SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: August 25, 1997
CROSS MEDICAL PRODUCTS, INC.
(Exact Name of Registrant as specified in its charter)
Delaware 000-16893 31-1177614
(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification Number)
incorporation or
organization)
(Address, including zip code, and telephone number
including area code of Registrant's
principal executive offices)
5160 Blazer Memorial Parkway
Dublin, Ohio 43017-1339
(614)718-0530
Not Applicable
(Former name or former address, if changed since last report)
Item 5. Other Events
On August 25, 1997, Cross Medical Products, Inc., a Delaware corporation
("Cross") and Century Medical, Inc., a Japanese corporation ("Century") entered
into a Stock Purchase Agreement (the "Agreement") which provides for the
purchase of 210,748 shares of Cross by Century, for the total purchase price
of $1,999,998.52. With the purchase, Century will own approximately 4% of the
5,209,053 outstanding shares of Cross. The proceeds will be used by Cross for
general working capital.
The transaction was approved by the boards of directors of Cross and Century.
The transaction was accomplished through arms-length negotiations between the
management of Cross and Century.
Cross's press release issued on August 25, 1997 regarding the announcement of
the private placement of its shares to Century is attached as Exhibit 99 to
this report and is incorporated herein by reference. The foregoing summary of
the Agreement does not purport to be complete and is qualified in its entirety
by reference to Exhibit 2.
Item 7. Exhibits.
(c) Exhibits.
Exhibit No. Description
2 Stock Purchase Agreement between Cross Medical Products, Inc.
and Century Medical, Inc.
99 Press release of Cross Medical Products, Inc., issued on
August 25, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CROSS MEDICAL PRODUCTS, INC.
Date: August 29, 1997 By: /S/ Paul A. Miller
-----------------------------
Paul A. Miller, Vice President
and Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Description
2 Stock Purchase Agreement, dated as of August 25, 1997,
between Cross Medical Products, Inc. and Century
Medical, Inc.
99 Press release of Cross Medical Products, Inc. issued
on August 25, 1997.
EXHIBIT 2
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement is entered into as of August 22, 1997,
between Century Medical, Inc., a Japanese corporation ("Buyer") and Cross
Medical Products, Inc., a Delaware corporation ("Company").
WHEREAS, the Company desires to sell, and Buyer desires to acquire the
Company's shares as provided herein.
NOW, THEREFORE, in consideration of the mutual benefits to be derived
from this Agreement and the representations, warranties, conditions and
promises hereinafter contained, the Company and Buyer hereby represent,
warrant and agree as follows:
ARTICLE I
DEFINITIONS/PURCHASE & SALE/CLOSING
1.1 Definitions. For all purposes of this Agreement, unless
otherwise expressly provided,
(a) the terms defined in this Article I have the meanings assigned
to them in this Article I and include the plural as well as the singular,
(b) all accounting terms not otherwise defined herein have the
meanings assigned under generally accepted accounting principles,
(c) all references in this Agreement to designated "Articles,"
"Sections" and other subdivisions are to the designated Articles, Sections and
other subdivisions of the body of this Agreement,
(d) pronouns of either gender or neuter shall include, as
appropriate, the other pronoun forms, and
(e) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
As used in this Agreement and the Exhibits and Schedules delivered
pursuant to this Agreement, the following definitions shall apply.
"Action" means any action, complaint, petition, investigation, suit or
other proceeding, whether civil or criminal, in law or in equity, or before
any arbitrator or Governmental Entity.
"Affiliate" means a Person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, a specified Person.
"Agreement" means this Stock Purchase Agreement between Buyer and the
Company as amended or supplemented together with all Exhibits and Schedules
attached or incorporated by reference.
"Approval" means any approval, authorization, consent, qualification
or registration, or any waiver of any of the foregoing, required to be
obtained from, or any notice, statement or other communication required to be
filed with or delivered to, any Governmental Entity or any other Person.
"Business" means the business of Company, and shall be deemed to
include any of the following incidents of such business: income, operations,
condition (financial or other), assets/properties, anticipated revenues/income,
prospects, and liabilities.
"Buyer Stock" means the shares of Common Stock being acquired by Buyer
hereunder.
"Closing" means the consummation of the purchase and sale of the Buyer
Stock under this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" shall mean the Common Stock, $0.01 par value, of the
Company.
"Contract" means any agreement, arrangement, bond, commitment,
franchise, indemnity, indenture, instrument, lease, license or understanding,
whether or not in writing.
"Disclosure Materials" has the meaning set forth in Section 4.3.
"Encumbrance" means any claim, charge, easement, encumbrance, lease,
covenant, security interest, lien, option, pledge, rights of others, or
restriction (whether on voting, sale, transfer, disposition or otherwise),
whether imposed by agreement, understanding, law, equity or otherwise, except
for any restrictions on transfer generally arising under any applicable
federal or state securities law.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles in the United
States, as in effect from time to time.
"Governmental Entity" means any government or any agency, bureau,
board, commission, court, department, official, political subdivision,
tribunal or other instrumentality of any government, whether federal, state or
local, domestic or foreign.
"Intangible Property" means any trade secret, secret process or other
confidential information or know-how and any and all marks.
"IRS" means the Internal Revenue Service or any successor entity.
"Law" means any constitutional provision, statute or other law, rule,
regulation, or interpretation of any Governmental Entity and any Order.
"Loss" means any action, cost, damage, disbursement, expense,
liability, loss, deficiency, diminution in value, obligation, penalty or
settlement of any kind or nature, whether foreseeable or unforeseeable,
including but not limited to, interest or other carrying costs, penalties,
legal, accounting and other professional fees and expenses incurred in the
investigation, collection, prosecution and defense of claims and amounts paid
in settlement, that may be imposed on or otherwise incurred or suffered by the
specified person.
"NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotations system.
"Order" means any decree, injunction, judgment, order, ruling,
assessment or writ.
"Permit" means any license, permit, franchise, certificate of
authority, or order, or any waiver of the foregoing, required to be issued by
any Governmental Entity.
"Person" means an association, a corporation, an individual, a
partnership, a trust or any other entity or organization, including a
Governmental Entity.
"Purchase Price" has the meaning set forth in Section 1.3.
"SEC" means the Securities and Exchange Commission or any successor
entity.
"Securities Act" means the Securities Act of 1933, as amended.
"Tax" means any foreign, federal, state, county or local income, sales
and use, excise, franchise, real and personal property, gross receipt, capital
stock, production, business and occupation, disability, employment, payroll,
severance or withholding tax or charge imposed by any Governmental Entity, any
interest and penalties (civil or criminal) related thereto or to the
nonpayment thereof, and any Loss in connection with the determination,
settlement or litigation of any Tax liability.
"Tax Return" means a report, return or other information required to
be supplied to a Governmental Entity with respect to Taxes including, where
permitted or required, combined or consolidated returns for any group of
entities that includes Company or any subsidiary.
1.2 Sale and Purchase of Buyer Stock. In reliance on the
representations, warranties and covenants contained herein and subject to the
terms and conditions hereof, at the Closing the Company will issue, sell and
deliver to the Buyer, and the Buyer will purchase from the Company the Buyer
Stock, consisting of 210,748 shares of Common Stock, and representing in the
aggregate 4.05% of the Company's Common Stock outstanding as of the Closing.
1.3 Purchase Price; Payment. The price per share of the Buyer
Stock shall be $9.49 for a total purchase price of $1,999,998.52 (the
"Purchase Price"). At the Closing, the Buyer will deliver, by wire transfer
to the Company's account 981170028-00002 at Bank One, Columbus, N.A., an
amount equal to the Purchase Price in immediately available funds and the
Company will deliver the certificate(s) representing the Buyer Stock.
1.4 Closing. The Closing hereunder shall take place as soon as
practicable after the date hereof, but in any event before August 26, 1997
(the "Closing Date"), at such location and at such time as shall be agreed in
writing by the parties hereto.
ARTICLE II
CONDITIONS TO OBLIGATIONS OF THE BUYER
The obligation of the Buyer to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment, or the
waiver by the Buyer, on or prior to the Closing Date, of the following
conditions:
2.1 Representations and Warranties True at the Closing Date. The
representations and warranties of the Company contained in this Agreement
shall be deemed to have been made again on and as of the Closing Date and
shall then be true and correct in all material respects, except for changes
thereto agreed to in writing by the Buyer.
2.2 Performance of Covenants. The Company shall have performed
all covenants required to be performed by it under this Agreement prior to the
Closing.
2.3 Approvals and Consents. Any and all approvals, authorizations,
consents and requirements of governmental and regulatory authorities required
prior to Closing in order to consummate the transactions contemplated hereby
shall have been obtained or completed, no such approvals, authorizations,
consents or requirements shall have imposed a condition which in the
reasonable judgment of the Buyer is unduly burdensome, and all waiting periods
specified by applicable law shall have expired.
2.4 Financial Statements. The Buyer shall have received the most
recent available (as of the date of Closing) quarterly financial statements,
and monthly balance sheet and income statement, of the Company.
2.5 Certificate. The Company shall have furnished the Buyer with
a certificate of the Company signed by its Chief Executive Officer, and its
Secretary or an Assistant Secretary to the effect that (i) the Company's
representations and warranties contained in this Agreement are true and
correct in all material respects at and as of the Closing Date, (ii) the
Company has performed or complied in all material respects with all terms,
covenants and provisions of this Agreement required to be performed or
complied with by it prior to or at the Closing, (iii) the Buyer Stock
represents 4.05% of the shares of Common Stock outstanding as of the Closing
Date and (iv) the Articles of Incorporation and By-Laws of the Company
previously provided to the Buyer remain in effect and no changes, or
modifications have been made thereto.
2.6 No Governmental or Other Proceeding. No order of any court or
Governmental Entity shall be in effect which restrains or prohibits any
transaction contemplated hereby or which would limit or otherwise affect in a
material respect the Buyer's ownership of the Buyer Stock; no suit, action, or
proceeding by any Governmental Entity or other person or entity, or
investigation or inquiry by any Governmental Entity, shall be pending or, in
the case of a Governmental Entity, threatened, which challenges the validity
or legality, or seeks to restrain the consummation, of any transaction
contemplated hereby or which seeks to limit or otherwise affect the Buyer's
ownership of the Buyer Stock; and no written advice shall have been received
by the Buyer, the Company or their respective counsel from any Governmental
Entity, and remain in effect, stating that an action or proceeding will, if
the issuance of the Buyer Stock is consummated or sought to be consummated,
be filed seeking to invalidate or restrain the issuance of the Buyer Stock or
limit or otherwise affect the Buyer's ownership of the Buyer Stock.
2.7 Distribution Agreement. The Company shall have executed and
delivered to Buyer a distribution agreement, in form and substance as attached
as Exhibit I hereto, granting to the Buyer the exclusive right to distribute
certain products of the Company in the territory of Japan for a period
commencing on the date thereof and terminating on December 31, 2007 (the
"Distribution Agreement).
2.8 Due Diligence. Buyer shall not, in the course of its on-going
business investigation, have discovered information not previously disclosed
by Company, which Buyer reasonably believes has or is likely to have a
materially adverse effect on the Business or is materially inconsistent with
information disclosed to Buyer prior to the date hereof.
2.9 No Regulatory Changes. No action shall have been taken by any
Governmental Entity, and no Law shall have been proposed or enacted, which
would (or, in the case of a proposed Law, if enacted would) materially and
adversely affect the financial condition, operations or prospects of Buyer,
the Business, or the regulatory compliance status of Company.
