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EXHIBIT 10.16
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") dated October 24,
1995, by and among HORIZON MEDICAL PRODUCTS, INC., a Georgia corporation
("Horizon"); HORIZON ACQUISITION CORP., a Georgia corporation ("Purchaser");
NEOSTAR MEDICAL TECHNOLOGIES, INC., a Delaware corporation ("Seller"); and
XXXXXX X. XXXX ("Xxxx"), XXXXXX X. XXXXXX, XX ("Xxxxxx"), XXXXX X. XXXXXXXXXXX
("Xxxxxxxxxxx"), and XXXXXXX X. XXXXX, as Trustee of the Xxxxx Family Trust
("Xxxxx") (Pike, Darden, Bronnenkant and Xxxxx, collectively, the
"Shareholders").
RECITALS:
A. WHEREAS, Seller is engaged in the business of manufacturing and
selling various medical device products, including without limitation catheter
and needle products and chronic central venous critical care products and acute
central venous critical care products (the "Business");
B. WHEREAS, Seller conducts its manufacturing operations and the
principal operations of the Business at 000 Xxxx Xxxx, Xxxx xx Xxxxxxx,
Xxxxxxxxxxxx 00000 (the "Operations Facility") and operates an administrative
facility at 000 Xxxxx Xxxxxx Xxxxx, Xxxxx Xxxxxxxxx, Xxx Xxxxxx (the
"Administration Facility");
C. WHEREAS, Shareholders are the principal shareholders of Neostar
Holdings, Inc., the sole shareholder of Seller ("Holdings");
D. WHEREAS, Purchaser is a wholly owned subsidiary of Horizon;
E. WHEREAS, Purchaser has agreed that on the terms and conditions set
forth herein, Purchaser will purchase certain assets of Seller, free and clear
of all liens, encumbrances and claims of any kind, and will assume certain
liabilities of Seller.
NOW, THEREFORE, for and in consideration of the mutual promises and
covenants herein contained and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
1. AGREEMENT TO SELL AND AGREEMENT TO PURCHASE.
1.1. Transferred Assets. Subject to the terms and conditions
and in reliance upon the representations, warranties and covenants herein
contained, Purchaser hereby agrees to purchase, and Seller hereby agrees to
sell, at Closing (as hereinafter defined), the following described assets of
Seller and the Business of Seller (collectively, the "Transferred Assets"):
(a) All inventories of Seller (including, without
limitation, raw materials, work in process and finished goods
(collectively, the "Product Inventory")), and all office supplies,
containers and other packaging materials, safety equipment, maintenance
supplies and other similar items of Seller (collectively, the
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"Supplies Inventory"; the Product Inventory and Supplies Inventory
together referred to herein as the "Inventory"), the Product Inventory
being described in the computer printout and/or lists delivered by
Seller to Purchaser at the Closing;
(b) All prepaid items, deposits and other similar
assets of Seller (the "Prepaid Expenses"), including without limitation
those items described in the Interim Financial Statements;
(c) All accounts and accounts receivable of Seller
(the "Accounts Receivable") as described in the computer printout
delivered by Seller to Purchaser at the Closing;
(d) All furniture, fixtures, machinery and equipment
of Seller (the "Fixed Assets"), including without limitation those
items located at the Operations Facility or the Administration
Facility;
(e) All right, title and interest of Seller in and
to the Xxxxxxxx License Agreements ("Xxxxxxxx Licenses"), as described
on Schedule 1.1(e);
(f) All right, title and interest of Seller in leases
(including without limitation the lease of the real property and
improvements relating to the Operations Facility (the "Operations
Facility Lease")), licenses, contracts, agreements, employee secrecy or
confidentiality agreements, distribution agreements and all other
contracts, written or oral, to which Seller is a party, as listed on
Schedule 1.1(f) (hereinafter referred to collectively as "Contracts");
(g) All patents, patent applications, copyrights,
copyright applications, trademarks, and trademark registrations and
applications (in each such case, whether registered or to be registered
in the United States or elsewhere) owned or licensed by Seller, and
each process, invention, trade secret, trade name, computer program and
formula, including without limitation items of the type described in
this Section 1.1(g) set forth on Schedule 1.1(g);
(h) All FDA 510(k) filings and other FDA filings for
Seller's products, all product drawings, all product test protocols and
results, all biocompatibility data, all customer lists, all computer
software, all rights in software used, but not owned, pursuant to
license or otherwise (all as listed on Schedule 1.1(h)), sales
brochures, medical records, data bases, all books and records,
correspondence, production records and any and all confidential
information relating to or arising out of the Business;
(i) All right, title and interest of Seller in the
names "Neostar" and "Neostar Medical Technologies"; and
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(j) All other assets of Seller not listed on
Schedules 1.1(a) through 1.1(h) as set forth on Schedule 1.1(i).
1.2. Excluded Assets. The following assets, properties and
records of Seller are excluded from the Transferred Assets: The minute book and
stock records of Seller and all predecessor corporations to Seller and Seller's
rights and interests under any leases for the Administration Facility.
1.3. Further Assurances. From time to time after the Closing,
Seller will execute and deliver to Purchaser such instruments of sale, transfer,
conveyance, assignment and delivery, consents, assurances, powers of attorney
and other similar instruments as may be reasonably requested by Purchaser or its
counsel in order to vest in Purchaser all rights, title and interest of Seller
in and to the Transferred Assets and otherwise in order to carry out the
purposes and intent of this Agreement. Notwithstanding any provision of this
Agreement to the contrary, Seller agrees that prior to the Closing Seller shall
not (i) take any action that would cause a material decrease in the value of the
good will of Seller, including but not limited to Seller's relationships with
each of its customers, or (ii) fail to take any reasonable action of which
Seller becomes aware that would prevent a material decrease in such value.
1.4. Closing. The closing of the transactions herein
contemplated (the "Closing") shall, unless another date, time or place is agreed
to by the parties hereto, take place at the office of Purchaser, Atlanta,
Georgia at 9:30 p.m., local time, on October 24, 1995 (the "Closing Date").
2. LIABILITIES OF SELLER.
2.1. Assumption of Liabilities of Seller. In connection with
the purchase and sale of the Transferred Assets, it is expressly understood and
agreed that Seller shall remain liable for all obligations, responsibilities and
liabilities of Seller, whether incurred or accrued in connection with the
operation of the Business or otherwise, except only those liabilities and
obligations of Seller relating to the Transferred Assets expressly assumed and
agreed to be discharged by Purchaser (collectively, the "Assumed Liabilities")
under the terms of the Assumption Agreement, in the form attached hereto as
Exhibit A, to be executed and delivered at closing. The Assumed Liabilities are
those liabilities that are specifically described in Schedule 2.1.
2.2. Liabilities Not Assumed by Purchaser. Except for the
Assumed Liabilities, Purchaser shall not assume and shall not be liable for any
other expense, obligation, responsibility or liability whatsoever (including any
contingent liability) of Seller or Holdings, including without limitation any
responsibility or liability (a) for federal, state or local income taxes for any
period or for any other federal, state or local taxes of any nature, except as
provided in Section 2.1 above, relating to Seller, Holdings, the Business or the
Transferred Assets; or (b) with respect to any suit, proceeding, arbitration,
claim or counterclaim or any actions or occurrences constituting the basis
therefor, whether or not such suit, proceeding, arbitration, claim or
counterclaim is first asserted before or after the Closing Date, except to the
extent such suit, proceeding, arbitration, claim or
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counterclaim involves an Assumed Liability; or (c) for any legal fees,
accounting fees or other costs incurred by Seller or Shareholders in connection
with the transactions described in this Agreement, or (d) for any liabilities
under Seller's or Holding's lease agreement for the Administration Facility; or
(e) with respect to any product defect or liability claim for products that were
manufactured and sold by Holdings or by Seller prior to the Closing; or (f) for
any indebtedness owed by Seller to Holdings or to the Shareholders of Holdings;
or (g) obligations of Seller or Holdings to employees and former employees of
Seller or Holdings, including without limitation the obligations described in
Schedule 4.14 hereto excluding, however, severance pay described in Schedule
4.14 hereto for Xxx Xxxxx and Xxxxx Xxxxxx.
3. PURCHASE PRICE.
3.1. Purchase Price. Subject to the provisions of this Section
3, the aggregate purchase price ("Purchase Price") for the Transferred Assets
shall be Three Million Nine Hundred Sixty-One Thousand Seventeen Dollars
($3,961,017.00), plus the amount of the Assumed Liabilities, and shall be
allocated among the Transferred Assets in the manner provided on Schedule 3.1.
3.2. Payment of Purchase Price. The Purchase Price shall be
paid as follows:
(a) At the Closing, Purchaser shall pay to Seller One Million
Five Hundred Thousand Dollars ($1,500, 000.00) by bank cashiers check
or wire transfer, in immediately available federal funds, in the manner
designated by Seller; and
(b) A subordinated note in the amount of Two Million Four
Hundred Sixty-One Thousand Seventeen Dollars ($2,461,017.00) (the
"Note") with' installments payable to Seller in the amounts provided
therein. The form of the Note is set forth in Exhibit B to this
Agreement. The Note will be secured by a second lien on the Transferred
Assets (the "Collateral"), which lien will be subordinated to the
indebtedness of Purchaser to Sirrom Capital Corporation ("Sirrom") and
Sirrom's first lien on the Transferred Assets, pursuant to security
agreements in form and content acceptable to Seller and Purchaser.
3.3. Reduction in Indebtedness Under Note and NonCompetition
Agreements.
(a) The indebtedness represented by the Note and the
indebtedness owed under the Non-Competition Agreements will be reduced in the
aggregate amount of Five Hundred Thousand Dollars ($500,000.00), in the manner
provided in Section 3.3(c) below, in the event that all of the following
conditions are not satisfied unless Souerwine is terminated without cause by
Purchaser:
(i) Xxxxx X. Xxxxxxxxx ("Xxxxxxxxx") must become an
employee of Purchaser as of the Closing Date and must execute and
deliver the Employment
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Agreement attached hereto as Exhibit D.
(ii) As an employee of Purchaser, for the term of
his Employment Agreement Souerwine must supervise Purchaser's
manufacturing operations in the Operations Facility until the
manufacturing operations are moved to Purchaser's new manufacturing
facility in Georgia.
(iii) During the term of his Employment Agreement, as
an employee of Purchaser, Souerwine must supervise Purchaser's move of
the manufacturing operations from the Operations Facility to
Purchaser's new manufacturing facility in Georgia.
(iv) After the move of such manufacturing operations
into Purchaser's new manufacturing facility in Georgia, as an employee
of Purchaser provided such move occurs during the term of his
Employment Agreement, Souerwine must staff such manufacturing facility
and must supervise and be responsible for such manufacturing facility's
becoming operational and producing, to Purchaser's reasonable
satisfaction, all products (with the exception of dual lumen fistula
needles which have been previously discontinued by Seller) that Seller
was manufacturing at the Operations Facility during the year prior to
the Closing Date.
(v) Seller will pay to Purchaser the amount of
$14,000 on or prior to the last day of each month after the Closing
through May 1996 or through the last month in which Souerwine is
employed by Purchaser if he ceases to be employed prior to May 1996.
(vi) Purchaser's move of the manufacturing
operations from the Operations Facility to Purchaser's facility in
Georgia is not impaired by action being taken by any of Seller's
present or former shareholders, officers, directors or employees that
materially and adversely affects Purchaser's move.
In the event Souerwine should die or become disabled while employed by
Purchaser and while attempting to satisfy the above conditions, then the
Shareholders may, within sixty (60) days after such death or disability, replace
Souerwine with an individual who would be retained by Purchaser as an employee
or consultant and be given the opportunity under an employment agreement or
consulting agreement to satisfy the above conditions. Such individual must be
acceptable to Purchaser, and his compensation in an amount acceptable to the
Shareholders would be paid by Seller or the Shareholders through May, 1996.
(b) The indebtedness represented by the Note and the
indebtedness under the Non-Competition Agreements will be reduced, in the manner
provided in Section 3.3(c) below, by the following amounts:
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(i) to the extent that any outstanding Accounts
Receivable on the books and records of Seller as of the Closing Date,
other than amounts owed by Horizon to Seller, that is older than sixty
(60) days for any domestic customer of Seller or older than one hundred
twenty days (120) for any non-domestic customer of Seller are not
collected by Purchaser, then the amount of such accounts receivable
that are not collected (net of the allowance for doubtful accounts
shown on the September 30, 1995 balance sheet of Seller) will reduce
the indebtedness under the Note and the indebtedness under the
Non-Competition Agreements.
(ii) to the extent any raw materials or finished
goods inventory of Seller reflected on the September 30, 1995 balance
sheet is obsolete inventory, then the amount of such obsolete inventory
on such balance sheet (net of the inventory reserve shown on such
balance sheet) will reduce the indebtedness under the Note and the
indebtedness under the Non-Competition Agreements.
(iii) to the extent any equipment, furniture and
fixtures or molds of Seller reflected on the September 30, 1995 balance
sheet are obsolete, then the amount of such obsolete items on such
balance sheet (net of accumulated depreciation for such obsolete item)
will reduce the indebtedness under the Note and the indebtedness under
the Non-Competition Agreements.
(c) In the event the indebtedness owed under the Note and the
indebtedness owed under the Non-Competition Agreements are reduced under Section
3.3(a) or Section 3.3(b) above, then the following reductions ("reduction
amount") shall be made:
(i) for each such reduction amount, there shall be
a reduction in the same amount as the reduction amount in the aggregate
of indebtedness owed under the Note and indebtedness owed under all
Non-Competition Agreements, commencing with indebtedness payable under
the Note and under the Non-Competition Agreements in 1997, with the
reduction made in the most immediate payments payable at the time of
the reduction until the entire reduction amount is so applied and used.
