EXHIBIT 2.2
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made this 11th day
of September, 1996, by and among CryoLife, Inc., a Florida corporation
("CryoLife"); United Cryopreservation Foundation, Inc., a non-profit Illinois
corporation ("UCFI"); United Transplant Foundation, Inc., an Illinois non-profit
corporation, which is a corporate member of UCFI ("UTF"); and QV, Inc., an
Illinois non-profit corporation, which is a corporate member of UCFI ("QV").
(UTF and QV are hereinafter referred to collectively as the "Members" and
individually as a "Member").
W I T N E S S E T H:
WHEREAS, CryoLife is in the business of developing and commercializing
technology for the ultralow temperature preservation of viable human
cardiovascular and orthopedic tissues for transplant;
WHEREAS, UCFI is a non-profit organization organized for the
cryopreservation of human tissue for transplant;
WHEREAS, UCFI desires to sell to CryoLife, and CryoLife desires to
purchase from UCFI, substantially all of the assets of UCFI pursuant to the
terms of this Agreement;
WHEREAS, the parties desire to set forth certain representations,
warranties and covenants made by each to the other as an inducement to the
consummation of the sale and certain additional agreements related thereto;
NOW, THEREFORE, in consideration of $10.00 paid by CryoLife to UCFI,
the mutual representations, warranties and covenants herein contained, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 PURCHASED ASSETS. Subject to and upon the terms and conditions set
forth herein and except for those assets described in Section 1.2 hereof, UCFI
agrees to sell to CryoLife, and CryoLife agrees to purchase from UCFI, at the
Closing (as hereinafter defined), all of the tangible and intangible assets of
UCFI (collectively, the "Assets"), including but not limited to:
(a) All of UCFI's interest in and the rights and benefits accruing
to UCFI as sublessee under that certain Sublease (collectively, with the letter
amendments hereinafter referenced, the "Sublease") dated November, 1995 between
Regional Organ Bank of Illinois,
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Inc. ("ROBI") and UCFI, as amended by that certain letter dated November, 1995
from ROBI to UCFI and countersigned by UCFI and submitted for countersigning by
American National Bank and Trust Company of Chicago, as Trustee under Trust No.
59097, (the "Landlord") and that certain letter dated December 21, 1995, from
Winthrop Management, as agent for the Landlord and countersigned by ROBI and
UCFI, for certain real property as described in such Sublease and located at 800
South Wells, Chicago, Illinois 60607 (the "Subleased Property");
(b) All of UCFI's machinery, appliances, equipment, including
UCFI's computer hardware and software, tools, supplies, leasehold improvements,
construction in progress, furniture and fixtures owned by UCFI as of the
Closing, including, without limitation, those items listed on Schedule 1.1(b)
attached hereto ("Fixed Assets") and all other tangible personal property
located at the Subleased Property and relating to the business conducted
thereat;
(c) All intellectual property of UCFI, including without
limitation, all proprietary processes, methods, formulas, devices, and
techniques related to the procurement, processing, and distribution of
cryopreserved tissue; trademarks; service marks; goodwill and other intangible
assets but excluding those items listed on Schedule 1.2 (collectively,
"Intellectual Property");
(d) All of UCFI's right, title and interest in and to its telephone
numbers and the directory advertising for such telephone numbers, to the extent
assignable;
(e) All claims, security and other deposits, prepayments, prepaid
expenses, refunds, causes of action, choses in action, rights of recovery,
warranty rights, rights of set off, rights to receive insurance proceeds, and
rights of recoupment of UCFI ("Deposits");
(f) All of UCFI's licenses, consents, permits, variances,
certifications and approvals of governmental agencies to the extent transferable
and requested by CryoLife;
(g) Business books, records, ledgers, files, documents, business
plans, budgets, financial statements, correspondence, customer lists,
advertising and promotional materials of UCFI ("Books and Records");
(h) Cash on hand, cash in UCFI's bank accounts and escrow accounts
and cash equivalents; and
(i) All accounts and notes receivable and deferred preservation
costs of UCFI as of Closing ("Accounts Receivable").
EACH PARTY ACKNOWLEDGES THAT CRYOLIFE SHALL NOT OBTAIN TITLE TO ANY
HUMAN TISSUE OR ORGANS UNDER THE AGREEMENT.
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1.2 EXCLUDED ASSETS. Anything to the contrary in Section 1.1 hereof
notwithstanding, the Assets shall exclude the following ("Excluded Assets"):
(a) any real property owned by UCFI; and
(b) those items set forth on Schedule 1.2 attached hereto.
1.3 NO LIENS OR ENCUMBRANCES. The Assets will be transferred and sold
to CryoLife free and clear of all claims, liens, encumbrances, security
interests, and similar interests of any kind or nature whatsoever.
ARTICLE 2
PURCHASE PRICE; ASSUMPTION OF LIABILITIES
2.1 PURCHASE PRICE. The consideration for the Assets (collectively, the
"Asset Consideration") will be an amount equal to $2,000,000 (the "Cash
Consideration"), plus the aggregate amount of the Assumed Liabilities as
described in and subject to the provisions of Section 2.3.
2.2 PAYMENT. The Asset Consideration shall be paid to UCFI as follows:
(a) $750,000 shall be paid in immediately available funds at
Closing;
(b) the balance of the Cash Consideration will be evidenced by
delivery of a promissory note from CryoLife in favor of UCFI, in the form
attached hereto as Exhibit 2.2 (the "Promissory Note"); and
(c) the Assumed Liabilities shall be assumed by CryoLife pursuant
to the Assignment and Assumption Agreement and Assignment and Assumption of
Sublease (as defined in Section 2.3).
2.3 ASSUMED LIABILITIES.
(a) At the Closing, CryoLife agrees to assume only the following
(collectively, the "Assumed Liabilities"): (i) obligations and liabilities of
UCFI arising from and after the Closing with respect to the Sublease as
contemplated in the Assignment and Assumption of Sublease attached hereto as
Exhibit 2.3(a)(i) (the "Assignment and Assumption of Sublease"); (ii) trade
payables, accrued expenses and other current liabilities incurred by UCFI prior
to Closing and payable in the ordinary course of business as contemplated by the
Assignment and Assumption Agreement attached hereto as Exhibit 2.3(a)(ii) (the
"Assignment and Assumption Agreement"). CryoLife shall not assume, and UCFI
shall remain responsible for, the payment of the $750,000 loan payable by UCFI
to the Members. Notwithstanding the foregoing, in no event shall the aggregate
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amount of liabilities and obligations assumed by CryoLife under Section
2.3(a)(ii) exceed $500,000.
(b) Except for the Assumed Liabilities set forth in Section 2.3(a)
above, it is expressly understood and agreed that CryoLife shall not be liable
for any obligations, liabilities, contracts, debts, claims, costs, expenses,
agreements or understandings of any kind or nature whatsoever related to UCFI's
operation of its business or its ownership or use of the Assets, including,
without limitation, (i) any debts or liabilities of UCFI arising from events or
occurrences prior to the Closing, (ii) any liability of UCFI for any period of
time for federal, state or local taxes, and (iii) any liability of UCFI for
expenses, debts or obligations incurred within or outside the ordinary course of
business. Anything to the contrary contained herein notwithstanding, CryoLife
shall not assume or have any obligations or liabilities whatsoever in respect of
severance, Worker Adjustment and Retraining Act, income tax withholding, payroll
and/or unemployment tax, workers' compensation, pension, profit-sharing, health
insurance, Part 6 of Subtitle B of Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or any other employee or other
benefit liabilities, including, without limitation any contribution, tax, lien,
penalty, cost, interest, claim, loss, action, suit, damage, cost assessment,
withdrawal liability, liability to the Pension Benefit Guaranty Corporation (the
"PBGC"), liability under Section 412 of the Internal Revenue Code of 1986, as
amended (the "Code") or Section 302(a)(2) of ERISA or other similar liability or
expense of UCFI or any ERISA Affiliate, in respect of any Employee to be Hired
(as defined in Section 3.1), for the period of time prior to Closing, and in
respect of any Leased Employees, for any period of time before, on or after
Closing. ERISA Affiliate shall mean any trade or business, whether or not
incorporated, which has employees who are or have been at any date of
determination occurring within the preceding six years, treated pursuant to
Section 4001(a)(14) of ERISA and/or Section 414 of the Code as employees of a
single employer.
2.4 ALLOCATION OF THE CONSIDERATION AMONG THE ASSETS. The Asset
Consideration received by UCFI shall be allocated, for tax purposes, among each
item or class of the Assets of UCFI pursuant to Schedule 2.4 hereof. UCFI and
CryoLife each agrees that it will prepare and file any notice or other filings
required pursuant to Section 1060 of the Code, and that any such notices or
filings will be prepared based on such tax allocation of the Asset
Consideration. CryoLife agrees to send to UCFI a completed copy of its Form 8594
("Asset Acquisition Statement under Section 1060") with respect to this
transaction prior to filing such form with the Internal Revenue Service.
2.5 CLOSING. The closing of the transactions contemplated herein (the
"Closing") shall take place on or before September 15, 1996, at the offices of
CryoLife's counsel upon compliance with the terms, conditions and contingencies
contained herein or on such other date as is mutually agreed upon by the parties
hereto (such date to be herein referred to as the "Closing Date"). All
computations, adjustments, and transfers for the purposes hereof shall be
effective as of the close of business on the Closing Date on terms reasonably
acceptable to CryoLife.
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ARTICLE 3
OTHER COVENANTS AND AGREEMENTS
3.1 EMPLOYEE MATTERS. UCFI currently receives the services of certain
individuals who are employees of QV, pursuant to a management agreement between
UCFI and QV. A true, correct and complete list of such persons (the "QV
Employees") is attached hereto as Schedule 3.1. CryoLife intends to hire three
of these employees as of Closing, each of whom are identified on Schedule 3.1
(the "Employees to be Hired"). With respect to the Employees to be Hired, from
Closing forward, CryoLife shall be solely responsible and exclusively liable for
compensating the Employees to be Hired and complying with all applicable
federal, state and local laws with respect to the employment of such persons,
including without limitation, liability for FICA, FUTA, unemployment tax,
pension and profit-sharing plan contributions, employee fringe benefits;
provided, however, that in no event shall CryoLife have any responsibility with
respect to any Employees to be Hired for liabilities attributable to periods on
or prior to Closing (including without limitation any severance pay or
liabilities arising under continuation of group healthcare coverage benefits
pursuant to Section 4980B of the Code and Part 6 of Subtitle B of Title I of
ERISA ("COBRA") attributable to their termination of employment with QV).
