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EXHIBIT 2.1
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ASSET PURCHASE AGREEMENT
BY AND BETWEEN
HORIZON MEDICAL PRODUCTS, INC.
AND
IDEAS FOR MEDICINE, INC.
OCTOBER 9, 2000
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made as of October
9, 2000 by and between HORIZON MEDICAL PRODUCTS, INC., a Georgia corporation
("Horizon"), and IDEAS FOR MEDICINE, INC., a Florida corporation ("IFM").
WITNESSETH:
WHEREAS, IFM is a wholly-owned subsidiary of CryoLife, Inc., a Florida
corporation ("CryoLife"), and is in the medical device manufacturing business
(the "Business");
WHEREAS, Horizon and IFM previously entered into that certain purchase
agreement, dated as of May 19, 1998 (the "First Purchase Agreement"), pursuant
to which Horizon purchased certain assets of IFM;
WHEREAS, Horizon and IFM previously entered into that certain purchase
agreement, dated as of September 30, 1998 (the "Second Purchase Agreement"),
pursuant to which Horizon purchased certain additional assets of IFM; and
WHEREAS, Horizon wishes to acquire substantially all of the remaining
assets of IFM, and IFM wishes to sell such assets, all on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and for other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, Horizon and
IFM agree as follows:
1. Purchase and Sale of Assets; Assumed Liabilities.
1.1. Purchase and Sale of Assets. On the Closing Date (as
hereinafter defined), upon and subject to the terms and conditions of this
Agreement, IFM shall sell, transfer, assign, convey, and deliver to Horizon,
and Horizon shall purchase and acquire from IFM all right, title and interest
of IFM in and to all of the assets, properties and rights of IFM, of every kind
and description, personal and mixed, tangible and intangible, wherever
situated, except for the Excluded Assets (as defined in Section 1.4)
(collectively, the "Purchased Assets"), free and clear of all mortgages, liens,
pledges, security interests, charges, claims, restrictions and encumbrances of
any nature whatsoever, except for the Assumed Liabilities (as defined in
Section 1.7). The Purchased Assets shall not include any assets previously
purchased by Horizon pursuant to the First Purchase Agreement or the Second
Purchase Agreement.
1.2. Purchased Assets. Except as otherwise expressly set
forth in Section 1.4 hereof, the Purchased Assets shall include, without
limitation, the following assets, properties and rights of IFM:
(a) All of IFM's right, title and interest in
and to its fixed assets, as further described in Schedule 1.2(a)
hereto, including, without limitation, all production equipment,
office equipment, dies, drawings and other equipment used in the
production, manufacture, sale, marketing or distribution of products
(the "Fixed Assets");
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(b) All of IFM's right, title and interest in
and to (1) all finished goods inventory as of the close of business on
the Closing Date, including, without limitation, the items set forth
on Schedule 1.2(b)(1) hereto, and all containers and other packaging
materials associated with such finished goods inventory (the "Finished
Goods Inventory"); and (2) all other inventory, as further described
in Schedule 1.2(b)(2) hereto, including, without limitation, raw
materials and work in process, whether located at IFM's or CryoLife's
facilities, in route to the sterilizer or other outside vendors, or
elsewhere (the "Other Inventory," and together with the Finished Goods
Inventory, collectively, the "Inventory").
(c) All leasehold improvements, as further
described in Schedule 1.2(c) hereto, including, without limitation,
clean rooms and air handling equipment;
(d) All of IFM's right, title and interest in
and to all United States and foreign patents, patent applications,
tradenames, trademarks, copyrights, trade dress, logos, business and
product names, slogans, inventions, trade secrets, industrial models,
formulas, processes, designs, confidential and technical information,
manufacturing, engineering and technical drawings, product
specifications, know-how and all other material intangible property
and intellectual property rights to or similar to and registrations
and applications for registration relating to any of the foregoing or
licenses owned by IFM (collectively, "Intellectual Property")
including, without limitation, the items set forth on Schedule 1.2(d)
hereto;
(e) All of IFM's and/or CryoLife's rights and
benefits pursuant to those certain third-party contracts and
agreements set forth on Schedule 1.2(e) hereto and incorporated herein
by reference (the "Assigned Contracts");
(f) All of IFM's right, title and interest in
and to the "Ideas for Medicine" and "IFM" names and any trademarks and
tradenames, designs and logos associated therewith; and
(g) All records and documents related to the
Business or the Purchased Assets, whether in paper, electronic or
other media, including, without limitation, all FDA 510(k) filings and
other FDA filings, all drawings and designs, all test protocols and
results, all biocompatibility data, all customer lists, sales
brochures, medical records, all production records and all other
business records. IFM shall be entitled to keep a copy of all such
records and documents. IFM shall protect such records and documents
under the confidentiality provisions of Section 11.1 through the sixth
(6th) anniversary of the Closing Date and shall then promptly destroy
all of such records and documents with written notice to Horizon
confirming such destruction. After the destruction of such records and
documents, IFM will have access to such records and documents in
Horizon's possession in accordance with Section 6.8(b). Such records
and documents will be used by IFM solely for the preparation of the
prosecution or the defense of any suit, action, litigation or
administrative, arbitration or other proceeding or investigation by or
against IFM or CryoLife or for any third party claim for which
indemnification is claimed pursuant to the terms of Section 9 below,
or for the preparation for the filing of
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any document required by any federal, state or local governmental
department, regulatory agency, authority, commission, board or court.
1.3. Technical Files. At the Closing, IFM shall deliver
to Horizon copies of the technical file or dossier on the CE mark for each
Product, which copies shall include, without limitation, all paper and
electronic files related to IFM's products. IFM may redact from such copies any
information pertaining to the Excluded Products.
1.4. Excluded Assets. IFM shall retain and shall not sell
or deliver to Horizon, and Horizon shall not purchase from IFM, the following
assets, all of which shall be excluded from the Purchased Assets (collectively,
the "Excluded Assets"):
(a) All cash;
(b) All accounts receivable relating to or
arising out of sales on or before the Effective Date;
(c) Any rights including without limitation,
all trade secrets, know how and other intellectual property to the
following products and their related inventory and packaging
(collectively, the "Excluded Products"):
(i) BioGlue applicator tip connector;
(ii) heart valve holder;
(iii) BioGlue Aortic dissection
catheters;
(iv) CryoValve tags; and
(v) Cardiac Manipulator for Minimally
Invasive Surgical Procedures;
(d) Any raw materials supplied by third
parties, including, without limitation, work in progress and finished
goods inventory resulting from such raw materials, to which title
shall remain with such third party supplier pursuant to an Assigned
Contract;
(e) Accounts receivable resulting from work
performed under the Assigned Contracts prior to the Effective Date, as
set forth in Schedule 1.4(e) hereto;
(f) Any packaging or other items bearing the
"CryoLife" name;
(g) Any materials, equipment, fixtures, dies
and tooling listed on Schedule 1.4(g) which are utilized in connection
with the packaging and manufacture of the Excluded Products;
(h) All packaging for and work in process and
inventory of the Excluded Products, including, without limitation, all
BioGlue dispensers, mixing tips and
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twist rings and connectors, all CryoPacks, and all CryoLife
Intermediates (also known as allograft packaging); and
(i) All equipment owned by third parties and
listed on Schedule 1.4(i) hereto, which shall continue to be owned by
such third parties.
1.5. Liabilities Not Assumed. Except as expressly set
forth in Section 1.7, Horizon shall not and will not accept or assume any
liability or obligation of any nature whatsoever (whether express or implied,
fixed or contingent, liquidated or unliquidated, known or unknown, accrued or
to become due) of IFM or CryoLife. Without limiting the generality of the
foregoing, Horizon shall not and will not accept nor assume any liability or
obligation of IFM:
(a) arising from or related to any federal,
state, or local income, sales, use, excise, or other tax of IFM
(including without limitation any such taxes incurred by IFM as a
result of the transactions contemplated hereby), except as set forth
in Section 1.7(c);
(b) relating to any employees or former
employees of IFM arising by reason of any such other person's
employment or termination of employment by IFM, except as expressly
set forth in Section 6.5;
(c) resulting from the conduct of the Business
on or prior to the Closing Date, provided the foregoing shall not be
deemed to limit IFM's right to seek indemnification from Horizon under
the Manufacturing Agreement (as defined in Section 2.7);
(d) resulting from any product manufactured by
IFM for Horizon pursuant to the Manufacturing Agreement (the "HMP/IFM
Products") which is returned to Horizon or IFM prior to, on, or after
the Closing Date if such product (i) is defective as a result of a
defect in the manufacture or assembly thereof (and not as a result of
any defect in the design or specifications), and (ii) was sold by IFM,
or is a part of the Finished Goods Inventory (a "Defective HMP/IFM
Product"), provided such defect is not caused by the action or
inaction of Horizon;
(e) resulting from IFM's production,
manufacture and assembly of any of IFM's products other than the
HMP/IFM Products (the "Non-HMP Products") on or prior to the Closing
Date, including, without limitation, any personal injury or product
damage whether occurring prior to, on, or after the Closing Date,
caused by or through or arising as a result of the marketing, sale,
delivery, production, manufacture or assembly by IFM of the Non-HMP
Products;
(f) resulting from any defective or damaged
Non-HMP Product returned to Horizon or IFM prior to, on, or after the
Closing Date if such product (i) was sold by IFM, or (ii) is a part of
the Finished Goods Inventory (a "Defective Non-HMP Product," and
together with the Defective HMP/IFM Products, collectively, the
"Defective Products"), provided such defect or damage is not caused by
the action or inaction of Horizon; or
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(g) resulting from IFM's lack of compliance
with any applicable federal, state, or local laws, rules, regulations,
ordinances, or orders.
1.6. Valuation For Tax Reporting Purposes. IFM and
Horizon agree that Schedule 1.6, in which the parties have allocated the
Purchase Price (as defined below) among the Purchased Assets, has been jointly
prepared by the parties hereto. The parties agree to use Schedule 1.6 in
preparing and filing their respective Forms 8594 with the Internal Revenue
Service 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.
In the event the parties are unable to agree on Schedule 1.6 as of the Closing,
the parties shall agree on such Schedule 1.6 within ninety (90) days of the
Closing Date.