For example, for the reduction described in Section 3.3(a) above
(assuming no reduction as of that time under Section 3.3(b)), the
reduction would reduce and be applied against all payments due for the
twelve months during 1997 under the Note (under which $212,235 is
payable during 1997) and under the Non-Competition Agreements (under
which an aggregate of $287,765 is payable during 1997).
As a further example, if there is a reduction of $30,000 under
Section 3.3(b) above and there has been no reduction as of that time
under Section 3.3(a), then the reduction amount would be applied
against the indebtedness payable on January 31, 1997 under the Note and
under the Non-Competition Agreements on the basis of a $12,735
reduction under the Note (such amount being determined by
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$17,686.25/$41,667 X $30,000) and a $17,265 reduction in the aggregate
under the Non-Competition Agreements (such amount being determined by
$23,98l/$41,667 X $30,000).
The $17,265 reduction in the aggregate under the
Non-Competition Agreements under such example, as well as any other
reduction of indebtedness under the Non-Competition Agreements that
does not reduce and eliminate the entire indebtedness payable on a
specific date under all Non-Competition Agreements, will be allocated
among the Shareholders in the following percentages:
Pike Non-Competition Agreement - 30.36%
Xxxxxx Non-Competition Agreement - 30.36%
Bronnenkant Non-Competition Agreement - 20.15%
Xxxxx Non-Competition Agreement - 19.13%
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100.00%
(ii) in the event that at the time of any reduction
under this Section 3.3(c), no remaining amount is owed to a particular
Shareholder under his Non-Competition Agreement pursuant to the
provisions of such Non-Competition, then the percentages set forth
above for the other remaining Shareholders will be recomputed on a pro
rata basis. In the event that at the time of any reduction under this
Section 3.3(c), (x) no remaining amount is owed to any of the
Shareholders under their Non-Competition Agreement or (y) the remaining
amount owed to the Shareholders in the aggregate under their
Non-Competition Agreements at the time of the reduction is less than
the total reduction amount for the Non-Competition Agreements under
paragraph (i) above, then the entire reduction amount under (x) above
or the remaining unused reduction amount under (y) above shall reduce
the indebtedness under the Note in the manner provided in paragraph (i)
above.
The provisions of this Section 3.3 are intended by the parties to work
in conjunction with, and not contrary to, the offset provisions in Section 8.4
hereof and Schedule 8.4. In the event there are both reductions in indebtedness
under Sections 3.3(a) and/or 3.3(b) and offsets under Section 8.4, such
reductions and offsets will not be duplicative but will reduce and offset
different amounts of indebtedness in the order that the reductions and offsets
are made pursuant to this Section 3.3 and the provisions of Section 8.4 and
Schedule 8.4 hereof and the Note and the Non-Competition Agreements.
3.4. NonCompetition Agreements and Kapany Agreement. Each of
the Shareholders will enter into at the Closing a Non-Competition and Consulting
Agreement ("Non-Competition Agreement") with Purchaser substantially in the form
attached hereto as Exhibit C. As described in Schedule 3.4 hereto, each
Non-Competition Agreement will provide for a schedule of payments to each
Shareholder in the manner provided therein, which indebtedness of Purchaser will
be secured by the Collateral.
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3.5. Operating Covenants. Purchaser and Horizon shall perform
the covenants set forth in Schedule 3.5.
4. REPRESENTATIONS AND WARRANTIES OF SELLER.
In order to induce Purchaser to enter into this Agreement and
to consummate the transactions contemplated hereunder, Seller represents and
warrants to and covenants with Purchaser that:
4.1. Outstanding Securities.
(a) The authorized capital stock of Seller consists solely of
9,000,000 shares of Common Stock, $.01 par value per share, of which 4,500,000
shares (the "Shares") are issued and outstanding. All of the issued and
outstanding Shares are owned of record or beneficially by Holdings. No shares
are held by Seller as treasury shares.
(b) Except as set forth in paragraph 4.1(a) above, there are
no other debt or equity securities of Seller outstanding. Schedule 4.1 contains
a listing of any and all agreements or other obligations to issue or any rights
to convert any obligations into, any shares of capital stock of Seller.
4.2. Organization, Good Standing and Authority. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the state of Delaware. Seller has full authority and power to carry on its
business as it is now conducted and to own or lease, and operate, the Business.
Seller is qualified to do business and is in good standing and has all required
and appropriate licenses in each jurisdiction in which its failure to obtain or
maintain such qualification, good standing or licensing would have a material
and adverse effect on the condition (financial or otherwise), assets, properties
or prospects of the Business. Seller has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement and each other agreement herein contemplated
to be executed in connection herewith by Seller have been (or upon execution
will have been) duly executed and delivered by Seller and constitute (or upon
execution will constitute) legal, valid and binding obligations of Seller,
enforceable against Seller in accordance with their respective terms. This
Agreement and the transactions contemplated herein have been duly approved by
the Board of Directors and the Shareholder of Seller.
4.3. Books and Records of Seller. True and correct copies of
the charter documents, bylaws, and minutes from Seller's minute books have been
delivered to Purchaser. Seller's minute books (through September 30, 1995) are
complete and accurate as to the records of all proceedings and/or actions of its
incorporators, shareholders and directors, and reflect all matters required to
be acted on by the shareholders and directors from its incorporation to the date
of this Agreement.
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4.4. Ownership of Assets. Seller is the lawful owner of or has
the right to use each of the Transferred Assets, and, except as disclosed on
Schedule 4.4 attached hereto, the Transferred Assets are free and clear of all
liens, mortgages, pledges, security interests, restrictions, prior assignments,
encumbrances and claims of any kind or nature whatsoever. At Closing, Seller
will except as disclosed on Schedule 4.4:
(a) with respect to Transferred Assets other than
those listed on Schedules 1.1(e) and 1.1(f) have good title to such
assets, free and clear of all liens, mortgages, pledges, security
interests, restrictions, prior assignments, encumbrances and claims of
any kind or nature whatsoever; and
(b) with respect to the Transferred Assets described
in Sections 1.1(e) and 1.1(f) hereof, have all rights of possession
and/or enforcement to allow Seller to realize the full benefits of such
items in accordance with the terms of any written or oral agreements
underlying such assets.
By instrument dated November 1, 1994, Holdings conveyed all of its
operational assets to Seller, the wholly owned subsidiary of Holdings. Such
transfer and conveyance was duly approved by the Board of Directors and the
Shareholders of Holdings, was a valid conveyance and transfer of such assets and
is binding upon Holdings, Seller and their respective creditors.
4.5. Financial Statements.
(a) Annual Financial Statements. Included with
Schedule 4.5(a) attached hereto are the unaudited balance sheet of
Seller as of December 31, 1994, and the related statements of income
for the fiscal year then ended, as prepared by Seller (collectively,
the "Annual Financial Statements"). Except as disclosed on Schedule
4.5(a), the Annual Financial Statements (i) have been prepared in
accordance with the books and records of Seller, and (ii) fairly
present the financial condition and the results of operations of the
Business and of Seller as of the relevant dates thereof and for the
periods covered therein.
(b) Interim Statements. Included with Schedule 4.5(b)
attached hereto is an unaudited balance sheet and the related statement
of income of Seller as of and for the nine month period ended September
30, 1995 (collectively, the "Interim Financial Statements"). Except as
disclosed on Schedule 4.5(b), such Interim Financial Statements (i)
have been prepared in accordance with the books and records of Seller,
and (ii) fairly present the financial condition and the results of
operations of the Business and of Seller as of the date thereof and for
the period covered therein.
4.6. Absence of Certain Changes. Except as disclosed on
Schedule 4.6 attached hereto or as otherwise provided for or contemplated in
this Agreement, since the date of the Interim
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Financial Statements, there has not been any (i) transaction or occurrence
relating to the Business or the Transferred Assets other than in the ordinary
course of business, (ii) sale or disposition of any Fixed Assets, (iii) sale or
disposition of Inventory other than in the ordinary course of business, or (iv)
event or condition of any character which is reasonably likely to have or has
had a material and adverse effect on the condition (financial or otherwise),
assets, properties or prospects of the Business.
4.7. Real Property and Leaseholds. Seller does not own any
real property. Schedule 4.7 attached hereto contains a list of all real
properties used by Seller in the Business, under which Seller is a lessee,
sublessee or sublessor. A true and complete copy of each such lease or sublease
has been provided to Purchaser. Except as indicated on Schedule 4.7:
(a) No officer, director, shareholder or employee of
Seller, nor any spouse, child or other relative or affiliate thereof,
owns directly or indirectly, in whole or in part, any of the real
properties described on Schedule 4.7 or any interest therein;
(b) Seller is not in default with respect to any term
or condition of any such lease, including, without limitation, the
Operations Facility Lease, nor, to the best knowledge of Seller has any
event occurred which, through the passage of time or the giving of
notice, or both, would constitute a default thereunder, would cause the
acceleration of any obligation of Seller or the creation of a lien or
encumbrance upon any of the Transferred Assets or interfere with
Seller's right to occupy the leasehold;
(c) The Operations Facility Lease is enforceable by
Seller in accordance with its terms;
(d) Seller has not received any notice that any such
building, fixtures or improvements is in violation of any applicable
building code; zoning ordinance, land use or other similar law or
regulation; and
(e) Since the first date of its occupancy of the
Operations Facility, neither Seller nor Holdings has experienced any
material interruption in the delivery of adequate quantities of any
utilities (including, without limitation, electricity, natural gas,
potable water, water for cooling or similar purposes and fuel oil) or
other public services (including, without limitation, sanitary and
industrial sewer service) required in the operation of the Business
during such period.
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4.8. Tangible Personal Property Other Than Inventory. Except
as indicated on Schedule 4.8:
(a) Seller has good title to each item of tangible
personal property which it owns, free and clear of all liens, leases,
encumbrances, claims under bailment and storage agreements, equities,
conditional sales contracts, security interests, charges and
restrictions except for liens, if any, for personal property taxes not
yet due and payable;
(b) Each material item of tangible personal property
included in the Transferred Assets, as of the Closing Date, will be in
good operating condition and repair, ordinary wear and tear excepted;
and
(c) Seller owns or otherwise has the right to use all
of the tangible personal property now used by it in the operation of
the Business or the use of which is necessary for the performance of
any contract or proposal to which Seller is a party.
4.9. Intangible Personal Property. Schedules 1.1(g) and 1.1(h)
and Schedule 1.1(e) hereto include (i) a list and description of all material
intangible personal property owned by Seller or otherwise used in the Business,
including, but not limited to, computer software and programs (except for
personal computer software generally available to the public), software in
process, computer operating systems and applications, United States and foreign
patents, patent applications, trade names, trademarks, trade name and United
States and foreign trademark registrations, copyright registrations and
applications for any of the foregoing, and (ii) a true and complete list of all
licenses or similar agreements or arrangements to which Seller is a party either
as licensee or licensor for each such item of intangible personal property.
Except as indicated on Schedule 4.9:
(a) Seller owns or has the right to use such
intangible personal property, free and clear of all liens, security
interests, charges, encumbrances, equities and other adverse claims;
(b) No interference or infringement actions or other
judicial or adversary proceedings concerning any of such items of
intangible personal property are pending, and to the best of Seller's
knowledge, no such action or proceeding is threatened;
(c) Seller has the right and authority to use such
items of intangible personal property in connection with the conduct of
the Business in the manner presently conducted, and, to the best of
Seller's knowledge, such use does not conflict with, infringe upon or
violate any rights of any other person, firm or corporation;
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(d) There are no outstanding or, to the best of
Seller's knowledge, threatened disputes or other disagreements with
respect to any licenses or similar agreements or arrangements described
on Schedule 1.1(g) and Schedule 1.1(e); and
(e) There is no intangible personal property used in
any material respect to the operations of the Business as presently
conducted and that is not owned by or licensed to Seller.
4.10. Inventory. The finished goods Inventory is good, usable,
merchantable and saleable in the ordinary course of the Business, after
application of the reserve for inventory on the Interim Financial Statements.
4.11. Accounts Receivable. Except as set forth on Schedule
4.11 attached hereto, the Accounts Receivable, other than the amounts owed by
Horizon, (i) arose out of the sale of Inventory by Seller in the ordinary course
of the Business (ii) have been billed or invoiced in the ordinary course of the
Business and in accordance with all applicable laws, regulations and
administrative rulings and procedures, (iii) represent bona fide indebtedness of
the applicable account debtor, not subject to defense, set-off or counterclaim,
and (iv) are collectible in full, net of the reserves set forth in the Interim
Financial Statements.
4.12. Insurance. Schedule 4.12 attached hereto sets forth a
true and correct list of all insurance policies of any nature whatsoever
maintained by Seller on the date of this Agreement and describes the annual or
other premiums payable from time to time thereunder. Complete copies of all such
policies have been otherwise furnished to Purchaser. Except as set forth on
Schedule 4.12, neither Seller nor Holdings has received written notice or other
written communication from any such insurance company within the three (3) years
preceding the date hereof cancelling or materially amending any insurance
policies or materially increasing the annual or other premiums payable under any
of such insurance policies and no such cancellation, amendment or material
increase of premiums is threatened.
4.13. Environmental Matters.
(a) To the best knowledge of Seller and except as set forth on
Schedule 4.13 attached hereto, no toxic, hazardous, explosive or otherwise
dangerous materials, substances, pollutants or wastes (as those terms are used
in the Clean Air Act, the Clean Water Act, the Resource Conservation and
Recovery Act of 1976, the Hazardous Materials Transportation Act, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), the Emergency Planning and Community Right-to-Know Act or in any
other federal, state or local environmental law (collectively "Environmental
Laws")), petroleum products, polychlorinated biphenyls, urea-formaldehyde foam,
or radioactive materials (all of the above being collectively referred to herein
as "Hazardous Materials") have been or are stored, treated, disposed of,
managed, generated, manufactured, produced, released (as defined in CERCLA
Section 101(22)), emitted or discharged on, to, in, under or from the real
estate upon which the Operations Facility is situated.
