EXHIBIT 2.1
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ASSET PURCHASE AGREEMENT
BY AND AMONG
XXXXXX CORPORATION,
HORIZON MEDICAL PRODUCTS, INC.
AND
ARROW INTERNATIONAL, INC.
DATED: AUGUST 23, 2002
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TABLE OF CONTENTS
Article I. DEFINITIONS............................................................................................1
Article II. SALE OF ASSETS........................................................................................7
2.1 Sale of Assets; Assumption of Liabilities...............................................................7
2.2 Purchase Price; Payment...............................................................................10
2.3 Closing Date Net Assets Value: Definitive Purchase Price Adjustment...................................11
2.4 Conveyance and Transfer, Assumption....................................................................14
2.5 Closing Date...........................................................................................14
2.6 Allocation of Purchase Price...........................................................................15
Article III. REPRESENTATIONS AND WARRANTIES OF SELLER AND HMP....................................................15
3.1 Authority..............................................................................................15
3.2 Title to Assets........................................................................................15
3.3 Existence, Good Standing and Authority.................................................................15
3.4 Financial Statements...................................................................................16
3.5 No Material Changes....................................................................................16
3.6 Books and Records......................................................................................17
3.7 Real Property and Leases...............................................................................17
3.8 Material Contracts.....................................................................................18
3.9 No Conflict............................................................................................19
3.10 Litigation.............................................................................................20
3.11 Tax Returns and Payments...............................................................................20
3.12 Liabilities............................................................................................21
3.13 Insurance..............................................................................................21
3.14 Intellectual Property..................................................................................21
3.15 Compliance with Laws; Governmental Authorizations......................................................21
3.16 Employees..............................................................................................21
3.17 Labor Relations........................................................................................22
3.18 Employee Benefit Plans.................................................................................22
3.19 Broker's or Finder's Fees..............................................................................22
3.20 Environmental and Health and Safety Matters............................................................22
3.21 Relationships with Related Persons.....................................................................23
3.22 Inventories............................................................................................23
3.23 Customers and Suppliers................................................................................24
3.24 Seller Products........................................................................................24
3.25 Accuracy...............................................................................................24
Article IV. REPRESENTATIONS OF PURCHASER.........................................................................24
4.1 Existence and Good Standing of Purchaser...............................................................24
4.2 Power and Authority....................................................................................24
4.3 Broker's or Finder's Fees..............................................................................25
4.4 No Conflict............................................................................................25
4.5 Litigation.............................................................................................25
Article V. PRE-CLOSING COVENANTS.................................................................................25
5.1 Full Access............................................................................................25
5.2 Reasonable Best Efforts................................................................................26
5.3 Notices, Consents and Approvals........................................................................26
5.4 Operation of the Business..............................................................................26
5.5 Notice of Developments.................................................................................28
5.6 Exclusivity............................................................................................28
5.7 Cooperation............................................................................................29
5.8 Prior Knowledge........................................................................................29
5.9 Publicity..............................................................................................29
5.10 No Solicitation by Purchaser...........................................................................30
Article VI. POST-CLOSING COVENANTS...............................................................................30
6.1 Cooperation............................................................................................30
6.2 Employees..............................................................................................30
6.3 Non-Competition........................................................................................31
6.4 Use of Name; Change of Name............................................................................32
6.5 Confidentiality........................................................................................32
6.6 Retained Liabilities; Assumed Liabilities..............................................................32
6.7 Tax Matters............................................................................................33
6.8 Books and Records......................................................................................33
6.9 Collection of Accounts.................................................................................33
6.10 Supplemental Disclosure................................................................................33
6.11 Submission of Purchase Orders..........................................................................33
6.12 Consent to Assignment of Customer Contract.............................................................33
Article VII. CONDITIONS TO PURCHASER'S OBLIGATIONS...............................................................34
7.1 Truth of Representations and Warranties................................................................34
7.2 Covenants and Agreements of Seller.....................................................................34
7.3 Good Standing and Tax Certificates.....................................................................34
7.4 Secretary's Certificate................................................................................34
7.5 No Material Adverse Change.............................................................................34
7.6 No Litigation Threatened...............................................................................34
7.7 Approvals, Filings.....................................................................................34
7.8 Opinion of Counsel.....................................................................................35
7.9 Lien Releases..........................................................................................35
7.10 Sale and Assignment Documents, Etc.....................................................................35
7.11 Lock Box Agreement with LaSalle........................................................................35
Article VIII. CONDITIONS TO SELLER'S OBLIGATIONS.................................................................35
8.1 Truth of Representations and Warranties................................................................35
8.2 Covenants and Agreements of Purchaser..................................................................36
8.3 Good Standing Certificates.............................................................................36
8.4 Secretary's Certificate................................................................................36
8.5 No Litigation Threatened...............................................................................36
8.6 Opinion of Counsel.....................................................................................36
8.7 Deliveries.............................................................................................36
Article IX. INDEMNIFICATION, REMEDIES............................................................................36
9.1 Survival; Right to Indemnification Not Affected by Investigation.......................................36
9.2 Indemnification by Seller..............................................................................37
9.3 Indemnification by Purchaser...........................................................................37
9.4 Defense of Third Party Actions.........................................................................38
9.5 Limitations on Seller's Indemnification................................................................39
9.6 Procedure for Indemnification--Other Claims............................................................39
9.7 Claims Period..........................................................................................39
9.8 Exclusivity............................................................................................40
9.9 Set-off................................................................................................40
Article X. MISCELLANEOUS.........................................................................................40
10.1 Termination............................................................................................40
10.2 Procedure and Effect of Termination....................................................................41
10.3 Arbitration............................................................................................42
10.4 Expenses...............................................................................................42
10.5 Governing Law..........................................................................................42
10.6 Enforcement; Remedies..................................................................................42
10.7 Investigation by Purchaser.............................................................................42
10.8 Captions; References...................................................................................43
10.9 Variation in Pronouns..................................................................................43
10.10 Notices.............................................................................................43
10.11 Parties in Interest.................................................................................44
10.12 Counterparts........................................................................................44
10.13 Entire Agreement....................................................................................44
10.14 Amendments..........................................................................................45
10.15 Severability........................................................................................45
10.16 Third Party Beneficiaries...........................................................................45
10.17 Joint Preparation...................................................................................45
10.18 Waiver..............................................................................................45
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is entered into as of
August 23, 2002, by and among XXXXXX CORPORATION, a New York corporation
("Seller"), HORIZON MEDICAL PRODUCTS, INC., a Georgia corporation ("HMP"), and
ARROW INTERNATIONAL, INC., a Pennsylvania corporation ("Purchaser").
WITNESSETH:
WHEREAS, HMP is the owner of all of the outstanding shares of capital
stock of Seller;
WHEREAS, Seller is engaged in the business of the sale and distribution
of specialty medical products and devices, representing multiple critical care
and intera-operative manufacturers, primarily on an exclusive basis within
certain designated territories (the "Business");
WHEREAS, Seller and HMP have agreed that Seller shall sell, and
Purchaser has agreed that Purchaser shall purchase, certain of the assets of
Seller under the terms and conditions contained herein;
NOW, THEREFORE, in consideration of the premises and mutual
representations, warranties, covenants and agreements of the parties hereinafter
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties hereby agree as follows:
ARTICLE I. DEFINITIONS
"Acquisition Documents" means this Agreement, all Exhibits and
Schedules hereto, and all agreements contemplated herein.
"Affiliate" is used in this Agreement to indicate a relationship with
one or more persons and when used shall mean any corporation, limited liability
company or other organization of which such person is an executive officer,
manager, director, member or partner or is directly or indirectly the beneficial
owner of five percent (5%) or more of any class of equity securities or
financial interest therein; or person that directly, or indirectly through one
or more intermediaries, controls or is controlled by, or is under common control
with, the person specified.
"Agreement" has the meaning set forth in the preamble of this
Agreement.
"Assumed Contracts" has the meaning set forth in Section 2.1(a)(vi).
"Assumed Employees" has the meaning set forth in Section 6.2(c).
"Assumed Liabilities" has the meaning set forth in Section 2.1(c)(i).
"Balance Sheets" has the meaning set forth in Section 3.4.
"Base Price" has the meaning set forth in Section 2.2(a)(i).
"Business" has the meaning set forth in the recitals.
"Challenge Notice" has the meaning set forth in Section 2.3(c).
"Claim" has the meaning set forth in Section 2.1(c)(ii).
"Claim Notice" has the meaning set forth in Section 9.6.
"Claims Period" means the period during which a claim for
indemnification may be asserted under this Agreement by an Indemnified Person.
"Closing" has the meaning set forth in Section 2.5.
"Closing Date" has the meaning set forth in Section 2.5.
"Closing Date Net Assets Value" has the meaning set forth in Section
2.2(a)(ii).
"Closing Date Payment" has the meaning set forth in Section 2.2(c).
"Code" means the Internal Revenue Code of 1986 or any successor law,
and regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"Competing Business" has the meaning set forth in Section 3.21.
"Confidentiality Agreement" means the confidentiality agreement between
HMP and Purchaser, dated as of June 26, 2002.
"Consenting Supplier" has the meaning set forth in Section 2.3(f).
"Contract" means any written agreement, contract, instrument,
obligation, promise, commitment or undertaking that is legally binding.
"Designated Suppliers" means those Suppliers set forth on Exhibit F and
"Designated Supplier" means any one of such Suppliers.
"Employee Benefit Plans" has the meaning set forth in Section 3.18(a).
"Encumbrance" means any material charge, claim, community property
interest, condition, covenant, equitable interest (including any equitable
servitude), lien, option, pledge, security interest, right of first refusal,
defect in title, or restriction of any kind, including any material restriction
on use, voting, transfer, receipt of income, or exercise of any other attribute
of ownership.
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"Environmental and Safety Requirements" means all federal, state,
provincial and municipal statutes, regulations, common law and similar
provisions having force or effect of law, all orders, permits, licenses and
approvals with respect to environmental, public health and safety, occupational
health and safety, product liability and transportation including all such
standards of conduct or bases of obligations relating to the presence, use,
production, generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, control or
cleanup of any contaminant, waste, hazardous materials, substances, chemical
substances or mixtures, pesticides, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise or radiation.
"Equipment" has the meaning set forth in Section 2.1(a)(iii).
"ERISA" means the Employee Retirement Income Security Act of 1974 or
any successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Escrow Agent" has the meaning set forth in Section 2.2(c)(i).
"Escrow Agreement" has the meaning set forth in Section 2.2(c)(i).
"Escrow Amount" has the meaning set forth in Section 2.2(c)(i).
"Estimated Closing Date Net Assets Value" has the meaning set forth in
Section 2.2(b).
"Excluded Assets" has the meaning set forth in Section 2.1(b).
"Final Inventory Schedule" has the meaning set forth in Section 2.3(b).
"Financial Statements" has the meaning set forth in Section 3.4.
"GAAP" means generally accepted United States accounting principles,
applied on a basis consistent with past practices.
"Governmental Authorization" means any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"Governmental Body" means any federal, state, provincial, local,
municipal, foreign, or other government or jurisdiction (including any
governmental agency, branch, department, official, or entity and any court or
other tribunal).
"HMP" has the meaning set forth in the preamble of this Agreement.
"Indemnification Basket" has the meaning set forth in Section 9.5(a).
"Indemnification Cap" has the meaning set forth in Section 9.5(b).
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"Indemnified Person" means the Person entitled to be indemnified under
Article IX of this Agreement.
"Indemnifying Person" means any Person obligated to indemnify another
person under Article IX of this Agreement.
"Insurance Policies" has the meaning set forth in Section 3.13.
"Intellectual Property Rights" has the meaning set forth in Section
3.14.
"Inventory" has the meaning set forth in Section 2.1(a)(ii).
"Inventory Bring-Down" has the meaning set forth in Section 2.3(b).
"IRS" means the Internal Revenue Service.
"Just In Time Accruals" means Seller's accrued liability for rebates
owed to just in time providers, computed in accordance with the practices and
methodologies historically applied by Seller.
"Knowledge" means (i) with respect to Purchaser, any one of the
following individuals has actual personal knowledge of the matter of fact in
question: Xxxxxx Xxxxxx, Xx., Xxxx Xxxxxxxx, or Xxxxxxxxx X. Xxxx, (ii) with
respect to Seller, any one of the following individuals has actual personal
knowledge of the matter of fact in question: Xxxxxxxx X. Xxxx, Xxxxxxx X.
Xxxxxxxx, Xx., Xxxxx Xxxxxxxxx, Xxxxx Xxxxxxxx or Xxxx Xxxxxxxx, and (iii) with
respect to HMP, any one of the following individuals has actual personal
knowledge of the matter of fact in question: Xxxxxxxx X. Xxxx, Xxxxxxx X.
Xxxxxxxx, Xx., Xxxxx Xxxxxxxxx, Xxxxx Xxxxxxxx or Xxxx Xxxxxxxx.
"Large Customers" has the meaning set forth in Section 3.23.
"Legal Requirement" means any federal, state, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute, or
treaty.
"Material Adverse Effect" means any event, condition or change which
materially and adversely affects or may materially and adversely affect the
business, financial condition, assets or results of operations of Seller;
provided, however, that a Material Adverse Effect shall not include any event,
change in or effect upon Seller, the Business or the Purchased Assets, directly
or indirectly, arising out of, attributable to or as a consequence of: (a)
conditions, events or circumstances generally affecting the medical device
distribution industry or the overall economy; or (b) the public announcement of
either the execution of this Agreement or the transactions contemplated hereby.
"Net Assets Arbitrator" has the meaning set forth in Section 2.3(c).
"Non-Consenting Supplier" has the meaning set forth in Section
2.3(f)(iii).
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"Note" has the meaning set forth in Section 2.2(c)(ii).
"Order" means any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Organizational Documents" means (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) any charter or similar
document adopted or filed in connection with the creation, formation, or
organization of a Person; and (c) any amendment to any of the foregoing.
"Pall Inventory" means Seller's inventory of Pall Corporation products.
"Pall Payable" means the payable owed to Pall Corporation by Seller.
"Pall Rebate" means the rebate owed to Seller by Pall Corporation.
"Pall Receivable" means the receivable owed to Seller by Pall
Corporation.
