Exhibit 2.1
861986v1 Execution Copy
ASSET PURCHASE AGREEMENT
Dated as of May 25, 1999
Among
ALLEGIANCE HEALTHCARE CORPORATION,
ISOLYSER COMPANY, INC.
and
MEDSURG INDUSTRIES, INC.
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861986v1
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS................................................1
1.1. Definitions.........................................................1
ARTICLE II PURCHASE AND SALE..........................................8
2.1. Purchased Assets....................................................8
2.2. Excluded Assets....................................................10
2.3. Assumed Liabilities................................................11
2.4. Excluded Liabilities...............................................11
2.5. Non-assignable Contracts...........................................13
ARTICLE III PURCHASE PRICE............................................14
3.1. Purchase Price.....................................................14
3.2. Adjustment to Preliminary Purchase Price...........................14
3.3. Determination of Inventory Adjustment Amount.......................14
3.4. Determination of Net Asset Adjustment..............................16
3.5. Deferred Closing Adjustment to Purchase Price......................16
3.6. Allocation of Purchase Price.......................................17
ARTICLE IV CLOSING...................................................18
4.1. Closing Date.......................................................18
4.2. Payment on the Closing Date........................................18
4.3. Buyer's Additional Deliveries......................................18
4.4. Parent's Deliveries................................................19
4.5. Deferred Closing...................................................20
4.6. Payments in Connection with Certain Personal Property Leases.......21
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MEDSURG......22
5.1. Organization of Parent.............................................22
5.2. Subsidiaries and Investments.......................................22
5.3. Authority of Parent................................................23
5.4. Financial Statements...............................................23
5.5. Operations Since Balance Sheet Date................................24
5.6. No Undisclosed Liabilities.........................................25
5.7. Taxes..............................................................25
5.8. Availability of Assets.............................................26
5.9. Governmental Permits...............................................26
5.10. Real Property. ....................................................27
5.11. Real Property Leases...............................................27
5.12. Condemnation.......................................................27
5.13. Personal Property..................................................28
5.14. Personal Property Leases...........................................28
5.15. Intellectual Property; Software....................................28
5.16. Accounts Receivable; Inventories...................................29
5.17. Title to Property..................................................30
5.18. Employees and Related Agreements; ERISA............................30
5.19. Employee Relations.................................................30
5.20. Contracts..........................................................31
5.21. Status of Contracts................................................32
5.22. No Violation, Litigation or Regulatory Action......................32
5.23. Environmental Matters..............................................33
5.24. Insurance..........................................................34
5.25. Customers and Suppliers............................................34
5.26. [INTENTIONALLY BLANK]..............................................35
5.27. Warranties and Product Liabilities.................................35
5.28. No Finder..........................................................35
5.29. No Third Party Options.............................................35
5.30. Disclosure.........................................................36
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER...................36
6.1. Organization of Buyer..............................................36
6.2. Authority of Buyer.................................................36
6.3. No Finder..........................................................37
ARTICLE VII ACTION PRIOR TO THE CLOSING DATE..........................37
7.1. Investigation of the Business by Buyer.............................37
7.2. Preserve Accuracy of Representations and Warranties................37
7.3. Consents of Third Parties; Governmental Approvals..................38
7.4. Operations Prior to the Closing Date...............................38
7.5. Notification by Parent of Certain Matters..........................40
7.6. Antitrust Law Compliance...........................................40
7.7. Insurance..........................................................40
7.8. [INTENTIONALLY BLANK]..............................................40
ARTICLE VIII ADDITIONAL AGREEMENTS.....................................40
8.1. Covenant Not to Compete or Solicit Business........................40
8.2. Use of Names.......................................................41
8.3. Taxes..............................................................42
8.4. Discharge of Business' Liabilities.................................43
8.5. Employees and Employee Benefit Plans...............................43
8.6. [INTENTIONALLY BLANK]..............................................43
8.7. Ancillary Agreements...............................................44
8.8. Handling of Returned Products......................................44
ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER..............44
9.1. No Misrepresentation or Breach of Covenants and Warranties.........44
9.2. No Changes or Destruction of Property..............................44
9.3. No Restraint or Litigation.........................................45
9.4. Necessary Governmental Approvals...................................45
9.5. Necessary Consents.................................................45
9.6. Maintenance of Accounts............................................45
9.7. Key Employees......................................................45
9.8. [INTENTIONALLY BLANK]..............................................45
9.9. Instrument of Assignment and Ancillary Agreements..................45
ARTICLE X CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MEDSURG.46
10.1. No Misrepresentation or Breach of Covenants and Warranties.........46
10.2. No Restraint or Litigation.........................................46
10.3. Necessary Governmental Approvals...................................46
10.4. Purchase Price, Instrument of Assumption and Ancillary Agreements..46
ARTICLE XI INDEMNIFICATION...........................................46
11.1. Indemnification by Parent..........................................46
11.2. Indemnification by Buyer...........................................47
11.3. Notice of Claims...................................................48
11.4. Third Person Claims................................................48
ARTICLE XII TERMINATION...............................................49
12.1. Termination........................................................49
12.2. Notice of Termination..............................................50
12.3. Effect of Termination..............................................50
ARTICLE XIII GENERAL PROVISIONS........................................50
13.1. Survival of Obligations............................................50
13.2. Confidential Nature of Information.................................50
13.3. No Public Announcement.............................................51
13.4. Notices............................................................51
13.5. Successors and Assigns.............................................52
13.6. Access to Records after Closing....................................53
13.7. Entire Agreement; Amendments.......................................53
13.8. Interpretation.....................................................53
13.9. Waivers............................................................54
13.10. Expenses...........................................................54
13.11. Partial Invalidity.................................................54
13.12. Execution in Counterparts..........................................54
13.13. Further Assurances.................................................54
13.14. Governing Law......................................................55
13.15. Submission to Jurisdiction..........................................55
Schedules
1.1 Exceptions to Agreed Accounting Principles
2.1(L) Purchased Assets
2.2(I) Inventory on Consignment
2.4(B) Excluded Liabilities
5.1 Organization of Parent
5.2(A) Organization of MedSurg
5.3 Authority of Parent
5.4 Financial Statements
5.5(A) Operations Since Balance Sheet Date
5.5(B) Operations Since Balance Sheet Date
5.6 No Undisclosed Liabilities
5.7 Taxes
5.8 Availability of Assets
5.9 Governmental Permits
5.10 Real Property
5.11 Real Property Leases
5.13 Personal Property
5.14 Personal Property Leases
5.15 Intellectual Property; Software
5.17 Title to Property
5.19 Employee Relations
5.20 Contracts
5.21 Status of Contracts
5.22 No Violation, Litigation or Regulatory Action
5.23 Environmental Matters
5.24 Insurance
5.25 Customers and Suppliers
5.27 Warranties and Product Liabilities
9.5 Necessary Consents
9.7 Key Employees
EXHIBITS
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EXHIBIT A-1-INSTRUMENT OF ASSIGNMENT DUE AT CLOSING
EXHIBIT A-2-INSTRUMENT OF ASSIGNMENT DUE AT THE DEFERRED CLOSING
EXHIBIT B-1-INSTRUMENT OF ASSUMPTION DUE AT CLOSING
EXHIBIT B-2-INSTRUMENT OF ASSUMPTION DUE AT THE DEFERRED CLOSING
EXHIBIT C - SUPPLY & LICENSE AGREEMENT
EXHIBIT D - CONTRACT MANUFACTURING AGREEMENT
EXHIBIT E - ESCROW AGREEMENT
EXHIBIT F - OPINION OF GENERAL COUNSEL OF BUYER AND OPINION OF COUNSEL TO BUYER
EXHIBIT G - OPINION OF COUNSEL TO PARENT
EXHIBIT H - PAYMENT IN CONNECTION WITH CERTAIN PERSONAL PROPERTY LEASES
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of May 25, 1999 (this "Agreement"),
among Allegiance Healthcare Corporation, a Delaware corporation ("Buyer"),
Isolyser Company, Inc., a Georgia corporation ("Parent") and MedSurg Industries,
Inc, a Georgia corporation and a wholly-owned subsidiary of Parent ("MedSurg").
WHEREAS, Parent is engaged through one or more of its subsidiaries in
the business of assembling, packaging, marketing and selling procedure kits and
trays (the "Business"); and
WHEREAS, Parent desires to sell or cause to be sold to Buyer, and
Buyer desires to purchase the Business and certain of the assets of the
Business, together with certain liabilities related thereto, all on the terms
and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, it is hereby agreed among Parent, MedSurg and
Buyer as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. In this Agreement, the following terms have the
meanings specified or referred to in this Section 1.1 and shall be equally
applicable to both the singular and plural forms. Any agreement referred to
below shall mean such agreement as amended, supplemented and modified from time
to time to the extent permitted by the applicable provisions thereof and by this
Agreement.
"Action" means any legal action, suit, arbitration, inquiry,
proceeding or investigation by or before any court, any governmental or other
regulatory or administrative agency or commission or any arbitration tribunal.
"Adjusted Purchase Price" has the meaning specified in Section 3.2(b).
"Adjustment Report" has the meaning specified in Section 3.4(a).
"Affiliate" means, with respect to any Person, any other Person which
directly or indirectly controls, is controlled by or is under common control
with such Person.
"Agreed Accounting Principles" means generally accepted accounting
principles consistently applied, provided that, notwithstanding the foregoing,
Agreed Accounting Principles shall include the accounting policies and be
subject to the exceptions described in Schedule 1.1; and provided further that,
for purposes of the Agreed Accounting Principles, no known adjustments for items
or matters, regardless of the amount thereof, shall be deemed to be immaterial.
"Allocation Schedule" has the meaning specified in Section 3.6.
"Ancillary Agreements" has the meaning specified in Section 8.7.
"Assumed Liabilities" has the meaning specified in Section 2.3.
"Balance Sheet" means the unaudited balance sheet of the Business as
of April 30, 1999 included in Schedule 5.4.
"Balance Sheet Date" means April 30, 1999.
"Business" has the meaning specified in the first recital to this
Agreement.
"Buyer" has the meaning specified in the first paragraph of this
Agreement.
"Buyer Ancillary Agreements" means all agreements, instruments and
documents being or to be executed and delivered by Buyer under this Agreement or
in connection herewith.
"Buyer Group Member" means Buyer and its Affiliates and their
respective successors and assigns.
"CA" has the meaning specified in Section 4.6(a).
"CA License Agreement" has the meaning specified in Section 4.6(a).
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. Sections 9601 et seq. and any amendments thereto,
and any regulations promulgated thereunder, as in effect on or prior to the
Closing Date.
"Claim Notice" has the meaning specified in Section 11.3(a).
"Closing" means the closing of the transfer of the Purchased Assets
(except for the Unfinished Goods) from Parent to Buyer.
"Closing Date" has the meaning specified in Section 4.1.
"COBRA" has the meaning specified in Section 8.5(b).
"Code" means the Internal Revenue Code of 1986, as amended.
"Collection Report" has the meaning specified in Section 8.6(b).
"Confidentiality Agreement" means the Confidentiality Agreement dated
March 19, 1999 between Buyer and Parent.
"Contracts" means all contracts, agreements, commitments,
understandings and arrangements, whether written or oral.
"Contract Manufacturing Agreement" means the Contract Manufacturing
Agreement in the form of Exhibit D.
"Copyrights" means United States and foreign copyrights, whether
registered or unregistered, and pending applications to register the same.
"Court Order" means any judgment, order, award or decree of any
foreign, federal, state, local or other court or tribunal and any award in any
arbitration proceeding.
"Deferred Closing" has the meaning in Section 4.5.
"Deferred Closing Adjustment Report" has the meaning specified in
Section 3.5(a).
"Deferred Closing Purchase Price Adjustment Amount" has the meaning
specified in Section 3.5(c).
"Deferred Closing Trade Payables" has the meaning specified in Section
3.5(a).
"Deferred Closing Unfinished Goods Inventory" has the meaning
specified in Section 3.5(a).
"Designated Employees" has the meaning specified in Section 8.1(b).
"Encumbrance" means any lien (statutory or other) claim, charge,
security interest, mortgage, deed of trust, pledge, hypothecation, assignment,
conditional sale or other title retention agreement, preference, priority or
other security agreement or preferential arrangement of any kind or nature, and
any easement, encroachment, covenant, restriction, right of way, defect in title
or other encumbrance of any kind.
"Employees" has the meaning specified in Section 8.5(a).
"Environmental Encumbrance" means an Encumbrance in favor of any
Governmental Authority for (i) any liability under any Environmental Law, or
(ii) damages arising from, or costs incurred by such Governmental Authority in
response to, a Release or threatened Release of Hazardous Materials into the
environment.
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"Environmental Law" means all Requirements of Laws derived from or
relating to all federal, state and local laws or regulations relating to or
addressing the environment, health or safety, including but not limited to
CERCLA, OSHA and RCRA and any state equivalent thereof as in effect on or prior
to the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Account" has the meaning specified in Section 4.2(b).
"Escrow Agent" has the meaning specified in Section 4.2(b).
"Escrow Agreement" has the meaning specified in Section 4.2(b).
"Escrowed Amount" has the meaning specified in Section 4.2(b).
"Excluded Assets" has the meaning specified in Section 2.2.
"Excluded Liabilities" has the meaning specified in Section 2.4.
"Expenses" means any and all expenses incurred in connection with
investigating, defending or asserting any claim, action, suit or proceeding
incident to any matter indemnified against hereunder (including, without
limitation, court filing fees, court costs, arbitration fees or costs, witness
fees, and reasonable fees and disbursements of legal counsel, investigators,
expert witnesses, consultants, accountants and other professionals).
"Facilities" means any plant, building, facility, structure,
underground storage tank, equipment or unit, or other asset owned, leased or
operated by either Parent or MedSurg and used primarily in the Business.
"Governmental Authority" means any foreign, federal, state, local or
other government, governmental, statutory or administrative authority,
regulatory body or commission or any court, tribunal, or judicial or arbitral
body.
"Governmental Permits" has the meaning specified in Section 5.9.
"Hazardous Materials" means any waste, pollutant, hazardous or toxic
substance or waste, petroleum-based substance or waste, special waste or any
constituent of any such substance or waste, as the same are defined in, or for
which standards of care are imposed pursuant to, Environmental Laws.
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"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"IBM" has the meaning specified in Section 4.6(b).
"IBM Lease" has the meaning specified in Section 4.6(b).
"Indemnified Party" has the meaning specified in Section 11.3(a).
"Indemnitor" has the meaning specified in Section 11.3(a).
"Independent Accountant" has the meaning specified in Section 3.3(f).
"Instrument of Assignment" means the Instruments of Assignment in the
forms of Exhibit A-1 or Exhibit A-2, as the case may be.
"Instrument of Assumption" means the Instruments of Assumption in the
forms of Exhibit B-1 or Exhibit B-2, as the case may be.
"Intellectual Property" means Copyrights, Patent Rights, Trademarks
and Trade Secrets and all agreements, Contracts, licenses, sublicenses,
assignments, and indemnities which relate or pertain to any of the foregoing.
"Inventory" has the meaning specified in Section 2.1(b).
"Inventory Adjustment Amount" has the meaning specified in Section
3.2(b).
"Inventory Book Value" has the meaning specified in Section 3.3(a).
"IRS" means the Internal Revenue Service.
"knowledge" means, as to a particular matter, actual knowledge after
due inquiry of Parent and its Affiliates.
"Leased Real Property" has the meaning specified in Section 5.11.
"Losses" means any and all losses, costs, obligations, liabilities,
settlement payments, awards, judgments, fines, penalties, damages, fees,
expenses, deficiencies claims or other charges.
"Medical Product Regulatory Authority" means any Governmental
Authority that is concerned with the safety, efficacy, reliability, manufacture,
sale or marketing of medical products.
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"MedSurg" has the meaning specified in the first paragraph of this
Agreement.
"Net Asset Adjustment" has the meaning specified in Section 3.2(b).
"Net Assets" has the meaning specified in Section 3.2(b).
"Net Deferred Closing Inventory" has the meaning specified in Section
3.5(c).
"Net Inventory Base" means the amount of the Unfinished Goods set
forth on the Balance Sheet minus the amount of Trade Payables set forth on the
Balance Sheet.
"OSHA" means the Occupational Safety and Health Act, 29 U.S.C.
Sections 651 et seq., any amendment thereto, any successor statute, and any
regulations promulgated thereunder.
"Parent" has the meaning specified in the first paragraph of this
Agreement.
"Parent Agreements" has the meaning specified in Section 5.21.
"Parent Ancillary Agreements" means all agreements, instruments and
documents being or to be executed and delivered by Parent or any of its
Affiliates under this Agreement or in connection herewith.
"Parent Group Member" means Parent and its Affiliates and their
respective successors and assigns.