2.10 Market Price of Common Stock. The price per share of the
Common Stock as quoted on NASDAQ shall not, prior to the Closing Date, have
closed at a price that is less than $6.50 per share.
ARTICLE III
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligations of the Company to consummate the transaction
contemplated by this Agreement shall be subject to the fulfillment, or the
waiver by the Company, on or prior to the Closing Date, of the following
conditions:
3.1 Representations and Warranties True at the Closing Date. The
representations and warranties of the Buyer contained in this Agreement shall
be deemed to have been made again on and as of the Closing Date and shall then
be true and correct in all material respects, except for changes thereto
agreed to in writing by the Company.
3.2 Performance of Covenants. The Buyer shall have performed all
covenants required to be performed by it under this Agreement prior to the
Closing.
3.3 Approvals and Consents. Any and all approvals, authorizations,
consents and requirements of governmental and regulatory authorities required
prior to the Closing in order to consummate the transactions contemplated
herein shall have been obtained or completed, no such approvals,
authorizations, consents or requirements shall have imposed a condition which
in the reasonable judgment of Company is unduly burdensome and all waiting
periods specified by applicable law shall have expired.
3.4 Certificate. The Buyer shall have furnished the Company with a
certificate of the Buyer signed by its Chief Executive Officer, its President or
any General Manager to the effect that the Buyer's representations and
warranties contained in this Agreement are true and correct in all material
respects at and as of the Closing Date and that the Buyer has performed or
complied in all material respects with all terms, covenants and provisions of
this Agreement required to be performed or complied
3.5 No Governmental or Other Proceeding. No order of any court or
Governmental Entity shall be in effect which restrains or prohibits any
transaction contemplated hereby or which would limit or otherwise affect in a
material respect the Buyer's ownership of the Buyer Stock; no suit, action, or
proceeding by any Governmental Entity or other person or entity, or
investigation or inquiry by any Governmental Entity, shall be pending or, in
the case of a governmental body, threatened, which challenges the validity or
legality, or seeks to restrain the consummation, of any transaction
contemplated hereby or which seeks to limit or otherwise affect the Buyer's
ownership of the Buyer Stock; and no written advice shall have been received
by the Buyer, the Company or their respective counsel from any Governmental
Entity, and remain in effect, stating that an action or proceeding will, if
the issuance of the Buyer Stock is consummated or sought to be consummated,
be filed seeking to invalidate or restrain the issuance of the Buyer Stock or
limit or otherwise affect the Buyer's ownership of the Buyer Stock.
3.6 Distribution Agreement. The Buyer shall have executed and
delivered to Company the Distribution Agreement, as amended, in form and
substance as attached as Exhibit I.
3.7 Market Price of Common Stock. The price per share of the
Common Stock as quoted on NASDAQ shall not, prior to the Closing Date, have
closed at a price that is less than $6.50 per share.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Buyer as follows:
4.1 Organization and Related Matters. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all necessary corporate power and
authority to execute, deliver and perform this Agreement and any related
agreements to which it is a party. Company has all necessary corporate power
and authority to own its properties and assets and to carry on its respective
business as now conducted and is duly qualified or licensed to do business as
a foreign corporation in good standing in all jurisdictions in which the
character or the location of the assets owned or leased by it or the nature of
the business conducted by it requires licensing or qualification. Schedule 4.1
correctly lists the current directors and executive officers of Company.
True, correct and complete copies of the charter documents of Company as in
effect on the date hereof and minutes of all meetings of the Shareholders, the
Board of Directors, or Committees thereof, held since January 1, 1996, have
been delivered to Buyer.
4.2 Stock.
(a) The Company's authorized capital stock consists of 40,000,000
authorized shares of Common Stock, of which as of the date hereof, 4,998,305
shares are issued and outstanding. All of the outstanding Common Stock has
been duly authorized and is validly issued, fully paid and nonassessable.
Except as described on Schedule 4.2 there are no outstanding securities
convertible into or exchangeable for Common Stock or any outstanding options,
calls or other commitments for the issuance, sale or delivery of any shares of
Common Stock or of any securities so convertible or exchangeable.
(b) Upon consummation of the transactions contemplated by this
Agreement, Buyer will acquire good and marketable title to and complete
ownership of the Buyer Stock, free and clear of any Encumbrance. The Buyer
Stock will, upon such consummation, be duly authorized, validly issued,
fully-paid and nonassessable.
(c) Except as disclosed in Schedule 4.2, the Company has no legal
obligation, absolute or contingent, to, nor is it engaged in any ongoing
negotiations or discussions with, any person or firm to sell the assets of the
Company (other than sales in the ordinary course of the Company's business),
or to issue or sell any shares of voting stock (or securities convertible into,
or granting a right to purchase, such stock) comprising more than 10% of
outstanding Common Stock, or to effect any merger, consolidation, or other
reorganization of the Company, or to enter into any agreement with respect to
any of the above, nor is it aware of any discussions taking place with
respect to the foregoing transactions.
4.3 Financial Statements; Changes; Contingencies.
(a) The Company has furnished to Buyer all of its periodic reports
to, and other filings with, the SEC since December 31, 1996, including its
annual report on Form 10-K for the fiscal year ended December 31, 1996
(collectively, the "Disclosure Materials"). The Disclosure Materials fairly
present the information purported to be set forth therein and do not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading. All of the audited
consolidated financial statements and unaudited consolidated interim
financial statements of the Company included in the Disclosure Materials have
been prepared in accordance with GAAP applied on a consistent basis for the
dates and during the periods involved (except as otherwise stated in such
financial statements or, in the case of unaudited interim statements, to the
extent they may not include footnotes or may be condensed or summary
statements), and fairly present the consolidated financial position, results
of operations and changes in financial position of the Company as of the dates
thereof and for the periods indicated therein (subject, in the case of any
unaudited interim financial statements, to normal year end audit adjustments).