CryoLife shall offer to obtain the services of the QV Employees other than the
Employees to be Hired (the "Leased Employees") pursuant to an agreement between
CryoLife and QV, the form of which is attached hereto as Exhibit 3.1 (the
"Employee Leasing Agreement"). In no event shall CryoLife have any obligation or
liability whatsoever to provide any benefits or compensation directly to the
Leased Employees, it being acknowledged and agreed that QV shall have the
exclusive liability and responsibility for compensating the Leased Employees and
complying with all applicable federal, state and local laws with respect to the
employment of such persons, including without limitation, liability for FICA,
FUTA, unemployment tax, pension and profit-sharing plan contributions, employee
fringe benefits, and that QV shall indemnify and hold harmless CryoLife from any
liability whatsoever with respect thereto whether arising before, on, or after
the Closing Date. In the event of termination of the relationship between
CryoLife and QV described herein with respect to the Leased Employees, CryoLife
shall have no liability whatsoever to provide any severance or other benefits of
any nature whatsoever to any Leased Employees or their dependents (including,
without limitation, severance pay or liabilities arising under COBRA, it being
acknowledged and agreed that the exclusive responsibility for all such matters
shall be with QV. QV shall be responsible for all vacation of the Employees to
be Hired prior to Closing, and QV shall be responsible for all vacation of all
Leased Employees accruing prior to or after Closing; provided, however, CryoLife
acknowledges and agrees that amounts accrued by UCFI in connection with vacation
of QV Employees and payable to QV in the ordinary course of UCFI's business
shall be an "Assumed Liability" of CryoLife under Section 2.3(a)(ii) of this
Agreement.
3.2 CONSENTS. Promptly after execution of this Agreement, UCFI will
promptly apply for or otherwise seek, and use their best efforts to obtain, all
consents and approvals required for consummation of the transactions
contemplated hereby, including without
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limitation, those consents listed in Schedule 3.2 hereof (including estoppels
and consents from the lessors and sublessors under the Sublease to the
assignment thereof to CryoLife in form substantially similar to Exhibit 3.2
attached hereto). Any charges imposed by the lessors for such estoppels and
consents shall be borne by UCFI, and UCFI and the Members shall jointly and
severally indemnify CryoLife against any action brought against CryoLife
resulting from UCFI's failure to pay such charges. Notwithstanding the
foregoing, the parties agree that CryoLife shall bear all charges imposed by the
lessor of the Subleased Property in connection with establishing a direct
landlord-tenant relationship between CryoLife and said lessor to the extent such
charges exceed $1,500, and that ROBI shall bear such charges to the extent such
charges are less than or equal to $1,500. The parties acknowledge that it may be
difficult to obtain, prior to Closing, the consent of the Landlord and the
mortgagee of the Subleased Property (the "Mortgagee") to the assignment of the
Sublease. In the event UCFI uses its best efforts to obtain such consent prior
to Closing but is unable to obtain such consent by such date, CryoLife agrees to
waive the receipt of such consent as a condition to close. CryoLife shall
cooperate with UCFI in all reasonable respects in UCFI's efforts to obtain such
consent, whether before or after Closing. Notwithstanding any waiver by CryoLife
of the receipt of the Landlord's and Mortgagee's Consents prior to Closing, UCFI
and its Members shall jointly and severally indemnify CryoLife for any damages
incurred by it as a result of the failure to obtain the Landlord and Mortgagee's
consent, including, without limitation, any moving expenses incurred by
CryoLife. To the extent the Landlord and Mortgagee refuse to give such consent
and require CryoLife to vacate the Subleased Property, the assignment and the
assumption of the Sublease shall become null, void, and ineffective and CryoLife
shall have no rights under or liability for payment of any rental obligations
thereunder after the date it vacates such premises. Notwithstanding the
foregoing, CryoLife shall be responsible for the payment and performance of all
of UCFI's obligations under the Sublease for all periods up to the date it
vacates the premises following the Landlord or Mortgagee's denial of its
consent. To the extent the consent of the Landlord and Mortgagee is obtained,
CryoLife agrees to use reasonable efforts to obtain from the Landlord and
Mortgagee the release of UCFI and ROBI from any obligation or liability
subsequent to the Closing in connection with the Subleased Property.
3.3 DUE DILIGENCE REVIEW.
(a) UCFI currently conducts its business at the Subleased Property.
Upon the execution and delivery hereof, UCFI shall concurrently deliver to
CryoLife all Schedules required to be attached hereto. Prior to the execution
and delivery hereof, UCFI shall deliver to CryoLife true, correct and complete
copies of the Sublease, insurance policies, the Historical Financials and UCFI's
tax returns (pursuant to Section 4.11 hereof), together with all amendments
thereto through the date of execution hereof. UCFI, its employees, agents and
representatives shall provide to CryoLife and its employees, agents, counsel,
accountants, financial consultants and other representatives full access to all
information regarding the Assets and business of UCFI and shall fully cooperate
with CryoLife as reasonably needed to verify the accuracy of the information
prepared by UCFI. UCFI shall
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afford CryoLife, its employees, agents, counsel, accountants and financial
consultants full access, during normal business hours and upon reasonable
notice, any reasonably necessary hours thereafter, to the offices, properties,
records, files and other documents and information of or relating to UCFI's
business and the Assets as CryoLife, its employees, agents, counsel, accountants
or financial consultants may reasonably request. UCFI shall allow CryoLife, its
employees, agents, counsel, accountants and financial consultants access to a
work area within such business office and shall allow the copying of any such
records as requested by such party. However, CryoLife's due diligence review
shall at all times be conducted in a manner which is not disruptive to the
business of UCFI. UCFI reserves the right to require CryoLife's agents to enter
into confidentiality agreements covering information acquired in connection with
such due diligence reviews in form reasonably satisfactory to UCFI.
(b) Prior to Closing, UCFI shall prepare and deliver to CryoLife an
unaudited balance sheet as of July 31, 1996 (or such later date as designated by
CryoLife) and an unaudited income statement for the one-month period then ended,
in accordance with generally accepted accounting principles consistently applied
throughout the period involved (except that such interim statements need not
include footnotes or normal year-end adjustments) (collectively, the "Interim
Financials"). The Interim Financials shall be accompanied by a certificate
signed by the President that such Interim Financials have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the period involved (except for the absence of footnotes or normal
year-end adjustments) and fairly present the financial condition of UCFI as of
the date thereof and the results of operations for the period then ended. As
soon as is reasonably practicable after the execution of this Agreement, UCFI
will provide CryoLife with such financial statements and information as are
reasonably necessary to permit KPMG Peat Marwick to prepare financial statements
of UCFI in accordance with generally accepted accounting principles consistently
applied and Regulation S-X as promulgated by the Securities and Exchange
Commission ("SEC"). UCFI acknowledges that such financial information and
statements must be provided to the Accountants in a manner which will enable the
Accountants to complete the Audit within 60 days following the Closing of this
Agreement in order to comply with SEC filing requirements. All costs associated
with the Audit (other than UCFI's personnel costs, if any) shall be the
responsibility of CryoLife.
(c) CryoLife shall cause its employees, agents, counsel,
accountants, financial consultants and other representatives to hold in strict
confidence any and all information obtained from UCFI and to not disclose any
such information (unless such information is or becomes ascertainable from
public sources or public disclosure of such information is in the good faith
judgment of CryoLife required by law); provided, however, that nothing contained
herein shall limit the right of any such persons to disclose any such
information to CryoLife or its employees, agents, representatives, counsel,
accountants, financial advisors, underwriters and sources of financing (and
their counsel and accountants) for the purpose of facilitating the consummation
of the transactions contemplated hereby. Should the transaction contemplated
herein not be consummated for any reason whatsoever,
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CryoLife agrees to keep information obtained from UCFI confidential and not use
it for any purpose adverse to the interests of UCFI (unless such information is
or becomes ascertainable from public sources or public disclosure of such
information is in the good faith judgment of CryoLife required by law). Upon
termination of this Agreement pursuant to Section 9.1, CryoLife shall return to
UCFI all documents obtained by or provided to CryoLife pursuant to this Section
3.3.
(d) CryoLife's due diligence review and any inspections pursuant
thereto shall not waive or release UCFI or the Members from any of their
representations or warranties under this Agreement.
3.4 NONCOMPETITION AGREEMENTS. Concurrently with the Closing, UCFI, QV,
and UTF, shall each enter into a Noncompetition Agreement with CryoLife, in the
form of Exhibit 3.4 attached hereto.
3.5 UCFI'S ACCESS TO BOOKS AND RECORDS. CryoLife agrees to preserve all
of the records and books, customer records, and any other records which UCFI may
turn over to CryoLife pursuant to this Agreement until the fifth anniversary of
the Closing Date, and, until such time, to make them available, during normal
business hours, to UCFI or the Members, their counsel, accountants and others
authorized by them for inspection and the making of extracts therefrom, provided
such inspection and making of extracts do not unreasonably interfere with
CryoLife's operations and business.
3.6 CONDUCT OF BUSINESS BY UCFI PENDING THE CLOSING. UCFI covenants and
agrees that, unless CryoLife shall otherwise consent in writing, between the
date hereof and the Closing, the business of UCFI shall be conducted only in,
and UCFI shall not take any action except in, the ordinary course of business
and in a manner consistent with past practice; and UCFI will use its best
efforts to preserve substantially intact the business organization of UCFI, to
keep available the services of its present officers and the QV Employees and to
preserve the present relationships of UCFI with customers, suppliers and other
persons with which UCFI has significant business relations except that UCFI may
take steps to terminate any agreements which are not to be assigned. By way of
amplification and not limitation, except as expressly provided for in this
Agreement, UCFI shall not, between the date hereof and the Closing, directly or
indirectly, take any of the following actions without the prior written consent
of CryoLife:
(a) (i) issue, sell, pledge, dispose of, encumber, authorize, or
propose the issuance, sale, pledge, disposition, encumbrance or authorization of
any membership interests or rights of any kind to acquire any membership
interests of UCFI; (ii) amend or propose to amend the Articles of Incorporation
or By-Laws of UCFI; (iii) redeem, purchase or otherwise acquire or offer to
redeem, purchase or otherwise acquire any membership interests; or (iv)
authorize or propose or enter into any contract, agreement, commitment or
arrangement with respect to any of the matters set forth in this Section 3.6(a);
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(b) (i) acquire (by merger, consolidation, or acquisition of stock
or assets) any interest in any corporation, partnership or other business
organization or division thereof; (ii) except in the ordinary course of
business, sell, pledge, dispose of, or encumber or authorize or propose the
sale, pledge, disposition or encumbrance of any assets of UCFI; (iii) incur any
indebtedness for borrowed money or enter into any material contract or
agreement, except in the ordinary course of business; (iv) authorize any single
capital expenditure in excess of $1,000 or capital expenditures in the aggregate
in excess of $5,000; or (v) enter into or amend any contract, agreement,
commitment or arrangement with respect to any of the matters set forth in this
Section 3.6(b);
(c) take any action other than in the ordinary course of business
and in a manner consistent with past practice (none of which actions shall be
unreasonable or unusual) with respect to increasing compensation of any officer,
director, or any of the QV Employees or with respect to the grant of any
severance or termination pay (otherwise than pursuant to policies of UCFI in
effect on the date hereof and fully disclosed to CryoLife prior to the date
hereof) or with respect to any increase of benefits payable under its severance
or termination pay policies in effect on the date hereof; provided, however,
CryoLife's consent shall not be required with respect to grants or increases of
severance pay provided, if made prior to Closing, such payments are made by or
reimbursed by the Members or, if made following the Closing, are the sole
responsibility of the Members;
(d) except as permitted by (c), make any payments except in the
ordinary course of business and in amounts and in a manner consistent with past
practice (none of which payments shall be unreasonable or unusual), to any
employee of, or independent contractor or consultant to, UCFI, enter into any
employee benefit plan, any employment or consulting agreement, grant or
establish any new awards under any employee benefit plan or agreement, or adopt
or otherwise amend any of the foregoing;
(e) take any action except in the ordinary course of business and
in a manner consistent with past practice or make any change in its methods of
procurement, management, distribution, marketing, accounting or operating (or
practices relating to payment of trade accounts or to other payments);
(f) except in the ordinary course of business or as specifically
permitted herein, take any action to incur or increase prior to Closing any
indebtedness for borrowed money from banks or other financial institutions or
cancel without payment in full, any notes, loans or receivables except in the
ordinary course of business;
(g) loan or advance monies to any person under any circumstance
whatsoever, except travel advances, salary advances in connection with
vacations, or other reasonable expense advances to QV Employees made in the
ordinary course of business consistent with past practices; or
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(h) do any act or omit to do any act which would cause a breach of
any contract, commitment or obligation of UCFI except where such breach would
not cause a Material Adverse Effect (as defined in Section 3.9).