"Patent Rights" means United States and foreign patents, patent
applications, provisional applications, continuations, continuations-in-part,
divisions, reissues, patent disclosures, inventions (whether or not patentable
or reduced to practice) or improvements thereto.
"Permitted Encumbrances" means (a) liens for taxes and other
governmental charges and assessments reflected on the Valuation Date Balance
Sheet and arising in the ordinary course of the Business which are not yet due
and payable, (b) liens of landlords and liens of carriers, warehousemen,
mechanics and materialmen and other like liens reflected on the Valuation Date
Balance Sheet and arising in the ordinary course of the Business for sums not
yet due and payable, (c) other non-monetary liens or imperfections on property
which do not interfere with, and are not violated by, the consummation of the
transactions contemplated by this Agreement, and do not impair the marketability
of, or detract from the value of or impair the existing use of the property
affected by such lien or imperfection and (d) leases to which any leased asset
is subject.
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"Person" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization or Governmental Authority.
"Physical Inventory Value" has the meaning specified in Section
3.3(c).
"Preliminary Purchase Price" has the meaning specified in Section 3.1.
"Purchase Price" has the meaning specified in Section 3.1.
"Purchase Price Adjustment Amount" has the meaning specified in
Section 3.2(a).
"Purchased Assets" has the meaning specified in Section 2.1.
"RCRA" means the Resource Conservation and Recovery Act, 42 U.S.C.
Sections 6901 et seq., and any amendments thereto, and any regulations
promulgated thereunder, as in effect on or prior to the Closing Date.
"Release" means release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration of Hazardous
Materials into the indoor or outdoor environment or into or out of any of the
Facilities, including the movement of Hazardous Materials through or in the air,
soil, surface water, groundwater or Facilities.
"Remedial Action" means actions required to (a) clean up, remove,
treat or in any other way address Hazardous Materials in the indoor or outdoor
environment; (b) prevent the Release or threatened Release or minimize the
further Release of Hazardous Materials; or (c) investigate and determine if a
remedial response is needed and to design such a response and post-remedial
investigation, monitoring, operation and maintenance and care.
"Requirements of Laws" means any foreign, federal, state and local
laws, statutes, regulations, rules, codes, ordinances or requirements enacted,
adopted, issued or promulgated by any Governmental Authority (including, without
limitation, those pertaining to electrical, building, zoning, subdivision, land
use, environmental and occupational safety and health requirements) or common
law.
"Software" means computer software programs and software systems,
including, without limitation, all databases, compilations, tool sets,
compilers, higher level or "proprietary" languages, related documentation,
technical manuals and materials, whether in source code, object code or human
readable form and any licenses or rights with respect to the foregoing.
"Special Audit" has the meaning specified in Section 3.3(c).
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"Supply & License Agreement" means the Supply & License Agreement in
the form of Exhibit C.
"Tax" means any federal, state, local or foreign net income,
alternative or add-on minimum, ad valorem, value-added, gross income, gross
receipts, windfall profits, severance, production, environmental, property,
sales, use, transfer, stamp, gains, license, excise, employment, payroll,
withholding or minimum tax, or any other tax, custom, duty, governmental fee or
other like assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount imposed by any
Governmental Authority.
"Tax Return" means any return, report or similar statement required to
be filed with respect to any Taxes (including any attached schedules),
including, without limitation, any information return, claim for refund, amended
return and declaration of estimated Tax.
"Trade Payables" means accounts payable to trade creditors.
"Trade Secrets" means confidential ideas, trade secrets, know-how,
concepts, methods, processes, formulae, reports, data, customer lists, mailing
lists, business plans or other proprietary information.
"Trademarks" means United States, state and foreign trademarks,
service marks, logos, trade dress, trade names and Internet domain names
(including all assumed or fictitious names under which the Business is
conducting its business or has within the previous five years conducted its
business), whether registered or unregistered and pending applications to
register the foregoing.
"Unfinished Goods" means all Inventory excluding finished goods
inventory.
"Valuation Date Balance Sheet" has the meaning specified in Section
3.4(a).
"Year 2000 Compliant" means, with respect to a microprocessor,
computer, computer program or other items of software (a) the functions,
calculations, and other computing processes of the microprocessor, computer,
program or software (collectively, the AProcesses@) perform in a consistent and
correct manner without interruption regardless of the date on which the
Processes are actually performed and regardless of the date input to the
applicable computer system, whether before, on, or after January 1, 2000; (b)
the microprocessor, computer, program or software accepts, calculates, compares,
sorts, extracts, sequences, and otherwise processes date inputs and date values,
and returns and displays date values, in a consistent and correct manner
regardless of the dates used whether before, on, or after January 1, 2000; (c)
the microprocessor, computer, program or software accepts and responds to year
input, if any, in a manner that resolves any ambiguities as to century in a
defined, predetermined, and appropriate manner; (d) the microprocessor,
computer, program or software stores and displays date information in ways that
are unambiguous as to the determination of the century; and (e) leap years will
be determined by the following standard (A) if dividing the year by 4 yields an
integer, it is a leap year, except for years ending in 00, but (B) a year ending
in 00 is a leap year if dividing it by 400 yields an integer.
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"WARN Act" has the meaning specified in Section 5.19.
"Warn Notice" has the meaning specified in Section 8.5(c).
ARTICLE II
PURCHASE AND SALE
2.1. Purchased Assets. Upon the terms and subject to the conditions of
this Agreement and subject to Sections 2.2 and 4.5, on the Closing Date, Parent
shall sell, transfer, assign, convey and deliver, or cause to be sold,
transferred, assigned, conveyed and delivered, to Buyer, and Buyer shall
purchase, free and clear of all Encumbrances (except for Permitted
Encumbrances), the Business and all of the assets of Parent and its Affiliates
including MedSurg, of every kind and description, wherever located, personal or
mixed, tangible or intangible, used primarily, or held primarily for use in to
the Business as the same shall exist on the Closing Date (herein collectively
called the "Purchased Assets"), including, without limitation, all right, title
and interest of MedSurg in, to and under:
(a) all notes and accounts receivable;
(b) except for the consignment Inventory set forth in
Schedule 2.2(I), all raw materials, supplies, work-in-process,
finished goods, packaging materials, samples and other materials
included in the inventory (the "Inventory");
(c) the machinery, equipment, appliances, vehicles, tools,
spare parts, accessories, furniture and other personal property listed
or referred to in Schedule 5.13 (including all such items which are
currently on order for use primarily in the Business and all such
items which are stored or used off-site but which have been used
primarily in the ordinary course of the Business within the 12 months
preceding the date hereof);
(d) the personal property leases listed in Schedule 5.14;
(e) the lease agreements and leasehold improvements listed
or described in Schedule 5.11;
(f) the Governmental Permits listed in Schedule 5.9;
(g) the Copyrights, Patent Rights and Trademarks (and all
goodwill associated therewith), including the product labels,
Contracts, licenses, sublicenses, assignments and indemnities, listed
in Schedule 5.15;
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(h) the Parent Agreements included as part of the Purchased
Assets;
(i) all Trade Secrets and other proprietary or confidential
information used primarily in or relating primarily to the Business;
(j) [INTENTIONALLY BLANK];
(k) all books, records, files, invoices, Inventory records,
product specifications, advertising materials, customer lists, cost
and pricing information, supplier lists, business plans, catalogs,
customer literature, quality control records and manuals, research and
development files, records and laboratory books and credit records of
customers (including all data and other information stored on discs,
tapes or other media) primarily relating to the assets, properties,
business and operations of the Business, excluding, however, records,
files and other information kept for financial reporting or income tax
purposes;
(l) all telephone, telex and telephone facsimile numbers,
other directory listings and Internet domain names utilized primarily
in connection with the Business, including the toll free customer
service numbers listed in Schedule 2.1(L);
(m) all benefits and rights arising from prepaid expenses
attributable primarily to the Business other than those relating to
any of the Excluded Assets, including, without limitation, (i) ad
valorem and other property Taxes, (ii) all refundable security
deposits paid by MedSurg with respect to the Contracts listed in
Schedule 5.20, (iii) pre-paid expenses to outside vendors for special
orders that have not been reimbursed to MedSurg in the ordinary course
of the Business, and (iv) payments or deposits related to licenses and
permits transferred to Buyer; and
(n) all benefits and rights, including rights of recovery,
under insurance notices relating primarily to the Business or the
Purchased Assets with respect to occurrences on or prior to the
Closing Date.
2.2. Excluded Assets. Notwithstanding the provisions of Section 2.1,
the Purchased Assets shall not include the following (herein referred to as the
"Excluded Assets"):
(a) all cash, bank deposits and cash equivalents, except for
deposits and refunds related to the Purchased Assets;
(b) except as provided in Section 8.2, the name "Isolyser"
or any related or similar trade names, trademarks, service marks or
logos to the extent the same incorporate the name "Isolyser" or any
variation thereof;
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(c) rights, claims or causes of action against third parties
relating to the assets, properties, business or operations of the
Business which may arise in connection with the discharge by Parent of
the Excluded Liabilities;
(d) Intellectual Property related primarily to Parent's Orex
and Enviroguard products;
(e) all Contracts of insurance;
(f) all corporate minute books and stock transfer books and
the corporate seal of MedSurg;
(g) all Contracts with employees of Parent or MedSurg, other
than those Contracts entered into by employees in a capacity other
than as employees of Parent or MedSurg;
(h) all refunds of any Tax for which Parent or MedSurg is
liable pursuant to Section 8.3;
(i) Inventory on consignment from unrelated third parties of
Parent, MedSurg or any of their Affiliates set forth in Schedule
2.2(I);
(j) all assets under or relating to any employee benefit
plan, program or arrangement of Parent, MedSurg or any of their
Affiliates;
(k) Software listed on Schedule 5.15;
(l) the name "MedSurg Industries, Inc.";
(m) the Contracts listed in items 1 and 2 of Schedule 5.14;
in items 1 and 2 of Schedule 5.15; and in items 3, 4, 6, 7, 8, 9, 11,
12, 14, 15, and 16 of Schedule 5.20; and
(n) the items described in Schedule 5.8.
2.3. Assumed Liabilities. Upon the terms and subject to the conditions
of this Agreement, on the Closing Date, Buyer shall, subject to Sections 2.4 and
4.5, deliver to MedSurg the Instrument of Assumption pursuant to which Buyer
shall assume and agree to discharge all of the following obligations and
liabilities of Parent or its Affiliates, including MedSurg in accordance with
their respective terms and subject to the respective conditions thereof:
(a) all liabilities of the Business other than Trade Payables
reflected in the Valuation Date Balance Sheet as a dollar amount but
only to the extent of the dollar amount shown thereon;
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(b) all Trade Payables included in the Deferred Closing Trade
Payables Amount as a dollar amount but only to the extent of the dollar
amount so included;
(c) all liabilities and obligations to be paid or performed
after the Closing Date under the Parent Agreements or any other
Contracts related primarily to the Business which are not required by
the terms of Section 5.20 to be listed or described in Schedule 5.20,
in each case included as part of the Purchased Assets; and
(d) all liabilities and obligations arising out of or
resulting from the conduct of the Business from the Balance Sheet Date
to the Closing Date but only if such liabilities and obligations shall
have been incurred by MedSurg in the ordinary course of the Business
consistent with past practice and in compliance with this Agreement;
provided, however, that nothing in this Section 2.3 shall be deemed to
modify or limit any representation or warranty contained in Article V
or any covenant or obligation of Parent contained in this Agreement or
the obligation to indemnify Buyer as provided in Article XI.
All of the foregoing liabilities and obligations to be assumed by Buyer
hereunder (excluding any Excluded Liabilities) are referred to herein as the
"Assumed Liabilities".
2.4. Excluded Liabilities. Notwithstanding anything to the contrary in
Section 2.3 and subject to Section 4.5, Buyer shall not assume or be obligated
to pay, perform or otherwise discharge any liability or obligation of Parent or
any of its Affiliates including MedSurg, direct or indirect, known or unknown,
absolute or contingent, not expressly assumed by Buyer pursuant to the
Instrument of Assumption (all such liabilities and obligations not being assumed
being herein called the "Excluded Liabilities") and none of the following shall
be Assumed Liabilities for purposes of this Agreement:
(a) any liabilities in respect of Taxes for which Parent is
liable pursuant to Section 8.3;
(b) any intercompany payables and other liabilities or
obligations to Parent or any of its Affiliates, except as set forth in
Schedule 2.4(B);
(c) any costs and expenses incurred by Parent or MedSurg incident
to its negotiation and preparation of this Agreement and its
performance and compliance with the agreements and conditions
contained herein;
(d) any liabilities or obligations in respect of any Excluded
Assets except Excluded Assets described in Section 2.2(i);
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(e) any liabilities in respect of the claims or proceedings
described in Schedule 5.22;
(f) liabilities of any kind which were not reflected on the
Valuation Date Balance Sheet as a dollar amount or which are in excess
of the dollar amount shown thereon (other than those described in
Section 2.3(c) or (d);
(g) any liabilities and obligations related to, associated with
or arising out of the occupancy, operation, use or control of any of
the Facilities or the operation of the Business on or prior to the
Closing Date, in each case incurred or imposed by any Environmental
Law (including, without limitation, any Release of any Hazardous
Materials on, at or from (i) the Facilities, including, without
limitation, all facilities, improvements, structures and equipment
thereon, surface water thereon or adjacent thereto and soil or
groundwater thereunder, or any conditions whatsoever on, under or in
the vicinity of such real property) or (ii) any real property or
facility owned by a third Person to which Hazardous Materials
generated by the Business were sent prior to the Closing Date;
(h) any product liability or claims for injury to person or
property, regardless of when made or asserted, relating to products
manufactured, distributed or sold by the Business or services
performed by the Business on or prior to the Closing Date or which is
imposed, or asserted to be imposed, by operation of law, in connection
with any service performed or product manufactured by or on behalf of
Parent or any of its Affiliates, including MedSurg, prior to the
Closing Date;
(i) any recalls on or after the Closing Date mandated by any
Governmental Authority of the products manufactured, distributed or
sold by the Business on or prior to the Closing Date;
(j) any liability, claim or obligation arising out of, or
otherwise relating to, any Actions (i) currently pending, as of the
Closing Date, against Parent or any of its Affiliates including
MedSurg, or (ii) instituted after Closing to the extent based upon, or
arising out of, any fact, condition, event or circumstance which
occurs or is otherwise existing prior to the Closing Date;
(k) any obligations related to products manufactured, distributed
or sold by the Business on or prior to the Closing Date which are
returned by a customer after the Closing Date;
(l) any liability or obligation to provide warranty or service
on, or to repair or replace, any products manufactured, distributed or
sold by the Business on or prior to the Closing Date;
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(m) any liability or obligation arising with respect to any claim
seeking recovery for consequential damage, lost revenue or income or
punitive damages, regardless of the nature thereof, to the extent
arising out of service performed or products related to the Business
manufactured by or on behalf of Parent or any of its Affiliates,
including MedSurg, prior to the Closing Date or any other fact,
condition, event or circumstance which occurs or is otherwise existing
prior to the Closing Date;
(n) any liability or obligation within the scope of Section 8.5;
(o) any obligations of Parent or any of its Affiliates, including
MedSurg, to indemnify any Person in connection with the operation of
the Business by reason of the fact that such Person was an officer,
employee or agent of Parent or any of its Affiliates or was serving at
the request of Parent or any of its Affiliates as a partner, trustee,
director, officer, employee or agent of another entity, whether
arising under Contract, common law or otherwise; and
(p) any liability or obligation to Employees for vacation pay or
severance.
2.5. Nonassignable Contracts. To the extent that assignment hereunder
to Buyer of any Contract, license, lease, or permit is not permitted or is not
permitted without the consent of any third Person, this Agreement shall not be
deemed to constitute an undertaking to assign the same if such consent is not
given or if such an undertaking otherwise would constitute a breach of or cause
a loss of benefits thereunder. Parent shall use its commercially reasonable
efforts to obtain any and all such third Person consents effective as of the
Closing. Parent shall also use its commercially reasonable efforts to cooperate
with and assist Buyer in preparing and submitting any information required in
connection with registrations and licenses that relate to periods of time
commencing prior to and ending after the Closing Date; provided that Parent
shall have no obligation to offer or pay any consideration in order to obtain
any such consents or approvals provided further, that, in the case of any
arrangements relating to the sale of products of the Business to any
Governmental Authority. Parent and MedSurg will cooperate with Buyer to
facilitate the approval and/or the novation of such arrangements in favor of
Buyer, and until the earlier to occur of such approval or novation, Parent and
MedSurg will assist Buyer with respect to the sale of any such products
currently offered for sale pursuant to such arrangements.