The Company does not have any liability or obligation, secured or unsecured
(whether absolute, accrued, contingent or otherwise, and whether due or to
become due), which is of a nature required under generally accepted accounting
principles applied on a consistent basis to be included in a consolidated
corporate balance sheet or disclosed in the notes thereto, except such
liabilities and obligations which (i) are recorded in the most recent balance
sheet included in the Disclosure Materials, or (ii) were incurred after the
date of such balance sheet in the ordinary course of business, or (iii) are
disclosed in Schedule 4.3.
(b) Except as disclosed in the Company's financial statements
contained in its most recent Quarterly Report on Form 10-Q filed with the SEC
and included in the Disclosure Materials, and the items mentioned in Schedule
4.3, since December 31, 1996;
(i) there has been no material adverse change in the Business; and
(ii) there has not been any Loss, (whether or not covered by
insurance) adversely affecting any assets material to the Business.
4.4 Tax and Other Returns and Reports. The Company has timely
filed all required Tax Returns and has paid all Taxes due for all periods
ending on or before December 31, 1996. Adequate provision has been made in
the books and records of Company, and to the extent required by GAAP in the
financial statements referred to in Section 4.3(b) above for all Taxes whether
or not due and payable and whether or not disputed. Company has not elected
to be treated as a consenting corporation under Section 341(f) of the Code.
Schedule 4.4 lists the date or dates through which the IRS and any other
Governmental Entity have examined the United States federal income tax returns
and any other Tax Returns of Company. All required Tax Returns, including
amendments to date, have been prepared in good faith without negligence or
willful misrepresentation and are complete and accurate in all material
respects. Except as set forth in the Schedule 4.4, no Governmental Entity has,
during the past three years, examined or is in the process of examining any
Tax Returns of Company. Except as set forth on Schedule 4.4, no Governmental
Entity has proposed (tentatively or definitively), asserted or assessed or,
to the best knowledge of Company, threatened to propose or assert, any
deficiency, assessment or claim for Taxes and the Company knows of no basis
for any such delinquency assessment or claim.
4.5 Intangible Property. Schedule 4.5 lists any and all material
items of Intangible Property in which Company has an interest and the nature
of such interest. Such assets include all Permits or other rights with
respect to any of the foregoing. Company has complete rights to and ownership
of all Intangible Property required for use in connection with the Business,
the absence of which would have a material adverse effect on the Business.
Except as disclosed on Schedule 4.5, Company does not use any Intangible
Property by consent of any other person and is not required to and does not
make any payments to others with respect thereto. Company has in all material
respects performed all obligations required to be performed by it, and is not
in default in any material respect under any Contract relating to any of the
foregoing. Company has not received any notice to the effect (or is otherwise
aware) that the Intangible Property or any use by Company of any such property
conflicts with or allegedly conflicts with or infringes the rights of any
Person.
4.6 Authorization. The execution, delivery and performance of
this Agreement and any related agreements by the Company has been duly and
validly authorized by the Board of Directors of Company and by all other
necessary corporate action on the part of Company. This Agreement and any
related agreements constitute the legally valid and binding obligation of
Company, enforceable against Company in accordance with its terms except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws and equitable principles relating to or
limiting creditors rights generally.
4.7 No Conflicts. The execution, delivery and performance of this
Agreement by Company and the execution, delivery and performance of any
related agreements or contemplated transactions by Company will not violate,
or constitute a breach or default (whether upon lapse of time and/or the
occurrence of any act or event or otherwise) under, the charter documents or
by-laws of Company, any Law to which Company is subject or any Contract to
which Company is a party that is material to the financial condition, results
of operations or conduct of the Business.
4.8 Governmental Approvals. Except for matters identified in
Schedule 4.8, the execution and delivery of this Agreement and the performance
of this Agreement and any related or contemplated transactions by Company will
not require filing or registration with, or the issuance of any Permit by, any
other third party or Governmental Entity.
4.9 Legal Matters. Except as disclosed in the Disclosure Materials
or in Schedule 4.9; (i) there is no Order or Action pending, or, to the best
knowledge of Company, threatened, against or affecting Company or any of its
properties or assets that individually or when aggregated with one or more
other Orders or Actions has or if determined adversely to the interest of the
Company might reasonably be expected to have a material adverse effect on
Company, the Business, on Company's ability to perform this Agreement, or on
any aspect of the transactions contemplated by this Agreement; and (ii) the
Company is not in violation of any Laws, the effect of which violation would
be materially adverse to the Business.
4.10 Insurance. There is in full force and effect insurance
coverage on the assets, properties, premises, operations and personnel of
Company in such amounts and against such risks and losses as in the opinion of
Company is adequate in all material respects for the business engaged in by
Company. The Company has delivered or made available to Buyer true copies of
all of the insurance policies maintained by or for the benefit of the Company
which are in effect. All such insurance policies are in full force and effect,
and the Company has not received a notification with respect to any material
policies of their cancellation or that they will not be renewed or that the
insurance carrier insuring same has placed by condition on renewal or
cancellation which would make the renewal or cancellation onerous.
4.11 Permits. Company holds all Permits that are required by any
Governmental Entity to permit it to conduct the business as now conducted, and
all such Permits are valid and in full force and effect and will remain so
upon consummation of the transactions contemplated by this Agreement. No
suspension, cancellation or termination of any of such Permits is threatened
or, to the best knowledge of Company, imminent.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Company as follows:
5.1 Organization and Related Matters. Buyer is a corporation duly
organized and validly existing under the laws of Japan. Buyer has the
necessary corporate power and authority to execute, deliver and perform this
Agreement and any related agreements to which it is a party.