3.7 NO NEGOTIATIONS. UCFI covenants that subject to Section 9.2, from
and after the date hereof, neither UCFI, nor its officers, members or directors,
nor anyone acting on behalf of UCFI or such persons, shall, directly or
indirectly, solicit, engage in discussions or negotiations with, or provide any
information to, any person, firm or other entity or group (other than CryoLife
or its representatives) concerning any merger, sale of substantial assets,
purchase or sale of membership interests or similar transaction involving UCFI.
3.8 CLOSING COSTS.
(a) All of the expenses incurred by CryoLife in connection with the
authorization, negotiation, preparation, execution and performance of this
Agreement and other agreements referred to herein and the consummation of the
transactions contemplated hereby, including, without limitation, all fees and
expenses of agents, representatives, brokers, counsel and accountants for
CryoLife, shall be paid by CryoLife.
(b) All expenses incurred by the Members and UCFI in connection
with the authorization, negotiation, preparation, execution and performance of
this Agreement and the other agreements referred to herein and the consummation
of the transactions contemplated hereby, including without limitation, all fees
and expenses of agents, representatives, brokers, counsel and accountants, shall
be paid by the Members and UCFI. Prior to the Closing, the Members shall
reimburse UCFI in full for any and all such expenses (excluding expenses which
would otherwise have been incurred by UCFI in the ordinary course of business)
incurred on behalf of the Members or UCFI which have been or will be paid by
UCFI prior to the Closing. After the Closing, UCFI and the Members shall remain
responsible for and shall pay all such expenses incurred on behalf of UCFI and
the Members.
3.9 NOTIFICATION OF CERTAIN MATTERS.
(a) UCFI shall give prompt notice to CryoLife in the event any of
the following events occur prior to the Closing:
(i) the occurrence or nonoccurrence of any event
whose occurrence or nonoccurrence would be likely to cause
either (A) any representation or warranty of UCFI or the
Members contained in this Agreement to be untrue or inaccurate
in any material respect at any time from the date hereof to
the Closing, or (B) directly or indirectly, any Material
Adverse Effect for UCFI. The term "Material Adverse Effect"
means any change in or effect on the business of the specified
entity that is or will be materially adverse to the business,
operations, properties (including intangible properties),
condition
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(financial or otherwise), assets, liabilities or regulatory
status of such entity by virtue of the fact that it would have
an adverse effect of in excess of $5,000 on the financial
condition of such entity, would represent a potential
liability or claim in excess of $5,000, or would constitute a
criminal act; or
(ii) Any material failure of UCFI or any Member, or
any officer, director, or agent thereof, to comply with or
satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder.
(b) CryoLife shall give prompt notice to UCFI in the event any of
the following events occur prior to the Closing:
(i) the occurrence or nonoccurrence of any event
whose occurrence or nonoccurrence would be likely to cause
either (A) any representation or warranty of CryoLife
contained in this Agreement to be untrue or inaccurate in any
material respect at any time from the date hereof to the
Closing, or (B) an event, the disclosure of which is required
by the Securities Exchange Act of 1934, as amended; or
(ii) any material failure of CryoLife, or any
officer, director, employee or agent thereof, to comply with
or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder.
(c) Notwithstanding the foregoing, the delivery of any notice
pursuant to this Section 3.9 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
3.10 PUBLIC ANNOUNCEMENTS.
(a) Except as may be required by law or as provided in this Section
3.10, each of UCFI and CryoLife agrees that it will not, and will direct its
directors, officers, employees, representatives and agents who have knowledge of
the transactions between UCFI, the Members, and CryoLife contemplated by this
Agreement not to, disclose to any person who is not a participant in discussions
concerning such transactions (other than any persons whose consent is required
to be obtained hereunder), any of the terms, conditions or other facts with
respect to any such transactions.
(b) Attached hereto as Exhibit 3.10 is the form of press release
that has been approved by CryoLife and UCFI for issuance upon the Closing. After
the Closing, each of CryoLife and UCFI shall obtain the prior written consent of
the other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement and
shall not issue any such press release or make any such public statement prior
to such consent; provided, however, notwithstanding the foregoing, CryoLife
shall be entitled to make any disclosure that it believes in its good faith
judgment,
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after consultation with its legal counsel, is required by law to be made. In the
event CryoLife determines that a disclosure is required by law to be made,
CryoLife shall use reasonable efforts to provide a copy of any contemplated
press release to UCFI prior to the issuance thereof and to include any changes
requested by UCFI with respect thereto.
3.11 BULK SALES. CryoLife hereby waives compliance by UCFI with the
provisions of any applicable state bulk transfer statutes, and UCFI and the
Members, jointly and severally, covenant and agree to pay and discharge when due
all claims of creditors asserted against CryoLife by reason of any failure of
UCFI and/or the Members to so comply, and to indemnify CryoLife fully in respect
thereof, which indemnity shall survive the Closing.
3.12 PROCUREMENT AGREEMENTS. At the Closing, Procurement Agreements in
the form attached hereto as Exhibit 3.12 (the "Procurement Agreements") shall be
entered into between CryoLife and ROBI and CryoLife and Mid-America Transplant
Services ("MTS"), respectively.
3.13 PREPAYMENT OF SUBLEASE. To the extent rent under the Sublease is
prepaid and such prepayments do not extend for more than six months following
Closing, CryoLife shall reimburse the existing tenant, ROBI, for its pro rata
portion of such prepayments on a monthly basis as such payments would have
otherwise become due under the Sublease.
3.14 DISTRIBUTION AGREEMENT. At the Closing, CryoLife and UCFI shall
enter into a Distribution Agreement in the form attached hereto as Exhibit 3.14
(the "Distribution Agreement").
3.15 FURNITURE. The parties hereby acknowledge that the furniture and
certain other equipment (the "Furniture") used by UCFI in the operation of its
business is leased pursuant to that certain Master Lease Agreement dated October
11, 1995 between UCFI and First American Bank of Dundee (the "Furniture Lease").
The parties have agreed that, prior to Closing, UCFI shall exercise its right to
purchase the Furniture pursuant to the terms of the Furniture Lease. UCFI
represents and warrants to CryoLife that the cost to exercise such purchase
option shall not exceed $32,000.
3.16 TRANSITIONAL AGREEMENTS. At the Closing, ROBI and CryoLife shall
enter into (a) a License Agreement in the form attached hereto as Exhibit
3.16(a), and (b) an Agreement Regarding Services and Related Matters in the form
attached hereto as Exhibit 3.16(b) (collectively, the "Transitional
Agreements").
3.17 INSURANCE. UCFI has submitted to its insurance company a claim in
the aggregate amount of $141,309.14 (the "Insured Amount") for the water damages
incurred in connection with the events described on Schedule 4.24. UCFI agrees
it shall provide reasonable cooperation and assistance to CryoLife following the
Closing in the collection of the Insured Amount, and to the extent the insurance
company refuses or fails to pay the Insured Amount within 120 days following
Closing, UCFI shall pay to CryoLife the Insured
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Amount, and thereafter UCFI shall be entitled to pursue payment thereof and to
receipt of the Insured Amount upon any payment by the insurance company.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF UCFI AND THE MEMBERS
In order to induce CryoLife to enter into this Agreement and consummate
the transactions contemplated hereby, UCFI and each Member hereby, jointly and
severally, makes the following representations and warranties to CryoLife, each
of which warranties and representations is material to and is relied upon by
CryoLife.
4.1 ORGANIZATION AND AUTHORITY OF UCFI. UCFI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Illinois. UCFI and each Member is a non-profit organization under Illinois law
and is an organization described in Section 501(c)(3) of the Code and is not a
"Private Foundation," within the meaning of Section 509 of the Code. UCFI has
received a determination letter from the Internal Revenue Service (the "IRS")
that it is described in Section 501(c)(3) of the Code and that it is not a
Private Foundation. UCFI is duly qualified as a foreign corporation in all
jurisdictions in which the conduct of its business or the ownership of its
properties requires such qualification and Schedule 4.1 lists all the states
where UCFI is so qualified. UCFI has all necessary corporate power and authority
to own, lease and operate its properties and conduct its business as it is
currently being conducted. UCFI does not own, directly or indirectly, any equity
interest in any corporation, partnership, joint venture or other entity and does
not have any "subsidiaries," which for purposes of this Agreement means any
corporation or other legal entity of which UCFI owns, directly or indirectly,
more than 50% of the stock or other equity interests the holders of which are
generally entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity.
4.2 CORPORATE POWER AND AUTHORITY; DUE AUTHORIZATION. UCFI and each
Member has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. UCFI, the
Members, ROBI, and MTS each have full corporate power and authority to execute
and deliver each of the Asset Purchase Transaction Documents to which it is or
will be a party and to consummate the transactions contemplated thereby. "Asset
Purchase Transaction Documents" means all Exhibits and all officer's
certificates to be delivered at the Closing and referenced in Sections 7 and 8
excluding Exhibits 3.10, 7.4(g) and 8.4(i). All of the members of UCFI are set
forth on Schedule 4.2 attached hereto. The duly elected officers and directors
of UCFI are set forth on Schedule 4.2 attached hereto. The directors and the
Members of UCFI have duly approved and authorized the execution and delivery of
this Agreement and each of the Asset Purchase Transaction Documents to which it
is a party and the consummation of the transactions contemplated hereby and
thereby, and no other corporate proceedings are necessary. Assuming that this
Agreement and each of the Asset Purchase Transaction Documents to which CryoLife
is a party constitutes a valid and binding
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agreement of CryoLife, as applicable, this Agreement and each of the Asset
Purchase Transaction Documents to which UCFI, QV, UTF, ROBI, and/or MTS is a
party, constitutes, or will constitute when executed and delivered, a valid and
binding agreement of such party, in each case enforceable in accordance with its
terms subject to applicable bankruptcy, insolvency, reorganization, moratorium,
or similar laws affecting the rights of creditors generally and principles
governing the availability of equitable remedies.
4.3 TITLE TO ASSETS. UCFI has good and valid title to all of its
Assets, free and clear of any liens, pledges, encumbrances, claims or similar
rights of third parties. At the Closing, UCFI will transfer to CryoLife good and
valid title to all of its Assets, free and clear of any liens, pledges, charges,
encumbrances, claims, or similar rights of third parties.