1.7. Assumption of Liabilities. On the Closing Date,
Horizon shall assume from IFM the following liabilities and obligations of IFM
(the "Assumed Liabilities"):
(a) the trade payables of IFM with respect to
Inventory received after the Effective Date and the trade payables of
IFM arising in respect of the provision of goods (excluding Inventory)
or services on or after the Effective Date;
(b) all ad valorem taxes on the Purchased
Assets accruing on or after the Effective Date; and
(c) the monetary obligations of IFM accruing on
or after the Effective Date under the Assigned Contracts and all other
obligations or liabilities under the Assigned Contracts accruing after
the Closing Date.
2. Purchase Price; Refund of Purchase Price.
2.1. Purchase Price. In consideration for IFM's sale,
transfer and delivery of the Purchased Assets (as defined above) to Horizon,
Horizon shall deliver to IFM at Closing a promissory note in the form of
Exhibit A hereto (the "Note") in favor of IFM with a principal amount equal to
Five Million Nine Hundred Forty-Five Thousand Two Hundred Sixteen Dollars
($5,945,216) (the "Purchase Price"). The terms of the Note shall be as follows:
(a) Three Million Eight Hundred Thousand
Dollars ($3,800,000) of the Note shall bear interest at the rate of
nine percent (9%) per annum and shall be payable in monthly
installments of principal and interest of One Hundred Forty Thousand
Dollars ($140,000) per month until all principal and interest due
under the Note is paid in full.
(b) Two Million One Hundred Forty-Five Thousand
Two Hundred Sixteen Dollars ($2,145,216) of the Note shall bear no
interest so long as Horizon makes all payments under the Note on a
timely basis.
(c) If Horizon fails to make any payment under
the Note on time, the remaining principal balance of the Note shall
bear interest at eighteen percent (18%). If Horizon makes all payments
on a timely basis without any late or deficient payments until such
time as the principal balance on the Note is reduced (by payment,
set-off,
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adjustment or otherwise) to Two Million One Hundred Forty-Five
Thousand Two Hundred Sixteen Dollars ($2,145,216), IFM shall forgive
the remaining Two Million One Hundred Forty-Five Thousand Two Hundred
Sixteen Dollar ($2,145,216) principal balance of the Note (the
"Discount").
2.2. Scheduled Payment of Note. Horizon agrees to pay
under the Note the sum of One Million Dollars ($1,000,000) in cash (the
"Scheduled Payment") upon the earlier of (i) the closing of one or more equity
financings which result in consideration to Horizon of at least Fifteen Million
Dollars ($15,000,000) in exchange for Horizon common and/or preferred stock
(the "Equity Financing") or (ii) April 3, 2001. In the event Horizon's pays the
Scheduled Payment prior to April 3, 2001, IFM shall forgive One Million Dollars
($1,000,000) of the principal amount of the Note in accordance with the terms
of the Note.
2.3. Physical Inventory.
(a) Horizon and IFM have taken a physical
inventory of the Inventory and Fixed Assets (the "Physical Inventory")
prior to Closing. Based on the Physical Inventory, the Purchase Price
shall be adjusted as follows to reflect the difference, if any,
between (1) the estimated value of the Inventory and the Fixed Assets
totalling Three Million Three Hundred Eighteen Thousand Three Hundred
Twenty ($3,318,320) (the "Estimated Asset Value"), and (2) the value
of the Inventory and Fixed Assets reflected in the Physical Inventory
(the "Actual Asset Value").
(i) In the event that the Estimated
Asset Value is greater than the Actual Asset Value, the
principal amount of the Note shall be reduced to reflect the
difference between the Estimated Asset Value and the Actual
Asset Value.
(ii) In the event that the Actual Asset
Value is greater than the Estimated Asset Value, the
principal amount of the Note shall be increased to reflect
the difference between the Actual Asset Value and the
Estimated Asset Value.
(b) For purposes of determining the Actual
Asset Value pursuant to this Section 2.3, (i) the value of all raw
materials, work in process and finished goods inventory shall reflect
IFM's fully absorbed cost which shall be equal to the original cost of
such Inventory, excluding any write-off or discount subsequently taken
by IFM with respect thereto, and (ii) the value of the Fixed Assets
shall be the book value for such Fixed Assets, calculated in
accordance with generally accepted accounting principles.
(c) In connection with the Purchase Price
adjustment pursuant to this Section 2.3, the Parties shall take into
account the appropriate prorations for the following items: utilities,
phone service, deposits, rent, prepaid items and employee
compensation. IFM shall be responsible for all such expenses incurred
or accruing prior to October 1, 2000, and Horizon shall be responsible
for all such expenses incurred or accruing on or after October 1,
2000.
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(d) In the event that the parties are unable to
agree on the amount of the Purchase Price adjustment required pursuant
to this Section 2.3, if any, within twenty (20) days after the Closing
Date, Horizon and IFM shall engage an independent accounting firm
("IA") at such time, to determine the amount of the Purchase Price
adjustment. The cost of the IA shall be paid equally by both parties
The decision of the IA shall be made within thirty (30) days after
being engaged and shall be final and binding on the parties. In the
event that Horizon and IFM are unable to agree on the IA by the
twentieth (20th) day after the Closing Date, any dispute under this
Section 2.3 shall be settled in accordance with the provisions of
Section 2.4(b).
(e) Any adjustment to the Purchase Price
required pursuant to this Section 2.3 will be made against the
principal balance of the Note. In the event of such adjustment, IFM
shall surrender the Note, and Horizon shall execute and deliver to IFM
an amended and restated Note that reflects such adjustment. In such
case, the original Note shall be canceled regardless of any failure of
IFM to deliver said Note, which failure shall not affect the amendment
and restatement of the Note. Any failure of Horizon to deliver an
amended and restated Note if required hereunder shall not affect the
obligation to make payments as required hereunder.
2.4. Refund for Damaged Finished Goods Inventory.
(a) IFM and CryoLife agree to reduce the
principal amount of the Note by the price paid by Horizon for any
Defective Product in accordance with this Section 2.4. On or before
the ninetieth (90th) day after delivery of the Inventory pursuant to
Section 2.5, Horizon shall return all products which are alleged to be
Defective Products to IFM or CryoLife for inspection with a
description of the alleged defect or damage. If IFM determines in good
faith that a product is a Defective Product, IFM or CryoLife shall
agree to reduce the principal amount of the Note by the price paid by
Horizon for each such Defective Product. In the event of such a
reduction, IFM shall surrender the Note, and Horizon shall execute and
deliver to IFM or CryoLife an amended and restated note that reflects
such adjustment.
(b) Any dispute between the parties under this
Section 2.4 shall be settled by arbitration conducted in Atlanta,
Georgia before and in accordance with the then-existing Rules for
Commercial Arbitration of the American Arbitration Association,
provided that only one arbitrator as selected by the American
Arbitration Association shall conduct any arbitration proceeding. Any
arbitration shall be final and binding. Any judgment upon any interim
or final award or order rendered by the arbitrator may be entered by
any federal or state court having jurisdiction thereof. Each party in
the arbitration proceeding shall bear its own costs and expenses of
investigating, preparing, and pursuing such arbitration claim. The
cost of the arbitration shall be borne by the non-prevailing party
which the arbitration will determine in such arbitration proceeding.
In the event that the arbitrator is unable to determine a prevailing
and non-prevailing party, the cost of arbitration will be shared
equally.
2.5. Shipment of Finished Goods Inventory to Horizon. On
or before the sixtieth (60th) business day after the Closing Date, IFM will
deliver the Finished Goods
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Inventory which is located at any location (a "Storage Location") other than
the Premises (as defined in Section 4.7) to Horizon or its carrier F.O.B. such
Storage Location. IFM shall deliver such Finished Goods Inventory at such times
and in such number of shipments as instructed by Horizon; provided, however,
that the number of shipments requested by Horizon shall not exceed four (4)
shipments.
2.6. Manufacturing Agreement. Horizon and IFM hereby
agree to terminate that certain Manufacturing Agreement, dated as of September
30, 1998, by and between Horizon and IFM (the "Manufacturing Agreement"), as of
the Closing Date and agree that the Manufacturing Agreement shall have no
further force or effect after the Closing Date; provided, however, that the
provisions of Sections 6, 8, 9, 12, 14, 17, 18 and 19 of the Manufacturing
Agreement shall survive such termination. The parties acknowledge and agree
that upon termination of the Manufacturing Agreement as provided herein, (i)
Horizon shall not owe any further payment to IFM under the Manufacturing
Agreement, (ii) Horizon shall not be subject to any claims, liabilities,
obligations, losses, costs, expenses, penalties, fines or other judgments (at
equity or at law) or damages (collectively, "Damages"), whenever arising or
incurred, arising out of or relating to Horizon's default under the
Manufacturing Agreement prior to the date hereof, excluding Damages for which
the other party is entitled to indemnification pursuant to Section 6 thereof,
and (iii) IFM shall not be subject to any Damages, whenever arising or
incurred, arising out of or relating to default by IFM, if any, under the
Manufacturing Agreement prior to the date hereof, excluding Damages for which
the other party is entitled to indemnification pursuant to Section 6 thereof.
3. Closing.
3.1. Date and Place of Closing. The purchase and sale of
the Purchased Assets contemplated by this Agreement (the "Closing") shall occur
at the offices of King & Spalding at 191 Peachtree Street, Atlanta, Georgia on
October 9, 2000 (the "Closing Date"). The term "Effective Date" as used in this
Agreement shall mean the opening of business on October 1, 2000.
