
does not contain any equitable order, judgment or term which in any
manner affects, restrains or interferes with the business of the
Indemnified Party or any of the Indemnified Party's respective
affiliates.
(c) In the event an Indemnified Party shall claim a right to
payment pursuant to this Agreement, such Indemnified Party shall send
written notice of such claim to the appropriate Indemnifying Party.
Such notice shall specify the basis for such claim. As promptly as
possible after the Indemnified Party has given such notice, such
Indemnified Party and the appropriate Indemnifying Party shall
establish the merits and amount of such claim (by mutual agreement,
litigation, arbitration or otherwise) and, within five (5) business
days of the final determination of the merits and amount of such claim,
the Indemnifying Party shall deliver to the Indemnified Party
immediately available funds in an amount equal to such claim as
determined hereunder.
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Section 8.4. Claims Period. Except as provided in this Section 8.4, no
claim for indemnification under this Agreement may be asserted by an Indemnified
Party after the expiration of the appropriate claims period (the "Claims
Period") which shall commence on the Closing Date and shall terminate on the
[fifth (5th)] anniversary of the Closing Date; provided, however, that the
Claims period with respect to Purchaser Losses arising under Sections 8.1(a),
8.1(b) and 8.1(d) of this Agreement shall commence on the date hereof and shall
survive and remain in effect without limitation, except as limited by law;
provided, further, however, that if prior to the close of business on the last
day of the Claims Period, an Indemnifying Party shall have been properly
notified of a claim for indemnity hereunder and such claim shall not have been
finally resolved or disposed of at such date, the basis of such claim shall
continue to survive with respect to such claim and shall remain a basis for
indemnity hereunder with respect to such claim until such claim is finally
resolved or disposed of in accordance with the terms hereof.
Section 8.5. Right of Offset.
(a) Purchaser shall be entitled to offset (the "Offset") any
amount which it is owed by Seller or Shareholders under this Article 8
against any sum which it owes Seller or Shareholders under this
Agreement.
(b) If Seller fails to object to the calculation of the Offset
as set forth in a written notice from Seller to Purchaser describing
such Offset, then such Offset set forth therein shall be deemed to
constitute the final and binding Offset for the purposes hereof. In
connection with such written notice, Purchaser agrees to provide Seller
with copies of material documents utilized by Purchaser in arriving at
its basis for the Offset and substantiation of the amount of such
Offset. If Seller provides Purchaser with a written objection to the
calculation of the Offset as set forth in such written notice within
thirty (30) days of the receipt thereof, then Seller and Purchaser
shall negotiate in good faith for a period not to exceed thirty (30)
days to resolve such dispute and reach agreement upon the final and
binding calculation of the Offset. If, at the end of such thirty
(30)-day negotiation period, Seller and Purchaser shall have failed to
resolve such a dispute and to reach agreement upon the proper
calculation of the Offset, then Seller and Purchaser shall submit the
matter to binding arbitration by the American Arbitration Association
("AAA") in Chicago, Illinois, or such other location as agreed to by
the parties or proposed by AAA. Such arbitration shall be conducted by
a panel of three arbitrators. The fees and expenses of AAA shall be
shared equally by Purchaser on the one hand and Seller and Shareholders
on the other. The final decision of the panel shall be rendered in
writing within 180 days of submission and shall be final and binding on
the parties hereto.
(c) All such monies in dispute shall be held in escrow by a
United States bank reasonably acceptable by the parties hereto pursuant
to an escrow agreement reasonably acceptable by the parties thereto
pending resolution of the matters set forth herein; provided, however,
that, solely to induce the parties to negotiate in good faith toward an
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expeditious settlement of any such dispute, 100% of such funds shall
revert to the control of Purchaser after the expiration of 180 days of
arbitration.
Section 8.6. Arbitration.
If any matter with respect to this Agreement or the transactions contemplated
herein shall be the subject of a dispute, Seller, Shareholders and Purchaser
shall negotiate in good faith to resolve such dispute for a period not to exceed
thirty (30) days following the written notice of such dispute delivered by one
party to the other. If, at the end of such thirty (30)-day negotiation period,
Seller, Shareholders and Purchaser shall have failed to resolve such dispute,
then Seller and Purchaser shall submit the matter to binding arbitration by AAA
in Chicago, Illinois, or such other location as agreed to by the parties or
proposed by AAA. Such arbitration shall be conducted by a panel of three
arbitrators, each of which arbitrators shall have experience arbitrating issues
as appropriate to the subject matter of the dispute. The fees and expenses of
AAA shall be share equally by Purchaser on the one hand and Seller and
Shareholders on the other. The final decision of the panel shall be rendered in
writing within 180 days of submission and shall be final and binding on the
parties hereto.