"Person" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"Pre-Closing Physical Inventory" has the meaning set forth in Section
2.3(b).
"Preliminary Inventory Schedule" has the meaning set forth in Section
2.3(b).
"Purchased Accounts" has the meaning set forth in Section 2.1(a)(i).
"Purchased Assets" has the meaning set forth in Section 2.1(a).
"Purchase Price" has the meaning set forth in Section 2.2(a).
"Purchaser" has the meaning set forth in the preamble of this
Agreement.
"Purchaser Losses" means all losses, damages, liabilities, payments and
obligations of the Purchaser's Indemnified Persons as to which the Purchaser's
Indemnified Persons are entitled to indemnification under Section 9.2, and all
expenses related thereto, including any reasonable legal fees and costs incurred
by any of the Purchaser's Indemnified Persons subsequent to the Closing in
defense of or in connection with any alleged or asserted liability, payment or
obligation, whether or not any liability or payment, obligation or judgment is
ultimately imposed against the Purchaser's Indemnified Persons and whether or
not the Purchaser's Indemnified Persons are made or become parties to any such
action; provided that Purchaser Losses shall include punitive and consequential
damages only with respect to Third Party Actions.
"Purchaser's Indemnified Persons" means Purchaser, its Affiliates and
their respective directors, officers, employees, stockholders and agents.
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"Real Estate" has the meaning set forth in Section 2.1(a)(vii).
"Real Estate Lease" has the meaning set forth in Section 2.1(a)(vii).
"Retained Accounts" has the meaning set forth in Section 2.1(b)(i).
"Retained Employees" has the meaning set forth in Section 6.2(b).
"Retained Liabilities" has the meaning set forth in Section 2.1(c)(ii).
"Schedule" means any schedule delivered by Seller, HMP or Purchaser
pursuant to, and referred to in, Article III or IV of this Agreement, together
with any supplements thereto.
"Seller" has the meaning set forth in the preamble of this Agreement.
"Seller Lock Box Account" means Seller's lock box account with LaSalle
Bank National Association.
"Seller Losses" means all losses, damages, liabilities, payments and
obligations of the Seller's Indemnified Persons as to which the Seller's
Indemnified Persons are entitled to indemnification under Section 9.3, and all
expenses related thereto, including any reasonable legal fees and costs incurred
by any of the Seller's Indemnified Persons subsequent to the Closing in defense
of or in connection with any alleged or asserted liability, payment or
obligation, whether or not any liability or payment, obligation or judgment is
ultimately imposed against the Seller's Indemnified Persons and whether or not
the Seller's Indemnified Persons are made or become parties to any such action;
provided that Seller Losses shall include punitive and consequential damages
only with respect to Third Party Actions.
"Seller's Indemnified Persons" means Seller and HMP, their Affiliates
and their and their Affiliates' respective directors, officers, employees,
shareholders and agents.
"Severance and Change in Control Payments" means the aggregate amount
of cash payments required to satisfy in full Seller's obligations under any
severance, employment, consulting, change in control or similar agreement in
force as of the date hereof upon the consummation of the transactions
contemplated hereby.
"Xxxxxx Name" means the name "Xxxxxx Corporation" and any variation
thereof.
"Supplier" means any vendor, manufacturer, supplier or other Person
from whom Seller has purchased inventory, goods, or material for sale to
Seller's customers in the ordinary course of the Business.
"Supplier Rebates" has the meaning set forth in Section 2.1(a)(iv).
"Suppliers Arbitrator" has the meaning set forth in Section 2.3(g).
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"Tax" or "Taxes" means any federal, state, provincial, local or foreign
income tax including any tax on gross income, net income, franchise, gross
receipts, royalty, capital gains, value added, sales, goods and services,
commodity, harmonized, use, health, education, social service, excise, property,
ad valorem, transfer, license, use, profits, windfall profits, environmental,
withholding on amounts paid to or by Seller, payroll, employment, disability,
employee's income withholding, workers' compensation, employment insurance,
unemployment insurance, social insurance, health insurance, social security,
excise, severance, stamp, occupation, premium, gift or estate, levy, assessment,
tariff, duty, deficiency, or other fee, and any related charge or amount
(including any fine, penalty, interest, or addition to tax), imposed, assessed,
or collected by or under the authority of any Governmental Body or payable
pursuant to any tax-sharing agreement or any other Contract relating to the
sharing or payment of any such tax, levy, assessment, tariff, duty, deficiency,
or fee.
"Tax Return" means any return (including any information return),
declaration report, statement, schedule, notice, form, claim for refund, or
other document or information filed with or submitted to, or required to be
filed with or submitted to, any Governmental Body in connection with the
determination, assessment, collection, or payment of any Tax or in connection
with the administration, implementation, or enforcement of or compliance with
any Legal Requirement relating to any Tax.
"Territory" has the meaning set forth in Section 6.3(a).
"Test Period" has the meaning set forth in Section 2.3(f).
"Third Party Action" means any written assertion of a claim, or the
commencement of any action, suit or proceeding, by a third party as to which any
Person believes it may be an Indemnified Person hereunder.
"Trade Payables" has the meaning set forth in Section 2.1(c)(i).
ARTICLE II. SALE OF ASSETS
2.1 Sale of Assets; Assumption of Liabilities.
(a) Purchase and Sale of Assets. Upon the terms and
subject to the conditions contained in this Agreement, at the Closing, Seller
shall sell, assign, transfer and convey to Purchaser, and Purchaser shall
purchase, acquire and accept from Seller, the Business of Seller as a going
concern, including all of Seller's assets of every kind and description, other
than the Excluded Assets (the "Purchased Assets"), and subject only to the
liabilities and obligations of Seller which are defined in subsection (c) as the
"Assumed Liabilities". The Purchased Assets shall include the following assets
and properties of Seller:
(i) all trade and other accounts receivable and
other indebtedness owing to Seller on the Closing Date which, as of
that date have been outstanding for less than ninety-one (91) days from
their respective due dates, and including the benefit of all
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collateral, security, guaranties, and similar undertakings received or
held in connection therewith, as well as all of Seller's right, title
and interest in and to the post office box designation for the Seller
Lock Box Account (the "Purchased Accounts");
(ii) all saleable, non-obsolete inventories of
Seller other than inventories purchased or acquired from HMP (the
"Inventory");
(iii) the machinery, equipment, materials and
supplies, fixtures and furniture of Seller listed on Exhibit A attached
hereto (the "Equipment");
(iv) all rebates receivable from Suppliers with
respect to sales of Inventory prior to the Closing Date other than
rebates due from HMP (the "Supplier Rebates");
(v) all prepaid expenses, deposits and rights to
refunds and rebates from customers;
(vi) all rights, interests and benefits of Seller
under those Contracts, including leases of personal property, which are
listed on Exhibit B attached hereto, the assumption of which are
subject to the provisions of Section 2.1(c)(i)(A) (the "Assumed
Contracts");
(vii) all rights, interests and benefits of Seller
under its Lease Agreement with Xxxxx Xxxxxxxxx Associates dated
September 1, 2000 (the "Real Estate Lease"), pursuant to which Seller
leases and occupies the real estate and commercial building and
improvements located at 000-00 Xxxxx Xxxxxxxx, Xxxxxxxxxx, Xxx Xxxx
(the "Real Estate");
(viii) all of Seller's books, records and other
data relating to the Business;
(ix) all of Seller's goodwill, Supplier and
customer lists, sales and marketing information, and all know-how,
technology, drawings and software;
(x) all of Seller's interest in patents, patent
applications, proprietary designs, copyrights, trade names, service
marks, trademarks and trademark applications (including the exclusive
right to use the Xxxxxx Name), in each case together with the goodwill
appurtenant thereto, all federal, state, local and foreign
registrations thereof, if applicable, all common law rights thereto,
and all claims or causes of action for infringement thereof;
(xi) all permits, licenses, and approvals of all
federal, state, local or foreign governmental or regulatory authorities
or industrial bodies which are held by Seller, to the extent the same
are transferable;
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(xii) all rights of Seller to causes of action,
lawsuits, judgments, claims and demands of any nature relating to the
Business; and
(xiii) except for the Excluded Assets, all other
items of property, real or personal, tangible or intangible, including
all corporate names, computer programs, tapes and discs owned, used by
or accruing to the benefit of Seller.
(b) Excluded Assets. Notwithstanding any provision
contained herein to the contrary, the Purchased Assets shall not include, and
Seller will retain ownership of, the following assets (collectively, the
"Excluded Assets"):
(i) all trade and other accounts receivable and
other indebtedness owing to Seller on the Closing Date other than the
Purchased Accounts, the Supplier Rebates, and the items specified in
Section 2.1(a)(v), including the benefit of all collateral, security,
guaranties, and similar undertakings received or held in connection
therewith (the "Retained Accounts");
(ii) all inventories of Seller other than the
Inventory;
(iii) all cash, cash equivalents, and securities;
(iv) Seller's minute and stock record books,
journals, ledgers and books of original entry; provided, however, that
Seller shall provide Purchaser, prior to and following the Closing,
with reasonable access to each of the foregoing;
(v) those assets of Seller expressly set forth
on Exhibit C attached hereto;
(vi) Seller's rights under this Agreement;
(vii) those assets of Seller unrelated to the
Business;
(viii) all of the Seller's interests and rights in
the Seller Lock Box Account other than those specified in Section
2.1(a)(i) as included in the Purchased Accounts; and
(ix) the Pall Receivable, the Pall Inventory and
the Pall Rebate.
(c) Assumed Liabilities.
(i) Purchaser does not and shall not assume or
agree to assume the liabilities and obligations of Seller of any
nature, direct, contingent or otherwise, except (A) all liabilities and
obligations with respect to the performance under each of the Assumed
Contracts at the Closing from and after the Closing Date, provided the
other contracting party or parties consent to the assignment of such
contract to Purchaser or, if the other contracting party or parties do
not consent to the assignment, Purchaser shall assume the liabilities
and obligations thereunder only for so long as it receives the
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benefits thereunder, (B) the trade accounts payable and accrued
expenses of Seller relating to the Business incurred in the ordinary
course of business and outstanding as of the Closing Date other than
those payable to Pall and HMP (the "Trade Payables"), (C) all
liabilities and obligations of Seller under the Real Estate Lease, (D)
all accrued commissions due employees of Seller other than the Retained
Employees as of the Closing Date for sales by Seller in the ordinary
course of business under commission agreements or arrangements
customarily maintained by Seller and in effect as of June 30, 2002 and
(E) the Just In Time Accruals incurred in the ordinary course of
business and outstanding as of the Closing Date (all of such assumed
liabilities being herein referred to as the "Assumed Liabilities").
(ii) Except for the Assumed Liabilities,
Purchaser shall not assume or be bound by any obligations or
liabilities of Seller of any kind or nature, known, unknown, accrued,
absolute, contingent or otherwise, whatsoever, all of which shall be
retained by Seller (the "Retained Liabilities"). Seller shall be
responsible for and pay any and all losses, damages, obligations,
liens, assessments, judgments, fines, disposal and other costs and
expenses, liabilities and claims, including interest and penalties, as
the same are incurred, of every kind or nature whatsoever (all the
foregoing being a "Claim" or the "Claims"), made by or owed to any
person to the extent any of the foregoing relates to the Retained
Liabilities, including Claims relating to (A) Seller's operations and
assets unrelated to the Business, (B) the Excluded Assets, (C) any
employees or Employee Benefit Plans of Seller, including any Severance
and Change in Control Payments, except for liabilities and obligations
arising out of the employment of such persons by Purchaser after the
Closing Date, (D) any Taxes of Seller, (E) any indebtedness for
borrowed money of Seller, (F) the operations or assets of the Business
arising in connection with or on the basis of events, acts, omissions,
conditions or any other state of facts occurring or existing prior to
or on the Closing Date, or (including, in each case, any Claim relating
to or associated with product liability matters, Tax matters, pension
and benefit matters, any failure to comply with applicable laws and/or
permitting or licensing requirements, personal injury and property
damage matters and environmental and worker health and safety matters),
(G) products liability claims relating to Inventory purchased by Seller
and sold prior to the Closing, other than Inventory previously
purchased or acquired by Seller from Purchaser, and (H) the Pall
Payable.
(iii) The assumption of the Assumed Liabilities by
Purchaser hereunder shall be treated as independent of Purchaser's
existing business and shall not enlarge any rights of third parties
under contracts or arrangements with Purchaser or Seller or any of
their respective Affiliates. Nothing herein shall prevent Purchaser
from contesting in good faith any of the Assumed Liabilities; provided,
however, no such contest by Purchaser shall relieve Purchaser of its
indemnification obligations under Section 9.3 hereof. Nothing herein
shall prevent Seller from contesting in good faith any of the Retained
Liabilities; provided, however, no such contest by Seller shall relieve
Seller of its indemnification obligations under Section 9.2 hereof.
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2.2 Purchase Price; Payment.
(a) As consideration for the purchase of the Purchased
Assets, Purchaser shall pay to Seller the aggregate sum (the "Purchase Price")
of:
(i) Three Million Five Hundred Thousand Dollars
($3,500,000) (the "Base Price"), adjusted, if applicable, as provided
in Section 2.3(h); plus
(ii) The net book value of the Purchased Assets
minus the Assumed Liabilities on the Closing Date, determined in
accordance with GAAP on a basis consistent with the principles,
practices and methodologies used by Seller in the preparation of the
Balance Sheets, except that all reserves for inventory and accounts
receivable shall be eliminated for purposes of this determination (the
"Closing Date Net Assets Value").
(b) As soon as reasonably practicable, but in no event
later than five (5) business days prior to the Closing Date, Seller shall in
good faith cause to be prepared and delivered to Purchaser its calculation of
the estimated net book value of the Purchased Assets minus the Assumed
Liabilities as of the Closing Date, calculated in accordance with Section
2.2(a)(ii) above. Purchaser and Seller shall, after reviewing such calculation
prepared by Seller, in good faith discuss and agree upon their best estimate of
such net book value (the "Estimated Closing Date Net Assets Value").