ARTICLE III
PURCHASE PRICE
3.1. Purchase Price. The purchase price for the Purchased Assets (the
"Purchase Price") shall be equal to $31,800,000 (the "Preliminary Purchase
Price"), as adjusted pursuant to Section 3.2 and Section 3.5 below. The Purchase
Price shall be paid by Buyer in cash pursuant to Section 4.2 hereof.
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3.2. Adjustment to Preliminary Purchase Price. (a) If the Adjusted
Purchase Price (as herein defined) is less than the Preliminary Purchase Price,
the Preliminary Purchase Price shall be decreased by the amount of such
difference (the "Purchase Price Adjustment Amount").
(b) For purposes of Sections 3.2 and 3.4, the following terms have the
following meanings:
"Adjusted Purchase Price" means the Preliminary Purchase Price,
minus the Net Asset Adjustment, if any.
"Net Assets" means the Purchased Assets as shown on the Valuation
Date Balance Sheet, excluding any amounts for Unfinished Goods shown
thereon, minus Assumed Liabilities, excluding Trade Payables.
"Net Asset Adjustment" means an amount, if any, equal to the
excess of $15,000,000 over the Net Assets shown on the Valuation Date
Balance Sheet; provided, however, that if such amount is less than $
1,500,000 then the Net Asset Adjustment shall be zero.
3.3. Determination of Inventory Adjustment Amount. (a) Prior to the
Closing Date, Buyer shall be entitled to test the accuracy of the amounts of
Inventory reflected in Parent's general ledger (the "Inventory Book Value").
Such testing shall consist of (A) tying the Inventory balance in Parent's
general ledger to the Inventory balance in Parent's perpetual inventory system,
(B) testing Parent's perpetual inventory system by performing a reasonable
number of test counts, and (C) identifying slow moving and obsolete Inventory.
(b) If, as a result of the testing performed by Buyer described in
clause (a) above, Buyer shall determine that the amounts of Inventory reflected
on Parent's general ledger are acceptable, then for purposes of determining the
amount of Net Assets as of the Closing Date and the Amount of the Deferred
Closing Unfinished Goods Inventory, Inventory shall be determined by the amount
of Inventory reflected on Parent's general ledger.
(c) If, as a result of the testing performed by Buyer described in
clause (a) above, Buyer shall determine that the amounts of Inventory reflected
on Parent's general ledger are not acceptable, Parent shall cause a special
audit of the physical Inventory (the "Special Audit") to be conducted by
Deloitte & Touche for purposes of verifying the amount of Inventory (the
"Physical Inventory Value"). Such Special Audit shall be conducted as of the
Closing Date with respect to all Inventory other than Unfinished Goods and as of
the Deferred Closing Date with respect to Unfinished Goods. Buyer and Buyer's
representatives shall be permitted to observe the Special Audit. Upon completion
of the Special Audits (but not later than 30 days after the Closing Date or the
Deferred Closing Date, as the case may be), Parent shall prepare and deliver
schedules to Buyer setting forth the Physical Inventory Value (excluding
Unfinished Goods) as of the Closing Date and Unfinished Goods as of the Deferred
Closing Date observed during the Special Audit. Such schedules shall be prepared
in accordance with the Agreed Accounting Principles, including:
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(i) a breakdown of the physical Inventory present as of the
effective date of the audit, including each item included in such
Inventory, the quantities of each such item and the value of each such
item;
(ii) adequate documentation supporting the aggregate purchased
quantities and aggregate purchased cost for the physical Inventory; and
(iii) the method (e.g., average cost or market value) used for
calculation of the Physical Inventory Value as of the effective date of
the audit.
(d) Promptly following its receipt of the Physical Inventory Value
schedule, Buyer may review the same and, within 20 days after the date of such
receipt, may deliver to Parent a certificate setting forth its objections to the
calculation of the Physical Inventory Value as set forth in the Physical
Inventory Value schedule, together with a summary of the reasons therefor and
calculations which, in its view, are necessary to eliminate such objections. In
the event that Buyer does not so object within such 20-day period, the Physical
Inventory Value set forth in the Physical Inventory Value schedule shall be
final and binding for purposes of this Agreement but shall not limit the
representations, warranties, covenants and agreements of the parties set forth
elsewhere in this Agreement.
(e) In the event that the Buyer objects within such 20-day period, the
parties shall use their reasonable efforts to resolve by written agreement any
differences as to the Physical Inventory Value and, in the event parties so
resolve (in writing) any such differences, the Physical Inventory Value (as
adjusted) shall be final and binding for purposes of this Agreement but shall
not limit the representations, warranties, covenants and agreements of the
parties set forth elsewhere in this Agreement.
(f) In the event any objections relating to the calculation of the
Physical Inventory Value raised by Buyer are not resolved within the 15-day
period next following such 20-day period, then the matter shall be referred to a
firm of independent certified public accounts as the parties mutually agreement
(the "Independent Accountant") for resolution. The Independent Accountant shall
be instructed to use every reasonable effort to resolve the matter within 15
days of the submission to it of the dispute and, in any case, as soon as
practicable after such submission. The decision of the Independent Accountant
with respect to any such disputed item shall be final, binding and conclusive on
the parties and there shall be no right of appeal therefrom. The fees, costs and
expenses of the Independent Accountant shall be shared equally by Buyer and
Parent.
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3.4. Determination of Net Asset Adjustment. (a) As soon as possible,
but in any event on or before the 60th day following the Closing Date, Buyer
shall prepare and distribute to Parent (i) an unaudited balance sheet of the
Business as of the close of business on the Closing Date (the "Valuation Date
Balance Sheet") and (ii) a report (the "Adjustment Report") setting forth the
Adjusted Purchase Price and the Net Asset Adjustment, along with a calculation
of each such item. Buyer shall prepare the Valuation Date Balance Sheet in
accordance with Agreed Accounting Principles.
(b) Promptly following its receipt of the Valuation Date Balance Sheet
and the Adjustment Report, Parent may review same. The Valuation Date Balance
Sheet and the Adjustment Report will be deemed to be accepted by the parties
hereto and shall be conclusive for purposes of determining the Adjusted Purchase
Price and the Net Asset Adjustment, except to the extent that, within 20 days
after the date of such receipt, Parent may deliver to Buyer describing in
reasonable detail its objections (if any) thereto, specifying the amount in
dispute together with a summary of the reasons therefor and calculations which,
in its view, are necessary to eliminate such objections. Buyer and Parent shall
use reasonable efforts to resolve any such objections in good faith, but if they
do not obtain a final resolution within 15 days after Parent has delivered the
statement of objections, then the Independent Accountant shall be retained to
resolve any remaining objections and shall within 25 days after submission
determine and report to Buyer and Parent upon such remaining disputed items. The
fees, costs and expenses of the Independent Accountant shall be shared equally
by Buyer and Parent.
(c) Promptly (but not later than 5 days) after the determination of
the Adjusted Purchase Price pursuant to Sections 3.2 and 3.4 that is final and
binding as set forth herein, Parent shall pay to Buyer, the Purchase Price
Adjustment Amount, if any, by wire transfer of immediately available funds to
the account in the United States specified by Buyer.
3.5. Deferred Closing Adjustment to Purchase Price. (a) Within 60 days
following the termination of the Contract Manufacturing Agreement as provided
therein, Buyer shall prepare and distribute to Parent (i) a schedule setting
forth the amount of the Unfinished Goods as of such termination date (the
"Deferred Closing Unfinished Goods Inventory") and each item included therein,
the quantities of each such item and the value of each such item determined in
accordance with the Agreed Accounting Principles; (ii) a schedule setting forth
the amount of the Trade Payables as of such date (the "Deferred Closing Trade
Payables"); and (iii) a report setting forth the Deferred Closing Purchase Price
Adjustment Amount as determined in accordance with Section 3.5(c) (collectively,
such schedules and report shall be hereinafter referred to as the "Deferred
Closing Adjustment Report").
(b) Promptly following its receipt of the Deferred Closing Adjustment
Report, Parent may review same. The Deferred Closing Adjustment Report will be
deemed to be accepted by the parties hereto and shall be conclusive for purposes
of determining the Deferred Closing Unfinished Goods Inventory, Deferred Closing
Trade Payables and the Deferred Closing Purchase Price Adjustment Amount, except
to the extent that, within 20 days after the date of such receipt, Parent may
deliver to Buyer describing in reasonable detail its objections (if any)
thereto, specifying the amount in dispute together with a summary of the reasons
therefor and calculations which, in its view, are necessary to eliminate such
objections. Buyer and Parent shall use reasonable efforts to resolve any such
objections in good faith, but if they do not obtain a final resolution within 10
days after Parent has delivered the statement of objections, then the
Independent Accountant shall be retained to resolve any remaining objections and
shall within 15 days after submission determine and report to Buyer and Parent
upon such disputed items. The fees, costs and expenses of the Independent
Accountant shall be shared equally by Buyer and Parent.
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(c) The "Deferred Closing Purchase Price Adjustment Amount" shall be
equal to the Net Inventory Base minus the Net Deferred Closing Inventory. For
purposes of this Section 3.5, "Net Deferred Closing Inventory" means the
Deferred Closing Unfinished Goods Inventory minus the Deferred Closing Trade
Payables.
(d) Promptly (but not later than 5 days) after determination of the
Deferred Closing Purchase Price Adjustment Amount pursuant to this Section 3.5
that is final and binding as set forth herein, Parent shall pay to Buyer, the
Deferred Closing Purchase Price Adjustment Amount, if any, by wire transfer of
immediately available funds to the account in the United States specified by
Buyer.
3.6. Allocation of Purchase Price. Within 30 days following the
Deferred Closing Date, Buyer shall deliver to Parent a schedule (the "Allocation
Schedule") allocating the Purchase Price (including, for purposes of this
Section 3.6, any other consideration paid to Parent including the Assumed
Liabilities) among the Purchased Assets and the covenants of Parent in Section
8.1. The Allocation Schedule shall be reasonable and shall be prepared in
accordance with Section 1060 of the Code and the regulations thereunder. Parent
agrees that promptly after receiving the Allocation Schedule, it shall sign the
Allocation Schedule and return an executed copy thereof to Buyer. Buyer and
Parent each agrees to file Internal Revenue Service Form 8594, and all federal,
state, local and foreign Tax Returns, in accordance with the Allocation
Schedule. Buyer and Parent each agrees to provide the other promptly with any
other information required to complete Form 8594.
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ARTICLE IV
CLOSING
4.1. Closing Date. The Closing shall be consummated at 10:00 A.M.,
local time, on the third business day following the expiration or termination of
the waiting period under the HSR Act, or such later date as may be agreed upon
by Buyer and Parent after the conditions set forth in Articles IX and X have
been satisfied, at the offices of Sidley & Austin, One First National Plaza,
Chicago, IL 60603, or at such other place or at such other time as shall be
agreed upon by Buyer and Parent, except that the closing with respect to the
Unfinished Goods and Trade Payables shall be consummated as provided in Section
4.5. The time and date on which the Closing is actually held are sometimes
referred to herein as the "Closing Date."
4.2. Payment on the Closing Date; Escrow. (a) Subject to fulfillment
or waiver of the conditions set forth in Article IX, at Closing Buyer shall pay
MedSurg an amount equal to the Preliminary Purchase Price less the Escrowed
Amount (as defined below) by wire transfer of immediately available funds to the
account in the United States specified by Parent in writing to Buyer at least
two business days prior to the Closing.
(b) On or prior to the Closing Date, Buyer, MedSurg and the First
National Bank of Chicago, as escrow agent (the "Escrow Agent"), shall enter into
an Escrow Agreement in the form of Exhibit E (the "Escrow Agreement") providing
for the establishment of an escrow account (the "Escrow Account") with the
Escrow Agent to secure the obligations of Parent to Buyer (and any Buyer Group
Member) pursuant to Article XI hereof. No right or remedy given by any term of
the Escrow Agreement shall be deemed exclusive, but each shall be cumulative
with all other rights, remedies and elections available under this Agreement, at
law or in equity. At the Closing, there shall be deposited in the Escrow Account
10% of the sum of Preliminary Purchase Price (the "Escrowed Amount"), which
shall be subsequently disbursed in accordance with the terms, conditions and
provisions of the Escrow Agreement. The Escrow Agent=s fees shall be shared
equally by Buyer and Parent.
4.3. Buyer's Additional Deliveries. Subject to fulfillment or waiver
of the conditions set forth in Article IX, at Closing Buyer shall deliver to
MedSurg all the following:
(a) Copies of Buyer's Certificate of Incorporation, as
amended, certified as of a recent date by the Secretary of State of
the State of Delaware;
(b) Certificate of good standing of Buyer issued as of a
recent date by the Secretary of State of the State of Delaware;
(c) Certificate of the secretary or an assistant secretary
of Buyer, dated the Closing Date, in form and substance reasonably
satisfactory to Parent, as to (i) no amendments to the Certificate of
Incorporation of Buyer since a specified date; (ii) the by-laws of
Buyer; (iii) the resolutions of the Board of Directors of Buyer
authorizing the execution and performance of this Agreement and the
transactions contemplated hereby; and (iv) incumbency and signatures
of the officers of Buyer executing this Agreement and any Buyer
Ancillary Agreement;
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(d) Opinions of Buyer's General Counsel and Sidley & Austin
substantially in the forms contained in Exhibit F;
(e) The Instrument of Assumption duly executed by Buyer, as
set forth in Exhibit B-1;
(f) The certificate contemplated by Section 10.1, duly
executed by the President or any Vice President of Buyer;
(g) The Escrow Agreement duly executed by Buyer;
(h) The Supply & License Agreement duly executed by Buyer; and
(i) The Contract Manufacturing Agreement duly executed by
Buyer.
4.4. Parent's Deliveries. Subject to fulfillment or waiver of the
conditions set forth in Article X, at Closing Parent shall deliver to Buyer all
the following:
(a) Copies of the Articles of Incorporation, as amended, of
Parent and MedSurg certified as of a recent date by the Secretary of
State of the State of Georgia;
(b) Certificate of good standing of Parent and MedSurg issued
as of a recent date by the Secretary of State of the State of Georgia;
(c) Certificate of the secretary or an assistant secretary of
Parent, dated the Closing Date, in form and substance reasonably
satisfactory to Buyer, as to (i) no amendments to the Articles of
Incorporation of Parent and MedSurg since a specified date; (ii) the
by-laws of Parent and MedSurg; (iii) the resolutions of the Board of
Directors of Parent and of the Board of Directors and/or stockholders
of MedSurg authorizing the execution and performance of this Agreement
and the transactions contemplated hereby; and (iv) incumbency and
signatures of the officers of Parent and MedSurg executing this
Agreement and any Parent Ancillary Agreement;
(d) Opinion of counsel to Parent substantially in the form
contained in Exhibit G;
(e) The Instrument of Assignment duly executed by MedSurg,
as set forth in Exhibit A-1;
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(f) Certificates of title or origin (or like documents) with
respect to any vehicles or other equipment included in the Purchased
Assets for which a certificate of title or origin is required in order
to transfer title;
(g) Any other assignments or instruments with respect to any
Intellectual Property included in the Purchased Assets for which an
assignment or instrument is required to assign, transfer and convey
such assets to Buyer;
(h) All consents, waivers or approvals obtained by Parent or
MedSurg with respect to the Purchased Assets or the consummation of the
transactions contemplated by this Agreement;
(i) The Supply & License Agreement duly executed by Parent;
(j) The Escrow Agreement duly executed by MedSurg;
(k) The Contract Manufacturing Agreement duly executed by
Parent and MedSurg;
(l) The certificates contemplated by Sections 9.1 and 9.2,
duly executed by the President or any Vice President of Parent;
(m) Such other bills of sale, assignments and other
instruments of transfer or conveyance as Buyer may reasonably request
or as may be otherwise necessary to evidence and effect the sale,
assignment, transfer, conveyance and delivery of the Purchased Assets
to Buyer;
(n) Such lien releases and termination statements or other
reasonable evidence as Buyer may require relating to the release of any
Encumbrances (other than Permitted Encumbrances) which may exist with
respect to any Purchased Assets; and
(o) Documentation deemed adequate by Buyer demonstrating full
compliance with any applicable environmental property transfer act.
In addition to the above deliveries, Parent and MedSurg shall take all steps and
actions as Buyer may reasonably request or as may otherwise be necessary to put
Buyer in actual possession or control of the Purchased Assets.