Section 8.7. Compliance with Bulk Sales Laws. Seller and Purchaser
hereby waive compliance by Purchaser and Seller with the bulk sales law and any
other similar laws in any applicable jurisdiction in respect of the transactions
contemplated by this Agreement. The Seller shall indemnify Purchaser from, and
hold Purchaser harmless against, any liabilities, damages, costs and expenses
resulting from or arising out of (a) the parties' failure to comply with any
such laws in respect of the transactions contemplated by this Agreement and (b)
any action brought or levy made as a result thereof.
ARTICLE 9.
MISCELLANEOUS PROVISIONS
Section 9.1. Notices. All notices, communications and deliveries
hereunder shall be made in writing signed by the party making the same, shall
specify the Section hereunder pursuant to which it is given or being made, and
shall be deemed given or made on the date delivered if delivered in person, on
the date initially received if delivered by telecopy transmission followed by
registered or certified mail confirmation, on the date delivered if delivered by
a nationally recognized overnight courier service or on the third (3rd) business
day after it is mailed if mailed by registered or certified mail (return receipt
requested) (with postage and other fees prepaid) as follows:
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<PAGE> 36
To Purchaser:
Horizon Medical Products, Inc.
4200 Northside Parkway
Building 7
Atlanta, Georgia 30327-1000
Attn: Marshall B. Hunt
Telecopy No.: (404) 264-2611
with a copy to:
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303
Attn: Jon R. Harris, Jr., Esq.
Telecopy No.: (404) 572-5146
Slaughter & Virgin
Suite 1110
400 Colony Square
1201 Peachtree Street, NE
Atlanta, Georgia 30361
Attn: Nathaniel G. Slaughter, III, Esq.
Telecopy No.: (404) 872-7879
To Seller:
Columbia Vital Systems, Inc.
100 East Chestnut Avenue
Westmont, Illinois 60559
Attn: William C. Huck
Telecopy No.: (630) 325-0257
with a copy to:
DeFrees & Fiske
200 South Michigan Avenue
Suite 1100
Chicago, IL 60604
Telecopy No.: (312) 939-5617
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<PAGE> 37
or to such other representative or at such other address of a party as such
party hereto may furnish to the other parties in writing.
Section 9.2. Disclosure Letters and Exhibits. The recitals at the
forefront of this Agreement, the Seller's Disclosure Letter and the Purchaser
Disclosure Letter and all Exhibits hereto are hereby incorporated into this
Agreement and are hereby made a part hereof as if set out in full in this
Agreement.
Section 9.3. Time of the Essence; Computation of Time. Time is of the
essence for each and every provision of this Agreement. Whenever the last day
for the exercise of any privilege or the discharge of any duty hereunder shall
fall upon a Saturday, Sunday, or any date on which banks in Atlanta, Georgia are
closed, the party having such privilege or duty may exercise such privilege or
discharge such duty on the next succeeding day which is a regular business day.
Section 9.4. Assignment; Successors in Interest. No assignment or
transfer by Purchaser, Seller of their respective rights and obligations
hereunder shall be made except with the prior written consent of the other
parties hereto. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their permitted successors and assigns, and
any reference to a party hereto shall also be a reference to a permitted
successor or assign.
Section 9.5. Investigations; Representations and Warranties. The
representations and warranties of the Seller and Purchaser set forth in this
Agreement shall not be extinguished by the Closing and shall survive the Closing
Date for a period of three (3) years. Notwithstanding anything to the contrary
set forth in this Section 9.5, (i) the covenants, agreements and undertakings of
the Seller and Purchaser set forth herein shall survive the Closing and shall
remain in full force and effect until duly satisfied or performed by the
appropriate party hereto and (ii) this Section 9.5 shall not limit or restrict
Purchaser's or Seller's remedy against the other or any other person for fraud,
willful misconduct, bad faith or any other intentional breach of any
representation, warranty, covenant, agreement or undertaking contained herein.
The respective representations and warranties of Purchaser and Seller contained
herein or in any certificate, or other document delivered by any party prior to
Closing shall not be deemed waived or otherwise affected by any investigation
made by a party hereto.
Section 9.6. Number; Gender. Whenever the context so requires, the
singular number shall include the plural and the plural shall include the
singular, and the gender of any pronoun shall include the other genders.