4.4 NO CONFLICT; REQUIRED CONSENTS. Assuming all consents, approvals,
authorizations and other actions listed on Schedule 3.2 hereto have been
obtained or taken with respect to items (a) and (b) below, the execution and
delivery by UCFI of this Agreement and the execution and delivery by UCFI and
the Members of each Asset Purchase Transaction Document to which it is a
signatory and the consummation by UCFI and the Members of the transactions
contemplated hereby and thereby do not and will not, to the knowledge of UCFI or
the Members, (a) require the consent, approval or action of, or any filing or
notice to, any corporation, firm, person or other entity or any public,
governmental or judicial authority; (b) violate the terms of any instrument,
document or agreement to which UCFI or any Member is a party, or by which UCFI
or any Member or the property of UCFI (including the Assets) is bound, or be in
conflict with, result in a breach of or constitute (upon the giving of notice or
lapse of time or both) a default under any such instrument, document or
agreement of UCFI or any Member, or result in the creation of any lien upon any
of the property or assets of UCFI (including the Assets); (c) violate any order,
writ, injunction, decree, judgment, ruling, law, rule or regulation of any
federal, state, county, municipal, or foreign court or governmental authority
applicable to UCFI or any Member or relating to the Assets or to UCFI's
business; or (d) violate the Articles of Incorporation or Bylaws of UCFI.
4.5 COMPLIANCE WITH LAWS. To the best of UCFI's and each Member's
knowledge, UCFI is in compliance with all applicable laws, orders, rules and
regulations of all governmental bodies and agencies.
4.6 LICENSES AND PERMITS. UCFI holds and is in compliance with all
licenses, permits, concessions, grants, franchises, approvals and authorizations
listed on Schedule 4.6 attached hereto, and to the best of UCFI's and each
Member's knowledge, such list constitutes all of the licenses, permits,
concessions, grants, franchises, approvals and authorizations necessary or
required for the use or ownership of the Assets and the operation of UCFI's
business. Except as previously disclosed to CryoLife in writing, neither UCFI
nor any Member has received notice of any violations in respect of any such
licenses, permits, concessions, grants, franchises, approvals or authorizations.
No proceeding is pending or, to the knowledge of UCFI or a Member, is
threatened, which seeks revocation
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or limitation of any such licenses, permits, concessions, grants, franchises,
approvals or authorizations.
4.7 FINANCIAL INFORMATION.
(a) Prior to the date hereof, UCFI has delivered to CryoLife true,
correct and complete copies of the audited balance sheets of UCFI as of June 30,
1996 and June 30, 1995, and audited income statements for the fiscal years then
ended (collectively, the "Historical Financials"). All such Historical
Financials (including any related notes and schedules) have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved and fairly present the financial condition of
UCFI at the respective dates thereof and the results of its operations for the
periods then ended.
(b) The Interim Financials, when delivered, will have been prepared
in accordance with generally accepted accounting principles consistently applied
throughout the periods involved (except for the absence of footnotes and normal
year-end adjustments) and will show all liabilities, direct and contingent, of
UCFI required at the time of preparation to be shown in accordance with such
principles. The balance sheet included in the Interim Financials, when
delivered, will fairly present the financial condition of UCFI as of the date
thereof, and the income statement included in the Interim Financials, when
delivered, will fairly present the results of the operations of UCFI for the
period indicated. The income statement included in the Interim Financials, when
delivered, will not contain any material items of special or non-recurring
income or any other income not earned in the ordinary course of UCFI's business.
(c) On the date hereof, there are no liabilities or obligations of
UCFI of any nature, whether liquidated, unliquidated, accrued, absolute,
contingent or otherwise except for those (i) that will be specifically reflected
or reserved against as to amount in the balance sheets contained in the
Historical Financials, (ii) that arise thereafter in the ordinary course of
business, and (iii) that are specifically set forth on Schedule 4.7 attached
hereto; and at the Closing, there will be no liabilities or obligations of UCFI
of any nature, whether liquidated, unliquidated, accrued, absolute, contingent
or otherwise except for those (A) that will be specifically reflected or
reserved against as to amount in the balance sheet contained in the Interim
Financials, (B) that arise after the date of such balance sheet in the ordinary
course of business or (C) that are specifically set forth on Schedule 4.7.
(d) UCFI has not been during the 12 months immediately preceding
the execution of this Agreement, insolvent within the meaning of 11 U.S.C.
Section 101(31). UCFI has and is paying its debts as they become due.
4.8 SUFFICIENCY OF ASSETS. The Assets and the assets excluded therefrom
pursuant to Section 1.2 hereof constitute all the material assets of any nature
with which UCFI has conducted its business for the 12-month period prior to the
Closing Date, subject only to
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additions and deletions in the ordinary course of business. All material assets
and rights relating to UCFI's business are held only by UCFI, and all
agreements, obligations, expenses and transactions related to UCFI's business
have been entered into, incurred and conducted only by UCFI or one of its
Members. To the extent any agreements or transactions have been entered into by
a Member, such agreement or transaction has or will be assigned to UCFI prior to
Closing or, to the extent not assigned, has been previously disclosed to
CryoLife in writing.
4.9 DEPOSITS. Attached as Schedule 4.9 is a true, correct and complete
list of Deposits of UCFI, setting forth the amount of each Deposit.
4.10 TRADE PAYABLES; ACCRUED EXPENSES.
(a) Schedule 4.10(a) is a true, correct and complete list of the
trade payables and accrued expenses of UCFI outstanding as of the date of this
Agreement, which list indicates the number of days such payables have been
outstanding. All such trade payables and accrued expenses have been incurred in
the ordinary course of business.
(b) At the Closing, UCFI shall deliver to CryoLife an updated list
of trade payables and accrued expenses of UCFI (the "Closing Trade Payables and
Accrued Expenses List") listing all trade payables and accrued expenses of UCFI
as of the Closing. The Closing Trade Payables and Accrued Expenses List will be
true, correct and complete as of the Closing.
(c) Schedule 4.10(c) attached hereto is a true, correct and
complete list of all obligations for indebtedness owed by UCFI as of the date
hereof (other than trade payables) and all obligations of UCFI as of the date
hereof incurred other than in the ordinary course of business, stating the
origin of the obligation and the amount owed.
4.11 TAX RETURNS AND PAYMENTS. All federal, state and local income,
franchise, sales, use, payroll, excise, business, license and information
(including, without limitation, IRS Form 990) tax returns of UCFI required by
law to be filed for all periods to and including the Closing Date have been or
will be timely filed and were or will be accurate and correct when filed, and
UCFI has paid or will pay all taxes, including federal, state or local income,
franchise, sales, use, payroll, excise, business and license taxes and any
penalties and interest or other charges applicable thereto ("Taxes") due for all
periods prior to and including the Closing Date. No state, federal or local tax
liens exist with respect to UCFI or any of its assets (including the Assets). No
audit of the Taxes of UCFI is currently in progress or has, to UCFI's or any
Member's knowledge, been scheduled. The full amount of any unpaid tax
liabilities which have accrued through June 30, 1996 has been reflected as a
liability in the books and in the financial statements of UCFI as of the date of
their accrual. UCFI has paid all taxes which would not otherwise require the
filing of returns and which are required to be paid and which otherwise would be
delinquent. Prior to the execution of this Agreement, UCFI has provided to
CryoLife true, correct and complete
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copies of UCFI's federal income tax returns on Form 990 for 1995, 1994, and
1993, which returns were properly signed by UCFI and timely filed with the
Internal Revenue Service.
4.12 FIXED ASSETS. The Fixed Assets owned by UCFI include all of the
furniture, fixtures and equipment owned and used by UCFI in the operation of its
business. Each of the Fixed Assets is in good operating condition and repair,
normal wear and tear excepted, for all present uses by UCFI. A true, correct and
complete list of the Fixed Assets is attached as Schedule 1.1(b), and all such
Fixed Assets are located at the Subleased Property unless a different location
is noted on Schedule 1.1(b).
4.13 PROCESSED TISSUE. UCFI's inventory of processed tissue held for
distribution pursuant to the Distribution Agreement consists, and as of the
close of business on the last business day preceding the Closing Date will
consist, only of human cryopreserved cardiovascular, vascular, and orthopedic
tissue which has been preserved using UCFI's protocols required for and used in
the recovery, processing, packing, storage and distribution of human tissue and
organs and has been processed in accordance with UCFI's protocols. True, correct
and complete copies of all such protocols have been supplied to CryoLife. UCFI's
inventory of processed tissue held for distribution pursuant to the Distribution
Agreement is in full compliance with all requirements of Title 21, Code of
Federal Regulations Part 1270 except where failure to so comply would not cause
a Material Adverse Effect. Schedule 4.13 attached hereto is a true, correct and
complete list of the processed tissue held by UCFI by type and size.
4.14 INTELLECTUAL PROPERTY. Schedule 4.14 hereto lists all trademarks,
service marks, and copyrights of UCFI used by UCFI in the operation of its
business. UCFI owns and/or has the sole and exclusive right to use all of the
Intellectual Property. Upon the consummation of the transactions contemplated
hereby, to the knowledge of UCFI and the Members, CryoLife will have the sole
and exclusive right to own and use the Intellectual Property. No claims have
been asserted and no claims are pending or, to UCFI's or any Member's knowledge
threatened by any person or entity, to the use of any such Intellectual Property
or challenging or questioning the validity or effectiveness of any state or
federal registration of the Intellectual Property and neither UCFI nor any
Member knows of any valid basis for such claim. UCFI's use of the Intellectual
Property, and, to the knowledge of UCFI and the Members, CryoLife's continued
use of the Intellectual Property following the Closing in the same manner as
heretofore used by UCFI, does not and will not infringe the rights of any person
or entity.
4.15 CONTRACTS. Schedule 4.15 sets forth a true and complete list of
all written or oral contracts, agreements and other instruments to which UCFI or
its Assets are subject or bound, including without limitation agreements with
organ procurement agencies and other procurement sources, sales representatives,
distributors, suppliers and independent contractors in the operation of UCFI's
business, except any contract, agreement or understanding involving an aggregate
annual expenditure of less than $10,000 (collectively, the "Contracts"). Prior
to execution of this Agreement, UCFI has provided to CryoLife
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true, correct and complete copies of the Contracts, including any and all
amendments and waivers thereto. Except as otherwise disclosed to CryoLife in
writing, such Contracts are valid, legally binding and enforceable against the
parties thereto. Except as otherwise disclosed to CryoLife in writing, neither
UCFI nor, to the best of UCFI's and any Member's knowledge, any other party to
any of the Contracts is in breach of, or in default under, any of the Contracts
and no event has occurred which, with the notice or lapse of time, or both,
would constitute a default by UCFI or any other party to any of the Contracts.
The assignment of any of the Contracts to CryoLife in accordance with this
Agreement will not constitute a breach or violation of such Contract.