(c) At the Closing, Purchaser shall make payment of an
amount (the "Closing Date Payment") equal to the sum of the Base Price plus the
Estimated Closing Date Net Assets Value as follows:
(i) The sum of One Million One Hundred Thousand
Dollars ($1,100,000) (the "Escrow Amount") shall be paid to SunTrust
Bank in Atlanta, Georgia, as Escrow Agent (the "Escrow Agent"), to be
held and maintained by the Escrow Agent pursuant to the terms of an
Escrow Agreement in a form reasonably acceptable to the parties (the
"Escrow Agreement") by and among Purchaser, Seller, HMP and the Escrow
Agent and distributed in accordance with Section 2.3(h);
(ii) Purchaser shall issue to Seller its
Promissory Note in the form of Exhibit D (the "Note"), in the principal
amount of Five Hundred Thousand Dollars ($500,000), bearing interest at
a fixed annual rate of five percent (5%) and payable as follows: (A)
the sum of Two Hundred Fifty Thousand ($250,000.00) Dollars, plus
accrued interest thereon, shall be due and payable on the date
occurring ten (10) days after the determination of the Closing Date Net
Assets Value, as referenced in Section 2.3(d), subject to offset as
specified in Section 2.3(e), and (B) the balance shall be due and
payable on the date occurring six (6) months after the Closing Date;
and
(iii) The balance of the Closing Date Payment
(i.e., the Closing Date Payment minus One Million Six Hundred Thousand
Dollars {$1,600,000}) shall be paid to Seller via wire transfer of
immediately available funds.
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2.3 Closing Date Net Assets Value: Definitive Purchase Price
Adjustment.
(a) As soon as practicable following the Closing, but in
no event later than fifteen (15) days following the final classification of the
Suppliers pursuant to Section 2.3(g) (whether by agreement between Seller and
Purchaser or a decision of the Suppliers Arbitrator), Seller shall in good faith
prepare or cause to be prepared and delivered to Purchaser a definitive
calculation of the Closing Date Net Assets Value. For the purpose of such
calculation, the book value of the Inventory shall be determined in accordance
with the provisions of Section 2.3(b) below.
(b) On or before the Closing, the parties and their
respective representatives will jointly conduct a physical inventory of all of
Seller's inventory (the "Pre-Closing Physical Inventory") and the parties will
jointly agree upon a schedule (the "Preliminary Inventory Schedule") setting
forth, as of the date of the Pre-Closing Physical Inventory, the nature and
quantity of such inventory. As soon as practicable following the Closing Date,
the parties and their respective representatives will jointly prepare an
accounting of all purchases and sales of such inventory by Seller from the time
of the Pre-Closing Physical Inventory until the Closing Date (the "Inventory
Bring-Down"). Based upon the Pre-Closing Physical Inventory and the Inventory
Bring-Down, the parties will agree upon a schedule (the "Final Inventory
Schedule") setting forth, as of the Closing Date, the nature and quantity of
such inventory. The amounts set forth in the Final Inventory Schedule shall be
used in the calculation of the Closing Date Net Assets Value.
(c) Within twenty (20) business days after Seller's
delivery of its calculation of the Closing Date Net Assets Value, Purchaser may
deliver a written notice (a "Challenge Notice") to Seller of any objections, and
the basis therefor, which Purchaser may have to Seller's calculation of the
Closing Date Net Assets Value. The failure of Purchaser to deliver a Challenge
Notice raising an objection to the Closing Date Net Assets Value within the
prescribed time period will constitute acceptance of the Closing Date Net Assets
Value, as delivered by Seller. During the ten (10) business days following
Seller's receipt of a Challenge Notice, if any, Purchaser and Seller shall
attempt in good faith to resolve any disagreement with respect to the Closing
Date Net Assets Value and the accuracy thereof. If, at the end of such period,
Purchaser and Seller shall have failed to resolve the disagreement specified in
the Challenge Notice, the items in dispute shall be referred to an independent
nationally recognized accounting firm as may be mutually agreed to by the
parties or their respective independent accountants (the "Net Assets
Arbitrator") for final determination as soon as practicable, but in all events
within thirty (30) days after submission to the Net Assets Arbitrator. This
provision for resolution shall be specifically enforceable by the parties, and
the determination of the Net Assets Arbitrator in accordance with the provisions
hereof shall be final and binding upon Purchaser, Seller and HMP, with no right
of appeal therefrom. The fees and expenses of the Net Assets Arbitrator shall be
borne equally by Purchaser and Seller.
(d) Within ten (10) days after the determination of the
Closing Date Net Assets Value (whether by agreement between Seller and Purchaser
or a decision of the Net Assets Arbitrator pursuant to Section 2.3(c) above),
payments shall be made to the appropriate
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party in order to give effect to the final determination of the Purchase Price
in accordance with the following provisions:
(i) If the Closing Date Net Assets Value is
greater than the Estimated Closing Date Net Assets Value, Purchaser
shall pay the amount of the difference to Seller; and
(ii) If the Closing Date Net Assets Value is less
than the Estimated Closing Date Net Assets Value, Seller shall pay such
amount to Purchaser.
In the event that amounts due under this Section 2.3(d) are not paid when due,
simple interest shall accrue on such obligation and shall be payable therewith
from the due date to the date of payment at an annual rate equal to the lesser
of five percent (5%) or the maximum rate allowable by applicable law.
(e) If an amount becomes due from Seller to Purchaser
under the provisions of Section 2.3(d)(ii) above and has not been paid as of the
expiration of the ten (10) day period referred to in Section 2.3(d) above,
Purchaser shall be entitled to set off such amount, dollar for dollar, against
the first payment due Seller under the Note and the amount set off shall be
deemed to have been paid in full and any accrued interest thereon from the
Closing Date shall be discharged and deemed to have been paid in full as well.
(f) Within the thirty (30) day period following the
Closing Date (the "Test Period"), the parties shall determine which of the
Suppliers shall have consented to the continuation of their distributorship
relationship with Purchaser with respect to the Business (each a "Consenting
Supplier") in the following manner:
(i) Suppliers shall be classified as Consenting
Suppliers if (A) during the Test Period they have sold products to
Purchaser, or have accepted purchase orders for the sale of products to
Purchaser, for sale and distribution to customers of the Business and
(B) they have not indicated (either orally or in writing) to
representatives of Purchaser during the Test Period that they will
discontinue or terminate their relationship as supplier to Purchaser in
the conduct of the Business on or before the date which is four (4)
months after the Closing Date; and
(ii) Each Supplier which is not classified as a
Consenting Supplier shall be classified and referred to herein as a
Non-Consenting Supplier.
(g) Within ten (10) days after the expiration of the Test
Period, Purchaser shall deliver to Seller and the Escrow Agent a list
classifying each of the Suppliers as Consenting Suppliers or Non-Consenting
Suppliers. Within twenty (20) days thereafter, Seller may deliver a written
Challenge Notice to Purchaser of any objections to such classifications and the
basis therefore. The failure of Seller to deliver a Challenge Notice raising an
objection to Purchaser's classification of the Suppliers within the prescribed
time period will constitute acceptance of such classification as delivered by
Purchaser. During the ten (10) business days following Purchaser's receipt of a
Challenge Notice, if any, Purchaser and Seller shall attempt in good faith
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to resolve any disagreement with respect to the classification of the Suppliers.
If, at the end of such period, Purchaser and Seller shall have failed to resolve
the disagreement specified in the Challenge Notice, the items in dispute shall
be determined by a single arbitrator (the "Suppliers Arbitrator") in an
arbitration conducted in Philadelphia, Pennsylvania. The Suppliers Arbitrator
shall be selected under the commercial arbitration rules of the American
Arbitration Association and the arbitration shall be conducted under such rules.
The Suppliers Arbitrator shall make a final determination as soon as
practicable, but in all events within thirty (30) days after submission to the
Suppliers Arbitrator. This provision for resolution shall be specifically
enforceable by the parties, and the determination of the Suppliers Arbitrator in
accordance with the provisions hereof shall be final and binding upon Purchaser,
Seller and HMP, with no right of appeal therefrom. The fees and expenses of the
Suppliers Arbitration shall be borne equally by Purchaser and Seller.
(h) Within ten (10) days after the final classification
of the Suppliers (whether by agreement between Seller and Purchaser or a
decision of the Suppliers Arbitrator pursuant to Section 2.3(g) above), the Base
Price shall be adjusted, if applicable, by subtracting therefrom the sum of
those amounts designated on Exhibit E for each Designated Supplier which is
classified as a Non-Consenting Supplier and the Escrow Agent shall distribute
and pay the Escrow Amount as follows:
(i) There shall be paid to Seller the sum of
those amounts designated on Exhibit E for each Designated Supplier
which is classified as a Consenting Supplier; and
(ii) There shall be paid to Purchaser the sum of
those amounts designated on Exhibit E for each Designated Supplier
which is classified as a Non-Consenting Supplier.
2.4 Conveyance and Transfer, Assumption.
At the Closing, and subject to the terms and conditions hereof, Seller
shall execute and deliver to Purchaser and Purchaser shall execute and deliver
to Seller bills of sale, assignments and such other good and sufficient
instruments of transfer, assignment and conveyance and assumption, in form
satisfactory to Purchaser and Seller and their counsel, as shall be effective to
convey to Purchaser good and merchantable title in and to the Purchased Assets
and to cause Purchaser to assume the Assumed Liabilities. Simultaneously with
such delivery, Seller will take all steps necessary to put Purchaser in actual
possession of the Purchased Assets. In addition, at the Closing, the parties
will enter into a Transition Services Agreement, pursuant to which each will
provide to the other such services as are necessary for the operation of the
Business or required for the transfer of the Business from Seller to Purchaser
and which could not be segregated and undertaken by the other party as of the
Closing Date. Following the Closing, Seller will execute and deliver to
Purchaser such other and further instruments of conveyance, assignment and
transfer and take such other action, none of which shall be inconsistent with
the terms hereof, as Purchaser may reasonably require to more effectively
convey, transfer, and assign to Purchaser and to put Purchaser in possession of,
the Purchased
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Assets, and Purchaser shall execute and deliver to Seller such other and further
instruments of assumption and take such other action, none of which shall be
inconsistent with the terms hereof, as Seller may reasonable require to confirm
Purchaser's assumption of the Assumed Liabilities.
2.5 Closing Date. The Closing under this Agreement (the "Closing")
shall be held on September 3, 2002, or such other date as Purchaser and Seller
may agree upon in writing, at the offices of King & Spalding, 000 Xxxxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxx, beginning at 10:00 a.m. The date on which the Closing
is to be held is referred to herein as the "Closing Date." The Closing may be
completed in escrow under terms and with assurances acceptable to all parties,
including, if agreed, upon verification of execution of documents by facsimile
transmission. Payment of the Closing Date Payment shall be made by wire
transfer. At the Closing, Purchaser and Seller shall furnish the Note and all
other documents, instruments, certificates, bills of sale and opinions required
under the provisions of this Agreement in form reasonably acceptable to the
parties and such other documents necessary or desirable to consummate the
transactions contemplated herein as the parties may reasonably request.
2.6 Allocation of Purchase Price. The Purchase Price shall be
allocated among the Purchased Assets as set forth on Exhibit F attached hereto.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER AND HMP
Seller and HMP, jointly and severally, hereby represent and warrant to
Purchaser as follows:
3.1 Authority. Seller and HMP have all requisite corporate power
and authority to enter into the Acquisition Documents to which Seller and HMP
are a party, respectively, and to carry out the transactions contemplated
thereby. The execution, delivery and performance of the Acquisition Documents to
which Seller is a party have been duly and validly authorized and approved by
all necessary corporate action by Seller and HMP, as necessary. The execution,
delivery and performance of the Acquisition Documents to which HMP is a party
have been duly and validly authorized and approved by all necessary corporate
action by HMP. Each of the Acquisition Documents to which Seller or HMP are a
party constitutes the legal and binding obligation of Seller or HMP, as the case
may be, enforceable against it in accordance with their respective terms,
subject to applicable laws of bankruptcy, insolvency, moratorium and other laws
affecting the rights of creditors generally and to general principles of equity.
3.2 Title to Assets. Seller has good and merchantable title to, or
a valid leasehold interest in, all of the Purchased Assets, free and clear of
all Encumbrances, other than as disclosed in Schedule 3.2, and the sale and
delivery of the Purchased Assets to Purchaser pursuant hereto shall vest in
Purchaser good and merchantable title thereto, free and clear of any and all
Encumbrances, other than as may be created by Purchaser or as disclosed on
Schedule 3.2 and marked with an asterisk thereon. Except as set forth on
Schedule 3.2, there is no material asset used or required by Seller in the
conduct of the Business (other than the Excluded Assets)
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which is not included in the Purchased Assets or licensed or leased to it
pursuant to one of the Contracts assigned to Purchaser hereunder.
3.3 Existence, Good Standing and Authority. Each of Seller and HMP
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its formation. Each of Seller and HMP has the power
to own its properties and to carry on its business as now being conducted.
Seller is duly qualified to do business in all jurisdiction(s) in which the
character or location of the properties owned or leased by it or the nature of
the business conducted by it makes such qualification necessary, except where
the failure to so qualify would not have a Material Adverse Effect. Schedule 3.3
sets forth each operating location of Seller and each jurisdiction in which the
Seller is qualified to do business.
3.4 Financial Statements. Seller has heretofore furnished
Purchaser with (i) the statement of revenues and expenses and trial balance for
Seller for the years ended December 31, 1999, 2000 and 2001 and the period
ending May 31, 2002, and (ii) the balance sheets of Seller dated as of December
31, 1999, December 31, 2000, December 31, 2001, and May 31, 2002 (collectively,
the "Balance Sheets"), all prepared internally by HMP (collectively, the
"Financial Statements"). Except for the absence of footnotes to the Financial
Statements and normal year-end adjustments to any interim Financial Statements,
the Financial Statements have been prepared from the books and records of Seller
in accordance with GAAP (except for the amortization of goodwill to the extent
FASB 142 is applicable to the Financial Statements) and fairly present in all
material respects the financial position of Seller at the respective dates
thereof. The Balance Sheets reflect all material claims against, and all
material debts and liabilities of, Seller, as at their respective dates required
to be reflected under GAAP.