4.5. Deferred Closing. The closing with respect to the Unfinished
Goods and Trade Payables (the "Deferred Closing") shall be consummated at 10:00
A.M., local time on the first day following the termination of the Contract
Manufacturing Agreement, at the offices of Sidley & Austin, One First National
Plaza, Chicago, IL 60603, or at such other place or at such other time as shall
be agreed upon by Buyer and Parent. At the Deferred Closing:
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(a) MedSurg shall sell, transfer, assign, convey and deliver
to Buyer, and Buyer shall purchase, free and clear of all Encumbrances
(except for Permitted Encumbrances), the Unfinished Goods;
(b) Buyer shall assume all liabilities for the Deferred
Closing Trade Payables and shall deliver to MedSurg the Instrument of
Assumption duly executed by Buyer as set forth in Exhibit B-2;
(c) Parent shall (i) provide any documents, instruments or
assignments, including the Instrument of Assignment as set forth in
Exhibit A-2 and (ii) take all steps and actions as Buyer may reasonably
request or as may be necessary to put Buyer in actual possession or
control of the Unfinished Goods and Trade Payables;
(d) Notwithstanding Sections 2.4(p) or 8.5 of this Agreement,
Buyer shall pay MedSurg on the date of the Deferred Closing as
additional purchase price an amount equal to the lesser of: (i) the sum
of (A) $250,000, and (B) any unused vacation accrued on the books of
MedSurg as of the date of the Deferred Closing and any severance, in
each case payable to the employees of MedSurg as a result of any
termination of employment as of the date of the Deferred Closing; or
(ii) $1,200,000, by wire transfer of immediately available funds to an
account in the United States specified by Parent in writing to Buyer at
least two business days prior to the Deferred Closing; and
(e) MedSurg shall sell, transfer, assign and convey to Buyer,
and Buyer shall purchase free and clear of all Encumbrances (except for
Permitted Encumbrances), the name "MedSurg Industries, Inc." and
MedSurg shall promptly after the Deferred Closing change its corporate
name to a name that does not include "MedSurg" or any variation
thereof.
4.6. Payments in Connection with Certain Personal Property Leases. (a)
Buyer shall pay Computer Associates International, Inc., ("CA") on behalf of
Parent the remaining unpaid license fees in accordance with paragraph 1 of
Exhibit H in connection with the Order Form between Parent and CA dated July 31,
1997, as amended (the "CA License Agreement").
(b) Buyer shall pay IBM Credit Corporation ("IBM") on behalf of Parent
the remaining unpaid license fees in accordance with paragraph 2 of Exhibit H in
connection with the Term Lease Master Agreement between Parent and IBM dated
October 14, 1996, as amended (the "IBM Lease").
(c) To the extent that either the CA License Agreement or the IBM
Lease are modified such that the outstanding license fee payments set forth in
Exhibit H are reduced, Buyer shall only be obligated to pay such reduced license
fee amounts.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MEDSURG
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, Parent and MedSurg represent
and warrant to Buyer and agree as follows:
5.1. Organization of Parent. Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State of Georgia.
Parent is duly qualified to transact business as a foreign corporation and is in
good standing in each of the jurisdictions listed in Schedule 5.1. Such
jurisdictions are the only ones in which the ownership or leasing of its
properties or the conduct of its Business requires such qualification. Except as
set forth in Schedule 5.1, no other jurisdiction has demanded, requested or
otherwise indicated that Parent is required so to qualify. Parent has full
corporate power and authority to own or lease and to operate and use the
Purchased Assets and to carry on the Business as now conducted.
True and complete copies of the certificate or articles of
incorporation and all amendments thereto and of the By-laws, as amended to date,
of Parent have been delivered to Buyer.
5.2. Subsidiaries and Investments. (a) Except for MedSurg, Parent does
not, directly or indirectly, (i) own, of record or beneficially, any outstanding
voting securities or other equity interests in any Person which is involved in,
or relates to, or holds assets used primarily in the Business or (ii) control
any Person which is involved in, or relates to, or holds assets used primarily
in the Business.
(b) MedSurg is a corporation duly organized, validly existing and in
good standing under the laws of the State of Georgia. MedSurg is duly qualified
to transact business as a foreign corporation and is in good standing in each of
the jurisdictions listed in Schedule 5.2(A). Such jurisdictions are the only
ones in which the ownership or leasing of the Purchased Assets or the conduct of
the Business requires such qualification. Except as set forth in Schedule
5.2(A), no other jurisdiction has demanded, requested or otherwise indicated
that MedSurg is required so to qualify on account of the ownership or leasing of
the Purchased Assets or the conduct of the Business. MedSurg has full power and
authority to own or lease and to operate and use the Purchased Assets and to
carry on the Business as now conducted.
All of the outstanding shares of capital stock of MedSurg are validly
issued, fully paid and nonassessable. All of the outstanding shares of capital
stock of MedSurg are owned by Parent of record and beneficially.
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True and complete copies of the articles of incorporation and all
amendments thereto and of the By-laws, as amended to date, of MedSurg have been
delivered to Buyer.
5.3. Authority of Parent. Parent has full power and authority to
execute, deliver and perform this Agreement and each of the Parent Ancillary
Agreements to which it is a party. MedSurg has full power and authority to
execute, deliver and perform each of the Parent Ancillary Agreements to which it
is a party. The execution, delivery and performance of this Agreement and the
Parent Ancillary Agreements by Parent and MedSurg, as the case may be, have been
duly authorized and approved by Parent's board of directors and by the board of
directors and stockholders of MedSurg and do not require any further
authorization or consent of Parent or its stockholders. Assuming that this
Agreement and each of the Parent Ancillary Agreements to which Buyer is a party
constitutes a valid and binding agreement of Buyer, this Agreement has been duly
authorized, executed and delivered by Parent and is the legal, valid and binding
obligation of Parent enforceable in accordance with its terms, and each of the
Parent Ancillary Agreements has been duly authorized by Parent and MedSurg and
upon execution and delivery by Parent or MedSurg, as the case may be, will be a
legal, valid and binding obligation of Parent enforceable in accordance with its
terms.
Except as set forth in Schedule 5.3, neither the execution and
delivery of this Agreement or any of the Parent Ancillary Agreements or the
consummation of any of the transactions contemplated hereby nor compliance with
or fulfillment of the terms, conditions and provisions hereof will:
(i) conflict with, result in a breach of the terms, conditions
or provisions of, or constitute a default, an event of default or an
event creating rights of acceleration, termination or cancellation or a
loss of rights under, or result in the creation or imposition of any
Encumbrance upon any of the Purchased Assets, under (1) the charter or
By-laws of Parent or MedSurg, (2) any Parent Agreement, (3) any other
note, instrument, agreement, mortgage, lease, license, franchise,
permit or other authorization, right, restriction or obligation to
which Parent or MedSurg is a party or any of the Purchased Assets is
subject or by which Parent is bound, (4) any Court Order to which
Parent or MedSurg is a party or any of the Purchased Assets is subject
or by which Parent or MedSurg is bound, or (5) any Requirements of Laws
affecting Parent, MedSurg or the Purchased Assets; or
(ii) require the approval, consent, authorization or act of,
or the making by Parent, MedSurg or the Business of any declaration,
filing or registration with, any Person, except as provided under the
HSR Act.
5.4. Financial Statements. Schedule 5.4 contains (i) the unaudited
balance sheets of the Business as of December 31, 1997 and 1998 and the related
statements of income and cash flows for the years then ended and (ii) the
unaudited balance sheet of the Business as of April 30, 1999 and the related
statements of income and cash flows for the four months then ended. Such balance
sheets and statements of income and cash flow, have been prepared in conformity
with generally accepted accounting principles consistently applied, and such
balance sheets and related statements of income and cash flow present fairly the
financial position and results of operations of the Business as of their
respective dates and for the respective periods covered thereby.
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5.5. Operations Since Balance Sheet Date. (a) Except as set forth in
Schedule 5.5(A), since the Balance Sheet Date, there has been:
(i) no material adverse change in the Facilities, the
Purchased Assets, the Business or the operations, liabilities, profits,
prospects or condition (financial or otherwise) of the Business, and to
the knowledge of Parent or MedSurg no fact or condition exists or is
contemplated or threatened which might reasonably be expected to cause
such a change in the future; and
(ii) no material damage, destruction, loss or claim, whether
or not covered by insurance, or condemnation or other taking adversely
affecting any of the Facilities, the Purchased Assets or the Business.
(b) Except as set forth in Schedule 5.5(B), since the Balance Sheet
Date, each of Parent and MedSurg has conducted the Business only in the ordinary
course and in conformity with past practice. Without limiting the generality of
the foregoing, since the Balance Sheet Date, except as set forth in such
Schedule, neither Parent nor MedSurg has in respect of the Business:
(i) sold, leased (as lessor), transferred or otherwise
disposed of (including any transfers (other than transfers of cash)
from the Business to Parent or any of its Affiliates), or mortgaged or
pledged, or imposed or suffered to be imposed any Encumbrance on, any
of the assets reflected on the Balance Sheet or any assets acquired by
the Business after the Balance Sheet Date, except for Inventory and
minor amounts of personal property sold or otherwise disposed of for
fair value in the ordinary course of the Business consistent with past
practice and except for Permitted Encumbrances;
(ii) canceled any debts owed to or claims held by the Business
(including the settlement of any claims or litigation) or waived any
other rights held by the Business other than in the ordinary course of
the Business consistent with past practice;
(iii) created, incurred or assumed, or agreed to create, incur
or assume, any indebtedness for borrowed money in respect of the
Business (other than money borrowed or advances from Parent or any of
its Affiliates in the ordinary course of the Business consistent with
past practice) or entered into, as lessee, any capitalized lease
obligations (as defined in Statement of Financial Accounting Standards
No. 13);
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(iv) accelerated or delayed collection of notes or accounts
receivable generated by the Business in advance of or beyond their
regular due dates or the dates when the same would have been collected
in the ordinary course of the Business consistent with past practice;
(v) delayed or accelerated payment of any account payable or
other liability of the Business beyond or in advance of its due date or
the date when such liability would have been paid in the ordinary
course of the Business consistent with past practice;
(vi) allowed the levels of Inventory of the Business to vary
in any material respect from the levels customarily maintained in the
Business;
(vii) made, or agreed to make, any payment of cash or
distribution of assets to Parent or any of its Affiliates (other than
cash realized upon collection of receivables in the ordinary course of
the Business);
(viii) instituted any increase in any compensation payable to
any employee of either Parent or MedSurg with respect to the Business
or in any profit-sharing, bonus, incentive, deferred compensation,
insurance, pension, retirement, medical, hospital, disability, welfare
or other benefits made available to employees of either Parent or
MedSurg with respect to the Business;
(ix) made any change in the accounting principles and
practices used by either Parent or MedSurg or the Business;
(x) paid any claims against the Business (including the
settlement of any claims and litigation against the Business or the
payment or settlement of any obligations or liabilities of the
Business) other than in the ordinary course of the Business consistent
with past practice;
(xi) acquired any real property or undertaken or committed to
undertake capital expenditures exceeding $25,000 in the aggregate; or
(xii) entered into or become committed to enter into any other
transaction material to the Business except in the ordinary course of
the Business.
5.6. No Undisclosed Liabilities. Except as set forth in Schedule 5.6,
neither Parent nor MedSurg is subject, with respect to the Business, to any
liability (including, without limitation, unasserted claims, whether known or
unknown) required to be recorded under generally accepted accounting principles,
whether absolute, contingent, accrued or otherwise, which is not shown or which
is in excess of amounts shown or reserved for in the Balance Sheet, other than
(a) liabilities of the same nature as those set forth in the Balance Sheet and
the notes thereto and reasonably incurred in the ordinary course of the Business
after the Balance Sheet Date and (b) liabilities under or reflected in this
Agreement or the Schedules hereto.
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5.7. Taxes. (a) Except as set forth in Schedule 5.7, (i) Parent or
MedSurg has, in respect of the Business and the Purchased Assets, filed all Tax
Returns which are required to be filed prior to the date hereof and have paid
all Taxes which have become due pursuant to such Tax Returns or pursuant to any
assessment which has become payable except such taxes, if any, as not yet due
and are being contested in good faith and which are either fully reserved on the
Balance Sheet or accrued after April 30, 1999; (ii) all such Tax Returns are
complete and accurate and disclose all Taxes required to be paid in respect of
the Business and, the Purchased Assets; (iii) all such Tax Returns have been
examined by the relevant taxing authority or the period for assessment of the
Taxes in respect of which such Tax Returns were required to be filed has
expired; (iv) there is no action, suit, investigation, audit, claim or
assessment pending or, to the knowledge of Parent or MedSurg, proposed or
threatened with respect to Taxes of the Business or, the Purchased Assets, (v)
Parent has not waived or been requested to waive any statute of limitations in
respect of Taxes associated with the Business or the Purchased Assets; (vi) all
monies required to be withheld by Parent from employees for income Taxes and
social security and other payroll Taxes have been collected or withheld, and
either paid to the respective taxing authorities, set aside in accounts for such
purpose, or accrued, reserved against and entered upon the books of the
Business; (vii) no transaction contemplated by this Agreement is subject to
withholding under Section 1445 of the Code and no stock transfer taxes, real
estate transfer taxes, or other similar taxes will be imposed on the transfer of
the Purchased Assets pursuant to this Agreement; (viii) following the Closing
Date, pursuant to any agreement or arrangement entered into by Parent on or
prior to the Closing Date, Buyer will not be obligated to make a payment to an
individual that would be a "parachute payment" to a "disqualified individual" as
those terms are defined in Section 280G of the Code, without regard to whether
such payment is reasonable compensation for personal services performed or to be
performed in the future.
(b) Parent is properly treated as the owner, for all federal, state,
local and other income Tax purposes, of all property of which it is the lessor.
5.8. Availability of Assets. (a) Except as set forth in Schedule 5.8
and except for the Excluded Assets, the Purchased Assets constitute all the
assets used, or held for use in, or otherwise relating to the Business
(including, but not limited to, all books, records, computers and computer
programs and data processing systems). Each tangible asset of the Business has
been maintained in accordance with normal industry practice, is in good
operating condition and repair (subject to normal wear and tear), and is
suitable for the purposes for which it presently is used and presently is
proposed to be used.
(b) Schedule 5.8 sets forth a description of all material services
provided by Parent or any Affiliate of Parent with respect to the Business
utilizing either (i) assets not included in the Purchased Assets or (ii)
employees of Parent or any of its Affiliates.
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5.9. Governmental Permits. Either Parent or MedSurg owns, holds or
possesses all licenses, franchises, permits, registrations, certifications,
privileges, immunities, approvals and other authorizations from a Governmental
Authority which are necessary to entitle it to own or lease, operate and use the
Purchased Assets and to carry on and conduct the Business substantially as
currently conducted (herein collectively called the "Governmental Permits"), and
has made all filings with, or notifications to, all Medical Product Regulatory
Authorities required pursuant to Requirements of Law. Schedule 5.9 sets forth a
list and brief description, including the identity of the holder of such
Governmental Permits, of each Governmental Permit relating to the Purchased
Assets or the Business other than any Governmental Permit that is not material
to the Business and that is readily obtainable by Buyer without undue cost or
delay. Complete and correct copies of all of the Governmental Permits have
heretofore been delivered to Buyer by Parent.
Except as set forth in Schedule 5.9, (i) each of Parent and MedSurg
has fulfilled and performed its respective obligations under the Governmental
Permits, and no event has occurred or condition or state of facts exists which
constitutes or, after notice or lapse of time or both, would constitute a breach
or default under any such Governmental Permit or which permits or, after notice
or lapse of time or both, would permit revocation or termination of any such
Governmental Permit, or which might adversely affect the rights of either Parent
or MedSurg, as the case may be, under any such Governmental Permit; (ii) no
notice of cancellation, of default or of any dispute concerning any Governmental
Permit, or of any event, condition or state of facts described in the preceding
clause, has been received by, or is known to, either Parent or MedSurg; and
(iii) each of the Governmental Permits is valid, subsisting and in full force
and effect and may be assigned and transferred to Buyer in accordance with this
Agreement and will continue in full force and effect thereafter, in each case
without (x) the occurrence of any breach, default or forfeiture of rights
thereunder, or (y) the consent, approval, or act of, or the making of any filing
with, any Governmental Authority.
5.10. Real Property. Neither Parent nor MedSurg (i) owns any real
property, (ii) is presently a party to any agreement to purchase any real
property or (iii) has previously sold or otherwise conveyed any real property,
or terminated a leasehold, under circumstances which could give rise to any
continuing obligation or liability on the part of either Parent or MedSurg
relating to the Purchased Assets or the Business. Schedule 5.10 sets forth a
list of all real property used, or held for use in, or otherwise relating to the
Business previously owned or occupied by Parent or MedSurg disposed prior to the
date hereof and all businesses previously conducted by Parent, MedSurg or to the
knowledge of Parent or MedSurg any of its predecessors discontinued prior to the
date hereof.