5.2 Authorization. The execution, delivery and performance of this
Agreement and any related agreements by Buyer has been duly and validly
authorized by the Board of Directors of Buyer and by all other necessary
corporate action on the part of Buyer. This Agreement constitutes the legal,
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws and equitable
principles relating to or limiting creditors' rights generally.
5.3 No Conflicts. The execution, delivery and performance of this
Agreement and any related agreements or contemplated transactions by Buyer
will not violate or constitute a breach or default (whether upon lapse of time
and/or the occurrence of any act or event or otherwise) under the charter
documents of Buyer, any Law to which Buyer is subject or any Contract to which
Buyer is a party that is material to the financial condition, results of
operations or conduct of the business of Buyer.
5.4 Investment Purpose. Buyer is purchasing the Buyer Stock for
investment purposes only, and is an "accredited investor" for purposes of
Regulation D under the Securities Act.
ARTICLE VI
COVENANTS OF THE COMPANY
6.1 Other Agreements. On or prior to the Closing Date the Company
shall not enter into any agreement or understanding with any person or entity
other than the Buyer or a representative thereof with respect to the issuance
or sale of any Common Stock or other capital stock of the Company (or
securities convertible into, or granting a right to purchase, such stock)
comprising more than 5% of the outstanding Common Stock, the merger or
acquisition of the Company or the acquisition of the capital stock of any
Subsidiary, or any or all of their material assets, or effect any such
transactions. On or prior to the Closing, should Company receive an
unsolicited offer for such transaction, or obtain information that such an
offer is likely to be made, Company shall provide Buyer with any information
which Company provides to its Board of Directors with respect thereto,
approximately at the same time such information is provided to its Board of
Directors.
6.2 Advise of Changes. On or before the Closing, the Company
shall promptly advise the Buyer in writing of (i) any event known to the
Company occurring subsequent to the date of this Agreement which would render
any representation or warranty of the Company contained in this Agreement, if
made on or as of the date of such event or the date of the Closing, untrue or
inaccurate in any material respect (other than an event so affecting a
representation or warranty which is expressly limited to a state of facts
existing at a time prior to the occurrence of such event) or (ii) any material
adverse change in the Company's Business.
6.3 Access to Books and Records. Until the Closing, the Company
shall afford to the Buyer and its accountants, attorneys and agents such
information regarding the Company and access to their books and records and
other documents as Buyer may reasonably request, subject to mutually
acceptable confidentiality requirements.
6.4 Distribution Agreement. The Company agrees to execute and
deliver to the Buyer the Distribution Agreement on or prior to the Closing
Date.
6.5 Registration Rights.
(a) If, at any time following the two year period commencing on
the Closing Date and until the tenth (10th) anniversary of the Closing Date,
the Company proposes to issue, in a firmly underwritten public offering, any
shares of its Common Stock, Company shall, at least 30 days prior to the
filing of any registration statement with respect thereto under the Securities
Act, provide written notice to Buyer of its intention to effect such
registration. If, within 20 days after receipt of such notice, Buyer submits
a written request to Company specifying the amount of Common Stock that Buyer
proposes to sell, Company shall include the shares specified in such request
in such offering; provided that the number of shares of Buyer Stock being
included in such offering may be reduced on a pro rata basis to the extent
that any of Ed Funk, Ingeborg Funk, Dan Funk, the Funk Trust or any of the
officers or directors of the Company have also elected to participate in such
offering and have had their desired shares reduced.
(b) Notwithstanding the foregoing, with respect to any inclusion
of the Buyer Stock in a registration pursuant to paragraph (a), Company will
pay all expenses incident to its performance of or compliance with this
Section including, without limitation, all registration and filing fees, fees
and expenses of compliance with securities or blue sky laws, printing expenses,
messenger, telephone and delivery expenses, and fees and disbursements of its
counsel and independent certified public accountants. Buyer will be
responsible for any stock transfer taxes, broker's fees, all internal
management, personnel and administrative costs of Buyer, and the fees and
expenses, of its attorneys, if any, incurred by it in connection therewith.
6.6 Distributions, Etc. The Company agrees that it will not
declare or pay any dividend or make any other distribution as of a record date
prior to the Closing in respect of its capital stock or prior to the Closing
change its or Subsidiary's capital structure.
6.7 Operations in Ordinary Course. Until the Closing, the Company
agrees to conduct its operations in a prudent manner and in the ordinary course
of business, consistent with its past practices.
ARTICLE VII
COVENANTS OF THE BUYER
7.1 Advise of Changes. On the Closing, the Buyer will promptly
advise the Company in writing of any event known to the Buyer occurring
subsequent to the date of this Agreement which would render any representation
or warranty of the Buyer contained in this Agreement, if made on or as of the
date of such event or the date of the Closing, untrue or inaccurate in any
material respect (other than an event so affecting a representation or
warranty which is expressly limited to a state of facts existing at a time
prior to the occurrence of such event).
7.2 Standstill. The Buyer agrees that it will not (i) acquire
additional shares of Common Stock or securities convertible into Common Stock
without the prior written consent of the Company; (ii) solicit proxies from
other shareholders of Company in opposition to any recommendation of the Board
of Directors of Company; or (iii) initiate or participate in any group which
proposes, without the support of the Board of Directors of Company, any change
in control of Company, whether by tender offer, merger or otherwise.
7.3 Restrictions on Transfer. Buyer shall not transfer any of the
Buyer Stock for a period of two years from the Closing Date. From the second
anniversary of the Closing Date and for a period of three years thereafter,
Company shall have the right of first refusal, exercisable for a period of
sixty (60) days after receipt of notice of a proposed transfer of Buyer Stock,
to purchase any shares proposed to be transferred.