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(b) Except as set forth on Schedule 4.13, to its best
knowledge, Seller is in compliance in all material respects with all
Environmental Laws and has obtained all environmental licenses, permits,
approvals, registrations and authorizations (federal, state and local) material
to the Business. Except as set forth on Schedule 4.13, all such licenses,
permits, approvals, registrations and authorizations will remain in full force
and effect as of the Closing and, to Seller's knowledge, may be effectively
transferred or assigned to Purchaser on or after the Closing Date without
materially and adversely affecting the operation of the Business by Purchaser
after the Closing.
(c) Except as set forth on Schedule 4.13, no governmental or
private action, suit or proceeding to enforce or impose liability under any
Environmental Laws is pending or, to the best of Seller's knowledge, threatened
against Seller and, to the best of Seller's knowledge, no lien has been created
on the Operations Facility, or the real estate upon which it is situated, under
any Environmental Laws.
4.14. Employment Matters. Except as set forth on Schedule
4.14, (i) there are no pending claims by any employee or former employee against
Seller or Holdings other than for compensation and benefits due in the ordinary
course of employment, (ii) there are no pending claims against Seller or
Holdings arising out of any statute, ordinance or regulation relating to
employment practices or occupational or safety and health standards, (iii) there
are no pending or, to the best of Seller's knowledge, threatened labor disputes,
strikes or work stoppages against Seller, and (iv) to the best of Seller's
knowledge, there are no union organizing activities in process or contemplated
with respect to the Business. Schedule 4.14 identifies all collective bargaining
units which have been certified or recognized by Seller, and Purchaser has been
supplied with all collective bargaining agreements covering the Employees.
Schedule 4.14 also identifies all Employees on leave of absence and all
employees and former employees of Seller and their dependents receiving health
benefits, or eligible to receive health benefits, as required by COBRA. Notice
of the availability of COBRA coverage will have been or will be provided to all
persons entitled thereto, and all persons electing such coverage are being (or
have been, if applicable) provided such coverage.
4.15. Employee Benefit Plans. All plans, programs, agreements,
commitments and arrangements maintained by or on behalf of Seller that provide
benefits or compensation to, or for the benefit of, any employee or former
employee of Seller (the "Plans") have been delivered to Purchaser. Except as set
forth on Schedule 4.15, only employees and former employees of Seller (and
eligible dependents and beneficiaries of such employees and former employees)
participate in the Plans. All of the Plans covered thereby are in compliance in
all respects with ERISA and the Internal Revenue Code of 1986, as amended
("Code"). All of the Plans which are intended to meet the requirements of
Section 401(a) of the Code have been determined by the Internal Revenue Service
to be "qualified" within the meaning of Section 401(a) of the Code, and there
are no facts which would adversely affect the qualified status of any of the
Plans. Except as set forth on Schedule 4.15, (i) there is no accumulated funding
deficiency, within the meaning of Section 412(a) of the Code or Section 302(a)
(2) of ERISA, in connection with the Plans; (ii) no reportable event, as defined
in Section 4043(b) of ERISA, has occurred in connection with the Plans; (iii)
the Plans
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have not, nor has any trustee or administrator of the Plans, engaged in any
prohibited transaction as defined in Sections 406 and 407 of ERISA or Section
4975 of the Code; (iv) Seller is not contributing to, and has not, since January
1, 1974, contributed to, any multi-employer plan, as defined in Section 4001(a)
(3) of ERISA; and (v) Seller has not, since January 1, 1974, terminated a single
employer plan, as defined in Section 4001(a) (15) of ERISA.
4.16. Agreement Not in Breach of Other Instruments. Except as
set forth on Schedule 4.16 attached hereto, the execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby and the
fulfillment of the terms hereof will not violate or result in a breach of any of
the terms and provisions of, or constitute a default (or an event which, with
notice or the passage of time, or both, would constitute a default) under, or
conflict with or result in the termination of, or accelerate the performance
required by any ('i) agreement (including, without limitation, the Operations
Facility Lease), indenture or other instrument to which Seller is a party or by
which Seller is bound, or (ii) Seller's Articles of Incorporation, Bylaws or
similar organizational documents, or (iii) any judgment, decree, order or award
of any court, governmental body or arbitrator by which Seller is bound, or (iv)
any law, rule or regulation applicable to Seller.
4.17. Tax Returns. Except as disclosed on Schedule 4.17:
(a) Within the times and in the manner prescribed by
law, each of Seller and Holdings has filed all federal, state and local
tax returns (including information returns) and all tax returns for
foreign countries, provinces and other governing bodies having
jurisdiction to levy taxes upon Seller and Holdings, and have paid all
taxes shown to be due to any taxing authority with respect to all
periods ending prior to or on the Closing Date; and
(b) All tax returns filed by Seller or by Holdings
through the Closing Date constitute complete and accurate
representations of the tax liabilities of Seller or Holdings, as the
case may be, in all material respects, as appropriate (and any
predecessor or subsidiary entity) for such years and accurately set
forth all items (to the extent required to be included or reflected in
such returns) relevant to its future tax liabilities, including the tax
bases of its properties and assets.
As used in this Section 4.17, the term "taxes" shall include
all federal, state, local, foreign or other income, gross profits, payroll,
workers' compensation, unemployment, withholding, excise, sales, use, property,
ad valorem or other taxes of any kind or nature whatsoever, together with any
penalties or interest applicable thereto.
4.18. Litigation. Except as listed on Schedule 4.18, there is
no action, suit, proceeding or investigation to which Seller or Holdings is a
party (either as a plaintiff or defendant) pending before any court or
governmental agency, authority or body or arbitrator; there is no action, suit,
proceeding or investigation threatened against Seller; and, to the best of
Seller's knowledge,
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there is no basis for any such action, suit, proceeding or investigation.
4.19. Compliance with Law. Seller holds all material licenses
and permits in all applicable jurisdictions necessary or appropriate to conduct
the Business; provided, however, that no representation or warranty is made with
respect to whether any distributor of Seller has obtained any necessary licenses
or permits in the distributor's name or in Seller's name. On the date hereof the
Business is being conducted in material compliance with all applicable laws and
regulations (excluding regulations of the Food and Drug Administration which are
addressed in the next sentence). To the best of its knowledge and to the best of
its ability, Seller has complied with and is complying with the current
applicable regulations of the Food and Drug Administration. Seller is not
prohibited by any order, writ, injunction or decree of any body of competent
jurisdiction from consummating the transactions contemplated by this Agreement
and all other agreements referenced herein, and no such action or proceeding is
pending against Seller which questions the validity of this Agreement or any
such other agreements, any of the transactions contemplated hereby or thereby or
any action which has been taken by any of the parties in connection herewith or
therewith or in connection with any of the transactions contemplated hereby or
thereby.
4.20. Brokerage. Seller has not dealt with, or is not
obligated to make any payment to, any finder, broker, investment banker or
financial advisor in connection with any of the transactions contemplated by
this Agreement or the negotiations looking toward the consummation of such
transactions.
4.21. Contracts. Schedule 1.1(f) hereto sets forth a true and
correct list of each Contract including, without limitation, all distribution
agreements to which Seller is a party. True, complete and correct copies of each
of the Contracts, or where they are oral, true and complete written summaries
thereof, have been delivered to Purchaser by Seller. Except as expressly
described on Schedule 1.1(f) attached hereto:
(a) Seller has fulfilled all material obligations
required pursuant to each Contract to have been performed by Seller;
(b) There has not occurred any default under any of
the Contracts on the part of Seller or, to the best knowledge of
Seller, on the part of any other party thereto, nor to the best of
Seller's knowledge has any event occurred which, with the giving of
notice or the lapse of time, or both, would constitute a default on the
part of Seller under any of the Contracts, nor, to the best of Seller's
knowledge, has any event occurred which, with the giving of notice or
the lapse of time, or both, would constitute a default on the part of
any other party to any of the Contracts; and
(c) No consent of any party to any of the Contracts
is required for the execution, delivery or performance of this
Agreement or the consummation of the transactions contemplated hereby
or the assignment of any Contract to Purchaser.
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4.22. No Undisclosed Liabilities. Except as and to the only
extent specifically reflected in the list of Assumed Liabilities in Schedule 2.1
and the specific liabilities not assumed by Purchaser as described in Section
2.2 hereof, Seller has no liabilities or obligations of a material nature,
whether absolute, accrued, contingent or otherwise, and whether due or to become
due (including, without limitation, any liability for taxes, interest, penalties
or other charges payable with respect to any such liability).
4.23. Distribution Agreements. As of the date hereof and as of
the Closing Date, Seller has not received notice of, and has no knowledge with
respect to, the termination of any distribution agreements to which Seller is a
party.
4.24. Conflict of Interest. Except as disclosed in Schedule
4.24, no officer, director or shareholder of Seller now has or within the last
three (3) years had, either directly or indirectly, (a) an equity or debt
interest in any corporation, partnership, joint venture, association,
organization or other person or entity which furnishes or sells or during such
period furnished or sold services or products to Seller, or purchases or during
such period purchased from Seller any goods or services, or otherwise does or
during such period did business with Seller or (b) a beneficial interest in any
contract, commitment or agreement to which Seller is or was a party or under
which Seller was obligated or bound or to which its properties may be or may
have been subject, other than contracts, commitments or agreements between
Seller and such persons in their capacities as employees, officers or directors
of Seller.
4.25. Subsidiaries. Except as listed in Schedule 4.25, Seller
does not have any wholly or partially owned subsidiaries and no portion of the
Business during the past five years has been conducted through any joint venture
or partnership.
4.26. Other Material Circumstances. To the best of Seller's
knowledge, there is no material fact or circumstance related to the Business,
Transferred Assets or liabilities of Seller which constitutes or would
constitute a serious threat to the viability or survival of Seller.
4.27. Xxxxxxxx Licenses. Schedule 1.1(e) sets forth a true and
correct description of all agreements with Xxxxxxxx to which Seller or Holdings
is a party. True, complete and correct copies of each such agreements have been
delivered to Purchaser by Seller. Except as expressly described on Schedule
1.1(e) attached hereto:
(a) Seller has fulfilled all material obligations
required pursuant to the Xxxxxxxx Licenses to have been performed by
Seller, and there is no reason to believe that Purchaser will not be
able to fulfill, when due, all of its obligations under the Xxxxxxxx
Licenses which remain to be performed after the Closing Date;
(b) There has not occurred any default under the
Xxxxxxxx Licenses on the part of Seller or, to the best of Seller's
knowledge, any other party thereto, nor to the best of Seller's
knowledge has any event occurred which, with the
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giving of notice or the lapse of time, or both, would constitute a
default on the part of Seller or any other party under the Xxxxxxxx
Licenses; and
(c) No consent of any party to the Xxxxxxxx Licenses
is required for the execution, delivery or performance of this
Agreement or the consummation of the transactions contemplated hereby
or the assignment of the Xxxxxxxx Licenses to Purchaser.
4.28. Other Information. The information concerning Seller or
Holdings set forth in this Agreement, the Schedules hereto and any document to
be delivered by Seller at the Closing to Purchaser pursuant hereto, taken as a
whole, does not and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated herein or therein or
necessary to make the statements and facts contained herein or therein, in light
of the circumstances in which they are made, not false or misleading. Copies of
all documents heretofore or hereafter delivered or made available to Purchaser
pursuant hereto were or will be complete and accurate copies of such documents.
4.29. FDA Matters. Seller has provided to Purchaser true and
complete copies of all reports with respect to defective products or patient
claims that have been filed by Seller or Holdings with the FDA since January 1,
1990. Except as provided in Schedule 4.29, all proposed actions of Seller that
were described in Seller's letter dated March 7, 1995 to the FDA have been
completed or implemented by Seller.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND HORIZON.
In order to induce Seller to enter into this Agreement and to
consummate the transactions contemplated hereunder, Purchaser and Horizon, both
jointly and severally, represent and warrant to and covenant with Seller that:
5.1. Organization, Good Standing, Authority and
Enforceability. Each of Purchaser and Horizon is a corporation duly organized,
validly existing and in good standing under the laws of the State of Georgia.
Purchaser has full authority and power to carry on its business as it is now
conducted, and to own, lease and operate the assets owned, leased or operated by
it. On or before the Closing Date, Purchaser shall be qualified to do business
in the state of Pennsylvania. Each of Purchaser and Horizon has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement and each other agreement herein
contemplated to be executed in connection herewith by Purchaser or Horizon have
been (or upon execution will have been) duly executed and delivered by Purchaser
or Horizon and constitute (or upon execution will constitute) legal, valid and
binding obligations of Purchaser or Horizon, as the case may be, enforceable
against Purchaser or Horizon in accordance with their respective terms.
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5.2. Agreement Not in Breach of Other Instruments. The
execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby and the fulfillment of the terms hereof will not violate or
result in a breach of any of the terms or provisions of, or constitute a default
(or any event which, with notice or the passage of time, or both, would
constitute a default) under, or conflict with or result in the termination of,
or accelerate the performance required by (i) any agreement, indenture or other
instrument to which Purchaser or Horizon is a party or by which either of them
is bound, (ii) the Articles of Incorporation or Bylaws of Purchaser or Horizon,
(iii) any judgment, decree, order or award of any court, governmental body or
arbitrator by which Purchaser or Horizon is bound, or (iv) any law, rule or
regulation applicable to Purchaser or Horizon.
5.3. Compliance with Laws. All consents, approvals and
authorizations and all other requirements prescribed by any law, rule or
regulation which must be obtained or satisfied by Purchaser and which are
necessary for the execution and delivery by Purchaser of this Agreement and the
documents to be executed and delivered by Purchaser in connection herewith and
in order to permit the consummation of the transactions contemplated by this
Agreement have been obtained and satisfied or shall be obtained and satisfied by
Closing.
