SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) June 15, 1999
Commission file number 0-25133
PharmaNetics, Inc.
(Exact name of issuer as specified in its charter)
North Carolina 56-2098302
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5301 Departure Drive, Raleigh, North Carolina 27616
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code 919-954-9871
<PAGE>
ITEM 2. DISPOSITION OF ASSETS
Effective June 15, 1999, PharmaNetics, Inc. (the "Company") sold
substantially all of the operating assets and assigned certain
liabilities of its wholly-owned subsdiary Coeur Laboratories, Inc.
("CLI") to Coeur Acquisition L.L.C., a private investment firm owned by
Bison Investments of Tampa, Florida. CLI has been presented in the
Company's historical financial statements as a separate segment. The
total cash consideration received by the Company was $1,782,644,
subject to certain post-closing adjustments. For this consideration,
Coeur Acquisition L.L.C. received the inventory, certain fixed assets,
intellectual property rights, certain other assets and assumed certain
liabilities of CLI. CLI's cash and accounts receivable at the closing
date, which the Company estimates to be approximately $2,400,000, were
retained by the Company. The Company will recognize a loss of
approximately $595,000 on the sale of CLI. This loss on sale of CLI is
comprised of the write-off of unamortized goodwill which was recognized
upon the Company's acquistion of CLI in 1993 partially offset by the
gain on sale of the operating assets. The loss will be presented as a
loss on sale of discontinued operations in the Company's consolidated
financial statements. The Company received an opinion from Scott &
Stringfellow, Inc. that the consideration received by the Company was
fair to the stockholders of the Company from a financial point of view.
The Company will lease space and provide certain services and employees
to Coeur Acquisition L.L.C. for up to twelve months from the closing
date.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro Forma Financial Information
The following financial statements present the pro forma balance sheet
of the Company as of December 31, 1998 as if the disposition had
occurred on December 31, 1998. The pro forma statements of operations
for the fiscal year ended December 31, 1998 and the three month period
ended March 31, 1999 reflect the sale of CLI as if it had occurred on
January 1, 1998 and January 1, 1999, respectively.
<PAGE>
PHARMANETICS, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
AS OF DECEMBER 31, 1998
(unaudited)
(In thousands, except share data)
<TABLE>
<CAPTION>
Actual Pro Forma
December 31, Pro Forma December 31,
1998 Adjustments 1998
--------------------------------------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $3,998 1,699 $5,697
Short term investments, held-to-maturity 3,703 3,703
Accounts receivable 2,069 2,069
Inventories 2,397 (582) 1,815
Other current assets 299 (17) 282
-------------------------------------------
Total current assets 12,466 1,100 13,566
Property and equipment, net 4,543 (889) 3,654
Intangible assets, net 1,547 (951) 596
Other assets, net 137 (14) 123
===========================================
Total assets $18,693 ($754) $17,939
===========================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $429 (109) $320
Accrued expenses 169 17 186
Current portion of long term debt 725 725
-------------------------------------------
Total current liabilities 1,323 (92) 1,231
Long term debt and capital lease obligations, less current portion 1,626 1,626
-------------------------------------------
Total liabilities 2,949 (92) 2,857
-------------------------------------------
Shareholders' equity:
Preferred stock -
Common stock 7 7
Additional paid-in capital 40,010 40,010
Accumulated deficit (24,262) (662) (24,924)
Unearned compensation (11) (11)
-------------------------------------------
Total shareholders' equity 15,744 (662) 15,082
-------------------------------------------
Total liabilities and shareholders' equity $18,693 ($754) $17,939
===========================================
The accompanying notes are an integral part of the pro forma financial statements.
</TABLE>
<PAGE>
PHARMANETICS, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(unaudited)
(In thousands, except share data)
<TABLE>
<CAPTION>
Actual Pro Forma
Twelve Months Twelve Months
Ended Ended
December 31, Pro Forma December 31,
1998 Adjustments 1998
----------------------------------------------
<S> <C> <C> <C>
Net sales $8,790 ($4,649) $4,141
Cost of goods sold 6,343 (3,497) 2,846
----------------------------------------------
Gross profit 2,447 (1,152) 1,295
Operating expenses:
General and administrative 3,191 (557) 2,634
Sales and marketing 748 (40) 708
Research and development 2,652 (143) 2,509
----------------------------------------------
Total operating expenses 6,591 (740) 5,851
----------------------------------------------
Operating loss (4,144) (412) (4,556)
----------------------------------------------
Other income(expense):
Interest expense (378) (378)
Interest income 281 (51) 230
Grant/royalty income 160 160
Development income 505 505
----------------------------------------------
Total other income (expense) 568 (51) 517
----------------------------------------------
Net loss before income taxes (3,576) (463) (4,039)
Provision for income taxes (67) 67 0
----------------------------------------------
Net loss ($3,643) ($396) ($4,039)
==============================================
Basic and diluted net loss per common share ($0.52) ($0.58)
=============== =======================
Weighted average shares outstanding 7,007,390 7,007,390
=============== =======================
The accompanying notes are an integral part of the pro forma financial statements.
</TABLE>
<PAGE>
PHARMANETICS, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(unaudited)
(In thousands, except share data)
<TABLE>
<CAPTION>
Actual Pro Forma
Three Months Three Months
Ended Ended
March 31, Pro Forma March 31,
1999 Adjustments 1999
---------------------------------------------
<S> <C> <C> <C>
Net sales $2,174 ($1,163) $1,011
Cost of goods sold 1,556 (862) 694
---------------------------------------------
Gross profit 618 (301) 317
Operating expenses:
General and administrative 739 (145) 594
Sales and marketing 205 (10) 195
Research and development 691 (15) 676
---------------------------------------------
Total operating expenses 1,635 (170) 1,465
---------------------------------------------
Operating loss (1,017) (131) (1,148)
---------------------------------------------
Other income(expense):
Interest expense (88) (88)
Interest income 80 (12) 68
Grant/royalty income 7 7
---------------------------------------------
Total other income (expense) (1) (12) (13)
---------------------------------------------
Net loss before income taxes (1,018) (143) (1,161)
Provision for income taxes (14) 14 0
---------------------------------------------
Net loss ($1,032) ($129) ($1,161)
=============================================
Basic and diluted net loss per common share ($0.14) ($0.16)
================ ====================
Weighted average shares outstanding 7,453,580 7,453,580
================ ====================
The accompanying notes are an integral part of the pro forma financial statements.
</TABLE>
<PAGE>
PHARMANETICS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The pro forma financial information presented herein includes all the pertinent
information related to the assets and liabilities disposed of and all the
financial information required pursuant to Article 11 of Regulation S-X.
The unaudited Pro Forma Consolidated Condensed Financial Statements of the
Company set forth herein include the Pro Forma Consolidated Condensed Balance
Sheet as of December 31, 1998 and the Pro Forma Consolidated Condensed
Statements of Operations for the year and three months ended December 31, 1998
and March 31, 1999, respectively. The Pro Forma Consolidated Condensed
Statements of Operations reflect the disposition as if it had occured as of
January 1, 1998 and January 1, 1999, respectively. The Pro Forma Balance Sheet
gives effect to the disposition of assets as if it occured on December 31, 1998.
The unaudited Pro Forma Consolidated Condensed Financial Statements give effect
to the adjustments set forth on the statements and are not necessarily
indicative of the results of operations and financial position which would have
been achieved had the disposition been completed as of the beginning of the
periods presented, nor are they necessarily indicative of the results of future
operations. The unaudited Pro Forma Consolidated Condensed Financial Statements
should be read in conjunction with the historical financial statements of the
Company.
2. PRO FORMA ADJUSTMENTS
The pro forma adjustments to the December 31, 1998 balance sheet represent the
removal of the operating assets and liabilities of the Company's Coeur
Laboratories, Inc. subsidiary which were sold in the transaction and represent
adjustments required to reflect the net loss on the sale as of December 31,
1998. The adjustments give effect to events that are directly attributable to
the transaction.
The pro forma adjustments to the Company's consolidated condensed statements of
operations for the year and three months ended December 31, 1998 and March 31,
1999, respectively reflect the disposition of Coeur Laboratories, Inc. as if it
had occured as of January 1, 1998 and January 1, 1999, respectively.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (continued)
(c) Exhibits
Asset Purchase Agreement by and among Coeur Laboratories, Inc. and
Coeur Acquisition, L.L.C. dated June 15, 1999
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
PHARMANETICS, INC.
(Registrant)
Date June 25, 1999 By /s/ Paul Storey
-------------- ----------------
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT (with all exhibits, schedules and other
attachments hereto, this "Agreement") is made and entered into this 15th day of
June, 1999 by and among COEUR LABORATORIES, INC., a North Carolina corporation
(the "Seller") and COEUR ACQUISITION L.L.C., a Delaware limited liability
company (the "Buyer").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Seller owns certain assets used by it in its business as a
manufacturer and seller of a line of disposable power injection syringes used
for cardiology and radiology procedures and a line of manifolds used in custom
angiographic procedure kits (the "Business"); and
WHEREAS, Seller desires to sell such assets and the Business to the
Buyer and the Buyer desires to purchase the same on the terms and subject to the
conditions contained and described in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements and the representations and warranties contained in
this Agreement, the parties hereto have agreed, and by these presents do hereby
agree, as follows:
1. DESCRIPTION OF TRANSACTION
-------------------------
1.1. SALE AND PURCHASE OF ASSETS. Seller agrees to sell to Buyer at Closing the
following assets (collectively, the "Assets"), free and clear of all security
interests, claims, liens, encumbrances, equities and other charges and interests
of others whatsoever:
1.1.1 FIXED ASSETS. All machinery, equipment, furniture, fixtures, office
equipment, vehicles, tools, tooling and molds (wherever located) and other
tangible personal property used exclusively in connection with the Business
(other than the Excluded Assets), including, without limitation, those assets
described on Schedule 1.1.1 hereto.
1.1.2. INVENTORY. All of Seller's inventory as of the Closing Date
1.1.3 CONTRACT RIGHTS; PERMITS; APPROVALS. All of Seller's contract rights,
warranties, licenses, permits, federal Food and Drug Administration
registrations, premarket notifications, applications for any of the foregoing,
and the like which are transferrable, including, without limitation, those
described on Schedule 1.1.3 hereto.
<PAGE>
1.1.4. TRADE NAME; GOODWILL. The trade name "Coeur Laboratories" and all
other trade names and goodwill exclusively associated with the Business,
including promotional and advertising literature and materials and customer
lists.
1.1.5 BUSINESS RECORDS. All product plans and specifications, customer
records, employee records, manufacturing and analytical records, records of
shipments and validation data and other customer and products materials and
information relating exclusively to the Business.
1.1.6. INTELLECTUAL PROPERTY. All trademarks, service marks, patents (in
each case whether registered or unregistered and including all applications
therefor and including all goodwill associated therewith), internet domain name
rights, trade secrets, business systems and procedures developed and/or used
exclusively with the operation of the Business, including without limitation the
trademarks and patents described on Schedule 1.1.6.
1.1.7. OTHER ASSETS. All other assets owned by Seller and used exclusively
in connection with the Business not otherwise described herein including without
limitation the specified prepaid expenses and other assets as described on
Schedule 1.1.7.
1.2 EXCLUDED ASSETS. Notwithstanding anything contained in Section 1.1 hereof,
the Assets shall not include the following assets, which shall remain the
property of Seller (the "Excluded Assets"):
1.2.1. the accounts receivable of Seller as of the day immediately
preceding the Closing Date;
1.2.2. intercompany accounts;
1.2.3. cash and bank accounts of Seller;
1.2.4 leasehold improvements of the Seller and certain equipment of the
Seller as set forth on Schedule 1.2.4; and
1.2.5. computer hardware and software used in the Business; provided,
however, that Seller shall use reasonable efforts to provide an electronic copy
of all records relating to the Business in a format to be specified by Buyer.
1.3 ASSUMPTION OF LIABILITIES AND AGREEMENTS. At Closing, the Buyer shall:
-----------------------------------------
1.3.1 ASSUMED AND EXCLUDED LIABILITIES. Assume and agree to pay the
liabilities of Seller described on Schedule 1.3.1 for the amounts set forth on
Schedule 1.3.1 (the "Assumed Liabilities"). The Assumed Liabilities shall not
include any claims, liabilities, or other obligations whatsoever of Seller not
reflected on Schedule 1.3.1 for the amounts set forth on Schedule 1.3.1 (the
"Excluded Liabilities").
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<PAGE>
1.3.2 ASSUMED AGREEMENTS. Assume the obligations of Seller under those
contracts, agreements and commitments described on Schedule 1.3.2 (the "Assumed
Agreements"); PROVIDED, HOWEVER, that the obligations of Seller under the
Assumed Agreements shall be current as of the Closing Date and the Buyer shall
be liable only for payments and performance under the Assumed Agreements with
respect to periods subsequent to the Closing Date.
1.4 ALLOCATION OF PURCHASE PRICE. The Purchase Price allocation for federal and
state income tax purposes shall be mutually agreed upon in writing by Buyer and
Seller after Closing.
1.5 AMOUNT OF PURCHASE PRICE. As consideration for the sale of the Assets and
the full and complete performance by the Seller of its obligations under this
Agreement and by the direct and indirect parents of the Seller of their
obligations under the guaranties delivered pursuant hereto, Buyer shall pay
Seller the "Total Purchase Price" (as defined in subsection 1.5.1 below). If the
Acquired Assets Value minus the Assumed Liabilities is less than the Closing
Payment, the Seller shall pay the Adjustment Payment to the Buyer on the
Adjustment Payment Date. If the Acquired Assets Value minus Assumed Liabilities
is more than the Closing Payment, the Buyer shall pay the Adjustment Payment to
the Seller on the Adjustment Payment Date.
1.5.1 DEFINITIONS.
------------
"Total Purchase Price" shall mean the net book value of the Assets as
stated on the Post-Closing Balance Sheet (as defined below) and shall
be paid by the "Closing Payment" (as defined below), payable at
Closing by the Buyer, plus the "Adjustment Payment" (as defined
below), if any, payable on the Adjustment Payment Date by the Buyer or
the Seller, as the case may be.
"Closing Payment" shall mean $1,782,664, payable by wire transfer of
immediately available funds by the Buyer to the Seller.
"Adjustment Payment" shall mean the difference between the Acquired
Assets Value minus the sum of Assumed Liabilities and the Closing
Payment.
"Adjustment Payment Date" shall mean fifteen days after delivery of
the Post-Closing Balance Sheet, or, if the Buyer and Seller do not
resolve any dispute concerning the Post-Closing Balance Sheet, the
date on which PricewaterhouseCoopers LLP delivers a Post-Closing
Balance Sheet, whose determination shall be final. The fees of
PricewaterhouseCoopers LLP shall be paid by Buyer.
"Acquired Assets Value" shall mean the value of the Assets as stated
on the Post-Closing Balance Sheet, with the adjustments and prepared
in accordance with Section 1.5.2.1 and 1.5.2.2. hereof. Buyer and
Seller acknowledge that the Acquired Asset Value shall include all
inventory physically on the Seller's premises all inventory on the
premises of Mid-States Plastics facility in Seagroves, North Carolina,
all inventory located on the premises of Isomedix, Inc. in
Spartenburg,
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<PAGE>
South Carolina, the value of leasehold improvements and the other
selected assets described on Schedule 1.2.4, notwithstanding the fact
that such improvements and such selected assets are not being
transferred hereunder.
1.5.2 PURCHASE PRICE DETERMINATION.
-----------------------------
1.5.2.1 BALANCE SHEET PREPARATION. As soon as practicable after the
Closing, but in any event not later than thirty (30) days after the
Closing Date, the Seller will deliver to the Buyer a balance sheet of
the Seller as of 11:59 p.m. on the day immediately preceding the
Closing Date, (the "Post-Closing Balance Sheet"). Accompanying such
Post-Closing Balance Sheet shall be a representation letter from
Seller to Buyer substantially in the form attached hereto as Schedule
1.5.2.1.
1.5.2.2 BASIS FOR PREPARATION OF POST-CLOSING BALANCE SHEET. The
Post-Closing Balance Sheet (A) shall be prepared in accordance with
generally accepted accounting principles, consistently applied; (B)
shall include line item titles consistent with those in the Seller
Financial Statements; (C) shall be prepared in accordance with the
accounting policies and practices (including policies and practices
with respect to the valuation of inventory, depreciation and asset
lives and the establishment and accrual of reserves) consistent with
those used in the preparation of the Seller Financial Statements and
the notes thereto; and (D) shall include the following adjustments:
(1) shall include no accounts receivable; (2) shall not include any
cash, intercompany accounts, or other Excluded Assets except that
leasehold improvements and the equipment described in Section 1.2.4
shall be included for the amounts set forth on Schedule 1.2.4; (3)
shall not include assets not used exclusively in the business of
Seller; (4) shall not include any adjustment to inventory, net of the
reserve established therefore, other than the physical count of
inventory completed on June 14, 1999. The Assumed Liabilities on such
Post-Closing Balance Sheet shall be for the amounts set forth on
Schedule 1.3.1. The Buyer and/or its accountants shall have the
opportunity to observe the physical inventory.
1.5.2.3. REVIEW BY BUYER. Seller will deliver to the Buyer, for its
review, a draft of the statement and permit the Buyer and its
accountants to review its supporting workpapers. If any adjustments to
the statement draft are requested by the Buyer or its accountants,
then the Seller, the Buyer and their respective accountants or
auditors shall confer and attempt in good faith to resolve any
difference in position prior to delivery of the Post-Closing Balance
Sheet to the Buyer; provided, however, that the physical inventory
count as of June 12, 1999 delivered to the Buyer on June 14, 1999
shall not be challenged and that the amount and the inclusion of
leasehold improvements and the equipment described in Section 1.2.4 in
each calculation shall not be challenged.
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<PAGE>
2 PROCEDURE FOR CLOSING
---------------------
2.1 GENERAL. Subject to the satisfaction or appropriate waiver of all
conditions precedent thereto, the closing of the purchase and sale of the Assets
as contemplated by this Agreement (the "Closing") shall be held at 10:00 a.m. on
June 15, 1999 (the "Closing Date") at the offices of Wyrick Robbins Yates &
Ponton LLP, 4101 Lake Boone Trail, Suite 300, Raleigh, North Carolina 27607. The
Closing shall be deemed to have occurred when, but not before, each party has
actually received (which receipt may be by facsimile transmission and may be by
another person acting on behalf of such party) the documents and instruments
contemplated hereunder to be received by such party.
2.2 DELIVERIES BY SELLER. At the Closing, Seller shall deliver to Buyer the
following:
2.2.1 BILLS OF SALE; ASSIGNMENTS. Unconditional bills of sale and
assignment in the form of Schedule 2.2.1 duly executed and acknowledged by
Seller transferring to the Buyer Seller's full right, title and interest in and
to the Assets, other than a landlord lien, free and clear of any lien,
restriction, covenant, lease, rental, required payment on assessment, or adverse
change or claim whatsoever.
2.2.2 DIRECT AND INDIRECT PARENT GUARANTIES. The absolute and
unconditional guaranty of each of Cardiovascular Diagnostics,
Inc. and Pharmanetics, Inc. of the obligations of Seller under
this Agreement and the documents executed in connection herewith,
substantially in the form of Schedule 2.2.2.
2.2.3 THIRD PARTY CONSENTS. Executed third party consents for the
assumption of the agreements set forth on Schedule 2.2.3 in the
form set forth on Schedule 2.2.3(1).
2.2.4 SUBLEASE. Executed sublease in the form of Schedule 2.2.4,
together with any necessary consents, for the operating location
of the Business for a period not to exceed 12 months.
2.2.5 OTHER DOCUMENTS. All documents and instruments required by the
terms of this Agreement and such other documents and instruments
as Buyer and/or its counsel may reasonably request in order to
accomplish the transactions contemplated by this Agreement.
2.3 DELIVERIES BY BUYER. At the Closing, Buyer shall deliver the
following:
2.3.1 PURCHASE PRICE. To Seller, the payment required by Section
1.5.1 hereof.
2.3.2 OTHER DOCUMENTS. All documents and instruments required by
the terms of this Agreement and such documents and
instruments as Seller and/or its
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<PAGE>
counsel may reasonably request in order to accomplish the
transactions contemplated by this Agreement.
3 REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
In order to induce the Buyer to enter into this Agreement and to consummate
the transactions contemplated hereby, Seller hereby represents and warrants to
Buyer the following:
3.1 ORGANIZATION AND STANDING. Seller is a corporation duly organized,
entitled to conduct business and validly existing and in good standing under the
laws of the State of North Carolina. Seller has the corporate power and
authority to carry on its business as it is now being conducted.
3.2 CORPORATE POWER AND AUTHORIZATION. Seller has had at all times the
corporate power to own or lease its properties and otherwise to conduct the
Business. Seller has the power to execute, deliver and perform this Agreement
and the other contracts, instruments and documents to be executed and delivered
by it pursuant to this Agreement (this Agreement and such other contracts,
instruments and documents to be delivered by Seller, collectively, are referred
to herein as the "Seller Delivered Documents"). The execution, delivery and
performance of Seller Delivered Documents have been duly authorized by all
necessary action (including any necessary shareholder action) on the part of
Seller in compliance with its articles of incorporation, its by-laws, any other
governing contracts, instruments or other documents and applicable law, and this
Agreement constitutes, and each of Seller Delivered Documents will constitute,
its valid and binding agreement, enforceable against it in accordance with their
terms.
3.3 OWNERSHIP OF STOCK. All outstanding shares of capital stock of Seller
are owned by Cardiovascular Diagnostics, Inc.
3.4. QUALIFICATION TO DO BUSINESS. Seller has qualified to do business as a
foreign corporation in those states listed on Schedule 3.4 hereto.
3.5 SUBSIDIARIES. Seller does not own any capital stock of any other
corporation.
3.6. FINANCIAL STATEMENTS. Attached hereto as Schedule 3.6 are (i) an
audited balance sheet of Seller as of December 31, 1998 (together with the notes
thereto) (the "Seller Year-End Balance Sheet"), (ii) an unaudited balance sheet
of Seller as of May 31, 1999 (the "Seller Interim Balance Sheet"), (iii) an
audited statement of income of Seller for the fiscal year ended December 31,
1998 (together with the notes thereto) (the "Seller Year End Income Statement"),
and (iv) an unaudited statement of income of Seller for the five month period
ended May 31, 1999, (the "Seller Interim Income Statement"), all of which are
collectively referred to herein as the Seller Financial Statements. The Seller
Financial Statements are in accordance with the books and records of Seller and
present fairly and in all material respects in accordance with generally
accepted accounting principles, consistently applied throughout the periods
involved, the financial condition and results of operations of Seller as of the
respective dates thereof and for
6
<PAGE>
the respective periods covered thereby. Seller has not received any advice or
notification from its firm of independent certified public accountants that it
has used any improper accounting practice that would have the effect of not
reflecting or incorrectly reflecting, in the Seller Financial Statements or
Seller's books and records, any properties, assets, liabilities, revenues, or
expenses.
