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EXHIBIT 10.14
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PURCHASE AGREEMENT
By and Among
PFIZER INC.,
STRATO/INFUSAID, INC.,
HORIZON MEDICAL PRODUCTS, INC.
and
ARROW INTERNATIONAL, INC.
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Dated as of June 20, 1997
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TABLE OF CONTENTS
Page
Background....................................................................1
ARTICLE I
DEFINITIONS.................................1
1.1 Definitions.........................................................1
ARTICLE II
PURCHASE AND SALE OF THE SECURITIES.....................5
2.1 Purchase and Sale of the Securities and the Foreign Assets..........5
ARTICLE III
THE CLOSING.................................5
3.1 Closing Date........................................................5
3.2 Conditions to Buyer's Obligation....................................5
3.3 Conditions to Seller's Obligations..................................6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES........................7
4.1 Representations and Warranties of Seller and the Company............7
(a) Authority......................................................7
(b) Organization and Standing of Seller and the Company............8
(c) Capital Structure of the Company; Ownership of Securities......8
(d) Subsidiaries of the company....................................9
(e) Financial Statements...........................................9
(f) Taxes..........................................................9
(g) Properties....................................................10
(h) Intellectual Property ........................................10
(i) Contracts ....................................................10
(j) Litigation; Compliance with Laws .............................12
(k) Benefit Plans ................................................13
(l) Absence of Changes or Events .................................15
(m) Licenses; Permits ............................................15
(n) Environmental Matters ........................................16
(o) Employee and Labor Relations .................................17
(p) Undisclosed Liabilities ......................................17
(q) Accounts; Safe Deposit Boxes; Powers of
Attorney; Officers and Directors .............................18
(r) Regulatory Matters ...........................................18
(s) Assignment of Assets of M1000 Business .......................20
4.2 Representations and Warranties of Horizon and Arrow................20
(a) Authority ....................................................20
(b) Sufficient Funds .............................................21
(c) Organization and Standing of Buyer............................21
(d) Litigation; Decrees ..........................................21
(e) Securities Act................................................21
ARTICLE V
COVENANTS..................................22
5.1 Covenants of Seller................................................22
(a) Access.........................................................22
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(b) Ordinary Conduct ..............................................22
(c) Confidentiality ...............................................23
(d) Other Transactions ............................................23
(e) Other Seller Obligations ......................................23
(f) Non-competition ...............................................23
5.2 Covenants of Buyer.................................................25
(a) Confidentiality ...............................................25
(b) Financial and Other Information ...............................25
(c) Solicitations Of Employees ....................................25
(d) Employees and Employee Benefits ...............................26
(e) Ongoing Programs ..............................................29
(f) No Impact on Seller's Indemnity ...............................29
(g) Extraordinary Transactions ....................................30
(h) Lease of the Facility .........................................30
5.3 Mutual Covenants...................................................30
(a) Antitrust Notification ........................................30
(b) Publicity .....................................................31
(c) Reasonable Diligent Efforts ...................................31
(d) Cooperation ...................................................31
(e) Tax Treatment .................................................32
(f) Transition Services ...........................................32
ARTICLE VI
OTHER AGREEMENTS..............................32
6.1 Certain Understandings ............................................32
6.2 Further Assurances ................................................33
6.3 Tax Matters .......................................................33
6.4 Liabilities and Causes of Action Relating to Furon ................34
ARTICLE VII
INDEMNIFICATION...............................35
7.1 Indemnification by Seller .........................................35
7.2 Indemnification by Buyer ..........................................37
7.3 Losses Net of Insurance, Etc ......................................38
7.4 Termination of Indemnification ....................................38
7.5 Procedures Relating to Indemnification under
Sections 7.1 and 7.2 ..............................................39
7.6 Exclusive Remedy ..................................................40