Section 9.7. Captions. The titles, captions and table of contents
contained in this Agreement are inserted herein only as a matter of convenience
and for reference and in no way define, limit, extend or describe the scope of
this Agreement or the intent of any provision hereof. Unless otherwise specified
to the contrary, all references to Articles and Sections are references to
Articles and Sections of this Agreement and all references to Exhibits are
references to Exhibits to this Agreement and the Seller's Disclosure Letter and
the Purchaser Disclosure Letter.
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<PAGE> 38
Section 9.8. Seller Executives; Knowledge. As used in this Agreement,
the terms "the best knowledge of Seller's Executives," "known to the Seller
Executives" or words of similar import used herein with respect to the Seller,
the Business or the Purchased Assets shall mean the actual knowledge of the
Seller Executives (as hereinafter defined) together with the knowledge a
reasonable business person, in a similar business of similar size to Seller,
would have obtained after making reasonable inquiry and after exercising
reasonable diligence with respect to the matters at hand. The "Seller
Executives" shall consist of William C. Huck.
Section 9.9. Controlling Law; Integration; Amendment.
(a) This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Georgia
without reference to that state's choice of law rules. This Agreement
and the documents and agreements delivered pursuant hereto supersede
all negotiations, agreements and understandings among the parties with
respect to the subject matter hereof and constitute the entire
agreement among the parties hereto.
(b) This Agreement may be amended by the parties hereto by or
pursuant to action duly and property taken by each of them. Without
limiting the foregoing, this Agreement may not be amended, modified or
supplemented except by written agreement executed by each of the
parties hereto.
Section 9.10. Severability. Any provision hereof which is prohibited or
unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction will not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by law, the parties hereto waive any
provision of law which renders any such provision prohibited or unenforceable in
any respect.
Section 9.11. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, and it shall not
be necessary in making proof of this Agreement or the terms hereof to produce or
account for more than one of such counterparts.
Section 9.12. Enforcement of Certain Rights. Nothing expressed or
implied in this Agreement is intended, or shall be construed, to confer upon or
give any person, firm or corporation other than the parties hereto, and their
successors or permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, or result in such person, firm
or corporation being deemed a third party beneficiary of this Agreement.
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<PAGE> 39
Section 9.13. Waiver. At any time prior to the Closing, the parties
hereto, by or pursuant to action duly and properly taken by each of them, may,
to the extent legally permitted: (i) extend the time for the performance of any
of the obligations or other acts of any other party, provided the party so
extending is the party hereunder for whom such obligation or act so extended was
to be performed; (ii) waive any inaccuracies in the representations or
warranties of any other party contained in the Agreement or in any document or
certificate delivered pursuant hereto, provided the party so waiving is the
Party hereunder for whom such representation or warranty was made; (iii) waive
compliance or performance by any other party with any of the covenants,
agreements or obligations of such party contained herein, provided the party so
waiving such compliance or performance is the party hereunder for whom such
covenant, agreement or obligation was to be performed; and (iv) waive the
satisfaction of any condition that is precedent to the performance by the party
so waiving of any of its obligations hereunder. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party. A waiver by one party
of the performance of any covenant, agreement, obligation, condition,
representation or warranty shall not be construed as a waiver of any other
covenant, agreement, obligation, condition, representation or warranty. A waiver
by any party of the performance of any act shall not constitute a waiver of the
performance of any other act or an identical act required to be performed at a
later time.
Section 9.14. Fees and Expenses. Except as otherwise provided herein
Purchaser shall pay its own fees, costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby, including, but not
limited to, the fees, costs and expenses of its accountants and counsel. Except
as otherwise provided herein, the Seller shall pay its own fees, costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby, including, but not limited to, the fees, costs and expenses
of its accountants and counsel.
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<PAGE> 40
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the date first above written.
HORIZON MEDICAL PRODUCTS, INC.
By:
----------------------------
Title:
----------------------------
COLUMBIA VITAL SYSTEMS, INC.
By:
----------------------------
Title:
----------------------------
SHAREHOLDERS
----------------------------------
William C. Huck
----------------------------------
R. Gregory Huck
<PAGE> 41
TRANSITION AGREEMENT
This TRANSITION AGREEMENT is dated as of, and effective as of 12:01
a.m. on, September 1, 1998 (the "Agreement"), by and among HORIZON MEDICAL
PRODUCTS, INC., a Georgia corporation ("Purchaser") and COLUMBIA VITAL SYSTEMS,
INC., an Illinois corporation ("Seller").