3.7. ABSENCE OF UNDISCLOSED LIABILITIES. Except (i) as and to the extent
expressly reflected or specifically reserved against in the Seller Financial
Statements (which reserves, if any, are adequate) and for, (ii) as disclosed on
Schedule 3.7, Seller has no other material liabilities which in accordance with
generally accepted accounting principles are required to be reflected on the
Seller Financial Statements
3.8. ABSENCE OF CERTAIN CHANGES. Except as set forth in Schedule 3.8, since
the date of the Seller Interim Income Statement, there has not been any activity
with respect to the Business other than in the ordinary course of business and,
without limiting the foregoing, there has not been to the knowledge of Seller:
(i) any material change in the Assets, the Assumed Liabilities, the
Assumed Agreements, financial condition, results of operation or prospects of
the Business other than changes in the ordinary course of business, none of
which has had, a material adverse effect on the Assets, the Assumed Liabilities,
the Assumed Agreements, the financial condition, or results of operation of the
Business taken as a whole;
(ii) any material damage, destruction or loss, whether or not covered
by insurance, which has had, individually or in the aggregate, a material
adverse effect on the Assets, the Assumed Liabilities, the Assumed Agreements or
the Business taken as a whole;
(iii) any material change in any method of accounting or accounting
practice used by Seller as to the Business or any other material change in
Seller's manner of conducting the Business;
(iv) any material write-down by Seller of any inventory of the
Business or any material write-off of any receivable of the Business, except for
write-downs and write-offs in the ordinary course of business, none of which are
material to the Business.
(v) any incurring of any material liability or material obligation
that is an Assumed Liability other than in the ordinary course of the Business.
(vi) any sale, lease or other conveyance of all or any portion of any
material Assets or any other of the material properties of the Business (other
than dispositions in the ordinary course of business), or any grant to any
person of any material right with respect to all or any portion of the Assets;
(vii) any material increase in the wages, salaries, benefits or other
compensation of any employee or agent of the Business other than in the ordinary
course of business, or
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(viii) any contract to do any of the foregoing or any material
contract entered into by Seller not in the ordinary course of business.
3.9 TAXES. Seller has no material liability for taxes that would affect in
any material respect Buyer's rights, title and interest in or Buyer's right to
use or enjoy (free and clear of any lien or restriction) any Asset, any Assumed
Agreement, or any aspect of the Business acquired by Buyer pursuant to this
Agreement. The word "taxes" means all taxes, assessments, charges, duties, fees,
levies or other governmental charges (whether or not requiring the filing of
returns) and all deficiency assessments, additions to tax, penalties, interest,
excise, use, value-added and similar taxes, duties, tariffs, surcharges and
other customs and other governmental fees. Seller (i) has prepared and filed in
a timely manner all federal, state and local tax returns and reports as are and
have been required to be filed by it, which returns were prepared on a basis
consistent with applicable federal, state and local law, all taxes and other
amounts which to the knowledge of Seller were due were shown thereon to be due,
and all such amounts have been paid in full; (ii) has not executed or filed with
the Internal Revenue Service or any other taxing authority any agreement
extending the period for assessment or collection of any income or other taxes;
(iii) is not a party to any pending action or proceeding by any governmental
authority for assessment or collection of taxes, and no claim for assessment or
collection of taxes has been asserted against such corporation; and (iv) no
formal claims have been made or asserted against Seller by the United States
government or by any state or foreign country or local government for income or
any other taxes, except such as have been paid or (whether or not disputed) are
disclosed in this Agreement.
3.10. REAL AND PERSONAL PROPERTY -- OWNED OR LEASED.
-----------------------------------------------
3.10.1 OWNED PROPERTIES. Schedule 3.10.1 lists the tangible personal
property of Seller included in the Assets to which Seller holds legal or
equitable title, whether or not, of record, having an original cost of $1,000 or
more (the "Owned Assets"). Seller does not own any real property that is used in
the Business, other than leasehold improvements and fixtures that may be
classified as real property under North Carolina law. Except as set forth in
Schedule 3.10.1: (i) Seller owns all rights, title and interests in and to each
of the Owned Assets; (ii) no person has any rights to acquire, lease or use, or
any other interest in, any of the Owned Assets; and (iii) other than a landlord
lien, none of the Owned Assets is subject to any lien, restriction, covenant,
lease, rental, required payment or assessment, or adverse charge or claim
whatsoever.
3.10.2 LEASES; SUBLEASES. For purposes of this Agreement: (i) "Lease"
means any written or oral lease, sublease, rental contract or similar contract
and all amendments, modifications, supplements, waivers and covenants to or
under them pursuant to which Seller leases or rents either as lessee or tenant,
any property; and (ii) "Leased Assets" means the property that Seller leases,
subleases or rents pursuant to a Lease, included in the Assumed Agreements.
Schedule 3.10.2: (i) lists all written Leases, and (ii) describes all oral
leases. Except as set forth on Schedule 3.10.2, Seller is in possession of each
Leased Asset, and each Lease grants to Seller the right to possess the Leased
Asset without disruption.
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3.10.3. CONDITION OF OWNED ASSETS AND LEASED ASSETS. The Owned Assets
and the Leased Assets (collectively, the "Business Properties") are transferred
"as is".
3.11 TRADEMARKS, TRADE NAMES AND OTHER INTELLECTUAL PROPERTY. Schedule 3.11
lists (other than computer software generally available to the public and having
a purchase price of less than $2,000 per applicable):
3.11.1 all patents, trademarks, service marks, trade name or
registered copyrights that Seller owns or uses, or currently proposes to acquire
or use, in the Business and all applications or registrations for them
("Intellectual Property"),
3.11.2. all licenses or other contracts or rights relating to Seller's
use or license in the Business of technology, know-how, processes or the
Intellectual Property (the "Intellectual Property Licenses").
Except as disclosed in Schedule 3.11: (i) To the knowledge of Seller, Seller
owns all rights, titles and interests, free and clear of all payment obligations
(other than as set forth in the Intellectual Property Licenses), liens and
restrictions, in and to, or to the knowledge of Seller, has the sole and
exclusive right to use, all Intellectual Property and all of its trade secrets
and other confidential information, whether under Intellectual Property Licenses
or otherwise, used in or necessary for the ordinary conduct of the Business (and
Schedule 3.11 indicates whether such are owned or, if not, the basis on which
Seller has its rights); (ii) no person or entity has challenged or, to Seller's
knowledge, threatened to challenge the validity of, or Seller's rights to, any
of such; and (iii) to the knowledge of Seller no act or omission by Seller,
including the use, production, marketing, licensing or sale of the products of
the Business or Seller's use of the Intellectual Property violates, infringes or
misappropriates, or has violated, infringed or misappropriated, any patent,
trademark, service mark, trade name, copyright, technology, know-how, process,
trade secret or other rights or other intellectual properties of any other
person or entity.
3.1.2. CONTRACTS. Schedule 3.12 lists each material written or oral
contract to which Seller is a party or bound or to which it or any Asset is
subject (and each and every amendment, modification or supplement to any of
them) and that relates to exclusively to the Business (individually, a
"Contract" and collectively, "Contracts"), including, but not limited to, the
following:
(i) customer contracts for manufactured products;
(ii) contracts restricting the right of the Business to compete,
whether by restricting territories, customers or otherwise, in any line of
business in any location;
(iii) contracts for the purchase of goods or services;
(iv) contracts providing for payments based on results;
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(v) contracts making the Business liable, by indemnification
contract, contribution contract or otherwise, upon or which respect to any debt,
dividend or other liability or obligation of any other person or entity (except
endorsements made in the ordinary course of business in connection with the
deposit of items for collection);
(vi) contracts relating to participation by the Business in a
cooperative, partnership or joint venture; or
(vii) contracts imposing confidentiality requirements on the
Business.
3.13 STATUS. Except as disclosed in Schedule 3.13: (i) Seller has not
assigned any of its rights or obligations under (and is not otherwise restricted
for any reason from enjoining the full benefits under) any of the Leases,
Intellectual Property Licenses or Contracts; (ii) to the knowledge of Seller no
act or event has occurred which, with notice or lapse of time or both or other
action required to be taken by the other party as a prerequisite to exercising
its rights, would constitute a breach or default under any of them; (iii) Seller
has not had any notice that any other party with respect to any of them is
subject to any bankruptcy, insolvency or similar proceeding; (iv) there is no
outstanding notice of cancellation or termination in connection with any of
them; (v) to the knowledge of Seller each of them is the valid and binding
agreement of the parties to them, in full force and effect and enforceable in
accordance with its terms; (vi) to the knowledge of Seller neither the
execution, delivery nor performance of them violated, violates or will violate
any applicable law; (vii) neither Seller, nor, to Seller's knowledge, any other
party currently contemplates any termination, amendment or change to any of
them; and (viii) none of them requires Seller to maintain any performance bond,
letter of credit or other security arrangement
3.14. EMPLOYEE MATTERS
----------------
3.14.1. CURRENT EMPLOYEES AND BENEFITS. A list of all employees of
the Seller with respect to the Business as of the date of this Agreement
together with the current base compensation and total compensation for the
preceding fiscal year is attached hereto as Schedule 3.14.1(a). Schedule
3.14.1(b) identifies all plans and policies that provide or may provide benefits
or compensation in respect of any employee or former employee of the Business.
3.14.2. NO EMPLOYEE PLAN LIABILITY. To the knowledge of Seller,
neither Seller nor any "ERISA Affiliate" (as defined below) has any liability,
or is subject to any lien, restriction or other adverse right relating to any
"employee pension benefit plan" (as such term is defined in the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) that would affect
in any manner whatsoever Buyer's rights, titles and interests in, or Buyer's
right to use or enjoy (free and clear of any lien, other than permitted liens,
or restriction), any Assets or any Assumed Agreement or any aspect of the
Business acquired by Buyer pursuant to this Agreement. "ERISA Affiliate" means
each trade or business (whether or not incorporated) which together with Seller
is treated as a single employer pursuant to IRC ss. 414(b), (c), (m) or (o).
Neither Seller nor any ERISA Affiliate has ever maintained, contributed to or
otherwise
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participated in, or had any liability or obligation with respect to, any
"multi-employer plan" (as defined in ERISA) or any "multiple employer welfare
arrangement" (as defined in ERISA).
3.15. LABOR RELATIONS. Except as described in Schedule 3.15: (i) to
Seller's knowledge, Seller is (and has been) in compliance in all material
respects with all applicable law respecting employment and employment practices;
(ii) there are no charges, investigations, administrative proceedings or formal
complaints or discrimination pending or, to Seller's knowledge, threatened
before any governmental authority against Seller with respect to the Business;
(iii) there have been no governmental audits of the Business' equal employment
opportunity practices; (iv) there is no unfair labor practice complaint, charge
or other matter against or involving the Business pending, or to Seller's
knowledge, threatened before any governmental authority; (v) there is no labor
strike, organizing effort, organized slow down, organized stoppage or other
organized labor difficulty pending, involving or threatened against or affecting
the Business; (vi) no grievance or arbitration proceeding arising out of or
under collective bargaining agreements is pending, and no claim therefor exists;
and (vii) there is no collective bargaining contract which is binding on the
Business.
3.16. LITIGATION. Except as described in Schedule 3.16, Seller: (i)
is not engaged in, a party to, or, to Seller's knowledge, threatened with any
material claim, controversy, legal or equitable action, recall, field corrective
action, withdrawal or denial of regulatory approval, or other proceeding or
dispute (whether as plaintiff, defendant, applicant or otherwise) involving the
Assets or the Business; and (ii) is not a party to or subject to any material
judgment, order, decree, recall, field corrective action, withdrawal or denial
of regulatory approval, or restriction against it or any of the Assets, the
Assumed Agreements or the Business. Except as set forth in Schedule 3.16, there
has been no reservation of rights by any insurance carrier.
3.17. COMPLIANCE WITH LAWS. Except as set forth on Schedule 3.17:
---------------------
3.17.1. GENERALLY. To Seller's knowledge Seller is and has been
in compliance in all material respects with all applicable law, including, but
not limited to, that involving federal, state, local and foreign registration
and regulation of medical devices and establishments, federal and foreign export
and import regulation, antitrust, unfair competition, trade regulation,
antipollution, export regulation, environmental, employment, plant downsizing,
relocation, closing or safety except where the failure to be in compliance would
not have a material adverse effect on the Business taken as a whole. Without
limiting the foregoing, Seller has not at any time made any illegal payments for
political contributions or any bribes, illegal kickback payments or other
illegal payments or is disqualified, for any reason, from bidding on any
project.
3.17.2. PERMITS AND REGULATORY APPROVALS. To Seller's
knowledge, Seller has all permits and regulatory approvals, registrations and
pre-approvals required with respect to any Asset, any Assumed Agreement or any
aspect of the Business, including without limitation all required federal Food
and Drug Administration registrations (and all such permits, registrations and
approvals are listed in Schedule 3.17.2 except where the failure to have such
permits, registrations or approvals would not have a material adverse effect on
the Business taken as a
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whole); each such permit, registration or approval is to the knowledge of
Seller, in full force and effect; and to the knowledge of Seller, Seller is in
compliance in all material respects with each such permit, registration or
approval and any predecessor permit, registration or other approval applied for
or held in the past.
3.17.3 CHARGES OR VIOLATION; INVESTIGATIONS. Seller is not in
receipt of any notice or warning of, or to Seller's knowledge, charged with or
under investigation with respect to any failure or alleged failure to comply
with any applicable law with respect to Business.
3.17.4. ENVIRONMENTAL. Without limiting the foregoing, (i)
Seller has received no notice of any material fine, penalty, judgment (including
those for exemplary or punitive damages), settlement payment, or other liability
or obligation whatsoever (including those with respect to personal injury,
clean-up, removal or remediation and including the cost of defending against any
allegation of any of the foregoing) which relates to, is based upon or arises
from or in connection with any Federal, state, local or foreign statutes,
ordinances, orders, judgments, rulings or regulations relating to environmental
pollution or environmental regulation or control ("Environmental Law") with
respect to the Business, whether made or asserted by a governmental authority or
by a private person, with respect to any acts or omissions occurring, or facts
or circumstances existing, on or before the Closing Date and whether or not any
such act, omission, condition or circumstance was lawful when it occurred or
initially or subsequently existed, and (ii) to Seller's knowledge Seller has
complied in all material respects with all Environmental Law with respect to the
Business, has maintained all material records and has made all material filings
required by applicable Environmental Law with respect to treatment, storage,
presence, contamination, generation, transport, emission, discharge or release
into the environment by the Business of any substance (including solids, liquids
and gases) and the proper disposal by the Business of such materials (including
solid waste materials and petroleum or any fractions or by-products of them)
required for the operation of the Business except where the failure to do so
would not have a material adverse effect on the Business taken as a whole.
Copies of all environmental audits and reports performed by or on behalf of or
provided to Seller related to the Business have been provided to Buyer.
3.17.5. OSHA. To the knowledge of Seller, there is no
"recognized hazard" (as such term is used under the Occupational Safety and
Health Act of 1970 ("OSHA")) with respect to any Asset, any Assumed Agreement or
the Business Properties or the Business. Schedule 3.17.5 lists all reports and
filings made or filed by Seller with respect to the Business or its employees
working in the Business pursuant to OSHA and similar applicable laws.
3.18. PRODUCTS AND SERVICES; WARRANTIES; CUSTOMERS AND SUPPLIERS.
-----------------------------------------------------------
3.18.1. PRODUCTS, SERVICES, AND WARRANTIES. Except as disclosed
in Schedule 3.18.1: (i) Seller makes no warranty, guaranty or claim as to
products sold or services provided by the Business (ii) Seller has maintained
accurate sales records, order backlog and other information with respect to all
services and products of the Business; and (iii) to the knowledge of Seller each
of the services and products of the Business comply in all material respects
with applicable law in the jurisdictions where such products are manufactured,
distributed, and sold
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except where the failure to do so would not have a material adverse effect on
the Business taken as a whole. Without limiting the foregoing, all products of
the Business have been produced in all material respects in accordance with and
the production process is in compliance with the regulations and applicable good
manufacturing practices as promulgated from time to time by the United States
Food and Drug Administration and foreign equivalents thereof (the "FDA"),
including without limitation all technical and quality standards except where
the failure to do so would not have a material adverse effect on the Business
taken as a whole. To the knowledge of Seller, all material manufacturing and
analytical records, records of shipments and validation data required by
applicable laws and regulations are included with the records of the Business.
3.18.2. CUSTOMERS AND SUPPLIERS. Except as and to the extent set
forth in Schedule 3.18.2: (i) since the date of the Seller Interim Income
Statement, no material adverse change has occurred in Seller's relationship with
any customers and suppliers of the Business (including without limitation
E-Z-Em, Inc. and Liebel Flarsheim Company) as to whom payments during Seller's
immediately preceding fiscal year to or from Seller exceeded $50,000; (ii) no
such customers or suppliers have provided written notice to Seller that, after
the date of this Agreement, they will cease purchasing or supplying goods or
services or, substantially to reduce its purchases from, or sales to, the
Business; and (iii) without limiting the foregoing, no such customer of or
supplier to the Business has given Seller notice that it is subject to any
bankruptcy, insolvency or similar proceeding and, to Seller's knowledge, no such
proceeding by any other party is pending or threatened.
3.19. ABSENCE OF VIOLATIONS OR CONFLICTS. Except as disclosed pursuant to
Schedule 3.20 or to any other Schedule attached hereto, to the knowledge of
Seller, the execution, delivery and performance of each of Seller's Delivered
Documents do not (i) violate, conflict with, constitute a material default or
require any material consent or payment under, permit a termination of, or
create or impose any material lien or material restriction upon any Asset, any
Assumed Agreement or the Business under (a) any term or provision of Seller's
articles of incorporation or by-laws, (b) any contract to which Seller is a
party or bound or to which it or any of its properties is subject or bound, (c)
any permit, judgement, decree or order of any governmental authority to which
Seller or any of its properties are subject or bound or (d) any applicable law;
or (ii) create, or cause the acceleration of the maturity of, any obligation or
liability that is an Assumed Liability. The Company has obtained all consents
required for the assignment of the Assumed Agreements
3.20. INVENTORY. The Inventory is "as is".
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3.21. NO GOVERNMENTAL CONSENTS REQUIRED. Except as described on Schedule
3.21, to the knowledge of Seller, no consent, approval, order or authorization
of, or registration, declaration or filing with, any governmental authority on
Seller's part is required in connection with Seller's execution, delivery or
performance of this Agreement, the transfer of any Asset or any approval or
license related to any Asset, or any contract, instrument or document to be
delivered by any of them pursuant to this Agreement, other than any medical
device manufacturing establishment registration that may be required by the
Buyer.
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3.22. NO BROKERAGE. Other than Scott & Stringfellow, Inc., whose fees shall
be payable only by Seller, no person is entitled to any brokerage commission or
finder's fee from Seller in connection with any of the transactions contemplated
by this Agreement by reason of any act or omission of Seller or any of its
shareholders.
3.23 TRANSACTIONS WITH AFFILIATES. Except as disclosed in Schedule 3.23 (an
no cross-reference shall be made to any other schedule nor shall disclosure on
any other schedule be deemed disclosure on Schedule 3.23), no affiliate of
Seller or any person or entity controlled (directly or indirectly) by Seller:
(i) is a party to any contract of plan of any kind whatsoever involving the
Business; (ii) owns directly or indirectly, in whole or in part, any of the
Assets; or (iii) has any cause of action or other claim whatsoever against, or
owes any amount to, the Business.
3.24 OTHER. To the knowledge of Seller, no representation or warranty of
Seller in this Agreement or in any other Seller Delivered Document contains or
will contain any untrue statement of a material fact, or omits or will omit to
state a material fact, necessary to make the statements in this Agreement or in
such other materials not misleading.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer hereby represents and warrants the following:
4.1 ORGANIZATION AND STANDING. Buyer is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware with the power and authority to carry on its business as it is now
being conducted.
4.2. AUTHORITY RELATIVE TO THIS AGREEMENT.
-------------------------------------
4.2.1. AUTHORIZATION. The execution of this Agreement and the
delivery of this Agreement by Buyer has been duly authorized by Buyer; this
Agreement has been duly and validly executed by Buyer, and no further action is
necessary on its part to make this Agreement valid and binding upon Buyer and
enforceable against Buyer in accordance with the terms hereof, or to carry out
the transactions contemplated hereby.
4.2.2. NO VIOLATIONS. The execution, delivery and performance of this
Agreement by Buyer will not (1) constitute a breach or a violation of the
Articles of Incorporation or by-laws of Buyer or of any law, rule or regulation,
agreement, indenture, deed of trust, mortgage loan agreement or other instrument
to which Buyer is a party or by which Buyer is bound; (2) constitute a violation
of any order, judgment or decree to which Buyer is a party or by which any of
the assets or properties of Buyer are bound or affected; or (3) result in the
creation of any lien, charge or encumbrance upon any of the assets or properties
of Buyer.
4.2.3. CONSENTS; APPROVALS. No consent, approval or authorization is
required to be obtained by Buyer in connection with the execution or delivery of
this Agreement by Buyer or
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the consummation by Buyer of the transactions contemplated hereby except as has
been or will have been timely obtained prior to Closing.
5. CERTAIN OTHER AGREEMENTS
------------------------
5.1. CONFIDENTIALITY AND ANNOUNCEMENTS AS TO THIS AGREEMENT. Seller and
Buyer agree that the terms of this Agreement shall remain confidential, except
with the prior mutual consent of Seller and Buyer and except to the extent that
enforcement of its terms and applicable law requires public disclosure.
5.2. CERTAIN EMPLOYEE MATTERS.
-------------------------
5.2.1 OFFER OF EMPLOYMENT. Buyer will offer employment to employees
of Seller actively at work and engaged exclusively in the operation of the
Business as of the Closing Date for substantially the same base compensation
paid to such employees by the Seller. Nothing in this Agreement requires Buyer
to pay any such persons severance pay in the event of termination of employment
or any accrued but unpaid benefits.
5.2.2. PAYMENT OF COMPENSATION. Seller shall pay all of its
employees base compensation (other than those employees set forth on Schedule
5.6) through June 30, 1999 in accordance with Seller's normal payroll schedule
and Buyer shall reimburse Seller when the payroll is delivered for such
compensation paid by Seller for days after the Closing Date.