3.2. Deliveries by IFM. At the Closing, IFM shall deliver
or cause to be delivered to Horizon the following:
(a) An executed copy of the Guaranty of
CryoLife in the form of Exhibit B hereto (the "CryoLife Guaranty");
(b) An executed copy of the Bill of Sale and
General Assignment from IFM in the form of Exhibit C hereto (the "Bill
of Sale") conveying good and marketable title to the Purchased Assets
free and clear of all liens, mortgages, pledges, security interests,
restrictions, prior assignments, charges, encumbrances, equities, and
other claims of any kind or nature whatsoever (collectively,
"Encumbrances");
(c) An executed copy of the Assignment and
Assumption Agreement in the form of Exhibit D hereto (the "Assignment
and Assumption Agreement") assigning the Assigned Contracts to
Horizon;
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(d) A legal opinion of Arnall, Golden &
Gregory, counsel to IFM, in the form of Exhibit E hereto;
(e) An executed copy of the Sublease Agreement
in the form of Exhibit F hereto (the "Sublease Agreement");
(f) An executed copy of the Manufacturing,
Assembly and Packaging Agreement in the form of Exhibit G hereto (the
"Manufacturing, Assembly and Packaging Agreement"), pursuant to which
Horizon shall provide certain manufacturing, assembly and packaging
services to CryoLife;
(g) An executed copy of the Transition Services
Agreement in the form of Exhibit H hereto (the "Transition Services
Agreement"), whereby IFM and CryoLife agree to continue to provide
information technology, accounting and laboratory services during the
transition period;
(h) A certificate of IFM as required by Section
7.3 hereof;
(i) A certified copy of the corporate charter
and bylaws of IFM, and the resolutions of the Board of Directors of
IFM and the shareholder(s) of IFM authorizing the transactions
contemplated by this Agreement;
(j) Certificates from the appropriate public
officials evidencing IFM's good standing in its state of incorporation
and any other jurisdiction in which IFM is qualified to conduct
business;
(k) The written consent of each party to the
Assigned Contracts consenting to the assignment of such Assigned
Contract if such consent is required under such Assigned Contract;
(l) Actual possession and operating control of
the Purchased Assets;
(m) A list of open purchase orders for
materials purchased by IFM but not yet received by IFM, together with
any supporting materials relating to such open purchase orders as
Horizon shall reasonably request; and
(n) Such other instruments, assignments,
terminations, releases, and other instruments of transfer, assignment,
and release of IFM as shall be reasonably deemed necessary by Horizon
to vest in Horizon good and marketable title to the Purchased Assets,
free and clear of any and all Encumbrances.
3.3. Deliveries by Horizon. At the Closing, Horizon shall
deliver or cause to be delivered to IFM the following:
(a) The Purchase Price in the manner provided by Section
2 hereof;
(b) An executed copy of a Security Agreement in the form
of Exhibit I hereto evidencing a security interest in all of the
Purchased Assets purchased by Horizon
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to secure payment of the Note which will be junior in priority to the
security interests granted to secure (i) Horizon's Obligations (as
defined in that certain Amended and Restated Credit Agreement, dated
as of May 26, 1998, among Horizon, Bank of America, N.A. f/k/a
NationsCredit Commercial Corporation ("Lender"), and Stepic
Corporation, Horizon Acquisition Corp., and Strato/Infusaid Inc., as
Guarantors, as amended prior to or following the date hereof
(collectively, the "Credit Agreement")) under or in connection with
the Credit Agreement, as the Credit Agreement and/or such Obligations
may be increased, renewed, modified, extended or otherwise changed in
the absolute discretion of Lender, and (ii) any future bank
indebtedness incurred by Horizon; provided, however, that in no event
shall the aggregate of subsections (i) and (ii) above exceed
Sixty-Five Million Dollars ($65,000,000) of principal indebtedness,
exclusive of interest, fees and other charges (collectively, the "Bank
Indebtedness").
(c) An executed copy of the Manufacturing, Assembly and
Packaging Agreement;
(d) An executed copy of the Transition Services
Agreement;
(e) A legal opinion of King & Spalding, counsel to
Horizon in the form of Exhibit J hereto;
(f) A certificate of Horizon as required by Section 8.2
hereof;
(g) A certified copy of the corporate charter and bylaws
of Horizon, and the resolutions of the Board of Directors of Horizon
authorizing the transactions contemplated by this Agreement;
(h) A Certificate from the Secretary of State of Georgia
evidencing Horizon's good standing in the State of Georgia, and
Certificates from any states where Horizon is qualified to do business
as a foreign corporation;
(i) An executed copy of the Assignment and Assumption
Agreement; and
(j) An executed copy of the Sublease Agreement.
4. Representations and Warranties of IFM. In order to induce
Horizon to enter into this Agreement and to consummate the transactions
contemplated hereunder, IFM represents and warrants to and covenants with
Horizon that:
4.1. Organization and Good Standing. IFM is a corporation
duly organized, validly existing, and in good standing under the laws of
Florida, and has the requisite corporate power and authority to execute and
deliver this Agreement and all other documents, agreements, and certificates
(collectively, the "IFM Transfer Documents") which are required to be executed
and delivered by IFM pursuant to this Agreement and to perform in all respects
its obligations hereunder and thereunder. IFM is duly qualified or licensed to
do business and in good standing in each jurisdiction in which the nature of
its business or the character of the assets owned or leased by IFM makes such
qualification or licensing necessary, except where the failure to be so
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qualified or licensed would not materially impair or adversely affect the
transactions contemplated hereunder. IFM has all of the necessary local, state,
and federal licenses and permits to carry on and operate the Business.
4.2. Due Authorization; Enforceability; No Conflict. The
execution, delivery, and performance of this Agreement and the IFM Transfer
Documents have been duly authorized by all requisite corporate action on the
part of IFM. This Agreement has been duly executed and delivered by IFM and
constitutes, and each of the IFM Transfer Documents when executed and delivered
will constitute, valid and binding obligations of IFM, enforceable in
accordance with and subject to their respective terms, except as limited by
bankruptcy, insolvency, reorganization, and similar laws affecting the
enforcement of creditors' rights or contractual obligations generally. Except
as expressly described in Schedule 4.2, the execution, delivery, and
performance by IFM of this Agreement and IFM Transfer Documents, the assignment
of IFM's rights under the Assigned Contracts, and the consummation of the
transactions contemplated hereby and thereby will not:
(a) violate any provision of the Articles of
Incorporation or bylaws of IFM;
(b) result in the creation of any liens,
security interests, or encumbrances upon any of the Purchased Assets,
assuming the consents set forth on Schedule 4.2 are obtained;
(c) violate any provision of any judicial or
administrative order, award, judgment, or decree applicable to IFM;
(d) conflict with, result in a material breach
of or constitute a default under any agreement or instrument to which
IFM is a party or by which it is bound, assuming the consents set
forth on Schedule 4.2 are obtained;
(e) violate, in any material respect, any
applicable law, rule, ordinance, or regulation applicable to IFM; or
(f) require IFM to obtain the consent,
approval, or authorization of, or require IFM to file with, any
federal, state, or local governmental authority or agency, any lender
or lien holder, or other person or entity.
4.3. Litigation. There are no judicial or administrative
actions, suits, or proceedings or, to the knowledge of IFM, any investigations
pending against IFM or CryoLife which would, if adversely determined, prevent,
hinder, delay, or otherwise adversely affect the consummation of the
transactions contemplated hereby. IFM is not a party to or subject to the
provisions of any order, decree, or judgment of any court or of any
governmental authority or agency which may prevent, hinder, or otherwise
adversely affect the consummation of the transactions contemplated hereby.
Except as expressly described in Schedule 4.3, to the knowledge of IFM, there
are no outstanding or pending product liability, intellectual property
infringement or other claims that have been asserted against IFM, nor are there
any outstanding or pending claims that have been asserted against CryoLife
arising out of or related to the Business or the Purchased Assets.
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4.4. Ownership of Assets.
(a) On the Closing Date, IFM will have, and
upon completion of the Closing will have conveyed to Horizon, good and
marketable title to the Purchased Assets, free and clear of any and
all Encumbrances.
(b) All equipment and other items of tangible
property and assets which are included in the Purchased Assets are in
good operating condition and repair subject to normal wear and
maintenance, and are usable in the regular and ordinary course of
business.
(c) 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.
4.5. Tax Returns; Taxes. IFM 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 IFM 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. There are no pending claims asserted for
taxes of IFM or outstanding agreements or waivers extending the statutory
period of limitation applicable to any tax return of IFM or outstanding
agreements or waivers extending the statutory period of limitation applicable
to any tax return of IFM for any period that would affect the Business or the
transaction contemplated by this Agreement or any of IFM Transfer Documents.
IFM 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.
4.6. Inventory. The Inventory is of good and usable
quality and is merchantable and saleable in the ordinary course of business.
4.7. Insurance. Schedule 4.7 hereto sets forth a true and
correct description of all insurance policies of any nature whatsoever
maintained by CryoLife or IFM on the date of this Agreement relating to the
Business or any property owned, leased or used by IFM (the "Premises"). Neither
CryoLife nor IFM has received notice of a cancellation with respect to such
policies or of any default thereunder. Each of IFM or CryoLife has complied in
all material respects with the terms and provisions of such policies. Within
the past two years, neither CryoLife nor IFM has been refused any basic
insurance coverage applied for with respect to the Business.
4.8. Intellectual Property. Except as expressly described
on Schedule 4.8:
(a) No interference or infringement actions or
other judicial or adversary proceedings concerning any of such items
of intangible personal property are pending, and to the best of IFM's
knowledge, no such action or proceeding is threatened;
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(b) To the best of IFM's knowledge, IFM has the right
and authority to use the Intellectual Property in connection with the
conduct of the Business in the manner presently conducted, and to the
best of IFM's knowledge, such use does not conflict with, infringe
upon, or violate any rights of any other person, firm, or corporation;
(c) There are no outstanding or, to the best of IFM's
knowledge, threatened disputes or other disagreements with respect to
any of the Intellectual Property;
(d) To the best of IFM's knowledge, there is no
proprietary intangible personal property used in any material respect
in the operations of the Business as presently conducted that is not
owned by or licensed to IFM; and
(e) To the best of IFM's knowledge, none of the
Intellectual Property is subject to any outstanding order, ruling,
decree, judgment or stipulation by or with any court, arbitrator, or
administrative agency, nor has any of the Intellectual Property been
the subject of any litigation involving IFM or CryoLife within the
last four years, whether or not resolved in favor of IFM.
4.9. Contracts. Schedule 4.9 hereto sets forth a true and
correct list of each contract pertaining to the Business (other than the
Assigned Contracts and the Manufacturing Agreement) to which IFM or CryoLife is
a party (collectively and together with the Assigned Contracts, but excluding
the Manufacturing Agreement, the "Contracts"). True, complete, and correct
copies of each of the Contracts, or where they are oral, true and complete
written summaries thereof, have been delivered to Horizon by IFM. Except as
expressly described on Schedule 4.9:
(a) IFM has fulfilled all material obligations
required pursuant to each Contract to have been performed by IFM;
(b) There has not occurred any default under
any of the Contracts on the part of IFM or, to the best knowledge of
IFM, on the part of any other party thereto, nor has any event
occurred which, with the giving of notice or the lapse of time, or
both, would constitute a default on the part of IFM under any of the
Contracts, nor, to the best of IFM's knowledge, has any event occurred
which, with the giving of notice or the lapse of time, or both, would
constitute a default on the part of any other party to any of the
Contracts;
(c) Except for the consents described on
Schedule 4.2, no consent of any party to any of the Contracts is
required for the execution, delivery, or performance of this Agreement
or the consummation of the transactions contemplated hereby; and
(d) All such Contracts are in full force and
effect and enforceable against IFM and each other party thereto.