5.11. Real Property Leases. Schedule 5.11 sets forth a list and brief
description of each lease or similar agreement under which (i) either Parent or
MedSurg is lessee of, or holds or operates, any real property owned by any third
Person and used, or held for use in, or otherwise relating to the Business or
(ii) either Parent or MedSurg is lessor of any of owned real property used, or
held for use in, or otherwise relating to the Business (the "Leased Real
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Property"). Except as set forth in such Schedule and subject to compliance with
applicable laws and the applicable underlying lease, Parent and MedSurg have the
right to quiet enjoyment of all the real property described in such Schedule for
the full term of each such lease or similar agreement (and any renewal option
related thereto) relating thereto, and the leasehold or other interest of either
Parent or MedSurg in such real property is not subject or subordinate to any
Encumbrance except for Permitted Encumbrances. Complete and correct copies of
any title opinions, surveys and appraisals in Parent or MedSurg's possession or
any policies of title insurance currently in force and in the possession of
either Parent or MedSurg with respect to each such parcel of leased property
included as part of the Purchased Assets have heretofore been delivered by
Parent to Buyer.
5.12. Condemnation. Neither the whole nor any part of any real
property leased, used or occupied in connection with the Business is subject to
any pending suit for condemnation or other taking by any public authority, and,
to the best knowledge of Parent, no such condemnation or other taking is
threatened or contemplated.
5.13. Personal Property. Schedule 5.13 contains a detailed list of all
machinery, equipment, vehicles, furniture and other personal property owned by
either Parent or MedSurg and used, or held for use in, or otherwise relating to
the Business.
5.14. Personal Property Leases. Schedule 5.14 contains a brief
description of each lease or other agreement or right, whether written or oral
(including in each case the annual rental, the expiration date thereof and a
brief description of the property covered), under which either Parent or MedSurg
is lessee of, or holds or operates, any machinery, equipment, vehicle or other
tangible personal property owned by a third Person and used, or held for use in,
or otherwise relating to the Business.
5.15. Intellectual Property; Software. (a) Schedule 5.15 contains a
list and description (showing in each case any product, device, process,
service, business or publication covered thereby, the registered or other owner,
expiration date and number, if any) of all Copyrights, Patent Rights and
Trademarks (including all assumed or fictitious names under which either Parent
or MedSurg is conducting the Business or has within the previous five years
conducted the Business) owned by, licensed to or used by either Parent or
MedSurg in connection with the conduct of the Business.
(b) Schedule 5.15 contains a list and description (showing in each case
any owner, licensor or licensee) of all Software owned by, licensed to or used
by either Parent or MedSurg in the conduct of the Business, provided that
Schedule 5.15 does not list Software licensed to either Parent or MedSurg that
is available in consumer retail stores and subject to "shrink-wrap" license
agreements.
(c) Schedule 5.15 contains a list and description of all Contracts,
licenses, sublicenses, assignments and indemnities which relate to (i) any
Copyrights, Patent Rights or Trademarks listed in Schedule 5.15, (ii) any
material Trade Secrets owned by, licensed to or used by either Parent or MedSurg
in connection with the conduct of the Business (except implicit Trade Secrets or
other Intellectual Property associated with the distribution of products in the
ordinary course of the Business) or (iii) any Software listed in Schedule 5.15.
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(d) Except as disclosed in Schedule 5.15, either Parent or MedSurg: (i)
owns the entire right, title and interest in and to the Intellectual Property
included in the Purchased Assets, free and clear of any Encumbrance, or (ii) has
the perpetual, royalty-free right to use the same.
(e) Except as disclosed in Schedule 5.15: (i) all registrations for
Copyrights, Patent Rights and Trademarks identified in Schedule 5.15 as being
owned by either Parent or MedSurg are valid and in force, and all applications
to register any unregistered Copyrights, Patent Rights and Trademarks so
identified are pending and in good standing, all without challenge of any kind;
(ii) the Intellectual Property owned by Parent is valid and enforceable; and
(iii) each of Parent and MedSurg has the sole and exclusive right to bring
actions for infringement or unauthorized use of the Intellectual Property and
Software owned by either Parent and MedSurg, as the case may be, and included in
the Purchased Assets. Correct and complete copies of: (x) registrations for all
registered Copyrights, Patent Rights and Trademarks identified in Schedule 5.15
as being owned by either Parent and MedSurg; and (y) all pending applications to
register unregistered Copyrights, Patent Rights and Trademarks identified in
Schedule 5.15 as being owned by either Parent and MedSurg (together with any
subsequent correspondence or filings relating to the foregoing) have heretofore
been delivered by Parent to Buyer.
(f) Except as set forth in Schedule 5.15, no infringement of any
Intellectual Property of any other Person has occurred or results in any way
from the operations of the Business, no claim of any infringement of any
Intellectual Property of any other Person has been made or asserted in respect
of the operations of the Business and neither Parent nor MedSurg has had notice
of, or knowledge of any basis for, a claim against either Parent or MedSurg that
the operations, activities, products, software, equipment, machinery or
processes of the Business infringe any Intellectual Property of any other
Person.
(g) [INTENTIONALLY BLANK]
(h) Except as disclosed in Schedule 5.15, all employees, agents,
consultants or contractors who have contributed to or participated in the
creation or development of any copyrightable, patentable or trade secret
material on behalf of Parent, MedSurg or any predecessor in interest thereto
either: (i) are a party to a "work-for-hire" agreement under which Parent or
MedSurg are deemed to be the original owner/author of all property rights
therein; or (ii) have executed an assignment or an agreement to assign in favor
of Parent (or such predecessor in interest, as applicable) of all right, title
and interest in such material.
(i) Except as disclosed in Schedule 5.15, (i) each microprocessor,
computer, computer program and other item of Software (whether installed on a
computer or on any other piece of equipment, including firmware) that is owned,
licensed or used by either Parent or MedSurg for use in the Business or in any
Product is Year 2000 Compliant, (ii) each microprocessor, computer program and
other item of Software that has been designed, developed, sold, licensed or
otherwise made available to any Person by either Parent or MedSurg is Year 2000
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Compliant, (iii) each of Parent and MedSurg has conducted sufficient Year 2000
compliance testing for each microprocessor, computer, computer program and item
of Software referred to above to be able to determine whether such computer,
computer program and items of Software is Year 2000 Compliant, and have obtained
warranties or other written assurances from each of its suppliers to the effect
that the products and services provided by such suppliers to Parent and MedSurg
are Year 2000 Compliant and (iv) the Business has not sold, licensed or
otherwise made available to any Person products that process data.
5.16. Accounts Receivable; Inventories. All accounts receivable of the
Business have arisen from bona fide transactions by Parent or MedSurg in the
ordinary course of the Business.
Except to the extent reserved on the books and records of the
Business, all Inventory of the Business (i) is in good, merchantable and useable
condition, (ii) is reflected in the Balance Sheet and will be reflected in the
Valuation Date Balance Sheet at the lower of cost or market in accordance with
generally accepted accounting principles and (iii) is, in the case of finished
goods, of a quality and quantity saleable in the ordinary course of the Business
and, in the case of all other Inventory is of a quality and quantity useable in
the ordinary course of the Business. The Inventory obsolescence policies of the
Business are appropriate for the nature of the products sold and the marketing
methods used by the Business, the reserve for Inventory obsolescence contained
in the Balance Sheet fairly reflects the amount of obsolete Inventory as of the
Balance Sheet Date, and the reserve for Inventory obsolescence to be contained
in the Valuation Date Balance Sheet will fairly reflect the amount of obsolete
Inventory as of the Closing Date. Parent has heretofore delivered to Buyer a
list of places where all material Inventory of the Business was located as of
April 30, 1999. The quantity of materials, component parts and finished goods on
hand is generally consistent with the levels of the same historically maintained
by the Business recognizing that such levels will vary from time to time
consistent with the past practices of the Business. Except for Inventory in
transit to Parent from its suppliers, all Inventory is located at the premises
of the Business. Since the Balance Sheet Date, Parent has continued to replenish
the Inventory in a normal and customary manner consistent with prior practice.
No purchase commitments of Parent are in excess of the normal, ordinary and
usual requirements of its business, or were made at any price in excess of the
then current market price, or contain terms and conditions more onerous than
those usual and customary in the conduct of the Business.
5.17. Title to Property. Either Parent or MedSurg has good and
marketable title to all of the Purchased Assets, free and clear of all
Encumbrances, except for Permitted Encumbrances and except as set forth in
Schedule 5.17. Upon delivery to Buyer on the Closing Date of the instruments of
transfer contemplated by Section 4.4, Parent will thereby transfer, or cause to
be transferred, to Buyer good and marketable title to the Purchased Assets
(except for the Unfinished Goods to be transferred pursuant to Section 4.5),
subject to no Encumbrances, except for Permitted Encumbrances and those matters
described in Schedule 5.17.
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5.18. Employees and Related Agreements; ERISA. Parent has no liability
of any kind whatsoever, whether direct, indirect, contingent or otherwise, on
account of (i) any violation of the health care requirements of Part 6 of Title
I of ERISA or Section 4980B of the Code, (ii) under Section 502(i) or Section
502(l) of ERISA or Section 4975 of the Code, (iii) under Section 302 of ERISA or
Section 412 of the Code or (iv) under Title IV of ERISA. No payments under any
employee benefit plans, programs or arrangements of Parent or any of its
Affiliates will be triggered as a result of Buyer's purchase of the Business
assets for which Buyer or any of its Affiliates will bear any liability except
as expressly set forth herein.
5.19. Employee Relations. Except as set forth in Schedule 5.19, each
of Parent and MedSurg has complied in respect of the Business with all
applicable laws, rules and regulations which relate to prices, wages, hours,
discrimination in employment and collective bargaining and is not liable for any
arrears of wages (other than normal accruals reflected in the books and records
of the Business) or any taxes or penalties for failure to comply with any of the
foregoing. Each of Parent and MedSurg is in compliance with the requirements of
the Workers Adjustment and Retraining Notification Act (the "WARN Act") and has
no liabilities pursuant to the WARN Act. Each of Parent and MedSurg believes
that its relations with the employees of the Business are satisfactory. Neither
Parent nor MedSurg is a party to, and the Business is not affected by or
threatened, to the knowledge of Parent and MedSurg, with, any dispute or
controversy with a union or with respect to unionization or collective
bargaining involving the employees of the Business. To the knowledge of Parent
and MedSurg, none of Parent, MedSurg or the Business is materially affected by
any dispute or controversy with a union or with respect to unionization or
collective bargaining involving any supplier or customer of the Business.
Schedule 5.19 sets forth a description of any union organizing or election
activities involving any non-union employees of the Business which have occurred
since April 30, 1994 or, to the knowledge of either Parent or MedSurg, are
threatened as of the date hereof.
5.20. Contracts. Except as set forth in Schedule 5.20 or any other
Schedule hereto, each of Parent and MedSurg, as the case may be, is not as of
the date hereof, with respect to the Business, a party to or bound by:
(i) any Contract for the purchase or sale of real property;
(ii) any Contract for the purchase of raw materials which
involved the payment of more than $50,000 in 1998, which either Parent
or MedSurg reasonably anticipate will involve the payment of more than
$50,000 in 1999 or which extends on a non-cancelable basis by Buyer
beyond April 30, 2000;
(iii) any Contract for the sale of goods or services which
involved the payment of more than $50,000 in 1998, which either Parent
or MedSurg reasonably anticipate will involve the payment of more than
$50,000 in 1999 or which extends on a non-cancelable basis by Buyer
beyond April 30, 2000;
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(iv) any Contract for the purchase, licensing or development
of Software to be used by the Business;
(v) any consignment, distributor, dealer, manufacturers
representative, sales agency, advertising representative or
advertising or public relations Contract;
(vi) any guarantee of the obligations of customers,
suppliers, officers, directors, employees, Affiliates or others;
(vii) any Contract which provides for, or relates to, the
incurrence by the Business of debt for borrowed money (including,
without limitation, any interest rate or foreign currency swap, cap,
collar, hedge or insurance agreements, or options or forwards on such
agreements, or other similar agreements for the purpose of managing
the interest rate and/or foreign exchange risk associated with its
financing);
(viii) any Contract with or for the benefit of any
Governmental Authority;
(ix) any Contract not made in the ordinary course that
involves the expenditure or receipt by the Business of more than
$10,000;
(x) any other Contract which is material to the Business;
(xi) any purchase order with a term of greater than 30 days
or involving more than $10,000 in the aggregate; or
(xii) any sole source supply Contract for the purchase of
raw material or a component that is otherwise not generally available
and that is used in the manufacture of any product.
5.21. Status of Contracts. Except as set forth in Schedule 5.21 or in
any other Schedule hereto, each of the Contracts listed in Schedules 5.11, 5.14,
5.15 and 5.20 (collectively, the "Parent Agreements") constitutes a valid and
binding obligation of the parties thereto and is in full force and effect and
(subject to the qualifications and exceptions set forth in Schedule 5.3 and
except for those Parent Agreements which by their terms will expire prior to the
Closing Date or are otherwise terminated prior to the Closing Date in accordance
with the provisions hereof) may be transferred to Buyer pursuant to this
Agreement and will continue in full force and effect thereafter, in each case
without breaching the terms thereof or resulting in the forfeiture or impairment
of any rights thereunder and without the consent, approval or act of, or the
making of any filing with, any other party. Parent or MedSurg, as the case may
be, has fulfilled and performed its obligations under each of the Parent
Agreements to which it is a party, and neither Parent nor MedSurg is in, or
alleged to be in, breach or default under, nor is there or is there alleged to
be any basis for termination of, any of the Parent Agreements to which it is a
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party and, to the knowledge of Parent and MedSurg no other party to any of the
Parent Agreements has breached or defaulted thereunder, and no event has
occurred and no condition or state of facts exists which, with the passage of
time or the giving of notice or both, would constitute such a default or breach
by Parent, MedSurg or by any such other party. Neither Parent nor MedSurg is
currently renegotiating any of the Parent Agreements or paying liquidated
damages in lieu of performance thereunder. Complete and correct copies of each
of the Parent Agreements as currently in effect, including all pricing terms,
have heretofore been delivered to Buyer by Parent.
5.22. No Violation, Litigation or Regulatory Action. Except as set
forth in Schedule 5.22:
(i) the Purchased Assets and their uses comply with all
applicable Requirements of Laws and Court Orders;
(ii) each of Parent and MedSurg has complied with all
Requirements of Laws and Court Orders which are applicable to the
Purchased Assets or the Business;
(iii) there are no criminal, civil, administrative or
regulatory lawsuits, claims, suits, proceedings or investigations
pending or, to the best knowledge of either Parent or MedSurg,
threatened against or affecting either Parent or MedSurg in respect of
the Purchased Assets or the Business nor, to the best knowledge of
either Parent or MedSurg, is there any basis for any of the same, and
there are no lawsuits, suits or proceedings pending in which either
Parent or MedSurg is the plaintiff or claimant and which relate to the
Purchased Assets or the Business; and
(iv) there is no criminal, civil, administrative or
regulatory action, suit or proceeding pending or, to the best
knowledge of Parent, threatened which questions the legality or
propriety of the transactions contemplated by this Agreement.
5.23. Environmental Matters. Except as set forth in Schedule 5.23:
(i) the operations of the Business comply and have complied
with all applicable Environmental Laws;
(ii) Parent and MedSurg have in respect of the Business,
obtained all environmental, health and safety Governmental Permits
necessary for its operation, and all such Governmental Permits are in
full force and effect and Parent is in compliance with all terms and
conditions of such permits;
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(iii) neither Parent nor MedSurg with respect to the
Business, nor any of the present Facilities or operations, or the past
Facilities or operations, is subject to any on-going investigation by,
order from or agreement with any Person (including without limitation
any prior owner or operator of the Facilities) respecting (i) any
Environmental Law, (ii) any Remedial Action or (iii) any claim of
Losses and Expenses arising from the Release or threatened Release of
Hazardous Materials into the environment;
(iv) Neither Parent nor MedSurg has been, with respect to
the Business, subject to any judicial or administrative proceeding,
order, judgment, decree or settlement alleging or addressing a
violation of or liability under any Environmental Law;
(v) Neither Parent nor MedSurg has with respect to the
Business:
(a) reported a Release of a hazardous substance
pursuant to Section 103(a) of CERCLA, or any state
equivalent;
(b) filed a notice pursuant to Section 103(c) of
CERCLA;
(c) filed notice pursuant to Section 3010 of RCRA,
indicating the generation of any hazardous waste, as that
term is defined under 40 CFR Part 261 or any state
equivalent; or
(d) filed any notice under any applicable
Environmental Law reporting a substantial violation of any
applicable Environmental Law;
(vi) there is not now, nor to the best knowledge of Parent
has there ever been, on or in the Facilities:
(a) any treatment, recycling, storage or disposal
of any hazardous waste, as that term is defined under 40 CFR
Part 261 or any state equivalent, that requires or required
a Governmental Permit pursuant to Section 3005 of RCRA;
(b) any underground storage tank or surface
impoundment or landfill or waste pile; or
(c) any storage on-site or Release of any
Hazardous Materials in quantities sufficient to trigger
reporting obligations under federal Emergency Planning
Community Right-to-Know or any state equivalent.