5.3. Reserved.
5.4. INSURED FRINGE BENEFIT PLANS. Seller will administer its insured
fringe benefit plans, at its expense, for the benefit of current and former
employees of the Business for claims relating to matters arising on or before
the Closing Date. To the extent applicable, Seller shall provide for COBRA
coverage for such persons under such plans. In addition, Seller will continue
the medical coverage provided prior to the Closing Date under Seller's Blue
Cross/Blue Shield plan for all employees hired by Buyer for a period of at least
30 days and shall use reasonable efforts to obtain such coverage for a period
not to exceed an additional 60 days, and shall use reasonable efforts to obtain
dental and disability insurance provided prior to Closing Date under Seller's
plans for all employees hired by Buyer for a period not to exceed ninety (90)
days. Buyer shall reimburse Seller for the premiums associated with any such
coverage within fifteen (15) days of invoice by Seller.
5.5. CERTAIN OBLIGATIONS OF SELLER. Seller shall pay all Excluded
Liabilities in accordance with their terms or other applicable requirements.
5.6. TRANSITION SERVICES. Seller shall make available the transition
services and personnel described on Schedule 5.6 for the period and on the terms
described on such Schedule. Except as otherwise set forth on Schedule 5.6,
Seller shall pay Buyer for such services and personnel on a
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monthly basis within fifteen days of invoice. Notwithstanding the foregoing,
during the period Buyer operates the Business on Seller's premises in accordance
with the terms of the sublease described in Section 7.12 hereof, Buyer shall be
permitted to use the leasehold improvements and equipment described in Section
1.2.4 without charge in the same manner such have been used in the Seller's
operation of the business. Seller shall offer reasonable assistance to Buyer in
the transition of computer software and business records to Buyer's computer
system.
5.7 CORRECTIVE WORK. All corrective work with respect to work performed or
products sold on or before the Closing Date by Seller with respect to the
Business including, but not limited to, the corrective work listed on Schedule
5.7 hereto is an Excluded Liability. Buyer shall perform the corrective work
listed on Schedule 5.7 hereto for a price equal to Direct Cost (as defined
herein) plus fifteen percent; provided, that, Seller shall have no obligation to
pay Buyer for such corrective work until receipt by Seller from the respective
customer of the payment for such product. If directed in writing by Seller, such
direction which will not unreasonably be withheld, Buyer shall perform
corrective work not listed on Schedule 5.7 in Buyer's reasonable discretion at
Seller's expense at a price equal to Direct Cost plus fifteen percent, and a
reasonable allocation of Buyer's overhead costs; provided, that, with respect to
products sold on or before the Closing Date, Seller shall have no obligation to
pay Buyer for such corrective work until receipt by Seller from the respective
customer of the payment for such product. For purposes of this Section 5.7,
"Direct Cost" shall be Buyer's direct labor cost and materials at Buyer's actual
cost
5.8 EXPENSES. Each party shall pay its own expenses and costs incurred in
connection with the negotiation and consummation of this agreement and the
transactions contemplated by it. Notwithstanding the foregoing, to the extent
the transactions contemplated by this Agreement are not exempt from sales taxes,
Buyer shall pay such taxes.
5.9 NAME CHANGE. As soon as practicable after Closing, Seller will file
Articles of Amendment to the Seller's Articles of Incorporation changing the
name of Seller to a name that does not include the word "Coeur" and shall amend
all fictitious or assumed name filings in any jurisdictions to exclude the word
"Coeur".
6. TRANSACTIONS PRIOR TO THE CLOSING
---------------------------------
6.1 CONDUCT OF BUSINESS UNTIL CLOSING. Except as the parties may otherwise
agree in writing, at all times prior to completion of the Closing on the Closing
Date or until the earlier termination of this Agreement, Seller will:
6.1.1. ORDINARY COURSE. Cause the business of Seller to be operated
only in the usual, regular and ordinary manner and, to the extent consistent
with such operation, use reasonable efforts to preserve the present business
organization intact, keep available the services of present officers and
employees and preserve present business relationships with customers, suppliers
and others having business dealings with Seller.
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6.2.2. NO VIOLATIVE TRANSACTION. Neither enter into any transaction,
take any action nor fail to take any action which would result in, or could
reasonably be expected to result in or cause, any of the representations,
warranties, disclosures, agreements or covenants of Seller contained in this
Agreement not being true and complete in all material respects at and as of the
time immediately after the occurrence of such transaction or immediately after
such action is taken or failed to be taken, and also on the Closing Date.
6.2.3. CORPORATE ACTION; APPROVALS AND CONSENTS. The Seller promptly
will take or cause to be taken all corporate and other action and use reasonable
efforts to obtain in writing as promptly as possible all approvals and consents
required to be obtained in order to effectuate the consummation of the
transactions contemplated hereby.
6.3. ADVICE OF CHANGES. Between the date of this Agreement and the
Closing, Seller will promptly advise Buyer in writing of any fact which, if
existing and actually known to them at the date of this Agreement, would have
been required to be set forth in or disclosed pursuant to this Agreement.
6.4. ACCESS TO PROPERTIES AND RECORDS, ETC. BY BUYER. Buyer and its
counsel, accountants and other representatives will be given reasonable access
during normal business hours to all of the properties, personnel, books, tax
returns, contracts, commitments and records of Seller, and will be furnished
with all such additional documents (certified if requested) and information with
respect to the Business and the Assets as they may from time to time reasonably
request, at all times prior to the Closing.
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
------------------------------------------------
The obligations of Buyer under this Agreement are subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(the fulfillment of any of which may be waived in writing by Buyer):
7.1. ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties and covenants of Seller contained in this Agreement shall not only
have been true and complete in all material respects as of the date of this
Agreement and when made but shall also be true and complete in all material
respects as though again made on the Closing Date, except to the extent that
they are incorrect as of the Closing Date by reason of events occurring after
the date of this Agreement in compliance with the terms hereof or as a result of
additional disclosures made to Buyer or on any Schedule.
7.2. COMPLIANCE. Seller shall have performed and complied with all
agreements, covenants and conditions required by this Agreement to be performed
and complied with by each of them at or prior to the Closing.
7.3. GOOD STANDING CERTIFICATE. Buyer shall have received a certificate
executed by the Secretary of State of the State of North Carolina dated as of a
recent date certifying that Seller is a corporation in good standing under the
laws of the State of North Carolina
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7.4 AGREEMENTS NOT TO COMPETE. Buyer shall have received Agreements Not to
Compete, substantially in the form attached hereto as Schedule 7.4, with the
Seller, Cardiovascular Diagnostics, Inc., Pharmanetics, Inc. and John P.
Funkhouser.
7.5 OPINION OF COUNSEL. Buyer shall have received the opinion of counsel
to Seller dated the Closing Date, in substantially the form attached hereto as
Schedule 7.5.
7.6. LITIGATION. There shall not be any litigation or proceeding to
restrain or invalidate the consummation of the transactions contemplated hereby,
the defense of which, in the sole discretion of Buyer, involves expense to Buyer
or lapse of time that would be materially adverse to the interests of Buyer.
7.7. NO MATERIAL ADVERSE CHANGE. Since the date of execution of this
Agreement, there shall have been no material adverse change in the Assets or in
the Business.
7.8. ACTIONS, PROCEEDINGS, ETC. All actions, proceedings, instruments,
agreements and documents required to carry out the transactions contemplated by
this Agreement or incidental thereto and all other related legal matters shall
have been reasonably satisfactory to Buyer, which shall have been furnished with
such copies (certified if requested) of all such actions, proceedings,
instruments, agreements and documents as they shall have reasonably requested.
7.9. CASUALTY; EMINENT DOMAIN. Prior to the completion of the Closing on
the Closing Date, no portion of the Assets deemed by Buyer in its sole
discretion to be material to the operations of the Business shall have been
destroyed or damaged (whether or not there exists insurance against such loss),
and no such portion of the Assets shall have been taken or threatened to be
taken by power of eminent domain.
7.10. ASSIGNMENT OF LICENSES, PERMITS, APPROVALS, CONTRACTS, ETC. The
Buyer shall have received assignments, satisfactory in form and substance to its
counsel, of all licenses, permits, environmental permits, registrations,
approvals, contracts and the like applicable to the operation of the Business;
and Buyer shall have obtained all necessary permits, registrations or approvals
to conduct the Business as it is currently conducted.
7.11. TERMINATION OF FINANCING STATEMENTS. No financing statements shall
be of record with the Secretary of State of any state in which Seller is
incorporated or does business, or in the public records of any county thereof,
with respect to any of the Assets, and Seller shall have furnished evidence
satisfactory to counsel to the Buyer of the termination of all such filings
previously on record with respect to any of the Assets.
7.12. LEASE. Seller shall execute and deliver to the Buyer a sublease for
the space currently occupied by the in the form attached hereto as Schedule
2.2.4. on a month-to-month basis for a period of up to twelve months at a rate
equal to Seller's pro rata direct cost for the space to be occupied by Buyer.
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<PAGE>
8 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
-------------------------------------------------
The obligations of Seller under this Agreement are subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(the fulfillment of any one of which may be waived in writing by Seller):
8.1. ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties and statements of Buyer contained in this Agreement shall not only
have been true and complete in all material respects on the date of this
Agreement and when made but shall also be true and complete in all material
respects as though again made on the Closing Date, except to the extent that
they are incorrect as of the Closing Date by reason of events occurring after
the date of this Agreement in compliance with the terms hereof.
8.2. COMPLIANCE. Buyer shall have performed and complied with all
agreements, covenants and conditions required by this Agreement to be performed
and complied with by Buyer at or prior to the Closing.
8.3. GOOD STANDING CERTIFICATE. Seller shall have received a certificate
executed by the Secretary of State of the State of Delaware dated as of a recent
date certifying that Buyer is a limited liability company in good standing under
the laws of the State of Delaware.
8.4. OPINION OF COUNSEL. The Seller Stockholders shall have received an
opinion of counsel to Buyer, dated the Closing Date, in substantially the same
form as is attached hereto as Schedule 8.4.
8.5. LITIGATION. There shall not be any litigation or proceeding to
restrain or invalidate the consummation of the transactions contemplated hereby
the defense of which, in the sole discretion of the Seller, involves expense to
the Seller or lapse of time that would be materially adverse to the interests of
the Seller.
8.6. ACTIONS, PROCEEDINGS, ETC. All actions, proceedings, instruments,
agreements and documents required to carry out the transactions contemplated by
this Agreement or incidental thereto and all other related legal matters shall
have been reasonably satisfactory to and approved by counsel to the Seller; and,
such counsel shall have been furnished with such copies (certified if requested)
of all such actions, proceedings, instruments, agreements and documents as they
shall have reasonably requested.
9 INDEMNIFICATION
---------------
9.1 GENERAL.
------------
9.1.1. SURVIVAL. All representations and warranties of each party
hereto shall survive until the first anniversary of the Closing Date. All
covenants of each party shall survive until the third anniversary of the Closing
Date. Each party acknowledges that the other is entitled
19
<PAGE>
to rely on its representations, warranties, covenants and agreements in this
Agreement (qualified only by the disclosures in the Schedules) in order to
preserve the benefit of the bargain otherwise represented in this Agreement.
9.1.2. INDEMNIFICATION OBLIGATIONS -- GENERAL. The indemnification
obligations of this Article 9, although stated in terms of the parties, shall be
for the benefit of the parties, their permitted successors and assigns, and
their officers, directors, employees, agents and affiliates. The term "Loss"
means costs, damages, claims, expenses or payments, including, but not limited
to, (i) related attorneys', accountants' and other professional advisors' fees
and expenses; (ii) amounts paid in settlement of a dispute with a person or
entity not a party that if resolved in favor of such third party would
constitute a matter to which a party is indemnified pursuant to this Agreement,
even though such settlement does not acknowledge that the underlying facts or
circumstances constitute a breach of a representation and warranty or other
indemnified matter; (iii) reasonable costs and expenses necessary to avoid
having a claim for indemnification against another party pursuant to this
Agreement or to mitigate any such claim; and (iv) interest on each of the
foregoing at the "prime rate" of interest (as published in the WALL STREET
JOURNAL) from the date Loss was incurred.
9.1.3. BY BUYER. Buyer agrees to indemnify and hold harmless Seller
in respect of any and all Losses which are incurred by Seller arising out of:
9.1.3.1. any material breach by Buyer of its representations,
warranties, covenants or agreements made in this Agreement;
9.1.3.2. any attempt (regardless of its success) by any person
to cause or require Seller to pay or discharge any material claim, debt,
obligation, liability or commitment which is the direct result of a material
breach by Buyer of any representation, warranty, covenant or agreement;
9.1.3.3. any action, suit, proceeding, assessment or judgment
arising out of or incident to any of the matters indemnified against in this
Section 9.1.3.
9.1.3.4. all material product warranty, product liability and
similar claims or obligations, including without limitation all claims for
damages or injury to persons or property, infringement of intellectual property
rights or other liability, which arises out of or is based upon any express or
implied representation, warranty, agreement or guarantee made or alleged to have
been made by Buyer or any affiliate of Buyer or which is imposed or asserted to
be imposed by operation of law, in connection with any service or product of the
Business sold on or after the Closing Date.
9.1.3.5. the acts or omissions of any employees of Seller, or
an affiliate of Seller, in providing the services provided pursuant to Schedule
5.6, including any Losses incurred by Buyer.
20
<PAGE>
The indemnification herein provided shall include all of the
expenses of the Seller in enforcing the indemnification rights granted in this
Agreement, whether such expenses involve defense or prosecution against a Third
Party or directly against Buyer.
9.1.4 BY SELLER. Seller agrees to indemnify and hold harmless Buyer
in respect of any and all Losses which are incurred by Buyer arising out of:
9.1.4.1. any breach by Seller of its representations,
warranties, covenants or agreements made in this Agreement;
9.1.4.2. any attempt (regardless of its success) by any person
to cause or require Buyer to pay or discharge any claim, debt, obligation,
liability or commitment which is the direct result of a material breach by
Seller of any representation, warranty, covenant or agreement;
9.1.4.3. all material product warranty, product liability and
similar claims or obligations, including without limitation all claims for
damages or injury to persons or property, infringement of intellectual property
rights or other liability, which arises out of or is based upon any express or
implied representation, warranty, agreement or guarantee made or alleged to have
been made by Seller or any affiliate of Seller or which is imposed or asserted
to be imposed by operation of law, in connection with any service or product of
the Business sold on or before the Closing Date
9.1.4.4. any action, suit, proceeding, assessment or judgment
arising out of or incident to any of the matters indemnified against in this
Section 9.1.4.
9.1.4.5. any Losses for inventory that is obsolete as of the
Closing Date, including without limitation the amount of obsolete inventory set
forth on Schedule 9.1.4.5; provided, that, for purposes of this Section 9.1.4.5,
(i) Seller and Buyer agree that the inventory set forth at Schedule 9.1.4.5 is
obsolete, and shall count toward the Threshold Amount set forth in Section 9.6.1
without any further action on the part of Buyer or Seller, (ii) that for the
purposes of calculating "Losses" under this Section 9.1.4.5, "Losses" shall mean
the book value on the Closing Date of such obsolete inventory; and (iii)
notwithstanding any provision to the contrary in this Agreement, this Section
9.1.4.5 shall survive for a period of only one year from the Closing Date and
any claims under this Section 9.1.4.5 shall be commenced before the expiration
of such period.
The indemnification herein provided shall include all of the
expenses of the Buyer in enforcing the indemnification rights granted in this
Agreement, whether such expenses involve defense or prosecution against a Third
Party or directly against Seller.
9.2. CLAIMS FOR INDEMNIFICATION. Whenever any claim shall arise for
indemnification under this Section 9, the party seeking indemnification (the
"Indemnified Party") shall notify the party or parties (as the case may be)
against whom indemnification is sought (whether one party
21
<PAGE>
or more, the "Indemnifying Party") in writing of the facts constituting the
basis for such claim ("Notice of Claim"). Such notice shall state generally the
basis for such indemnification right and the amount or an estimate of the amount
of the liability arising therefrom. The right to indemnification hereunder and
the amount or the estimated amount thereof, as set forth in such notice, shall
not be deemed agreed to by the Indemnifying Party, unless the Indemnified Party
is notified in writing that the Indemnifying Party does not dispute the right to
indemnification as set forth or estimated in such notice.
9.3. THIRD PARTY CLAIMS. If the facts giving rise to any indemnification
right shall involve any actual or threatened claim or demand by any third party
("Third-Party Claimant") against the Indemnified Party or any possible claim by
the Indemnified Party against any third party, such claim by or against a third
party shall be referred to as a "Third-Party Claim." If the Indemnifying Party
gives the Indemnified Party an agreement in writing stating that the
Indemnifying Party will indemnify the Indemnified Party and hold the Indemnified
Party harmless from all cost and liability arising from any Third-Party Claim,
the Indemnifying Party may, at its own expense undertake full responsibility for
and control of the settlement, defense or prosecution of such Third-Party Claim
and may contest or settle it on such terms as it may choose; provided that: (i)
the Indemnified Party is given a full and unconditional release by the
Third-Party Claimant; (ii) such settlement will not abrogate or impair any
rights or agreements that the Indemnified Party may have with respect to the
Third-Party Claimant; (iii) the settlement will not provide for injunctive or
non-monetary relief affecting the Indemnified Party; and (iv) the settlement
will not adversely affect the assets, future operations or business of the
Indemnified Party. In any other case, the Indemnified Party may contest or
settle the Third-Party Claim upon such terms as it may choose, in its sole
discretion, although the Indemnified Party shall not reach a settlement until it
has consulted in good faith with the Indemnifying Party. Any such consultation
shall not relieve the Indemnifying Party of its obligations to indemnify the
Indemnified Party under this Section 9.
If by reason of any Third-Party Claim a lien, attachment, garnishment or
execution is placed upon any of the property or assets of the Indemnified Party,
the Indemnifying Party, if it desires to exercise its right to defend or
prosecute such suit, shall furnish a satisfactory indemnity bond to obtain the
prompt release of such lien, attachment, garnishment or execution.
9.4. COOPERATION. The parties to this Agreement shall execute such powers
of attorney as may be necessary or appropriate to permit participation of
counsel selected by any party hereto and, as may reasonably be related to any
such claim or action, shall provide access to the counsel, accountants and other
representatives of each party during normal business hours to all relevant
properties, personnel, books, tax records, contracts, commitments and all other
relevant business records of such other party and will furnish to such other
party copies of all such documents as may reasonably be requested (certified, if
requested).
9.5. TIME LIMITATION. No claim for indemnification under this Agreement
shall be valid or enforceable unless made on or prior to the expiration of the
survival of the applicable representation, warranty or covenant as set forth in
Section 9.1 of this Agreement.
22
<PAGE>
9.6. LIMITATION ON INDEMNIFICATION.
------------------------------
9.6.1 Threshold Amount. No amount of indemnity will be payable in
the case of a claim by the Seller or Buyer under this Section 9 unless, until
and only to the extent that the claimant has suffered or incurred Losses
aggregating in excess of eighty thousand dollars ($80,000) (the "Threshold
Amount") as a result of or arising out of the matters described in this Section
9, at which time the indemnified parties shall be entitled to seek
indemnification for the entire amount of any Losses in excess of the Threshold
Amount.
9.6.2 Limitation on Recovery. The Seller and the Buyer agree that
the maximum aggregate amount of Losses for which the Seller and the Buyer will
be liable to pay to the other party under this Section 9 will be an amount equal
to the Total Purchase Price.
9.7. EXCLUSIVITY. This Section 9 contains the sole and exclusive remedies
for any party hereto with respect to any claim relating to this Agreement on the
transactions contemplated hereby and the facts and circumstances relating and
pertaining hereto (whether any such claims will be made in contract, breach or
warranty, tort or otherwise).
10. GENERAL
-------
10.1. BROKERS. The Seller and Buyer hereby represent and warrant, each to
the others, that it has not utilized the services of any finder, broker or agent
in connection with the transactions contemplated hereby (other than Seller's
engagement of Scott & Stringfellow, LLP, whose fees and expenses shall be
payable solely by Seller), and each agrees to indemnify the other parties to
this Agreement against and hold them harmless from any and all liabilities to
any person, firm or corporation, claiming any broker's or finder's fee or
commission of any kind on account of services rendered on behalf of such party
in connection with the transactions contemplated by this Agreement.
10.2. WAIVERS. No action taken pursuant to this Agreement, including any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representation,
warranty, covenant or agreement contained in this Agreement. The waiver by any
party to this Agreement of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach.
10.3. EXPENSES. Each of the parties to this Agreement shall pay its own
expenses in connection with this Agreement and the transactions contemplated
hereby, including the fees and expenses of its counsel and its certified public
accountants and other experts.
10.4. PRESS RELEASES. Except as required by law, no statement or public
disclosure concerning the transactions contemplated by this Agreement or the
closing thereof shall be made or released to any medium of public communication
except with the prior approval of both the Buyer and Seller. The parties agree
that to the extent possible under applicable law, all details regarding this
transaction (including without limitation the purchase price hereunder) shall be
kept confidential. Nothing in this Section 10.4. shall prevent Seller from
making any public
23
<PAGE>
disclosure required by the Securities and Exchange Commission , the 1933
Securities Act or the 1934 Securities Exchange Act.
10.5. CONFIDENTIALITY. If the transactions contemplated by this Agreement
are not consummated, then each of the parties to this Agreement agrees to keep
confidential and shall not use for its own benefit any of the information
(unless in the public domain) obtained from any other party and shall promptly
return to such other parties all schedules, documents or other written
information (without retaining copies thereof) previously obtained from such
other parties.
10.6. NOTICES. Any notice, request, demand and other communication which is
required or which may be given under this Agreement shall be in writing and
shall be deemed to have been duly given if personally delivered, or if actually
received by postage prepaid first class mail, private carrier, telegram or
telephone facsimile transmission, to the addresses set forth on Schedule 10.6.
hereto or, as to any party, to such other address as such party shall have
specified by notice in writing to the other parties.
10.7. ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the entire
agreement, and supersedes all prior agreements and understandings, oral and
written, among the parties to this Agreement with respect to the subject matter
hereof. This Agreement may be amended only by written agreement executed by all
of the parties hereto.
10.8. SEVERABILITY. Any provision of this Agreement which is determined by
a court of competent jurisdiction to be prohibited, unenforceable or not
authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition, unenforceability or non-authorization without
invalidating the remaining provisions hereof or affecting the validity,
enforceability or legality of such provision in any other jurisdiction. In any
such case, such determination shall not affect any other provision of this
Agreement, and the remaining provisions of this Agreement shall remain in full
force and effect.
10.9. ASSIGNABILITY. This Agreement shall not be assignable by any of the
parties to this Agreement without the prior written consent of all other parties
to this Agreement; provided, however, that Buyer shall have the right to assign
this Agreement to an affiliate of Buyer.
10.10. FURTHER ASSURANCES. Each party to this Agreement will execute and
deliver, or cause to be executed and delivered, such additional or further
transfers, assignments, endorsements or other instruments as any other party or
its counsel may reasonably requests for the purpose of carrying out the
transactions contemplated by this Agreement.