7.7 Collateral Sources ................................................40
7.8 Certain Limitations ...............................................41
ARTICLE VIII
MISCELLANEOUS................................41
8.1 Assignment ........................................................41
8.2 No Thirty-Party Beneficiaries .....................................41
8.3 Termination .......................................................41
8.4 Survival of Representations .......................................42
8.5 Expenses ..........................................................42
8.6 Amendments ........................................................43
8.7 Notices ...........................................................43
8.8 Fees ..............................................................44
8.9 Consent to Jurisdiction ...........................................45
8.10 Severability ......................................................45
8.11 Interpretation ....................................................45
8.12 Waiver ............................................................45
8.13 Counterparts ......................................................46
8.14 Entire Agreement ..................................................46
8.15 Governing Law .....................................................46
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LIST OF EXHIBITS & SCHEDULES
Exhibit A Form of Seller's Certificate
Exhibits B-1 & B-2 Form of Buyer's Certificate
Exhibit C Form of Release Agreement
Schedule 2.1(b) Allocation of Purchase Price
Schedule 4.1(a) Authority
Schedule 4.1(b) Qualification to do Business
Schedule 4.1(c) Capital Structure of the Company
Schedule 4.1(d) Subsidiaries
Schedule 4.1(e) Financial Statements
Schedule 4.1(f) Taxes
Schedule 4.1(g) Properties
Schedule 4.1(h) Intellectual Property
Schedule 4.1(i) Contracts
Schedule 4.1(j) Litigation; Compliance with Laws
Schedule 4.1(k) Benefit Plans
Schedule 4.1(1) Absence of Changes or Events
Schedule 4.1(m) Licenses; Permits
Schedule 4.1(n) Environmental Matters
Schedule 4.1(o) Employee and Labor Relations
Schedule 4.1(q) Accounts, Safe Deposit Boxes, Powers
of Attorney, Officers and Directors
Schedule 4.1(r) Regulatory Matters
Schedule 4.1(r)(i) Device Information
Schedule 4.2(d) Litigation; Decrees
Schedule 5.1(b) Ordinary Conduct
Exhibit I Joint Assignment & License Agreement
Exhibit II Transition Services Agreement
Schedule 5.1(c) Confidentiality
Schedule 5.2(d) Buyer's Benefit Plans
Schedule 5.2(d)(i) Company Employees
Schedule 5.2(d)(ii) Excluded Employees
Schedule 5.2(d)(iii)(2) Buyer Qualified Plans
Schedule 5.2(e) Ongoing Programs
Schedule 7.1(a) Seller's Retained Obligations
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PURCHASE AGREEMENT
This PURCHASE AGREEMENT and the Exhibits and Schedules attached hereto
(collectively, this "Agreement") is dated as of June 20, 1997 by and among
Pfizer Inc., a Delaware corporation ("Seller"), Strato/Infusaid, Inc., a
Massachusetts corporation (the "Company"), Horizon Medical Products, Inc., a
Georgia corporation ("Horizon") and Arrow International, Inc. a Pennsylvania
corporation ("Arrow") Arrow and Horizon are hereinafter referred to collectively
and, when the context so indicates, each individually as "Buyer".
Background
A. Seller owns 300,000 shares of Common Stock, par value $.01 per
share, of the Company (the "Securities"), which constitutes all of the
outstanding Common Stock, $.01 par value per share, of the Company (the "Common
Stock").
B. Buyer desires to purchase from Seller and Seller desires to sell to
Buyer, the Securities and the Foreign Assets (as hereinafter defined), upon the
terms and subject to the conditions hereinafter set forth.
Accordingly, intending to be legally bound, the parties hereto hereby
agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions.
(a) Certain Definitions. As used in this Agreement, the following
terms shall have the following meanings:
"Affiliate" of any Person means any Person directly or indirectly
controlling, controlled by or under common control with such Person, and
includes any Person who is an officer, director or employee of such Person and
any Person that would be deemed to be an "affiliate" or an "associate" of such
Person, as those terms are defined in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended. As used in
this definition, "controlling" (including, with its correlative meanings,
"controlled by" and "under common control with") means possession, directly or
indirectly, of power to direct or cause the direction of management or policies
(whether through ownership of securities, partnership or other ownership
interests, by contract or otherwise).
"Authority" means any Federal, state, provincial, local or foreign
governmental department, regulatory agency, authority commission, board or court
or other law, rule or regulation-making entity having jurisdiction over the
Company.
"Best Efforts" means a diligent, reasonable and good faith effort to
accomplish the applicable objective, provided
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that Best Efforts does not require any unreasonable expenditure of funds or the
incurrence of any unreasonable liability on the part of the obligated party, nor
does it require the obligated party to act in a manner which would otherwise be
contrary to prudent business judgment or normal commercial practices in order to
accomplish the objective.
"Business Day" means any day other than a Saturday, Sunday, or a day
on which banking institutions in New York, New York are authorized or obligated
by law or executive order to close.