3.5 No Material Changes.
(a) Except as set forth on Schedule 3.5, since May 31,
2002, there has not been:
(i) any material adverse change in the business,
operations, properties, assets or condition (financial or other) of
Seller or any event which has had or could reasonably be expected to
have a Material Adverse Effect;
(ii) any damage, destruction or similar loss,
whether or not covered by insurance, materially adversely affecting the
Business or the Purchased Assets;
(iii) any material change in business policies or
practices or accounting methods, conventions, principles or assumptions
of Seller except as relates to the transactions contemplated herein; or
(iv) any material adverse change in the nature of
the business relationships of Seller with any of its respective
customers or Suppliers.
(b) Since May 31, 2002, except as otherwise permitted or
contemplated in this Agreement or as set forth on Schedule 3.5, Seller has not:
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(i) entered into any material transaction other
than in the ordinary course of business and consistent with past
practices or conducted its business other than in its usual manner;
(ii) incurred any material obligation or
liability (including any guaranty, indemnity, agreement for or with
respect to any obligation or liability of another person) or paid,
satisfied or discharged any material obligation or liability prior to
the due date or maturity thereof, except current obligations and
liabilities in the ordinary course of business and consistent with past
practice, other than non-recurring liabilities and those obligations
and liabilities which will be paid at Closing;
(iii) sold, assigned, pledged, mortgaged, leased
or transferred any of the Purchased Assets or any interest therein, or
created, incurred, assumed, granted or suffered to exist any lien
(which remains in existence on the Closing Date) on any of the
Purchased Assets or any interest therein, except, in each case, in the
ordinary course of business and consistent with past practice;
(iv) waived any right of value or canceled,
forgiven or discharged any debt owed to it or claim in its favor except
in the ordinary course of business and consistent with past practice;
(v) increased the compensation or fringe
benefits payable to any of its employees in a manner which is
inconsistent with past practice; or
(vi) entered into any agreement to do any of the
foregoing.
3.6 Books and Records. The books of account, minute books, stock
record books, and other records of Seller, all of which have been made available
to Purchaser, are complete and correct in all material respects and have been
maintained in accordance with sound business practices, including the
maintenance of an adequate system of internal controls.
3.7 Real Property and Leases.
(a) To the Knowledge of Seller, the improvements located
on the Real Estate and the use and occupancy of the Real Estate are not the
subject of any official complaint or notice of violation of any applicable
zoning ordinance, subdivision and land development ordinance, use ordinance,
building code, certificate of occupancy or similar rule, regulation or permit,
and no such violation is known to exist. To the Knowledge of Seller, there is no
zoning ordinance, subdivision and land development ordinance or building code
violation, use or occupancy restriction or condemnation proceeding existing,
pending, threatened or contemplated which would preclude or impair the use of
the Real Estate or the improvements thereon by Purchaser for the purposes for
which they are now used.
(b) To the Knowledge of Seller, the use of the Real
Estate in the Business is currently permitted as a conforming use or prior
nonconforming use under all zoning ordinances
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and regulations applicable to the Real Estate and the Real Estate conforms in
all material respects with all applicable laws, ordinances and regulations.
(c) The Real Estate Lease is the only lease of real
estate to which Seller is a party. With respect to the Real Estate Lease:
(i) correct and complete copies thereof have
been delivered to Purchaser;
(ii) the Real Estate Lease is legal, valid,
binding, enforceable against Seller, and in full force and effect and
will continue to be so on identical terms following the consummation of
the transactions contemplated hereby;
(iii) Seller is not, and to the Knowledge of
Seller, no other party to the Real Estate Lease is, in breach or
default of the Real Estate Lease, and no event has occurred which, with
notice or lapse of time or both, would constitute a breach or default
or permit termination, modification, or acceleration thereunder or
which would prevent the exercise by Purchaser of any right to renew or
extend such lease;
(iv) Seller has not, and to the Knowledge of
Seller, no other party to the Real Estate Lease has, repudiated any
provision thereof, and there are no disputes, oral agreements, or
forbearance programs in effect as to the Real Estate Lease;
(v) Seller has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest in the
leasehold;
(vi) Seller has received no notice regarding
violations of any Legal Requirements with respect to the Real Estate;
(vii) all facilities leased thereunder are
supplied with utilities and other services necessary for the operation
of said facilities; and
(viii) there are in existence no subleases or
licenses with respect to the Real Estate or any other arrangement by
which any third party has the right to possession of the Real Estate.
Subject to receipt of any required consents or approvals, the consummation of
the transactions contemplated by this Agreement will not result in the
termination of the Real Estate Lease.
3.8 Material Contracts. Set forth on Schedule 3.8, is a complete
list of all of the following Contracts to which Seller is a party or by which it
is bound:
(a) all Contracts relating to the employment of any
person, and all bonus, deferred compensation, pension, profit sharing, stock
option, employee stock purchase, phantom stock, retirement, severance benefits
retirement, stock appreciation and other employee benefit plans;
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(b) all Contracts with Suppliers or otherwise relating to
the sale or distribution of inventory or goods or relating to the representation
by Seller of Suppliers or manufacturers or distributors;
(c) all Contracts with customers (including all hospitals
and medical facilities) that provide for annual payments in excess of $25,000,
including any written terms and conditions which are included in purchase orders
or govern or apply to purchases by any customer;
(d) all Contracts relating to capital expenditures;
(e) all guarantees and other contingent liabilities with
respect to any indebtedness or obligation of any other Person (other than the
endorsement of negotiable instruments for collection in the ordinary course of
business);
(f) all management services, consulting and any other
similar type Contracts;
(g) all leases of personal property that provide for
annual payments in excess of $10,000;
(h) all Contracts limiting the freedom of Seller to
engage in any line of business or to compete with any other Person;
(i) all Contracts not entered into in the ordinary course
of business;
(j) all Contracts which involve the receipt of or
expenditure by Seller of more than $25,000 in any one year;
(k) any license agreement (as licensor or licensee);
(l) any Contract with any shareholder, manager, director,
officer or employee of Seller; and
(m) all other Contracts material to the Business or
operation of the Purchased Assets.
Each Contract set forth on Schedule 3.8 is a valid and binding agreement of
Seller and, to Seller's Knowledge, of all other parties thereto and is in full
force and effect and enforceable in accordance with its terms. Except as set
forth on Schedule 3.8, Seller has no written Contracts with Suppliers or
customers. Seller has not violated any of the terms or conditions of any of the
Contracts set forth on Schedule 3.8, and, to the Knowledge of Seller, all of the
terms and conditions to be performed by any party thereto other than Seller have
been fully performed. Except as set forth on Schedule 3.8, there exists no
default or event of default under any of the Contracts set forth on Schedule 3.8
or event, occurrence, condition or act (including the purchase of the Purchased
Assets hereunder) which, with the giving of notice, the lapse of time or the
happening of any other event or condition, would become a default or event of
default thereunder.
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3.9 No Conflict.
(a) Except as set forth on Schedule 3.9, neither the
execution and delivery of this Agreement nor the consummation or performance of
the transactions contemplated will, directly or indirectly (with or without
notice or lapse of time):
(i) contravene, conflict with, or result in a
violation of any provision of the Organizational Documents of either
Seller or HMP;
(ii) contravene, conflict with, or result in a
violation of, any Legal Requirement, Governmental Authorization, or any
Order to which either Seller, HMP, or any of the Purchased Assets are
bound or subject;
(iii) contravene, conflict with, or result in a
violation or breach of any provision of, or to accelerate the maturity
or performance of, or to cancel, terminate, or modify, any Contract; or
(iv) result in the imposition or creation of any
Encumbrance upon or with respect to any of the Purchased Assets.
(b) Except as set forth on Schedule 3.9, neither Seller
nor HMP is required to give any notice to or obtain any consent from any Person
in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the transactions contemplated hereby.
3.10 Litigation. Except as set forth on Schedule 3.10, there is no
proceeding, investigation or litigation by any Person, or by or before any
Governmental Body, pending or, to the Knowledge of Seller, threatened, against
or affecting (i) Seller, the Business or the Purchased Assets, or (ii) the
transactions contemplated hereby. Seller is not subject or a party to any Order.
3.11 Tax Returns and Payments.
(a) All of the Tax Returns of Seller required by law to
be filed on or before the date hereof have been duly and timely filed, and all
Taxes owed by Seller (whether or not shown on such Tax Return) have been paid.
All such Tax Returns were correct and complete in all material respects. Except
as set forth on Schedule 3.11, Seller is not currently the beneficiary of any
extension of time within which to file any Tax Return. No claim has ever been
made by an authority in a jurisdiction where Seller does not file Tax Returns
that it is or may be subject to the imposition of any Tax by that jurisdiction.
There are no Encumbrances on any of the Purchased Assets that arose in
connection with any failure (or alleged failure) to pay any Tax.
(b) There are in effect no waivers of any applicable
statute of limitations in respect of Taxes nor any extensions of time with
respect to a Tax assessment or deficiency.
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(c) Seller has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, consultant, independent contractor, creditor, stockholder, or other
third party.
(d) Seller is not a party to any Tax allocation or
sharing agreement. Seller has no liability for the Taxes of any Person under
Treas. Reg.ss.1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor by contract or otherwise.
(e) No liability for any Tax will be imposed upon the
Purchased Assets or Seller or its other assets with respect to any period before
the Closing Date. Seller is not subject to any open audit in respect of its
Taxes, no deficiency assessment or proposed adjustment for Taxes is pending, and
Seller has no Knowledge of any liability, whether or not proposed, for any Tax
with respect to any period through the date hereof to be imposed upon any of its
properties or assets for which there is not an adequate reserve reflected in its
May 31, 2002 Balance Sheet. Neither Seller nor HMP is aware of any dispute or
claim concerning any liability for Taxes of Seller.
3.12 Liabilities. Seller has no, and none of the Purchased Assets
is subject to, any outstanding claims, liabilities or indebtedness, accrued,
contingent or otherwise, and whether due or to become due, except as set forth
in the Financial Statements or on Schedule 3.12, other than liabilities incurred
subsequent to the Balance Sheet of May 31, 2002 in the ordinary course of
business and other than liabilities which would not have, individually or in the
aggregate, a Material Adverse Effect. Seller is not in default in respect of the
terms or conditions of any indebtedness, nor does Seller have Knowledge of any
facts which, with the passage of time, would result in any such default. Seller
has no Knowledge of any basis for the assertion against Seller of any such
liability not fully reflected or accrued for in the Balance Sheets.
3.13 Insurance. Seller has maintained, and as of the date hereof
has in effect, such policies of motor vehicle, property, casualty, workers'
compensation, general liability and other insurance as are required by law and
are adequate and appropriate with respect to the Business. Set forth on Schedule
3.13 is a complete list, with a summary thereof, of all insurance policies (the
"Insurance Policies") which Seller maintains with respect to the Business and
its properties or employees, which Insurance Policies are legal, valid, binding,
enforceable and in full force and effect. Seller has not violated any of the
terms or conditions of the Insurance Policies or is otherwise in default
thereof. No party to any of the Insurance Policies has repudiated any provision
thereof.
3.14 Intellectual Property. Set forth on Schedule 3.14 are all
patents, patent rights, patent applications, licenses, trademarks, trademark
rights, trademark applications, trade names, trade name rights, service marks,
service xxxx rights, copyrights or similar rights (collectively, "Intellectual
Property Rights") used by Seller in connection with the conduct of the Business.
Except as set forth on Schedule 3.14, Seller has valid and enforceable rights to
utilize the Intellectual Property Rights in the Business as is presently
operated, free and clear of any Encumbrances. Seller is not infringing the right
of any Person under or in respect to, any Intellectual Property Right, there is
no claim by any Person pending or, to Seller's Knowledge,
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threatened against Seller with respect thereto, and to the Knowledge of Seller,
there is no Person infringing upon any of the Intellectual Property Rights.
3.15 Compliance with Laws; Governmental Authorizations. Seller is
in material compliance with all Legal Requirements, including, but not limited
to, all employment-related Legal Requirements and all Environmental and Safety
Requirements. Seller has not received any notice of any asserted present or past
failure of Seller to comply with any of such Legal Requirements. Except as set
forth on Schedule 3.15, no Governmental Authorizations other than local business
licenses or permits are required for use or used in the Business or operation of
the Assets.
3.16 Employees.
(a) Schedule 3.16 contains a complete and accurate list
of the following information for each employee, officer, manager or director of
Seller, including each employee on leave of absence or layoff status: name; job
title; date of hire; current compensation; vacation accrued; sick and/or
personal pay accrued; and service credited for purposes of vesting and
eligibility to participate under all of Seller's Employee Benefit Plans.
(b) To Seller's Knowledge, no employee, officer, manager
or director of Seller is a party to, or is otherwise bound by, any agreement or
arrangement, including any confidentiality, noncompetition, or proprietary
rights agreement, between such employee, officer, manager or director and any
other Person that in any way will adversely affect the performance of his duties
as an employee of Purchaser.
3.17 Labor Relations. Seller is not, nor ever has been, a party to
any collective bargaining or other labor Contract. There is not presently
pending or existing, and to Seller's Knowledge there is not threatened, any
strike, slowdown, picketing, work stoppage, or employee grievance process. To
Seller's Knowledge, no event has occurred or circumstance exists that could
provide the basis for any work stoppage or other labor dispute.
3.18 Employee Benefit Plans.
(a) Set forth on Schedule 3.18 is a complete and accurate
list of all Employee Benefit Plans established, maintained or contributed to by
Seller (including for this purpose and for the purpose of all of the
representations in this Section 3.18, all entities (whether or not incorporated)
which by reason of common control or affiliation are treated together with
Seller as a single employer within the meaning of Section 414(b), (c), (m) or
(o) of the Code) at any time during the three (3) year period ending on the
Closing Date.
For purposes of this Agreement, the term "Employee Benefit
Plans" means (A) all employee benefit plans within the meaning of ERISA Section
3(3), whether or not any such employee benefit plans are exempt from the
provisions of ERISA; and (B) all stock option plans, bonus or incentive award
plans, severance pay policies or agreements, parachute payment arrangements,
deferred compensation agreements, supplemental income arrangements, vacation
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plans, accrued sick days and any personal time off, and all other employee
benefit plans, agreements and arrangements not described in (A) above.