10.11. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
24
<PAGE>
10.12. SECTION AND OTHER HEADINGS. The section and other headings contained
in this Agreement are for purposes of reference only and shall not affect the
meaning or interpretation of this Agreement.
10.13. GOVERNING LAW. The validity, construction and enforcement of, and
the remedies under, this Agreement shall be governed in accordance with the laws
of the State of North Carolina.
10.14. KNOWLEDGE. For the purposes of this Agreement, use of the phrase or
reference to facts as "to the knowledge" of a person is intended to and shall be
construed as a reference to the actual contemporaneous knowledge and
recollection of such person.
[The next page is the Signature page]
25
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed by an officer thereunto
duly authorized and attested under the corporate seal by the Secretary or
Assistant Secretary of each of the corporation parties hereto, all as of the
date first above written.
COEUR LABORATORIES, INC.
Attest:
/s/ Paul Storey By:/s/ John Funkhouser
- --------------- -------------------
Its: Its:
COEUR ACQUISITION L.L.C.
Attest:
/s/ Carol Wood By:/s/ William J. Cude III
- -------------- -----------------------
Its: Its:
26
<PAGE>
SCHEDULE 1.1.1(A)
MANUFACTURING EQUIPMENT LIST ON LOCATION AT COEUR LABORATORIES, INC
1) ALLOYD HEAT SEALERS
a) Lines A/B (C/N 1101)
b) Lines C/D (C/N 1102)
c) Lines E/F (C/N 1207)
d) Nesting Trays
e) Machine Shaft
2) AIR GUNS
a) Simco Power Units
b) Simco Top Gun
c) Air Gun X 8
d) Topgun 2 X 2
e) Fowler 6" Extension X 2 Unknown
3) LABEL PRINTERS
a) M8400
b) M8400 (C/N 1133)
c) M8400 (C/N 1297)
d) M8400RV (C/N 1268)
e) Spare Parts
i) M8400 Printhead & cutter
ii) M8400 Printhead X 2
iii)M8400 Cutter Kit X 2
4) CEMA EQUIPMENT
a) Pouch Sealer (C/N 1110)
b) Production Tables
c) Production Chairs
d) Cleanroom Vacuum
e) Marsh Electric Tape Dispenser
f) Mastercraft Wet Vacuum
g) Wire Cart X 2
h) Cleanroom Shoe Cleaner
i) Scales
i) Allied-Fisher Scientific (C/N 1010)
ii) Sartorius (C/N 1251)
iii)Mettler-Toledo (C/N 1203)
j) Blower/Cabinet/Conveyor
k) Laminer Flow Hood
<PAGE>
5) COILED LINE EQUIPMENT
a) Grieve Oven (C/N 1152)
b) Coiled Line Redesign
c) Coiled Line Equipment
i) Coiled Air Cleaner (C/N 1206)
ii) Coil Winder (C/N 1161)
iii) Coil Cutter X 2 (C/N 1262 & 1263)
iv) Mauls & Cutting Board Unknown
6) MANIFOLD EQUIPMENT
a) Hot Stamp Machine (C/N 1106)
b) Manifold Pressure Tester (C/N 1103)
c) Manifold Handle Press (C/N 1104)
d) Manifold Rotator Press (C/N 1105)
7) MISCELLANEOUS EQUIPMENT
a) Jacket Siliconizer (Tumbler) (C/N 1137)
b) Honeywell Hepa Filter X 2 (C/N 1278 & NEW)
c) ACCO - Hepa Filters (C/N 1111 & 1117)
d) Particle Counter (C/N 1118)
e) Fork Truck, battery & charger
f) Shrink wrap machine
g) Bar Code Verifier
<PAGE>
SCHEDULE 1.1.1(B)
QUALITY ASSURANCE EQUIPAMENT ON LOCATION AT
COUER LABORATORIES, INC
1) QA EQUIPMENT
a) Mark IV injector (130mL) C/N 1119
b) Mark V injector (150/200mL) C/N 1120
c) MCT injector C/N 1267
d) Percupump injector X 3 N/A
e) Front Load injector head N/A
f) 130mL Power jacket for injector N/A
g) Injector Re-design N/A
h) Static & Plunger Test Fixture C/N 1253
i) Coiled Line Pressure Test Fixture C/N 1252
j) Chattilon Pull Test Fixture C/N 1095
k) MTI Digimatic Indicator/Gauge C/N 1275
l) Digital Temperature Gauge C/N 5022
m) Pistol-Grip bore gauge C/N 1269
n) Aluminum syringe & cap N/A
o) Go/No Go Gauges C/N 1291-1296, 1174-1175, 1300
p) Ring Gauges C/N 1301-1304
q) Optical Comparator
<PAGE>
SCHEDULE 1.1.3
CONTRACT RIGHTS;PERMITS;APPR0VALS
1) CONTRACT RIGHTS
a) OEM Purchase Agreement By and Between Coeur Laboratories, Inc. and
Liebel Flarsheim Company
b) Manufacturing Agreement By and Between Coeur Laboratories, Inc.
and E-Z-EM, Inc.
2) FOOD AND DRUG ADMINISTRATION REGISTRATION
a) Facility Registration.
b) Device Listing
3) PREMARKET NOTIFICATIONS
a) K971712 Coeur 130ml Angiographic Syringe Regulatory Class II
b) K960965 Front Load Injector Turret & 200ml Front Load Syringe
Regulatory Class II
c) K965214 Coeur Front Load Injector Retrofit Regulatory Class II
d) K823920/A Coeurlock Sterile Disposable Angiographic Syringe Regulatory
Class II
e) K873173 Medrad MRI Injection Systems Regulatory Class II
f) K954082 Injector Turret
g) K885138 Capillary Tube, Blood Collection Regulatory Class II
h) K890292 PCA-10, 10cc Disposable Angiography Control Syringe
Regulatory Class II
i) K873597 Tubing Polyethylene Regulatory Class II
j) K874579 Coeur Control Syringe Regulatory Class II
k) K854960 Disposable Manifold Regulatory Class II
l) K942381 Low Pressure Injection Tubing, Coil Line, Extension
Regulatory
Class II
<PAGE>
SCHEDULE 1.1.6
INTELLECTUAL PROPERTY
See Schedule 3.11
<PAGE>
SCHEDULE 1.1.7
OTHER ASSETS
PREPAID EXPENSES AND OTHER ASSETS
Item May 31, 1999 Period
---- ------------ ------
h) Prepaid Employee Benefits-Medical and Dental $4,374 June
i) Prepaid Front Load Manuals $12,546 All of 1999
c) Prepaid Packaging and Manufacturing Supplies $1,480 June
d) Capitalized Patent Costs $67,589 -
e) BSI 9002 Fees $13,800 -
<PAGE>
SCHEDULE 1.2.4
EXCLUDED EQUIPMENT
ITEM NET BOOK VALUE
---- --------------
1) Leasehold Improvements $155,990
2) Computer hardware and software $22,031
2) Telephone equipment $6,283
3) Security System $1,903
4) Non-production chairs $629
5) Breakroom refrigerator $659
6) 1 Forklift with battery and charger $2,414
7) ARO Seal Tester $6,789
8) Test stand $411
9) QC Gauge $473
10)Mallet Handle $340
11)Bore gauge $2,650
12)Temparature gauge and mercury contactor $397
<PAGE>
SCHEDULE 1.3.1
ASSUMED LIABILITIES
1) Accounts payable outstanding as of Closing. $106,677 as of May 31, 1999
2) Accrued personal property taxes as of Closing. $5,000 as of May 31, 1999
3) Accrued vacation of $7,218 as of Closing.
<PAGE>
SCHEDULE 1.3.2
ASSUMED AGREEMENTS
8) AGREEMENTS
a) OEM Purchase Agreement By and Between Coeur Laboratories, Inc. and Liebel
Flarsheim Company
b) Manufacturing Agreement By and Between Coeur Laboratories, Inc. and
E-Z-EM, Inc.
9) PURCHASE COMMITMENTS
a) Open purchase orders in the normal course of business
<PAGE>
SCHEDULE 1.5.2.1
REPRESENTATION LETTER
June, 1999
Coeur Acquisition L.L.C.
We are providing this letter in connection with the Asset Purchase Agreement
dated June ,1999 between Coeur Laboratories, Inc. and Coeur Acquisition L.L.C
(the "Asset Purchase Agreement"). We confirm that we are responsible for the
fair presentation of the financial position and results of operations in
conformity with generally accepted accounting principles. All terms used herein
but not defined shall have the same meaning set forth in the Asset Purchase
Agreement.
We represent to you, to the best of our knowledge and belief, as of June 15,
1999 the following representations made to you:
1. The Post Closing Balance Sheet of Coeur Laboratories, Inc., subject to the
adjustments described in Section 1.5.2.2 of the Asset Purchase Agreement,
is fairly presented in conformity with generally accepted accounting
principles and is prepared on a basis consistent with the December 31, 1998
balance sheet.
2. There have been no communications from regulatory agencies concerning
noncompliance with or defiencies in financial reporting.
3. There are no material transactions, agreements or accounts that have not
been properly recorded in the accounting records underlying the Post
Closing Balance Sheet, subject to the adjustments described in Section
1.5.2.2 of the Asset Purchase Agreement.
4. Inventories recorded in the Post Closing Balance Sheet are stated at the
lower of cost or market, cost being determined on the basis of FIFO.
Inventory quantities at the Post Closing Balance Sheet date were determined
from physical counts or from the Company's perpetual inventory records,
which have been adjusted on the basis of physical inventories taken by
competent employees completed on June 14, 1999. Liabilities for amounts
unpaid are recorded for all items included in inventories at the balance
sheet dates and all quantities billed to customers at those dates are
excluded from the inventory balances.
5. There has been no:
a. Fraud involving management or employees who have significant roles in
the Company's internal control.
b. Fraud involving others that could have a material effect on the
financial statements.
(We understand the term "fraud" to mean those matters described in
Statement on Auditing Standards No. 82.)
<PAGE>
c. Violations or possible violations of laws or regulations whose effects
should be considered for disclosure in the financial statements or as a
basis for recording a loss contingency.
6. The Company has complied with all aspects of contractual agreements that
would have a material effect on the Post Closing Balance Sheet in the event
of noncompliance.
- -----------------------------------------
John Funkhouser
President and CEO
- -----------------------------------------
Paul Storey
Director of Finance
<PAGE>
SCHEDULE 2.2.1
BILLS OF SALE;ASSIGNMENTS
ASSIGNMENT AND ASSUMPTION AGREEMENT
KNOW ALL PERSONS BY THESE PRESENTS, that pursuant to that certain Asset
Purchase Agreement dated June 15, 1999 by and among COEUR LABORATORIES, INC., a
North Carolina corporation and COEUR ACQUISITION, L.L.C., a Delaware limited
liability company (the "Purchase Agreement"), and in consideration of the sum of
Ten and No/100 Dollars ($10.00) and other good and valuable consideration paid
by the Purchaser, the receipt and sufficiency of which are hereby acknowledged,
COEUR LABORATORIES, INC. (the "Seller") does hereby assign, convey, set over,
transfer and deliver to COEUR ACQUISITION, L.L.C. (the "Buyer") and its
successors and assigns all of the Seller's right, title and interest in, to and
under that certain O.E.M. Purchase Agreement by and between the Seller and
Liebel Flarsheim Company dated July 1, 1997 and that certain Agreement by and
between Seller and E-Z-EM, Inc. dated March 25, 1995 (the "Assigned Contracts"),
TO HAVE AND TO HOLD the property hereby assigned, transferred, conveyed, set
over and delivered, and all right, title and interest of the Seller thereto and
therein, unto the Buyer its successors and assigns, all on the terms and subject
to the conditions set forth in the Purchase Agreement. All capitalized terms
herein shall have the meaning set forth in the Purchase Agreement.
The Buyer hereby assumes the obligations of the Seller with respect to
the Assigned Contracts; PROVIDED, HOWEVER, that the obligations of Seller under
the Assigned Contracts shall be current as of the date hereof and the Buyer
shall be liable only for payments and performance under the Assigned Contracts
with respect to periods subsequent to the date hereof.
IN WITNESS WHEREOF, the Seller and the Purchaser have each caused this
instrument to be executed by its duly authorized officer to be effective for all
purposes as of June 15, 1999.
COEUR LABORATORIES, INC.
By: John Funkhouser
---------------------------
Its:
"Seller"
COEUR ACQUISITION, L.L.C.
By: William J. Cude III
---------------------------
Its:
<PAGE>
BILL OF SALE AND ASSIGNMENT
KNOW ALL PERSONS BY THESE PRESENTS, that pursuant to that
certain Asset Purchase Agreement dated June 15, 1999 by and among COEUR
LABORATORIES, INC., a North Carolina corporation and COEUR ACQUISITION,
L.L.C., a Delaware limited liability company (the "Purchase
Agreement"), and in consideration of the sum of Ten and No/100 Dollars
($10.00) and other good and valuable consideration paid by the
Purchaser, the receipt and sufficiency of which are hereby
acknowledged, COEUR LABORATORIES, INC. (the "Seller") does hereby sell,
transfer, assign, convey, set over, transfer and deliver to COEUR
ACQUISITION, L.L.C. (the "Buyer") and its successors and assigns all of
the Seller's right, title and interest in, to and under the following
assets (collectively, the "Assets") free and clear of all security
interests, claims, liens, encumbrances, equities and other charges and
interests of others whatsoever (other than any landlord's lien held by
any party other than an affiliate of Seller):
1.1.1 FIXED ASSETS. All machinery, equipment, furniture,
fixtures, office equipment, vehicles, tools, tooling and molds (wherever
located) and other tangible personal property used exclusively in connection
with the Business (other than the Excluded Assets listed below), including,
without limitation, those assets described on Schedule 1.1.1 hereto.
1.1.2. INVENTORY. All of Seller's inventory as of the Closing
Date
1.1.3 CONTRACT RIGHTS; PERMITS; APPROVALS. All of Seller's
contract rights, warranties, licenses, permits, federal Food and Drug
Administration registrations, premarket notifications, applications for any of
the foregoing, and the like which are transferrable, including, without
limitation, those described on Schedule 1.1.3 hereto.
1.1.4. TRADE NAME; GOODWILL. The trade name "Coeur Laboratories"
and all other trade names and goodwill exclusively associated with the Business,
including promotional and advertising literature and materials and customer
lists.
1.1.5 BUSINESS RECORDS. All product plans and specifications,
customer records, employee records, manufacturing and analytical records,
records of shipments and validation data and other customer and products
materials and information relating exclusively to the Business.
1.1.6. INTELLECTUAL PROPERTY. All trademarks, service marks,
patents (in each case whether registered or unregistered and including all
applications therefor and including all goodwill associated therewith), internet
domain name rights, trade secrets, business systems and procedures developed
and/or used exclusively with the operation of
<PAGE>
the Business, including without limitation the trademarks and patents described
on Schedule 1.1.6.
1.1.7. OTHER ASSETS. All other assets owned by Seller and used
exclusively in connection with the Business not otherwise described herein
including without limitation the specified prepaid expenses and other assets as
described on Schedule 1.1.7.
PROVIDED HOWEVER, that the Assets transferred hereunder shall not
include the following (the "Excluded Assets"), which shall remain the property
of Seller (the "Excluded Assets"):
1.2.1. the accounts receivable of Seller as of the day
immediately preceding the Closing Date;
1.2.2. intercompany accounts;
1.2.3. cash and bank accounts of Seller;
1.2.4 leasehold improvements of the Seller and certain equipment
of the Seller as set forth on Schedule 1.2.4; and
1.2.5. computer hardware and software used in the Business;
provided, however, that Seller shall use reasonable efforts to provide an
electronic copy of all records relating to the Business in a format to be
specified by Buyer.
TO HAVE AND TO HOLD the property hereby sold, assigned, transferred,
conveyed, set over and delivered, and all right, title and interest of the
Seller thereto and therein, unto the Buyer, its successors and assigns. All
capitalized terms herein shall have the meaning set forth in the Purchase
Agreement.
IN WITNESS WHEREOF, the Seller has caused this instrument to be
executed by its duly authorized officer to be effective for all purposes as of
June 15, 1999.
COEUR LABORATORIES, INC.
By: John Funkhouser
--------------------------------
Its:
"Seller"
<PAGE>
SCHEDULE 2.2.2
FORM OF GUARANTY
GUARANTY
--------
THIS GUARANTY is made by Cardiovascular Diagnostics, Inc. ("CDVI") and
Pharmanetics, Inc. ("PI"), each a North Carolina corporation (each herein,
together with its respective successors and assigns, referred to as the
"Guarantor") in favor of Coeur Acquisition, L.L.C., a Delaware limited liability
company and its successors and assigns (the "Buyer").
WHEREAS, CDVI owns all of the issued and outstanding stock of Coeur
Laboratories, Inc. (the "Seller"), and PI is the indirect parent corporation of
Seller; and
WHEREAS, in connection with the purchase of the assets of the Seller by
the Buyer pursuant to that certain Asset Purchase Agreement between the Seller
and the Buyer dated on or about even date herewith (the "Purchase Agreement"),
the Buyer has required, as a condition precedent to the closing of such
transaction, that each Guarantor execute an absolute and unconditional guaranty
of the Seller's obligations under the Asset Purchase Agreement; and
WHEREAS, the closing of the Asset Purchase Agreement benefits each
Guarantor; and
WHEREAS, the Buyer is not willing to purchase the Assets absent this
guaranty of the Seller's obligations under the Asset Purchase Agreement by each
Guarantor, and each Guarantor is willing and able to provide such guaranty to
and for the benefit of the Buyer.
<PAGE>
NOW, THEREFORE, in consideration of the premises and for Ten ($10.00)
Dollars and other good and valuable consideration, the receipt and sufficiency
whereof is hereby acknowledged by Guarantor from Payee, and to induce Payee to
accept the Note, Guarantor does hereby agree as follows:
1. The foregoing recitations are true and correct and are incorporated
herein by reference. Capitalized terms used herein and not defined shall have
the meaning set forward in the Asset Purchase Agreement.
2. The Guarantors hereby jointly and severally, unconditionally,
absolutely, continually and irrevocably guarantee to Buyer the due and punctual
payment and performance in full of the Seller's Obligations (as defined below).
"Seller's Obligations" means: (a) the Seller's prompt, full and faithful
performance, observance and discharge of each and every agreement, undertaking,
covenant and provision to be performed, observed or discharged by the Seller
under the Asset Purchase Agreement and the documents executed in connection
therewith; and (b) the Seller's prompt payment in full, when due and at all such
times, of any obligations to pay money now or hereafter arising under the Asset
Purchase Agreement and the documents executed in connection therewith.
Notwithstanding the foregoing, the liability of each Guarantor individually with
respect to its obligations hereunder shall be limited to an aggregate amount
equal to the largest amount that would not render its obligations hereunder
subject to avoidance under Section 548 of the United States Bankruptcy Code or
any comparable provisions of any applicable state law.
3. This is a continuing guaranty of payment and not a guaranty of
collection, and each Guarantor, jointly and severally, undertakes to pay
forthwith all amounts due from the Seller to Buyer, regardless of whether or not
Buyer, or anyone on behalf of Buyer shall have instituted any suit, action or
proceeding or exhausted its remedies or taken any steps to collect all or part
of any such amount, at law or in equity.
4. Each Guarantor hereby unconditionally: (i) waives any requirement
that Buyer, in the event of any default by the Seller, first make demand upon,
or seek to enforce remedies against the Seller before demanding payment under or
seeking to enforce this Guaranty; (ii) covenants that this Guaranty will not be
discharged except by the full performance of all Seller Obligations.
5. The obligations, covenants, agreements and duties of each Guarantor
under this Guaranty shall not be released, affected or impaired by any
assignment or transfer, in whole or in part, of any obligation of the Seller
although made without notice to or the consent of the Guarantor, or any waiver
by Buyer, or by any other person, of the performance or observance by the Seller
under the Asset Purchase Agreement or any related document or a Guarantor
hereunder, or any indulgence in or the extensions of time for payment or
performance by the Buyer or any Guarantor of any Sellers' Obligation, or the
modifications or amendment (whether material or otherwise) of any Seller's
Obligation, or any receiverships, insolvency, bankruptcy, reorganization or
other similar proceedings, affecting the Seller's or any of its assets, or the
impairment of any such property or other security, or the release or discharge
of the Seller or any Guarantor
<PAGE>
from the performance or observance of any agreement, covenant, term or condition
contained in the Asset Purchase Agreement or hereunder by operation of law, or
the merger or consolidation of the Seller or any Guarantor.
6. This Guaranty may not be amended or modified except by a writing
executed by the Guarantor and Buyer, and may not be assigned by either Guarantor
(whether by operation of law or otherwise) without the prior written consent of
the Buyer, which consent may not be unreasonably withheld, except in connection
with the assignment to a successor in interest of substantially all of the
assets of the Guarantor where such successor in interest after such transaction
has a fair market value (or if no market exists, a net book value) equal to or
greater than the Guarantor, in which case consent shall not be required. No
consent shall be required for a merger or consolidation of the Guarantor with or
into any affiliated entity so long as the Guarantor is the surviving entity and
continues to hold substantially all assets held immediately prior to such merger
or consolidation. The obligations of the Guarantors under this Guaranty are
continuing obligations and a fresh cause of action shall arise in respect to
each default hereunder.
7. This Guaranty shall for all purposes be construed in accordance with
and governed by the laws of the State of Florida. If any action or proceeding
shall be brought by Buyer in order to enforce any right or remedy under this
Guaranty, each Guarantor hereby consents and will submit to the jurisdiction of
any state or federal court of competent jurisdiction sitting within Hillsborough
County, Florida on the date hereof.
8. Each Guarantor warrants and represents to the Buyer, that it is duly
authorized to execute, deliver and perform this Guaranty Agreement; that this
Guaranty Agreement has been duly executed and delivered on behalf of such
Guarantor by its duly authorized representatives; that this Guaranty Agreement
is legal, valid, binding and enforceable against such Guarantor in accordance
with its terms except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles; and that
such Guarantor's execution, delivery and performance of this Guaranty Agreement
do not violate or constitute a breach of any of its operating documents or
organizational documents, any agreement or instrument to which such Guarantor is
a party, or any law, order, regulation, decree or award of any governmental
authority or arbitral body to which it or its properties or operations is
subject.
9. This Guaranty Agreement, together with the Asset Purchase Agreement,
constitutes and expresses the entire understanding between the parties hereto
with respect to the subject matter hereof, and supersedes all prior
negotiations, agreements, understandings, inducements, commitments or
conditions, express or implied, oral or written, except as herein contained. The
express terms hereof control and supersede any course of performance or usage of
the trade inconsistent with any of the terms hereof.