"Employee" means an individual listed in Schedule 5.2(d)(i) (as
updated by Seller and the Company on the Closing Date) who, as of the Business
Day immediately preceding the Closing Date, (i) shall be (or in the case of (D)
below, is about to become) an employee of the Company and (ii) either (A) shall
have been employed and at work on the Business Day immediately preceding the
Closing Date, or (B) shall have been on short-term disability (including
maternity disability), workers' compensation, vacation, parental or other leave
of absence consistent with the Company's policies, practices and procedures in
effect at the time such leave commenced, or (C) shall have been receiving short
term disability benefits for no more than 180 consecutive days or (D) shall have
received and accepted an offer of employment with the Company, in the ordinary
course of business, but shall have not yet commenced work.
"Environmental Laws" means foreign and United States federal, state
and local laws, rules, regulations, codes and ordinances, and any orders,
decrees, judgments or injunctions issued, promulgated, approved or entered
thereunder, relating to the environment, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act, as further amended
("CERCLA"); the Resource Conservation and Recovery Act of 1976, as amended; the
Federal Water Pollution Control Act, as amended; the Federal Clear Air Act, as
amended; the Toxic Substances Control Act, as amended; the Surface Mining
Control and Reclamation Act of 1977, as amended; the Safe Drinking Water Act, as
amended; the Pollution Control Act of 1990, as amended; the Federal Insecticide,
Fungicide and Rodenticide Act, as amended; and comparable state and local laws,
in all of the foregoing cases, in effect on the date hereof.
"Hazardous Substances" means any substance (a) that is defined as a
"hazardous waste", "hazardous material", "hazardous substance", "toxic
substance" or similar term used under any Environmental Law; or (b) that
contains or consists of oil, petroleum or petroleum products.
"Knowledge" means, with respect to Seller, the actual current
knowledge of the executive officers of Seller and those officers of the Company
identified in Schedule 4.1(q) hereto.
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"Material Adverse Effect" means a material adverse effect on the
financial condition or results of operations of the Company or the Buyer, as the
case may be, other than with respect to any adverse effects which, directly or
indirectly, relate to or result from public or industry knowledge relating to
the transactions contemplated by this Agreement. Seller may, however, at its
option, include in the Schedules of this Agreement or elsewhere items which
would not have a Material Adverse Effect within the meaning of the previous
sentence in order to avoid any misunderstanding, and such inclusion shall not be
deemed to be an acknowledgement by Seller that such items would have a Material
Adverse Effect or further define the meaning of such term for the purpose of
this Agreement.
"Person" means an individual, a corporation, a partnership, an
association, a trust or other entity or organization, including an Authority.
(b) Other Definitions. The following defined terms shall have the
meaning set forth in the referenced Section:
Defined Term As Defined in Section
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Arrow.................................................. Recitals
Agreement.............................................. Recitals
Annual Financial Statements ........................... 4.1(e)
Basket ................................................ 7.1(a)
Books and Records ..................................... 5.2(b)
Business .............................................. 4.1(b)
Buyer ................................................. Recitals
Buyer Qualified Plan .................................. 5.2(d)(iii)(2)
Cap ................................................... 7.1(a)
Closing ............................................... 3.1
Closing Date .......................................... 3.1
Code .................................................. 4.1(f)
Collateral Source ..................................... 7.3
Common Stock........................................... Recitals
Company ............................................... Recitals
Company's Benefit Plans ............................... 4.1(k)
Confidentiality Agreement ............................. 5.2(a)
Contracts ............................................. 4.1(i)
Controlled Entities ................................... 5.1(f)
Covered Obligations ................................... 7.1(a)
Device ................................................ 4.1(r)
DOJ ................................................... 3.2(c)
Employee Benefit Plans ................................ 4.1(k)
Encumbrances .......................................... 4.1(c)
Environmental Permits ................................. 4.1(n)
ERISA ................................................. 4.1(k)
Facility .............................................. 5.2(h)
FDA ................................................... 4.1(j)
Financial Statements Date ............................. 4.1(e)
Foreign Assets ........................................ 4.1(g)
Form 483s ............................................. 4.1(r)
FTC ................................................... 3.2(c)
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Furon ........................................................ 6.4(a)
Furon Liabilities ............................................ 6.4(c)
GAAP ......................................................... 4.1(e)
Horizon ...................................................... Recitals