(b) Seller has not taken any action that may result in
Purchaser being a party to, or bound by, any Employee Benefit Plan and Purchaser
shall have no liability under, or be subject to any liability on account of, any
Employee Benefit Plan listed on Schedule 3.18 either prior to or after the
Closing Date.
(c) No Employee Benefit Plan or other employment
arrangement of Seller has provided for the payment of retiree benefits by
Purchaser.
3.19 Broker's or Finder's Fees. Except as set forth on Schedule
3.19, no agent, broker, investment banker, Person, or firm acting on behalf of
either Seller or HMP, or any Person affiliated with any of them, or under their
authority, is or will be entitled to a financial advisory fee, brokerage
commission, finders fee or other like payment in connection with the
transactions contemplated hereby.
3.20 Environmental and Health and Safety Matters.
(a) Seller has not received any notice, report or
information regarding any liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise), or any corrective, investigatory or remedial
obligations, arising under Environmental and Safety Requirements with respect to
the past or present operations or properties of the Business.
(b) Seller has obtained, and is in compliance with all
terms and conditions of, all permits, licenses and other authorizations required
pursuant to Environmental and Safety Requirements for the occupation of the
properties of the Business and the conduct of its operations, except in each
case where the failure to have obtained or to have been in compliance with such
permits, licenses and other authorizations would not have a Material Adverse
Effect.
(c) To the Knowledge of Seller, none of the following
exists at the Real Estate or any property owned or occupied by Seller:
asbestos-containing material in any form or condition; polychlorinated
biphenyl-containing materials or equipment; or underground storage tanks.
(d) To the Knowledge of Seller, no facts, events or
conditions relating to the past or present properties or operations of the
business of Seller or properties contiguous thereto, will (x) prevent, hinder or
limit continued compliance by Purchaser with Environmental and Safety
Requirements, (y) give rise to any corrective, investigatory or remedial
obligations on the part of Purchaser pursuant to Environmental and Safety
Requirements, or (z) give rise to any liabilities on the part of Purchaser
(whether accrued, absolute, contingent, unliquidated or otherwise) pursuant to
Environmental and Safety Requirements, including those liabilities relating to
on-site or off-site hazardous substance releases, personal injury, property
damage or natural resources damage.
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(e) Seller has not assumed any liabilities or obligations
of any third party under Environmental and Safety Requirements.
3.21 Relationships with Related Persons. Except as set forth on
Schedule 3.21, since December 31, 2001, neither Seller nor HMP or any Affiliate
of Seller or HMP, is, or has owned (of record or as a beneficial owner) an
equity interest or any other financial or profit interest in, a Person that has
(i) had business dealings (including being a party to a Contract) or a material
financial interest in any transaction with Seller other than business dealings
or transactions conducted in the ordinary course of business with Seller at
substantially prevailing market prices and on substantially prevailing market
terms, or (ii) engaged in competition with Seller with respect to the sale and
distribution of specialty medical products and devices or any other line of the
products or services of Seller (a "Competing Business") in any market presently
served by Seller (except for the ownership of less than one percent (1%) of the
outstanding capital stock of any Competing Business that is publicly traded on
any recognized exchange or in the over-the-counter market).
3.22 Inventories. (a) The inventories of Seller are properly
reflected in the Balance Sheets and are of a quality saleable in the ordinary
course of business of Seller, and (b) the values of the inventories stated in
the Financial Statements reflect Seller's normal inventory valuation policies
and were determined in accordance with GAAP consistently applied. Since May 31,
2002, no inventory items have been sold or disposed of except through sales in
the ordinary course of business.
3.23 Customers and Suppliers. Schedule 3.23 sets forth all of the
Suppliers and customers of Seller from January 1, 2002 through August 8, 2002.
The twenty (20) largest customers of Seller in the calendar year 2001 (the
"Large Customers") are listed on the final page of Schedule 3.23. Except as set
forth on Schedule 3.23 neither any of the Suppliers nor Large Customers has
canceled or otherwise terminated, or threatened to cancel or otherwise
terminate, its relationship with Seller or has, during the last twelve (12)
months, decreased materially or threatened to decrease or limit materially, its
services, supplies or materials to Seller or its usage or purchase of the
services or products of Seller. Other than as set forth on Schedule 3.23, Seller
has no Knowledge that any of the Suppliers or Large Customers intends to cancel
or otherwise adversely modify its relationship with Seller or to decrease
materially or limit its services, supplies or materials to Seller or its usage
or purchase of the services or products of Seller.
3.24 Seller Products. To the Knowledge of Seller, each product
sold, leased, distributed or delivered by Seller has been in conformity with all
applicable contractual commitments and all applicable express and implied
service and product warranties. There are no existing or, to the Knowledge of
Seller, threatened material claims against Seller for services or merchandise
which are defective or fail to meet any express or implied service or product
warranties, or any facts which, if discovered by a third party, would support
such a claim.
3.25 Xxxxxxxx.Xx representation, warranty, covenant or statement by
Seller and HMP in this Agreement, the Schedules attached hereto or the
certificates furnished or to be furnished to Purchaser pursuant hereto, contains
or will contain any untrue statement of a material fact, or
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omits or will omit to state a material fact required to be stated herein or
therein or necessary to make the statements contained herein or therein in light
of the circumstances under which they were made, not false or materially
misleading.
ARTICLE IV. REPRESENTATIONS OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
4.1 Existence and Good Standing of Purchaser. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Pennsylvania.
4.2 Power and Authority. Purchaser has the legal right, corporate
power and authority to make, execute, deliver and perform each of the
Acquisition Documents to which it is a party. Each of the Acquisition Documents
to which Purchaser is a party has been duly authorized and approved by all
required action of Purchaser. Purchaser has taken, or will take before the
Closing Date, all actions required by law, Purchaser's Articles of
Incorporation, Bylaws, or otherwise, to authorize the execution and delivery of
each of the Acquisition Documents to which Purchaser is a party, and the
performance of its obligations thereunder. This Agreement has been duly executed
and delivered by Purchaser and, upon the execution and delivery of the remaining
Acquisition Documents by a duly authorized officer of Purchaser, the remaining
Acquisition Documents will have been duly executed and delivered by Purchaser,
and this Agreement is, and such other Acquisition Documents will be, upon due
execution and delivery thereof, the legal, valid, and binding obligations of
Purchaser enforceable against it in accordance with the respective terms
thereof, subject to applicable laws relating to bankruptcy, insolvency,
moratorium or other laws relating to creditors' rights generally and to general
principles of equity.
4.3 Broker's or Finder's Fees. No agent, broker, investment
banker, person, or firm acting on behalf of Purchaser, or any person affiliated
with it, or under its authority, is or will be entitled to a financial advisory
fee, brokerage commission, finders fee or other like payment in connection with
the transactions contemplated hereby.
4.4 No Conflict.
(a) Neither the execution and delivery of each of the
Acquisition documents to which Purchaser is a party nor the consummation or
performance of any of the transactions contemplated thereby will, directly or
indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a
violation of any provision of the Organizational Documents of
Purchaser;
(ii) contravene, conflict with, or result in a
violation of, or give any Governmental Body or other Person the right
to challenge any of the transactions
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contemplated hereby or to exercise any remedy or obtain any relief
under, any Legal Requirement or any Order to which Purchaser is a party
or subject; or
(iii) contravene, conflict with, or result in a
violation or breach of any provision of, or give any Person the right
to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify, any
Contract to which Purchaser is a party.
(b) Except as set forth on Schedule 4.4(b), Purchaser is
not required, and will not be required, to give any notice to or obtain any
consent from any Person in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the transactions
contemplated hereby.
4.5 Litigation. There is no litigation or other proceeding by any
Person, pending, or to the Knowledge of Purchaser threatened, against or
affecting the transactions contemplated by this Agreement or Purchaser's ability
to consummate such transactions.
ARTICLE V. PRE-CLOSING COVENANTS
The parties agree as follows with respect to the period between the
execution of this Agreement and the Closing:
5.1 Full Access. Between the date hereof and the Closing Date,
Seller will permit Purchaser and its employees, attorneys, accountants and other
representatives to inspect the Purchased Assets and Seller's business records
relating to the Business and conduct the physical inventory referred to in
Section 2.3(b), and Seller will supply any information and copies of records
reasonably requested by Purchaser or its representatives, including current
reports regarding accounts receivable, sales and inventory; provided, however,
that such inspection shall be conducted under the supervision of Seller's
personnel and in such a manner as to maintain the confidentiality of this
Agreement and the transactions contemplated hereby and not interfere with the
operation of the Business.
5.2 Reasonable Best Efforts. Each of Purchaser, Seller and HMP
will use its reasonable best efforts to take all action and to do all things
necessary, proper or advisable in order to consummate and make effective the
transactions contemplated by this Agreement (including satisfaction, but not
waiver, of the closing conditions set forth in Articles VII and VIII below) and
will take no action, other than those of Seller and/or HMP which in their
reasonable judgment are necessary for the operation of Seller and/or the
Business, which would cause its representations and warranties to be untrue or
inaccurate in any material respect on the Closing Date.
5.3 Notices, Consents and Approvals. Seller shall give any notices
and use its reasonable best efforts to obtain any consents that may be required
from the lenders, investors or shareholders of either Seller or HMP for the
consummation of the transactions specified in this
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Agreement and as are required for the assignment of the Real Estate Lease.
Seller shall also use its reasonable best efforts to obtain an Estoppel
Certificate executed by the Landlord under the Real Estate Lease to the effect
that: (i) the use of the Real Estate in the Business is currently permitted as a
conforming use or prior non-conforming use under all zoning ordinances and
regulations applicable to the Real Estate, (ii) the Real Estate Lease is in full
force and effect and neither Seller nor the Landlord is in breach or default of
any provision of the Real Estate Lease and no event has occurred which, with
notice or lapse of time or both, would constitute a breach or default by either
party, and (iii) no event or circumstance has occurred which, with notice or
lapse of time or both, would permit a termination or modification of the Real
Estate Lease by either party thereto. Each of Purchaser and Seller will give any
notices to, make any filings with, and use its reasonable best efforts to obtain
any authorizations, consents and approvals of Governmental Bodies in connection
with the transactions contemplated by this Agreement.
5.4 Operation of the Business. From the date hereof until the
Closing Date, Seller shall, except as required by this Agreement and except as
otherwise approved by Purchaser:
(a) not enter into any transaction not in the ordinary
course of business;
(b) continue to conduct the Business in the ordinary
course and carry on the Business consistent with its prior practice and in its
normal and customary manner;
(c) maintain the Purchased Assets in normal operating
repair and condition, subject to normal wear and tear and make repairs and
replacements in accordance with prior practices;
(d) maintain its inventory at customary levels consistent
with customer demand;
(e) collect its accounts receivable in the normal course
of business;
(f) continue to pay and satisfy its liabilities in the
ordinary course of business, paying such liabilities when due and taking
advantage of any discounts for early payment in accordance with its prior
practices;
(g) continue to maintain in full force and effect or
renew or replace all policies of insurance now in effect which cover the
Purchased Assets or the Business and give all notices and present all claims
under all policies of insurance in due and timely fashion;
(h) not make any capital expenditures in excess of $5,000
or take any other action which would materially impact current or future
operations;
(i) not enter into any leases or contracts for the
purchase of raw materials, supplies or other products, utilities, services,
repairs or construction except those made in the ordinary course of business or
which may be canceled without liability upon not more than thirty (30) days'
notice;
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(j) not lower the selling price of any merchandise (other
than the sale of slow moving or obsolete inventory which do not affect pricing
levels) so as to change the gross profit percentage for such merchandise from
that prevailing on the date hereof, except in the ordinary course of business
(including reasonable price changes necessary to maintain customers, in which
case Seller shall promptly notify Purchaser) nor sell products to customers
other than in the ordinary course of business, consistent with each such
customer's historical purchasing patterns;
(k) if requested by Purchaser, encourage the Assumed
Employees to accept employment with Purchaser after the Closing Date;
(l) use its reasonable best efforts to (i) preserve the
business organization intact of Seller, (ii) keep available to Purchaser the
services of Seller's present employees and representatives and (iii) preserve
for Purchaser the goodwill of Seller's employees, suppliers, customers and other
persons with whom Seller has business relations;
(m) not enter into or amend any employment agreement with
or commitment to any employee, not enter into any contract, agreement or
understanding with any labor union or other association representing any
employee, not enter into, amend or terminate, fully or partially, any benefit
plan, or withdraw any funds from any benefit plan or trust or other funding
arrangement maintained pursuant thereto;
(n) except for annual merit increases awarded to
non-officer employees in the ordinary course of its business consistent with
past business practices, not authorize or grant any wage or salary increase or
bonus, or otherwise directly or indirectly increase compensation to or for any
employee, or agree in any manner to any such increase; authorize or grant any
loan or other advance of funds to any employee or any shareholder; or authorize,
grant or agree in any manner to pay any severance or termination pay to any such
employee;
(o) not make any material change in the accounting
methods, practices, policies, principles, or procedures of Seller relating to
the Business;
(p) not terminate any of its employees, except for good
cause;
(q) not materially change any of its business policies
relating to the Business, including advertising, marketing, pricing, production,
research and development, technology, purchasing, personnel, budget, or
acquisition policies;
(r) not enter into any lease, sublease, or contract,
regarding the acquisition, leasing or occupancy of any real estate relating to
the Business;
(s) not sell, convey, lease, abandon or otherwise dispose
of, or grant, suffer or permit any Encumbrance upon, any of the Purchased
Assets, except for the routine arm's length sales of merchandise and provision
of services in the ordinary course of business and for prices consistent with
its past business practices including those in effect immediately prior to the
date
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hereof (other than the sale of slow moving or obsolete inventory which does not
affect pricing levels);
(t) not enter into or modify in any manner any material
Contract to which it is a party or by which the Purchased Assets or the Business
are bound including contracts relating to the purchase or acquisition of any
material assets or properties and leases;
(u) keep the Business and its properties to be
transferred hereunder substantially intact, including its present operations,
physical facilities (normal wear and tear expected), working conditions and
relationships with lessors, licensors, Suppliers, customers and employees.
(v) accrue and/or pay all withholding and other Taxes on
a timely basis; and
(w) not take any action which would cause a breach of a
representation and warranty or a covenant herein or the failure of a condition
to the closing of the transactions contemplated hereby.