(vii) there is not now on or in any of the Facilities any
polychlorinated biphenyls (PCB) used in pigments, hydraulic oils,
electrical transformers or other equipment;
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(viii) Neither Parent nor MedSurg has received any notice or
claim under CERCLA or any comparable state law to the effect that it
is or may be liable to any Person as a result of the Release or
threatened Release of Hazardous Materials and there are no facts or
conditions relating to the operation of the Business that could
reasonably be expected to give rise to any such notice or claim;
(ix) no Environmental Encumbrance has attached to any of the
Facilities;
(x) any asbestos-containing material which is on or part of
any of the Facilities is in good repair according to the current
standards and practices governing such material, and its presence or
condition does not violate any currently applicable Environmental Law;
and
(xi) none of the products Parent or MedSurg manufactures,
distributes or sells in connection with the Business, now or in the
past, contains asbestos or asbestos-containing material.
5.24. Insurance. Schedule 5.24 sets forth a list and brief description
(including nature of coverage, limits and deductibles with respect to each type
of coverage) of all policies of insurance maintained, owned or held by either
Parent or MedSurg on the date hereof with respect to the Purchased Assets or the
Business (excluding any of the Excluded Assets). Parent shall keep or cause such
insurance or comparable insurance to be kept in full force and effect through
the Closing Date. Each of Parent and MedSurg has complied with each of such
insurance policies, as the case may be, and has not failed to give any notice or
present any claim thereunder in a due and timely manner. Each of Parent and
MedSurg has made available to Buyer correct and complete copies of the most
recent inspection reports, if any, received from insurance underwriters as to
the condition of the Purchased Assets.
5.25. Customers and Suppliers. Set forth in Schedule 5.25 hereto is
(i) a list of names and addresses of the ten largest customers and the ten
largest suppliers (measured by dollar volume of purchases or sales in each case)
of the Business and the percentage of the Business which each such customer or
supplier represents or represented during each of the years ended December 31,
1997 and 1998 and the period January 1, 1999 through March 31, 1999; and (ii)
copies of the forms of purchase order for Inventory and sales Contracts for
finished goods used in respect of the Business. Except as set forth in Schedule
5.25, there exists no actual or, to the knowledge of Parent and MedSurg,
threatened termination, cancellation or limitation of, or any modification or
change in, the business relationship with any customer or group of customers
listed in Schedule 5.25, or whose purchases individually or in the aggregate are
material to the operations of the Business, or with any supplier or group of
suppliers listed in Schedule 5.25, or whose sales individually or in the
aggregate are material to the operations of the Business, and there exists no
present or future condition or state of facts or circumstances involving
customers, suppliers or sales representatives which Parent can now reasonably
foresee would materially adversely affect the Business or prevent the conduct of
the Business after the consummation of the transactions contemplated by this
Agreement in essentially the same manner in which it has heretofore been
conducted.
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5.26. [INTENTIONALLY BLANK]
5.27. Warranties and Product Liabilities. (a) Each product
manufactured, sold, leased or delivered by the Business has been in conformity
with all applicable contractual commitments and all express and implied
warranties, and the Business has no liability (and there is no basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand against any of them giving rise to any liability) for
replacement or repair thereof or other damages in connection therewith, subject
only to the reserve for product warranty claims set forth on the face of the
Balance Sheet rather than in any notes thereto) as adjusted for the passage of
time through the Closing Date in accordance with the past custom and practice of
the Business. No product manufactured, sold, leased, or delivered by the
Business is subject to any guaranty, warranty, or other indemnity beyond the
applicable standard terms and conditions of sale or lease. Schedule 5.27
includes copies of the standard terms and conditions of sale or lease for the
Business (containing applicable guaranty, warranty and indemnity provisions) and
a summary of the warranty expense incurred by the Business during each of the
last three fiscal years.
(b) The Business has no liability (and there is no basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand against any of them giving rise to any liability)
arising out of any injury to individuals or property as a result of the
ownership, possession or use of any product manufactured, sold, leased or
delivered by the Business.
5.28. No Finder. Neither Parent nor MedSurg, nor any Person acting on
their behalf, has paid or become obligated to pay any fee or commission to any
broker, finder or intermediary for or on account of the transactions
contemplated by this Agreement.
5.29. No Third Party Options. There are no existing agreements,
options, commitments or rights with, of or to any person to acquire, directly or
indirectly, the Business or any of the Purchased Assets or any interest therein,
except for those Contracts for the sale of Inventory entered into in the normal
course of business consistent with past practice.
5.30. Disclosure. None of the representations or warranties contained
in this Article V and none of the information contained in the Schedules
referred to in Article V, is false or misleading in any material respect or
omits to state a fact herein or therein necessary to make the statements herein
or therein not misleading in any material respect.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Parent and MedSurg to enter into this Agreement
and to consummate the transactions contemplated hereby, Buyer hereby represents
and warrants to Parent and MedSurg and agrees as follows:
6.1. Organization of Buyer. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Buyer is duly qualified to transact business as a foreign corporation and is in
good standing in each of the jurisdictions in which the ownership or leasing of
its properties or the conduct of its business requires such qualification. No
other jurisdiction has demanded, requested or otherwise indicated that Buyer is
required to so qualify. Buyer has full corporate power and authority to own or
lease and to operate and use its properties and assets and to carry on its
business as now conducted.
True and complete copies of the certificate of incorporation and all
amendments thereto and of the By-laws, as amended to date, of Buyer have been
delivered to Parent.
6.2. Authority of Buyer. Buyer has full power and authority to
execute, deliver and perform this Agreement and all of the Buyer Ancillary
Agreements. The execution, delivery and performance of this Agreement and the
Buyer Ancillary Agreements by Buyer have been duly authorized and approved by
Buyer's Board of Directors and do not require any further authorization or
consent of Buyer or its stockholder. This Agreement has been duly authorized,
executed and delivered by Buyer and is the legal, valid and binding agreement of
Buyer enforceable in accordance with its terms, and each of the Buyer Ancillary
Agreements has been duly authorized by Buyer and upon execution and delivery by
Buyer will be a legal, valid and binding obligation of Buyer enforceable in
accordance with its terms.
Neither the execution and delivery of this Agreement or any of the
Buyer Ancillary Agreements or the consummation of any of the transactions
contemplated hereby or thereby nor compliance with or fulfillment of the terms,
conditions and provisions hereof or thereof will:
(i) conflict with, result in a breach of the terms,
conditions or provisions of, or constitute a default, an event of
default or an event creating rights of acceleration, termination or
cancellation or a loss of rights under (1) the Certificate of
Incorporation or By-laws of Buyer, (2) any material note, instrument,
agreement, mortgage, lease, license, franchise, permit or other
authorization, right, restriction or obligation to which Buyer is a
party or any of its properties is subject or by which Buyer is bound,
(3) any Court Order to which Buyer is a party or by which it is bound
or (4) any Requirements of Laws affecting Buyer; or
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(ii) require the approval, consent, authorization or act of,
or the making by Buyer of any declaration, filing or registration
with, any Person, except as provided under the HSR Act.
6.3. No Finder. Neither Buyer nor any Person acting on its behalf has
paid or become obligated to pay any fee or commission to any broker, finder or
intermediary for or on account of the transactions contemplated by this
Agreement.
ARTICLE VII
ACTION PRIOR TO THE CLOSING DATE
The respective parties hereto covenant and agree to take the following
actions between the date hereof and the Closing Date:
7.1. Investigation of the Business by Buyer. Parent shall afford and
cause the Business to afford to the officers, employees and authorized
representatives of Buyer (including, without limitation, independent public
accountants and attorneys) complete access during normal business hours to the
offices, properties, employees and business and financial records (including
computer files, retrieval programs and similar documentation and such access and
information that may be necessary in connection with an environmental audit) of
the Business to the extent Buyer shall deem necessary or desirable and shall
furnish to Buyer or its authorized representatives such additional information
concerning the Purchased Assets, the Business and the operations of the Business
as shall be reasonably requested, including all such information as shall be
necessary to enable Buyer or its representatives to verify the accuracy of the
representations and warranties contained in this Agreement, to verify that the
covenants of Parent contained in this Agreement have been complied with and to
determine whether the conditions set forth in Article IX have been satisfied.
Buyer agrees that such investigation shall be conducted in such a manner as not
to interfere unreasonably with the operations of, Parent, MedSurg or the
Business. No investigation made by Buyer or its representatives hereunder shall
affect the representations and warranties of Parent hereunder.
7.2. Preserve Accuracy of Representations and Warranties. Each of the
parties hereto shall refrain from taking any action which would render any
representation or warranty contained in Article V or VI of this Agreement
inaccurate as of the Closing Date. Each party shall promptly notify the other of
any action, suit or proceeding that shall be instituted or threatened against
such party to restrain, prohibit or otherwise challenge the legality of any
transaction contemplated by this Agreement. Parent shall promptly notify Buyer
of any lawsuit, claim, proceeding or investigation that may be threatened,
brought, asserted or commenced against Parent or MedSurg which would have been
listed in Schedule 5.22 if such lawsuit, claim, proceeding or investigation had
arisen prior to the date hereof.
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7.3. Consents of Third Parties; Governmental Approvals. (a) Parent
will act diligently and reasonably to secure, before the Closing Date, the
consent, approval or waiver, in form and substance reasonably satisfactory to
Buyer, from any party to any Parent Agreement required to be obtained to assign
or transfer any such Agreements to Buyer or to otherwise satisfy the conditions
set forth in Section 9.5; provided that neither Parent nor Buyer shall have any
obligation to offer or pay any consideration in order to obtain any such
consents or approvals; and provided, further, that Parent shall not make any
agreement or understanding affecting the Purchased Assets or the Business as a
condition for obtaining any such consents or waivers except with the prior
written consent of Buyer. During the period prior to the Closing Date, Buyer
shall act diligently and reasonably to cooperate with Parent to obtain the
consents, approvals and waivers contemplated by this Section 7.3(a).
(b) During the period prior to the Closing Date, Parent and Buyer shall
act diligently and reasonably, and shall cooperate with each other, to secure
any consents and approvals of any Governmental Authority required to be obtained
by them in order to assign or transfer any Governmental Permits to Buyer, to
permit the consummation of the transactions contemplated by this Agreement, or
to otherwise satisfy the conditions set forth in Section 9.4; provided that
Parent shall not make any agreement or understanding affecting the Purchased
Assets or the Business as a condition for obtaining any such consents or
approvals except with the prior written consent of Buyer.
7.4. Operations Prior to the Closing Date. (a) Parent shall, and shall
cause MedSurg to, operate and carry on the Business only in the ordinary course
and substantially as presently operated. Consistent with the foregoing, Parent
shall, and shall cause MedSurg to, keep and maintain the Purchased Assets in
good operating condition and repair and shall use its commercially reasonable
efforts consistent with good business practice to maintain the business
organization of the Business intact and to preserve the goodwill of the
suppliers, contractors, licensors, employees, customers, distributors and others
having business relations with the Business.
(b) Except as expressly contemplated by this Agreement or except with
the express written approval of Buyer, Parent shall not, and shall cause MedSurg
not to:
(i) [INTENTIONALLY BLANK]
(ii) make any capital expenditure in excess of $20,000 in
the aggregate with respect to the Business or enter into any Contract
or commitment therefor;
(iii) enter into any Contract which would have been required
to be set forth in Schedule 5.20 if in effect on the date hereof or
enter into any Contract which cannot be assigned to Buyer or a
permitted assignee of Buyer under Section 13.5;
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(iv) enter into any Contract for the purchase of real
property to be used, or held for use in, or otherwise relating to the
Business or exercise any option to extend a lease listed in Schedule
5.11;
(v) sell, lease (as lessor), transfer or otherwise dispose
of (including any transfers from the Business to Parent or any of its
Affiliates), or mortgage or pledge, or impose or suffer to be imposed
any Encumbrance on, any of the Purchased Assets, other than Inventory
and minor amounts of personal property sold or otherwise disposed of
for fair value in the ordinary course of the Business consistent with
past practice and other than Permitted Encumbrances;
(vi) cancel any debts owed to or claims held by the Business
(including the settlement of any claims or litigation) other than in
the ordinary course of the Business consistent with past practice;
(vii) create, incur or assume, or agree to create, incur or
assume, any indebtedness for borrowed money in respect of the Business
(other than money borrowed or advances from Parent or any of its
Affiliates in the ordinary course of the Business consistent with past
practice) or enter into, as lessee, any capitalized lease obligations
(as defined in Statement of Financial Accounting Standards No. 13)
except as set forth in item 2 of Schedule 5.5(B);
(viii) accelerate or delay collection of any notes or
accounts receivable generated by the Business in advance of or beyond
their regular due dates or the dates when the same would have been
collected in the ordinary course of the Business consistent with past
practice;
(ix) delay or accelerate payment of any account payable or
other liability of the Business beyond or in advance of its due date
or the date when such liability would have been paid in the ordinary
course of the Business consistent with past practice;
(x) allow the levels of Inventory of the Business to vary in
any material respect from the levels customarily maintained in the
Business;
(xi) make, or agree to make, any payment of cash or
distribution of assets to Parent or any of its Affiliates (other than
cash realized upon collection of receivables generated in the ordinary
course of the Business);
(xii) institute any increase in any profit-sharing, bonus,
incentive, deferred compensation, insurance, pension, retirement,
medical, hospital, disability, welfare or other employee benefit plan
with respect to employees of the Business;
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(xiii) make any change in compensation of the employees of
the Business, other than changes made in accordance with normal
compensation practices and consistent with past compensation
practices;
(xiv) make any material change in the accounting policies
applied in the preparation of the financial statements contained in
Schedule 5.4; and
(xv) enter into any agreement or commitment to take any
action prohibited by this Section 7.4.
7.5. Notification by Parent of Certain Matters. During the period
prior to the Closing Date, Parent will promptly advise Buyer in writing of (i)
any material adverse change in the condition of the Purchased Assets or the
Business, (ii) any notice or other communication from any third Person alleging
that the consent of such third Person is or may be required in connection with
the transactions contemplated by this Agreement, and (iii) any material default
under any Parent Agreement or event which, with notice or lapse of time or both,
would become such a default on or prior to the Closing Date and of which Parent
has knowledge.
7.6. Antitrust Law Compliance. As promptly as practicable after the
date hereof, Buyer and Parent shall file with the Federal Trade Commission and
the Antitrust Division of the Department of Justice the notifications and other
information required to be filed under the HSR Act, or any rules and regulations
promulgated thereunder, with respect to the transactions contemplated hereby.
Each party warrants that all such filings by it will be, as of the date filed,
true and accurate and in accordance with the requirements of the HSR Act and any
such rules and regulations. Each of Buyer and Parent agrees to make available to
the other such information as each of them may reasonably request relative to
its business, assets and property (including, in the case of Parent, the
Business) as may be required of each of them to file any additional information
requested by such agencies under the HSR Act and any such rules and regulations.
7.7. Insurance. Until the Closing, Parent shall maintain or cause to
be maintained in force (including necessary renewals thereof) insurance policies
against risk and liabilities to the extent and in the matter heretofore
maintained by Parent with respect to the Business and the Purchased Assets.
7.8. [INTENTIONALLY BLANK]
ARTICLE VIII
ADDITIONAL AGREEMENTS
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8.1. Covenant Not to Compete or Solicit Business. (a) In furtherance
of the sale of the Purchased Assets and the Business to Buyer hereunder by
virtue of the transactions contemplated hereby and more effectively to protect
the value and goodwill of the Purchased Assets and the Business so sold, Parent
covenants and agrees that, for a period ending on the third anniversary of the
Closing Date, neither Parent nor any of its Affiliates will directly or
indirectly (whether as principal, agent, independent contractor, partner or
otherwise) own, manage, operate, control, participate in (other than as a
supplier of components), or otherwise carry on, a business engaged in
assembling, packaging, marketing or selling procedure kits or trays anywhere in
or outside of the United States (it being understood by the parties hereto that
the prohibited activities are not limited to any particular region because such
business has been conducted by Parent throughout and outside the United States
and the prohibited activities may be engaged in effectively from any location in
or outside of the United States): provided, however, that nothing set forth in
this Section 8.1 shall prohibit Parent or its Affiliates from owning not in
excess of 5% in the aggregate of any class of capital stock of any corporation
if such stock is publicly traded and listed on any national or regional stock
exchange or on the NASDAQ national market system.