10. The provisions of this Guaranty Agreement are independent of and
separable from each other. If any provision hereof shall for any reason be held
invalid or
<PAGE>
unenforceable, such invalidity or unenforceability shall not affect the validity
or enforceability of any other provision hereof, but this Guaranty Agreement
shall be construed as if such invalid or unenforceable provision had never been
contained herein. This Guaranty Agreement may be executed in any number of
counterparts each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Guaranty
Agreement to produce or account for more than one such counterpart executed by
the Guarantor against whom enforcement is sought.
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be
executed by a duly authorized officer of Guarantor this 15th day of June, 1999.
Pharmanetics, Inc.
By: John Funkhouser
---------------------------------
Its:_________________________________
Cardiovascular Diagnostics, Inc.
By: John Funkhouser
---------------------------------
Its: ________________________________
<PAGE>
SCHEDULE 2.2.3
THIRD PARTY CONSENTS
1) Highwoods Property Management
2) E-Z-EM
<PAGE>
CONSENT
Reference is made to that certain agreement between Coeur Laboratories,
Inc., a North Carolina corporation ("Coeur") and E-Z-EM, Inc., a Delaware
corporation ("E-Z-Em") dated 3/24/95 (the "OEM Agreement").
In connection with the sale of the operating assets of Coeur to Coeur
Acquisition, L.L.C., a Delaware limited liability company (the "Buyer"), Coeur
is assigning the OEM Agreement to the Buyer, and Buyer is assuming the
obligations of Coeur under the OEM Agreement only to the extent of any payments
and performance under the Agreement after June 15, 1999.
E-Z-EM hereby consents to such assignment and assumption as stated in
the foregoing paragraph, and confirms Coeur's representation to Buyer that as of
June 15, 1999, Coeur is current on its obligations under the Agreement.
E-Z-Em, Inc.
By: Howard Stern
-------------------
Its:
Date: June 15, 1999
-------------------
<PAGE>
SCHEDULE 2.2.4
FORM OF SUBLEASE AND CONSENT
CONSENT TO SUBLEASE
As of this 15th day of June, 1999, HIGHWOODS REALTY LIMITED PARTNERSHIP (the
"Landlord"), Cardiovascular Diagnostics Inc. (the "Tenant") and Coeur
Acquisition L.L.C. (the "Subtenant") do hereby enter into this Consent to
Sublease and Agreement (the "Agreement").
RECITALS
WHEREAS, Landlord and Tenant entered into that certain Office Lease
dated November 21, 1990 as amended (the "Lease") for approximately 54,477 square
feet of office space (the "Premises") in the building, located at 5301 Departure
Drive, Raleigh, North Carolina, (the "Building");
AND, WHEREAS, Tenant and Subtenant have agreed to enter into a sublease
of the Premises in the form attached hereto and incorporated herein by reference
(the "Sublease");
NOW THEREFORE, Landlord does hereby consent to the Sublease in the form
attached hereto, conditioned upon the agreement by Tenant and Subtenant of
Paragraphs 1 through 8 hereof:
1. Tenant shall not be released in any manner from any of its obligations
under the Lease.
2. Tenant shall pay to Landlord, as additional rent, one-half of all rents
received by Tenant from Subtenant in excess of the rent payable by
Tenant to Landlord under the Lease.
3. The Sublease shall be subject to all the terms and provisions of the
Lease and no use or occupancy of the Subleased Premises (as defined in
the Sublease) shall be permitted by Tenant or undertaken by Subtenant
that is in any way inconsistent with the terms and provisions of the
Lease.
4. Landlord shall not be obligated to Subtenant under any of the
provisions of the Sublease.
5. Subtenant shall indemnify and hold harmless Landlord from and against
any and all claims arising out of (a) Subtenant's use of the Subleased
Premises or any part thereof; (b) any activity, work, or other thing
done, permitted or suffered by Subtenant in or about the Subleased
Premises or the building, or any part thereof, (c) any breach by
Subtenant in the performance of any of its obligations under the
Sublease; or (d) any act or negligence of Subtenant, or any officer,
agent, employee contractor, servant, invitee or guest of Subtenant; and
in each case from
<PAGE>
and against any and all damages, losses, liabilities, lawsuits, costs
and expenses (including attorneys' fees at all tribunal levels) arising
in connection with any such claim or claims as described in (a) through
(d) above or any action brought thereon. If such action be brought
against Landlord, Subtenant upon notice from Landlord, shall defend the
same through counsel selected by Subtenant's Insurer or other counsel,
in each case acceptable to Landlord, as the case may be. Subtenant
assumes all risk of damage or loss to its property or injuries or death
to persons in, on, or about the Subleased Premises, from all causes
except those for which the law imposes liability on Landlord regardless
of any attempted waiver thereof, and Subtenant hereby waives such
claims in respect thereof against Landlord. The provisions of this
paragraph shall survive the termination of the Sublease. This Agreement
shall not be deemed to constitute a consent to any future sublease (or
any future assignment) and each and every such proposed future sublease
(and any proposed future assignment) shall require the prior written
consent of Landlord, which Landlord may not arbitrarily refuse to give.
6. If Landlord so elects, the termination of the Lease by lapse of time or
as otherwise provided in the Lease shall immediately cause the Sublease
to be terminated and have no further force or effect.
7. Any options provided to Tenant in the Lease shall be extended to and
exercisable by Subtenant.
8. This Consent to Sublease is conditioned upon the execution and delivery
by the tenant and the Subtenant of the attached Sublease.
IN WITNESS WHEREOF, Landlord, Tenant and Subtenant have caused this
instrument to be executed as of the date first above written, by their
respective officers or parties thereunto duly authorized.
Landlord: HIGHWOODS REALTY PARTNERSHIP
a North Carolina limited partnership
By: Highwoods Properties, Inc., its general partner
a Maryland corporation
By: James C. Ciao
---------------------
Date: June 15, 1999
-------------------
Attest: Cathleen Morgan Corporate Seal:
-----------------
Cathleen C. Morgan, Assistant Secretary
<PAGE>
Tenant: CARDIOVASCULAR DIAGNOSTICS, INC.
By: John Funkhouser
-----------------------
Name: John Funkhouser
---------------------
Title: President
---------------------
Date: June 15, 1999
---------------------
Attest: Paul Storey Corporate Seal:
-------------------
________________________ Secretary
Subtenant: COEUR ACQUISITION L.L.C.
By: William J. Cude III
---------------------------
Name: William J. Cude III
-------------------------
Title: President
-------------------------
Date: June 15, 1999
Attest: Carol P. Wood Corporate Seal:
-----------------
________________________ Secretary
<PAGE>
SUBLEASE
This sublease dated this 15th day of June, 1999 (the "Sublease"), by
and between Coeur Laboratories, Inc. (the "Tenant") with its principal office at
5301 Departure Drive, Raleigh, North Carolina, and Coeur Acquisition L.L.C. (the
"Subtenant") sets forth the agreement (consented to by Landlord) whereby
Subtenant subleases from Tenant the Subleased Premises as described below:
Approximately sixteen thousand five hundred and and eighty five
(16,585) rentable square feet of office space (the "Subleased Premises") in the
building, located at 5301 Departure Drive, Raleigh, North Carolina, (the
"Building").
TERM: Subtenant shall occupy the Subleased Premises on a month to month
basis through June 14, 2000, at which time this Sublease shall terminate and be
of no further force and effect without any further action required by the
parties; provided, that for the first 12 months hereof this Sublease shall not
be terminable by the Tenant without cause.
It is understood that this is a Sublease and that all terms and
conditions as set forth in that certain Office Lease by and between Highwoods
Realty Limited Partnership (the "Landlord") and Tenant dated November 21, 1990,
as amended (the "Lease"), are in effect and binding upon the Subtenant and
Tenant. Tenant shall have the right to enforce the provisions of the Lease
against Subtenant. The Lease Agreement and all referenced amendments are
attached hereto as Exhibit "A" and made a part hereof.
MONTHLY RENEWAL: Subtenant shall indicate in writing by the 10th day of
each month whether it intends not to renew the Sublease for the following
monthly period. Failure to receive such indication by such date shall result in
the automatic renewal of the Sublease for the following monthly period.
RENT: Subtenant covenants and agrees to pay to the Tenant for the Term
of this Sublease, rent equal to 30% of the rent (which includes common area
maintenance changes, insurance and property taxes) payable by Tenant to its
Landlord for the respective month ("Tenant Rent Portion"). Each monthly rental
payment shall be due and payable on the first day of each month. Said rental
payments shall commence July 1, 1999 and continue through the sublease
termination. The rental for the period from June 15, 1999 through July 30, 1999
shall be due and payable July 1, 1999.
The above payment schedule does not include operating expense pass
through adjustments, if any, to be computed annually in accordance with the
Lease, which shall be payable at the end of such period by Subtenant for its
respective pro-rata share.
Subtenant will not make changes to the Subleased Premises without
written approval of Tenant and Landlord other than removal of assets of the
Subtenant upon vacating the Premises upon termination of this Sublease.
<PAGE>
ASSIGNMENT; SUBLEASE: Any Sublease of the Subleased Premises by
Subtenant or assignment by Subtenant of the Sublease is prohibited.
INSURANCE: Notwithstanding anything to the contrary contained in the
Lease, Subtenant shall maintain general public liability insurance as specified
in Section 17 ("INDEMNIFICATION AND LIABILITY INSURANCE") of the Lease in the
amounts described in Section 17 of the Lease. Subtenant shall also insure its
personal property to such extent as it deems appropriate, and shall neither have
nor make claim against Landlord or Tenant for any loss or damage to Subtenant's
personal property, regardless of the cause thereof.
USE OF PREMISES: Subtenant shall use the subleased premises only
for manufacturing of syringes and for general office and warehouse purposes.
Tenant hereby waives any and all landlord's liens it may have against
Subtenant under applicable law.
This Sublease is contingent on the approval of Landlord, Highwoods
Realty Limited Partnership. If for any reason Landlord will not allow Tenant to
sublease the aforementioned Subleased Premises, this Sublease is null and void.
[Next Page is Signature Page]
<PAGE>
IN WITNESS WHEREOF, Tenant and Landlord have caused this instrument to be
executed as of the date first above written, by their respective officers or
parties thereunto duly authorized.
Tenant: CARDIOVASCULAR DIAGNOSTICS, INC.
By: John Funkhouser
-----------------------
Name: John Funkhouser
---------------------
Title:President
--------------------
Date: June 15, 1999
---------------------
Attest: Paul Storey
-------------------
________________________ Secretary
Corporate Seal
Subtenant: COEUR ACQUISITION L.L.C.
By: William J. Cude III
---------------------------
Name: William J. Cude III
-------------------------
Title: President
------------------------
Date: June 15, 1999
-------------------------
Attest: Carol P. Wood
------------------------
________________________ Secretary
Corporate Seal
<PAGE>
SCHEDULE 3.4
QUALIFICATION TO DO BUSINESS
None
<PAGE>
SCHEDULE 3.6
FINANCIAL STATEMENTS
a) Audited Financial Statements as of December 31, 1998
b) Unaudited Balance Sheet and Income Statement as of May 31, 1999
<PAGE>
COEUR LABORATORIES, INC.
(a wholly-owned subsidiary of
Cardiovascular Diagnostics, Inc.)
Financial Statements
for the years ended December 31, 1998 and 1997
<PAGE>
Coeur Laboratories, Inc.
Index
- --------------------------------------------------------------------------------
PAGE(S)
Report of Independent Accountants 1
Financial Statements:
Balance Sheets 2
Statements of Income and Retained Earnings 3
Statements of Cash Flows 4
Notes to Financial Statements 5-9
<PAGE>
Report Of Independent Accountants
February 12, 1999
The Shareholder
Coeur Laboratories, Inc.
In our opinion, the accompanying balance sheets and the related statements of
income ad retained earnings and cash flows present fairly, in all material
respects, the financial position of Coeur Laboratories, Inc. (a wholly-owned
subsidiary of Cardiovascular Diagnostics, Inc.) at December 31, 1998 and 1997,
and the results of their operations and their cash flows for the years then
ended, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
<PAGE>
COEUR LABORATORIES, INC.
BALANCE SHEETS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets 1998 1997
---------- ---------
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 986,276 $ 851,647
Trade accounts receivable 1,235,244 1,269,684
Receivable from CVDI 1,284,976 1,172,236
Inventories 582,469 744,687
Other current assets 208,599 92,027
---------- ---------
Total current assets 4,297,564 4,130,281
Property and equipment, net 1,137,054 1,175,179
Patents pending 57,567 32,770
Other noncurrent assets 43,342 41,900
---------- ---------
$ 5,535,527 $ 5,380,130
---------- ---------
Liabilities and Shareholder's Equity
Current liabilities:
Accounts payable 108,680 532,057
Accrued expenses 5,873 23,861
Income taxes payable 1,084,550 953,735
---------- ---------
Total current liabilities 1,199,103 1,509,653
---------- ---------
Commitments and contingencies (Note 4 and 8)
Shareholder's equity:
Common stock, no par value, 100 shares authorized,
10 shares issued and outstanding 4,249,796 4,249,796
Retained earnings (accumulated deficit) 86,628 (379,319)
---------- ---------
Total shareholder's equity 4,336,424 3,870,477
---------- ---------
$ 5,535,527 $ 5,380,130
---------- ---------
The accompanying notes are in integral part of these financial statements.
<PAGE>
COEUR LABORATORIES, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
- --------------------------------------------------------------------------------
1998 1997
---------- ---------
Net Sales $ 4,633,323 $ 4,694,465
---------- ---------
Cost of sales:
Materials and labor 2,535,992 2,394,286
Overhead 965,473 925,320
---------- ---------
Total cost of sales 3,501,465 3,319,606
---------- ---------
Gross profit 1,131,858 1,374,859
Selling, general and administrative expenses 539,272 558,895
---------- ---------
Income from operations 592,586 815,964
Interest income 54,950 46,876
---------- ---------
Income before provision for income taxes 647,536 862,840
Provision for income taxes 181,589 274,448
---------- ---------
Net income 465,947 588,392
Accumulated deficit, beginning of year (379,319) (967,711)
---------- ---------
Retained earnings (accumulated deficit), end of year $ 86,628 $ (379,319)
---------- ---------
The accompanying notes are in integral part of these financial statements.
<PAGE>
COEUR LABORATORIES, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
- --------------------------------------------------------------------------------
1998 1997
---------- ---------
Cash flows from operating activities:
Net income $ 465,947 $ 588,392
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 217,290 220,084
Loss (gain) on sale of property and equipment - 7,502
Provision for inventory obsolecene 43,647 20,000
Change in assets and liabilities:
Trade receivables 34,440 (760,751)
Inventories 118,571 (57,236)
Other assets (118,014) 17,156
Accounts payable and accrued expenses (441,365) 418,792
Income taxes payable 130,815 193,248
---------- ---------
Net cash provided by operating activities 451,331 647,187
---------- ---------
Cash flows from investing activities:
Costs incurred to obtain patents (24,797) (17,901)
Increase in receivable from CVDI (112,740) (395,317)
Payments for purchase of property and equipment (179,165) (385,021)
---------- ---------
Net cash provided by (used in) investing activities (316,702) (798,239)
---------- ---------
Net increase (decrease) in cash and cash equivalents 134,629 (151,052)
Cash and cash equivalents at beginning of year 851,647 1,002,699
---------- ---------
Cash and cash equivalents at end of year $ 986,276 $ 851,647
=========== ===========
</TABLE>
The accompanying notes are in integral part of these financial statements.
<PAGE>
COEUR LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Coeur Laboratories, Inc. (the "Company" or "Coeur"), a wholly-owned
subsidiary of Cardiovascular Diagnostics, Inc. ("CVDI"), is a North
Carolina corporation that manufactures and sells a line of disposable
power injection syringes used for cardiology and radiology procedures, as
well as a line of manifolds used in custom angiographic procedure kits.
CVDI, the parent company of Coeur, is a wholly-owned subsidiary of
Pharmanetics, Inc., which was incorporated in July 1998. The Company was
acquired by CVDI on October 31, 1993 in a purchase transaction.
BASIS OF PRESENTATION
As permitted under generally accepted accounting principles, the
accompanying financial statements have been prepared using the historical
costs of Coeur, prior to its acquisition by CVDI, and do not reflect
CVDI's cost basis in the assets and liabilities of Coeur. The excess of
the cost over fair value of net assets acquired (i.e., goodwill) has not
been "pushed down" to Coeur and is not reflected in the accompanying
financial statements.
CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of
three months or less at acquisition to be cash equivalents.
INVENTORIES
Inventories are stated at the lower of standard cost (which approximates
cost on a first-in, first-out basis) or market.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost and depreciated using the
straight-line method over the estimated useful lives of the respective
assets, which range from three to seven years. Leasehold improvements are
amortized over the shorter of the estimated useful lives of the
improvements, or the term of the facility lease.
Expenditures for repairs and maintenance are charged to expense as
incurred. The costs of major renewals and betterments are capitalized and
depreciated over their estimated useful lives. Upon disposition, the cost
and related accumulated depreciation of property and equipment are
removed from the accounts and any resulting gain or loss is reflected in
operations.
PATENTS
The costs associated with obtaining patents are capitalized and
amortized, commencing on the patent issuance dates, using the
straight-line method over the estimated useful lives. Periods of
amortization are evaluated periodically to determine whether events and
circumstances warrant revised estimates of useful lives.
<PAGE>
COEUR LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
REVENUE RECOGNITION
Revenue from the sale of products is recorded at the time title passes,
which is generally when the goods are shipped.
INCOME TAXES
The federal income tax expense recognized in the accompanying financial
statements has been determined on the "separate return" method of income
tax allocation.
Deferred tax assets and liabilities are determined based on the
difference between the financial statement and tax basis of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to affect taxable income. Valuation allowances
are established when necessary to reduce deferred tax assets to the
amounts expected to be realized.
COMPREHENSIVE INCOME
On January 1, 1998 the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 130 "Reporting Comprehensive Income." SFAS No. 130
requires the Company to display an amount representing comprehensive
income. For the years ended December 31, 1998 and 1997 there were no
items of other comprehensive income, therefore comprehensive income is
equal to net income for these years.
USE OF ESTIMATES IN THE PREPARATION OF THE FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the dates of the
financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those
estimates.
2. INVENTORIES
Inventories at December 31, 1998 and 1997 consist of the following:
1998 1997
---------------- ----------------
Raw materials $ 528,664 $ 480,715
Finished goods 53,805 263,972
---------------- ----------------
$ 582,469 $ 744,687
================ ================
<PAGE>
COEUR LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
3. PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1998 and 1997 consists of the
following:
1998 1997
---------------- ----------------
Molds and equipment 2,415,552 2,274,180
Furniture, fixtures and equipment 289,303 280,538
Leasehold improvements 575,667 546,641
---------------- ----------------
3,280,522 3,101,359
Less accumulated depreciation 2,143,468 1,926,180
---------------- ----------------
1,137,054 1,175,179
================ ================
4. LEASES
The Company leased its office space under a noncancelable operating lease
agreement that expired in December 1997. Beginning in January 1998, CVDI
leases the office space and subleases a portion of it to the Company for
approximately $114,000 annually. In addition, the Company leases certain
equipment under various operating lease agreements. Rent expense for
operating leases totaled $103,394 and $121,424 for the years ended
December 31, 1998 and 1997, respectively.
Future minimum lease payments as of December 31, 1998 are as follows:
1999 16,020
2000 16,020
2001 16,020
2002 16,020
2003 12,015
----------------
76,095
================
5. SIGNIFICANT CUSTOMERS AND CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of cash and cash
equivalents and trade accounts receivable. The Company places its
temporary cash in federally insured depository institutions.
Concentrations of credit risk with respect to trade receivables exist due
to the Company's small customer base. Ongoing credit evaluations of
customers' financial condition are performed and generally no collateral
is required. The Company establishes reserves for expected credit losses
and such losses, in the aggregate, have not exceeded management's
expectations.
<PAGE>
COEUR LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
During the years ended December 31, 1998 and 1997 there were sales to two
customers that exceeded 10% of net sales. Sales to these customers were
as follows:
Percentage of Percentage of
Net Sales Net Sales
in 1998 in 1997
----------------- ---------------
Customer A 46% 49%
Customer B 32% 29%
Customer A comprised 67% and 57% of the trade accounts receivable balance
at December 31, 1998 and 1997, respectively. In addition, Customer B
comprised 26% and 33% of the trade accounts receivable balance at
December 31, 1998 and 1997, respectively.
The Company generated revenue from export sales for the years ended
December 31, 1998 and 1997 as follows:
1998 1997
----------------- -----------------
United Kingdom $ 601,045 $ 769,942
Germany 85,425 233,817
Other foreign sales 301,477 249,487
----------------- -----------------
$ 987,947 $ 1,253,246
----------------- -----------------
6. INCOME TAXES
The components of the net deferred tax assets as of December 31, 1998 and
1997 are as follows:
<TABLE>
<CAPTION>
1998 1997
----------------- -----------------
<S> <C> <C> <C>
Net operating loss carryforward ("NOL") $ 396,000 $ 456,000
Other 4,000 15,000
Valuation (400,000) (471,000)
----------------- -----------------
$ - $ -
================= =================
</TABLE>
<PAGE>
COEUR LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Income tax expense for the year ended December 31, 1998 consists of
$46,042 in current federal taxes and $135,547 in current state taxes.
Income tax expense for the year ended December 31, 1997 consists of
$192,365 in current federal taxes and $82,083 in current state taxes. The
Company's effective rate differs from the statutory rate primarily as the
result of the utilization of NOL's of $71,000 and $84,000 during the
years ended December 31, 1998 and 1997, respectively.
At December 31, 1998 and 1997, the Company had approximately $1,165,000
and $1,340,000, respectively, of net operating losses to offset future
federal income taxes. These carryforwards will expire in 2002 through
2005 if not utilized.
The Company files a separate North Carolina income tax return and is
included in CVDI's consolidated federal income tax return. Due to the
Company's Section 382 limitation on utilization of its net operating
losses (see below), management has determined that a valuation allowance
equal to the amount of net deferred assets is required.
As a result of the acquisition by CVDI in 1993, the Company experienced a
change of ownership as defined by the Internal Revenue Code Section 382.
Consequently, utilization of its net operating loss carryforwards will be
subject to an annual limitation of approximately $175,000. Furthermore,
the utilization of the Company's losses is subject to limitation based
upon the Company's ability to generate income as a separate company.
During the years ended December 31, 1998 and 1997 the Company paid
approximately $68,000 and $57,000 in cash for income taxes.
7. RELATED PARTY TRANSACTIONS
The Company and CVDI share certain facilities and personnel. As a result,
certain expenses such as rent, utilities, payroll, insurance and other
general, selling and administrative expenses which are shared are
typically billed by vendors to either the Company or CVDI on a single
bill. Management allocates these expenses based on its best estimate of
the benefits realized by each entity. In addition, the Company and CVDI
provide each other with non-interest-bearing advances of cash, which are
payable on demand, to fund on-going operations. During the years ended
December 31, 1998 and 1997, the Company billed CVDI $331,982 and
$626,335, respectively, for expenses paid on behalf of CVDI and cash
advances made to CVDI. During the years ended December 31, 1998 and 1997,
CVDI billed the Company $219,242 and $129,018, respectively, for expenses
paid on behalf of the Company.