HMP agrees to cause Seller to comply with the covenants contained in this
Section 5.4 and to not take any action itself which would violate any provision
hereof applicable to Seller.
5.5 Notice of Developments. Each of Purchaser and Seller will give
prompt written notice to the other of any material adverse development causing a
breach of any representations and warranties in Articles III or IV above. No
disclosure by any party pursuant to this Section 5.5 shall, however, be deemed
to prevent or cure any misrepresentation, breach of warranty, or breach of
covenant.
5.6 Exclusivity. From the date hereof until the earlier of the
termination of this Agreement or the Closing, neither Seller nor HMP shall
solicit, initiate or encourage the submission of any proposal or offer from any
person relating to the acquisition of any capital stock or other voting
securities, or any substantial portion of the assets of Seller (including any
acquisition structured as a merger, consolidation or share exchange); provided,
however, that each of Seller and HMP and their directors and officers shall
remain free to participate in any discussions or negotiations regarding, furnish
any information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek any of the
foregoing to the extent their fiduciary duties require. Seller will notify
Purchaser immediately if any person makes any proposal, offer, inquiry or
contact with respect to any of the foregoing. In the event of a breach by Seller
or HMP of the covenants contained in this Section 5.6, Seller and HMP (i) shall
reimburse Purchaser, upon demand, for all of its out pocket costs and expenses
in any way related to the proposed transactions specified in this Agreement,
including counsel fees and all costs related to any of Purchaser's due diligence
activities, (ii) agree that Purchaser may immediately terminate its
distributorship relationship with Seller and commence direct sales to any and
all of Seller's customers, and (iii) irrevocably waive any notice or waiting
period otherwise required for the termination of such distributorship
relationship and any right to object or claim for monetary damages with respect
to such termination and/or Purchaser's sales to Seller's customers.
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5.7 Cooperation. Purchaser and Seller shall cooperate with each
other in attempting to obtain, prior to Closing, such licenses, permits,
consents and approvals as are necessary for Purchaser's continued use and
operation, uninterrupted, of the Purchased Assets and the Business as currently
used and operated by Seller. In furtherance of the foregoing, (i) all
significant communications related to the transaction contemplated hereby or the
ownership transition to customers, Suppliers and employees will be mutually
coordinated between Seller and Purchaser, and (ii) Seller's senior management
will be made available on a reasonable basis to coordinate transition issues
with Purchaser.
5.8 Prior Knowledge. If at any time on or before the Closing Date,
Purchaser obtains any written notification (whether through investigation or
otherwise) of any material fact which causes Purchaser to reasonably believe
that any of the representations, warranties, covenants or agreements of Seller
or HMP contained herein are untrue or inaccurate in any respect, then Purchaser
shall inform Seller and HMP of such material fact promptly in writing following
Purchaser's obtaining knowledge thereof. In the event Purchaser fails to inform
Seller and HMP of such material fact as provided herein, such failure will
constitute a waiver and release by Purchaser of any rights it may have under
this Agreement to delay the Closing or terminate this Agreement or otherwise as
a result of such representation, warranty, covenant or agreement being untrue or
inaccurate because of such material fact.
5.9 Publicity. Unless the parties mutually agree in advance or are
required by Legal Requirements, prior to the Closing, each of the parties shall
keep the terms of this Agreement strictly confidential and may not make any
disclosure of the terms of this Agreement or the transactions contemplated
hereby to any Person unless required by Legal Requirements. Any public
announcement or similar publicity with respect to this Agreement or the
transactions contemplated hereby after the Closing will be issued, if at all, at
such time, with such content and in such manner as agreed upon by the parties
hereto; provided, however, that if required by Legal Requirements, a party
hereto may make an announcement or other disclosure whether or not agreed upon
by the other parties after providing the other parties an opportunity to review
and comment on such announcement or other disclosure.
5.10 No Solicitation by Purchaser. For a period of two (2) years
following the date hereof, if this Agreement is terminated for any reason,
neither Purchaser nor any of its Affiliates shall actively solicit or induce any
employee, agent or contractor of HMP or Seller to leave such employment and
become an employee, agent or contractor of Purchaser or any of its Affiliates;
provided, however, that the employment by Purchaser of any such employee, agent
or contractor arising in response to general advertisements of Purchaser
generally seeking candidates for employment shall not constitute a violation of
this provision. Purchaser agrees not to hire any of the Retained Employees or
solicit any of the Retained Employees for the purpose of hiring them at any time
prior to September 3, 2002, whether or not this Agreement is terminated, and
thereafter, in accordance with the provisions of Section 6.2(b).
ARTICLE VI. POST-CLOSING COVENANTS
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The parties hereto agree as follows with respect to the period
following Closing:
6.1 Cooperation. Seller will cooperate with and provide such
further assurances to Purchaser as are reasonably necessary and requested to
perfect (of record or otherwise) and effectively vest Purchaser's title to or
interest in the Purchased Assets, assist Purchaser in exercising rights with
respect to the Purchased Assets, aid in the prosecution, defense or other action
regarding litigation of any rights arising therefrom or affecting the same, and
assist in making a smooth transition in ownership from Seller to Purchaser. For
a period of six (6) years following the Closing: (a) Seller will provide
Purchaser, at all reasonable times, with access to and copies of all books,
papers and records pertaining to the Purchased Assets and the Business before
the Closing Date, including records pertaining to the Assumed Employees, (b)
Seller will permit Purchaser and its employees, attorneys, accountants and other
representatives reasonable access to Seller's business records relating to the
Purchased Assets, and (c) Purchaser will permit Seller and its employees,
attorneys, accountants and other representatives reasonable access to Seller's
records transferred to Purchaser as provided in this Agreement. No consideration
will be paid for the foregoing unless the acts required are unrelated to a
representation, warranty or covenant herein and are unreasonably burdensome to
Seller or Purchaser, as the case may be, in which case reimbursement therefor
will be made at a reasonable rate.
6.2 Employees.
(a) In the event Seller terminates the employment of an
employee, whether on or after the Closing Date, Seller shall pay all applicable
severance benefits to such employee in accordance with its severance benefit
policy or any applicable Severance and Change in Control Agreement.
(b) As of the Closing, Seller will offer continued
employment to the following employees of Seller: Xxxx Xxxxx, Xxxx Xxxxx, Xxxxxx
Xxxxxxxx and Xxxx Xxxxxxxxx (the "Retained Employees"). Seller shall not be
obligated to continue any employment relationship with any of the Retained
Employees for any specific period of time. For a period of two (2) years after
the Closing Date, Purchaser shall not solicit or hire any of the Retained
Employees unless Seller (and not the Retained Employee) has terminated their
employment relationship, in which case Purchaser shall be permitted to solicit
and hire such terminated Retained Employee.
(c) As of the Closing, Seller will terminate, and
Purchaser will offer employment to, all employees of Seller other than Xxxxx
Xxxxxxxx and the Retained Employees as set forth on Schedule 6.2(c) (the
"Assumed Employees"). Purchaser shall not be obligated to continue any
employment relationship with any of the Assumed Employees for any specific
period of time and all Assumed Employees shall be "at will" employees.
(d) Seller shall be responsible for and shall pay all
wages, salaries and benefits owing or payable to Seller's employees according to
Seller's policies or otherwise required by law through the Closing Date.
Commencing on the day following the Closing Date, Purchaser, as applicable,
shall be responsible for and shall pay all wages and salaries and provide such
benefits as Purchaser deems appropriate which become payable to the Assumed
Employees hired by Purchaser and which accrue after the Closing Date. Seller
agrees not to solicit any of the
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Assumed Employees who become employees of Purchaser as a result of this
transaction during such employment.
(e) The foregoing undertakings are made solely for the
benefit of the parties hereto, and no employee of the Companies shall be deemed
to be a third party beneficiary of any of the provisions of this Section of this
Agreement in any respect.
6.3 Non-Competition.
(a) Non-Competition by Seller and HMP. Seller and HMP
agree that the Purchase Price was fixed on the basis that the transfer of the
Purchased Assets to Purchaser would provide Purchaser with the full benefit and
goodwill of Seller as it existed on the Closing Date. Seller and HMP acknowledge
that it is proper for Purchaser to have assurance that the value of the
Purchased Assets will not be diminished by acts of Seller or HMP after the
Closing Date. Accordingly, Seller and HMP covenant and agree that, during the
time period commencing on the Closing Date and ending on the date occurring
eighteen (18) months thereafter, they will not (i) acquire, start, operate, or
provide financial assistance to (in the form of borrowed money or any capital or
equity contribution), a medical products distribution company within the states
of New York, New Jersey, Connecticut, Massachusetts, Rhode Island, New
Hampshire, Vermont and Maine (collectively, the "Territory") or (ii) directly or
indirectly sell or distribute within the Territory any product that competes
with a product in the product catalogue of Purchaser on the Closing Date, a copy
of which is attached as Schedule 6.3(a); provided, however, that HMP shall not
be prohibited from selling or distributing in the Territory (i) any product in
the HMP catalogue of January 1, 2002, a copy of which is attached as Schedule
6.3(b), (ii) any product that HMP has released for sale during 2002 or will be
released for sale during the remainder of 2002, as described in Schedule 6.3(b),
(iii) any vascular access port, (iv) any Xxxxx safety needle, or (v) any pump
and related products of Medtronic, Inc. The foregoing provisions shall not apply
to investments in shares of stock of a corporation traded on a national
securities exchange or on the national over-the-counter market which constitutes
less than one percent (1%) of the outstanding shares of the stock of such
corporation.
(b) Non-Competition of Purchaser. In consideration of
HMP's covenants and obligations under this Agreement, Purchaser covenants and
agrees that, commencing on the Closing Date and ending on the date occurring
eighteen (18) months thereafter, it will not, directly or indirectly (whether by
itself or through any of its Affiliates or otherwise) sell or distribute any
implantable infusion ports within the Territory. The foregoing provision shall
not apply to investments in shares of stock of a corporation traded on a
national securities exchange or on the national over-the-counter market which
constitutes less than one percent (1%) of the outstanding shares of the stock of
such corporation.
(c) Interpretation. If any provisions of this Agreement,
and specifically the provisions of this Section 6.3, are deemed invalid by a
court of competent jurisdiction, the covenants contained herein shall be
applicable and enforceable for such lesser period of time, within such more
limited geographical area and for such lesser activity as such court may then or
thereafter determine to be reasonable and proper under the circumstances.
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6.4 Use of Name; Change of Name. Seller has transferred to
Purchaser all of its right to use the Xxxxxx Name. Seller and HMP agree not to
use and to cause their affiliates not to use the Xxxxxx Name following the
Closing without the prior written consent of Purchaser. However, Seller and HMP
may utilize, and Purchaser hereby grants Seller and HMP a fully paid-up,
royalty-free, worldwide, irrevocable, non-exclusive, non-transferable license to
utilize, without the prior written consent of Purchaser or obligation to pay
royalties to Purchaser, the Xxxxxx Name for a period of six (6) months following
the Closing, in connection with the collection of the Retained Accounts. Seller
and HMP shall, within ten (10) business days following the Closing, change
Seller's name to a name not using the Xxxxxx Name.
6.5 Confidentiality. Before and after the Closing, Seller and HMP
shall, and shall cause their respective representatives and Affiliates to, hold
in strict confidence and not use or disclose to any other party without the
prior written consent of Purchaser, all confidential information obtained from
Purchaser in connection with the transactions contemplated hereby and all
information relating to the Purchased Assets and the Business; provided,
however, that such information may be used or disclosed (i) when required by
Legal Requirements, (ii) if it is publicly available other than as a result of a
breach of this Agreement, or (iii) if it is otherwise expressly provided for
herein.
6.6 Retained Liabilities; Assumed Liabilities.
(a) From and after the date hereof through to the Closing
Date and following the Closing, Seller and HMP jointly and severally agree to
promptly pay, perform and fully discharge all of the Retained Liabilities as
they come due, including product liability and warranty claims arising out of
operation of the Business prior to the Closing Date; provided, however, that
Seller and HMP shall have the right to contest and defend any disputed claims
relating to the Retained Liabilities.
(b) Following the Closing, Purchaser agrees to promptly
pay, perform and fully discharge all of the Assumed Liabilities as they come
due, including product liability and warranty claims arising out of operation of
the Business after the Closing Date; provided, however, that Purchaser shall
have the right to contest and defend any disputed claims relating to the Assumed
Liabilities.
6.7 Tax Matters. Seller shall be responsible for and shall cause
to be prepared and duly filed all tax returns relating to Taxes of Seller.
6.8 Books and Records. For a period of six (6) years commencing on
the Closing Date, or for such longer period as may be required by applicable
law, Seller shall make all books and records relating to the Business which are
not included as part of the Purchased Assets available for inspection and
copying by Purchaser and its representatives during regular business hours upon
two (2) business days' prior notice. For a period of six (6) years commencing on
the Closing Date, or for such longer period as may be required by applicable
law, Purchaser shall make all books and records relating to the Business with
respect to the conduct thereof prior to the Closing Date available for
inspection and copying by Seller and its representatives during regular business
hours upon two (2) business days' prior notice.
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6.9 Collection of Accounts. Purchaser shall use its reasonable
efforts to collect those of the Retained Accounts which are accounts due from
customers of the Business and shall transmit such collected funds to Seller, at
the address it shall have provided, within two (2) business days after receipt
by Purchaser. Purchaser shall not, however, be required to commence or prosecute
litigation in the fulfillment of its obligations hereunder. Payments received
from customers of the Business which do not identify an invoice number shall be
applied to outstanding invoices in accordance with Seller's historic cash
application procedures on a customer-by-customer basis. In addition, if, as a
result of Purchaser's use of the post office box designation for the Seller Lock
Box Account or otherwise, Purchaser receives payment of sums which are the
property of and intended for HMP, it shall promptly remit the same to HMP.
6.10 Supplemental Disclosure. Seller and HMP shall have the right
from time to time prior to the Closing to supplement or amend the Schedules with
respect to any matter required to be set forth or described in such Schedules;
provided, however, that if the matter giving rise to such supplement or
amendment to the Schedules has a Material Adverse Effect, Purchaser shall have
the right, within five (5) days of receipt by Purchaser of such supplemental or
amended disclosure, to terminate this Agreement pursuant to Section 10.1(d)
hereof by written notice to Seller and HMP.