RECITALS
WHEREAS, pursuant to an Asset Purchase Agreement, dated as of September
1, 1998 (the "Asset Purchase Agreement"), by and among Purchaser, Seller, and
the Shareholders, Purchaser has purchased from Seller, and Seller has sold to
Purchaser, certain assets related to Seller's Midwest medical device
distribution business, including, among other things, distributing and selling
medical devices (the "Business");
WHEREAS, in order to provide for an efficient and orderly transition of
the ownership and management of the Business and pursuant to Section 5.12 of the
Asset Purchase Agreement, Seller has agreed to enter into this Agreement to
provide certain transition services to Purchaser on the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the mutual covenants herein
expressed and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Definitions. Capitalized terms used but not otherwise
defined in this Agreement shall have the meanings ascribed to such terms in the
Asset Purchase Agreement.
Section 2. Employees
(a) Employees of Seller. Seller employs or engages as
independent contractor, personnel (the "Personnel") to perform services
at the Premises (as defined below). Seller shall be responsible for the
salary, employee benefits, taxes and other expenses related to the
employment or engagement as independent contractor of all Personnel.
Seller shall also be responsible for the hiring, supervision,
discipline and dismissal of Personnel at the Premises (as defined
below).
(a) Employee of Purchaser. The parties acknowledge that during
the Term of this Agreement (as defined below) there will be one (1)
employee of Purchaser (the "Supervisor") who will be providing
supervision of sales representatives and oversight of the Business at
the Premises (as defined below). Purchaser will be responsible for the
salary, employee benefits, taxes and other expenses related to the
employment or engagement as independent contractor of the Supervisor.
Purchaser shall also be responsible for the hiring, supervision,
discipline and dismissal of the Supervisor at the Premises (as defined
below).
<PAGE> 42
Section 3. Transition Services. Seller agree to furnish all of the
following services, (referred to herein collectively as the "Transition
Services"):
(a) Use of Office and Warehouse Facility. For a period of
twenty four months after the Closing Date, Seller shall allow Purchaser
to utilize Seller's existing office (including furniture and equipment)
located at 100 East Chestnut Avenue, Westmont, Illinois 60559 (the
"Office") and a portion of the warehouse facility located at 100 East
Chestnut Avenue, Westmont, Illinois 60559 (the "Warehouse") for the
purpose of warehousing products and operating a distribution operation
(the Office and Warehouse shall collectively be referred to as the
"Premises").
(b) Personnel. Seller will provide:
(i) a sufficient number of Personnel for conducting
the business of Purchaser on the Premises during the Term of
this Agreement;
(ii) assistance by the office administrator in the
supervision of all services, systems and support staff;
(iii) appropriate typing, secretarial and filing
services; answering and monitoring incoming telephone calls;
(iv) ordering adequate office supplies for the
operation of the Business conducted at the Premises;
(v) use of telephone and office equipment,
including facsimile machine, copier and a personal computer at
the Premises and adequate space and office furniture at the
Office for the Supervisor.
(c) Relocation of Purchaser's Manufacturing Facility. Within
thirty (30) days after the expiration of the twenty four month time
period described above in Section 2(a), Seller shall use its best
efforts to assist Purchaser with the relocation of the Business of
Purchaser to Purchaser's manufacturing facility located in Manchester,
Georgia, or to another facility. The representations and agreements of
the parties contained in this Section 3(c) of this Agreement shall
survive the expiration of the Term of this Agreement.
(d) September Services. For the month of September 1998, in
addition to the payments in Section 5, Purchaser shall reimburse to
Seller all compensation and benefits paid by Seller to the Sales
Representatives (as defined in the Asset Purchase Agreement) and James
Herrmann.
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<PAGE> 43
Section 4. Performance of Transition Services. Seller agrees to
perform the Transition Services in a professional and competent manner, using at
least the same standard of care that Seller uses in performing such services in
its own affairs.
Section 5. Consideration.
(a) Amount of Consideration. During the Term of this Agreement
(as defined below) and in connection with Seller's obligations under
this Agreement, Purchaser shall be responsible to reimburse Seller for
an amount equal to the fraction of Costs (as defined below) directly
attributable to Purchaser or the Business. The parties agree that for
the first two months of this Agreement, Purchaser shall pay to Seller
an amount equal to five percent (5%) of the revenues of Purchaser in
the Territory (as defined in the Asset Purchase Agreement) for such
period. After such period the parties shall negotiate an adjustment to
the amounts previously paid to reflect actual costs.