(b) At all times prior to the Deferred Closing, Parent shall not, and
shall cause MedSurg not to, transfer or cause to be transferred from MedSurg any
of its current employees. Buyer agrees to deliver to Parent no later than 75
days prior to the Deferred Closing a list of any employees of MedSurg to whom
Buyer proposes to offer employment upon termination of the Contract
Manufacturing Agreement (the "Designated Employees"). Parent agrees to cooperate
with Buyer and to use its reasonable efforts to persuade the Designated
Employees to accept positions with Buyer or one of its Affiliates. Parent
covenants that neither Parent nor any of its Affiliates will for a period ending
on the third anniversary of the Closing Date, induce or attempt to persuade any
Designated Employee (except any individual who has not accepted a position with
Buyer or one of its Affiliates within 90 days after the Deferred Closing Date)
or any employee, agent, or customer of the Business to terminate such
employment, agency or business relationship in order to enter into any such
relationship on behalf of any other business relationship with Parent or any of
its Affiliates or in competition with the Business.
(c) In addition, Parent covenants and agrees that neither it nor any of
its Affiliates will divulge or make use of any trade secrets or other
confidential information of the Business other than to disclose such secrets and
information to Buyer or its Affiliates.
(d) In the event Parent or any Affiliate of Parent violates any of its
obligations under this Section 8.1, Buyer may proceed against it in law or in
equity for such damages or other relief as a court may deem appropriate. Parent
acknowledges that a violation of this Section 8.1 may cause Buyer irreparable
harm which may not be adequately compensated for by money damages. Parent
therefore agrees that in the event of any actual or threatened violation of this
Section 8.1, Buyer shall be entitled, in addition to other remedies that it may
have, to a temporary restraining order and to preliminary and final injunctive
relief against Parent or such Affiliate of Parent to prevent any violations of
this Section 8.1, without the necessity of posting a bond. The prevailing party
in any action commenced under this Section 8.1 shall also be entitled to receive
reasonable attorneys' fees and court costs. It is the intent and understanding
of each party hereto that if, in any action before any court or agency legally
empowered to enforce this Section 8.1, any term, restriction, covenant or
promise in this Section 8.1 is found to be unreasonable and for that reason
unenforceable, then such term, restriction, covenant or promise shall be deemed
modified to the extent necessary to make it enforceable by such court or agency.
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8.2. Use of Names. For a period of 6 months after the Deferred Closing
Date, Buyer and its Affiliates shall have the royalty-free right to refer to the
Business as "formerly an Affiliate of Isolyser Company, Inc." and to use such
reference in advertising or in the description or name of any service or product
from time to time purchased, processed, manufactured or sold by Buyer and its
Affiliates in continuation of the Business. Buyer and its Affiliates shall have
the further royalty-free right from and after the Closing Date to sell or
otherwise use or dispose of any Inventory which bears the name "Isolyser
Company, Inc." or "MedSurg Industries, Inc." alone or in combination with other
words if such materials (i) were included in the Purchased Assets, (ii) are
returned to Buyer or its Affiliates after the Closing Date, or (iii) were
contracted for by Parent prior to the Closing Date; provided that such right
shall terminate 12 months after the Closing Date with respect to any such
materials unless the only reference therein to Parent is to its copyright claim,
in which case such right shall be unlimited as to time. Buyer and its Affiliates
shall also have the royalty-free right from and after the Closing Date to use,
for a period of 12 months following the Closing Date, any signs, letterhead,
invoices or other supplies which bear the name "Isolyser Company, Inc." or
"MedSurg Industries, Inc." alone or in combination with other words if such
signs or supplies (i) were included in the Purchased Assets, or (ii) were
contracted for by Parent prior to the Closing Date.
8.3. Taxes. (a) Except to the extent reflected as a liability on the
Valuation Date Balance Sheet and taken into account as a deduction in Net Assets
in connection with the determination of the Purchase Price, Parent shall be
liable for and shall pay or cause to be paid all Taxes (whether assessed or
unassessed) applicable to the Business and the Purchased Assets, in each case
attributable to periods (or portions thereof) ending on or prior to the Closing
Date. Buyer shall be liable for and shall pay (i) all Taxes reflected as a
liability on the Valuation Date Balance Sheet and taken into account as a
deduction in Net Assets in connection with the determination of the Purchase
Price and (ii) all Taxes (whether assessed or unassessed) applicable to the
Business, the Purchased Assets, in each case attributable to periods (or
portions thereof) beginning after the Closing Date. For purposes of this
paragraph (a), any period beginning before and ending after the Closing Date
shall be treated as two partial periods, one ending on the Closing Date and the
other beginning after the Closing Date except that Taxes (such as property
Taxes) imposed on a periodic basis shall be allocated on a daily basis.
(b) Notwithstanding Section 8.3(a), any sales Tax, use Tax, real
property transfer or gains Tax, documentary stamp Tax or similar Tax
attributable to the sale or transfer of the Purchased Assets shall be paid by
Parent, provided that the foregoing shall not include fees payable by Buyer
pursuant to the HSR Act. Buyer agrees to timely sign and deliver such
certificates or forms as may be necessary or appropriate to establish an
exemption from (or otherwise reduce), or make a report with respect to, such
Taxes.
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(c) Parent or Buyer, as the case may be, shall provide reimbursement
for any Tax paid by one party all or a portion of which is the responsibility of
the other party in accordance with the terms of this Section 8.3. Within a
reasonable time prior to the payment of any said Tax, the party paying such Tax
shall give notice to the other party of the Tax payable and the portion which is
the liability of each party, although failure to do so will not relieve the
other party from its liability hereunder.
(d) Any payments made pursuant to this Section 8.3 shall be treated by
Buyer and Parent as an adjustment to the Purchase Price.
8.4. Discharge of Business' Liabilities. Parent covenants and agrees
that it will pay and discharge, and hold Buyer harmless from, each and every
liability and obligation of Parent in respect of the Business or the Purchased
Assets arising from events occurring on or prior to the Closing Date, excepting
only those liabilities and obligations expressly assumed by Buyer at the Closing
pursuant to instruments of assumption delivered to Parent at the Closing, or the
Deferred Closing, as the case may be, it being understood and agreed that Buyer
is assuming no liabilities or obligations of Parent other than liabilities and
obligations so expressly assumed by Buyer.
8.5. Employees and Employee Benefit Plans. (a) No person who is an
employee of Parent or any of its Affiliates (an "Employee") shall transfer
employment to Buyer or any of its Affiliates in connection with Buyer's purchase
of the assets pursuant to this Agreement. Parent shall retain the sole
responsibility for all matters relating to the maintenance of personnel and
payroll records, the withholding and payment of federal, state and local income
and payroll taxes, the payment of workers' compensation and unemployment
compensation insurance, salaries, wages and pension, welfare and other fringe
benefits, including any severance which may be triggered as a result of any
termination employment and the conduct of all other matters relating to labor
relations, including compliance with Parent's obligations under any applicable
collective bargaining agreements and all negotiations and communications with
any union relating to employment of the Employees by Parent. Parent shall retain
liability for compliance with all applicable labor and employment laws relating
to the Employees and shall indemnify Buyer (and its successors, assigns,
officers, directors and employees) for any liability or legal or other expenses
that result from any legal action alleging noncompliance with such laws.
(b) Parent shall cause MedSurg to retain all liabilities under its
employee benefits plans, programs, agreements and arrangements, including (i)
any liabilities relating to any noncompliance with applicable laws, including
the Employee Retirement Income Security Act, the Internal Revenue Code and the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"),
and (ii) any liabilities which arise as a result of Parent's joint and several
liability through its relationship with an Affiliate. Parent shall be solely
responsible to provide continuation coverage under COBRA and other any
applicable state law to any Employee or beneficiary of any Employee who is
entitled to such continuation coverage. Parent shall indemnify Buyer (and its
successors, assigns, officers, directors, employees and employee benefits plans)
for any liability resulting from Parent's failure to provide such continuation
coverage and for any other liability described in the first sentence of this
paragraph.
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(c) Parent shall have the responsibility of giving the Employees any
notice (a "Warn Notice") required under the WARN Act. Parent shall comply with
all applicable requirements of the WARN Act and shall indemnify Buyer (and its
successors, assigns, officers, directors and employees) for any liability or
legal or other expenses resulting from any legal action alleging noncompliance
with such act.
8.6. [INTENTIONALLY BLANK]
8.7. Ancillary Agreements. At the Closing, Buyer Parent and MedSurg
shall execute and deliver the following agreements (the "Ancillary Agreements"):
(i) a Supply & License Agreement substantially in the form
attached as Exhibit C hereto; and
(ii) a Contract Manufacturing Agreement substantially in the
form attached as Exhibit D hereto with such other terms, including
Exhibit C thereto regarding Manufacturing Costs, as are mutually
acceptable to Buyer and Parent.
8.8. Handling of Returned Products. Notwithstanding Section 2.4(l) of
this Agreement, the parties hereto agree that Buyer shall administer and manage
all matters related to the warranty and service on any products manufactured,
distributed or sold by the Business on or prior to the Closing Date. In
addition, notwithstanding Sections 2.4(k) and (l) of this Agreement, Buyer
agrees to replace a de minimis amount of any products manufactured, distributed
or sold by the Business on or prior to the Closing Date which are returned for
replacement by a customer after the Closing Date pursuant to any warranty
obligation of the Business.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement shall, at the option of
Buyer, be subject to the satisfaction, on or prior to the Closing Date, of the
following conditions:
9.1. No Misrepresentation or Breach of Covenants and Warranties. There
shall have been no material breach by Parent in the performance of any of its
covenants and agreements herein; each of the representations and warranties of
Parent contained or referred to herein shall be true and correct in all material
respects on the Closing Date as though made on the Closing Date, except for
changes therein specifically permitted by this Agreement or resulting from any
transaction expressly consented to in writing by Buyer or any transaction
permitted by Section 7.4; and there shall have been delivered to Buyer a
certificate to such effect, dated the Closing Date, signed on behalf of Parent
by the President or any Vice President of Parent.
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9.2. No Changes or Destruction of Property. Between the date hereof
and the Closing Date, there shall have been (a) no material adverse change in
the Purchased Assets, the Business or the operations, liabilities, profits,
prospects or condition (financial or otherwise) of the Business; (b) no material
adverse federal or state legislative or regulatory change affecting the Business
or its products or services; and (c) no material damage to the Purchased Assets
by fire, flood, casualty, act of God or the public enemy or other cause,
regardless of insurance coverage for such damage; and there shall have been
delivered to Buyer a certificate to such effect, dated the Closing Date and
signed on behalf of Parent by the President or any Vice President of Parent.
9.3. No Restraint or Litigation. The waiting period under the HSR Act
shall have expired or been terminated, and no action, suit, investigation or
proceeding shall have been instituted or threatened to restrain or prohibit or
otherwise challenge the legality or validity of the transactions contemplated
hereby.
9.4. Necessary Governmental Approvals. The parties shall have received
all approvals and actions of or by all Governmental Bodies which are necessary
to consummate the transactions contemplated hereby, which are either specified
in Schedule 5.3 or otherwise required to be obtained prior to the Closing by
applicable Requirements of Laws or which are necessary to prevent a material
adverse change in the Purchased Assets, the Business or the operations,
liabilities, profits, prospects or condition (financial or otherwise) of the
Business.
9.5. Necessary Consents. Parent shall have received consents, in form
and substance reasonably satisfactory to Buyer, to the transactions contemplated
hereby from the other parties to all Contracts, leases, and permits to which
Parent is a party or by which Parent or any of the Purchased Assets is affected
and which are specified in Schedule 9.5.
9.6. Maintenance of Accounts. The revenues of the Business for the
period commencing January 1, 1999 and ending immediately prior to the Closing
Date shall have been equal to or in excess of an annual rate of $55 million
based upon 256 billing days in a year and the number of billing days in the
period from January 1, 1999 to the Closing Date.
9.7. Key Employees. Parent shall have used reasonable efforts to
arrange for the individuals listed in Schedule 9.7 to agree to become employees
of Buyer as of the Closing Date and to enter into employment agreements with
Buyer on terms satisfactory to Buyer. Buyer acknowledges that Parent has no
obligation to ensure that such individuals agree to become employees of Buyer.
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9.8. [INTENTIONALLY BLANK]
9.9. Instrument of Assignment and Ancillary Agreements. Parent shall
have executed and delivered to Buyer all of the necessary deeds and assignments,
including the Instrument of Assignment, necessary to sell, transfer, assign,
convey and deliver to Buyer the Purchased Assets and the Ancillary Agreements.
Parent shall have provided to Buyer such other items acceptable in form and
substance to Buyer and its counsel which Buyer may reasonably request to
consummate the transactions contemplated by this Agreement.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MEDSURG
The obligations of Parent and MedSurg under this agreement shall, at
the option of Parent and MedSurg, be subject to the satisfaction, on or prior to
the Closing Date, of the following conditions:
10.1. No Misrepresentation or Breach of Covenants and Warranties.
There shall have been no material breach by Buyer in the performance of any of
its covenants and agreements herein; each of the representations and warranties
of Buyer contained or referred to in this Agreement shall be true and correct in
all material respects on the Closing Date as though made on the Closing Date,
except for changes therein specifically permitted by this Agreement or resulting
from any transaction expressly consented to in writing by Parent or any
transaction contemplated by this Agreement; and there shall have been delivered
to Parent a certificate to such effect, dated the Closing Date and signed on
behalf of Buyer by the President or any Vice President of Buyer.
10.2. No Restraint or Litigation. The waiting period under the HSR Act
shall have expired or been terminated, and no action, suit or proceeding by any
Governmental Authority shall have been instituted or threatened to restrain,
prohibit or otherwise challenge the legality or validity of the transactions
contemplated hereby.
10.3. Necessary Governmental Approvals. The parties shall have
received all approvals and actions of or by all Governmental Bodies necessary to
consummate the transactions contemplated hereby, which are required to be
obtained prior to the Closing by applicable Requirements of Laws.
10.4. Purchase Price, Instrument of Assumption and Ancillary
Agreements. Buyer shall have delivered to Parent the amount contemplated by
Section 3.1 and shall have executed and delivered to Parent the Instrument of
Assumption and the Ancillary Agreements.
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ARTICLE XI
INDEMNIFICATION
11.1. Indemnification by Parent. (a) Parent agrees to indemnify and
hold harmless each Buyer Group Member from and against any and all Losses and
Expenses incurred by such Buyer Group Member in connection with or arising from:
(i) any breach or alleged breach by either Parent or MedSurg
of any of its covenants in this Agreement;
(ii) any failure of either Parent or MedSurg to perform any
of its obligations in this Agreement;
(iii) any breach or alleged breach of any warranty or the
inaccuracy of any representation of Parent contained or referred to in
this Agreement or any certificate delivered by or on behalf of Parent
pursuant hereto;
(iv) the failure of Parent to comply with any applicable
bulk sales law, except that this clause shall not affect the
obligation of Buyer to pay and discharge the Assumed Liabilities; or
(v) the failure of Parent to perform or cause to be
performed any Excluded Liability.
(b) The indemnification provided for in Section 11.1(a)(iii) shall
terminate five years after the Closing Date (and no claims for indemnification
hereunder shall be made by any Buyer Group Member under Section 11.1(a)(iii)
thereafter), except that the indemnification by Parent shall continue as to:
(i) any Losses or Expenses of which any Buyer Group Member
has notified Parent in accordance with the requirements of Section
11.3 on or prior to the date such indemnification would otherwise
terminate in accordance with this Section 11.1, as to which the
obligation of Parent shall continue until the liability of Parent
shall have been determined pursuant to this Article XI, and Parent
shall have reimbursed all Buyer Group Members for the full amount of
such Losses and Expenses in accordance with this Article XI;
(ii) the representations and warranties contained in Section
5.7, Section 5.18 and Section 5.23, which shall survive until 90 days
after the expiration of all applicable statutes of limitation; and
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(iii) the representations and warranties contained in
Section 5.17, which shall survive indefinitely.
11.2. Indemnification by Buyer. (a) Buyer agrees to indemnify and hold
harmless each Parent Group Member from and against any and all Losses and
Expenses incurred by such Parent Group Member in connection with or arising
from:
(i) any breach or alleged breach by Buyer of any of its
covenants or agreements in this Agreement;
(ii) any failure by Buyer to perform any of its obligations
in this Agreement;
(iii) any breach or alleged breach of any warranty or the
inaccuracy of any representation of Buyer contained or referred to in
this Agreement or in any certificate delivered by or on behalf of
Buyer pursuant hereto; or
(iv) any failure of Buyer to perform or cause to be
performed any Assumed Liability.
(b) The indemnification provided for in Section 11.2(a)(iii) shall
terminate five years after the Closing Date (and no claims for indemnification
hereunder shall be made by and Parent Group Member under Section 11.2(a)(iii)
thereafter), except that the indemnification by Buyer shall continue as to any
Losses or Expenses of which any Parent Group Member has notified Buyer in
accordance with the requirements of Section 11.3 on or prior to the date such
indemnification would otherwise terminate in accordance with this Section 11.2,
as to which the obligation of Buyer shall continue until the liability of Buyer
shall have been determined pursuant to this Article XI, and Buyer shall have
reimbursed all Parent Group Members for the full amount of such Losses and
Expenses in accordance with this Article XI.