8. CONTINGENCIES
The Company is subject to certain legal proceedings and claims arising in
the ordinary course of business. It is management's opinion that the
disposition of these matters will not have a material adverse effect on
the consolidated financial position, results of operations or liquidity
of the Company.
<PAGE>
- --------------------------------------------------------------------------------
COEUR LABORATORIES
BALANCE SHEET
MAY 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
Cash & Investment $1,384,000
Accounts Receivable 1,017,000
Inventories 673,000
Other Current Assets 25,000
------------
Total Current Assets 3,099,000
Property and Equipment, Net 1,102,000
Other Non-Current Assets 111,000
------------
Total Assets $4,312,000
============
Accouts Payable & accrued expenses 125,000
------------
Total Current Liabilities 125,000
LTD and lease obligations 0
------------
Total Liabilities 125,000
Shareholder's Equity 4,187,000
------------
Total Liabilities and Shareholder
Equity $ 4,312,000
------------
<PAGE>
- --------------------------------------------------------------------------------
COEUR LABORATORIES
YTD INCOME STATEMENT
MAY 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
Net sales $1,723,000
Cost of sales 1,331,000
------------
Gross profit 392,000
Selling, general and administrative
expenses 224,000
------------
Income from operations 168,000
Interest Income 21,000
------------
Income before provision for income
taxes 189,000
Provision for income taxes 17,000
------------
Net Income $172,000
============
<PAGE>
SCHEDULE 3.7
ABSENCE OF UNDISCLOSED LIABILITIES
Corrective work as disclosed in Schedule 5.7
<PAGE>
SCHEDULE 3.8
ABSENCE OF CERTAIN CHANGES
None other than corrective work disclosed in Schedule 5.7
<PAGE>
SCHEDULE 3.10.1
OWNED PROPERTIES
Assets listed on Schedule 1.1.1(a) and Schedule 1.1.1(b)
<PAGE>
SCHEDULE 3.10.2
LEASES
The Company uses facility space of Cardiovascular Diagnostics, Inc. under an
oral lease and incurs an expense allocation for use of this facility space.
<PAGE>
SCHEDULE 3.11
TRADEMARKS, TRADE NAMES AND OTHER INTELLECTUAL PROPERTY
- --------------------------------------------------------------------------------
COEUR LABORATORIES, INC. - PATENT PORTFOLIO
- --------------------------------------------------------------------------------
(1) U.S. PATENT 5,007,904 ISSUED: APRIL 16, 1991
INVENTORS: LARRY L. DENSMORE AND THOMAS A. LINDNER
ATTY. REF.: 2769-010
TITLE: "PLUNGER FOR POWER INJECTOR ANGIOGRAPHIC
SYRINGE, AND SYRINGE COMPRISING SAME"
- --------------------------------------------------------------------------------
(2) U.S. PATENT 4,911,695 ISSUED: MARCH 27, 1990
INVENTORS: THOMAS A. LINDNER
ATTY. REF.: 2769-011
TITLE: "PLUNGER FOR POWER-DRIVEN ANGIOGRAPHIC SYRINGE, AND
SYRINGE AND POWER INJECTOR SYSTEM UTILIZING SAME"
- --------------------------------------------------------------------------------
(3) U.S. PATENT APPLICATION NO. 08/916,369 ALLOWED: WILL ISSUE IN NEXT
2 MONTHS.
INVENTORS: MICHAEL TRULL FILED: AUGUST 22, 1997
ATTY. REF.: 2769-130
TITLE: "FRONT-LOAD ANGIOGRAPHIC INJECTOR SYSTEM, ANGIOGRAPHIC SYRINGE AND
PLUNGER FOR ANGIOGRAPHIC SYRINGE"
- --------------------------------------------------------------------------------
(4) U.S. PATENT APPLICATION NO. 09/096,442 PENDING
INVENTORS: MICHAEL TRULL AND RICHARD L. ABBOTTFILED: JUNE 11, 1998
ATTY. REF.: 2769-131
TITLE: "ANGIOGRAPHIC SYRINGE ADAPTER FOR FRONT-LOAD ANGIOGRAPHIC INJECTOR"
- --------------------------------------------------------------------------------
<PAGE>
(5) INTERNATIONAL PATENT APPLICATION NO. PCT/US98/17374 PENDING
APPLICANT: COEUR LABORATORIES, INC. FILED: AUGUST 21, 1998
ATTY. REF.: 2769-131PCT MUST BE FILED ABROAD FEBRUARY 22, 2000
TITLE: "ANGIOGRAPHIC INJECTION SYRINGE AND FRONT-LOAD INJECTOR ADAPTER"
- --------------------------------------------------------------------------------
(6) DESIGN PATENT NO. 320,276
APPLICANT: COEUR LABORATORIES, INC. FILED: SEPTEMBER 24, 1991
ATTY. REF.: 2769-112
DESIGN: "SYRINGE FOR ADMINISTRATION OF CONTRAST MEDIA"
- --------------------------------------------------------------------------------
(7) DESIGN PATENT NO. 321,053
APPLICANT: COEUR LABORATORIES, INC. FILED: OCTOBER 22, 1991
ATTY. REF.: 2769-107
DESIGN: "INJECTOR DEVICE"
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COEUR LABORATORIES, INC. - TRADEMARK PORTFOLIO
- --------------------------------------------------------------------------------
(8) TRADEMARK REGISTRATION NO. 1,608,126 ISSUED: JULY 31, 1990
MARK: "COEUR" AND DESIGN
REGISTRANT: COEUR LABORATORIES, INC.
<PAGE>
SCHEDULE 3.12
CONTRACTS
b) OEM Purchase Agreement By and Between Coeur Laboratories, Inc. and Liebel
Flarsheim Company
c) Manufacturing Agreement By and Between Coeur Laboratories, Inc. and E-Z-EM,
Inc.
<PAGE>
SCHEDULE 3.13
STATUS
None
<PAGE>
SCHEDULE 3.14.1(B)
BENEFIT PLANS & POLICIES
1) Medical Plan. Coverage provided by Blue Cross/Blue Shield of North
Carolina, Inc.
2) Dental Plan. Coverage provided by The Guardian Life Insurance Group
3) Short and Long-Term Disability and Life Insurance Plan. Coverage provided
by Unum Life Insurance Company of America
4) 401(k) Plan. Administered by the Principal Financial Group.
5) Vacation and Holidays
6) Flexible Spending Accounts. Administered by Professional Benefits Planning
Inc.
7) Pre-Approved Educational Assistance
<PAGE>
SCHEDULE 3.15
LABOR RELATIONS
None
<PAGE>
SCHEDULE 3.16
LITIGATION
None
<PAGE>
SCHEDULE 3.17
COMPLIANCE WITH LAWS
None
<PAGE>
SCHEDULE 3.17.2
PERMITS AND REGULATORY APPROVALS
10) Food and Drug Administration Registrations
a) Facility Registration.
b) Device Listing
11) Premarket Notifications
a) K971712 Coeur 130ml Angiographic Syringe Regulatory Class II
b) K960965 Front Load Injector Turret & 200ml Front Load Syringe
Regulatory Class II
c) K965214 Coeur Front Load Injector Retrofit Regulatory Class II
d) K823920/A Coeurlock Sterile Disposable Angiographic Syringe Regulatory
Class II
e) K873173 Medrad MRI Injection Systems Regulatory Class II
f) K954082 Injector Turret
g) K885138 Capillary Tube, Blood Collection Regulatory Class II
h) K890292 PCA-10, 10cc Disposable Angiography Control Syringe
Class II
i) K873597 Tubing Polyethylene Regulatory Class II
j) K874579 Coeur Control Syringe Regulatory Class II
k) K854960 Disposable Manifold Regulatory Class II
l) K942381 Low Pressure Injection Tubing, Coil Line, Extension Regulatory
Class II
<PAGE>
SCHEDULE 3.17.5
OSHA
None
<PAGE>
SCHEDULE 3.18.1
PRODUCTS, SERVICES AND WARRANTIES
1) Coeur's Product Return Policy:
Coeur grants credit for pre-approved returns of standard catalog items provided
the return is accompanied by a Return Goods Authorization number, the reason is
given, and the merchandise is returned, unused, in the original carton, suitable
for resale. All returns, except those caused by Coeur error, will be subject to
a 20% restocking charge.
Coeur will not accept the return of any items which have not been authorized for
return or which have been in the customer's possession for over three (3)
months.
2) Warranties as disclosed in : (a) the OEM Purchase Agreement By and Between
Coeur Laboratories, Inc. and Liebel Flarsheim Company and (b) the Manufacturing
Agreement By and Between Coeur Laboratories, Inc. and E-Z-EM, Inc.
<PAGE>
SCHEDULE 3.18.2
CUSTOMERS AND SUPPLIERS
None
<PAGE>
SCHEDULE 3.20
ABSENCE OF VIOLATIONS OR CONFLICTS
None
<PAGE>
SCHEDULE 3.21
GOVERNMENTAL CONSENTS
None
<PAGE>
SCHEDULE 3.23
TRANSACTIONS WITH AFFILIATES
None
<PAGE>
SCHEDULE 5.6
TRANSITION SERVICES
All non-personnel services are to be paid within 30 days of Seller's invoice
accompanied by a copy of the bills referenced below. Personnel charges related
to accounting, customer service, engineering, and quality will be due on the
15th and 30th of each month. Personnel charges related to warehouse and
documentation personnel will be due each Thursday of the month. Personnel
charges related to warehouse and documentation personnel will be due each
Thursday of the month.
I. Utilities
---------
30.44% of each monthly Carolina Power & Light bill during each month of sublease
II. Building Maintenance
--------------------
HVAC and compressor maintenance and cleaning contract - 30.44% of each monthly
bill during each month of sublease. Non routine maintenance that benefit both
Seller and New Owner will be prorated 30.44% to New Owner.
Consent of New Owner will be obtained before the expenditure.
III. Personnel
---------
Unless otherwise noted below, during the term of the sublease or until notified
by the New Owner (if earlier) that an individual's services are no longer
required (provided New Owner gives Seller 30 days notice) the following
personnel charges shall be billed:
Warehouse Personnel - One headcount at $2,973 per month plus 50% of any
actual overtime.
Accounting Personnel - Kandy Foster at $3,818 per month.
Customer Service Personnel - Claire Kirven at $1,655 per month.
Engineering personnel - Richard Abbott at $5,157 per month (services
not to exceed six months).
Documentation Control Personnel - One headcount at $2,859 per month.
Quality Manager - Mike Noll at $2,938 per month for 45 days.
After nine months, the charges for warehouse, accounting, customer service and
documentation control personnel shall increase to their actual salary and
benefits + 15%.
Monthly billings for personnel will be adjusted January 1, 2000 for wage and
salary adjustments made in the normal course of business.
<PAGE>
SCHEDULE 5.7
CORRECTIVE WORK
See attached
<PAGE>
<TABLE>
<CAPTION>
ASSOCIATED
LOT NUMBER DIRECT LABOR SALES
NUMBER OF LOT DEPOSITION AND MATERIAL PRICE
CASES COST
<S> <C> <C> <C> <C>
70398761 84 Replace with new product $8,697 $20,958
70398762 42 Replace with new product $4,348 $10,479
70998764 101 Rework or replace. To be determined $25,200
Rework cost $6,033
Replacement cost $10,457
71298763 168 Rework or replace. To be determined $41,916
Rework cost $9,376
Replacement cost $17,394
70299762 168 Replace with new product $17,394 $41,916
</TABLE>
<PAGE>
SCHEDULE 7.4
AGREEMENTS NOT TO COMPETE
NONCOMPETITION AND CONFIDENTIALITY AGREEMENT
--------------------------------------------
THIS NONCOMPETITION AND CONFIDENTIALITY AGREEMENT is entered into to be
effective for all purposes the 15th day of June, 1999, by and between COEUR
LABORATORIES, INC., a North Carolina corporation (the "Company"), in favor of
COEUR ACQUISITION L.L.C., a Delaware limited liability company, and its
successors and assigns (the "Buyer").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company has been engaged in business as a manufacturer and
seller of a line of disposable power injection syringes used for cardiology and
radiology procedures and a line of manifolds used in custom angiographic
procedure kits (the "Business"); and
WHEREAS, simultaneous with the execution of this Agreement, the Buyer
acquired all of the assets of the Company (the "Acquisition"); and
WHEREAS, the Acquisition was effected pursuant to the provisions of
that certain Asset Purchase Agreement dated as of June 15, 1999, by and among
the Company and the Buyer (the "Asset Purchase Agreement") and the Company is
obligated to execute and deliver this Agreement as a condition precedent to the
closing of the Acquisition.
NOW, THEREFORE, in consideration of the consummation of the
transactions contemplated by the Asset Purchase Agreement and in consideration
of the covenants contained herein, the Company agrees as follows:
1. Restrictive Covenants.
----------------------
(a) NonDisclosure; Customers; Non-Solicitation.
-------------------------------------------
(i) Nondisclosure. The Company acknowledges that it
has trade secrets, marketing, operating and strategic plans, customer
and supplier lists, proprietary information and other confidential or
specialized data and/or information relative to the Business, whether
now existing or to be developed or created after the Closing Date
(collectively, "Trade Secrets"). The Company covenants and agrees that
it shall at all times after the date hereof hold in strictest
confidence any and all Trade Secrets concerning or related to the
products, services, processes, businesses, suppliers and customers of
the Business. The Company covenants and agrees that neither it nor any
entity controlled by him
<PAGE>
will for any reason, directly or indirectly, for himself or for the
benefit of any other entity, use, copy, divulge or otherwise
disseminate or disclose any of the Trade Secrets relating to the
Business; provided, that the Company may disclose Trade Secrets
pursuant to an order by a court of competent jurisdiction, provided,
further, that the Company shall give the Buyer notice of such order and
any court pleading requesting such disclosure, in order to provide the
Buyer with an opportunity to prevent such disclosure or procure an
appropriate protective order.
(ii) Customers. The Company acknowledges that
customers and customer accounts of the Business will at all times be
the sole and separate property of the Buyer, and all activities of or
work performed for or on behalf of the Company was and will be
performed solely for the benefit of the Company and the goodwill
resulting from such efforts is and at all times will be the sole and
separate property of the Buyer.
(iii) Non-Solicitation; Non-Hire. The Company agrees
that from the date of this Agreement and continuing for a period of
three (3) years from the date of this Agreement (the "Restricted
Period"), neither it nor any person or enterprise controlled by or
affiliated with it will solicit or, without the Buyer's prior written
consent, for employment or any other reason any person who was employed
by the Seller, the Company or the Buyer at any time within one (1) year
prior to the time of the act of solicitation. The Company agrees that
from the date of this Agreement and continuing for a period of one (1)
year from the date of this Agreement (or, if shorter, the term of
Buyer's Sublease of Seller's facility), neither it nor any person or
enterprise controlled by or affiliated with it will hire, for
employment or any other reason any person who was employed by the
Seller, the Company or the Buyer at any time within one (1) year prior
to the time of hire
(b) Non-Competition by Company. During the Restricted Period,
the Company agrees that neither it nor any person or enterprise
controlled by or affiliated with it will become a stockholder,
director, officer, agent, employee or representative of or consultant
to a corporation, or member of a partnership, or engage as a sole
proprietor in any business, or act as a consultant to any of the
foregoing or otherwise engage, directly or indirectly, in any
enterprise which competes with the Business anywhere in the continental
United States or the United Kingdom; provided, however, that the
foregoing shall not prohibit the ownership of less than two percent
(2%) of the outstanding shares of the stock of any corporation engaged
in any business, which shares are regularly traded on a national
securities exchange or in any over-the-counter market.
(c) Relief; Remedies.
-----------------
(i) Relief, Reformation; Severability. The parties agree
that the covenants contained in this Section are separate and are
reasonable in their scope and duration and may be enforced by specific
performance or otherwise.
<PAGE>
The parties shall not raise any issue of reasonableness as a defense in
any proceeding to enforce any of the covenants herein. Notwithstanding
the foregoing, in the event that a covenant included in this Section
shall be deemed by any court to be unreasonably broad in any respect,
the court which makes such finding shall modify such covenant for the
purpose of making such covenant reasonable in scope and duration. The
validity, legality or enforceability of the remaining provisions of
this Agreement shall not be affected by any such modification.
(ii) Remedies. The parties acknowledge that any breach of
the restrictive covenants herein will cause irreparable harm to the
other, and that such harm will be difficult if not impossible to
ascertain. Therefore, if any action or proceeding is commenced by or on
behalf of any party to enforce the provisions hereof, such party shall
be entitled to equitable relief, including injunction, against any
actual or threatened breach hereof, and any damages arising therefrom
including, without limitation, reasonable fees of its attorneys and
their support staff and all other costs and expenses incurred by the
other party in good faith in connection therewith without bond and
without liability should such relief be denied, modified or vacated.
Neither the right to obtain such relief nor the obtaining of such
relief shall be exclusive of or preclude any party from any other
remedy. Each party hereby waives the claim or defense to an action for
equitable relief by the other that the other has an adequate remedy at
law or has not been or is not being irreparably injured by such breach.
2. Applicable Law. The terms and conditions of this Agreement shall be
governed by and construed in accordance with the laws of the State of
North Carolina.
4. Consent to Jurisdiction. For those matters or disputes of any nature
arising out of, connected with, related or incidental to this
Agreement, the parties hereto hereby irrevocably submit themselves to
the exclusive jurisdiction of the courts of the State of North Carolina
located in Wake County, North Carolina and to the jurisdiction of the
United States District Court for the Eastern District of North Carolina
for the purpose of bringing any action that may be brought in
connection with the provisions hereof. The parties hereto hereby
individually agree that they shall not assert any claim that they are
not subject to the jurisdiction of such courts, that the venue is
improper, that the forum is inconvenient or any similar objection,
claim or argument. Service of process on any of the parties hereto with
regard to any such action may be made by mailing the process to such
Persons by regular or certified mail to the address of such Person set
forth herein or to any subsequent address to which notices shall be
sent.
5. Effect of Disputes. Notwithstanding the fact that there may from
time to time be disputes among the parties concerning the terms and
conditions hereof, the parties agree not to under any circumstances,
disparage, criticize or denigrate
<PAGE>
the talents, skills, prospects, abilities, integrity or character of
the other parties hereto, or such parties' management, directors,
employees, agents or representatives (including those of the Buyer's
affiliates). The Company further agrees that it will not, at any time
after the date hereof and without the written consent of the Buyer,
contact any past, present or prospective customer, supplier, employee
or agent or representative of the Company, the Buyer or its respective
predecessor(s) with the intent, purpose or effect of injuring the
reputation, business or business relationships of the Company or the
Buyer. The provisions of this Section shall survive the execution and
termination hereof, irrespective of the reason for such termination.
6. Notices. Any notice, request, demand and other communication which
is required or which may be given under this Agreement shall be in
writing and shall be deemed to have been duly given if personally
delivered, or if actually received by postage prepaid first class mail,
private carrier, telegram or telephone facsimile transmission, to:
If to the Buyer: Coeur Acquisition, L.L.C.
C/o Bison Investments, Inc.
3225 South MacDill Avenue (#236)
Tampa, Florida 33629
with a copy to: Elizabeth P. Francis, Esq.
Trenam, Kemker et al
450 Carillon Parkway, Suite 120
St. Petersburg, FL 33716
If to the
Company: Coeur Laboratories, Inc.
5301 Departure Drive
Raleigh, North Carolina
with a copy to: Larry Robbins, Esq.
Wyrick Robbins et al
4101 Lake Boone Trail
Suite 300
Raleigh, North Carolina 27607
or, as to any party, to such other address as such party shall have
specified by notice in writing to the other parties.
7. Waiver of Breach. The failure of a party at any time to require
performance by the other of any provision expressed herein shall in no
way affect such party's right thereafter to enforce such provision.
Furthermore, a waiver by a party of a
<PAGE>
breach of any provision hereof by the other party shall not operate or be
construed as a waiver of any subsequent breach by the other party.
8. Entire Agreement. This Agreement contains the entire understanding of
the parties with respect to the subject matter hereof. Any prior
statements, negotiations, representations, understandings, proposals or
agreements relating to the subject matter hereof shall be deemed to be
merged into this Agreement, and to the extent inconsistent herewith shall
be deemed to be of no force or effect. No alteration, amendment or
modification of any of the terms or provisions hereof shall be valid
unless made pursuant to an instrument in writing signed by the parties
hereto. This Agreement shall terminate on the fifth anniversary of the
date hereof; provided, however, that such termination shall not result in
any right of the Company to reveal any trade secret or disclose any
confidentiality, or affect in any way the Buyer's free and clear title to
all trade secrets and other intellectual property purchased in connection
with the Acquisition.
IN WITNESS WHEREOF, the Company has executed this Agreement Not to
Compete as of the day and year first above written.
By: John Funkhouser
------------------------
Its: President
------------------------
"Company"
<PAGE>
NONCOMPETITION AND CONFIDENTIALITY AGREEMENT
--------------------------------------------
THIS NONCOMPETITION AND CONFIDENTIALITY AGREEMENT is entered into to be
effective for all purposes the 15th day of June, 1999, by and between
CARDIOVASCULAR DIAGNOSTICS, INC., a North Carolina corporation (the "Company"),
in favor of COEUR ACQUISITION L.L.C., a Delaware limited liability company, and
its successors and assigns (the "Buyer").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Coeur Laboratories, Inc. ("Coeur"), a wholly owned subsidiary
of the Company, has been engaged in business as a manufacturer and seller of a
line of disposable power injection syringes used for cardiology and radiology
procedures and a line of manifolds used in custom angiographic procedure kits
(the "Business"); and
WHEREAS, simultaneous with the execution of this Agreement, the Buyer
acquired all of the assets of Coeur (the "Acquisition"); and
WHEREAS, the Acquisition was effected pursuant to the provisions of
that certain Asset Purchase Agreement dated as of June 15, 1999, by and among
Coeur and the Buyer (the "Asset Purchase Agreement") and the Company is
obligated to execute and deliver this Agreement as a condition precedent to the
closing of the Acquisition.
NOW, THEREFORE, in consideration of the consummation of the
transactions contemplated by the Asset Purchase Agreement and in consideration
of the covenants contained herein, the Company agrees as follows:
1. Restrictive Covenants.
----------------------
(a) NonDisclosure; Customers; Non-Solicitation.