4.16 HAZARDOUS SUBSTANCE. For purposes of this paragraph, "hazardous
substance" means any substance or material (a) identified in Section 101(14) of
the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Section 9601(14) and as set forth in Title 40, Code of Federal
Regulations, Part 302, as the same may be amended from time to time, (b)
determined to be toxic, a pollutant or contaminant, under federal, state or
local statute, law, ordinance, rule, or regulation or judicial or administrative
order or decision, as same may be amended from time to time, (c) petroleum and
petroleum products and distillates, (d) asbestos, (e) radon, (f) polychlorinated
biphenyls and (g) such other materials, substances or waste subject to
regulation under any applicable law. There are no violations of federal, state
or local laws relating to health, safety and the environment relating to the
operations of UCFI's business or the current or former state of the Assets
(excluding violations which would not have a Material Adverse Effect). To UCFI's
and the Members' knowledge, either there are no "hazardous substances" located
on, in or under the Subleased Property or used in the operation of UCFI's
business; or UCFI has fully disclosed to CryoLife in writing the existence,
extent and nature of any "hazardous substances" which UCFI is legally authorized
to maintain on, in, or under the Subleased Property or the Assets as to use in
connection therewith and UCFI has obtained all licenses, permits, and approvals
required with respect thereto and is in full compliance with all of the terms,
conditions and requirements of such licenses, permits and approvals. UCFI has
not caused or permitted to exist, as a result of an intentional or unintentional
act or omission on its part, a releasing, discharging, spilling, leaking,
pumping, emitting, pouring, emptying, or dumping of "hazardous substances."
Except as otherwise disclosed to CryoLife in writing, neither UCFI nor any
Member has received any written notice, summons, citation, notice of violation,
letter or other communication concerning any pending or threatened claim or
litigation in which any person or entity alleges the presence, release, threat
of release, placement on or at the Subleased Property or the Assets, or the
generation, transportation, storage, treatment, or disposal at, on or from the
Subleased Property or the Assets, of any hazardous substance, or in which any
person alleges a violation of any law governing or imposing any liability
arising out of any matter relating to health, safety or the environment.
4.17 LITIGATION; JUDGMENTS. Except as otherwise disclosed by UCFI to
CryoLife in writing, there is no action, proceeding or investigation pending, or
to UCFI's or any Member's knowledge, threatened against or involving UCFI or any
Member relating to any of the Assets or the operation of UCFI's business, nor is
there any action or proceeding
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pending or threatened before any court, tribunal or governmental body seeking to
restrain or prohibit or to obtain damages or other relief in connection with the
consummation of transactions contemplated by this Agreement, or which might
adversely affect UCFI's business or Assets, or UCFI's or any Member's ability to
consummate the transactions contemplated by this Agreement and the Asset
Purchase Transaction Documents. Neither UCFI nor any Member is the subject of
any judgment, order or decree entered in any lawsuit or proceeding relating to
the Assets or the operation of UCFI's business.
4.18 SUBLEASE. UCFI has delivered to CryoLife a true, correct and
complete copy of the Sublease, together with all amendments, addenda and
supplements thereto with respect to the Sublease:
(a) The Sublease is legal, valid, binding, enforceable, and in full
force and effect;
(b) Subject to obtaining any necessary consent from the Landlord
and Mortgagee in respect of the transactions contemplated hereunder, the
Sublease will continue to be legal, valid, binding, enforceable and in full
force and effect on identical terms following the Closing;
(c) No party to the Sublease is in breach or default, and no event
has occurred which, with notice or lapse of time, would constitute a breach or
default or permit termination, modification or acceleration thereunder;
(d) No other party to the Sublease has repudiated any provision
thereof;
(e) There have not been and there are no disputes, oral agreements
or forebearances in effect as to the Sublease;
(f UCFI has good title to the leasehold interest under the
Sublease;
(g) UCFI has not assigned, transferred, conveyed, mortgaged, deeded
in trust or encumbered any interest in the leasehold and neither UCFI nor any
Member is aware of any such assignment, transfer, conveyance, mortgage, deed in
trust or encumbrance of any interest in the leasehold; and
(h) All facilities leased or subleased under the Sublease have
received or have applied for all approvals of governmental authorities
(including licenses and permits) required in connection with the operation
thereof and have been operated and maintained in accordance with applicable
laws, rules and regulations with respect to the activities of UCFI conducted
thereat.
4.19 INSURANCE. UCFI maintains property, fire, casualty, workman's
compensation, general liability insurance and other forms of insurance relating
to its Assets and the
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operation of UCFI's business against risks of the kind customarily insured
against and in amounts customarily insured (and, where appropriate, in amounts
not less than the replacement cost of the Assets). UCFI will maintain its
insurance policies in full force and effect through the Closing Date. Schedule
4.19 lists all of the insurance policies maintained by UCFI, which schedule
includes the name of the insurance company, the policy number, a description of
the type of insurance covered by such policy, the dollar limit of the policy,
and the annual premiums for such policy.
4.20 UNION; LABOR. UCFI does not engage any person directly as an
employee, and the QV Employees constitute all of the individuals performing
full-time services for UCFI and participating in the day-to-day operations of
UCFI. Neither UCFI nor QV is a party to any collective bargaining agreement or
any other contract, written or oral, with any trade or labor union, employees'
association or similar organization with respect to the QV Employees. There are
no strikes or labor disputes pending or threatened, or to UCFI's or any Member's
knowledge, any attempts at union organization of the QV Employees. All salaries
and wages paid and withheld by QV are and have been in compliance with all
applicable federal, state and local laws.
4.21 BENEFIT PLANS AND ERISA.
(a) UCFI does not maintain, contribute to or otherwise have any
liability whatsoever with respect to any "employee benefit plan" (within the
meaning of Section 3(3) of ERISA) or any other bonus, profit sharing, pension,
compensation, deferred compensation, stock option, stock purchase, fringe
benefit, severance, post-retirement, scholarship, disability, sick leave,
vacation, individual employment, commission, bonus, payroll practice, retention,
or other plan, agreement, policy, trust fund or arrangement for any of the QV
Employees or other personnel providing services to UCFI.
(b) CryoLife shall not, as a result of the transactions
contemplated by this Agreement (including without limitation the receipt of
services of the QV Employees): (i) become liable for any contribution, tax,
lien, penalty, cost, interest, claim, loss, action, suit, damage, cost
assessment or other similar type of liability or expense of UCFI or any ERISA
Affiliate (including predecessors thereof) with regard to any "employee benefit
plan" (within the meaning of Section 3(3) of ERISA) of UCFI, QV or any other
ERISA Affiliate.
4.22 IMMIGRATION MATTERS. (Intentionally deleted.)
4.23 BROKERS FEES AND EXPENSES. Neither UCFI nor any Member has
retained or utilized the services of any broker, finder or intermediary, or paid
or agreed to pay any fee or commission to any person or entity for or on account
of the transactions contemplated hereby, or had any communications with any
person or entity which would obligate CryoLife to pay any such fees or
commissions.
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4.24 ABSENCE OF MATERIAL CHANGES. Except as set forth in Schedule 4.24
attached hereto or otherwise reflected in the Interim Financials, from June 30,
1996 to the date of this Agreement:
(a) there has not been any Material Adverse Effect in the condition
(financial or otherwise) of the business, the liabilities or the assets of UCFI;
(b) there has been no Material Adverse Effect in UCFI's relations
with, nor has UCFI lost (or received written notice that it is about to lose)
any distributors or suppliers with which UCFI has significant business relations
(except if as a result of UCFI's efforts to terminate agreements which will not
be assigned);
(c) UCFI has operated its business in the ordinary course and has
not sold, assigned, or transferred any of its assets, except in the ordinary
course of its business;
(d) except as disclosed on Schedule 4.24, UCFI has not mortgaged,
pledged or subjected to any lien, pledge, mortgage, security interest,
conditional sales contract, or other encumbrance of any nature whatsoever, any
of UCFI's assets (including the Assets);
(e) there has been no amendment, termination, or waiver of any
right of UCFI under any contract, governmental license or permit that would have
a Material Adverse Effect on its Assets or its business;
(f) UCFI has not:
(i) paid any judgment resulting from any suit, proceeding,
arbitration, claim or counterclaim in respect of Assets or business in excess of
$10,000 (provided that all such excluded payments do not aggregate to more than
$50,000);
(ii) made any such payment to any party in settlement of any
such suit, proceeding, arbitration, claim or counterclaim in excess of $10,000
(provided that all such excluded payments do not aggregate to more than
$50,000);
(iii) written down or failed to write down (in accordance with
generally accepted accounting principles), or written up the value of any
inventory or assets of UCFI;
(iv) made any material changes in the customary methods of
operation of UCFI's business, including practices and policies relating to
accounting, purchasing, marketing or selling;
(v) (except in respect of ordinary trade payables) incurred any
indebtedness or guaranteed any indebtedness, except for borrowings under
existing loans or lines of credit in the ordinary course of business; or
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(vi) agreed, whether in writing or otherwise, to take any of
the actions specified in this Section 4.24.
4.25 BANK ACCOUNTS. Schedule 4.25 contains a true, complete and correct
list showing the name and location of each bank or other institution in which
UCFI has any deposit account or safe deposit box, together with a listing of
account numbers and names of all persons authorized to draw thereon or have
access thereto.
4.26 FULL DISCLOSURE. The statements, representations and warranties
made by UCFI and the Members in this Agreement, in the Schedules and Exhibits
attached hereto, and in the Asset Purchase Transaction Documents do not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF CRYOLIFE
In order to induce UCFI and the Members to enter into this Agreement
and to consummate the transactions contemplated hereby, CryoLife represents and
warrants to UCFI and the Members as follows:
5.1 ORGANIZATION OF CRYOLIFE. CryoLife is a corporation duly organized
and validly existing and in good standing under the laws of the State of Florida
and has the corporate power to own, lease, and operate its property and to carry
on its business as now being conducted by it.
5.2 CORPORATE POWER AND AUTHORITY; DUE AUTHORIZATION. CryoLife has full
corporate power and authority to execute and deliver this Agreement and each of
the Asset Purchase Transaction Documents to which CryoLife is or will be a party
and to consummate the transactions contemplated hereby and thereby. The Board of
Directors of CryoLife have duly approved and authorized the execution and
delivery of this Agreement and each of the Asset Purchase Transaction Documents
to which it is or will be a party and the consummation of the transactions
contemplated hereby and thereby, and no other corporate proceedings on the part
of CryoLife are necessary to approve and authorize the execution and delivery of
this Agreement and such Asset Purchase Transaction Documents and the
consummation of the transactions contemplated hereby and thereby. Assuming that
this Agreement and each of the Asset Purchase Transaction Documents to which
CryoLife is a party constitutes a valid and binding agreement of UCFI and/or a
UCFI Affiliate, as the case may be, this Agreement and each of the Asset
Purchase Transaction Documents to which CryoLife is a party constitutes, or will
constitute when executed and delivered, a valid and binding agreement of
CryoLife, as applicable, in each case enforceable against CryoLife in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting the rights of creditors generally and
principles governing the availability of equitable remedies.
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5.3 NO CONFLICT; CONSENTS. The execution and delivery by CryoLife of
this Agreement, the Asset Purchase Transaction Documents to which it is or will
be a party and the consummation by CryoLife of the transactions contemplated
hereby and thereby do not and will not, to CryoLife's knowledge, (a) require the
consent, approval or action of, or any filing or notice to, any corporation,
firm, person or other entity or any public, governmental or judicial authority;
(b) violate the terms of any instrument, document or agreement to which CryoLife
is a party, or by which CryoLife or the property of CryoLife is bound, or be in
conflict with, resulting in a breach of or constitute (upon the giving of notice
or lapse of time, or both) a default under any such instrument, document or
agreement; (c) violate any order, writ, injunction, decree, judgment, ruling,
law or regulation of any federal, state, county, municipal, or foreign court or
governmental authority applicable to CryoLife and relating to the purchase of
UCFI's business; or (d) violate the Articles of Incorporation or Bylaws of
CryoLife.