7.4 Distribution Agreement. The Buyer agrees to execute and
deliver to the Company the Distribution Agreement on or prior to the Closing
Date.
ARTICLE VIII
OTHER AGREEMENTS
8.1 Payment of Certain Expenses. Except as provided in Section
6.5, with respect to registration rights, the Company and Buyer shall be
liable for their own costs and expenses incurred in connection with this
Agreement including the fees of their respective advisors.
8.2 Public Announcements. The Buyer and the Company agree that
they will advise and confer with each other prior to the issuance of any
reports, statements or releases pertaining to this Agreement or any transaction
contemplated hereby.
8.3 Confidentiality. The Buyer and the Company will, and will
cause each of their respective affiliates to, maintain the confidentiality of
any and all confidential information received from the other in connection
with the transactions contemplated by this Agreement, except as may otherwise
be required by any applicable law or any court or governmental agency. If
this Agreement is terminated (as provided in Section 10.1), then upon notice
by the Company to the Buyer of those confidential documents of the Company
which it wishes returned, the Buyer shall within 30 days of such notice return
such documents and any copies thereof to the Company.
8.4 Necessary Consents; Preparation of Certain Filings and
Documents.
(a) Each party will use its best efforts to obtain as soon as
practicable any approvals or consents of any Governmental Entities or third
parties necessary in order to consummate the transactions contemplated by this
Agreement.
(b) Each party agrees to cooperate with the other with respect to
any governmental proceedings relating to this Agreement.
8.5 Voting Agreement. Buyer agrees not to vote its Buyer Stock
against the wishes of the Board of Directors of Company in connection with any
change of control of Company. Change of control for this purpose will mean
the acquisition of a majority of the voting securities or assets of Company by
a person or group of such persons joined together for the purpose of such
acquisition. Unless earlier terminated pursuant to Section 8.6 below, the
restrictions of this Section 8.5 will run until the earlier of (i) ten (10)
years from the date hereof, or (ii) termination or expiration of the
Distribution Agreement.
8.6 Termination of Restrictions. Notwithstanding any other
limitations set forth herein, the restrictions contained in Section 7.2,
Section 7.3 and Section 8.5 will in any event terminate immediately (i) upon
the expiration or termination of the Distribution Agreement, for any reason,
or (ii) should Buyer at any time beneficially own less than 3.25% of the issued
and outstanding Common Stock of Company.
ARTICLE IX
NATURE AND SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNITIES
9.1 Nature of Representations and Warranties. All statements
contained in the Schedules hereto or in any certificate or instrument of
conveyance delivered by or on behalf of the parties pursuant to this Agreement
or in connection with the transactions contemplated hereby shall be deemed
representations and warranties by the parties hereunder.
9.2 Survival of Representations, Warranties, etc. All
representations and warranties of the parties made in this Agreement or as
provided herein shall survive the Closing Date for a period of two (2) years.
9.3 Indemnification.
(a) The Company will indemnify, to the extent permitted by Law,
the Buyer, its officers and directors and each Person who controls the Buyer
(within the meaning of the Securities Act or the Exchange Act) against any
Losses caused by, resulting from or arising from (i) any inaccuracy in or
breach or nonperformance of any of the representations, warranties, covenants
or agreements made by the Company in or pursuant to this Agreement; or (ii) any
untrue or alleged untrue statement of material fact contained in any
registration statement or prospectus (or any amendment or supplement thereto)
of the Company, or any exhibits or materials incorporated by reference
therein, filed with the SEC, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are caused by or
contained in any information furnished in writing to the Company by the Buyer
expressly for use therein.
(b) In connection with the registration statements or prospectuses
referred to in Section 6.5, the Buyer will furnish to the Company in writing
such information and affidavits as the Company reasonably requests for use in
connection with any such registration. The Buyer will indemnify the Company,
its directors and officers and each Person who controls the Company within the
meaning of the Securities Act or the Exchange Act) against any Losses caused
by, resulting from or arising from (i) any inaccuracy in or breach or
nonperformance of any of the representations, warranties, covenants or
agreements made by the Buyer in or pursuant to this Agreement; or (ii) any
untrue or alleged untrue statement of material fact or any omission or alleged
omission of a material fact required to be stated in such registration
statements or prospectuses or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement or omission is
caused by or contained in any information or affidavit so furnished in writing
by the Buyer.
9.4 Procedure. Any person entitled to indemnification under
Section 9.3 will (i) give prompt written notice to the indemnifying party of
any claim with respect to which it seeks indemnification and (ii) unless in
such indemnified party's reasonable judgment a conflict of interest between
such indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party. If such defense is
assumed, the indemnifying party will not be subject to any liability for any
settlement made by the indemnified party without its consent (but such consent
will not be unreasonably withheld). An indemnifying party who is not entitled
to, or elects not to, assume the defense of a claim will not be obligated to
pay the fees and expenses of more than one counsel for all parties indemnified
by such indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist between
such indemnified party and any other of such indemnified parties with respect
to such claim.
9.5 Survival. The indemnification obligations set forth in Section
9.3 shall survive the Closing Date.
ARTICLE X
TERMINATION AND ABANDONMENT
10.1 Termination and Abandonment. This Agreement may be terminated
(i) by the mutual consent of the Buyer and the Company; (ii) by the Buyer if
there has been a material misrepresentation or material breach on the part of
the Company in the representations, warranties and covenants of the Company set
forth herein, or if there has been any material failure on the part of the
Company to comply with its obligations hereunder; (iii) by the Company if
there has been a material misrepresentation or material breach on the part of
the Buyer in the representations, warranties and covenants of the Buyer set
forth herein, or if there has been any material failure on the part of the
Buyer to comply with its obligations hereunder; (iv) by the Buyer if it should
reasonably conclude that the approvals contemplated in Section 2.3 will not be
forthcoming or (v) by the Company if it should reasonably conclude that the
approvals contemplated in Section 3.3 will not be forthcoming.