11.3. Notice of Claims. (a) Any Buyer Group Member or Parent Group
Member (the "Indemnified Party") seeking indemnification hereunder shall give to
the party obligated to provide indemnification to such Indemnified Party (the
"Indemnitor") a notice (a "Claim Notice") describing in reasonable detail the
facts giving rise to any claim for indemnification hereunder and shall include
in such Claim Notice (if then known) the amount or the method of computation of
the amount of such claim, and a reference to the provision of this Agreement or
any other agreement, document or instrument executed hereunder or in connection
herewith upon which such claim is based; provided, that a Claim Notice in
respect of any action at law or suit in equity by or against a third Person as
to which indemnification will be sought shall be given promptly after the action
or suit is commenced; provided further that failure to give such notice shall
not relieve the Indemnitor of its obligations hereunder except to the extent it
shall have been prejudiced by such failure.
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(b) After the giving of any Claim Notice pursuant hereto, the amount of
indemnification to which an Indemnified Party shall be entitled under this
Article XI shall be determined: (i) by the written agreement between the
Indemnified Party and the Indemnitor; (ii) by a final judgment or decree of any
court of competent jurisdiction; or (iii) by any other means to which the
Indemnified Party and the Indemnitor shall agree. The judgment or decree of a
court shall be deemed final when the time for appeal, if any, shall have expired
and no appeal shall have been taken or when all appeals taken shall have been
finally determined. The Indemnified Party shall have the burden of proof in
establishing the amount of Loss and Expense suffered by it.
11.4. Third Person Claims. (a) Subject to Section 11.4(b), the
Indemnified Party shall have the right to conduct and control, through counsel
of its choosing, the defense, compromise or settlement of any third Person
claim, action or suit against such Indemnified Party as to which indemnification
will be sought by any Indemnified Party from any Indemnitor hereunder, and in
any such case the Indemnitor shall cooperate in connection therewith and shall
furnish such records, information and testimony and attend such conferences,
discovery proceedings, hearings, trials and appeals as may be reasonably
requested by the Indemnified Party in connection therewith; provided, that the
Indemnitor may participate, through counsel chosen by it and at its own expense,
in the defense of any such claim, action or suit as to which the Indemnified
Party has so elected to conduct and control the defense thereof; and provided,
further, that the Indemnified Party shall not, without the written consent of
the Indemnitor (which written consent shall not be unreasonably withheld), pay,
compromise or settle any such claim, action or suit. Notwithstanding the
foregoing, the Indemnified Party shall have the right to pay, settle or
compromise any such claim, action or suit without such consent, provided that in
such event the Indemnified Party shall waive any right to indemnity therefor
hereunder unless such consent is unreasonably withheld.
(b) If any third Person claim, action or suit against any Indemnified
Party is solely for money damages or, where Parent is the Indemnitor, will have
no continuing effect in any material respect on the Business or the Purchased
Assets, then the Indemnitor shall have the right to conduct and control, through
counsel of its choosing, the defense, compromise or settlement of any such third
Person claim, action or suit against such Indemnified Party as to which
indemnification will be sought by any Indemnified Party from any Indemnitor
hereunder if the Indemnitor has acknowledged and agreed in writing that, if the
same is adversely determined, the Indemnitor has an obligation to provide
indemnification to the Indemnified Party in respect thereof, and in any such
case the Indemnified Party shall cooperate in connection therewith and shall
furnish such records, information and testimony and attend such conferences,
discovery proceedings, hearings, trials and appeals as may be reasonably
requested by the Indemnitor in connection therewith; provided, that the
Indemnified Party may participate, through counsel chosen by it and at its own
expense, in the defense of any such claim, action or suit as to which the
Indemnitor has so elected to conduct and control the defense thereof.
Notwithstanding the foregoing, the Indemnified Party shall have the right to
pay, settle or compromise any such claim, action or suit, provided that in such
event the Indemnified Party shall waive any right to indemnity therefor
hereunder unless the Indemnified Party shall have sought the consent of the
Indemnitor to such payment, settlement or compromise and such consent was
unreasonably withheld, in which event no claim for indemnity therefor hereunder
shall be waived.
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11.5. Limitations. Notwithstanding anything contained herein to the
contrary, Parent shall be required to indemnify and hold harmless under Section
11.1(a)(iii) with respect to Losses and Expenses incurred by Buyer Group Members
only to the extent that (i) the amount of Loss and Expense suffered by Buyer
Group Members related to any individual claim exceeds $5,000 and (ii) the
aggregate amount of such Losses and Expenses exceeds $100,000.
ARTICLE XII
TERMINATION
12.1. Termination. Anything contained in this Agreement to the
contrary notwithstanding, this Agreement may be terminated at any time prior to
the Closing Date:
(a) by the mutual consent of Buyer and Parent;
(b) by Buyer or Parent if the Closing shall not have
occurred on or before August 31, 1999 (or such late date as may be
mutually agreed to by Buyer and Parent);
(c) by Buyer in the event of any material breach by Parent
of any of Parent's agreements, representations or warranties contained
herein and the failure of Parent to cure such breach within seven days
after receipt of notice from Buyer requesting such breach to be cured;
or
(d) by Parent in the event of any material breach by Buyer
of any of Buyer's agreements, representations or warranties contained
herein and the failure of Buyer to cure such breach within seven days
after receipt of notice from Parent requesting such breach to be
cured.
12.2. Notice of Termination. Any party desiring to terminate this
Agreement pursuant to Section 12.1 shall give notice of such termination to the
other party to this Agreement.
12.3. Effect of Termination. In the event that this Agreement shall be
terminated pursuant to this Article XII, all further obligations of the parties
under this Agreement (other than Sections 13.2 and 13.10) shall be terminated
without further liability of any party to the other, provided that nothing
herein shall relieve any party from liability for its willful breach of this
Agreement.
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ARTICLE XIII
GENERAL PROVISIONS
13.1. Survival of Obligations. All representations, warranties,
covenants, indemnities and obligations contained in this Agreement shall survive
the consummation of the transactions contemplated by this Agreement; provided
that the representations and warranties contained hereon shall survive only
through the period during which claims for indemnification may be made pursuant
to Article XI.
13.2. Confidential Nature of Information. Each party agrees that it
will treat in confidence all documents, materials and other information which it
shall have obtained regarding the other party during the course of the
negotiations leading to the consummation of the transactions contemplated hereby
(whether obtained before or after the date of this Agreement), the investigation
provided for herein and the preparation of this Agreement and other related
documents, and, in the event the transactions contemplated hereby shall not be
consummated, each party will return to the other party all copies of nonpublic
documents and materials which have been furnished in connection therewith. Such
documents, materials and information shall not be communicated to any third
Person (other than, in the case of Buyer, to its counsel, accountants, financial
advisors or lenders, and in the case of Parent, to its counsel, accountants or
financial advisors). No other party shall use any confidential information in
any manner whatsoever except solely for the purpose of evaluating the proposed
purchase and sale of the Purchased Assets; provided, however, that after the
Closing Buyer may use or disclose any confidential information included in the
Purchased Assets or otherwise reasonably related to the Business or the
Purchased Assets. The obligation of each party to treat such documents,
materials and other information in confidence shall not apply to any information
which (i) is or becomes available to such party from a source other than such
party, (ii) is or becomes available to the public other than as a result of
disclosure by such party or its agents, (iii) is required to be disclosed under
applicable law or judicial process, but only to the extent it must be disclosed,
or (iv) such party reasonably deems necessary to disclose to obtain any of the
consents or approvals contemplated hereby.
13.3. No Public Announcement. Neither Buyer nor Parent shall, without
the approval of the other, make any press release or other public announcement
concerning the transactions contemplated by this Agreement, except as and to the
extent that any such party shall be so obligated by law or the rules of any
stock exchange, in which case the other party shall be advised and the parties
shall use their best efforts to cause a mutually agreeable release or
announcement to be issued; provided that the foregoing shall not preclude
communications or disclosures necessary to implement the provisions of this
Agreement or to comply with the accounting and Securities and Exchange
Commission disclosure obligations.
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13.4. Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given or delivered
when delivered personally or when sent by registered or certified mail or by
private courier addressed as follows:
If to Buyer, to:
Allegiance Healthcare Corporation
1430 Waukegan Road
MPKB 3A
McGaw Park, Illinois 60085-6787
Attention: General Counsel
Telecopy: (847) 578-4448
with a copy to:
Cardinal Health, Inc.
7000 Cardinal Place
Dublin, Ohio 43017
Attention: Robert D. Walter
Telecopy: 614-717-8919
and
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: John M. O'Hare, Esq.
Telecopy: (312) 853-7036
If to Parent, to:
Isolyser Company Inc.
4320 International Blvd.
Norcross, Georgia 30093
Attention: President
Telecopy: 770 - 806-8869
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with a copy to:
Arnall, Golden & Gregory, LLP
2800 One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Attention: Stephen D. Fox
Telecopy: 404-873-8501
or to such other address as such party may indicate by a notice delivered to the
other party hereto.
13.5. Successors and Assigns. (a) The rights of either party under
this Agreement shall not be assignable by such party hereto prior to the Closing
without the written consent of the other, except that the rights of Buyer
hereunder may be assigned prior to the Deferred Closing, without the consent of
Parent, to Cardinal Health, Inc. or any subsidiary thereof; provided that (i)
such assignment shall not result in Buyer or Parent having to amend its
respective Notification and Report Form filed under the HSR Act in connection
with the transactions contemplated hereunder, (ii) the assignee shall assume in
writing all of Buyer's obligations to Parent hereunder, (iii) Buyer shall not be
released from any of its obligations hereunder by reason of such assignment and
(iv) Parent's obligations under this Agreement shall be subject to the delivery
by such assignee, on or prior to the Deferred Closing of a certificate signed on
its behalf containing representations and warranties similar to those made by
Buyer in Article VI and an opinion of counsel reasonably acceptable to Parent
with respect to the assignee which is similar to the opinion with respect to
Buyer set forth in Exhibit F. Following the Deferred Closing, either party may
assign any of its rights hereunder, but no such assignment shall relieve it of
its obligations hereunder.
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and permitted assigns. The successors
and permitted assigns hereunder shall include without limitation, in the case of
Buyer, any permitted assignee as well as the successors in interest to such
permitted assignee (whether by merger, liquidation (including successive mergers
or liquidations) or otherwise). Nothing in this Agreement, expressed or implied,
is intended or shall be construed to confer upon any Person other than the
parties and successors and assigns permitted by this Section 13.5 any right,
remedy or claim under or by reason of this Agreement.
13.6. Access to Records after Closing. For a period of six years after
the Closing Date, Parent and its representatives shall have reasonable access to
all of the books and records of the Business transferred to Buyer hereunder to
the extent that such access may reasonably be required by Parent in connection
with matters relating to or affected by the operations of the Business prior to
the Closing Date or in connection with Parent's 1999 audit. Such access shall be
afforded by Buyer upon receipt of reasonable advance notice and during normal
business hours. Parent shall be solely responsible for any costs or expenses
incurred by it pursuant to this Section 13.6. If Buyer shall desire to dispose
of any of such books and records prior to the expiration of such six-year
period, Buyer shall, prior to such disposition, give Parent a reasonable
opportunity, at Parent's expense, to segregate and remove such books and records
as Parent may select.
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For a period of six years after the Closing Date, Buyer and its
representatives shall have reasonable access to all of the books and records
relating to the Business which Parent or any of its Affiliates may retain after
the Closing Date. Such access shall be afforded by Parent and its Affiliates
upon receipt of reasonable advance notice and during normal business hours.
Buyer shall be solely responsible for any costs and expenses incurred by it
pursuant to this Section 13.6. If Parent or any of its Affiliates shall desire
to dispose of any of such books and records prior to the expiration of such
six-year period, Parent shall, prior to such disposition, give Buyer a
reasonable opportunity, at Buyer's expense, to segregate and remove such books
and records as Buyer may select.
13.7. Entire Agreement; Amendments; Schedules. This Agreement and the
Exhibits and Schedules referred to herein and the documents delivered pursuant
hereto contain the entire understanding of the parties hereto with regard to the
subject matter contained herein or therein, and supersede all prior agreements,
understandings or letters of intent between or among any of the parties hereto,
except for paragraph 8 of the Confidentiality Agreement. This Agreement shall
not be amended, modified or supplemented except by a written instrument signed
by an authorized representative of each of the parties hereto. The matters
expressly disclosed in the Schedules provided by Parent pursuant to this
Agreement shall be specifically limited to the corresponding representation and
warranty to which such Schedule relates and no implication or inference shall be
made in any other representation or warranty.
13.8. Interpretation. Article titles and headings to sections herein
are inserted for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement. The Schedules
and Exhibits referred to herein shall be construed with and as an integral part
of this Agreement to the same extent as if they were set forth verbatim herein.
13.9. Waivers. Any term or provision of this Agreement may be waived,
or the time for its performance may be extended, by the party or parties
entitled to the benefit thereof. Any such waiver shall be validly and
sufficiently authorized for the purposes of this Agreement if, as to any party,
it is authorized in writing by an authorized representative of such party. The
failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
any party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.
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13.10. Expenses. Each party hereto will pay all costs and expenses
incident to its negotiation and preparation of this Agreement and to its
performance and compliance with all agreements and conditions contained herein
on its part to be performed or complied with, including the fees, expenses and
disbursements of its counsel and accountants.
13.11. Partial Invalidity. Wherever possible, each provision hereof
shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such provision shall be ineffective to the extent, but only to the
extent, of such invalidity, illegality or unenforceability without invalidating
the remainder of such invalid, illegal or unenforceable provision or provisions
or any other provisions hereof, unless such a construction would be
unreasonable.
13.12. Execution in Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be considered an original
instrument, but all of which shall be considered one and the same agreement, and
shall become binding when one or more counterparts have been signed by each of
the parties hereto and delivered to each of Parent and Buyer.
13.13. Further Assurances. On the Closing Date and on the Deferred
Closing Parent shall (i) deliver to Buyer such other bills of sale, deeds,
endorsements, assignments and other good and sufficient instruments of
conveyance and transfer, in form reasonably satisfactory to Buyer and its
counsel, as Buyer may reasonably request or as may be otherwise reasonably
necessary to vest in Buyer all the right, title and interest of Parent and its
Affiliates in, to or under any or all of the Purchased Assets, and (ii) take all
steps as may be reasonably necessary to put Buyer in actual possession and
control of all the Purchased Assets. From time to time following the Closing and
the Deferred Closing Parent shall execute and deliver, or cause to be executed
and delivered, to Buyer such other instruments of conveyance and transfer as
Buyer may reasonably request or as may be otherwise necessary to more
effectively convey and transfer to, and vest in, Buyer and put Buyer in
possession of, any part of the Purchased Assets, and, in the case of licenses,
certificates, approvals, authorizations, Contracts, leases, easements and other
commitments included in the Purchased Assets (a) which cannot be transferred or
assigned effectively without the consent of third parties which consent has not
been obtained prior to the Closing, to cooperate with Buyer at its request in
endeavoring to obtain such consent promptly, and if any such consent is
unobtainable, to use its best efforts to secure to Buyer the benefits thereof in
some other manner, or (b) which are otherwise not transferable or assignable, to
use its best efforts jointly with Buyer to secure to Buyer the benefits thereof
in some other manner (including the exercise of the rights of Parent
thereunder); provided, however, that nothing herein shall relieve Parent of its
obligations under Section 7.3. Notwithstanding anything in this Agreement to the
contrary, this Agreement shall not constitute an agreement to assign any
license, certificate, approval, authorization, Contract, lease, easement or
other commitment included in the Purchased Assets if an attempted assignment
thereof without the consent of a third party thereto would constitute a breach
thereof.
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13.14. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws (as opposed to the conflicts of
law provisions) of the State of Illinois.
13.15. Submission to Jurisdiction. Parent and Buyer hereby irrevocably
submit in any suit, action or proceeding arising out of or related to this
Agreement or any of the transactions contemplated hereby or thereby to the
jurisdiction of the United States District Court for the Northern District of
Illinois and the jurisdiction of any court of the State of Illinois located in
Chicago and waive any and all objections to jurisdiction that they may have
under the laws of the State of Illinois or the United States.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed the day and year first above written.
ALLEGIANCE HEALTHCARE CORPORATION
By _________________________________________
Name:
Title:
(Corporate Seal)
ATTEST:
____________________________
ISOLYSER COMPANY, INC.
By _________________________________________
Name:
Title:
(Corporate Seal)
ATTEST:
____________________________
MEDSURG INDUSTRIES, INC.
By _________________________________________
Name:
Title:
(Corporate Seal)
ATTEST:
____________________________
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