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4.10. Compliance with Law; FDA Matters.
(a) Except as set forth on Schedule 4.10(a),
IFM 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 IFM 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 (as defined in Section
4.12(b)). Schedule 4.10(a) sets forth a true and complete list of all
Material Licenses.
(b) With respect to the Business and the
Purchased Assets:
(i) IFM has been and is in compliance
with all current and otherwise applicable statutes, rules,
regulations, standards, guides or orders pertaining to the
Purchased Assets (each a "Law" and collectively the "Laws")
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 CryoLife, IFM or the Business (the "Authorities"),
except for any such failure to comply that would not have a
Material Adverse Effect; and
(ii) Except as set forth on Schedule
4.10(b)(ii), IFM has not received any notice of adverse
findings, warning letters, Section 305 notices, subpoenas or
other similar communications by any Authorities since
September 30, 1998 related to the Purchased Assets.
(c) There have been no recalls, field
notifications, alerts or seizures requested or threatened relating to
the Purchased Assets that Horizon has not itself directed.
(d) IFM has made available to Horizon a copy of
all its European Union notified body's certifications and all FDA
inspection reports ("Form 483's") or comparable reports of foreign
authorities relating to the Business, IFM's responses to such Form
483's or comparable foreign reports. In addition, IFM will make
available to Horizon information relating to design dossiers for the
Excluded Products during the term of the Manufacturing, Assembly and
Packaging Agreement.
(e) The representations and warranties set
forth in this Section 4.10 shall not apply to any environmental
matters with respect to which Section 4.17 shall solely apply.
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4.11. Transactions with Affiliates. Except for the
Contracts identified on Schedule 4.11, no officer or director of IFM or
CryoLife has any interest in: (i) any contract, arrangement or understanding
with, or relating to, the Business or the Purchased Assets; (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.
4.12. Financial Statements, Absence of Changes, and
Related Matters.
(a) IFM has delivered to Horizon (i) the
unaudited balance sheets of IFM as of December 31, 1999 and the
related statements of revenues and expenses for the fiscal years then
ending; and (ii) the unaudited balance sheet of IFM as of August 31,
2000 (the "Interim Balance Sheet") and the related unaudited
statements of revenues and expenses for the quarterly period then
ended (the "Interim Balance Sheet Date"). All of the foregoing
financial statements are hereinafter collectively referred to as the
"Financial Statements." The Financial Statements have been prepared
from and are in accordance with the books and records of IFM and
present fairly the financial position and results of operations of
IFM, in accordance with GAAP, as of the dates for the periods
indicated.
(b) Since the Interim Balance Sheet Date, there
has not been (i) any material adverse effect upon the assets,
liabilities, results of operations, financial condition, business or
prospects of the Business (a "Material Adverse Effect"), (ii) any
damage, destruction, loss or casualty to property or assets of the
Business, not covered by insurance which property or assets are
material to the Business, (iii) any liability or obligation (absolute,
accrued or contingent) incurred or any bad debt, contingency or other
reserve increased suffering, except, in each such case in the ordinary
course of business and consistent with past practice, (iv) 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 relating to the Business, except in each such
case in transactions in the ordinary course of business and consistent
with past practice, (v) any transactions entered into other than in
the ordinary course of business, or (vi) any agreements to do any of
the foregoing (other than this Agreement).
4.13. Hart-Scott-Rodino. No shareholder of CryoLife
directly or indirectly beneficially owns or has the right to vote 50% or more
of the outstanding voting securities of CryoLife, or, directly or indirectly,
has the right (whether by contract or otherwise) to elect 50% or more of the
members of the board of directors of CryoLife. The total assets (within the
meaning of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended) of CryoLife are less than $100,000,000 in the aggregate.
4.14. Officers, Directors and Employees. Schedule 4.14
contains (a) a true and complete list of all of the officers and directors of
IFM, specifying (i) their office, and (ii) their salary, bonuses, commissions
and other compensation programs paid by IFM, and (b) a true and complete list
of all of the employees of IFM as of the date hereof together with an
appropriate notation next to the name of any employee on such list with whom
IFM has a written
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employment agreement or to whom IFM has made verbal commitments which are
binding on IFM.
4.15. Employee Benefit Plans.
(a) Definition of Benefit Plans. For purposes
of this Section 4.15, the term "IFM Benefit Plan" means any plan,
program, arrangement, fund, policy, practice or contract which,
through which or under which IFM or any IFM ERISA Affiliate (as
hereinafter defined) provides benefits or compensation to or on behalf
of employees or former employees of IFM or any IFM ERISA Affiliate,
whether formal or informal, whether or not written, including but not
limited to the following:
(i) Arrangements. Any bonus, incentive
compensation, stock option, deferred compensation,
commission, severance pay, golden parachute or other
compensation plan or rabbi trust;
(ii) ERISA Plans. Any "employee benefit
plan" (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")),
including, but not limited to, any multiemployer plan (as
defined in Section 3(37) and Section 4001(a) (3) of ERISA),
defined benefit plan, profit sharing plan, money purchase
pension plan, 401(k) plan, savings or thrift plan, stock
bonus plan, employee stock ownership plan, or any plan, fund,
program, arrangement or practice providing for medical
(including post-retirement medical), hospitalization,
accident, sickness, disability, or life insurance benefits;
and
(iii) Other Employee Fringe Benefits.
Any stock purchase, vacation, scholarship, day care, prepaid
legal services, dependent care or other fringe benefit plans,
programs, arrangements, contracts or practices.
(b) IFM ERISA Affiliate. For purposes of this
Section 4.15, the term "IFM ERISA Affiliate" means each trade or
business (whether or not incorporated) which together with IFM is
treated as a single employer under Section 414(b), (c), (m) or (o) of
the Internal Revenue Code (the "Code").
(c) Identification of Benefit Plans. Except for
(i) those IFM Benefit Plans identified in Schedule 4.15, and (ii) IFM
Benefit Plans which have been terminated and with respect to which
neither IFM nor any IFM ERISA Affiliate has any material financial,
administrative or other liability, obligation or responsibility, IFM
neither maintains, nor have they at any time established or
maintained, nor have they at any time been obligated to make, or
otherwise made, contributions to or under or otherwise participated in
any IFM Benefit Plan.
(d) MEPPA Liability/Post-Retirement Medical
Benefits/Defined Benefit Plans/Supplemental Retirement Plans. Neither
IFM, nor any IFM ERISA Affiliate maintains, or has at any time
established or maintained, or has at any time been obligated to make,
or made, contributions to or under any multiemployer plan (as defined
in Section 3(37) and Section 4001(a) (3) of ERISA). IFM does not
maintain, nor has at
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any time established or maintained, nor has at any time been obligated
to make, or made, contributions to or under (i) any plan which
provides post-retirement medical or health benefits with respect to
employees of IFM, (ii) any organization described in Sections 501(c)
(9) or 501(c) (20) of the Code, (iii) any defined benefit pension plan
subject to Title IV of ERISA.
(e) Compliance with Laws. Each IFM Benefit Plan
is in material compliance with the provisions of all applicable laws
including, but not limited to, ERISA and the Code with respect to the
administration and documentation of said plan. In addition, all
medical benefit plans are in material compliance with the provisions
of the Consolidated Omnibus Budget Reconciliation Act relating to the
continuance of insurance coverage or benefit coverage and with the
requirements of the Health Insurance Portability and Accountability
Act.
(f) Qualified Status. Each IFM Benefit Plan
that is an employee benefit plan (within the meaning of Section 3(2)
of ERISA) that is funded through a trust or insurance contract or is a
welfare benefit plan (within the meaning of Section 3(1) of ERISA)
funded through a trust has at all times satisfied in all material
respects, by its terms and in its operation, all applicable
requirements for an exemption from federal income taxation under
Section 501(a) of the Code. Neither IFM nor any IFM ERISA Affiliate
maintains or has previously maintained a IFM Benefit Plan which meets
or was intended to meet the requirements of Section 401(a) of the Code
except as disclosed on Schedule 4.15.
(g) Legal Actions. There are no actions,
audits, suits or claims which are pending or, to the knowledge of IFM,
threatened against any IFM Benefit Plan, any fiduciary of any of IFM
Benefit Plans with respect to IFM Benefit Plans or against the assets
of any of IFM Benefit Plans, except claims for benefits made in the
ordinary course of the operation of such plans.
(h) Funding. Each of IFM and each IFM ERISA
Affiliate has made full and timely payment of all amounts required to
be contributed under the terms of each IFM Benefit Plan and applicable
law or required to be paid as expenses under such IFM Benefit Plan,
and no excise taxes are assessable as a result of any nondeductible or
other contributions made or not made to a IFM Benefit Plan. The assets
of all IFM Benefit Plans which are required under applicable laws to
be held in trust are in fact held in trust, and the assets of each
such IFM Benefit Plan equal or exceed the liabilities of each such
plan. The liabilities of each other plan are properly and accurately
reported on the financial statements and records of IFM. The assets of
each IFM Benefit Plan are reported at their fair market value on the
books and records of each plan.
(i) Liabilities. Neither IFM nor any IFM ERISA
Affiliate is subject to any material liability, tax or penalty to any
person as a result of IFM's or any ERISA Affiliate's engaging in a
prohibited transaction under ERISA or the Code, and IFM has no
knowledge of any circumstances which reasonably might result in any
such material liability, tax or penalty as a result of a breach of
fiduciary duty under ERISA. No IFM Benefit Plan has suffered any
accumulated funding deficiency within the meaning of
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<PAGE> 19
Section 302 of ERISA and Section 412 of the Code. There is no lien
upon any property of IFM or any IFM ERISA Affiliate outstanding
pursuant to Section 412(n) of the Code in favor of any IFM Plan. No
assets of IFM or any IFM ERISA Affiliate have been provided as
security to any IFM Plan pursuant to Section 401(a) (29) of the Code.