The power of termination provided for by this Section 10.1 may be
exercised by the Buyer or the Company by written notice thereof, given to the
other. If this Agreement is terminated in accordance with this Section 10.1,
the transactions contemplated by this Agreement shall be abandoned without
further action by the Buyer or the Company.
10.2 Liability Upon Termination. In the event of termination and
abandonment of the transactions contemplated by this Agreement pursuant to
Section 10.1 (i), 10.1 (iv) or 10.1 (v), neither the Buyer nor the Company
shall have any liability or further obligation to the other except as provided
in Sections 8.1 and 8.3.
ARTICLE XI
GENERAL
11.1 Amendments; Waivers. This Agreement and any Schedules or
Exhibits attached hereto may be amended only by agreement in writing of all
parties. No waiver of any provision nor consent to any exception to the terms
of this Agreement or any agreement contemplated hereby shall be effective
unless in writing and signed by the party to be bound and then only to the
specific purpose, extent and instance so provided.
11.2 Schedules; Exhibits; Integration. Each Schedule and Exhibit
delivered pursuant to the terms of this Agreement shall be in writing and
shall constitute a part of this Agreement, although Schedules need not be
attached to each copy of this Agreement. This Agreement, together with such
Schedules and Exhibits, constitutes the entire agreement among the parties
pertaining to the subject matter hereof and supersedes all prior agreements
and understandings of the parties in connection therewith.
11.3 Best Efforts; Further Assurances. Each party will use its
best efforts to cause all conditions to its obligations and hereunder to be
timely satisfied and to perform and fulfill all obligations on its part to be
performed and fulfilled under this Agreement, to the end that the transactions
contemplated by this Agreement shall be effected substantially in accordance
with its terms as soon as practicable. The parties shall cooperate with each
other in such actions and in securing requisite Approvals. Each party shall
execute and deliver such further certificates, agreements and other documents
and take such other actions as may be necessary or appropriate to consummate
or implement the transactions contemplated hereby or to evidence such events
or matters.
11.4 Governing Law and Forum. This Agreement shall be deemed to
have been executed and entered into in the State of Ohio, U.S.A., and this
Agreement, and its formation, operation and performance shall be governed,
construed, performed and enforced in accordance with the substantive laws of
the State of Ohio, U.S.A. In the event there arises a dispute between the
parties as to the performance or interpretation of any of the provisions of
this Agreement, or as to matters related to but not covered by this Agreement,
the parties shall first attempt to find a mutually agreeable solution by
consultation in good faith. If the matter has not been resolved within thirty
(30) days of their first meeting to resolve a dispute, then any such dispute
shall be determined finally by arbitration in accordance with the International
Arbitration Rules of the American Arbitration Association. The place of
arbitration shall be Columbus, Ohio, U.S.A. if initiated and brought by Buyer,
or Tokyo, Japan ifinitiated and brought by Company and the language of the
arbitration shall be English. The arbitral tribunal shall consist of a single
arbitrator. If the parties shall not have agreed upon an arbitrator within
thirty (30) days of the notice of arbitration, then the Administrator of the
American Arbitration Association shall appoint one. The unsuccessful party in
an arbitration shall pay and discharge all reasonable costs and expenses
(including reasonable attorneys' fees) which are incurred by the other party in
enforcing this Agreement. Judgment upon the award of the arbitrator may be
entered in any court having jurisdiction thereof. The parties acknowledge that
this Agreement and any award rendered pursuant to it shall be governed by the
1958 United Nations Convention on the Recognition and Enforcement of Foreign
Arbitral Awards. Pending the submission to the arbitrator and thereafter until
the single arbitrator renders the award, the parties shall, except in the event
of termination, continue to perform all their obligations under this Agreement
without prejudice to a final adjustment in accordance with the award. Nothing
herein shall prevent any party from seeking injunctive relief from any court of
competent jurisdiction, in order to preserve assets, prevent irreparable harm
or as otherwise appropriate.
11.5 No Assignment. Except in connection with a transfer of all or
a portion of the Buyer Stock to Buyer, or as otherwise agreed, neither this
Agreement nor any rights or obligations under it are assignable.
11.6 Headings. The descriptive headings of the Articles, Sections
and subsections of this Agreement are for convenience only and do not
constitute a part of this Agreement.
11.7 Counterparts. This Agreement and any amendment hereto or any
other agreement (or document) delivered pursuant hereto may be executed in one
or more counterparts and by different parties in separate counterparts. All
of such counterparts shall constitute one and the same agreement (or other
document) and shall become effective (unless otherwise provided therein) when
one or more counterparts have been signed by each party and delivered (by
telecopier, mail or otherwise) to the other party.
11.8 Notices. Any notice or other communication hereunder must be
given in writing and (a) delivered in person, (b) transmitted by telex, telefax
or telecommunications mechanism provided that any notice so given is also
mailed as provided in clause (c) or (c) mailed by certified or registered mail,
postage prepaid, receipt requested as follows:
If to Buyer, addressed to:
Century Medical, Inc.
1-6-4 Ohsaki
Shinagawa-ku, Tokyo 141
Japan
Attn.: Mr. Mitsunari Suzuki
President
Tel: 81-3-3491-0161
Fax: 81-3-3491-0737
If to Company, addressed to:
Cross Medical Products, Inc.
5160 - A Blazer Memorial Parkway
Dublin, Ohio 43017-1339
Attn: Mr. Paul A. Miller
Vice President and
Chief Financial Officer
Tel: 1-617-718-0530
Fax: 1-614-718-0540
or to such other address or to such other person as either party shall have
last designated by such notice to the other party. Each such notice or other
communication shall be effective (i) if given by telecommunication, when
transmitted to the applicable number so specified in (or pursuant to) this
Section 11.8 and an appropriate answerback is received, (ii) if given by mail,
three days after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iii) if given by any other means,
when actually received at such address.