5.4 BROKERS FEES AND EXPENSES. CryoLife has not retained or utilized
the services of any broker, finder, or intermediary, or paid or agreed to pay
any fee or commission to any person or entity for or on account of the
transactions contemplated hereby, or had any communications with any person or
entity which would obligate UCFI or any Member to pay any such fees or
commissions.
5.5 FULL DISCLOSURE. The statements, representations and warranties
made by CryoLife in this Agreement and in the Exhibits attached hereto do not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE 6
INDEMNIFICATION
6.1 INDEMNIFICATION BY UCFI AND MEMBERS. In addition to any other
indemnification obligations of UCFI or the Members under any other provision
hereof, UCFI, and the Members, jointly and severally indemnify and hold
CryoLife, and its affiliates, directors, officers, employees and agents,
harmless from and against all claims, liabilities, lawsuits, costs, damages or
expenses (including, without limitation, reasonable attorneys' fees and expenses
incurred in litigation or otherwise) arising out of and sustained by any of them
due to (a) any misrepresentation or breach of any representation, warranty,
covenant or agreement of UCFI or the Members contained in this Agreement or any
Asset Purchase Transaction Document; (b) any liability or obligation relating to
the operation of UCFI's business or the ownership or use of the Assets through
the Closing Date, other than the Assumed Liabilities, including, without
limitation, any and all claims, liabilities, Taxes, debts, contracts,
agreements, obligations, damages, costs and expenses, known or unknown, fixed or
contingent, claimed or demanded by third parties against CryoLife arising out of
the operation of UCFI's business, including, without limitation, the processing
and distribution of human tissue, the Sublease and the use or occupancy of the
Subleased Property, or the
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ownership or use of the Assets, prior to and through the Closing Date; (c) the
failure of the parties to this Agreement to comply with the provisions of the
bulk sales law in any state having jurisdiction over Assets or the transactions
contemplated herein; (d) breach by ROBI or MTS of the Procurement Agreements;
(e) the occurrence of events which, had Sections 4.4 and/or 4.5 not been
qualified to the knowledge of UCFI and the Members, would have constituted a
breach of such Sections, or (f) claims resulting from the correct application
and conduct by CryoLife under the Distribution Agreement of UCFI's written
protocols for the distribution of processed tissue, which protocols are provided
to CryoLife in writing at the Closing (the "UCFI Protocols").
6.2 INDEMNIFICATION BY CRYOLIFE. CryoLife hereby indemnifies and holds
UCFI and the Members, and each of UCFI's and each Member's affiliates,
directors, officers, employees and agents (including, without limitation, ROBI
and MTS in their capacities as contracting parties to the Asset Purchase
Transaction Documents and otherwise), harmless from and against all claims,
liabilities, lawsuits, costs, damages or expenses (including without limitation
reasonable attorneys fees and expenses incurred in litigation or otherwise)
arising out of and sustained by any of them due to (a) any misrepresentation or
breach of any representation, warranty, covenant or agreement of CryoLife in
this Agreement or any Asset Purchase Transaction Document; (b) any Assumed
Liabilities; (c) the use or occupancy of the Subleased Property after the
Closing Date, except as contemplated by Section 3.2; (d) except with respect to
claims arising from or described in Section 6.1 or with respect to which UCFI
and/or the Members have specifically agreed to be responsible pursuant to this
Agreement or any Asset Purchase Document, any liability or obligation relating
to the operation, use, or ownership of the Assets after the Closing Date and the
employment after the Closing Date of the Employees to be Hired; or (e) the
occurrence of events which had Section 5.3 not been qualified to the knowledge
of CryoLife, would have constituted a violation of such Section.
In addition, the parties specifically acknowledge that claims may arise
with respect to tissue that has been processed by UCFI prior to the Closing, but
which is distributed by CryoLife, on behalf of UCFI after the Closing, pursuant
to the Distribution Agreement. With respect thereto, in the event a claim arises
or results from the processing of the tissue by UCFI prior to Closing or the
correct application and conduct by CryoLife under the Distribution Agreement of
the UCFI Protocols, UCFI and the Members shall indemnify and hold CryoLife
harmless from such claims in accordance with the provisions of Section 6.1; in
the event a claim arises or results from the distribution of the tissue by
CryoLife in violation of the terms of the Distribution Agreement or as a result
of CryoLife's negligence or willful misconduct in connection with the
distribution of the tissue under the Distribution Agreement, CryoLife shall
indemnify and defend UCFI and the Members in accordance with the provisions of
Section 6.2.
6.3 PROVISIONS REGARDING INDEMNIFICATION. The indemnified party (or
parties) shall promptly notify the indemnifying party (or parties) of any claim,
demand, action or proceeding for which indemnification will be sought under
Section 6.1 or 6.2 of this
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Agreement and, if such claim, demand, action or proceeding is being made or
prosecuted by a third party, the indemnifying party will have the right, at its
expense, to assume the defense thereof using counsel acceptable to the
indemnified party, whose consent shall not be withheld unreasonably. The
indemnified party shall have the right to participate in at its own expense, but
not control, the defense of any such third party claim, demand, action or
proceeding. In connection with any such third party claim, demand, action or
proceeding, UCFI, the Members, and CryoLife shall cooperate with each other. No
such third party claim, demand, action or proceeding shall be settled without
the prior written consent of the indemnified party provided, however, that if a
firm, written offer is made to settle any such third party claim, demand, action
or proceeding and the indemnifying party proposes to accept such settlement and
the indemnified party refuses to consent to such settlement, then: (i) the
indemnifying party shall be excused from, and the indemnified party shall be
solely responsible for, all further defense of such third party claim, demand,
action or proceeding; and (ii) the maximum liability of the indemnifying party
relating to such third party claim, demand, action or proceeding shall be the
amount of the proposed settlement if the amount thereafter recovered from the
indemnified party on such third party claim, demand, action or proceeding is
greater than the amount of the proposed settlement.
6.4 SURVIVAL. The representations and warranties contained in this
Agreement and in the Asset Purchase Transaction Documents delivered at the
Closing shall survive the Closing for a period ending on the fifth anniversary
date of the Closing and shall thereafter cease to be of any force and effect,
except for (a) claims for indemnification resulting from breaches of such
representations and warranties as to which notice has been given in accordance
with Section 6.3 hereof prior to such date and which are pending on such date
and (b) representations and warranties relating to: (i) title to the Assets
(Section 4.3 hereof), (ii) Taxes (Sections 4.11 and 6.1 hereof), (iii) financial
statements (Sections 3.3 and 4.7 hereof); (iv) compliance with bulk transfer
laws (Section 3.11 hereof) and (v) employee benefits (Sections 2.3, 3.1 and
4.21), each of which shall survive until the end of the statute of limitations
applicable to the underlying claim for which indemnification is sought. Neither
such survival nor the liability of any party with respect to the party's
representations and warranties shall be reduced by any investigation made at any
time by or on behalf of any party.
6.5 RIGHT OF SET-OFF.
(a) CryoLife shall have the limited right to set-off against the
Promissory Note in accordance with the procedures set forth in this Section 6.5
if an event has occurred that entitles CryoLife to indemnification under Article
6 of this Agreement, which Event has not been satisfied by UCFI or the Members
(a "Set-Off Event"). In the event of a Set-Off Event, CryoLife shall send
written notice to UCFI and the Members of its intent to exercise its right of
set-off hereunder, which notice shall contain (i) a specific description of the
reasons why CryoLife believes it is entitled to indemnification and set-off
under the Agreement, including a specific description of the nature of the
claim, liability, lawsuit, cost, damage or expense arising out of and sustained
by CryoLife, its affiliates, directors, officers,
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employees and agents, as well as a specific description of the Set-Off Event;
(ii) the amount of the proposed set-off (which amount shall equal the amount due
and payable by UCFI or the Members to CryoLife pursuant to the indemnification
provisions of this Article 6) (the "Proposed Set-Off Amount"); and (iii) a
specific description of how such amount was determined.
(b) In the event UCFI disputes CryoLife's assertion that a Set-Off
Event has occurred or disputes the Proposed Set-Off Amount, UCFI shall have ten
business days in which to notify CryoLife in writing that such claim is
disputed, which notice shall specify (i) the reasons UCFI believes no such
Set-Off Event has occurred, and (ii) why UCFI believes that the Proposed Set-Off
Amount is in error. In the event UCFI fails to notify CryoLife within such
ten-day period, UCFI and the Members shall be deemed to have accepted such
set-off, with respect to the amount and event described in the notice. In the
event of a dispute, the parties shall negotiate in good faith to resolve the
dispute.
(c) In the event the parties are unable to resolve the dispute
within 30 days following the expiration of the ten-day response period, the
matter shall be submitted to arbitration in accordance with Section 10. Pending
resolution of a dispute under this Section 6.5, all amounts payable or coming
due under the Promissory Note, up to the Proposed Set-Off Amount, shall be paid
by CryoLife into a separate, joint order, interest-bearing account (the "Escrow
Account").
(d) In the event it is determined by the arbiters that no Set-Off
Event has occurred, CryoLife shall forthwith release its interest in said Escrow
Account, including accrued interest thereon, or pay forthwith the amount of the
Proposed Set-Off Amount plus the amount of interest accrued thereon, to UCFI, at
CryoLife's option. In addition, CryoLife shall reimburse UCFI and the Members
for all reasonable costs, including attorney's fees, incurred by UCFI or the
Members in connection with resolving the dispute.
(e) In the event it is determined by the arbiters that a Set-Off
Event has occurred in an amount equal to the Proposed Set-Off Amount, then UCFI
shall release its interest in said Escrow Account and CryoLife shall be entitled
to the funds held in such Escrow Account, plus any interest accrued thereon. To
the extent that the funds held in such Account are less than the Proposed
Set-Off Amount, UCFI and the Members shall promptly pay to CryoLife the amount
of the deficit, or, at CryoLife's option, CryoLife may off-set such amount
against amounts coming due under the Promissory Note in the future. In addition,
UCFI or the Members shall forthwith pay an amount equal to the reasonable costs,
including attorney's fees, incurred by CryoLife in resolving the dispute.
(f) In the event it is determined by the arbiters that a Set-Off
Event has occurred but the Proposed Set-Off Amount is greater than the amount
which is determined to be the correct amount due and payable by UCFI or the
Members to CryoLife pursuant to the indemnification provisions of this Article 6
(the "Actual Set-Off Amount"), then UCFI shall forthwith release its interest in
said Escrow Account in an amount equal to the lower
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of the amount of funds held in the Escrow Account or the Actual Set-Off Amount
plus any interest accrued thereon. If the amount of funds held in the Escrow
Account is less than the Actual Set-Off Amount, UCFI and the Members shall
promptly pay to CryoLife the amount of the deficit, or, at CryoLife's option,
CryoLife may off-set such amount against amounts coming due under the Promissory
Note in the future. The difference between the Proposed Set-Off Amount and the
Actual Set-Off Amount is hereinafter referred to as the "Set-Off Differential."
To the extent that the funds held in the Escrow Account exceed the Actual
Set-Off Amount, plus interest, such excess shall be released to UCFI or the
Members forthwith, together with the amount of any interest accrued thereon in
accordance with the written instructions of UCFI.