(j) CIGNA Plan. The only IFM Benefit Plan which
provides healthcare benefits to IFM employees is a fully insured,
group health plan issued in the State of Florida which IFM purchased
from CIGNA HealthCare (the "CIGNA Plan"). Except as set forth on
Schedule 4.15(j), IFM pays 100% of the premiums for each employee's
coverage under the CIGNA Plan for each calendar month (either in whole
or in part from IFM's general assets or in whole or in part from
payroll deductions duly authorized by each affected employee), and all
such monthly premiums for such coverage for each calendar month are
paid at the beginning of each such calendar month. CIGNA HealthCare
has no right to receive any payments from IFM or any IFM employee for
such coverage in addition to such monthly premium payments, and IFM
has no right to any refunds or rebates from CIGNA HealthCare with
respect to any such coverage.
4.16. Labor Relations. IFM is in material compliance with
all federal and state laws respecting employment and employment practices,
terms and conditions of employment, wages and hours, and IFM is not engaged in
any unfair labor or unlawful employment practice. There is no unlawful
employment practice or discrimination charge 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 IFM 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 IFM, threatened against or
involving or affecting IFM and no NLRB representation question exists
respecting the employees of IFM. No grievance or arbitration proceeding
relating to the employees of IFM is pending, and, to the knowledge of IFM, no
written claim therefor exists with respect to any such employees. There is no
collective bargaining agreement that is binding on IFM.
4.17. Environmental Matters. To the best of IFM's
knowledge, except as disclosed on Schedule 4.17 and in the environmental report
(the "Horizon Environmental Report") done by Horizon on the Premises (as
defined in Section 4.7 above) and except for such failure to comply that would
not have a Material Adverse Effect, IFM is in compliance with all statutes,
regulations and ordinances and common law requirements relating to hazardous
substances and/or the protection of human health and the environment including,
without limitation, the Clean Water Act, 33 U.S.C. ss. 1251 et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq., the Clean
Air Act, 42 U.S.C. ss. 7401 et seq., the Toxic Substances Control Act, 15
U.S.C. ss. 2601 et seq., the Emergency Planning Community Right-to-Know Act, 42
U.S.C. ss. 11,001 et seq., the regulations developed pursuant to these statutes
and the corresponding state and local statutes, ordinances and regulations. To
the best of IFM's knowledge, except as disclosed on Schedule 4.17 and the
Horizon Environmental Report, IFM possesses all permits, authorizations, and
other governmental approvals and registrations required under any statute, law,
ordinance, regulation, or other legally binding requirement relating to
hazardous substances and/or the protection of human health and the environment
as are necessary for the continued operation of the Business, is in compliance
with all such permits, authorizations, and approvals, and no proceedings are
pending to revoke or modify such permits,
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authorizations, or approvals, except for a failure, non-compliance, or
proceeding that would not have a Material Adverse Effect. To the best of IFM's
knowledge, except as disclosed on Schedule 4.17 and the Horizon Environmental
Report, there has been no release of a "hazardous substance" as that term is
defined in the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. ss. 9601(14) into the environment at the Premises,
including, without limitation, any such release in the soil or groundwater
underlying or adjacent to the Premises, except for such releases that would not
have a Material Adverse Effect. To the best of IFM's knowledge, except as
disclosed on Schedule 4.17 and the Horizon Environmental Report, there is no
asbestos, polychlorinated biphenyls or underground storage tank located on the
Premises, and there have been no releases at, on or under the Premises of
asbestos, polychlorinated biphenyls or materials stored in underground storage
tanks, including, without limitation, petroleum or petroleum-based materials,
except for such releases that would not have a Material Adverse Effect. IFM has
not received written notice of, and no IFM officer has received any oral or
written notice of, any violation of any environmental statute or regulation or
other legal requirement pertaining to environmental matters, nor has IFM been
advised of any material claim or liability pursuant to any environmental
statute or regulation or other legal requirement pertaining to environmental
matters brought by any governmental agency or private party.
4.18. Property.
(a) To the best of IFM's knowledge, the
structures owned or leased by IFM are structurally sound, are in good
and safe operating condition and repair and are adequate for the uses
to which they are being put, except for maintenance performed in the
ordinary course of business.
(b) Schedule 4.18(b) hereto sets forth a true
and correct description of each of the services provided to IFM by
CryoLife.
4.19. Brokers. Neither IFM nor CryoLife has not retained,
employed, or dealt with any third-party broker, finder, or investment banker in
connection with this Agreement or the transactions contemplated hereby and no
broker or other third-party is entitled to any commission or finder's fee as a
result of any agreement or action taken by IFM or its affiliates in connection
with such transactions.
5. Horizon's Representations and Warranties. Horizon hereby
represents and warrants to IFM as follows:
5.1. Organization and Good Standing. Horizon is a
corporation duly organized, validly existing, and in good standing under the
laws of Georgia, and has the requisite corporate power and authority to execute
and deliver this Agreement and the documents, agreements, and certificates
(collectively, the "Horizon Transfer Documents") which are required to be
executed and delivered by Horizon pursuant to this Agreement and to perform in
all respects its obligations hereunder and thereunder.
5.2. Due Authorization; Enforceability; No Conflict. The
execution, delivery, and performance of this Agreement and the Horizon Transfer
Documents have been duly
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authorized by all requisite corporate action on the part of Horizon. This
Agreement has been duly executed and delivered by Horizon and constitutes, and
each of the Horizon Transfer Documents when executed and delivered will
constitute, the valid and binding obligation of Horizon, enforceable in
accordance with and subject to their respective terms, except as limited by
bankruptcy, insolvency, reorganization, and similar laws affecting the
enforceability of creditors' rights or contractual obligations generally.
Except as set forth on Schedule 5.2 attached hereto, the execution, delivery,
and performance by Horizon of this Agreement and the Horizon Transfer Documents
and the consummation of the transactions contemplated hereby and thereby will
not:
(a) Violate any provision of the Articles of
Incorporation or bylaws of Horizon;
(b) Violate any provision of any judicial,
arbitral or administrative order, award, judgment, or decree
applicable to Horizon;
(c) Conflict with, result in a material breach
of or constitute a default under any agreement or instrument to which
Horizon is a party or by which it is bound;
(d) Violate, in any material respect, any
applicable law, rule, ordinance, or regulation applicable to Horizon;
or
(e) Require Horizon to obtain the consent,
approval, or authorization of, or require Horizon to file a
certificate, notice, application, report, or other document with, any
federal, state, or local governmental authority or agency, lender,
lien holder, or other person or entity.
5.3. Litigation. There are no judicial, arbitral, or
administrative actions, suits, or proceedings or, to the knowledge of Horizon,
any investigations pending against Horizon which would, if adversely
determined, prevent, hinder, delay, or otherwise adversely affect the
consummation of the transactions contemplated hereby. Horizon is not a party to
or subject to the provisions of any order, decree, or judgment of any court or
of any governmental agency which may prevent, hinder, or otherwise adversely
affect the consummation of the transactions contemplated hereby.
5.4. Brokers. Horizon has not retained, employed, or
dealt with any third-party broker, finder, or investment banker in connection
with this Agreement or the transactions contemplated hereby and no broker or
other third-party is entitled to any commission or finder's fee as a result of
any agreement or action taken by Horizon or its affiliates in connection with
such transactions.
5.5. Priority of Security Interest. Upon execution and
delivery of the Security Agreement, IFM shall obtain a valid lien against all
the Purchased Assets, prior to all other liens or encumbrances, including those
which may hereafter accrue, except for any security interests granted with
respect to the Bank Indebtedness. The current aggregate amount loaned and
available for loan to Horizon under the Bank Indebtedness is approximately
Fifty Million Seven Hundred Thousand Dollars ($50,700,000).
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6. Covenants and Agreements of the Parties.
6.1. Horizon Access. Prior to the Closing, (i) authorized
representatives of Horizon shall have reasonable access to the properties,
books, records, employees and documents of IFM pertaining to the Business and
Purchased Assets, (ii) IFM will furnish to Horizon all information with respect
to the affairs of the Business that Horizon may reasonable request.
6.2. Cooperation in Litigation. Each party will fully
cooperate with the other in the defense or prosecution of any litigation or
proceeding already instituted or which may be instituted hereafter against or by
such party relating to or arising out of the conduct of the Business prior to or
after the Closing Date (other than litigation arising out of the transactions
contemplated by this Agreement). Except as provided for by Section 9 hereof, the
party requesting such cooperation shall pay the out-of-pocket expenses
(including legal fees and disbursements) of the party providing such cooperation
and of its officers, directors, employees, and agents reasonably incurred in
connection with providing such cooperation, but shall not be responsible to
reimburse the party providing such cooperation for such party's time spent in
such cooperation or the salaries or cost of fringe benefits or other similar
expenses paid by the parties providing such cooperation to its officers,
directors, employees, and agents while assisting in the defense or prosecution
of any such litigation or proceeding.
6.3. Conduct of Business. From the date of this Agreement
and through and including the Closing Date, (i) IFM shall conduct the Business
in accordance with prior practice and only in the ordinary course of business
and (ii) shall use its commercially reasonable efforts to preserve the Purchased
Assets and to preserve for Horizon, IFM's favorable business relationship with
its customers and others with whom business relationships exist. Without
limiting the generality of the foregoing, unless otherwise consented in writing
by Horizon, IFM shall:
(a) not produce finished goods inventory in
excess of the quantity that is needed to fill Horizon's purchase orders
and sustain current inventory levels;
(b) not purchase production equipment in excess
of Twenty-Five Thousand Dollars ($25,000);
(c) not purchase office equipment in excess of
Ten Thousand Dollars ($10,000);
(d) not enter into any material transaction not
in the ordinary course of the Business;
(e) not sell or transfer any of its assets ,
except for sales in the ordinary course of the Business;
(f) not pledge or encumber any of the Purchased
Assets;
(g) not materially amend, modify, or terminate
any material Contract relating to the Business or the Purchased Assets;
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(h) not reduce the amount of the Inventory other
than in the ordinary course of the Business;
(i) not make any material changes in its methods
or business operations relating to the Business or the Purchased
Assets; and
(j) comply in all material respects with all
Laws applicable to IFM, the Business or the Purchased Assets.
6.4. CryoLife Projects. After the Closing, Horizon shall
continue to perform the work currently being performed by IFM for CryoLife,
including (i) the manufacturing and packaging of BioGlue dispensers, mixing tips
and twist rings, (ii) the preparation of packaging for allograft tissue, and
(iii) the preparation work for CryoLife's cryopaks, pursuant to the terms of the
Manufacturing, Assembly and Packaging Agreement in the form of Exhibit G hereto.