5.4. No Legal Bar. Neither Purchaser nor Horizon is prohibited
by any order, writ, injunction or decree of any body of competent jurisdiction
from consummating the transactions contemplated by this Agreement and all other
agreements referenced herein, and no such action or proceeding is pending
against Purchaser or Horizon which questions the validity of this Agreement or
any such other agreements, any of the transactions contemplated hereby or
thereby or any action which has been taken by any of the parties in connection
herewith or therewith or in connection with any of the transactions contemplated
hereby or thereby.
5.5. No Brokerage Fees. No broker or finder has acted for
Purchaser or Horizon in connection with this Agreement or the transactions
contemplated hereby, and no broker 'or finder is entitled to any brokerage or
finder's fees or other commission in respect of such transactions based in any
way on agreements, arrangements or understandings made by or on behalf of
Purchaser.
5.6. Litigation. There is no action, suit, proceeding or
investigation to which Horizon or Purchaser is a party (either as Plaintiff or
Defendant) pending before any court or governmental agency, authority or body or
arbitrator. There is no action, suit, proceeding or investigation threatened
against Horizon or Purchaser and, to the best of Horizon's knowledge, there is
no basis for any such action, suit, proceeding or investigation.
6. CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES.
6.1. Purchaser Access. Between the date hereof and the Closing
Date, (i) authorized representatives of Purchaser shall have reasonable access
to all properties, books, records, Contracts and documents of Seller, (ii)
Seller will furnish to Purchaser all information with respect to the affairs and
the Business of Seller that Purchaser may reasonably request, and (iii)
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Purchaser shall have the right to discuss the affairs and the Business of Seller
with certain employees of Seller; provided, however, that Purchaser shall not
contact any employee or customer of Seller unless such employee or Purchaser
receives the prior authorization of the Chairman of the Board of Seller.
6.2. Seller Access. Seller shall have the right for a period
of the longer of two (2) years following the Closing Date or the applicable
statute of limitations to have reasonable access to such books, records and
accounts, correspondence, minutes, production records, employment records and
other similar information as are transferred to Purchaser pursuant to the terms
of this Agreement for the limited purposes of concluding its involvement in the
Business after the Closing Date and obtaining information reasonably necessary
in connection with any tax matters, FDA matters or regulatory matters.
6.3. Cooperation in Litigation. Each party will fully
cooperate with the other in the defense or prosecution of any litigation or
proceeding already instituted or which may be instituted hereafter against or by
such party relating to or arising out of the conduct of the Business prior to or
after the Closing Date (other than litigation arising out of the transactions
contemplated by this Agreement). Unless and other than to the extent provided
for by Section 8 hereof, the party requesting such cooperation shall pay the
out-of-pocket expenses (including legal fees and disbursements) of the party
providing such cooperation and of its officers, directors, employees and agents
reasonably incurred in connection with providing such cooperation, but shall not
be responsible to reimburse the party providing such cooperation for such
party's time spent in such cooperation or the salaries or costs of fringe
benefits or other similar expenses paid by the party providing such cooperation
to its officers, directors, employees and agents while assisting in the defense
or prosecution of any such litigation or proceeding.
6.4. Confidentiality. All information relating to Seller
obtained prior to the Closing by Purchaser and its authorized representatives
pursuant to Section 6.1 hereof or otherwise in connection with the transactions
contemplated hereby shall be kept confidential by Purchaser prior to the Closing
and shall not be used by it for any purpose other than to evaluate the proposed
purchase of the Business and the Transferred Assets and, if applicable, in
connection with the transactions contemplated hereby; provided, however, that
the foregoing shall not apply to (i) any information generally available to the
public on the date hereof or which becomes generally available to the public
through no fault of Purchaser, but only from and after the date such information
becomes so available, (ii) any information obtained by Purchaser from a third
party having the right to disclose such information, or (iii) any information
Purchaser is required by law to disclose; and provided further that Purchaser
shall have no obligation with respect to, or be restricted in its use of, any
such information after the Closing. In the event no Closing occurs, upon the
request of Seller, Purchaser shall promptly return all such written information,
and all copies thereof, to Seller.
6.5. Conduct of Business. Seller shall conduct the Business
from the date of this Agreement through the Closing in accordance with prior
practice and only in the ordinary course of the Business, and, without limiting
the generality of the foregoing, Seller shall not (except with the
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prior written consent of Purchaser): (i) enter into any material transaction not
in the ordinary course of the Business; (ii) sell or transfer any of its assets,
including, without limitation, any Fixed Assets, except for sales in the
ordinary course of the Business of Inventory or immaterial amounts of other
tangible personal property not required in the Business; (iii) mortgage, pledge
or encumber any of the properties or assets of Seller, except liens for taxes
not yet due and payable, and existing bank indebtedness; (iv) materially amend,
modify, or terminate any material Contract other than in the ordinary course of
the Business; (v) make any increase in, or any commitment to increase, the
benefits or compensation payable to any of its officers, directors,
shareholders, employees or agents; (vi) reduce the amount of its Inventory or
other assets other than in the ordinary course of the Business; (vii) materially
alter the manner of keeping its books, accounts, or records or the accounting
practices therein reflected; (viii) make any changes in its capital or corporate
structures; (ix) delay the payment of any account payable to the extent such
delay may adversely affect Purchaser's ability to conduct business with the
payee thereof; (x) make any material changes in its methods of business
operations; (xi) make, enter into any agreement to make or become obligated to
make, any capital expenditure in excess of Five Thousand Dollars ($5,000); (xii)
make, enter into or renew any agreement for services to be provided to Seller,
or permit the automatic renewal of any such agreement; or (xiii) pay any stock
dividends or make any other distributions to its shareholders. Seller shall make
no distributions of cash to its shareholders except compensation for services
performed and shall make no other distributions of cash not in the ordinary
course of business.
6.6. Preservation of Organization. Prior to the Closing,
Seller shall use its commercially reasonable efforts to preserve the Business,
to keep available to Purchaser the services of Seller's employees, and to
preserve for Purchaser Seller's favorable business relationships with its
suppliers, customers and others with whom business relationships exist.
6.7. Current Information.
(a) Seller will advise Purchaser and Purchaser will
advise Seller in writing immediately, but in any event prior to the Closing of:
(i) the occurrence of any event which renders any of the representations or
warranties set forth herein materially inaccurate or the awareness of either
Purchaser or Seller that any representation or warranty set forth herein was not
materially accurate when made; (ii) any fact that, if existing or known on the
date hereof, would have been required to be set forth or disclosed in or
pursuant to this Agreement; and (iii) the failure of any party hereto to comply
with or accomplish any of the covenants or agreements set forth herein.
(b) Seller shall provide to Purchaser copies of all
operating and financial reports prepared by or for Seller prior to the Closing
Date as soon as such reports become available.
6.8. Covenant Not to Compete. At the Closing, each of the
Shareholders shall enter into a NonCompetition Agreement with Purchaser,
substantially in the form attached hereto as Exhibit C.
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6.9. Employment Agreement and Kapany Agreement. At or prior
to the Closing, Souerwine shall enter into an Employment Agreement with
Purchaser, substantially in the form attached hereto as Exhibit D.
6.10. Use of Neostar Name. After the Closing, Seller will
promptly change its corporate name for the purpose of removing "Neostar" from
its corporate name and will cease all use of the "Neostar" name. A copy of the
Certificate of Amendment filed with the Secretary of State of Delaware for
purposes of changing Seller's name will be promptly furnished to Purchaser.
7. CONDITIONS TO CLOSING.
7.1. Conditions to Obligations of Each Party. The obligations
of Purchaser and Seller to consummate the transactions contemplated hereby shall
be subject to the fulfillment, on or prior to the Closing Date, of the following
conditions:
(a) Compliance with Law. There shall have been
obtained all permits, approvals, consents and authorizations of all
governmental bodies or agencies necessary or appropriate so that
consummation of the transactions contemplated by this Agreement will be
in compliance with applicable laws, and so that Purchaser will be
eligible to operate the Business.
(b) No Action or Proceeding. No claim, action, suit,
investigation or other proceeding brought by any governmental agency or
other third party shall be pending or threatened before any court or
governmental agency which presents a substantial risk of the
restraining or prohibition of the transactions contemplated by this
Agreement or the obtaining of material damages from Purchaser or Seller
or other relief in connection therewith.
7.2. Conditions to Obligations of Purchaser. The obligations
of Purchaser to consummate the transactions contemplated hereby shall be subject
to the fulfillment, at or prior to the Closing, of the following additional
conditions:
(a) Representations and Warranties True. The
representations and warranties of Seller and Holdings contained in this
Agreement or in any other document delivered by Seller pursuant hereto
shall have been true and correct in all material respects as of the
date of this Agreement or when otherwise given and shall be true and
correct in all material respects on the Closing Date.
(b) Performance of Covenants. Each of the obligations
of Seller to be performed by Seller on or before the Closing Date
pursuant to the terms of this Agreement shall have been duly performed
in all material respects on or before the Closing Date, and at the
Closing Seller shall have delivered to Purchaser certificates to such
effect signed by the Chairman of the Board, President and Secretary of
Seller.
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(c) Authority. All actions required to be taken by,
or on the part of, Seller to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby shall have been duly and validly taken by Seller
and the board of directors and the sole shareholder of Seller.
(d) Opinion of Seller's Counsel. Purchaser shall have
been furnished at the Closing with an opinion of Albrecht, Maguire,
Xxxxxxx & Xxxxx, P.C., legal counsel to Seller, dated the Closing Date,
substantially in the form of Exhibit F hereto.
(e) Additional Closing Documents of Seller. Purchaser
shall have received at the Closing the following documents, dated the
Closing Date: (i) copies, certified by the Secretary of Seller, of
resolutions of the Board of Directors and the shareholder of Seller
authorizing the execution, delivery and performance of this Agreement
and all other agreements, documents and instruments relating hereto and
the consummation of the transactions contemplated hereby; (ii) such
bills of sale and instruments of transfer and assignment as Purchaser
may request in order to transfer and convey to Purchaser good title to
the Transferred Assets; (iii) the NonCompetition Agreements, duly
executed pursuant to Section 6.8 hereof; (iv) the Employment Agreement
duly executed pursuant to Section 6.9 hereof; (v) a good standing
certificate, certificate of existence or certificate of valid
qualification as a foreign corporation, as the case may be, from the
state of Seller's incorporation and each state in which Seller conducts
the Business; (vi) Incumbency Certificate of Seller's officers
executing any documents or instruments delivered to Purchaser
hereunder; and (vii) such further documents and instruments as
Purchaser may reasonably require to assure the full and effective sale,
transfer, conveyance, assignment and delivery to it of the Transferred
Assets to be transferred to Purchaser under this Agreement.
(f) No Damage, Etc.. Between the date of this
Agreement and the Closing Date there shall not have occurred any damage
or destruction of, or loss to, any of the Transferred Assets, whether
or not covered by insurance, which has had or may reasonably be
expected to have a material and adverse effect on the Business or
Transferred Assets or any prospects of Seller, nor shall there have
occurred any other event or condition which has had or which reasonably
may be expected to have a material and adverse effect on the results of
operations, condition (financial or otherwise), assets, properties or
prospects of the Business.
(g) Financing. At or prior to the Closing, Purchaser
has closed financing that will enable Purchaser to pay the Purchase
Price that is required to be paid at Closing.
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Subordination Agreement. At the Closing, Seller has executed
and delivered a subordination agreement with Sirrom with respect to the
indebtedness owed by Purchaser to Sirrom and the security interest granted by
Purchaser in favor of Sirrom with respect to the Transferred Assets.
7.3. Conditions to Obligations of Seller. The obligation of
Seller to consummate the transactions contemplated hereby shall be subject to
the fulfillment, at or prior to the Closing Date, of the following additional
conditions:
(a) Representations and Warranties True. The
representations and warranties of Purchaser and Horizon contained in
this Agreement or in any other document delivered by Purchaser or
Horizon to Seller pursuant hereto shall have been true and correct in
all material respects as of the date of this Agreement or when
otherwise given and shall be true and correct in all material respects
on the Closing Date with the same effect as if made on the Closing
Date, and at the Closing Purchaser and Horizon shall have delivered to
Seller certificates to such effect, signed by the President of
Purchaser and the President of Horizon.
(b) Performance of Covenants. Each of the obligations
of Purchaser or Horizon to be performed on or before the Closing Date
pursuant to the terms of this Agreement shall have been duly performed
on or before the Closing Date, and at the Closing Purchaser and Horizon
shall have delivered to Seller certificates to such effect signed by
the President of Purchaser and the President of Horizon.
(c) Authority. All actions required to be taken by,
or on the part of, Purchaser to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby shall have been duly and validly taken by the board
of directors of Purchaser.
(d) Opinion of Purchaser's Counsel. The Seller shall
have been furnished with an opinion of Xxxxxxxxx & Virgin, P.C.,
counsel to Purchaser, dated the Closing Date, substantially in the form
of Exhibit G hereto.
(e) Additional Closing Documents of Purchaser. Seller
shall have received at the Closing the following documents, each dated
the Closing Date: (i) copies, certified by the Secretary of Purchaser,
of resolutions of the board of directors of Purchaser authorizing the
execution and delivery of this Agreement and all other agreements,
documents or instruments relating hereto and the consummation of the
transactions contemplated hereby; (ii) the cash payment of Purchaser
required to be delivered by Purchaser at the Closing pursuant to
Section 3.2; (iii) the Note and the Security Agreement; (iv) the
Non-Competition Agreements; (v) copies of Horizon's loan documents with
Sirrom Capital Corporation; and (iv) such other
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24
closing documents as Seller may reasonably request.