(g) In the event it is determined by the arbiters that a Set-Off
Event has occurred but the Proposed Set-Off Amount is less than the Actual
Set-Off Amount, then UCFI shall release its interest in said Escrow Account and
CryoLife shall be entitled to the funds held in such Account, plus interest
accrued on said amount. In addition, UCFI or the Members shall pay forthwith the
Set-Off Differential.
(h) In either of the events described in 6.5(f) or 6.5(g), the
arbitrator shall have the authority to award reasonable costs, including
attorneys' fees, as the arbitrator deems appropriate.
(i) In the event CryoLife fails to comply with the terms of this
Section 6.5, in addition to any other rights to which UCFI may be entitled at
law or in equity, ROBI and MTS shall have the right to terminate the Procurement
Agreements.
(j) In the event that UCFI or the Members fail to pay or release
amounts due under this Section 6.5, then in addition to any other rights which
CryoLife may be entitled at law or in equity, CryoLife shall be entitled to
set-off additional amounts due under the Promissory Note, but only in an amount
equal to the amount due hereunder.
(k) The foregoing rights of set-off shall not be exclusive of any
other right or remedy CryoLife may have with respect to the indemnified claims,
whether by contract, at law or in equity; provided, however, that under no
circumstance shall CryoLife be entitled to set-off any amounts against amounts
due under the Promissory Note except as provided herein. Except as otherwise
provided, this Section 6.5 shall not be deemed to limit CryoLife's rights to
indemnification, at law, in equity, or under this Agreement.
6.6 LIMITATION OF LIABILITY. Notwithstanding anything contained herein
to the contrary, in no event shall either party's liability pursuant to this
Article 6 for breach of any representation, warranty, or agreement exceed the
aggregate amount of the Asset Consideration; provided, however, the foregoing
shall not be applicable to claims with respect to (i) Taxes (Sections 4.11 and
6.1); (ii) employee benefits (Sections 2.3, 3.1, and 4.21, or (iii)
environmental matters (Section 4.16). The foregoing limitation shall not apply
with respect to claims arising under Section 6.1(b) or 6.2(c).
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ARTICLE 7
CONDITIONS TO OBLIGATIONS OF
CRYOLIFE TO CLOSE
Each and every obligation of the CryoLife under this Agreement to be
performed on or prior to the Closing shall be subject to the fulfillment, on or
prior to the Closing, of each of the following conditions:
7.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The representations
and warranties made by UCFI and the Members in or pursuant to this Agreement and
the Asset Purchase Transaction Documents or given on their behalf hereunder or
thereunder shall be true and correct on and as of the Closing Date with the same
effect as though such representations and warranties had been made or given on
and as of the Closing Date.
7.2 OBLIGATIONS PERFORMED. UCFI and the Members shall have performed
and complied with all agreements and conditions required by this Agreement and
the Asset Purchase Transaction Documents to be performed or complied with by
them prior to or at the Closing.
7.3 CONSENTS. Except for the consent of the Landlord and Mortgagee to
the assignment of Sublease, with respect to which the provisions of Section 3.2
shall apply, UCFI shall have obtained and delivered to CryoLife written consents
of all persons or entities whose consent is required to consummate the
transactions contemplated herein, if any, and all of such consents shall remain
in full force and effect at and as of the Closing.
7.4 CLOSING DELIVERIES. UCFI shall have delivered to CryoLife each of
the following, together with any additional items which CryoLife may reasonably
request to effect the transactions contemplated herein:
(a) possession of the Assets;
(b) a Bill of Sale in the form of Exhibit 7.4(b) attached hereto,
the Assignment and Assumption Agreement, the Assignment and Assumption of
Sublease, and such additional instruments of sale, transfer, conveyance, and
assignment duly executed by UCFI as of the Closing Date as counsel to CryoLife
shall deem necessary or appropriate;
(c) a certified copy of the corporate resolutions of UCFI and the
Members of UCFI authorizing the transactions contemplated hereby and the
execution, delivery and performance by UCFI of this Agreement and the other
agreements and instruments contemplated hereby, together with an incumbency
certificate with respect to officers of UCFI executing documents or instruments
on behalf of UCFI;
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(d) a certificate of the President of UCFI and a certificate of the
President of each Member certifying as to the matters set forth in Sections 7.1
and 7.2 hereof and as to the satisfaction of all other conditions set forth in
this Article 7;
(e) the Noncompetition Agreements referred to in Section 3.4 hereof
duly executed by UCFI and each Member;
(f) a Closing Trade Payables and Accrued Expenses List pursuant to
Section 4.10(b);
(g) an opinion of counsel to UCFI substantially in the form of
Exhibit 7.4(g);
(h) written consents from all parties to the Sublease whose consent
to the transactions contemplated hereby is required (subject to the provisions
of Section 3.2);
(i) the Procurement Agreements referred to in Section 3.12 duly
executed by ROBI and MTS;
(j) the Employee Leasing Agreement referred to in Section 3.1 duly
executed by QV;
(k) the Distribution Agreement referred to in Section 3.14 duly
executed by UCFI;
(l) the Transitional Agreements referenced in Section 3.16 duly
executed by ROBI; and
(m) any other documents or agreements contemplated hereby and/or
necessary or appropriate to consummate the transactions contemplated hereby.
7.5 NO CHALLENGE. There shall not be pending or threatened any action,
proceeding or investigation before any court or administrative agency by any
government agency or any pending action by any other person, challenging, or
seeking material damages in connection with, the acquisition by CryoLife of the
Assets pursuant to the transactions contemplated by this Agreement or the
ability of CryoLife or any of its affiliates to own and operate the Assets or
otherwise materially adversely affecting the business, assets, prospects,
financial condition or results of operations of UCFI.
7.6 NO INVESTIGATIONS OF UCFI OR BUSINESS. As of the Closing Date,
there shall be no, and neither UCFI nor any Member shall have any knowledge of
or reason to know of any, pending or threatened investigation by any municipal,
state or federal government agency or regulatory body with respect to the Assets
or UCFI's business.
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7.7 NO MATERIAL ADVERSE EFFECT. Since June 30, 1996, there shall have
been no Material Adverse Effect in the business, financial condition, results of
operations and/or Assets (without giving effect to the consequences of the
transactions contemplated by this Agreement) of UCFI, whether reflected in
financial statements, the schedules hereto or otherwise, which has not been
waived by CryoLife in writing.
7.8 REVISED SCHEDULES. UCFI shall have provided CryoLife with revised
Schedules dated as of the Closing Date (the "Revised Schedules"), with all
material changes through such date duly noted thereon, and the Revised Schedules
will not contain any disclosures which set forth changes which in the opinion of
CryoLife, individually or in the aggregate, have or may have a Materially
Adverse Effect on UCFI and/or its operations, unless such disclosures are
approved in writing by CryoLife.
7.9 LEGALITY. No federal or state statute, rule, regulation, executive
order, decree or injunction shall have been enacted, entered, promulgated or
enforced by any court or governmental authority which is in effect and has the
effect of making the transactions contemplated hereby illegal or otherwise
prohibiting the consummation of the transactions contemplated hereby.
7.10 REGULATORY MATTERS. All filings shall have been made and all
approvals shall have been obtained as may be legally required pursuant to
federal and state laws prior to the consummation of the transactions
contemplated by this Agreement and all actions, by or in respect of, or filings
with, any governmental body, agency or official or any other person which
require action on the part of or the cooperation and/or participation of UCFI
and which are required to permit the consummation of the transactions
contemplated by this Agreement so that CryoLife shall be able to continue to
carry on the business of UCFI substantially in the manner now conducted by UCFI
shall have been taken or made.
7.11 BLUE SKY. All blue sky permits or approvals required to carry out
the transactions contemplated hereby shall have been received.
7.12 REPAYMENT OF DEBTS. At the Closing, all officers, directors, and
Members of UCFI and the QV Employees shall repay in full any outstanding
indebtedness owed to UCFI by them.
7.13 FURNITURE. UCFI shall have acquired all right, title, and interest
in and to the Furniture as contemplated by Section 3.15.
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ARTICLE 8
CONDITIONS TO UCFI'S OBLIGATIONS
Each and every obligation of UCFI under this Agreement to be performed
on or prior to the Closing shall be subject to the fulfillment, on or prior to
the Closing, of each of the following conditions:
8.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The representations
and warranties made by CryoLife in or pursuant to this Agreement or given on its
behalf hereunder shall be true and correct on and as of the Closing Date with
the same effect as though such representations and warranties had been made or
given on and as of the Closing Date.
8.2 OBLIGATIONS PERFORMED. CryoLife shall have performed and complied
with all of its respective obligations under this Agreement which are to be
performed or complied with by it prior to or at the Closing.
8.3 CLOSING DELIVERIES. CryoLife shall have delivered to UCFI, each of
the following, together with any additional items which UCFI may reasonably
request to effect the transactions contemplated herein:
(a) the cash and Promissory Note, duly executed by CryoLife,
representing the Cash Consideration due to UCFI;
(b) certified copies of the corporate resolutions of CryoLife
authorizing the transactions contemplated hereby and the execution, delivery and
performance of this Agreement and the Asset Purchase Transaction Documents to
which CryoLife is a signatory by CryoLife, and incumbency certificates with
respect to the officers of CryoLife executing documents or instruments on behalf
of CryoLife;
(c) a certificate of the President of CryoLife certifying as to the
matters set forth in Sections 8.1 and 8.2 hereof and as to the satisfaction of
all other conditions set forth in this Article 8;
(d) the Assignment and Assumption Agreement and Assignment and
Assumption of Sublease duly executed by CryoLife and such additional instruments
of sale, transfer, conveyance, and assignment as counsel to CryoLife and counsel
to UCFI shall mutually deem necessary or appropriate;
(e) the Procurement Agreements referred to in Section 3.12 duly
executed by CryoLife;
(f) the Employee Leasing Agreement referred to in Section 3.1 duly
executed by CryoLife;
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(g) the Distribution Agreement referred to in Section 3.14 duly
executed by CryoLife;
(h) any other documents or agreements contemplated hereby and/or
necessary or appropriate to consummate the transactions contemplated hereby; and
(i) an opinion of counsel of CryoLife substantially in the form of
Exhibit 8.3(i).
8.4 NO CHALLENGE. There shall not be pending or threatened any action,
proceeding or investigation before any court or administrative agency by any
government agency or any pending action by any other person, challenging, or
seeking material damages in connection with, the acquisition by CryoLife of the
Assets pursuant to this Agreement or the ability of CryoLife or any of its
affiliates to own and operate the Assets or otherwise materially adversely
affecting the business, assets, prospects, financial condition or results of
operations of CryoLife.
8.5 NO MATERIAL ADVERSE EFFECT. Since June 30, 1996, there shall have
been no Material Adverse Effect in the business, financial condition, results of
operations and/or assets of CryoLife, whether reflected in financial statements,
the schedules hereto or otherwise.
8.6 LEGALITY. No federal or state statute, rule, regulation, executive
order, decree or injunction shall have been enacted, entered, promulgated or
enforced by any court or governmental authority which is in effect and has the
effect of making the transactions contemplated hereby illegal or otherwise
prohibiting the consummation of the transactions contemplated hereby.