6.11 Submission of Purchase Orders. Purchaser will submit a
purchase order for the purchase of products to each Designated Supplier within
the Test Period.
6.12 Consent to Assignment of Customer Contract. Seller will use
its best efforts to secure from New York City Health and Hospitals Corporation,
a customer of the Business, either (i) its consent to the assignment of its
Contract with Seller to Purchaser or (ii) its commitment in writing to enter
into a similar agreement or contract with Purchaser.
ARTICLE VII. CONDITIONS TO PURCHASER'S OBLIGATIONS
Subject to the provisions of Section 10.1, all obligations of Purchaser
to be discharged under this Agreement at the Closing are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions,
unless waived in writing by Purchaser prior to or at the Closing:
7.1 Truth of Representations and Warranties. The representations
and warranties of Seller and HMP contained in this Agreement or in any Schedule
delivered pursuant hereto shall be true and correct in all material respects
when made and as of the Closing Date, and Seller and HMP shall have delivered to
Purchaser a certificate, signed by their Presidents and dated as of the Closing
Date, to such effect.
7.2 Covenants and Agreements of Seller. Each of Seller and HMP
shall have caused all covenants, agreements, and conditions required by this
Agreement to be performed or complied with by such party prior to or at the
Closing to be so performed or complied with in all material respects, and Seller
and HMP shall have delivered to Purchaser a certificate, signed by their
Presidents and dated as of the Closing Date, to such effect.
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7.3 Good Standing and Tax Certificates. Seller and HMP shall have
delivered to Purchaser (a) copies of their respective Organizational Documents
including all amendments thereto, certified by the appropriate authority in each
corporation's jurisdiction of organization, and (b) certificates as to the
existence and corporate good standing of each of them certified by the
appropriate authority in the jurisdiction in which each corporation is
organized, and (c) if available, a certificate of tax good standing of Seller
certified by the appropriate authority in the jurisdiction in which Seller is
organized.
7.4 Secretary's Certificate. Seller and HMP shall have delivered a
certificate signed by each of their Secretaries certifying (a) the truth and
correctness of attached resolutions of the directors and shareholders of each
Corporation authorizing the entry by Seller and HMP into the Acquisition
Documents and consummation of the transactions contemplated thereby and (b) the
incumbency and genuineness of signatures of all officers of Seller and HMP
executing the Acquisition Documents.
7.5 No Material Adverse Change. Prior to the Closing Date, there
shall have been no material adverse change in the assets or liabilities, the
business or condition, financial or otherwise, or the results of operations of
Seller since May 31, 2002, except as set forth on Schedule 3.5 and there shall
not have been any events, circumstances or developments which, with the passage
of time, might reasonably be expected to have a Material Adverse Effect.
7.6 No Litigation Threatened. No Order shall exist and no
proceeding shall have been instituted or, to the Knowledge of Seller, threatened
before a court or other Governmental Body or by any public authority to restrain
or prohibit any of the transactions contemplated hereby.
7.7 Approvals, Filings. All authorizations, consents and approvals
of Governmental Bodies and Seller's and HMP's lenders, investors and/or
shareholders as specified in Section 5.3 necessary to permit the consummation of
the transactions contemplated hereby shall have been received. All filings and
notices (other than those, if any, which may be required to be filed, given,
obtained or taken solely by Purchaser) shall have been duly filed, given,
obtained or taken on or prior to the Closing Date and will be in full force and
effect on the Closing Date.
7.8 Opinion of Counsel. Seller shall have furnished Purchaser with
an opinion, dated the Closing Date, of King & Spalding in a form reasonably
acceptable to Purchaser.
7.9 Lien Releases. Seller shall have obtained fully executed UCC-3
releases and other lien releases (in form approved by the appropriate
Governmental Body or department having jurisdiction and authority) from each
secured party claiming an interest in any of the Purchased Assets for filing in
all appropriate public offices, and such UCC-3 releases and other lien release
forms shall be sufficient to fully release any security interest or Encumbrance
affecting the Purchased Assets.
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7.10 Sale and Assignment Documents, Etc. Seller shall have
delivered or caused to be delivered to the Purchaser:
(a) the bills of sale, endorsements, assignments and all
other documents required under Section 2.4;
(b) such supplemental documents and other information as
are necessary to fully vest in Purchaser full legal, equitable and beneficial
title to the Purchased Assets as contemplated herein;
(c) any required consents to the assignment of the Real
Estate Lease; and
(d) any and all other certificates, documents,
instruments and/or agreements required of Seller or HMP under this Agreement.
7.11 Lock Box Agreement with LaSalle. Purchaser shall have entered
into a satisfactory arrangement or agreement with LaSalle Bank National
Association for the maintenance of a lock box for collection of the Purchased
Accounts and a cash management depository account on terms reasonably
satisfactory to Purchaser.
ARTICLE VIII. CONDITIONS TO SELLER'S OBLIGATIONS
All obligations of Seller and HMP to be discharged under this Agreement
at the Closing are subject to the fulfillment, in all material respects, prior
to or at the Closing, of each of the following conditions, unless waived in
writing by Seller prior to or at the Closing:
8.1 Truth of Representations and Warranties. The representations
and warranties of Purchaser contained in this Agreement shall be true and
correct in all material respects when made and as of the Closing Date, and
Purchaser shall have delivered to Seller a certificate, signed by its President,
dated the Closing Date, to such effect.
8.2 Covenants and Agreements of Purchaser. Purchaser shall have
caused all covenants, agreements and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing to be so performed
or complied with in all material respects. Purchaser shall have executed and
delivered to Seller a certificate, signed by its President, dated the Closing
Date, to such effect.
8.3 Good Standing Certificates. Purchaser shall have delivered to
Seller (a) a copy of its Articles of Incorporation certified by the Secretary of
State of the Commonwealth of Pennsylvania and (b) a certificate as to the
existence and corporate good standing of Purchaser certified by the Secretary of
State of the Commonwealth of Pennsylvania.
8.4 Secretary's Certificate. Purchaser shall have delivered a
certificate signed by its Secretary certifying (a) the truth and correctness of
attached resolutions of Purchaser authorizing the entry by Purchaser into the
Acquisition Documents to which it is a party and the
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consummation of the transactions contemplated hereby, and (b) the incumbency and
genuineness of signatures of all officers of Purchaser executing the Acquisition
Documents to which it is a party.
8.5 No Litigation Threatened. No Order shall exist and no
proceeding shall have been instituted or, to the Knowledge of Purchaser,
threatened before a court or other Governmental Body or by any public authority
to restrain or prohibit any of the transactions contemplated hereby.
8.6 Opinion of Counsel. Purchaser shall have furnished Seller with
an opinion, dated the Closing, of Barley, Snyder, Xxxxx & Xxxxx, LLC, in a form
reasonably acceptable to Seller.
8.7 Deliveries. Purchaser shall have delivered or caused to be
delivered to Seller:
(a) the Closing Date Payment as required by Section 2.4
herein;
(b) such agreements and instruments as shall be effective
for Purchaser to assume the Assumed Liabilities; and
(c) any and all other certificates, documents,
instruments and/or agreements required of Purchaser under this Agreement.
ARTICLE IX. INDEMNIFICATION, REMEDIES
9.1 Survival; Right to Indemnification Not Affected by
Investigation. Except as otherwise expressly provided herein, each of the
representations and warranties, contained in this Agreement, the Schedules
attached hereto, and the certificates delivered pursuant hereto, shall survive
the Closing for the duration of its respective Claim Period, as specified in
Section 9.7. All covenants and obligations of the parties in Article VI of this
Agreement shall survive the Closing as specified herein. The right of any party
hereto to indemnification, payment of Losses or other remedy based on such
representations, warranties, covenants and obligations will not be affected by
an investigation conducted with respect to, or any Knowledge capable of being
acquired at any time, whether before or after the execution and delivery of this
Agreement or the Closing Date, with respect to the accuracy or inaccuracy of or
compliance with, any such representation, warranty, covenant or obligation.
9.2 Indemnification by Seller. Seller and HMP jointly and
severally agree to defend, indemnify and hold harmless Purchaser's Indemnified
Persons from and against all Purchaser Losses:
(a) resulting from or arising out of any breach of any of
the representations or warranties made by Seller and/or HMP in or pursuant to
this Agreement or in any agreement, document or instrument executed and
delivered pursuant hereto or in connection with the Closing;
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(b) resulting from or arising out of any breach of any
covenant or agreement made by Seller and/or HMP in or pursuant to this Agreement
or in any agreement, document or instrument executed and delivered pursuant
hereto or in connection with the Closing;
(c) in respect of any Retained Liability (including in
accordance with Section 6.6(a));
(d) resulting from or arising out of any liability,
payment or obligation in respect of any Taxes owing by Seller of any kind or
description (including interest and penalties with respect thereto);
(e) resulting from or arising out of Seller's and/or
HMP's failure to comply with any applicable bulk sales laws requiring compliance
by Seller and/or HMP;
(f) resulting from or arising out of the Business prior
to the Closing Date other than with respect to the Assumed Liabilities (solely
to the extent provided in Section 2.1(c)(i) hereof);
(g) resulting from or arising out of Purchaser's failure
to receive payment in full of any of the Supplier Rebates for any reason within
one hundred fifty (150) days after the Closing Date; and/or
(h) resulting from or arising out of the matters and
circumstances described on Schedule 3.10 to the extent relating to Seller, HMP,
and/or the Business and which exceed (and to the extent such Purchaser Loses
exceed) in the aggregate the sum of Five Thousand Dollars ($5,000.00).
9.3 Indemnification by Purchaser. From and after the Closing Date,
Purchaser shall indemnify and hold harmless Seller's Indemnified Persons from
any and all Seller Losses:
(a) resulting from or arising out of any breach of any of
the representations or warranties made by Purchaser, in or pursuant to this
Agreement or in any agreement, document or instrument executed and delivered
pursuant hereto or in connection with the Closing;
(b) resulting from or arising out of any breach of any
covenant or agreement made by Purchaser in or pursuant to this Agreement or in
any agreement, document or instrument executed and delivered pursuant hereto or
in connection with the Closing;
(c) resulting from or arising out of the operation of the
Business or the use of the Purchased Assets by Purchaser on or after the Closing
Date; and/or
(d) in respect of the Assumed Liabilities (solely to the
extent provided in Section 2.1(c)(i) hereof).
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9.4 Defense of Third Party Actions.
(a) Promptly after receipt of notice of any Third Party
Action, any person who believes he, she or it may be an Indemnified Person shall
give notice to the potential Indemnifying Person of such action. The omission to
give such notice to the Indemnifying Person will not relieve the Indemnifying
Person of any liability hereunder unless it was materially prejudiced thereby.
(b) By written notice within forty-five (45) days after
receipt of a notice of a Third Party Action, an Indemnifying Person may elect to
assume control of the defense, negotiation and settlement thereof, with counsel
reasonably satisfactory to the Indemnified Person. In the event, however, that
the Indemnifying Person declines or fails to assume the defense of such Third
Party Action on the terms provided above within such forty-five (45) day period,
then the Indemnified Person may employ counsel to represent or defend it in such
Third Party Action and, if the Indemnifying Person agrees that such Third Party
Action is a matter with respect to which the Indemnified Person is entitled to
receive payment from the Indemnifying Person for Purchaser Losses or Seller
Losses, as the case may be, the Indemnifying Person will pay the reasonable fees
and disbursements of such counsel as incurred; provided, however, that the
Indemnifying Person will not be required to pay the fees and disbursements of
more than one (1) counsel for all Indemnified Persons in any jurisdiction in any
single Third Party Action. In any Third Party Action with respect to which
indemnification is being sought hereunder, the Indemnified Person or the
Indemnifying Person, whichever is not assuming the defense of such Third Party
Action, shall have the right to participate in such Third Party Action and to
retain its own counsel at such Person's own expense. The Indemnifying Person or
the Indemnified Person, as the case may be, shall at all times use reasonable
efforts to keep the Indemnified Person or the Indemnifying Person, respectively,
reasonably apprised of the status of any Third Party Action the defense of which
they are maintaining and to cooperate in good faith with each other with respect
to the defense of any such Third Party Action.
(c) The Indemnified Person shall not in the defense of
the Third Party Action enter into any settlement or consent to entry of any
judgment, except with the prior written consent of the Indemnifying Person,
which consent shall not be unreasonably withheld. The Indemnifying Person shall
not in the defense of the Third Party Action enter into any settlement which
does not include as a term thereof the giving by the third party claimant of an
unconditional release of the Indemnified Person, or consent to entry of any
judgment, except with the prior written consent of the Indemnified Person, which
consent shall not be unreasonably withheld.
9.5 Limitations on Seller's Indemnification.
(a) Indemnification Basket. Notwithstanding anything to
the contrary set forth in this Agreement, the Purchaser's Indemnified Persons
shall not make a claim against Seller or HMP for indemnification under this
Article IX for any Purchaser Losses other than those specified in the following
sentence, unless and until the aggregate amount of such Purchaser Losses under
this Article IX exceeds One Hundred Fifty Thousand Dollars ($150,000)
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(the "Indemnification Basket"), and then only to the extent that the Purchaser
Losses exceed the Indemnification Basket. The foregoing shall not apply to
claims for Purchaser Losses under Section 3.1, Section 3.2 and Subparagraphs
(b), (c), (d), (f), (g) and (h) of Section 9.2.
(b) Maximum Exposure for Certain Claims. Notwithstanding
anything to the contrary set forth in this Agreement, Seller's and HMP's
indemnification liability hereunder shall in the aggregate not exceed an amount
equal to Seven Million Dollars ($7,000,000.00) (the "Indemnification Cap"),
exclusive of claims for breaches of the representations and warranties contained
in Section 3.1, Section 3.2, the first sentence of Section 3.3, and Section
3.11, for which there shall be no limitation and the amount of which shall not
be included in the calculation of the Indemnification Cap. In addition, there
shall be no limitation on the amount of claims asserted under Subparagraphs (c),
(d), and (e) of Section 9.2 and claims thereunder shall not be included in the
calculation of the Indemnification Cap.