8. INDEMNIFICATION.
8.1. Indemnification by Seller. Subject to the provisions of
Section 9.2 hereof, Seller and the Shareholders (but, as to the Shareholders,
only to the extent provided in the last sentence of Section 8.4 hereof), jointly
and severally, agree to defend, indemnify and hold Purchaser, its officers,
directors, agents, representatives, subsidiary and parent entities and
affiliates and their successors and assigns, harmless from and against any
claim, liability, expense, loss or other damage ("Claims") (including, without
limitation, reasonable attorneys fees and expenses) in respect of:
(a) any and all Claims, resulting from a
determination that the sale of the Transferred Assets hereunder is
ineffective against any creditor of Seller or Holdings or any taxing
authority or other entity asserting any similar claim against Seller or
Holdings (excluding any such Claim arising out of Purchaser's failure
to pay any Assumed Liability);
(b) any and all Claims resulting from any material
misrepresentation or material breach of a warranty or material
violation of any covenant made by Seller hereunder, or in any Schedule
or other instrument or document furnished or to be furnished by Seller
hereunder, including, without limitation, any documents furnished at
Closing;
(c) any and all Claims relating to (i) liabilities or
obligations of Seller or Holdings that are not on the list of Assumed
Liabilities in Schedule 2.1 or (ii) Seller's conduct of the Business or
otherwise prior to the Closing Date, including, without limitation, any
Claims arising from any act, occurrence, event or failure to act which
occurs prior to or on the Closing Date, including, without limitation,
any Claims arising in connection with any products manufactured and
sold by Holdings or by Seller prior to the Closing Date; and
(d) any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses incident to any
item to which the foregoing indemnity relates.
8.2. Indemnification by Purchaser. Subject to the provisions
of Section 9.2 hereof, Purchaser and Horizon, jointly and severally, agree to
defend, indemnify and hold Seller and its successors and assigns, harmless from
and against any Claim (including, without limitation, reasonable attorneys fees
and expenses) in respect of:
(a) any and all Claims related to the Assumed
Liabilities, and any and all Claims relating to the conduct of the
Business by Purchaser after the Closing Date;
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25
(b) any and all Claims resulting from any material
misrepresentation or material breach of warranty or material violation
of any covenant made by Purchaser hereunder or in any document
furnished or to be furnished by Purchaser hereunder, including, without
limitation, any documents or instruments furnished at Closing; and
(c) any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses incident to any
item to which the foregoing indemnity relates.
8.3. Determination of Loss. Indemnification pursuant to this
Section 8 shall be payable with respect to any Claim described herein as subject
to indemnification upon the happening of the earlier of the following:
(a) Resolution of such Claim by mutual agreement
between Seller and Purchaser; or
(b) The issuance of a final judgment, award, order or
other ruling by an arbitrator pursuant to Section 11.9 hereof.
8.4. Indemnification Payments. All amounts payable by one
party to the other pursuant to the provisions of this Section 8 shall be payable
within ten (10) days after final determination thereof in accordance with the
provisions hereof. In the event Seller fails to pay any amounts to Purchaser
that are finally determined to be owed to Purchaser pursuant to this Section 8
within such ten (10) day period, Purchaser at its sole discretion may set-off
any such amounts against the amounts, if any, owed Seller by Purchaser pursuant
to the Note and owed Shareholders by Purchaser under the Non-Competition
Agreements. Any such offset will be on a pro rata basis against the Note and the
Non-Competition Agreements as described on Schedule 8.4 hereto. Notwithstanding
any provisions of this Section 8 to the contrary, the liability and obligations
of any Shareholder under Section 8 is limited to the rights of Purchaser under
this Section 8.4 to offset claims of Purchaser against a Shareholder under this
Section 8 against amounts owed to the Shareholder under his Non-Competition
Agreement.
8.5. Limitations on Indemnification. Any amounts which any
party hereto may be obligated to pay another party hereto pursuant to Section
8.4 will be reduced by an amount equal to: (i) the tax benefit, if any, realized
as a result of such losses (for purposes of determining the "tax benefit", if
any, the reasonable determination by Purchaser's outside accountants will be
binding and conclusive as to all parties hereto); and (ii) any insurance
recovery with respect to such losses received by the indemnified party. No
amounts shall be payable under this Section 8 for the first $150,000.00 of
claims in the aggregate asserted against the indemnifying party or parties or
after the indemnifying party or parties have paid (by payments or offsets) as
indemnification hereunder the amount of $1,500,000.00 in the aggregate. The
preceding sentence shall not apply to claims under Section 8.2(a) for claims
related to the Assumed Liabilities, and the preceding sentence shall not
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26
apply to claims under Section 8.1(c) (i) relating to liabilities or obligations
of Seller or Holdings that are not on the list of Assumed Liabilities on
Schedule 2.1 and (i) that are described in subsections (a) through (g) of
Section 2.2 hereof or (ii) that are liabilities that have been incurred and
would be properly recorded as a liability on Seller's balance sheet as of the
Closing.
8.6. Notification. Purchaser or Seller, as the case may be,
will promptly notify the other of the existence or occurrence of any facts or
events which give rise to the assertion of any claim under the provisions of
this Section 8. If such claims are due to the claims of third parties, the
indemnifying party shall promptly and diligently take such actions as may be
reasonably required to defend or settle such claims and shall keep the
indemnified parties advised of the current status thereof. The indemnified party
shall, at the indemnifying party's expense, reasonably cooperate with the
indemnifying party's defense and the indemnifying party shall reasonably
consider the indemnified party's advice.
9. ADDITIONAL COVENANTS AND AGREEMENTS.
9.1. Expenses. Each party hereto shall bear and pay all costs
and expenses incurred by it in connection with the transactions contemplated by
this Agreement including, without limitation, fees, costs and expenses of its
own financial consultants, accountants and legal counsel. Seller shall be
responsible for payment of any sales, use or transfer taxes arising out of the
conveyance of the Transferred Assets along with the filing of any required
return or report.
9.2. Survival of Representations and Warranties. Except as
otherwise provided herein, the representations and warranties contained in
Sections 4 and 5 of this Agreement shall survive the Closing for a period of one
(1) year after the Closing Date; provided, however, that: (i) the
representations and warranties contained in Section 4.17 hereof shall survive
the Closing Date until sixty (60) days after the expiration of the applicable
statutes of limitations for the assessment of taxes; (ii) if any representation
or warranty contained in Section 4 or 5 is wilfully misrepresented, it shall
survive the Closing Date for an unlimited period of time; (iii) the
representations and warranties contained in Section 4.13 hereof shall survive
the Closing Date for a period of five (5) years after the Closing; and (iv) any
specific claim or action of which specific written notice is given to the party
which made such representation or warranty prior to the date on which such
representation or warranty otherwise terminates as provided herein, may continue
to be asserted and shall be indemnified against pursuant to Section 8. Any
indemnification claim asserted under Section 8 hereof with respect to any
representation or warranty that terminates under this Section 9.2 expires on the
date of termination under this Section 9.2 unless the indemnification claim is
asserted as provided in Section 8 prior to such date of termination, but such
expiration will not occur when relevant information concerning such
indemnification claim is withheld by a party to this Agreement from another
party so that such other party did not know that it had an indemnification
claim.
9.3. Public Releases. Purchaser and Seller shall agree with
each other as to the form and substance of any press release related to this
Agreement or the transactions contemplated hereby, and shall consult with each
other as to the form and substance of other public disclosures
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27
related thereto; provided, however, that nothing contained herein shall prohibit
any party hereto from making any disclosure which it deems necessary in light of
applicable laws or regulations, after notice to the other party with the
opportunity to comment to the extent that delay of the disclosure is permitted
under such laws or regulations.
9.4. Other Transactions Prohibited. During the period from the
date of this Agreement to the Closing Date, or termination hereof, Seller shall
not directly or indirectly, initiate, solicit, negotiate with, encourage
discussions with, provide information to, or agree to a transaction with, any
corporation, partnership, person or other entity or group concerning any merger
or any sale of Seller's assets, sale of shares of capital stock (or securities
convertible or exchangeable into or otherwise evidencing, or any agreement or
instrument evidencing, the right to acquire capital stock) or similar
transaction involving Seller (any such transaction being referred to herein as
an "Acquisition Transaction"). Seller shall promptly communicate to Purchaser
the terms of any proposal which Seller may receive in respect of an Acquisition
Transaction and any request by or indication of interest on the part of any
third party with respect to initiation of any Acquisition Transaction or
discussions with respect thereto.
10. TERMINATION; REMEDIES.
10.1. Termination. This Agreement and the transactions
contemplated hereby may be terminated at any time prior to or at Closing by
written notice delivered by Seller to Purchaser or by Purchaser to Seller, as
the case may be, in the following instances:
(a) By Purchaser pursuant to Section 7.1 or Section
7.2 hereof or if there has been a material misrepresentation, a
material breach of warranty or a material failure to comply on the part
of Seller with respect to any of the representations, warranties,
covenants or provisions set forth herein (or delivered in any other
document pursuant hereto), including without limitation, any
misrepresentation, breach or failure to comply that is evidenced in any
Schedule delivered by Seller, or which is discovered in Purchaser's due
diligence investigation of Seller and the Business, and such
misrepresentation, breach or failure has or may reasonably be expected
to have a material adverse effect on the condition (financial or
otherwise), assets or properties of the Business in the hands of
Purchaser and has not been cured, if capable of cure, in full within
twenty (20) days of receipt by Seller of notice from Purchaser.
(b) By Seller pursuant to Section 7.1 or Section 7.3
hereof or if there has been a material misrepresentation, a material
breach of warranty or a material failure to comply with any covenant on
the part of Purchaser with respect to the representations, warranties
or covenants set forth herein (or delivered in any other document
pursuant hereto) and such misrepresentation, breach or failure to
comply has not been cured, if capable of cure, within twenty (20) days
of receipt by Purchaser of notice from Seller.
(c) At any time prior to Closing by the mutual
consent in writing of Purchaser and Seller.
10.2. Liability in the Event of Termination; Remedies.
(a) In the event of termination of this Agreement
and the transactions contemplated hereby pursuant to Sections 10.1(a)
or (b) hereof, the non-breaching party may avail itself of all rights,
power and remedies now or hereafter existing at law or in equity or by
statute or otherwise.
(b) In the event of termination of this Agreement
and the transactions contemplated hereby pursuant to Section 10.1(c)
hereof, this Agreement shall, with the exception of Section 6.4, 9.1
and 9.3 hereof, become void and have no further effect, without any
liability on the part of any party hereto.
(c) Section 6.4 hereof shall survive the termination
of this Agreement regardless of the reason for such termination.
11. MISCELLANEOUS.
11.1. Entire Agreement. This Agreement (including all Exhibits
and Schedules hereto) supersedes any and all other
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28
agreements, oral or written, between the parties hereto with respect to the
subject matter hereof, including that certain letter of intent dated July 20,
1995 from Purchaser to Seller, and contains the entire agreement between such
parties with respect to the transactions contemplated hereby.
11.2. Amendments. This Agreement shall not be modified or
amended except by an instrument in writing signed by or on behalf of all of the
parties hereto.
11.3. Successors; Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted transferees and assignees.
Neither this Agreement nor any interest herein may directly or indirectly be
transferred or assigned by any party, in whole or in part, without the written
consent of the other parties, except that Purchaser may effect any such
assignment to any wholly owned subsidiary corporation, but any such assignment
shall not relieve Purchaser of its duties and obligations contained in this
Agreement.
11.4. Notices. All notices, requests, demands, and other
communications to be delivered hereunder shall be in writing and shall be
delivered by hand or mailed, by fax (receipt confirmed), by express mail
services, by registered or certified mail, postage prepaid, at or to the
following addresses:
(a) If to Seller or any Shareholder:
Xx. Xxxxxx X. Xxxx
6311 El Monte Video
P. O. Xxx 0000
Xxxxxx Xxxxx Xx, XX 00000-0000
with a copy to:
Albrecht, Maguire, Xxxxxxx & Xxxxx, P.C.
0000 Xxxx Xxxxx Xxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxx
(b) If to Purchaser:
Horizon Medical Products, Inc.
Seven North Parkway Square
0000 Xxxxxxxxx Xxxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
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29
Attention: Xxxxxxxx X. Xxxx
with a copy to:
Xxxxxxxxx & Virgin, P.C.
000 Xxxxxx Xxxxxx, Xxxxx 0000
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxx X. Xxxxxxxxx, III
or to such other address or to such other person as any party shall have last
designated by written notice to the other parties. Notices, requests, demands,
and other communications so delivered shall be deemed given upon receipt.
11.5. Waiver. If any party expressly waives in writing an
unsatisfied condition, representation, warranty, undertaking, covenant or
agreement (or portion thereof) set forth herein, the waiving party shall
thereafter be barred from recovering, and thereafter shall not seek to recover,
any damages, claims, losses, liabilities or expenses, including, without
limitation, legal or other expenses, from the other parties in respect of the
matter or matters so waived.
11.6. Severability. If any term or provision of this Agreement
or any application thereof shall be invalid or unenforceable, the remainder of
this Agreement and any other application of such term or provision shall not be
affected thereby.
10.6. No Third Party Beneficiary. This Agreement is for the
benefit of, and may be enforced only by, Seller and Purchaser, and their
respective successors and permitted transferees and assignees, and is not for
the benefit of, and may not be enforced by, any third party.
10.7. Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with, the laws of the State of Georgia.
10.8. Arbitration.
(a) Any controversy, dispute or claim arising out of,
in connection with, or in relation to the interpretation, performance or breach
of this Agreement, including, without limitation, any claim based on contract,
tort or statute, shall be settled by arbitration. Any arbitration pursuant to
this Agreement shall be conducted in Atlanta, Georgia, before and in accordance
with the then existing Rules for Commercial Arbitration of the American
Arbitration Association, provided that only one arbitrator as selected by the
American Arbitration Association shall conduct any arbitration proceeding. Any
arbitration shall be final and binding. Any judgment upon any interim or final
award or order rendered by the arbitrator may be entered by any federal or state
court
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30
having jurisdiction thereof.