(b) Definition of Costs. For purposes of this Agreement, Costs
shall mean all of the following expenses incurred by Seller:
(i) Personnel salary and employee benefits
expenses;
(ii) telephone costs, including (800) number, local
and long distance charges and telephone charges incurred in
connection with use of facsimile or modem; [describe cost
arrangements pertaining to shared (800) number, local
telephone charges and long distance charges and telephone
charges incurred in connection with use of facsimile or
modem];
(iii) shipping expenses, excluding postage expenses
which will be paid directly by Purchaser; and
(iv) the costs of office supplies (at Seller's
cost).
(c) Payment of Consideration. Within ten (10) days after the
end of each month during the Term (as defined below) of this Agreement,
Purchaser shall pay to Seller its share of the Costs.
Section 6. Term. The term of this Agreement (the "Term") shall
expire as of the date which is the last day of the twenty-fourth month from the
Closing Date.
Section 7. Use of Premises. During the Term of this Agreement, the
Premises shall be used for the purposes consistent with maintaining an office,
warehousing products and the operation of a distribution operation, unless the
Seller consents to an alternate use. The Premises shall not be used for any
illegal purposes, nor in any manner to create a nuisance or trespass, nor in any
manner
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<PAGE> 44
to change its current operation the result of which would be to adversely and
materially change the insurance rating on the Premises.
Section 8. Utility Bills. Seller shall pay on or before the date due
all utility bills, including, but not limited to, water, sewer, gas,
electricity, fuel, light and heat bills for the Premises, and Seller shall pay
all charges for garbage collection services or other sanitary services rendered
to the Premises or used by Purchaser in connection therewith. If Seller fails to
pay timely any of said utility bills or charges for garbage collection or other
sanitary services, Purchaser may, but shall have no obligation to, pay the same
and such payment shall be deducted from and become part of the next payment due
under Section 5 of this Agreement.
Section 9. Repairs. Seller agrees to keep and maintain in good repair,
at its expense, the roof, structural aspects of the exterior walls, and the
structural integrity of the Foundation of the Premises (exclusive of all glass
and exclusive of all exterior doors). Seller shall, at its expense, maintain in
good order and repair the Premises, including the building, heating and air
conditioning equipment (including, but not limited to, replacement of parts,
compressors, air handling units and heating units), and other improvements
located thereon. Seller further agrees to care for the grounds around the
building, including the mowing of grass, paving, care of shrubs and general
landscaping.
Section 10. Taxes. Seller shall pay and discharge on or before the last
day on which the same may be paid without penalty, all taxes, assessments, rates
and charges, sanitary assessments, and other governmental impositions and
charges of every kind and nature whatsoever, extraordinary as well as ordinary,
and each and every installment thereof, together with all interest and penalties
thereon, which shall or may during the Term of this Agreement be levied,
assessed or imposed against the Premises or any part thereof, or the
improvements located thereon, or any buildings, appurtenances, or equipment now
or hereafter erected or placed thereon or therein or any part thereof. All taxes
assessed or imposed in lieu of or in addition to the foregoing, shall be paid by
Seller, together with all interest and penalties thereon, under or by virtue of
all present or future laws, ordinances, requirements, orders, directions, rules
or regulations of the federal, state, county and city or local governments and
of all other governmental authorities whatsoever. Purchaser shall pay all taxes
and assessments which shall, prior to or during the Term of this Agreement be
levied, assessed or imposed on or become a lien upon the personal property of
Purchaser located upon the Premises. Purchaser shall, within thirty (30) days
after payment by Purchaser of any such taxes or assessments, produce and deliver
to Seller reasonably satisfactory evidence of such payment.
Seller shall have the right to contest or review in good faith by legal
proceedings, or in such other manner as it may deem suitable (which, if
instituted, Seller shall conduct at its own expense, and free of any expense to
Purchaser, and, if necessary, in the name of Purchaser), any taxes, assessment,
rate or charge, sanitary assessment, or other governmental imposition or charge
aforementioned. Notwithstanding the foregoing, Seller shall promptly pay all
such items prior to the dates the same may be paid without penalty. The legal
proceedings herein referred to shall include appropriate proceedings for review
of tax assessments and appeals from orders therein and appeals from any
judgement, decrees or orders, but all such proceedings shall be begun as soon as
reasonably
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<PAGE> 45
possible after the imposition or assessment of any contested items and shall be
prosecuted to final adjudication with reasonable dispatch. In the event of any
such contest by Seller, Seller shall and does hereby indemnify and hold harmless
Purchaser from and against any loss or damage to Purchaser, and Seller shall pay
any such tax, assessment, or claim underprotest, or take such other steps as may
be necessary, to prevent any sale of the Premises or any loss or damage to
Purchaser in connection with any such contest.