6.5. Employees. On the Closing Date, IFM shall terminate
the employment of all employees of IFM, and Horizon shall rehire and engage only
such employees as designated on Schedule 6.5(a) (the "Retained Employees");
provided, however, that the number of employees of IFM who do not become
Retained Employees shall not exceed forty-nine (49) employees. Horizon agrees to
pay the retention bonus amounts earned by the Retained Employees as set forth in
the contracts listed on Schedule 6.5(b) up to an aggregate amount of $62,123.24,
plus any amount resulting from an increase in any Retained Employee's
compensation on or after October 9, 2000. Horizon shall have no responsibility
to pay any Retained Employee any separation benefit or severance compensation if
Horizon should terminate the Retained Employee prior to December 1, 2000, except
to the extent that such separation benefit or severance compensation results
from any increase in any Retained Employee's compensation after October 9, 2000.
Horizon shall continue the CIGNA Plan (as defined in Section 4.15(j)) under
Horizon's name through the end of the current policy year for all Retained
Employees. After the current policy year, Horizon will continue the CIGNA Plan
on a month-to-month basis until the Retained Employees are added to the Horizon
group health plan. IFM shall take such steps as reasonably requested by Horizon
to assign to Horizon IFM's rights and interests as the employer under the CIGNA
Plan as of the Closing Date. All other liabilities and obligations arising from
employment or termination of IFM employees who are not engaged by Horizon shall
be the responsibility of IFM or CryoLife. All liabilities and obligations
accruing after Closing relating to the Retained Employees shall be the
responsibility of Horizon, and all liabilities and obligations relating to the
Retained Employees accruing prior to Closing shall be the responsibility of IFM
or CryoLife, except with respect to the payment of employee compensation that is
prorated pursuant to Section 2.3(c) and as otherwise set forth herein.
Notwithstanding the foregoing, Bill Wright shall become an employee of CryoLife,
and Horizon shall not be responsible for any obligations or liabilities arising
from the termination of Mr. Wright as an IFM employee. Mr. Wright's services
shall be made available without cost to Horizon by CryoLife for a period of six
(6) months following the Closing Date to assist with the transition of the
Purchased Assets from IFM to Horizon. Mr. Wright shall make available to Horizon
such information concerning the Business or the Purchased Assets as Horizon
shall request.
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<PAGE> 24
6.6. Transition Services. IFM and CryoLife agree to
provide information technology services, accounting assistance and laboratory
services to Horizon at cost for a period of transition as provided in the
Transition Services Agreement in the form of Exhibit H hereto.
6.7. Current Information. IFM will advise Horizon and
Horizon will advise IFM in writing immediately, but in any event prior to the
Closing, of:
(a) the occurrence of any event which renders
any of the representations or warranties set forth herein materially
inaccurate or the awareness of either Horizon or IFM that any
representation or warranty set forth herein was not materially accurate
when made;
(b) any fact that, if existing or known on the
date hereof, would have been required to be set forth or disclosed in
or pursuant to this Agreement; and
(c) the failure of any party hereto to comply
with or accomplish any of the covenants or agreements set forth herein.
6.8. Access.
(a) IFM and CryoLife shall reasonably cooperate
with Horizon after the Closing Date so that Horizon has access to any
information relating to the Business or the Purchased Assets as is
reasonably necessary (but only to the extent necessary) for (i) the
preparation for or the prosecution or defense of any suit, action,
litigation, or administrative, arbitration, or other proceeding or
investigation by or against Horizon or for any third party claim for
which indemnification is claimed pursuant to the terms of Section 9
below, (ii) the preparation and filing of any tax return or election
relating to the Business or the Purchased Assets and any audit by any
taxing authority relating thereto, (iii) the preparation and auditing
of Horizon's financial statements, or (iv) the preparation and filing
of any other document required by any federal, state, or local
governmental department, regulatory agency, authority, commission,
board, or court. The access contemplated by this provision shall be
during normal business hours and upon not less than two (2) business
days prior written request.
(b) Horizon shall reasonably cooperate with IFM
and CryoLife after the Closing Date so that IFM has access to
information and documentation concerning the Purchased Assets as is
necessary (but only to the extent necessary) for (i) the preparation
for or the prosecution or the defense of any suit, action, litigation,
or administrative, arbitration, or other proceeding or investigation by
or against IFM or CryoLife or for any third party claim for which
indemnification is claimed pursuant to the terms of Section 9 below,
(ii) the preparation and filing of any tax return or election relating
to the Business and any audit by any taxing authority relating thereto,
or (iii) the preparation and filing of any other document required by
any federal, state, or local governmental department, regulatory
agency, authority, commission, board, or court. The access contemplated
by this provision shall be during normal business hours and upon not
less than two (2) business days' prior written request.
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<PAGE> 25
6.9. Product Liability Insurance. The parties acknowledge
and agree that IFM's obligation to maintain product liability insurance pursuant
to Section 6.6 of the Second Purchase Agreement and Horizon's obligation to
maintain product liability insurance pursuant to Section 18 of the Manufacturing
Agreement shall remain in effect following the execution of this Agreement, in
accordance with the terms of the Second Purchase Agreement and the Manufacturing
Agreement, respectively. In addition, the insurance that IFM maintains pursuant
to Section 6.6 of the Second Purchase Agreement shall cover all products
manufactured by IFM prior to the Closing Date, including, without limitation,
the Excluded Products, in addition to the Products and the Products Business (as
defined in the Second Purchase Agreement).
6.10. 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 agreed upon among the parties hereto in advance (unless Horizon or IFM
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 American Stock Exchange and/or the New York Stock Exchange and then only
after making a reasonable attempt to comply with the provisions of this
Section).
6.11. Labeling. All Products (as defined in the Second
Purchase Agreement) shall be labeled as follows:
(a) all Products labeled on or prior to the
Closing Date (including all Finished Goods Inventory and labeled work
in process) shall bear labels including the IFM and CryoLife names, and
CryoLife grants Horizon a license to use its name and trademarks in the
sale and distribution of such Products;
(b) all Products labeled after the Closing Date
and on or prior to the sixtieth (60th) day following the Closing Date
shall bear labels including the IFM and CryoLife names; provided,
however, that Horizon shall mark out the CryoLife name on such labels;
and
(c) all Products labeled after the sixtieth
(60th) day following the Closing Date shall bear labels which do not
include the CryoLife name.
7. Conditions Precedent to Horizon's Obligations. Unless
otherwise waived by Horizon, the obligations of Horizon under this Agreement are
subject to the fulfillment on or before the Closing Date of each of the
following conditions:
7.1. Approvals. Horizon's obligations to purchase
the Purchased Assets are subject to:
(i) approval by the Board of Directors
of Horizon,
(ii) approval by the Board of Directors
of CryoLife,
(iii) approval by Horizon's lender, Bank
of America, N.A., and
(iv) consent by Secret Promise, Ltd. to
the Sublease Agreement.
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<PAGE> 26
7.2. Encumbrances. IFM shall have delivered to Horizon
evidence, in form and substance reasonably satisfactory to Horizon, that IFM has
not created any Encumbrances and that no Encumbrances then exist on the
Purchased Assets.
7.3. Representations, Warranties, and Covenants. The
representations and warranties of IFM contained in this Agreement shall be true
and correct in all material respects at and as of the date hereof and at and as
of the Closing Date with the same force and effect as though made at and as of
the Closing Date, except for changes therein as may be specifically contemplated
by this Agreement. IFM shall have duly performed and complied in all material
respects with all agreements and conditions required by this Agreement to be
performed or complied with by it prior to or on the Closing Date. IFM shall have
delivered to Horizon a certificate dated as of the Closing Date to the foregoing
effect.
7.4. Litigation Affecting Closing. There shall not be
pending or threatened any action or proceeding for any injunction, writ, or
preliminary restraining order, or for any order of any court, governmental
agency, or arbitrator, domestic or foreign, federal, state, or local, of
competent jurisdiction, or any investigation or examination which might result
in such an action or proceeding, directing that the sale of the Purchased Assets
to Horizon or any of the other transactions contemplated by this Agreement not
be consummated or otherwise challenging the legality thereof, and there shall
not be in effect on the Closing Date any such injunction, writ, or preliminary
restraining order or such other order.
7.5. Closing Deliveries. At the Closing, IFM shall have
delivered to Horizon such instruments, documents, and certificates as are
required pursuant to Section 3.2 hereof.
7.6. No Damage, etc. Between the date of this Agreement
and the Closing Date, there shall not have occurred any damage or destruction
of, or loss to, any of the Purchased Assets, whether or not covered by
insurance, which has had or may reasonably be expected to have a Material
Adverse Effect, nor shall there have occurred any other event or condition which
has had or which reasonably may be expected to have a Material Adverse Effect.
7.7. Consents. IFM shall have obtained all necessary
consents and approvals as set forth on Schedule 4.2, if any.
7.8. Corporate Action. All corporate action necessary by
IFM to authorize the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby shall have duly and
validly taken.
8. Conditions Precedent to IFM's Obligations. Unless
otherwise waived by IFM, the obligations of IFM under this Agreement are subject
to the fulfillment on or before the Closing Date of each of the following
conditions:
8.1. Approvals. IFM's obligation to sell the Purchased
Assets is subject to:
(i) approval by the Board of Directors of
CryoLife,
(ii) approval by the Board of Directors of
Horizon,
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<PAGE> 27
(iii) approval by CryoLife's lender, and
(iv) consent by Secret Promise, Ltd. to the
Sublease Agreement.
8.2. Representations, Warranties, and Covenants. The
representations and warranties of Horizon contained in this Agreement shall be
true and correct in all material respects at and as of the Closing Date with the
same force and effect as though made at and as of the Closing Date, except for
such changes therein as may be specifically contemplated by this Agreement.
Horizon shall have duly performed and complied in all material respects with all
agreements and conditions required by this Agreement to be performed or complied
with by it prior to or on the Closing Date. Horizon shall have delivered to IFM
a certificate dated the Closing Date to the foregoing effect.
8.3. Litigation Affecting Closing. There shall not be
pending or threatened any action or proceeding for any injunction, writ, or
preliminary restraining order, or for any order of any court, governmental
agency, or arbitrator, domestic or foreign, federal, state, or local, of
competent jurisdiction, or any investigation or examination which might result
in such an action or proceeding, directing that the sale of the Purchased Assets
to Horizon or any of the other transactions contemplated by this Agreement not
be consummated or otherwise challenging the legality thereof, and there shall
not be in effect on the Closing Date any such injunction, writ, or preliminary
restraining order or such other order.