(b) The parties intend that any agreement pursuant
hereto to arbitrate be valid, enforceable and irrevocable. Each party in any
arbitration proceeding commenced hereunder shall bear such party's own costs and
expenses (including expert witness and attorneys' fees) of investigating,
preparing and pursuing such arbitration claim. The parties to any arbitration
shall have the right to discover the relevant books and records of the other
side that are not privileged.
10.9. Reference to Best Knowledge. All references in this
Agreement to the best knowledge of any party hereto shall mean that such party
has made a reasonable investigation and inquiry with respect to the correctness
of the statement being made.
IN WITNESS WHEREOF, the parties hereto have executed this Asset
Purchase Agreement as of the date first hereinabove set forth.
ATTEST: HORIZON ACQUISITION CORP.
/s/ Xxxxxxx X. Xxxxxxxx, Xx. By: /s/ Xxxxxxxx X. Xxxx
----------------------------------- --------------------------------
Xxxxxxx X. Xxxxxxxx, Xx., Xxxxxxxx X. Xxxx, CEO
Secretary
ATTEST: HORIZON MEDICAL PRODUCTS, INC.
/s/ Xxxxxxxx X. Xxxx By: /s/ Xxxxxxxx X. Xxxx
----------------------------------- --------------------------------
Xxxxxxxx X. Xxxx, Secretary Xxxxxxxx X. Xxxx, CEO
ATTEST: NEOSTAR MEDICAL TECHNOLOGIES,
INC.
/s/ [unreadable] By: /s/ [unreadable]
----------------------------------- --------------------------------
, Secretary
Title: Vice President
-----------------------------
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31
SHAREHOLDERS:
/s/ [unreadable] /s/ Xxxxxx X. Xxxx
-------------------------------- -----------------------------------
Witness Xxxxxx X. Xxxx
/s/ [unreadable] /s/ Xxxxxx X. Xxxxxx, XX
-------------------------------- -----------------------------------
Witness Xxxxxx X. Xxxxxx, XX
/s/ [unreadable] /s/ Xxxxx X. Xxxxxxxxxxx
-------------------------------- -----------------------------------
Witness Xxxxx X. Xxxxxxxxxxx
/s/ Xxxxxxx X. Xxxxx, Trustee
-------------------------------- -----------------------------------
Witness Xxxxxxx X. Xxxxx, as Trustee
of the Xxxxxxx X. Xxxxx
Family Trust
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32
EXHIBIT A
ASSUMPTION AGREEMENT
THIS AGREEMENT, made and entered into as of October __, 1995 by and
between NEOSTAR MEDICAL TECHNOLOGIES, INC., a Delaware corporation ("Seller"),
and HORIZON ACQUISITION CORP., a Georgia corporation ("Purchaser");
WHEREAS, Purchaser and Seller have entered into the Asset Purchase
Agreement dated October __, 1995 ("Asset Purchase Agreement"), pursuant to which
Purchaser is purchasing the Transferred Assets (as defined therein);
WHEREAS, under Section 2.1 of the Asset Purchase Agreement Purchaser
has agreed to assume and pay certain liabilities of Seller, as provided in this
Agreement;
NOW, THEREFORE, in consideration of the agreements set forth herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. Subject to the provisions in the Asset Purchase Agreement, Purchaser
hereby assumes and will pay the liabilities of Seller that are described in
Schedule 2.1 attached hereto and incorporated herein by reference. Other than
the liabilities of Seller described in Schedule 2.1, Purchaser does not assume
or agree to pay any other liabilities or obligations of Seller, including
without limitation those liabilities of Seller described in Section 2.2 of the
Asset Purchase Agreement.
2. This Agreement and the Asset Purchase Agreement supersede any and
all other agreements, oral or written, between the parties hereto with respect
to the subject matter hereof and contain the entire agreement between the
parties with respect to the subject matter hereof.
3. This Agreement shall not be modified or amended except by an
instrument in writing signed by the parties hereto.
4. This Agreement and all the provisions hereof shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.
5. If any term or provision of this Agreement or any application
thereof shall be invalid or unenforceable, the remainder of this Agreement and
any other application of such term or provision shall not be affected thereby.
6. This Agreement is for the benefit of, and may be enforced only by,
Seller and Purchaser and their respective successors and assigns and is not for
the benefit of, and may not be enforced by, any third party.
33
7. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Georgia.
IN WITNESS WHEREOF, the parties hereto have executed this Assumption
Agreement as of the date first above written.
HORIZON ACQUISITION CORP.
By:
--------------------------------
Xxxxxxxx X. Xxxx, CEO
ATTEST:
-------------------------------------
Xxxxxxx X. Xxxxxxxx, Xx.,
Secretary
NEOSTAR MEDICAL
TECHNOLOGIES, INC.
By:
--------------------------------
Title:
-----------------------------
ATTEST:
-------------------------------------
Title:
-------------------------------
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34
EXHIBIT B
$2,461,017 Atlanta, Georgia
October __, 1995
SECURED SUBORDINATED NOTE
FOR VALUE RECEIVED, the undersigned, HORIZON ACQUISITION CORP., a
Georgia corporation (hereinafter referred to as "Maker"), hereby promises to pay
to the order of NEOSTAR MEDICAL TECHNOLOGIES, INC., a Delaware corporation
(hereinafter referred to, along with each subsequent holder of this Note, as the
"Holder") at ____________________________ or such other address as the Holder
hereof may designate in writing, the principal sum of TWO MILLION FOUR HUNDRED
SIXTY-ONE THOUSAND SEVENTEEN DOLLARS ($2,461,017.00). No interest shall be
payable on the unpaid principal balance hereof or otherwise under this Note.
Except as provided below upon the occurrence of an "Acceleration
Event", the principal amount of this Note shall be payable in the following
installment payments:
(i) $212,235.00 in twelve (12) consecutive monthly
installments of $17,686.25 per month, payable on the last day of each
month, commencing January 31, 1997 continuing through December 31,
1997;
(ii) $145,240.00 in twelve (12) consecutive monthly
installments of $12,103.33 per month, payable on the last day of each
month, commencing January 31, 1998 and continuing through December 31,
1998;
(iii) $253,200.00 in eighteen (18) consecutive monthly
installments of $14,066.67 per month, payable on the last day of each
month, commencing January 1, 1999 and continuing through June 30, 2000;
(iv) $84,400.00 on July 31, 2000;
(v) $60,753.00 on January 31, 2001;
(vi) $121,506.00 on October 31, 2001;
(vii) $86,841.50 on April 30, 2002;
(viii) $86,841.50 on October 31, 2002;
(ix) $1,160,000.00 on April 30, 2003; and
(x) $250,000.00 on October 31, 2003.
35
In the event any "Acceleration Event" (as defined below) should occur,
then the "Final Payoff Amount" (as defined below) shall be immediately due and
payable in full on the date on which the Acceleration Event occurs. The Final
Payoff Amount, when paid, shall be full and final payment of all sums due and
payable under this Note. The term "Acceleration Event" shall mean: (i) a sale of
Maker or Horizon Medical Products, Inc. ("Horizon") (through merger, sale of
eighty percent (80%) or more of the outstanding stock of Maker or Horizon or
sale of all or substantially all of the assets of Maker or Horizon; provided,
however, that a sale of Maker to Horizon or a merger of Maker into Horizon shall
not be an Acceleration Event), (ii) a sale of stock of Maker or Horizon to the
public in an initial public offering, or (iii) the failure by Maker to pay any
installment payment payable to Holder pursuant to the provisions in the
preceding paragraph after Maker receives written notice of default from Holder
and fails to pay the amount due within five (5) days after receiving notice of
nonpayment, (iv) the filing of a petition by or against the Maker for relief
under the Bankruptcy Code or under the bankruptcy, insolvency or any similar
statute of the United States or any state thereof that is not dismissed within
thirty (30) days after filing, (v) the making of any general assignment for the
benefit of creditors by the Maker, (vi) the institution by the Maker of any type
of insolvency proceeding or any proceeding for the liquidation or winding up of
its affairs, (vii) the Maker shall apply for or consent to the appointment of a
receiver, trustee or liquidator for the Maker or any of its assets, (viii) the
authorization by the Maker for the dissolution of the Maker; (ix) default shall
occur with respect to any material indebtedness of Maker for borrowed money if
the effect of such default is to accelerate the maturity of such indebtedness or
to permit the holder thereof to cause such indebtedness to become due prior to
its stated maturity, (x) any material indebtedness of Maker for borrowed money
shall not be paid when due subject to any applicable cure period, (xi) any
default by Horizon under the Loan Agreement between Horizon and Sirrom Capital
Corporation ("Sirrom") dated September 25, 1995 as the same may be amended,
supplemented or modified from time to time, or (xii) any default by Horizon
pursuant to the Secured Promissory Note dated September 25, 1995 of Horizon
given to Sirrom which note is guaranteed by the Maker. The term "Final Payoff
Amount" shall mean the remaining outstanding and unpaid amount due and payable
under this Note at any time under the provisions of the preceding paragraph,
with such amount then reduced to its present value as of the date on which the
Acceleration Event occurs using an interest rate of ten percent (10%) in
determining such present value. An illustration of the provisions in this
paragraph is set forth in Schedule A attached hereto and incorporated herein by
reference.
If the Holder should employ attorneys or incur other expenses for the
collection of amounts payable under this Note, the Maker shall pay the
reasonable attorneys fees and such other expenses so incurred by the Holder of
this Note.
Time is of the essence of this Note.
This Note is secured by a Security Agreement dated the date hereof
covering certain Collateral (as defined therein).
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36
This Note is subject to prepayment by the Maker in full or in part at
any time and from time to time without payment of penalty or premium. If Maker
elects to prepay this Note in full, then Maker shall pay the Final Payoff
Amount, calculated as of the date of such prepayment under the above provisions,
as full and final payment of all sums due and payable under this Note.
This Note is executed and delivered in payment of a portion of the
Purchase Price payable under the terms of that certain Asset Purchase Agreement,
dated as of October __, 1995 (the "Purchase Agreement"), by and among the Maker,
as Purchaser, the Holder, as Seller, and other parties. Under the terms of
Section 3.3(a) of the Purchase Agreement, the amount payable under this Note is
subject to an automatic reduction in the amount described in Section 3.3(a) and
Section 3.3(c), the provisions of which are incorporated herein by reference. If
the amount payable under this Note is reduced pursuant to the provisions of
Section 3.3(a) and Section 3.3(b) of the Purchase Agreement, then the reduction
shall be made in the monthly installment payments which commence January 31,
1997 and continue on the last day of each month thereafter until all reductions
are made; provided, however, that if any reduction to the amount owed under this
Note described in the next paragraph below in this Note is made prior to any
reduction under this paragraph, then the reduction under this paragraph shall be
made in the most immediate succeeding payments under this Note (until all such
reductions are made) after such reduction is made under the next paragraph
below. Any such reduction in amount shall not otherwise affect any of the terms
and provisions of this Note.
Under the terms of Section 3.3(b) of the Purchase Agreement, the amount
payable under this Note is subject to an automatic reduction in the amounts
described in Section 3.3(b), the provisions of which are incorporated herein by
reference. If the amount payable under this Note is reduced pursuant to the
provisions of Section 3.3(b) and Section 3.3(c) of the Purchase Agreement, then
the reductions shall be made in the monthly installment payments which commence
January 31, 1997 and continue on the last day of each month thereafter until all
reductions are made; provided, however, that if the reduction to the amount owed
under this Note described in the above paragraph is made prior to any reduction
under this paragraph, then the reductions under this sentence shall be made in
the most immediate succeeding payments under this Note (until all such
reductions are made) after such reduction under the above paragraph.
Pursuant to Section 8.4 of the Purchase Agreement, the amount owed
under this Note is subject to offset in the amounts and manner described in
Section 8.4 and Schedule 8.4 to the Purchase Agreement. Any offset that is
applied against the amount owed under this Note shall be applied against the
payments that are most immediately due and payable under this Note at the time
of the offset, taking into consideration any reductions in the amounts owed
under this Note under the provisions of the two preceding paragraphs of this
Note.
The principal of this Note is payable in lawful money of the United
States of America.
The amount due and payable to Holder under this Note is subordinated to
all indebtedness owed under the Loan Agreement dated September 25, 1995 to
Sirrom Capital Corporation, which indebtedness has been guaranteed by Maker and
is payable by Horizon. Other than such
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37
indebtedness, Maker will attempt to obtain priority for all indebtedness under
this Note with respect to other indebtedness incurred by Maker for borrowed
money from time to time until this Note is paid in full.
Demand, presentment, dishonor, protest and notice of dishonor are
hereby waived by the Maker. The Holder shall not be deemed to waive any of its
rights or remedies under this Note unless such waiver is express, in writing and
signed by the Holder. No delay or omission by the Holder in exercising any of
its rights or remedies shall operate as a waiver of any such right or remedy. An
express waiver of any right or remedy in writing and signed by the Holder on any
one occasion shall not be, nor be construed as, a waiver of any other right or
remedy then existing or existing on any other occasion.
This Note shall be governed by, construed under and interpreted and
enforced in accordance with the laws of the State of Georgia. Whenever possible,
each provision of this Note shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Note
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Note.
The word "Holder" as used herein shall include all transferees,
successor and assigns of the Holder. This Note shall be freely assignable upon
prior written notice to the Maker, and all rights of the Holder hereunder shall
inure to the benefit of its transferees, successors and assigns. All obligations
of the Maker shall bind its legal representatives, successors and assigns.
IN WITNESS WHEREOF, the Maker has caused this Promissory Note to be
executed in its corporate name and its corporate seal to be hereunder affixed,
all by its duly authorized officers, the day and year first written above.
HORIZON ACQUISITION CORP.