Nothing herein contain shall be construed to require Purchaser to pay
any inheritance, estate, succession, transfer, gift, franchise, income, profit
or excess profit, capital stock, capital level, corporate or incorporated
business tax or other similar tax that is or may be imposed upon Seller, its
successors or assigns, or upon the consideration payable by Purchaser.
Section 11. Destruction of or Damage to Premises. If the Premises are
destroyed whether by storm, fire, lightning, earthquake or other casualty or
otherwise, or damaged but not wholly destroyed by any such casualties Seller
shall rebuild and restore the Premises to substantially the same condition as
before damage as speedily as is practicable. If however, the Premises cannot
reasonably be expected to be completely repaired within one hundred eighty (180)
days or the damage occurs within one hundred eight (180) days prior to the
expiration of this Agreement, then Seller or Purchaser terminate this Agreement
upon written notice to the other party within fourteen (14) days of the date of
such casualty. Purchaser's obligation to pay consideration as set forth in
Section 5 herein shall ratably abate during any time and to the extent that the
Premises or any portion thereof are rendered unsuitable for the continued use as
theretofore used as a result of such casualty.
Section 12. Insurance.
(a) Throughout the Term of this Agreement, Purchaser shall:
(i) Keep its inventory located within the Premises
insured against loss or damage by fire with extended coverage,
all such insurance to be in an aggregate amount which shall be
not less than the full replacement value, and all such
insurance to be carried with such insurance companies and in
such form as shall be reasonably satisfactory to Seller, and
Purchaser shall provide Seller with a certificate of insurance
evidencing such coverage.
At least thirty (30) days prior to the expiration of each such policy,
Purchaser shall deliver to Seller the new certificate for renewal insurance.
Seller shall not violate or knowingly permit to be violated any of the
conditions or provisions of such policy. Purchaser and Seller shall cooperate in
connection with the collection of any insurance monies that may be due in the
event of loss.
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<PAGE> 46
Each such policy (including renewal insurance) issued by the insurer
shall contain an agreement by the insurer that such policy shall not be canceled
without at least thirty (30) days prior written notice to Purchaser.
(b) Throughout the Term of this Agreement, Seller, at Seller's cost and
expense shall:
(i) Keep the Premises and all other improvements, including
all fixtures and equipment, insured against loss or damage by fire with
extended coverage, all such insurance to be in an aggregate amount
which shall be not less than the full replacement value, without
deduction for depreciation, and all such insurance to be carried with
such insurance companies and in such form as shall be reasonably
satisfactory to Purchaser, and Seller shall provide Purchaser with a
certificate of insurance evidencing such coverage; and
(ii) Provide and keep in force a general public liability
insurance policy with an insurance company authorized to do business in
the State of Illinois. Such policy shall name the Purchaser as an
additional insured, and shall be in the amount of not less than One
Million Dollars ($1,000,000) with respect to any one accident, One
Million Dollars ($1,000,000) with respect to injury or death of any one
person and Two Hundred Fifty Thousand Dollars ($250,000) with respect
to damage to property. Such policy shall cover the entire Premises as
well as the driveways, roads, avenues and sidewalks included therein,
and the Seller shall provide the Purchaser with a certificate of such
insurance.
All insurance provided by Seller as required by this paragraph shall
include the interest of the landlord and any first mortgagee of the Premises, as
their respective interests may appear, and in such form as shall be reasonably
satisfactory to Seller and Purchaser. All policies shall provide that loss, if
any, payable thereunder with regard to Premises coverage, shall be payable to
Seller and to the holder of such mortgage, as their respective interests may
appear.
At least thirty (30) days prior to the expiration of each such policy,
Seller shall deliver to Purchaser the new certificate for renewal insurance.
Purchaser shall not violate or knowingly permit to be violated any of
the conditions or provisions of such policy. Purchaser and Seller shall
cooperate in connection with the collection of any insurance monies that may be
due in the event of loss.
Each such policy (including renewal insurance) issued by the insurer
shall contain an agreement by the insurer that such policy shall not be canceled
without at least thirty (30) days prior written notice to Seller.
Section 13. Governmental Orders. Seller shall at all times during the
Term and at Seller's sole cost and expense, cause the Premises to comply with
all covenants, conditions and restrictions of record and all applicable rules,
orders, statutes, requirements, laws, ordinances and regulations of all duly
constituted governmental, public, or quasi-public authorities now or hereafter
in any manner
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<PAGE> 47
affecting the Premises or the use thereof. To the best of the knowledge of
Seller, the Premises currently comply with all applicable rules, orders,
statutes, requirements, laws, ordinances and regulations of all duly constituted
governmental, public, or quasi-public authorities affecting the Premises.