8.4. Closing Deliveries. At the Closing, Horizon shall
have delivered to IFM such instruments, documents, certificates, and payments as
are required pursuant to Section 3.3 hereof.
8.5. Consents. Horizon shall have obtained all necessary
consents and approvals as set forth on Schedule 5.2, if any.
8.6. Corporate Action. All corporate action necessary by
Horizon to authorize the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby shall have duly and
validly taken.
9. Indemnification.
9.1. Indemnification Obligations of IFM. From and after
the Closing, IFM shall indemnify and hold harmless Horizon, its officers and
directors, and each of the successors and assigns of any of the foregoing
(collectively, the "Horizon 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)
(collectively "Damages") arising out of or relating to: (a) any and all
liabilities and obligations of IFM of any nature whatsoever, except the Assumed
Liabilities; (b) any and all actions, suits, claims, or legal, administrative,
arbitration, governmental or other proceedings or investigations against any
Horizon Indemnified Party that relate to IFM, the Business or the Purchased
Assets to the extent the principal event giving rise thereto (i) occurred on or
prior to the Closing Date or (ii) resulted from or arose out of any action or
inaction of IFM after the Closing Date; (c) any breach of any representation,
warranty,
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<PAGE> 28
covenant, agreement or undertaking made by IFM in this Agreement or in any of
the IFM Transfer Documents; or (d) any fraud, willful misconduct, bad faith or
any intentional breach of any representation, warranty, covenant, agreement or
undertaking made by IFM in this Agreement or the IFM Transfer Documents.
9.2. Indemnification Obligations of Horizon. From and
after the Closing, Horizon shall indemnify and hold harmless IFM and CryoLife
and their officers and directors, and each of the successors and assigns of any
of the foregoing (collectively, the "IFM Indemnified Parties") from, against and
in respect of any and all Damages arising out of or relating to: (a) any failure
of Horizon to perform or discharge any Assumed Liabilities; (b) any and all
actions, suits, claims, or legal, administrative, arbitration, governmental or
other proceedings or investigations against any IFM Indemnified Party that
relate to Horizon or the conduct by Horizon of the Business to the extent the
principal event giving rise thereto resulted from or arose out of any action or
inaction of Horizon after the Closing Date; (c) any breach of any
representation, warranty, covenant, agreement or undertaking made by Horizon in
this Agreement or in any of the Horizon Transfer Documents; or (d) any fraud,
willful misconduct, bad faith or any intentional breach of any representation,
warranty, covenant, agreement or undertaking made by Horizon in this Agreement
or any of the Horizon Transfer Documents.
9.3. Indemnification Procedure.
(a) Promptly after receipt by a Horizon
Indemnified Party or an IFM 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 Horizon or IFM, 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 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 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
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<PAGE> 29
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). 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 in immediately available funds an amount equal to
such claim as determined hereunder; provided, however, that to the extent
any such claim arising out of Section 9.1 of this Agreement does not
involve a payment by Horizon to any third party (including attorneys' fees
incurred by Horizon), an amount equal to such claim shall instead (i) be
set off against the monthly obligations of Horizon to pay principal and
interest under the Note as such monthly payments become due, and (ii) be
delivered to the Horizon Indemnified Party in immediately available funds
to the extent that such claim exceeds the remaining principal and interest
due under the Note.
9.4. Claims Period. Except as provided in this Section 9.4, no
claim for indemnification under this Agreement, including, but not limited to
claims for indemnification or breach of warranty or covenants, 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 eighteen (18) months after the Closing Date; provided, however, that
(a) the Claims Period with respect to Damages arising under Sections 4.1, 4.2,
4.4, 4.5, 4.15, 5.1, 5.2, 5.5, 9.1(a), (b), and (d), and 9.2(a), (b) and (d) of
this Agreement shall commence on the Closing Date and shall survive and remain
in effect without limitation until the expiration of the applicable statute of
limitations period, (b) the Claims Period with respect to Damages arising under
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<PAGE> 30
Section 4.17 of this Agreement shall commence on the Closing Date and shall
survive and remain in effect without limitation until the fifth (5th)
anniversary of the Closing Date, (c) the obligation of Horizon to pay, perform
and discharge the Assumed Liabilities shall survive until such liabilities have
been paid, performed and discharged, and (d) 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.
9.5. Liability Limits. Notwithstanding anything to the contrary set
forth herein:
(a) IFM shall be liable to Horizon Indemnified Parties
and Horizon shall be liable to IFM Indemnified Parties for Damages only to
the extent that any such Damages exceed, in the aggregate, Fifteen Thousand
Dollars ($15,000) (the "Basket Amount"); provided, however, that Damages
arising under or pursuant to Sections 4.1, 4.2, 4.4, 4.5, 4.15, 5.1, 5.2,
5.5, 9.1(a), (b) and (d) and 9.2(a), (b) and (d) shall not be subject to
Basket Amount, nor shall the amount of any such Damages or indemnification
be included in determining whether such Basket Amount has been reached.
(b) Cap Amount.
(i) The indemnification obligations of IFM or
Horizon hereunder shall not exceed Three Million Eight Hundred Thousand
Dollars ($3,800,000) (the "Cap Amount"). Notwithstanding the first
sentence of this Section 9.5(b)(i), the Cap Amount shall be increased
to Five Million Nine Hundred Forty-Five Thousand Two Hundred Sixteen
Dollars ($5,945,216) in the event that Horizon becomes ineligible for
any reason to receive the Discount (as defined in Section 2.1(c)).
Except to the extent that any claim arising out of Section 9.1 of this
Agreement involves a payment by Horizon to any third party (including
attorneys' fees incurred by Horizon), in no event shall the aggregate
amount of funds that may be paid by CryoLife and IFM pursuant to their
indemnification obligations hereunder exceed (a) the aggregate amount
of principal and interest payments received by IFM from Horizon under
the Note, plus (b) any amount offset by Horizon against the Note
pursuant to Section 9.3(c) as a result of any claim covered by Section
9.5(b)(ii).
(ii) Notwithstanding the provisions of Section
9.5(b)(i), any Damages arising under or pursuant to Sections 4.1, 4.2,
4.4, 4.5, 4.15, 5.1, 5.2, 5.5, 9.1(a), (b) and (d), and 9.2(a), (b),
and (d) shall not be subject to the Cap Amount, and there shall be no
limitation on the indemnification obligations of IFM or Horizon with
respect to Damages or indemnification arising under or pursuant to such
Sections.
(c) Neither Horizon nor IFM shall be liable under this
Agreement for any Damages arising out of or relating to the Port Business
(as that term is defined in the
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<PAGE> 31
First Purchase Agreement) and the provisions of this Section 9
shall neither extend nor limit the indemnification provided by
the First Purchase Agreement.
(d) Neither Horizon nor IFM shall be liable
under this Agreement for any Damages arising out of or
relating to the Products Business (as that term is defined in
the Second Purchase Agreement) and the provisions of this
Section 9 shall neither extend nor limit the indemnification
provided by the Second Purchase Agreement.
(e) Neither Horizon nor IFM shall be liable
under this Agreement for any Damages arising out of or
resulting from any defects in or damage or injury to any
person caused by any products manufactured or delivered by IFM
to Horizon pursuant to the Manufacturing Agreement, such
indemnification for such Damages to be as set forth in the
Manufacturing Agreement.
(f) The rights and remedies set forth in
Sections 9.1 through 9.5 shall be the exclusive remedies
available to the parties pertaining to any alleged
environmental liability, and the parties explicitly waive any
rights to cost recovery or contribution that they have or may
have under any state or federal environmental statute or under
the common law.
9.6. Jurisdiction and Forum.
(a) By the execution and delivery of this
Agreement, each Indemnifying Party irrevocably designates and
appoints each of the parties set forth under its name below as
its authorized agent upon which process may be served in any
suit or proceeding arising out of or relating to this
Agreement that may be instituted in any state or federal court
in the State of Georgia.
IFM:
Clinton D. Richardson, Esq.
Arnall Golden & Gregory, LLP
1201 West Peachtree Street
2800 One Atlantic Center
Atlanta, Georgia 30309
Horizon:
Jon R. Harris, Jr., Esq.
King & Spalding
191 Peachtree Street, N.E.
Suite 4600
Atlanta, Georgia 30303-1763
In addition, each party agrees that service of process upon
the above-designated parties shall be deemed in every respect
effective service of process upon such Indemnifying Party in
any such suit or proceeding. Each such Indemnifying Party
further agrees to take
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<PAGE> 32
any and all action reasonably requested by an Indemnified
Party, including the execution and filing of any and all such
documents and instruments, as may be necessary to continue
such designation and appointment of the above-designated
parties in full force and effect so long as this Agreement
shall be in effect. The foregoing shall not limit the rights
of any party to serve process in any other manner permitted by
law.
(b) To the extent that any Indemnifying Party
has or hereafter may acquire any immunity from jurisdiction of
any court or from any legal process (whether through service
or notice, attachment prior to judgment, attachment in aid of
execution or otherwise) with respect to itself or its
property, each Indemnifying Party hereby irrevocably waives
such immunity in respect of its obligations with respect to
this Agreement.
(c) The parties hereto consent and agree that
the appropriate forum and venue for any disputes between any
of the parties hereto arising out of this Agreement shall be
in any of the following courts and hereby waive any defense or
objection they may have of improper venue in any such lawsuits
filed in these courts: (i) the state or superior court of the
county where each of CryoLife and Horizon has its principal
place of business (presently, Cobb County, Georgia and
Meriwether County, Georgia); and (ii) the United States
District Court for the Northern District of Georgia, Atlanta
Division, and each of the parties hereto hereby submits to the
personal jurisdiction of any such court. The foregoing shall
not limit the rights of any party to obtain execution of
judgment in any other jurisdiction. The parties further agree,
to the extent permitted by law, that a final and unappealable
judgment against any of them in any action or proceeding
contemplated above shall be conclusive and may be enforced in
any other jurisdiction within or outside the United States by
suit on the judgment, a certified or exemplified copy of which
shall be conclusive evidence of the fact and amount of such
judgment.
9.7. Bulk Sales Indemnity. Horizon hereby waives
compliance with the provisions of any applicable bulk sales or transfer laws in
connection with the sale of the Purchased Assets contemplated by this Agreement.