-------------------------------------------
(i) Nondisclosure. The Company acknowledges that it has
trade secrets, marketing, operating and strategic plans, customer and
supplier lists, proprietary information and other confidential or
specialized data and/or information relative to the Business, whether
now existing or to be developed or created after the Closing Date
(collectively, "Trade Secrets"). The Company covenants and agrees that
it shall at all times after the date hereof hold in strictest
confidence any and all Trade Secrets concerning or related to the
products, services, processes, businesses, suppliers and customers of
the Business. The Company covenants and agrees that neither it nor any
entity controlled by him will for any reason, directly or indirectly,
for himself or for the benefit of any other entity, use, copy, divulge
or otherwise disseminate or disclose any of the Trade Secrets relating
to the Business; provided, that the Company may disclose Trade Secrets
pursuant to an order by a court of competent jurisdiction, provided,
further, that the Company shall give the Buyer notice of such order and
any court
<PAGE>
pleading requesting such disclosure, in order to provide the Buyer with
an opportunity to prevent such disclosure or procure an appropriate
protective order.
(ii) Customers. The Company acknowledges that customers
and customer accounts of the Business will at all times be the sole and
separate property of the Buyer, and all activities of or work performed
for or on behalf of the Company was and will be performed solely for
the benefit of the Company and the goodwill resulting from such efforts
is and at all times will be the sole and separate property of the
Buyer.
(iii) Non-Solicitation; Non-Hire. The Company agrees that
from the date of this Agreement and continuing for a period of three
(3) years from the date of this Agreement (the "Restricted Period"),
neither it nor any person or enterprise controlled by or affiliated
with it will solicit or, without the Buyer's prior written consent, for
employment or any other reason any person who was employed by Coeur or
the Buyer at any time within one (1) year prior to the time of the act
of solicitation. The Company agrees that from the date of this
Agreement and continuing for a period of one (1) year from the date of
this Agreement (or, if shorter, the term of Buyer's Sublease of Coeur's
facility), neither it nor any person or enterprise controlled by or
affiliated with it will hire, for employment or any other reason any
person who was employed by Coeur or the Buyer at any time within one
(1) year prior to the time of hire
(b) Non-Competition by Company. During the Restricted Period,
the Company agrees that neither it nor any person or enterprise
controlled by or affiliated with it will become a stockholder,
director, officer, agent, employee or representative of or consultant
to a corporation, or member of a partnership, or engage as a sole
proprietor in any business, or act as a consultant to any of the
foregoing or otherwise engage, directly or indirectly, in any
enterprise which competes with the Business anywhere in the continental
United States or the United Kingdom; provided, however, that the
foregoing shall not prohibit the ownership of less than two percent
(2%) of the outstanding shares of the stock of any corporation engaged
in any business, which shares are regularly traded on a national
securities exchange or in any over-the-counter market.
(c) Relief; Remedies.
-----------------
(i) Relief, Reformation; Severability. The parties agree
that the covenants contained in this Section are separate and are
reasonable in their scope and duration and may be enforced by specific
performance or otherwise. The parties shall not raise any issue of
reasonableness as a defense in any proceeding to enforce any of the
covenants herein. Notwithstanding the foregoing, in the event that a
covenant included in this Section shall be deemed by any court to be
unreasonably broad in any respect, the court which makes such finding
shall modify such covenant for the purpose of making such covenant
reasonable in scope and duration. The validity, legality or
enforceability of the
<PAGE>
remaining provisions of this Agreement shall not be affected by any
such modification.
(ii) Remedies. The parties acknowledge that any breach of
the restrictive covenants herein will cause irreparable harm to the
other, and that such harm will be difficult if not impossible to
ascertain. Therefore, if any action or proceeding is commenced by or on
behalf of any party to enforce the provisions hereof, such party shall
be entitled to equitable relief, including injunction, against any
actual or threatened breach hereof, and any damages arising therefrom
including, without limitation, reasonable fees of its attorneys and
their support staff and all other costs and expenses incurred by the
other party in good faith in connection therewith without bond and
without liability should such relief be denied, modified or vacated.
Neither the right to obtain such relief nor the obtaining of such
relief shall be exclusive of or preclude any party from any other
remedy. Each party hereby waives the claim or defense to an action for
equitable relief by the other that the other has an adequate remedy at
law or has not been or is not being irreparably injured by such breach.
2. Applicable Law. The terms and conditions of this Agreement shall be
governed by and construed in accordance with the laws of the State of
North Carolina.
4. Consent to Jurisdiction. For those matters or disputes of any nature
arising out of, connected with, related or incidental to this
Agreement, the parties hereto hereby irrevocably submit themselves to
the exclusive jurisdiction of the courts of the State of North Carolina
located in Wake County, North Carolina and to the jurisdiction of the
United States District Court for the Eastern District of North Carolina
for the purpose of bringing any action that may be brought in
connection with the provisions hereof. The parties hereto hereby
individually agree that they shall not assert any claim that they are
not subject to the jurisdiction of such courts, that the venue is
improper, that the forum is inconvenient or any similar objection,
claim or argument. Service of process on any of the parties hereto with
regard to any such action may be made by mailing the process to such
Persons by regular or certified mail to the address of such Person set
forth herein or to any subsequent address to which notices shall be
sent.
5. Effect of Disputes. Notwithstanding the fact that there may from
time to time be disputes among the parties concerning the terms and
conditions hereof, the parties agree not to under any circumstances,
disparage, criticize or denigrate the talents, skills, prospects,
abilities, integrity or character of the other parties hereto, or such
parties' management, directors, employees, agents or representatives
(including those of the Buyer's affiliates). The Company further agrees
that it will not, at any time after the date hereof and without the
written consent of the Buyer, contact any past, present or prospective
customer, supplier, employee or agent or representative of Coeur, the
Buyer or its respective
<PAGE>
predecessor(s) with the intent, purpose or effect of injuring the
reputation, business or business relationships of Coeur or the Buyer.
The provisions of this Section shall survive the execution and
termination hereof, irrespective of the reason for such termination.
6. Notices. Any notice, request, demand and other communication which
is required or which may be given under this Agreement shall be in
writing and shall be deemed to have been duly given if personally
delivered, or if actually received by postage prepaid first class mail,
private carrier, telegram or telephone facsimile transmission, to:
If to the Buyer: Coeur Acquisition, L.L.C.
C/o Bison Investments, Inc.
3225 South MacDill Avenue (#236)
Tampa, Florida 33629
with a copy to: Elizabeth P. Francis, Esq.
Trenam, Kemker et al
450 Carillon Parkway, Suite 120
St. Petersburg, FL 33716
If to the
Company: Cardiovascular Diagnostics, Inc.
5301 Departure Drive
Raleigh, North Carolina
with a copy to: Larry Robbins, Esq.
Wyrick Robbins et al
4101 Lake Boone Trail
Suite 300
Raleigh, North Carolina 27607
or, as to any party, to such other address as such party shall have
specified by notice in writing to the other parties.
7. Waiver of Breach. The failure of a party at any time to require
performance by the other of any provision expressed herein shall in no
way affect such party's right thereafter to enforce such provision.
Furthermore, a waiver by a party of a breach of any provision hereof by
the other party shall not operate or be construed as a waiver of any
subsequent breach by the other party.
8. Entire Agreement. This Agreement contains the entire understanding of
the parties with respect to the subject matter hereof. Any prior
statements, negotiations, representations, understandings, proposals or
agreements relating to the subject matter hereof shall be deemed to be
merged into this Agreement, and to the extent
<PAGE>
inconsistent herewith shall be deemed to be of no force or effect. No
alteration, amendment or modification of any of the terms or provisions
hereof shall be valid unless made pursuant to an instrument in writing
signed by the parties hereto. This Agreement shall terminate on the
fifth anniversary of the date hereof; provided, however, that such
termination shall not result in any right of the Company to reveal any
trade secret or disclose any confidentiality, or affect in any way the
Buyer's free and clear title to all trade secrets and other
intellectual property purchased in connection with the Acquisition.
IN WITNESS WHEREOF, the Company has executed this Agreement Not to
Compete as of the day and year first above written.
CARDIOVASCULAR DIAGNOSTICS, INC.
By: John Funkhouser
----------------------------
Its: President
"Company"
<PAGE>
NONCOMPETITION AND CONFIDENTIALITY AGREEMENT
--------------------------------------------
THIS NONCOMPETITION AND CONFIDENTIALITY AGREEMENT is entered into to be
effective for all purposes the 15th day of June, 1999, by and between
PHARMANETICS, INC., a North Carolina corporation (the "Company"), in favor of
COEUR ACQUISITION L.L.C., a Delaware limited liability company, and its
successors and assigns (the "Buyer").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Coeur Laboratories, Inc. ("Coeur"), a indirect subsidiary of
the Company, has been engaged in business as a manufacturer and seller of a line
of disposable power injection syringes used for cardiology and radiology
procedures and a line of manifolds used in custom angiographic procedure kits
(the "Business"); and
WHEREAS, simultaneous with the execution of this Agreement, the Buyer
acquired all of the assets of Coeur (the "Acquisition"); and
WHEREAS, the Acquisition was effected pursuant to the provisions of
that certain Asset Purchase Agreement dated as of June 15, 1999, by and among
Coeur and the Buyer (the "Asset Purchase Agreement") and the Company is
obligated to execute and deliver this Agreement as a condition precedent to the
closing of the Acquisition.
NOW, THEREFORE, in consideration of the consummation of the
transactions contemplated by the Asset Purchase Agreement and in consideration
of the covenants contained herein, the Company agrees as follows:
1. Restrictive Covenants.
----------------------
(a) NonDisclosure; Customers; Non-Solicitation.
-------------------------------------------
(i) Nondisclosure. The Company acknowledges that it has
trade secrets, marketing, operating and strategic plans, customer and
supplier lists, proprietary information and other confidential or
specialized data and/or information relative to the Business, whether
now existing or to be developed or created after the Closing Date
(collectively, "Trade Secrets"). The Company covenants and agrees that
it shall at all times after the date hereof hold in strictest
confidence any and all Trade Secrets concerning or related to the
products, services, processes, businesses, suppliers and customers of
the Business. The Company covenants and agrees that neither it nor any
entity controlled by him will for any reason, directly or indirectly,
for himself or for the benefit of any other entity, use, copy, divulge
or otherwise disseminate or disclose any of the Trade Secrets relating
to the Business; provided, that the Company may disclose Trade Secrets
pursuant to an order by a court of competent jurisdiction, provided,
<PAGE>
further, that the Company shall give the Buyer notice of such order and
any court pleading requesting such disclosure, in order to provide the
Buyer with an opportunity to prevent such disclosure or procure an
appropriate protective order.
(ii) Customers. The Company acknowledges that customers
and customer accounts of the Business will at all times be the sole and
separate property of the Buyer, and all activities of or work performed
for or on behalf of the Company was and will be performed solely for
the benefit of the Company and the goodwill resulting from such efforts
is and at all times will be the sole and separate property of the
Buyer.
(iii) Non-Solicitation; Non-Hire. The Company agrees that
from the date of this Agreement and continuing for a period of three
(3) years from the date of this Agreement (the "Restricted Period"),
neither it nor any person or enterprise controlled by or affiliated
with it will solicit or, without the Buyer's prior written consent, for
employment or any other reason any person who was employed by Coeur or
the Buyer at any time within one (1) year prior to the time of the act
of solicitation. The Company agrees that from the date of this
Agreement and continuing for a period of one (1) year from the date of
this Agreement (or, if shorter, the term of Buyer's Sublease of Coeur's
facility), neither it nor any person or enterprise controlled by or
affiliated with it will hire, for employment or any other reason any
person who was employed by Coeur or the Buyer at any time within one
(1) year prior to the time of hire
(b) Non-Competition by Company. During the Restricted Period,
the Company agrees that neither it nor any person or enterprise
controlled by or affiliated with it will become a stockholder,
director, officer, agent, employee or representative of or consultant
to a corporation, or member of a partnership, or engage as a sole
proprietor in any business, or act as a consultant to any of the
foregoing or otherwise engage, directly or indirectly, in any
enterprise which competes with the Business anywhere in the continental
United States or the United Kingdom; provided, however, that the
foregoing shall not prohibit the ownership of less than two percent
(2%) of the outstanding shares of the stock of any corporation engaged
in any business, which shares are regularly traded on a national
securities exchange or in any over-the-counter market.
(c) Relief; Remedies.
-----------------
(i) Relief, Reformation; Severability. The parties agree
that the covenants contained in this Section are separate and are
reasonable in their scope and duration and may be enforced by specific
performance or otherwise. The parties shall not raise any issue of
reasonableness as a defense in any proceeding to enforce any of the
covenants herein. Notwithstanding the foregoing, in the event that a
covenant included in this Section shall be deemed by any court to be
unreasonably broad in any respect, the court which makes such finding
shall modify such covenant for the purpose of making such covenant
<PAGE>
reasonable in scope and duration. The validity, legality or
enforceability of the remaining provisions of this Agreement shall not
be affected by any such modification.
(ii) Remedies. The parties acknowledge that any breach of
the restrictive covenants herein will cause irreparable harm to the
other, and that such harm will be difficult if not impossible to
ascertain. Therefore, if any action or proceeding is commenced by or on
behalf of any party to enforce the provisions hereof, such party shall
be entitled to equitable relief, including injunction, against any
actual or threatened breach hereof, and any damages arising therefrom
including, without limitation, reasonable fees of its attorneys and
their support staff and all other costs and expenses incurred by the
other party in good faith in connection therewith without bond and
without liability should such relief be denied, modified or vacated.
Neither the right to obtain such relief nor the obtaining of such
relief shall be exclusive of or preclude any party from any other
remedy. Each party hereby waives the claim or defense to an action for
equitable relief by the other that the other has an adequate remedy at
law or has not been or is not being irreparably injured by such breach.
2. Applicable Law. The terms and conditions of this Agreement shall be
governed by and construed in accordance with the laws of the State of
North Carolina.
4. Consent to Jurisdiction. For those matters or disputes of any nature
arising out of, connected with, related or incidental to this
Agreement, the parties hereto hereby irrevocably submit themselves to
the exclusive jurisdiction of the courts of the State of North Carolina
located in Wake County, North Carolina and to the jurisdiction of the
United States District Court for the Eastern District of North Carolina
for the purpose of bringing any action that may be brought in
connection with the provisions hereof. The parties hereto hereby
individually agree that they shall not assert any claim that they are
not subject to the jurisdiction of such courts, that the venue is
improper, that the forum is inconvenient or any similar objection,
claim or argument. Service of process on any of the parties hereto with
regard to any such action may be made by mailing the process to such
Persons by regular or certified mail to the address of such Person set
forth herein or to any subsequent address to which notices shall be
sent.
5. Effect of Disputes. Notwithstanding the fact that there may from
time to time be disputes among the parties concerning the terms and
conditions hereof, the parties agree not to under any circumstances,
disparage, criticize or denigrate the talents, skills, prospects,
abilities, integrity or character of the other parties hereto, or such
parties' management, directors, employees, agents or representatives
(including those of the Buyer's affiliates). The Company further agrees
that it will not, at any time after the date hereof and without the
written consent of the Buyer, contact any past, present or prospective
customer, supplier,
<PAGE>
employee or agent or representative of Coeur, the Buyer or its
respective predecessor(s) with the intent, purpose or effect of
injuring the reputation, business or business relationships of Coeur or
the Buyer. The provisions of this Section shall survive the execution
and termination hereof, irrespective of the reason for such
termination.
6. Notices. Any notice, request, demand and other communication which
is required or which may be given under this Agreement shall be in
writing and shall be deemed to have been duly given if personally
delivered, or if actually received by postage prepaid first class mail,
private carrier, telegram or telephone facsimile transmission, to:
If to the Buyer: Coeur Acquisition, L.L.C.
C/o Bison Investments, Inc.
3225 South MacDill Avenue (#236)
Tampa, Florida 33629
with a copy to: Elizabeth P. Francis, Esq.
Trenam, Kemker et al
450 Carillon Parkway, Suite 120
St. Petersburg, FL 33716
If to the
Company: Cardiovascular Diagnostics, Inc.
5301 Departure Drive
Raleigh, North Carolina
with a copy to: Larry Robbins, Esq.
Wyrick Robbins et al
4101 Lake Boone Trail
Suite 300
Raleigh, North Carolina 27607
or, as to any party, to such other address as such party shall have
specified by notice in writing to the other parties.
7. Waiver of Breach. The failure of a party at any time to require
performance by the other of any provision expressed herein shall in no
way affect such party's right thereafter to enforce such provision.
Furthermore, a waiver by a party of a breach of any provision hereof by
the other party shall not operate or be construed as a waiver of any
subsequent breach by the other party.
8. Entire Agreement. This Agreement contains the entire understanding of
the parties with respect to the subject matter hereof. Any prior
statements, negotiations, representations, understandings, proposals or
agreements relating to the subject
<PAGE>
matter hereof shall be deemed to be merged into this Agreement, and to
the extent inconsistent herewith shall be deemed to be of no force or
effect. No alteration, amendment or modification of any of the terms or
provisions hereof shall be valid unless made pursuant to an instrument
in writing signed by the parties hereto. This Agreement shall terminate
on the fifth anniversary of the date hereof; provided, however, that
such termination shall not result in any right of the Company to reveal
any trade secret or disclose any confidentiality, or affect in any way
the Buyer's free and clear title to all trade secrets and other
intellectual property purchased in connection with the Acquisition.
IN WITNESS WHEREOF, the Company has executed this Agreement Not to
Compete as of the day and year first above written.
PHARMANETICS, INC.
By: John Funkhouser
----------------------------
Its: President
"Company"
<PAGE>
NONCOMPETITION AND CONFIDENTIALITY AGREEMENT
--------------------------------------------
THIS NONCOMPETITION AND CONFIDENTIALITY AGREEMENT is entered into as of
this 15th day of June, 1999, by and between JOHN FUNKHOUSER, a resident of the
state of North Carolina, (the "Principal"), in favor of COEUR ACQUISITION
L.L.C., a Delaware limited liability company, and its successors and assigns
(the "Buyer").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Principal was an officer and employee of Coeur
Laboratories, Inc., a North Carolina corporation (the "Company"), which was
engaged in business as a manufacturer and seller of a line of disposable power
injection syringes used for cardiology and radiology procedures and a line of
manifolds used in custom angiographic procedure kits (the "Business"); and
WHEREAS, simultaneous with the execution of this Agreement, the Buyer
acquired all of the assets of the Company (the "Acquisition"); and
WHEREAS, the Acquisition was effected pursuant to the provisions of
that certain Asset Purchase Agreement dated as of June 15, 1999 by and among the
Company, its stockholders and the Purchaser (the "Asset Purchase Agreement") and
under the Principal is obligated to execute and deliver this Agreement as a
condition precedent to the closing of the Acquisition.
NOW, THEREFORE, in consideration of the consummation of the
transactions contemplated by the Asset Purchase Agreement and in consideration
of the covenants contained herein, the Principal agrees as follows:
1. Restrictive Covenants.
----------------------
(a) NonDisclosure; Customers; Non-Solicitation.
-------------------------------------------
(i) Nondisclosure. The Principal acknowledges that he has
been entrusted with trade secrets, marketing, operating and strategic
plans, customer and supplier lists, proprietary information and other
confidential or specialized data and/or information relative to the
Business, whether now existing or to be developed or created after the
Closing Date (collectively, "Trade Secrets"). The Principal covenants
and agrees that he shall at all times after the date hereof hold in
strictest confidence any and all Trade Secrets that may have come or
may come into his possession or within his knowledge concerning or
related to the products, services, processes, businesses, suppliers and
customers of the Business. The Principal covenants and agrees that
neither he nor any entity controlled by him will for any reason,
directly or indirectly, for himself or for the
<PAGE>
benefit of any other entity, use, copy, divulge or otherwise
disseminate or disclose any of the Trade Secrets relating to the
Business; provided, that the Principal may disclose Trade Secrets
pursuant to an order by a court of competent jurisdiction, provided,
further, that the Principal shall give the Buyer notice of such order
and any court pleading requesting such disclosure, in order to provide
the Buyer with an opportunity to prevent such disclosure or procure an
appropriate protective order.
(ii) Customers. The Principal acknowledges that customers
and customer accounts of the Business will at all times be the sole and
separate property of the Buyer, and all activities of or work performed
by the Principal for or on behalf of the Company was and will be
performed solely for the benefit of the Company and the goodwill
resulting from such efforts by the Principal is and at all times will
be the sole and separate property of the Buyer.
(iii) Non-Solicitation; Non-Hire. The Principal agrees
that from the date of this Agreement and continuing for a period of
three (3) years from the date of this Agreement (the "Restricted
Period"), neither he nor any person or enterprise controlled by him
will solicit for employment or any other reason any person who was
employed by the Seller, the Company or the Buyer at any time within one
(1) year prior to the time of the act of solicitation. The Principal
agrees that from the date of this Agreement and continuing for a period
of one (1) year from the date of this Agreement (or, if shorter, the
term of Buyer's Sublease of Seller's facility), neither he nor any
person or enterprise controlled by him will, without the Purchaser's
prior written consent, hire, for employment or any other reason any
person who was employed by the Seller, the Company or the Buyer at any
time within one (1) year prior to the time of the hire; provided,
however that this sentence shall not prohibit the hire of any employee
terminated by the Buyer after the date of such termination.
(b) Non-Competition by Principal. During the Restricted
Period, the Principal agrees that neither he nor any person or
enterprise controlled by him will become a stockholder, director,
officer, agent, employee or representative of or consultant to a
corporation, or member of a partnership, or engage as a sole proprietor
in any business, or act as a consultant to any of the foregoing or
otherwise engage, directly or indirectly, in any enterprise which
competes with the Business anywhere in the continental United States or
the United Kingdom; provided, however, that the foregoing shall not
prohibit the ownership of less than two percent (2%) of the outstanding
shares of the stock of any corporation engaged in any business, which
shares are regularly traded on a national securities exchange or in any
over-the-counter market.
(c) Relief; Remedies.
-----------------
(i) Relief, Reformation; Severability. The parties agree
that the covenants contained in this Section are separate and are
reasonable in their
<PAGE>
scope and duration and may be enforced by specific performance or
otherwise. The parties shall not raise any issue of reasonableness as a
defense in any proceeding to enforce any of the covenants herein.
Notwithstanding the foregoing, in the event that a covenant included in
this Section shall be deemed by any court to be unreasonably broad in
any respect, the court which makes such finding shall modify such
covenant for the purpose of making such covenant reasonable in scope
and duration. The validity, legality or enforceability of the remaining
provisions of this Agreement shall not be affected by any such
modification.
(ii) Remedies. The parties acknowledge that any breach of
the restrictive covenants herein will cause irreparable harm to the
other, and that such harm will be difficult if not impossible to
ascertain. Therefore, if any action or proceeding is commenced by or on
behalf of any party to enforce the provisions hereof, such party shall
be entitled to equitable relief, including injunction, against any
actual or threatened breach hereof, and any damages arising therefrom
including, without limitation, reasonable fees of its attorneys and
their support staff and all other costs and expenses incurred by the
other party in good faith in connection therewith without bond and
without liability should such relief be denied, modified or vacated.