Section 14. Condemnation. If the whole of the Premises, or such portion
thereof as will in Purchaser's reasonable judgment make the Premises unusable
for Purchaser's purposes, be condemned by any legally constituted authority for
any public use or purpose, then this Agreement shall terminate from date when
possession thereof is taken by public authorities, and consideration shall be
accounted for as between Seller and Purchaser as of said date. Any and all
compensation arising from such condemnation shall be paid to and belong to
Seller (except any award for damage to the inventory of Purchaser, which shall
belong to Purchaser).
Section 15. Removal of Fixtures. Purchaser may, prior to the expiration
of this Agreement or any extension provided hereunder thereof, remove all
inventory, fixtures and equipment which it has placed in the Premises, provided
that Purchaser repairs all damage to the Premises caused by such removal.
Section 16. Indemnification.
(a) Seller agrees to indemnify and hold harmless Purchaser and
its officers, employees, agents and assigns from and against any and
all liabilities, claims, demands, suits, actions, causes of action or
any other legal proceedings arising out of, or related in any way to,
any negligent or intentional act or omission by Seller arising out of
or in connection with Seller's performance of its obligations under
this Agreement. Seller agrees to pay all losses, damages (actual and
exemplary), costs, expenses, invoices and bills (including reasonable
attorneys' fees) incurred by Purchaser and its officers, employees,
agents and assigns as a result of any such negligent or intentional act
or omission by Seller.
(b) Purchaser agrees to indemnify and hold harmless Seller and
its officers, employees, agents and assigns from and against any and
all liabilities, claims, demands, suits, actions, causes of action or
any other legal proceedings arising out of, or related in any way to,
any negligent or intentional act or omission by Purchaser arising out
of or in connection with Purchaser's performance of its obligations
under this Agreement. Purchaser agrees to pay all losses, damages
(actual and exemplary), costs, expenses, invoices and bills (including
reasonable attorneys' fees) incurred by Seller and its officers,
employees, agents and assigns as a result of any such negligent or
intentional act or omission by Purchaser.
Section 17. Mortgagee's Rights. Purchaser's rights shall be subject to
any mortgage or deed to secure debt which is now, or may hereafter be placed
upon the Premises by a mortgagee of Seller; provided, however, that Purchaser
shall execute a separate agreement reflecting such subordination in a form
reasonably acceptable to Purchaser, and provided that Seller obtains a
Subordination, Non-disturbance and Attornment Agreement for Purchaser with
respect to any
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<PAGE> 48
mortgage or deed to secure debt which may be placed upon the Premises by a
mortgagee of Seller. At the request of either party, the other party shall
execute an estoppel certificate, in such form as the requesting party may
reasonably require, certifying as to the status and condition of the Premises
and this Agreement. There shall be no sale of the Premises or any portion
thereof, without the provision by Seller of services comparable to the services
provided by the Personnel and of facilities comparable to the Premises.
Section 18. Binding Effect; Assignment. This Agreement shall be binding
upon, and inure to the benefit of, the parties and their respective successors,
legal representatives and permitted assigns. No assignment of this Agreement or
of any rights or obligations hereunder may be made by either party without the
prior written consent of the other party, which shall not be unreasonably
withheld. Any attempted assignment without the required consent shall be null
and void. Notwithstanding the foregoing, Purchaser may assign this Agreement to
any of its subsidiaries or in the event of a sale of all or substantially all of
Purchaser's assets without prior written consent of Seller.
Section 19. Severability. If any term or provision of this Agreement
shall to any extent be invalid or enforceable, the remainder of this Agreement
shall not be affected thereby, and each term and provision of this Agreement
shall be valid and be enforced to the fullest extent permitted by law.
Section 20. Notices. Any notices which any party may or must give to
any other party under this Agreement shall be in writing and shall be delivered
personally or sent by certified or registered mail, return receipt requested to:
Purchaser: Seller:
--------- ------
Horizon Medical Products, Inc. Columbia Vital Systems, Inc.
4200 Northside Parkway 100 East Chestnut Drive
Building 7 Westmont, Illinois 60559
Atlanta, Georgia 30327 Attn: William C. Huck
Attn: Marshall B. Hunt
Notice shall be deemed given, if delivered personally, upon delivery
thereof, and if mailed, upon the mailing thereof.