IFM agrees to indemnify and hold Horizon harmless from and against any and all
Damages, including without limitation any claims made by creditors and any
Damages arising out of or relating to any Encumbrance on Purchased Assets
arising out of or relating to IFM's non-compliance with any applicable bulk
sales or transfer laws in connection with the sale of the Purchased Assets
contemplated by this Agreement, except to the extent that any such Damages
results from or arises out of any failure by Horizon to pay or perform, when
due, any obligations to be paid or performed by Horizon as provided in this
Agreement.
9.8. Exclusive Remedies. After the Closing, the rights of
indemnification contained in this Section 9 shall be deemed to be the exclusive
remedy of the parties hereto with respect to a default or breach by any other
party or other claim under or with respect to this Agreement.
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<PAGE> 33
10. Termination.
10.1. Termination and Abandonment. This Agreement may be
terminated at any time prior to the Closing:
(a) by mutual agreement of Horizon and IFM;
(b) by either party at any time after November
1, 2000 if Closing has not occurred and the Closing Date has
not been extended by the parties hereto;
(c) by IFM, if the conditions set forth in
Section 8 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 Horizon on or before the Closing Date;
and
(d) by Horizon, if the conditions set forth in
Section 7 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 IFM on or before Closing Date.
10.2. Effect of Termination. In the event of termination of
this Agreement pursuant to this Section 10, this Agreement shall forthwith be
void and there shall be no liability on the part of any party or its respective
officers, directors, partners or shareholders, except for obligations under
Sections 10, 11 and 12.3, 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.
11. Confidentiality.
11.1. Confidentiality. All proprietary information related
to the Business or the Purchased Assets (the "Confidential Information") shall
be treated by IFM and CryoLife as confidential and shall not be disclosed to any
third parties unless (i) such Confidential Information is or becomes part of the
public knowledge or literature through no fault of IFM or CryoLife, or (ii) IFM
and CryoLife are advised by written opinion of counsel that it is legally
required to disclose such Confidential Information, in which case such
Confidential Information may be disclosed only to the extent legally required;
provided, however, that IFM and CryoLife agree to promptly notify Horizon of
such legal disclosure requirement so that Horizon has a reasonable opportunity
to seek a protective order. IFM and CryoLife shall use all reasonable efforts to
prevent the use of all or any part of such Confidential Information in any other
connection or the transmission thereof to third parties unless and until it has
first obtained the written consent of Horizon specifically authorizing such use
or transmission.
11.2. Remedies. IFM and Horizon hereby agree that any
remedy at law for any breach of the provisions contained in Section 11.1 hereof
shall be inadequate and that Horizon or IFM, as the case may be, shall be
entitled to injunctive relief in addition to any other remedy Horizon might have
under this Agreement.
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<PAGE> 34
11.3. Continuing Right to Use. IFM and CryoLife shall
retain the right to use portions of the trade secrets, Confidential Information
and know-how conveyed to Horizon which have applications outside the Business
(the "Shared Information") and are retained in the minds of CryoLife employees
and Bill Wright, but only in connection with the manufacture of medical products
not in competition with the Business or Horizon, provided that IFM and/or
CryoLife shall be responsible for paying any royalty, license or fee obligations
arising out of IFM's and/or CryoLife's use of the Shared Information.
Notwithstanding anything to the contrary contained in this Section 11.3, neither
IFM nor CryoLife shall have the right to use any portion of the Shared
Information relating to the development, manufacture or sale of any synthetic
latex product.
12. Miscellaneous.
12.1. Further Assurances. Subject to the other provisions
of this Agreement, IFM agrees that after the Closing Date it shall, from time to
time, upon the reasonable request of Horizon, execute and deliver such other
instruments of conveyance and other similar documents and take such other
actions as Horizon may reasonably require, consistent with the terms of this
Agreement, as are reasonably necessary or desirable to transfer to Horizon title
to the Purchased Assets and to otherwise perform the provisions of this
Agreement to be performed by IFM. From and after the Closing Date, upon the
reasonable request of IFM, Horizon shall execute, deliver, and acknowledge all
such further instruments of conveyance and other similar documents and take such
other actions as IFM may reasonably require, consistent with the terms of this
Agreement, as are reasonably necessary or desirable to perform the provisions of
this Agreement to be performed by Horizon.
12.2. Benefit of Agreement. This Agreement shall be binding
upon and inure to the benefit of IFM and Horizon and their respective successors
and assigns and shall not confer any rights upon any third persons.
12.3. Expenses. Except as otherwise provided herein, each
party hereto agrees to pay its expenses incurred in connection with the
transactions contemplated by this Agreement, including, without limitation, the
fees and expenses of its accountants and counsel.
12.4. Entire Agreement; Amendments. This Agreement and the
agreements referenced herein (including, without limitation, the Horizon
Transfer Documents, the IFM Transfer Documents, the surviving provisions of the
Manufacturing Agreement as specified herein, the First Purchase Agreement and
the Second Purchase Agreement) constitute the entire agreement between the
parties pertaining to the subject matter contained herein, and supersedes all
prior agreements, arrangements, and understandings of the parties. No
supplement, modification, or amendment of or to this Agreement shall be binding,
unless executed in writing by the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute, a waiver of
any other provision, whether or not similar, nor shall any waiver constitute a
continuing waiver. No waiver shall be binding unless executed in writing by the
party granting the waiver.
- 33 -
<PAGE> 35
12.5. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, and all of
which shall constitute one and the same instrument.
12.6. Section and Paragraph Headings. The index and section
and paragraph headings of this Agreement are included for purposes of
convenience only and shall not affect in any way the construction or
interpretation of any of the provisions of this Agreement.
12.7. Notices. All notices, requests, demands, and other
communications under this Agreement shall be in writing and shall be deemed to
have been given on the date when delivered personally or sent by facsimile, the
next business day after delivery to a nationally recognized overnight delivery
service, or on the seventh (7th) day after mailing if mailed by first class
mail, registered or certified, postage prepaid, and properly addressed as
follows or to such other address as either party may designate by notice to the
other party:
(a) To Horizon:
Horizon Medical Products, Inc.
Attn: Robert M. Dodge,
Chief Financial Officer
Seven North Parkway Square
4200 Northside Parkway, N.W.
Atlanta, Georgia 30327
FAX: 404/264-9919
With copies to:
Nat G. Slaughter, III
Slaughter & Virgin, P.C.
400 Colony Square; Suite 1110
1201 Peachtree Street, N.E.
Atlanta, Georgia 30361
FAX: 404/872-7879
and
Jon R. Harris, Jr., Esq.
King & Spalding
191 Peachtree Street, N.E.
Suite 4600
Atlanta, Georgia 30303-1763
FAX: 404/572-5146
- 34 -
<PAGE> 36
(b) To IFM:
Ideas for Medicine, Inc.
c/o CryoLife, Inc.
Attn: Vice President of Finance
1655 Roberts Blvd., N.W.
Kennesaw, Georgia 30144
FAX: 770/590-3754
With a copy to:
Arnall Golden & Gregory, LLP
Attn: Clinton D. Richardson
2800 One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3450
FAX: 404/873-8665
(c) To CryoLife:
CryoLife, Inc.
Attn: Chief Financial Officer
1655 Roberts Blvd., N.W.
Kennesaw, Georgia 30144
FAX: 770/590-3754
With a copy to:
Arnall Golden & Gregory, LLP
Attn: Clinton D. Richardson
2800 One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3450
FAX: 404/873-8665
12.8. Governing Law. This Agreement shall be governed by
and construed exclusively in accordance with the internal laws of the State of
Georgia, without reference to its conflicts of law principles.
12.9. Interpretation. The parties acknowledge and agree
that: (i) each party and its counsel reviewed and negotiated the terms and
provisions of this Agreement and have contributed to its revision; (ii) the rule
of construction to the effect that any ambiguities are resolved against the
drafting party shall not be employed in the interpretation of this Agreement;
and (iii) the terms and provisions of this Agreement shall be construed fairly
as to all parties hereto, regardless of which party was generally responsible
for the preparation of this Agreement.
- 35 -
<PAGE> 37
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and delivered by its duly authorized officer as of the
day and year first above written.
HORIZON MEDICAL PRODUCTS, INC.
By: /s/ William E. Peterson, Jr.
-----------------------------------------
Name: William E. Peterson, Jr.
Title: President
IDEAS FOR MEDICINE, INC.
By:/s/ D. Ashley Lee
-------------------------------------------
Name: D. Ashley Lee
Title: Vice President of Finance and Chief
Financial Officer
<PAGE> 38
LIST OF EXHIBITS
----------------
<TABLE>
<S> <C>
Exhibit A Form of Note
Exhibit B Form of CryoLife Guaranty
Exhibit C Form of Bill of Sale
Exhibit D Form of Assignment and Assumption Agreement
Exhibit E Form of Opinion of Counsel to IFM and CryoLife
Exhibit F Form of Sublease Agreement
Exhibit G Form of Manufacturing, Assembly and Packaging
Agreement
Exhibit H Form of Transition Services Agreement
Exhibit I Form of Security Agreement
Exhibit J Form of Opinion of Counsel to Horizon
</TABLE>
LIST OF SCHEDULES
-----------------
<TABLE>
<S> <C>
Schedule 1.2(a) Fixed Assets
Schedule 1.2(b)(1) Finished Goods Inventory
Schedule 1.2(b)(2) Other Inventory
Schedule 1.2(c) Leasehold Improvements
Schedule 1.2(d) Intellectual Property
Schedule 1.2(e) Assigned Contracts
Schedule 1.4(e) Accounts Receivable
Schedule 1.4(g) Excluded Product Materials
Schedule 1.4(i) Third Party Equipment
Schedule 1.6 Allocation of Purchase Price
Schedule 1.7(a) Trade Payables
Schedule 4.2 IFM Consents and Approvals
Schedule 4.3 Litigation
Schedule 4.7 Insurance
Schedule 4.8 Intangible Personal Property
Schedule 4.9 Contracts
Schedule 4.10(a) Material Licenses
Schedule 4.10(b)(ii) Notice of Adverse Filings, etc.
Schedule 4.11 Transactions with Affiliates
Schedule 4.14 Officers, Directors and Employees
Schedule 4.15 Employee Benefit Plans
Schedule 4.15(j) CIGNA Plan Premiums
Schedule 4.17 Environmental Matters
Schedule 4.18(b) Assets Necessary to Conduct Business
Schedule 5.2 Horizon Consents and Approvals
Schedule 6.5(a) Retained Employees
Schedule 6.5(b) Bonuses
</TABLE>