Neither the right to obtain such relief nor the obtaining of such
relief shall be exclusive of or preclude any party from any other
remedy. Each party hereby waives the claim or defense to an action for
equitable relief by the other that the other has an adequate remedy at
law or has not been or is not being irreparably injured by such breach.
2. Applicable Law. The terms and conditions of this Agreement shall be
governed by and construed in accordance with the laws of the State of
North Carolina.
4. Consent to Jurisdiction. For those matters or disputes of any nature
arising out of, connected with, related or incidental to this
Agreement, the parties hereto hereby irrevocably submit themselves to
the exclusive jurisdiction of the courts of the State of North Carolina
located in Wake County, North Carolina and to the jurisdiction of the
United States District Court for the Eastern District of North Carolina
for the purpose of bringing any action that may be brought in
connection with the provisions hereof. The parties hereto hereby
individually agree that they shall not assert any claim that they are
not subject to the jurisdiction of such courts, that the venue is
improper, that the forum is inconvenient or any similar objection,
claim or argument. Service of process on any of the parties hereto with
regard to any such action may be made by mailing the process to such
Persons by regular or certified mail to the address of such Person set
forth herein or to any subsequent address to which notices shall be
sent.
5. Effect of Disputes. Notwithstanding the fact that there may from
time to time be disputes among the parties concerning the terms and
conditions hereof,
<PAGE>
the parties agree not to under any circumstances, disparage, criticize
or denigrate the talents, skills, prospects, abilities, integrity or
character of the other parties hereto, or such parties' management,
directors, employees, agents or representatives (including those of the
Purchaser's affiliates). The Principal further agrees that he will not,
at any time after the date hereof and without the written consent of
the Buyer, contact any past, present or prospective customer, supplier,
employee or agent or representative of the Company, the Buyer or its
respective predecessor(s) with the intent, purpose or effect of
injuring the reputation, business or business relationships of the
Company or the Buyer. The provisions of this Section shall survive the
execution and termination hereof, irrespective of the reason for such
termination.
6. Notices. Any notice, request, demand and other communication which
is required or which may be given under this Agreement shall be in
writing and shall be deemed to have been duly given if personally
delivered, or if actually received by postage prepaid first class mail,
private carrier, telegram or telephone facsimile transmission, to:
If to the Buyer: Coeur Acquisition, L.L.C.
C/o Bison Investments, Inc.
3225 South MacDill Avenue (#236)
Tampa, Florida 33629
with a copy to: Elizabeth P. Francis, Esq.
Trenam, Kemker et al
450 Carillon Parkway, Suite 120
St. Petersburg, FL 33716
If to the
Principal: ____________________________
____________________________
____________________________
with a copy to: Larry Robbins, Esq.
Wyrick Robbins et al
4101 Lake Boone Trail
Suite 300
Raleigh, North Carolina 27607
or, as to any party, to such other address as such party shall have
specified by notice in writing to the other parties.
7. Waiver of Breach. The failure of a party at any time to require
performance by the other of any provision expressed herein shall in no
way affect such party's
<PAGE>
right thereafter to enforce such provision. Furthermore, a waiver by a
party of a breach of any provision hereof by the other party shall not
operate or be construed as a waiver of any subsequent breach by the
other party.
8. Entire Agreement. This Agreement contains the entire understanding
of the parties with respect to the subject matter hereof. Any prior
statements, negotiations, representations, understandings, proposals or
agreements relating to the subject matter hereof shall be deemed to be
merged into this Agreement, and to the extent inconsistent herewith
shall be deemed to be of no force or effect. No alteration, amendment
or modification of any of the terms or provisions hereof shall be valid
unless made pursuant to an instrument in writing signed by the parties
hereto. This Agreement shall terminate on the fifth anniversary of the
date hereof; provided, however, that such termination shall not result
in any right of the Principal to reveal any trade secret or disclose
any confidentiality, or affect in any way the Buyer's free and clear
title to all trade secrets and other intellectual property purchased in
connection with the Acquisition.
IN WITNESS WHEREOF, the Principal has executed this Agreement Not to
Compete as of the day and year first above written.
John Funkhouser
-----------------------------------
John Funkhouser
"PRINCIPAL"
<PAGE>
SCHEDULE 7.5
OPINION OF COUNSEL
June 15, 1999
Coeur Acquisition L.L.C.
Ladies and Gentlemen:
We have acted as counsel for Pharmanetics, Inc., a North Carolina
corporation ("Pharmanetics"), Cardiovascular Diagnostics, Inc., a North Carolina
corporation ("CVDI") and Coeur Laboratories, Inc., a North Carolina corporation
("Coeur"), in connection with the acquisition by Coeur Acquisition L.L.C., a
Delaware limited liability company ("Buyer"), of certain assets and the
assumption by Buyer of certain liabilities of Coeur, pursuant to that certain
Asset Purchase Agreement, dated effective as of June 15, 1999 (the "Agreement"),
by and among Coeur, as Seller, and you, as Buyer. This opinion is rendered to
you pursuant to Section 7.5 of the Agreement. Capitalized terms used herein
without definition have the respective meanings specified in the Agreement. As
used herein, the term "Transaction Documents" shall mean the Agreement, the
guaranty delivered by Pharmanetics and CVDI, the Sublease delivered by you, CVDI
and Highwoods Realty Limited Partnership, and the Bill of Sale and other
assignments described in Schedule 2.2.1 of the Asset Purchase Agreement.
We have examined the originals, or copies certified or otherwise
identified to our satisfaction, of the Transaction Agreements, the corporate
minute books and stock transfer records of Pharmanetics, CVDI and Coeur and such
other certificates of public officials and officers of Pharmanetics, CVDI and
Coeur, documents and questions of law as we have deemed relevant or necessary as
a basis for the opinions hereinafter set forth. In making such examination, we
have assumed the genuineness of all signatures, the capacity of all individuals,
the authenticity of all documents submitted to us as originals and the
conformity to original documents of documents submitted to us as certified
copies or photocopies. As to certain matters of fact of which we have no or
insufficient independent knowledge, we have also relied upon representations and
certificates of officers of Pharmanetics, CVDI and Coeur, as well as upon the
accuracy of recitals made in resolutions adopted by the Board of Directors of
each of Pharmanetics, CVDI and Coeur and by the sole shareholder of Coeur.
As used in this opinion, the expressions "to our knowledge," "known to
us" or similar language with reference to matters of fact means that, after an
examination of documents made available to us by Pharmanetics, CVDI and Coeur,
and after inquiries of executive officers of Pharmanetics, CVDI and Coeur, but
without any independent factual investigation, we find no reason to believe that
the opinions expressed herein are
<PAGE>
factually incorrect. Further, the expression "to our knowledge," "known to us"
or similar language with reference to matters of fact refers to the current
actual knowledge of the attorneys of this firm who have worked on matters for
Pharmanetics, CVDI and Coeur solely in connection with the Agreement and the
transactions contemplated thereby. Except to the extent expressly set forth
herein or as we otherwise believe to be necessary to our opinion, we have not
undertaken any independent investigation to determine the existence or absence
of any fact, and no inference as to our knowledge of the existence or absence of
any fact should be drawn from our representation of Pharmanetics, CVDI and Coeur
or the rendering of the opinion set forth below.
For purposes of this opinion, we have assumed that you have all
requisite power and authority and have taken all necessary action to execute and
deliver the Agreement and to consummate the transactions contemplated thereby,
we have assumed that the representations and warranties made in the Agreement
and pursuant thereto are true and correct, and we do not render an opinion upon
the application of any federal or state law or regulation to your power or
authority.
The opinions hereinafter expressed are subject to the following
qualifications, as to which we render no opinion: (a) the effect of applicable
bankruptcy, reorganization, insolvency, moratorium and other laws affecting
creditors' rights generally; (b) the effect of rules of law governing specific
performance, injunctive relief and other equitable remedies; (c) the compliance
or noncompliance with applicable state and federal anti-fraud statutes, rules
and regulations concerning the transfer of securities; and (d) the absence of
fraud, duress or breach of fiduciary duty in the inducement or effectuation of
the subject transactions (in this connection we affirm that we have no direct
knowledge of the existence of same).
We express no opinion as to the enforceability of any provisions in the
subject documents: (i) relating to delay or omission of enforcement of remedies;
(ii) with respect to severability, exculpation and setoff rights; (iii)
respecting indemnification rights which may be limited under applicable
securities or other law; or (iv) purporting to restrict, limit, or prohibit
competition or the alienation of property.
We are members of the Bar of the State of North Carolina, and we
express no opinion as to the laws of any jurisdictions other than the federal
laws of the United States and the laws of the State of North Carolina.
Based upon and subject to the foregoing, and subject to the disclosures
contained in the Agreement and the exhibits and schedules thereto, we are of the
opinion that:
1. Pharmanetics, CVDI and Coeur are corporations duly incorporated and
validly existing under the laws of the State of North Carolina with full
corporate power and authority to enter into the Transaction Documents and to
carry out and perform their respective obligations under the terms of the
Transaction Documents.
<PAGE>
2. The execution and delivery of the Transaction Documents and the
consummation of the transactions contemplated thereby have been duly authorized
by all requisite corporate action on the part of Pharmanetics, CVDI and Coeur.
The respective Transaction Documents have been duly executed and delivered by
each of Pharmanetics, CVDI and Coeur and constitute the respective valid and
binding obligations of each of Pharmanetics, CVDI and Coeur enforceable in
accordance with their terms and conditions.
3. The execution and delivery by Pharmanetics, CVDI and Coeur of the
Transaction Documents and the performance by them of the transactions
contemplated thereby will not:
(a) violate the North Carolina Business Corporation Act;
(b) conflict with, result in the breach of any provision of,
or constitute a default under any of their respective articles or
certificate of incorporation or bylaws; or
(c) to our knowledge, constitute a default under or cause a
violation of any contract to which Pharmanetics, CVDI and Coeur is a
party or bound or to which it or any of their properties is subject or
bound ; or
(d) to our knowledge, constitute a violation of any permit,
judgment or order decree to which Pharmanetics, CVDI and Coeur or any
of their properties are subject or bound;
other than violations, conflicts, breaches or defaults, if any, that, either
singly or in the aggregate, will not have or would not reasonably be likely to
have a material adverse effect upon the financial condition of either Coeur,
CVDI or Pharmanetics.
This opinion is solely for your benefit and may not be used, circulated, quoted
or otherwise referred to for any purpose without our express written permission.
This opinion is given as of the date hereof, and we undertake no obligation to
update you in the future.
Very truly yours,
<PAGE>
SCHEDULE 8.4
OPINION OF COUNSEL
June 15, 1999
Coeur Laboratories, Inc.
5301 Departure Drive
Raleigh, North Carolina
Re: Coeur Laboratories, Inc.
--Purchase of Assets by Coeur Acquisition, L.L.C.
Gentlemen:
We have acted as counsel to Coeur Acquisition, L.L.C., a Delaware
limited liability company (the "Buyer") in connection with the purchase of
certain assets of Coeur Laboratories, Inc. (the "Seller"). This opinion is
delivered pursuant to the requirements of that certain Purchase Agreement
between the Buyer and the Seller dated June 15, 1999 (the "Purchase Agreement").
In connection with this opinion, terms defined in the Purchase Agreement shall
have the same meanings in this letter, unless indicated to the contrary.
In rendering the opinions expressed below, we have relied, with your
approval, as to certain factual matters that affect our opinions, solely on our
examination of copies of the following documents and have made no independent
verification of the facts asserted to be true and correct in those documents,
including the factual representations and warranties contained in the Agreement,
or any other document executed in connection therewith.
In our capacity as counsel to the Buyer, we have examined the following
documents:
1. The Purchase Agreement
2. Assignment and Assumption executed by the Buyer and the
Seller dated as of June 15, 1999 (the "Assignment").
3. Bill of Sale and Assignment executed by the Buyer and
Seller as of June 15, 1999 (the "Bill of Sale").
4. Copy of the Certificate of Formation, as certified by
the Secretary of State of Delaware on June 14, 1999.
5. A copy of the Operating Agreement of the Buyer, as
certified by an officer of the Buyer as of June 15, 1999 as
then being in effect.
<PAGE>
Documents 1 through 5 are referred to herein as the "Reviewed
Documents". Documents 1 through 3 are referred to herein as the "Transaction
Documents."
We note that the Reviewed Documents do not constitute all of the
documents utilized in connection with the transactions contemplated by the
Agreement. The opinions expressed in this letter are based solely upon our
review of the Reviewed Documents, as listed above, and any other documents
specifically referred to by name in this letter as having been reviewed by us.
We have not reviewed any other documents that are referred to in or incorporated
by reference into any of such documents, and we express no opinion as to the
legal implications of the relationship between such other documents and the
transactions contemplated and/or evidenced by the Reviewed Documents with
respect to the opinions expressed herein.
In each place where the phrase "to our knowledge" or like references
appears, our opinion is based on the actual current recollection of those
persons in our firm who have given substantive attention to the transaction that
is the subject of this opinion (Elizabeth P. Francis) and does not include
constructive knowledge of matters or information. As to certain factual matters
in connection with the preparation of this letter, our knowledge is based upon
oral inquiries made of and certificates provided by the Buyer. The phrase, "to
our knowledge" or like references contained herein do not imply that the firm or
any member thereof has undertaken any independent investigation within the firm,
with the Buyer or with any other persons to determine the existence or absence
of any facts or circumstances, and no inference should be drawn merely from the
firm's past and current representation of the Buyer. Stating that a matter is
"to our knowledge" means only that the attorneys of the firm who have given
substantive attention to the transaction do not have a current recollection of
any fact or circumstances contradicting the statement and should not imply that
the firm knows the statement is correct.
(i) Except as specifically stated in this letter, we express no opinion on
the following matters:
<PAGE>
federal and state securities laws and regulations; Federal Reserve Board margin
regulations; pension and employee benefit laws and regulations (e.g. ERISA);
federal and state antitrust and unfair competition laws and regulations; federal
and state laws and regulations concerning filing requirements (such as
Hart-Scott-Rodino and Exon-Florio) other than requirements applicable to charter
related documents; compliance with fiduciary duty requirements; local laws;
federal and state laws and regulations concerning the priority or enforcement of
the lien or security interest in real or personal property; fraudulent transfer
laws; federal and state environmental laws and regulations; and federal and
state land use and subdivision laws and regulations.
For purposes of this letter, we have assumed, with your approval, the
following:
(a) the legal capacity of each natural person; the legal existence of all
parties to the transaction other than the Buyer; the power and authority of each
person other than persons acting on behalf of the Buyer to execute, deliver and
perform each document executed and delivered and to do each other act done or to
be done by such person; the authorization, execution and delivery by each person
other than persons acting on behalf of the Buyer of each document executed and
delivered or to be executed and delivered by such person; the legality,
validity, binding effect and enforceability as to each person other than persons
acting on behalf of the Buyer of each document executed and delivered or to be
executed and delivered and of each other act done or to be done by such person;
except as otherwise expressly opined upon herein, the payment of all required
taxes and fees imposed upon the execution, filing or recording of documents;
that there have been no undisclosed modifications of any provision of any
document reviewed by us in connection with the rendering of the opinion and no
undisclosed prior waiver of any right or remedy contained in any of the
documents; the genuineness of each signature, the completeness of each document
submitted to us, the authenticity of each document reviewed by us as an
original, the conformity to the original of each document reviewed by us as a
copy and the authenticity of the original of each document received by us as a
copy; the truthfulness of each statement as to all factual matters otherwise not
known to us to be untruthful and the representations and warranties set forth in
the Purchase Agreement; the accuracy on the date of the opinion as well as on
the date stated in all governmental certifications of each statement as to each
factual matter contained in such governmental certifications; that the addressee
has acted in good faith, without notice of adverse claims, and has complied with
all laws applicable to it that affect the transaction; that the transaction
complies with all tests of good faith, fairness and conscionability required by
law; that routine procedural matters such as service of process or qualification
to do business in the relevant jurisdictions will be satisfied by the parties
seeking to enforce the Purchase Agreement; that all statutes, judicial and
administrative decisions and rules and regulations of governmental agencies
constituting the law for which we are assuming responsibility are published and
in each case in a manner generally available to lawyers practicing in our
judicial circuit; that other agreements related to the transaction will be
enforced as written; that no action, discretionary or otherwise, will be taken
by or on behalf of any party in the future that might result in a violation of
law; that there are no other agreements or understandings among the parties that
would modify the terms of the Purchase Agreement or the respective rights or
obligations of the parties to those documents; that with respect to the Purchase
Agreement and transactions contemplated thereby, there has
<PAGE>
been no mutual mistake of fact and there exists no fraud or duress; and the
constitutionality and validity of all relevant laws, regulations and agency
actions unless a reported case has otherwise held or widespread concern has been
expressed by commentators as reflected in materials which lawyers routinely
consult. We have not personally observed the execution and delivery by the
applicable parties of the documents.
We have engaged in such investigations of law as we have deemed
necessary to render the opinions expressed in this letter. The opinions set
forth below are based in part upon the Florida and federal authorities as they
are currently compiled and reported on by customary reporting services. However,
the Florida Legislature is presently in session. It is possible that legislation
affecting the opinions expressed below might have been enacted into law in
connection with the session. However, owing to the absence of any effective
legislative reporting service, it is not possible for us to know with certainty
as of the date of this letter whether such legislation has been passed into law.
Nevertheless, nothing has come to our attention that any legislation has been
enacted into law that would affect the transactions under the Purchase
Agreement.
We are qualified to practice law only in the State of Florida and we do
not purport to be experts in the law of any state other than Florida. We express
no opinion as to matters which may be governed by the substantive laws of any
state other than Florida and United States federal law. Our opinions as to the
Buyer are based solely upon the review of the documents referenced as above and
a review of the Delaware Limited Liability Act. As to any document which by its
terms or interpretation is to be governed by the laws of a state other than
Florida, our opinions herein are rendered as if Florida law governed and as if
the corporations or other entities were Florida corporations.
This letter is provided to the Seller solely for the benefit of such
party pursuant to the requirements of the Agreement and may not be relied upon,
quoted in whole or in part, or used in any manner by any third party or used for
any other purpose. The opinions expressed below are being rendered as of the
date of this letter and we specifically disclaim any obligation to update such
opinions in the future, regardless of the nature of any future developments or
our knowledge thereof. Further, we express no opinion on the likelihood or
effect of future conduct of any party, including without limitation performance
by any party under the Purchase Agreement. No opinions other than those
specifically set forth below are to be implied, and we specifically disclaim any
opinions by inference or implication from those specified below.
Based solely upon and in reliance on the documents and statements
referred to above, and subject to the assumptions, qualifications and
limitations set forth herein, we are of the opinion that:
<PAGE>
1. The Buyer is a limited liability corporation, duly organized,
validly existing and in good standing under the laws of the State of Delaware.
2. The Buyer has the full corporate power and authority to execute,
deliver and perform the Transaction Documents to which it is a party.
3. The execution, delivery and performance of the Buyer's obligations
under the Transaction Documents have been duly authorized by all necessary
action.
4. The Transaction Documents have been duly executed and delivered by
and on behalf of the Buyer.
5. Subject to the qualifications in the following sentence, each
Transaction Document is a valid and binding obligation of the Buyer enforceable
in accordance with its terms. Our opinion concerning the validity, binding
effect and enforceability means that: (a) such document constitutes an effective
contract under applicable law, (b) such document is not invalid in its entirety
because of a specific statutory prohibition or public policy and is not subject
in its entirety to a contractual defense, and (c) subject to the remaining
sentences of this paragraph, some remedy is available if the Buyer is in
material default under any such document. This opinion does not mean that: (a)
any particular remedy is available upon a material default, or (b) every
provision of each such document will be upheld or enforced in any or each
circumstance by a court. Furthermore, the validity, binding effect and
enforceability of each such document may be limited or otherwise affected by (x)
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar statutes, rules, regulations or other laws affecting the
enforcement of creditors' rights and remedies generally and (y) the
unavailability of, or limitation on the availability of, a particular right or
remedy (whether in a proceeding in equity or at law) because of an equitable
principle or a requirement as to commercial reasonableness, conscionability or
good faith.
6. The execution and delivery by the Buyer of the Transaction
Documents and its performance of the transactions contemplated thereby will not
violate any provision of the Delaware Limited Liability Act, conflict with,
result in the breach of any provision of or termination of, or constitute a
default under, its Certificate of Formation or Organizational Agreement, or, to
our knowledge (without independent investigation), constitute a default under or
violate any indenture, mortgage, deed of trust, joint venture agreement,
debenture, warrant or other instrument or agreement affecting the Buyer which
default would or would reasonably be likely to have a material adverse effect
upon the financial condition of the Buyer, or constitute a violation of any
order, judgment or decree to which the Buyer is a party, which violation would
or would reasonably be likely to have a material adverse effect upon the
financial condition of the Company.
<PAGE>
This opinion letter is rendered pursuant to your request, is intended
solely for your benefit and can be relied on solely by you and only in
connection with the closing under the Purchase Agreement. This opinion is not to
be furnished, quoted, or referred to any other party, or used for any other
purpose.
Very truly yours,
TRENAM, KEMKER, SCHARF, BARKIN,
FRYE, O'NEILL & MULLIS, P.A.
By: Elizabeth P. Francis, Esquire
----------------------------------
Elizabeth P. Francis, Esquire
<PAGE>
SCHEDULE 9.1.4.5
OBSOLETE INVENTORY
Coeur Obsolete Inventory @ 5/31/99
(To be adjusted for any changes due to
physical inventory completed on June 14, 1999)
Part# Total
- --------------------------------------
A202 588.06
A207 128.98
A210 29.58
A211 226.63
A230 98.33
D305-0008 3,168.48
D305-1001 2,445.14
D853-0162 4,141.90
D854-0095 123.00
D854-0101 156.91
D854-0126 115.82
D854-0131 1.52
D856-0212 62.10
D856-0212 341.55
D856-0212 31.05
D856-0909 0.11
D856-0913 26.10
D858-0131 950.26
D858-0156 1,036.45
D858-0211 779.15
D858-030 204.48
D859-0003 12,555.00
D859-0003 100.00
D859-0004 0.88
1858-0010 2.09
1858-0011 3.96
L859-0001 117.00
P858-0157 3,980.80
P858-0157 218.63
P858-0157 180.38
P858-0212 2,161.52
P858-0231 852.14
P858-0232 87.32
P858-0233 11.53
D853-0906 280.12
P858-0236 2,925.20
-----------
38,132.17
===========
<PAGE>
SCHEDULE 10.6
NOTICES
PharmaNetics, Inc.
5301 Departure Drive
Raleigh, NC 27616
Coeur Acquisition L.L.C.
5301 Departure Drive
Raleigh, NC 27616