Section 21. Relationship of the Parties. None of the provisions of this
Agreement are intended to create nor shall they be deemed or construed by the
parties to create any partnership or joint venture relationship or other
relationship between the parties hereto, except that of independent entities
contracting with each other solely for the purpose of effecting the provisions
of this Agreement.
Section 22. Governing Law. This Agreement shall be governed, construed
and enforced in accordance with the laws of the State of Georgia, without regard
to that state's conflict of laws
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<PAGE> 49
provisions. If any matter with respect to this Agreement or the transactions
contemplated herein shall be the subject of a dispute, Seller, Shareholders and
Purchaser shall negotiate in good faith to resolve such dispute for a period not
to exceed thirty (30) days following the written notice of such dispute
delivered by one party to the other. If, at the end of such thirty (30)-day
negotiation period, Seller, Shareholders and Purchaser shall have failed to
resolve such dispute, then Seller and Purchaser shall submit the matter to
binding arbitration by AAA in Chicago, Illinois, or such other location as
agreed to by the parties or proposed by AAA. Such arbitration shall be conducted
by a panel of three arbitrators, each of which arbitrators shall have experience
arbitrating issues as appropriate to the subject matter of the dispute. The fees
and expenses of AAA shall be share equally by Purchaser on the one hand and
Seller and Shareholders on the other. The final decision of the panel shall be
rendered in writing within 180 days of submission and shall be final and binding
on the parties hereto.
Section 23. Amendment. This Agreement may be amended, supplemented or
modified only by a written agreement signed by each party hereto.
Section 24. Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which shall
constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the date first above written.
HORIZON MEDICAL PRODUCTS, INC.
By:
------------------------------
Title:
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COLUMBIA VITAL SYSTEMS, INC.
By:
------------------------------
Title:
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-9-
<PAGE> 1
[HMP Horizon Medical Products, Inc. Letterhead]
FOR IMMEDIATE RELEASE
Investor Contact: Mark Jewett
Vice President of Finance
706-846-3126
Website: http://www.HMPvascular.com
HORIZON MEDICAL PRODUCTS, INC. ANNOUNCES AGREEMENT TO ACQUIRE ASSETS OF COLUMBIA
VITAL SYSTEMS' INC. MEDICAL DEVICE DISTRIBUTION BUSINESS.
Atlanta, GA--September 21, 1998--Horizon Medical Products, Inc. (NASDAQ:HMPS),
today announced that it has acquired certain assets from Columbia Vital Systems,
Inc. (CVS), a privately owned specialty medical device distributor based in
Westmont, Illinois for an initial purchase price of $4 million in cash. HMP will
make additional payments to CVS of up to $5.225 million in cash, subject to the
terms of the purchase agreement including the successful achievement of future
sales targets. According to Marshall B. Hunt, HMP's Chairman and Chief Executive
Officer, "CVS distributed products are primarily sold to the vascular access,
oncology and hematology markets. These are exactly the markets that HMP is
highly focuses on."
Mr. Hunt also stated, "We are very pleased to make this announcement to our
shareholders as we continue to execute our acquisition strategy. The acquisition
of CVS, one of the premier specialty medical device distributors in the Midwest,
strengthens our core business objective of developing one of our market's best
and most comprehensive direct sales forces. By acquiring a company of CVS's
stature, a well-known and well-run distributor formed in 1975, we can also make
this acquisition in a way that is not detrimental to our current earnings. In
addition to increasing the size of our direct sales force by approximately 25%,
we will also establish a number of contacts with key device manufacturers that
allow for new products being placed in the hands of our existing sales force.
The CVS sales force will now also be able to sell HMP's comprehensive line of
vascular access products. This acquisition also increases the number of
hospitals that Horizon Medical will be doing business with in the future."
Certain statements and information included herein may constitute
"forward-looking statements" which are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. The
forward-looking statements are based on current expectations and may be
significantly impacted by certain risks and uncertainties described herein and
in the Company's Prospectus on Form S-1 filed with the Securities and Exchange
Commission. There can be no assurance that statements made in this press
release relating to future events will be achieved. The Company undertakes no
obligation to update or revise forward-looking statements to reflect changed
assumptions, the occurrence of unanticipated events or changes to future
operating results over time.
Horizon, headquartered in Manchester, Georgia, is a rapidly growing specialty
medical device company focused on manufacturing and marketing vascular access
products. The Company's vascular access product lines include implantable
ports, which are used primarily in cancer treatment protocols, and specialty
catheters, which are used in hemodialysis and stem cell apheresis procedures.
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