(c) Fraud, Etc. Notwithstanding the foregoing, the
limitations in Section 9.6(b) will not apply to any claims or losses arising
from fraud, willful misfeasance or gross misconduct committed by Seller and/or
HMP.
9.6 Procedure for Indemnification--Other Claims. A claim for
indemnification for any matter not involving a Third Party Action may be
asserted by delivering, with reasonable promptness, written notice (a "Claim
Notice") to the party from whom indemnification is sought. If, within thirty
(30) days after delivery of the Claim Notice, the party from whom
indemnification is sought does not dispute the claim in the Claim Notice, the
Purchaser Losses or Seller Losses, as the case may be, claimed in the Claim
Notice shall be conclusively deemed a liability of the indemnifying party and
such party shall pay the amount of the Purchaser Losses or Seller Losses, as the
case may be, to the indemnified party on demand.
9.7 Claims Period.
(a) The Claims Periods under this Agreement shall begin
on the date hereof and terminate as follows:
(i) For Purchaser Losses arising from a breach
of the representations and warranties contained in Sections 3.1, 3.2
and 3.20 or arising under Subsections (b) and/or (c) of Section 9.2,
the Claims Period shall have no limitation;
(ii) with respect to Purchaser Losses arising
from a breach of the representations and warranties contained in
Section 3.11 or arising under Subsections (d) or (e) of Section 9.2,
the Claims Period shall terminate on the date that is thirty (30) days
after the expiration of the applicable statute of limitations,
including any extensions thereof; and
(iii) with respect to all other Purchaser Losses
arising under Section 9.2, the Claims Period shall terminate on the
date that is twenty-four (24) months after the Closing Date; and
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(iv) with respect to Seller Losses arising under
Section 9.3, the Claims Period shall terminate on the date that is
twenty-four (24) months after the Closing Date.
(b) Notwithstanding the foregoing, if prior to the close
of business on the last day of the Claims Period, an Indemnifying Person shall
have been properly notified of a claim for indemnity hereunder and such claim
shall not have been finally resolved or disposed of at such date, such claim
shall continue to survive and shall remain a basis for indemnity hereunder until
such claim is finally resolved or disposed of in accordance with the terms
hereof.
9.8 Exclusivity. If the Closing occurs, a claim for Purchaser
Losses or Seller Losses, as the case may be, pursuant to this Article IX shall
be the Indemnified Persons' sole and exclusive remedy for an item described in
Section 9.2 or 9.3; provided, however, that the Indemnified Persons shall retain
their legal and equitable remedies with respect to covenants and agreements to
be performed and complied with by the Indemnifying Persons subsequent to the
Closing Date.
9.9 Set-off. In addition to any other remedies it may have
hereunder or otherwise, Purchaser shall be entitled to set-off any amounts due
to it under this Article IX, dollar for dollar, against any payments to be made
to Seller under the Note, and the amount set-off against the Note shall be
deemed to have been paid in full thereon.
ARTICLE X. MISCELLANEOUS
10.1 Termination. This Agreement may, by notice given prior to or
at the Closing, be terminated:
(a) by the mutual written agreement of the parties;
(b) by either Purchaser or Seller, if a material breach
of any provision of this Agreement has been committed by the other party and
such breach has not been waived or cured within ten (10) business days of
written notice from the other party;
(c) (i) by Purchaser, if any of the conditions
contained in Article VII has not been satisfied as of September 3, 2002, or if,
prior to September 3, 2002, satisfaction of such a condition is or becomes
impossible (other than through the failure of Purchaser to comply with its
obligations under this Agreement), and Purchaser has not waived such condition,
or (ii) by Seller, if any of the conditions in Article VIII has not been
satisfied as of September 3, 2002, or if, prior to September 3, 2002,
satisfaction of such a condition is or becomes impossible (other than through
the failure of Seller to comply with its obligations under this Agreement), and
Seller has not waived such condition; provided, however, that if the condition
or conditions which have not been satisfied are susceptible of satisfaction and
the party having the ability to satisfy such condition is diligently pursuing
its satisfaction, then Purchaser and Seller shall agree (which agreement shall
not be unreasonably withheld) to a reasonable extension or extensions of the
Closing Date to a subsequent date no later than September 16, 2002;
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(d) by Purchaser, within five (5) days following receipt
of any supplement or amendment of Seller to the Schedules, by written notice to
Seller and HMP if the matter which gives rise to such supplement or amendment
has a Material Adverse Effect; or
(e) if the Closing shall not have occurred (other than
through the failure of any party seeking to terminate this Agreement to comply
fully with its obligations under this Agreement) as of September 16, 2002, or
such later date as the parties may agree upon in writing.
10.2 Procedure and Effect of Termination. In the event of the
termination of this Agreement and the abandonment of the transactions
contemplated hereby pursuant to Section 10.1 hereof, written notice thereof
shall forthwith be given by the party so terminating to the other parties, and
this Agreement shall terminate and the transactions contemplated hereby shall be
abandoned without further action by any party. If this Agreement is terminated
pursuant to Section 10.1 hereof:
(a) each party shall redeliver all documents, work papers
and other materials of the other parties relating to the transactions
contemplated hereby, whether obtained before or after the execution hereof, to
the party furnishing the same or, upon prior written notice to such party, shall
destroy all such documents, work papers and other materials and deliver notice
to the party seeking destruction of such documents that such destruction has
been completed, and all confidential information received by any party with
respect to the other parties shall be treated in accordance with the
Confidentiality Agreement;
(b) all filings, applications and other submissions made
pursuant hereto shall, at the option of Seller, and to the extent practicable,
be withdrawn from the agency or other Person to which made;
(c) there shall be no liability or obligation hereunder
on the part of Seller, HMP or Purchaser or any of their respective directors,
officers, employees, Affiliates, controlling Persons, agents or representatives,
except that Seller or Purchaser, as the case may be, shall have liability to the
Purchaser or Seller, as the case may be, if the basis of termination is a
material breach by Seller or Purchaser, as the case may be, of one or more of
the provisions of this Agreement, and except that the obligations provided for
in this Section 10.2 and Section 10.4 hereof and in the Confidentiality
Agreement shall survive any such termination; and
(d) if this Agreement has been terminated by Purchaser,
pursuant to Section 10.1(b) as a result of a material breach of a provision of
this Agreement by Seller, Purchaser may immediately terminate its
distributorship relationship with Seller and commence direct sales to any and
all of Seller's customers and Seller and HMP irrevocably waive any notice or
waiting period otherwise required for the termination of such distributorship
relationship and any right to object or claim monetary damages with respect to
such termination and/or Purchaser's sales to Seller's customers.
10.3 Arbitration. Any dispute among the parties under this
Agreement, including a dispute concerning the obligation of any party to
indemnify another party hereunder, shall be
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determined by a single arbitrator. A dispute shall be submitted to arbitration
upon the written demand for arbitration by either party. The arbitrator shall be
selected under the Commercial Arbitration Rules of the American Arbitration
Association and the arbitration shall be conducted under such rules. Any award
or determination in such arbitration shall be final, binding and conclusive
except as otherwise provided by law and may be entered as a final judgment in
any court having jurisdiction. The arbitrator in any arbitration may assess the
costs of arbitration against either party or against both parties and may award
attorneys fees to the prevailing party.
10.4 Expenses. The parties shall pay all of their own expenses
relating to this Agreement and the transactions contemplated hereby, including
the fees and expenses of their respective counsel and financial advisors.
10.5 Governing Law. THIS AGREEMENT, INCLUDING THE VALIDITY HEREOF
AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY IN SUCH STATE (WITHOUT
GIVING EFFECT TO THE CONFLICTS OF LAWS PROVISIONS THEREOF).
10.6 Enforcement; Remedies. In the event either party shall seek
enforcement of any covenant, warranty or other term or provision of this
Agreement or seek to recover damages for the breach thereof, the party which
prevails in such proceedings shall be entitled to recover reasonable attorneys'
fees and expenses actually incurred by it in connection therewith. If any party
commits a breach or default, or threatens to commit a breach or default, of any
of the provisions of Sections 6.3 and 6.5, the other party shall have the right
and remedy, in addition to any others, to have the provisions of such sections
specifically enforced by any court having equity jurisdiction and shall be
entitled to injunctive relief, it being acknowledged and understood by the
parties that any such breach or threatened breach will cause irreparable injury
to the other party and that money damages will not provide an adequate remedy
therefor.
10.7 Investigation by Purchaser. Purchaser has conducted its own
independent review and analysis of the business, operations, technology, assets,
liabilities, results of operations, financial condition and prospects of Seller
and acknowledges that Seller has provided Purchaser with access to the
properties, premises and records of Seller for this purpose. In entering into
this Agreement, Purchaser has relied solely upon its own investigation and
analysis, and Purchaser (a) acknowledges that neither HMP, Seller nor any of
their respective directors, officers, employees, Affiliates, controlling
Persons, agents or representatives makes or has made any representation or
warranty, either express or implied, as to the accuracy or completeness of any
of the information provided or made available to Purchaser or its directors,
officers, employees, Affiliates, controlling Persons, agents or representatives,
except as and only to the extent expressly set forth in the representations and
warranties of Seller and HMP in Article III of this Agreement and subject to the
limitations and restrictions contained herein, and (b) agrees, to the fullest
extent permitted by law, that neither HMP, Seller nor any of their respective
directors, officers, employees, Affiliates, controlling Persons, agents or
representatives shall have any liability or responsibility whatsoever to
Purchaser or its directors, officers, employees,
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Affiliates, controlling Persons, agents or representatives on any basis
(including in contract or tort or otherwise) based upon any information provided
or made available, or statements made, to Purchaser or its directors, officers,
employees, Affiliates, controlling Persons, agents or representatives (or any
omissions therefrom), except as and only to the extent expressly set forth in
the representations and warranties of Seller and HMP in Article III of this
Agreement and subject to the limitations and restrictions contained herein.
10.8 Captions; References. The Article and Section captions used
herein are for reference purposes only, and shall not in any way affect the
meaning or interpretation of this Agreement. The use of the word "including" in
any case in this Agreement shall be deemed to mean "including, without
limitation".
10.9 Variation in Pronouns. All pronouns and any variations thereof
refer to the masculine, feminine or neuter, singular or plural, as the identity
of the Person or Persons may require.
10.10 Notices. Any notice or other communications required or
permitted hereunder shall be in writing and, unless otherwise provided herein,
shall be deemed to have been duly given upon delivery in person, by facsimile,
by overnight courier or by certified or registered mail, return receipt
requested, as follows:
If to Seller or HMP: Horizon Medical Products, Inc.
Seven North Parkway Square
0000 Xxxxxxxxx Xxxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
With copies to: Xxxxxxxxx & Virgin
Xxxxx 0000
000 Xxxxxx Xxxxxx
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxx X. Xxxxxxxxx III, Esquire
Facsimile: (000) 000-0000
and
King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxx X. Xxxxxx, Xx., Esquire
Facsimile: (000) 000-0000
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If to Purchaser: Arrow International, Inc.
0000 Xxxxxxxxx Xxxx
X.X. Xxx 00000
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxxxx X. Xxxx
Vice President-Finance, CFO
Facsimile: (000) 000-0000
With a copy to: Barley, Snyder, Xxxxx & Xxxxx, LLC
000 Xxxxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esquire
Xxxxxxx X. Xxxxx, Esquire
Facsimile: (000) 000-0000
or at such other address or telecopy number as shall have been furnished in
writing by any such party in the manner set forth herein. Each such notice or
other communication shall be effective (i) when received, if hand delivered,
(ii) upon confirmation of receipt, if by facsimile, (iii) one day following
deposit, if sent by overnight courier, or (iv) on the third business day
following the date on which such communication is posted, if sent by certified
or registered mail.
10.11 Parties in Interest. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and its respective successors
and permitted assigns. This Agreement may not be transferred, assigned, pledged
or hypothecated by any party hereto without the prior consent of the other
parties hereto; provided that Purchaser may assign its rights hereunder,
including the right to purchase the Purchased Assets, to a wholly-owned
subsidiary of Purchaser, so long as Purchaser expressly agrees in writing to
remain liable for all obligations of Purchaser hereunder.
10.12 Counterparts. This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one instrument.
10.13 Entire Agreement. This Agreement, including the other
documents referred to herein which form a part hereof or any other written
agreements that the parties enter into pursuant to or relating to the
transactions contemplated by this Agreement, and the Confidentiality Agreement
contain the entire understanding of the parties hereto with respect to the
subject matter contained herein and therein, and supersede all prior agreements
and understandings between the parties with respect to such subject matter. All
Exhibits and Schedules referred to herein and attached hereto are incorporated
herein by reference.
10.14 Amendments. This Agreement may not be changed or modified
orally, but only by an agreement in writing signed by Seller, HMP and Purchaser.
10.15 Severability. Any term or provision of this Agreement
(including any provision of Section 6.3) which is invalid or unenforceable in
any jurisdiction shall, as to that jurisdiction,
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be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
10.16 Third Party Beneficiaries. Each party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any Person other than the parties hereto.
10.17 Joint Preparation. This Agreement has been prepared by the
joint efforts of the respective attorneys to each of the parties. No provision
of this Agreement shall be construed on the basis that such party was the author
of such provision.
10.18 Waiver. Except to the extent that a party may have otherwise
agreed in writing, no waiver (including proceeding to the Closing) by such party
of any breach by any other party of any such other party's representations,
warranties, obligations, agreements or covenants hereunder will be deemed to be
a waiver of any subsequent breach of the same or any other representations,
warranties, obligations, agreements or covenants. No forbearance by a party to
seek a remedy for any breach by any other party will be deemed a waiver of its
rights or remedies with respect to such breach, except to the extent that such
party otherwise agrees in writing.
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IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the day and year first above written.
XXXXXX CORPORATION
By: /s/ Xxxxxxxx X. Xxxx
-----------------------------------
Name: Xxxxxxxx X. Xxxx
Title: Chief Executive Officer
HORIZON MEDICAL PRODUCTS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx, Xx.
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxx, Xx.
Title: President
ARROW INTERNATIONAL, INC.
By: /s/ Xxxxxxxxx X. Xxxx
-----------------------------------
Name: Xxxxxxxxx X. Xxxx
Title: Vice-President Finance and CFO
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