HSR Act ...................................................... 3.2(c)
IDE .......................................................... 4.1(r)
Indemnified Party ............................................ 7.5
Indemnifying Party ........................................... 7.5
IRS .......................................................... 4.1(k)
Joint Agreement .............................................. 5.1(f)
Landlord ..................................................... 5.2(h)
Lease ........................................................ 5.2(h)
Loss ......................................................... 7.1(a)
Loiterman Agreement .......................................... 5.2(f)
M1000 Business ............................................... 4.1
Multiemployer Plans .......................................... 4.1(k)
Multiple Employer Plans ...................................... 4.1(k)
Non-competition Period ....................................... 5.1(f)
Normal Termination Date ...................................... 5.2(h)
Obligations .................................................. 5.2(h)
PBGC ......................................................... 4.1(k)
Permitted Activities ......................................... 5.1(f)
Pfizer Qualified Plans ....................................... 5.2(d)(iii)(1)
PMA .......................................................... 4.1(r)
Purchase Price ............................................... 2.1(b)
Qualified Plan ............................................... 4.1(k)
Recall ....................................................... 4.1(r)
Restricted Products .......................................... 5.1(f)
Restricted Sales Cap ......................................... 5.1(f)
Retirement Plan .............................................. 5.2(d)(iii)(1)
Returns ...................................................... 4.1(f)
Savings Plan ................................................. 5.2(d)(iii)(1)
Seller ....................................................... Recitals
Seller's Tax Returns ......................................... 6.3(a)
Securities ................................................... Recitals
Straddle Returns ............................................. 6.3(b)
Sub-limit .................................................... 7.1(a)
Taxes ........................................................ 4.1(f)
Third Party Claim ............................................ 7.5
Transfer Taxes ............................................... 6.3(b)
Transition Agreement ......................................... 5.3(f)
510(k)........................................................ 4.1(r)
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ARTICLE II
PURCHASE AND SALE OF THE SECURITIES AND THE FOREIGN ASSETS
2.1 Purchase and Sale of the Securities and the Foreign Assets.
(a) On the terms and subject to the conditions of this Agreement, at
the Closing referred to below, Seller will, or will cause one of its Affiliates
to, sell, transfer and deliver to the respective Buyer, and each Buyer
severally, but not jointly and severally, agrees that it will purchase from the
Seller or one of its Affiliates, such number of the Securities and such portion
of the Foreign Assets as set forth on Schedule 2.1(b). In addition, Seller shall
use its Best Efforts to cause any Japanese import licenses for Company products
to be transferred to Buyer or its designee as soon as reasonably practicable
following the Closing Date.
(b) The aggregate purchase price for the Securities and the Foreign
Assets (the "Purchase Price") shall be twenty one million two hundred fifty
thousand dollars ($21,250,000.00). The Purchase Price shall be allocated between
each Buyer and among the Securities and each of the Foreign Assets as set forth
on Schedule 2.1(b).
ARTICLE III
THE CLOSING
3.1 Closing Date. The closing (the "Closing") of the purchase and sale
of the Securities and the Foreign Assets shall be held at the offices of Dechert
Price & ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 a.m. on the
later to occur of (i) July 15, 1997 or (ii) the third Business Day after the
conditions to Closing set forth in Article III of this Agreement shall have been
satisfied; provided, however, that the Closing shall not occur later than the
date specified in Section 8.3 of this Agreement. The date on which the Closing
shall occur is hereinafter referred to as the "Closing Date." All transactions
at the Closing shall be deemed to take place simultaneously and effective as of
12:01 A.M. E.D.T. on the Closing Date.
3.2 Conditions to Buyer's Obligation. The obligation of each Buyer to
purchase and pay for its share of the Securities and the Foreign Assets is
subject to the satisfaction (or waiver by such Buyer) as of the Closing of the
following conditions:
(a) (i) The representations and warranties of Seller and the
Company made in this Agreement shall be true and correct in all material
respects on and as of the Closing, as though made on and as of the Closing Date
except for (1) changes contemplated by this Agreement or attributable to matters
disclosed by Seller in the Schedules hereto and (2) those representations and
warranties that address matters only as of a
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particular date (which shall be true and correct as of that date); (ii) Seller
and the Company shall have performed in all material respects their covenants
contained in this Agreement required to be performed by the time of the Closing;
and (iii) Seller shall have delivered to Buyer a certificate dated the Closing
Date and signed by duly authorized signatories of Seller, in the form of Exhibit
A, confirming the satisfaction of the foregoing clauses (i) and (ii).