8.7 REGULATORY MATTERS. All filings shall have been made and all
approvals shall have been obtained as may be legally required pursuant to
federal and state laws prior to the consummation of the transactions
contemplated by this Agreement and all actions, by or in respect of, or filings
with, any governmental body, agency or official or any other person which
require action on the part of or the cooperation and/or participation of
CryoLife and which are required to permit the consummation of the transactions
contemplated by this Agreement so that CryoLife shall be able to continue to
carry on the business of UCFI substantially in the manner now conducted by UCFI
shall have been taken or made.
8.8 BLUE SKY. All blue sky permits or approvals required to carry out
the transactions contemplated hereby shall have been received.
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ARTICLE 9
TERMINATION
9.1 TERMINATION. This Agreement may be terminated at any time before
the Closing Date:
(a) by mutual written consent of CryoLife and UCFI;
(b) by CryoLife if there occurs a substantial loss, damage or
diminution of Assets or other Material Adverse Effect on the business of UCFI or
arising from any cause including theft, fire, flood or act of God prior to
Closing;
(c) by any nonbreaching party hereto if there has been a material
breach of any representation, warranty, covenant or agreement contained in this
Agreement on the part of any nonterminating party hereto; or
(d) by either CryoLife or UCFI if the Closing is not consummated on
or before September 15, 1996.
9.2 EFFECTS OF TERMINATION. In the event this Agreement is terminated
pursuant to Section 9.1(a) or 9.1(d) above, no party shall have any obligations
to the others hereunder except for those obligations in respect to
confidentiality and the return of confidential information set forth in Section
3.3 hereof. If this Agreement is terminated pursuant to Section 9.1(b) or
9.1(c), the obligations in respect to confidentiality and the return of
confidential information set forth in Section 3.3 hereof shall remain in effect
and each party hereto may exercise all remedies available to it under this
Agreement, at law or in equity.
ARTICLE 10
MISCELLANEOUS PROVISIONS
10.1 RISK OF LOSS. The risk of loss prior to the Closing Date shall be
with UCFI. In the event a material portion of the Assets or the operations of
the business of UCFI shall have been materially damaged or otherwise adversely
affected as a result of any strike, accident or other casualty or act of God or
the public enemy, or any judicial, administrative or governmental proceeding at
such time as UCFI proposed to close, then CryoLife shall have the options of
either (a) proceeding to close with an assignment of any insurance proceeds
which may be paid to reflect such loss or damage, or (b) terminating this
Agreement without further liability to UCFI.
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10.2 SEVERABILITY AND OPERATIONS OF LAW. If any provision of this
Agreement is prohibited by the laws of any jurisdiction as those laws apply to
this Agreement, that provision shall be ineffective to the extent of such
prohibition and/or shall be modified to conform with such laws, without
invalidating the remaining provisions hereto.
10.3 MODIFICATION. This Agreement may not be changed or modified except
in writing specifically referring to this Agreement and signed by each of the
parties hereto.
10.4 ASSIGNMENT, SURVIVAL AND BINDING AGREEMENT. This Agreement and the
Asset Purchase Transaction Documents may not be assigned (a) by CryoLife, except
to a wholly owned subsidiary of CryoLife, in which event CryoLife shall
guarantee the payment and performance of such subsidiary under the Promissory
Note on terms acceptable to UCFI, or (b) by UCFI or the Members, without the
prior written consent of CryoLife, provided UCFI may assign its rights under the
Promissory Note to any of its Members by providing notice thereof to CryoLife in
writing. The terms and conditions hereof shall survive the Closing as provided
herein and shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and assigns.
10.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.6 NOTICES. All notices, requests, demands, claims and other
communications hereunder will be in writing and shall be deemed duly given if
personally delivered, sent by telefax, sent by a recognized overnight delivery
service which guarantees next day delivery ("Overnight Delivery") or mailed by
registered or certified mail, return receipt requested, postage prepaid and
addressed to the intended recipient as set forth below.
If to UCFI, UTF or QV: QV, Inc.
322 South Green Street
Suite 500
Chicago, Illinois 60607
Attention: President
Telefax: (312) 697-8477
with a copy to: Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661
Attention: Mr. Steven R. Olsen
Telefax: (312) 902-1061
378486.1
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If to CryoLife: Mr. Steven G. Anderson
Chairman of the Board,
Chief Executive Officer
and President
CryoLife, Inc.
2211 New Market Parkway
Suite 142
Marietta, Georgia 30067
Telefax: (770) 850-0762
with a copy to: Arnall Golden & Gregory
2800 One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3400
Attention: Ms. M. Nan King
Telefax: (404) 873-8775
or at such other address as any party hereto notifies the other parties hereof
in writing. The parties hereto agree that notices or other communications that
are sent in accordance herewith (i) by personal delivery or telefax, will be
deemed received on the business day sent, (ii) by Overnight Delivery, will be
deemed received the business day immediately following the date sent, and (iii)
by U.S. mail, will be deemed received three business days immediately following
the date sent. For purposes of this Agreement, a "business day" is a day on
which CryoLife is open for business and shall not include a Saturday or Sunday
or legal holiday. Notwithstanding anything to the contrary in this Agreement, no
action shall be required of CryoLife or UCFI except on a business day, and in
the event an action is required on a day which is not a business day, such
action shall be required to be performed on the next succeeding day which is a
business day.
10.7 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement,
together with the Exhibits and Schedules attached hereto, constitutes the entire
agreement and supersedes any and all other prior agreements and undertakings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof and, except as otherwise expressly provided herein, is not
intended to confer upon any person other than CryoLife and UCFI, any rights or
remedies hereunder.
10.8 FURTHER ASSURANCES. The parties to this Agreement agree to execute
and/or deliver, either before or after Closing, any further documents or
agreements contemplated hereby and/or necessary or appropriate to effectuate and
consummate the transactions contemplated hereby. UCFI agrees to provide to
CryoLife, both before and after the Closing, such information as CryoLife may
reasonably request in order to consummate the transactions contemplated hereby
and to effect an orderly transition following Closing.
378486.1
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10.9 ARBITRATION.
(a) SUBMISSION TO ARBITRATION. If any dispute or difference shall
arise between the parties to this Agreement, as to the interpretation of this
Agreement or any covenants or conditions of this Agreement or as to the rights,
duties, or liabilities of any party under this Agreement as to any act, matter,
or thing arising out of or under or relating to this Agreement, the same shall
be finally settled by arbitration conducted in accordance with the Commercial
Arbitration Rules (the "Rules") and Supplementary Procedures for Commercial
Arbitration (the "Supplementary Procedures") of the American Arbitration
Association, in effect the date hereof. Whenever any dispute, controversy,
claim, or difference which may be submitted to arbitration under this Section
10.9 arises between the parties, either party hereby may give the other party
notice of its intention to submit such dispute, controversy, claim, or
difference to arbitration. Such arbitration shall take place in Atlanta,
Georgia, before three arbitrators, with one arbitrator selected by each party
and the third arbitrator mutually agreed upon by the parties. In the event the
parties cannot agree upon the third arbitrator within 20 days after the
effective date of receipt, as provided in Section 10.6, of either party's notice
to arbitrate, the third arbitrator shall be appointed by the American
Arbitration Association in accordance with the Rules and Supplementary
Procedures. It is expressly agreed between the parties that whether or not the
Rules of the American Arbitration Association shall provide for a discovery
procedure, such discovery procedure is hereby granted and permitted in the said
arbitration proceedings, the parties may apply to the arbitrators for the
enforcement of any form of discovery which would be permitted by the laws of
Georgia, and their award or decision in respect of such discovery shall be final
and binding.
(b) COSTS; BINDING. The parties agree that each party to the
arbitration is to pay an equal part of the deposit fixed by the American
Arbitration Association or the arbitrators. The determinations of such
arbitrators will be final and binding upon the parties to the arbitration, and
judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction, or application may be made to such court for a judicial
acceptance of the award and an order of enforcement, as the case may be. The
arbitrators shall set forth the grounds for their decision in the award.
(c) CONDITION PRECEDENT. The parties hereto stipulate that
submission of disputes to arbitration as provided in this Section 10.9 and
arbitration pursuant thereto shall be a condition precedent to any suit, action,
or proceeding instituted in any court or before any administrative tribunal with
respect to this Agreement or disputes arising out of or regarding this
Agreement; provided, however, notwithstanding the foregoing, a party hereto
shall not be required to satisfy such condition precedent requiring the
submission of all disputes between the parties to arbitration if such party
seeks, a restraining order, injunction, or similar remedy to specifically
enforce the confidentiality, non-competition, or non-solicitation provisions of
this Agreement or any Asset Purchase Transaction Document.
378486.1
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year set forth above.
"CryoLife":
CryoLife, Inc.
By:/s/ Steven G. Anderson
------------------------------------
Steven G. Anderson
Chairman of the Board,
Chief Executive Officer and President
"UCFI":
UNITED CRYOPRESERVATION
FOUNDATION, INC.
By:/s/ Daniel Woods
------------------------------------
Daniel Woods
Title: Vice President/General Manager
"UTF":
UNITED TRANSPLANT FOUNDATION,
INC.
By:/s/ Jerold Anderson
------------------------------------
Jerold Anderson
Title: President
"QV":
QV, INC.
By:/s/ Daniel Woods
-----------------------------------
Daniel Woods
Title: Vice President
378486.1
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LIST OF SCHEDULES AND EXHIBITS
*Schedule 1.1(b) Fixed Assets
*Schedule 1.2 Excluded Items
*Schedule 2.4 Allocation of Asset Consideration
*Schedule 3.1 List of Employees Subleased from QV, Inc.
*Schedule 3.2 Consents
*Schedule 4.1 States in which UCFI is Qualified to do business
*Schedule 4.2 List of Members, Officers and Directors
*Schedule 4.6 Licenses and Permits
*Schedule 4.7 Certain Liabilities and Obligations
*Schedule 4.9 List of Deposits
*Schedule 4.10(a) Trade Payables as of Date of Agreement
*Schedule 4.10(c) Indebtedness
*Schedule 4.13 Processed Tissue
*Schedule 4.14 Intellectual Property
*Schedule 4.15 Contracts
*Schedule 4.19 Insurance
*Schedule 4.24 Material Changes since 6/30/95
*Schedule 4.25 Bank Accounts
*Exhibit 2.2 Form of Promissory Note
*Exhibit 2.3(a)(i) Form of Assignment and Assumption of Sublease
*Exhibit 2.3(a)(ii) Form of Assignment and Assumption Agreement
*Exhibit 3.1 Form of Employee Leasing Agreement
*Exhibit 3.2 Form of Consent
*Exhibit 3.4 Form of Noncompetition Agreement
*Exhibit 3.10 Form of Press Release
*Exhibit 3.12 Form of Procurement Agreements
*Exhibit 3.14 Form of Distribution Agreement
*Exhibit 3.16(a) Form of License Agreement
*Exhibit 3.16(b) Form of Agreement Regarding Services
and Related Matters
*Exhibit 7.4(b) Form of Bill of Sale
*Exhibit 7.4(g) Form of Opinion of UCFI's Counsel
*Exhibit 8.3(i) Form of Opinion of CryoLife's Counsel
* Indicates Schedules and Exhibits which have been omitted from this filing. The
Registrant hereby agrees to furnish to the Commission a copy of any omitted
Schedules and Exhibits listed above supplementally upon request.