By:
-----------------------------------------
Chief Executive Officer
Attest:
-------------------------------------
Secretary
[CORPORATE SEAL]
Address:
Seven North Parkway Square
0000 Xxxxxxxxx Xxxxxxx, XX
Xxxxxxx, Xxxxxxx 00000
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EXHIBIT C
NON-COMPETITION AND CONSULTING AGREEMENT
Xxxxxx X. Xxxx
THIS AGREEMENT (this "Agreement") is made and entered into as of the
___ day of October, 1995 by and between HORIZON ACQUISITION CORP., a Georgia
corporation ("Purchaser"), and XXXXXX X. XXXX, who resides at 0000 Xx Xxxxx
Xxxxx, Xxxxxx Xxxxx Xx, Xxxxxxxxxx 00000 ("Principal").
R E C I T A L S
WHEREAS, Principal is a shareholder of Neostar Holdings, Inc., which
owns all of the outstanding stock of Neostar Medical Technologies, Inc., a
Delaware corporation ("Neostar");
WHEREAS, Neostar has, as of this date, sold and conveyed to Purchaser
substantially all of the assets and business of Neostar, which engages in the
business of manufacturing, selling and distributing catheter medical products
(the "Business");
WHEREAS, Purchaser intends to carry on the Business;
WHEREAS, Principal, as a director of Neostar has been engaged in the
Business and Principal has developed certain customer contacts, contracts and
relationships with respect to the Business in the United States;
WHEREAS, Principal has considerable knowledge relating to the Business,
which knowledge has substantially aided Principal in the operation of the
Business on Neostar's behalf;
WHEREAS, Principal and Purchaser desire that Principal will be retained
as an independent consultant as provided herein for the purpose of advising and
assisting Purchaser with the Business; and
WHEREAS, in connection with the sale of the Business to Purchaser, the
parties hereto also have become parties to an Asset Purchase Agreement dated as
of ___________________, 1995 (the "Asset Purchase Agreement"), which
contemplates that the parties will enter into this Agreement which provides
substantial payments to Principal.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and in accordance with the Asset Purchase Agreement, the
parties hereto agree as follows:
1. Rights of Purchaser. Covenants contained herein are cumulative to
the rights of Purchaser under the laws of the United States, the State of
California and other states as applicable respecting its right to protect itself
from the competition of Principal.
39
2. Covenants Not to Compete or Hire.
(a) Covenants. Principal agrees that, for the period
commencing with the Closing Date (as defined in the Asset Purchase Agreement)
and ending on October 31, 2002, he shall not engage in any of the following
activities within the United States: (i) directly or indirectly engage or hold
an interest in any business engaged in the sale and distribution of catheter
products (the "Proscribed Business") or (ii) directly or indirectly have any
interest in, own, manage, operate, control, direct, be connected with as a
stockholder, joint venturer, officer, director, partner, employee or consultant,
or otherwise engage or invest or participate in, any business engaged in the
Proscribed Business, or (iii) hire any person employed or otherwise retained by,
or solicit or encourage any person to leave the employ of, Purchaser. Nothing in
this Section 2(a) shall prevent Principal from owning or holding as a
shareholder less than five percent of the issued and outstanding shares of a
publicly-held corporation.
(b) Injunctive Relief. The parties hereto agree that damages
would be an inadequate remedy for Purchaser in the event of a breach or
threatened breach of this Agreement and thus, in any such event, either with or
without pursuing any potential damage remedies, Purchaser may immediately obtain
and enforce an injunction prohibiting Principal from violating this Agreement
from any court of law or equity.
3. Consulting Services. Principal hereby agrees to provide
consulting services to Purchaser with respect to the Business acquired from
Neostar, and Purchaser hereby retains Principal to provide such services, as may
be specified and agreed to from time to time during the term of this Agreement,
as an independent contractor.
4. Payments.
(a) In consideration for Principal's compliance with the
covenants set forth in Section 2 hereof, Purchaser shall pay to Principal the
amount of Five Hundred Twenty One Thousand One Hundred Seventy Five and 96/100
($521,175.96) which amount shall be payable in the installment payments set
forth in Schedule A hereto, which is incorporated herein by reference.
(b) In consideration for Principal's consulting services
hereunder, Purchaser shall pay to Principal the amount of One Hundred Seventy
Three Thousand Seven Hundred Twenty Five and 32/100 Dollars ($173,725.32) which
amount shall be payable in the installment payments set forth in Schedule A
hereto, which is incorporated herein by reference.
(c) Under the terms of Section 3.3 of the Asset Purchase
Agreement, the amounts payable under Sections 4(a) and 4(b) above are subject to
reduction in the manner and amount provided for in such Section 3.3. Any such
reduction shall be applied as described in such Section 3.3 to the most
immediate installment payments due after such reduction.
- 2 -
40
(d) Under the terms of Section 8.4 of the Asset Purchase
Agreement and Schedule 8.4 thereto, the amounts payable under Sections 4(a) and
4(b) above are subject to offset. Any such offset shall be applied as described
in Schedule 8.4 to the most immediate installment payments due after such
offset.
(e) The provisions of Section 4(c) and Section 4(d) hereof are
intended by the parties to work in conjunction with, and not contrary to, each
other. In the event there are reductions in indebtedness under Section 4(c) and
offsets to indebtedness under Section 4(d), such reductions and offsets will not
be duplicative but will reduce and offset different amounts of indebtedness in
the order that the reductions and the offsets are made pursuant to Sections 3.3
and 8.4 in and Schedule 8.4 to the Asset Purchase Agreement.
(f) Upon termination of this Agreement under Section 10 below,
the payments under Sections 4(a) and 4(b) above that are due and payable after
such termination shall be abated and forfeited and shall not be payable.
(g) In the event any "Acceleration Event" (as defined below)
should occur, then the "Final Payoff Amount" (as defined below) shall be due and
payable in full on the date on which the Acceleration Event occurs. The Final
Payoff Amount, when paid, shall be full and final payment of all sums due and
payable under this Agreement. The term "Acceleration Event" shall mean (i) a
sale of Purchaser or Horizon Medical Products, Inc. ("Horizon") (through merger,
sale of eighty percent (80%) or more of the outstanding stock of Purchaser or
Horizon or sale of all or substantially all of the assets of Purchaser or
Horizon; provided, however, that a sale of Purchaser to Horizon or a merger of
Purchaser into Horizon shall not be an Acceleration Event), (ii) a sale of stock
of Purchaser or Horizon to the public in an initial public offering, or (iii)
the failure by Purchaser to pay any installment payment payable to Principal
pursuant to the provisions in Sections 4(a) and 4(b) above after Purchaser
receives written notice of default from Principal and fails to pay the amount
due within five (5) days after receiving notice of nonpayment, or (iv) any of
the events described in the paragraphs (i) through (xii) on page 2 of the
Secured Subordinated Note dated October ___, 1995, which paragraphs are
incorporated herein by reference. The term "Final Payoff Amount" shall mean the
remaining outstanding and unpaid amount due and payable under this Agreement at
any time under the provisions of Sections 4(a) and 4(b) above, with such amount
then reduced to its present value as of the date on which the Acceleration Event
occurs using an interest rate of ten percent (10%) in determining such present
value. An illustration of the provisions in this subsection is set forth in
Schedule B attached hereto and incorporated herein by reference.
The amounts under Sections 4(a) and 4(b) above that are unpaid at any
time are subject to prepayment by Purchaser in full or in part at any time and
from time to time without payment of penalty or premium. If Purchaser elects to
prepay such amounts in full, then Purchaser shall pay the Final Payoff Amount,
calculated as of the date of such prepayment under the above provisions, as full
and final payment of all sums due and payable under this Agreement.
- 3 -
41
5. Severability. Any provision of this Agreement which is deemed
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction and subject to this Section 5, be ineffective to the extent of such
invalidity, illegality or unenforceability, without affecting in any way the
remaining provisions hereof in such jurisdiction or rendering that or any other
provision of this Agreement invalid, illegal or unenforceable in any other
jurisdiction. If any covenant should be deemed invalid, illegal or unenforceable
because its scope is considered excessive, such covenant shall be modified so
that the scope of the covenant is reduced only to the minimum extent necessary
to render the modified covenant valid, legal and enforceable.
6. Complete Agreement. This Agreement and the Asset Purchase
Agreement contain the entire agreement between the parties hereto with respect
to the matters described herein and therein, and supersede all previous oral and
written discussions, agreements or understandings between the parties hereto
regarding such matters.
7. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Georgia.
8. Assignment. This Agreement shall not be assigned by any party
without the prior written consent of the other party, except that this Agreement
may be assigned by Purchaser, without the prior consent of Principal, (a) to any
corporation or other entity or person controlling, controlled by or under common
control with, Purchaser, or (b) to a Purchaser of substantially all of the
assets of the Business from Purchaser.
9. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but both of
which shall constitute one and the same instrument.
10. Termination. This Agreement shall terminate only if it is finally
determined by a court of competent jurisdiction that Principal has violated or
breached his obligations to Purchaser under this Agreement.
11. Independent Contractor. It is expressly understood and agreed
that in performing his obligations under this Agreement Principal shall act
solely as an independent contractor and not as an employee of Purchaser and is
not entitled to any employee benefits from Purchaser. Principal is not and shall
not hold himself out to be an agent of Purchaser for any purpose whatsoever, and
Principal shall not create any obligations for Purchaser or bind or attempt to
bind Purchaser in any manner whatsoever.
- 4 -
42
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first set forth above.
HORIZON ACQUISITION CORP.
By
-----------------------------------------
PRINCIPAL:
-------------------------------------------
Xxxxxx X. Xxxx
- 5 -
43
EXHIBIT D
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made this ____ day of October, 1995 by and
among Xxxxx X. Xxxxxxxxx ("Employee"), and Horizon Medical Acquisition Corp., a
Georgia corporation ("Purchaser");
WHEREAS, pursuant to the Asset Purchase Agreement dated as of October
____, 1995 (the "Asset Purchase Agreement"), Purchaser has acquired
substantially all of the assets and business of Neostar Medical Technologies,
Inc. ("Neostar"), which had previously employed Employee as an officer of
Neostar;
WHEREAS, all the parties hereto intend and agree that this Agreement
will replace and supersede any agreements or other arrangements with respect to
the employment of Employee by Purchaser;
WHEREAS, Employee will have access to confidential information, trade
secrets and other confidential and proprietary information of Purchaser; and
WHEREAS, this Agreement is executed in connection with and as a
condition precedent of the Asset Purchase Agreement;
NOW, THEREFORE, in consideration of these recitals and mutual covenants
and agreements hereinafter set forth, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Employment.
1.1. Duties. Purchaser shall employ Employee upon the terms and
conditions set forth in this Agreement. Employee shall have the duties which may
be assigned to Employee from time to time by the Chief Executive Officer or the
President of Purchaser, including without limitation the following:
(a) Employee will supervise Purchaser's manufacturing
operations in the Purchaser's facility at 000 Xxxx Xxxx, Xxxx xx
Xxxxxxx, Xxxxxxxxxxxx (the "Operations Facility") until the
manufacturing operations are moved to Purchaser's new manufacturing
facility in Georgia.
(b) Employee will supervise Purchaser's move of the
manufacturing operations from the Operations Facility to Purchaser's
new manufacturing facility in Georgia.
44
(c) After the move of such manufacturing operations into
Purchaser's new manufacturing facility in Georgia, Employee will be
responsible for staffing such manufacturing facility and for
supervising and being responsible for such manufacturing facility's
becoming operational and producing, to Purchaser's reasonable
satisfaction, all products (except for dual lumen fistula needles which
have previously been discontinued by Neostar) that Neostar was
manufacturing at the Operations Facility during the year prior to the
date of this Agreement.
(d) Employee will be responsible for assisting Purchaser in
locating and hiring an executive responsible for the Georgia facility.
1.2. Best Efforts. Employee agrees to devote his best efforts and
substantially his full time and attention to the performance of his duties under
this Agreement and to perform such duties in an efficient, trustworthy and
businesslike manner. Employee agrees that he will not, directly or indirectly,
engage or participate in, or become employed by or render advising or consulting
services or other services in connection with any business activity other than
that of Purchaser, without the prior written consent of Purchaser.
1.3. Duty to Act in the Best Interest of Purchaser. Employee shall not
act in any manner, directly or indirectly, which may damage the business of
Purchaser or which would adversely affect the good will, reputation or business
relations of Purchaser with its customers, the public generally or with any
other of its employees.
2. Term of Employment.
2.1. Term. The term of Employee's employment with Purchaser shall
commence as of October ___, 1995 (the "Effective Date") and shall continue for a
period of one year from the Effective Date. Following such initial term, this
Agreement will be automatically renewed for successive periods of six months
unless any party gives thirty (30) days written notice of his or its intention
not to renew.
2.2. Termination for Cause. Purchaser shall have the right to terminate
Employee's employment hereunder for the following causes (a "Termination for
Cause"):
(a) Conviction of Employee for, or entry of a plea of guilty
or nolo contendere by Employee with respect to any felony or any crime
involving an act of moral turpitude;
(b) Commission by Employee of any fact of fraud or dishonesty
affecting Purchaser;
(c) Conduct which is materially detrimental to the reputation,
good will or business operations of Purchaser;
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45
(d) Willful neglect or breach by Employee of his duties or
intentional misconduct by Employee in discharging such duties;
(e) Employee's continued absence from his duties without the
consent of the Chief Executive Officer or the President of Purchaser
after receipt of written notification from Purchaser; or
(f) Employee's breach of the restrictive covenants set forth
in Section 5 of this Agreement;
(g) The failure of Purchaser to receive the monthly payments,
when due, under Section 3.3(a) (v) of the Asset Purchase Agreement;
provided, however, that termination of Employee for any act or omission
described in subparagraphs (b) through (g) above shall not constitute a valid
Termination for Cause unless Employee shall have received written notice from
the President or the Chief Executive Officer of Purchaser stating the nature of
the conduct forming the basis for termination and affording Employee ten (10)
days to correct the act or omission described. Unless Employee cures such act or
omission to the satisfaction of Purchaser, such Termination for Cause shall be
effective immediately upon expiration of such ten day period. Upon the
effectiveness of any Termination for Cause by Purchaser, payment of all
compensation to Employee under this Agreement shall cease immediately (except
for any payment of compensation accrued but unpaid through the date of such
Termination for Cause).