11.9 Remedies; Waiver. To the extent permitted by Law, all rights
and remedies existing under this Agreement and any related agreements or
documents are cumulative to and not exclusive of, any rights or remedies
otherwise available under applicable Law. No failure on the part of any party
to exercise or delay in exercising any right hereunder shall be deemed a waiver
thereof, nor shall any single or partial exercise preclude any further or other
exercise of such or any other right.
11.10 Attorney's Fees. In the event of any Action by any party
arising under or out of, in connection with or in respect of, including any
participation in bankruptcy proceedings to enforce against a party a right or
claim in such proceedings, the prevailing party shall be entitled to reasonable
attorney's fees, costs and expenses incurred in such Action. Attorney's fees
incurred in enforcing any judgement in respect of this Agreement are
recoverable as a separate item. The preceding parties intend that the sentence
be severable from the other provisions of this Agreement, survive any judgment
and, to the maximum extent permitted by law, not be deemed merged into such
judgment.
11.11 Knowledge Convention. Whenever any statement herein or in any
schedule, exhibit, certificate or other documents delivered to any party
pursuant to this Agreement is made "to its knowledge" or "to its best
knowledge" or words of similar intent or effect of any party or its
representative, such person shall make such statement only after conducting a
diligent investigation of the subject matter thereof, and each statement shall
be deemed to include a representation that such investigation has been
conducted.
11.12 Representation By Counsel;Interpretation. Buyer and Company
each acknowledge that each party to this Agreement has been represented by
counsel in connection with this Agreement and the transactions contemplated
by this Agreement. Accordingly, any rule of Law, or any legal decision that
would require interpretation of any claimed ambiguities in this Agreement
against the party that drafted it has no application and is expressly waived.
The provisions of this Agreement shall be interpreted in a reasonable manner
to effect the intent of Buyer and Company.
11.13 Specific Performance. Buyer and Company each acknowledge that,
in view of the uniqueness of the Business and the transactions contemplated by
this Agreement and related agreements, each party would not have an adequate
remedy at law for money damages in the event that this Agreement has not been
performed in accordance with its terms, and therefore agrees that the other
party shall be entitled to specific enforcement of the terms hereof in addition
to any other remedy to which it may be entitled, at law or in equity.
11.14 Severability. If any provision of this Agreement is determined
to be invalid, illegal or unenforceable by any Governmental Entity, the
remaining provisions of this Agreement to the extent permitted by Law shall
remain in full force and effect provided that the essential terms and
conditions of this Agreement for both parties remain valid, binding and
enforceable, and that the economic and legal substance of the transactions
contemplated is not affected in any manner materially adverse to any party.
In event of any such determination, the parties agree to negotiate in good
faith to modify this Agreement to fulfill as closely as possible the original
intents and purposes hereof. To the extent permitted by Law, the parties
hereby to the same extent waive any provision of Law that renders any provision
hereof prohibited or unenforceable in any respect.
* * * * * * *
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized officers as of the day and
year first above written.
CENTURY MEDICAL, INC.
/S/ Mitsunari Suzuki
-------------------------------
By: Mitsunari Suzuki
Its: President and CFO
CROSS MEDICAL PRODUCTS, INC.
/S/ Joseph A. Mussey
-------------------------------
By: Joseph A. Mussey
Its: President
EXHIBIT 99
Cross Medical Completes $2 Million Private Placement
of Stock to its Japanese Distributor
Contact:
Paul A. Miller, Vice President & CFO
Cross Medical Products, Inc.
(614) 718-0530
DUBLIN, Ohio (August 25, 1997) - Cross Medical Products, Inc. (Cross) (NASDAQ:
CRSS) and Century Medical, Inc. (Century), a Japanese corporation, announced
today Century has purchased 210,748 shares of Cross Medical Products, Inc.
Common Stock at a price of $9.49 per share totaling $2 million. With the
purchase Century will own approximately 4% of the 5,209,053 outstanding shares
of Cross. The proceeds will be used for general working capital.
Century has been an exclusive distributor for Cross' spinal implant systems in
Japan since entering into a long term distribution agreement in 1994. "We are
pleased to have a partner the quality of Century not only distributing our
products but making a significant financial investment in Cross. This certainly
strengthens our growing relationship with Century", said Joseph A. Mussey,
President and Chief Executive Officer of Cross.
Mr. Mistunari Suzuki, President and CEO of Century Medical said "We have been
very pleased with our relationship with Cross Medical. This alliance further
solidifies our commitment to the spinal surgery market in Japan and in building
a long term relationship with Cross Medical."
The shares purchased by Century contain certain transfer restrictions. Century
has agreed not to transfer the shares for two years and Cross retains the
option to repurchase the shares in the event Century desires to transfer the
shares after the initial two year period.
This press release includes forward looking statements in the second paragraph.
These forward looking statements involve risk and uncertainties detailed in the
Company's Annual Report and Form 10-K for the year ended December 31, 1996, all
of which factors and risks may cause actual results to differ materially from
management's current expectations.
Cross Medial Products, Inc. is a world-wide supplier of spinal implant devices
used to treat degenerative conditions and deformities of the spine.
Century Medical, Inc. is headquartered in Tokyo with sales offices in Sapporo,
Sendai, Nagoya, Osaka and Fukuoka. Over the past two decades, Century Medical
has steadily expanded its medical products distribution business in Japan.
Century Medical's parent company, ITOCHU Corporation, last year reported
revenues of $155 billion. ITOCHU is a general trading company also
headquartered in Tokyo with world-wide operations that range from distribution
of raw materials to involvement in a variety of manufacturing and service
industries.