2.3. Termination Due to Disability or Death. If Employee is unable to
perform his duties under this Agreement by reason of physical or mental
disability or if Employee should die during the term of this Agreement, this
Agreement shall terminate and all payments to Employee under this Agreement
shall cease immediately (except for any such payments accrued but unpaid through
the date of disability or death).
2.4. Termination Without Cause. On or before June 30, 1996, Purchaser
may terminate Employee's employment without cause by giving Employee written
notice three (3) months prior to the effective date of such termination.
3. Compensation.
3.1. Compensation. Subject to the provisions of this Agreement, during
the term of this Agreement, Purchaser shall pay to Employee compensation of
$14,000 per month until termination or until such compensation terms are
modified by mutual written agreement between Employee and Purchaser.
3.2. Reimbursement of Business Expenses. During the term of this
Agreement, Purchaser will reimburse Employee for all ordinary and necessary
business expenses incurred by him in connection with the performance of his
duties under this Agreement, subject to the policies and
- 3 -
46
procedures of Purchaser for reimbursement of business expenses and upon
submission by Employee to Purchaser of vouchers itemizing such expenses in a
form satisfactory to Purchaser, properly identifying the nature and business
purpose of any such expenditures.
3.3. Benefits. During the term of this Agreement, Employee will be
entitled to such benefits as may be given from time to time to other
similarly-situated employees of Purchaser as determined from time to time by
Purchaser and will include health coverage for Employee at the sole cost of
Purchaser. Employee will be entitled to twenty (20) days of vacation in each
calendar year (prorated for partial years), provided that any vacation days not
taken in any calendar year shall not be carried over to the next.
4. Property of Purchaser.
Employee hereby grants and assigns to Purchaser (without additional
compensation) his entire right, title and interest under applicable laws in and
to all inventions, patents, patent applications, research, information, customer
lists, all other technical and research data, made, conceived, developed and/or
acquired by him solely or jointly with others during the period of his
employment by Purchaser, but only to the extent the foregoing pertains to the
business of Purchaser.
5. Covenants of Nondisclosure, Nonsolicitation and NonCompetition.
5.1. Nondisclosure. Employee shall not, and Employee shall use his best
efforts to insure that any persons over which Employee has control do not, at
any time during or after termination of Employee's employment relationship with
Purchaser, directly or indirectly, use any Purchaser or Horizon proprietary,
confidential information for any purpose not associated with Purchaser or
Horizon's activities, or disseminate or disclose any such information to any
person or entity not affiliated with Purchaser or Horizon. Such Purchaser or
Horizon proprietary, confidential information includes, without limitation,
sales methods, prospecting methods, customer lists, computer technology,
programs and data, financial information and trade secrets of Purchaser or
Horizon regardless of the form thereof. Employee will take all reasonably
necessary and appropriate steps to insure that the confidentiality of Purchaser
and Horizon proprietary, confidential information shall be maintained. To the
extent that any of such proprietary, confidential information is not a trade
secret, then Employee's obligations hereunder shall continue for a period of two
years after the termination of his employment with Purchaser for any reason.
5.2. Nonsolicitation. For a period of two (2) years after the
termination of Employee's employment with Purchaser for any reason, Employee
will not solicit, service or in any way or to any degree handle any business
similar to that performed by Employee for Purchaser, for any person, firm or
entity which is a customer or actively marketed prospect of Purchaser or Horizon
or which becomes a customer or actively marketed prospect of Purchaser or
Horizon during the term of Employee's employment, where such customer or
prospect has been contacted by Employee during the course of his employment with
Purchaser.
- 4 -
47
For a period of two (2) years after the termination of Employee's
employment with Purchaser for any reason, Employee will not solicit, take away,
hire, employ or endeavor to employ any of the employees of Purchaser or Horizon.
5.3. NonCompetition. Employee agrees that, while employed by Purchaser
and for a period of three (3) years after the termination of Employee's
employment with Purchaser for any reason, Employee shall not engage in any of
the following activities within the State of Georgia or within any other state
in which Horizon has a sales representative or distributor as of the date of
this Agreement (such states being described on Schedule A hereto): (i) directly
or indirectly engage or hold an interest in any business engaged in the sale and
distribution of catheter products (the "Prescribed Business") or (ii) directly
or indirectly have any interest in, own, manage, operate, control, direct, be
connected with as a stockholder, joint venturer, officer, director, partner,
employee or consultant or otherwise engage or invest or participate in, any
business engaged in the Prescribed Business. Nothing in this Section 5.3 shall
prevent Employee from owning or holding as a shareholder less than five percent
(5%) of the issued and outstanding shares of a publicly-held corporation.
Employee further agrees that, during his employment with Purchaser, he
shall use his best efforts to preserve the business and the organization of
Purchaser, to keep available to Purchaser the services of its employees and to
preserve for Purchaser its and his favorable business relationships with
suppliers, customers and others with whom Purchaser and Employee have business
relationships.
5.4. Remedies. In view of the services which Employee will perform for
Purchaser, which are special, unique, extraordinary and intellectual in
character, which place him in a position of confidence and trust with respect to
suppliers, customers and employees of Purchaser and Horizon and which provide
him with access to confidential information, trade secrets, know-how and other
confidential and proprietary information of Purchaser and Horizon, in view of
the geographic scope and nature of the business in which Purchaser and Horizon
are engaged and recognizing the value of this Agreement to him, Employee
expressly acknowledges that the restrictive covenants set forth in this
Agreement, including without limitation the geographic scope of such covenants,
are necessary in order to protect and maintain the proprietary interest and
other legitimate business interests of Purchaser and Horizon and that the
enforcement of such restrictive covenants will not prevent him from earning a
livelihood. Employee also acknowledges that the scope of the operations of
Purchaser and Horizon are such that it is reasonable that the restrictions set
forth in this Agreement are not more limited as to geographic area than is set
forth herein. Employee further acknowledges that the remedy at law for any
breach or threatened breach of this Agreement will be inadequate and,
accordingly, that Purchaser and Horizon shall, in addition to all other
available remedies (including without limitation, seeking such damages as they
may have sustained by reason of such breach), be entitled to injunctive and any
other appropriate form of equitable relief.
- 5 -
48
6. Miscellaneous.
6.1. Assignment and Successors. Purchaser may assign its rights and
obligations under this Agreement to any other corporation or other entity which
controls, is controlled by, or is under common control with, Purchaser, without
Employee's consent. Further, if Purchaser sells all or substantially all of the
assets of Purchaser, the rights and obligations of Purchaser under this
Agreement may be assigned without Employee's consent. In all other
circumstances, the rights and obligations of Purchaser under this Agreement may
be signed with Employee's consent (which shall not be unreasonably withheld) and
shall inure to the benefit of and be binding upon the successors and assigns of
Purchaser. Employee's obligations to provide services hereunder may not be
assigned or assumed by any other person or entity.
6.2. Notices. All notices, requests, demands or other communications
under this Agreement shall be in writing and shall only be deemed to be duly
given if in accordance with the terms of Section 11.4 of the Asset Purchase
Agreement, to Purchaser at Seven North Parkway Square, 0000 Xxxxxxxxx Xxxxxxx,
X.X., Xxxxxxx, Xxxxxxx 00000 and to Employee at his address as shown in
Purchaser's records.
6.3. Severability. If any provision or portion of this Agreement shall
become illegal, invalid or unenforceable in whole or in part for any reason,
such provision shall be ineffective only to the extent of such illegality,
invalidity or unenforceability without invalidating the remainder of such
provision or the remaining provisions of this Agreement. If any court should
deem any covenant herein to be invalid, illegal or unenforceable because its
scope is considered excessive, such covenant shall be modified so that the scope
of the covenant is reduced only to the minimum extent necessary to render the
modified covenant valid, legal and enforceable.
6.4. Integration, Amendment and Waiver. This Agreement constitutes the
entire agreement among the parties hereto, superseding all prior arrangements
and agreements, and may be modified, amended or waived only by written
instrument signed by all the parties hereto.
6.5. Governing Law. This Agreement shall be construed in accordance
with and governed for all purposes by the laws of the State of Georgia
applicable to contracts executed and wholly performed within such state;
provided, however, that the provisions of Section 5 hereunder shall be governed
by the laws of the state in which Employee resides at the time Purchaser or
Horizon enforces such provisions. The term "Horizon" used herein shall mean
Horizon Medical Products, Inc.
6.6. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
6.7. Nonwaiver of Rights and Breaches. No failure or delay of any party
herein in the exercise of any right given to such party hereunder shall
constitute a waiver thereof unless the time specified herein for the exercise of
such right has expired, nor shall any single or partial exercise of
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49
any right preclude other or further exercise thereof or of any other right.
Waiver by a party hereto of any default of any other party shall not be deemed
to be a waiver of any subsequent default or other default by such party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
HORIZON ACQUISITION CORP.
By:
------------------------------------
Chief Executive Officer
---------------------------------------
XXXXX X. XXXXXXXXX
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EXHIBIT F
FORM OF OPINIONS OF SELLER'S COUNSEL
1. The Company was duly organized as a corporation, and is existing and
in good standing, under the laws of the State of Delaware.
2. Company has the corporate power to execute and deliver the Asset
Purchase Agreement and the other ["closing documents"], to perform its
obligations thereunder, to own and use the Transferred Assets and to conduct the
Business.
3. Company has duly authorized the execution and delivery of the Asset
Purchase Agreement and the closing documents and all performance by the Company
thereunder and has duly executed and delivered the Asset Purchase Agreement and
the closing documents.
4. The execution and delivery by the Company of the Asset Purchase
Agreement and the closing documents do not, and if the Company were now to
perform its obligations under the Asset Purchase Agreement and the closing
documents such performance would not, result in any:
(a) Violation of the Company's Certificate of Incorporation or
by-laws, as amended;
(b) Violation of any existing federal or Delaware Constitution
or statute to which the Company is subject or violation, to our
knowledge, of any existing order or regulation of any court or
governmental agency to which the Company or the Transferred Assets are
subject;
(c) Breach of or default, to our knowledge, under any material
written agreements to which the Company is a party or by which, to our
knowledge, the Company or its properties are bound;
(d) Violation of any judicial or administrative decree, writ,
judgment or order to which, to our knowledge, the Company or the
Transferred Assets are subject; or
(e) Creation or imposition of a contractual lien or security
interest in, on or against the Transferred Assets under any material
written agreements to which, to our knowledge, the Company is a party
or which, to our knowledge, the Company or the Transferred Assets are
bound.
5. The Asset Purchase Agreement and the closing documents are
enforceable against the Company; provided, however, that the enforceability of
the Asset Purchase Agreement and the closing documents are subject to (i)
applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent
conveyance and similar federal and state laws affecting the rights and remedies
of
51
creditors generally and (ii) general principles of equity limiting the
availability of equitable remedies (including but not limited to the remedy of
specific performance), whether considered in a proceeding at law or in equity.
6. No consent, approval, authorization or other action by, or filing
with, any governmental authority of the United States or the State of Delaware
is required for Company's execution and delivery of the Asset Purchase Agreement
and the closing documents and the consummation of the sale that is reflected in
the Asset Purchase Agreement and the closing documents.
7. The Company has transferred to Purchaser all of Company's right,
title and interest in and to the Transferred Assets.
Based upon the limitations and qualifications set forth above, we
confirm to you that, to our knowledge, no litigation or other proceeding against
the Company or any of its properties is pending or overtly threatened by written
or oral communication to the Company.
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EXHIBIT G
FORM OF OPINIONS OF PURCHASER'S COUNSEL
1. The Company was duly organized as a corporation, and is existing and
in good standing, under the laws of the State of Georgia.
2. Company has the corporate power to execute and deliver the Asset
Purchase Agreement and the other ["closing documents"], to perform its
obligations thereunder, to own and use the Transferred Assets and to conduct the
Business.
3. Company has duly authorized the execution and delivery of the Asset
Purchase Agreement and the closing documents and all performance by the Company
thereunder and has duly executed and delivered the Asset Purchase Agreement and
the closing documents.
4. The execution and delivery by the Company of the Asset Purchase
Agreement and the closing documents do not, and if the Company were now to
perform its obligations under the Asset Purchase Agreement and the closing
documents such performance would not, result in any:
(a) Violation of the Company's Certificate of Incorporation or
by-laws, as amended;
(b) Violation of any existing federal or Georgia Constitution
or statute to which the Company is subject or violation, to our
knowledge, of any existing order or regulation of any court or
governmental agency to which the Company or the Transferred Assets are
subject;
(c) Breach of or default, to our knowledge, under any material
written agreements to which the Company is a party or by which, to our
knowledge, the Company or its properties are bound; or
(d) Violation of any judicial or administrative decree, writ,
judgment or order to which, to our knowledge, the Company or the
Transferred Assets are subject.
5. The Asset Purchase Agreement and the closing documents are
enforceable against the Company; provided, however, that the enforceability of
the Asset Purchase Agreement and the closing documents are subject to (i)
applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent
conveyance and similar federal and state laws affecting the rights and remedies
of creditors generally and (ii) general principles of equity limiting the
availability of equitable remedies (including but not limited to the remedy of
specific performance), whether considered in a proceeding at law or in equity.
6. No consent, approval, authorization or other action by, or filing
with, any governmental authority of the United States or the State of Georgia is
required for Company's
53
execution and delivery of the Asset Purchase Agreement and the closing documents
and the consummation of the sale that is reflected in the Asset Purchase
Agreement and the closing documents.
Based upon the limitations and qualifications set forth above, we
confirm to you that, to our knowledge, no litigation or other proceeding against
the Company or any of its properties is pending or overtly threatened by written
or oral communication to the Company.
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