(b) No injunction or order of any court or administrative
agency of competent jurisdiction shall be in effect as of the Closing which
restrains or prohibits the purchase and sale of the Securities or the Foreign
Assets.
(c) Any applicable waiting period under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976 and the regulations promulgated thereunder
(the "HSR Act"), including any extensions of such waiting period, shall have
expired and any investigations by either the Department of Justice ("DOJ") or
the Federal Trade Commission ("FTC") (by means of a request for additional
information or otherwise) shall have been terminated.
(d) All intercompany accounts between Seller and its
Affiliates, on the one hand, and the Company, on the other, shall be paid or
otherwise satisfied in full.
(e) The directors and officers of the Company shall have
delivered resignations to Buyer.
(f) The other Buyer shall contemporaneously consummate the
transactions contemplated by this Agreement.
3.3 Conditions to Seller's Obligations. The obligation of Seller
to sell and deliver the Securities and the Foreign Assets to Buyer is subject to
the satisfaction (or waiver by Seller) as of the Closing of the following
conditions:
(a) (i) The representations and warranties of Buyer made in
this Agreement shall be true and correct on and as of the Closing, as though
made on and as of the Closing Date except for (1) changes contemplated by this
Agreement or attributable to matters disclosed by Buyer in the Schedules hereto,
(2) those representations and warranties that address matters only as of a
particular date (which shall be true and correct as of that date), and (3)
breaches or inaccuracies of representations and warranties that do not,
individually or in the aggregate, have a Material Adverse Effect; (ii) Buyer
shall have performed in all material respects the covenants of Buyer contained
in this Agreement required to be performed by the time of the Closing; and (iii)
Buyer shall have delivered to Seller a certificate dated the Closing Date and
signed by duly authorized signatories of Buyer, in the form of Exhibit B,
confirming the satisfaction of the foregoing clauses (i) and (ii).
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(b) No injunction or order of any court or administrative
agency of competent jurisdiction shall be in effect as of the Closing which
restrains or prohibits the purchase and sale of the Securities or the Foreign
Assets.
(c) Any applicable waiting period under the HSR Act, including
any extensions of such waiting period, shall have expired and any investigations
by either DOJ or FTC (by means of a request for additional information or
otherwise) shall have been terminated.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of Seller and the Company.
Seller and the Company hereby jointly and severally represent and warrant
(other than with respect to the Company's manufacture, marketing, distribution
and sale of the M1000 programmable implantable pump (the "M1000 Business"), for
which neither Seller nor the Company makes any representation or warranty except
as provided in Section 4.1(s) of this Agreement) to each Buyer as follows:
(a) Authority. Each of Seller and the Company has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. All corporate acts and other proceedings
required to be taken by each of Seller and the Company to authorize the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby have been duly and properly taken. This
Agreement has been duly executed and delivered by each of Seller and the Company
and constitutes the legal, valid and binding obligation of each of them,
enforceable against them in accordance with its terms. Except as set forth on
Schedule 4.1(a), the execution, delivery and performance by Seller and the
Company of this Agreement and the consummation by each of them of the
transactions contemplated hereby will not (i) violate any provision of law, rule
or regulation to which either of them is subject, (ii) violate any order,
judgment, injunction, award or decree applicable to either of them, (iii)
violate the certificate or articles of incorporation, bylaws or other similar
governing documents of either of them, (iv) constitute a default under or give
rise to a right of termination, cancellation or acceleration of any right or
obligation of the Company under any provision of any agreement, contract or
other instrument binding upon the Company set forth on Schedule 4.1(i), or (v)
result in the creation or imposition of any lien, encumbrance, charge or claim
upon any of the assets of the Company or the Securities, except in the case of
any of the foregoing clauses (i)-(v) for any such violation, conflict, default,
right or lien which would not individually or in the aggregate have a Material
Adverse Effect. Except as set forth on Schedule 4.1(a) hereto, the execution,
delivery and performance by Seller and the Company of this Agreement and the
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consummation by each of them of the transactions contemplated hereby do not
require any consent from or filing with any Authority except for (i) the filing
of a report under the HSR Act and the expiration of the applicable waiting
period; (ii) any consent or filing that Buyer is required to obtain or make; and
(iii) consents and filings which, if not obtained or made, will not individually
or in the aggregate have a Material Adverse Effect.
(b) Organization and Standing of Seller and the Company. Seller is a
corporation duly organized and validly existing under the laws of the State of
Delaware. The Company is a corporation duly organized and validly existing under
the laws of the Commonwealth of Massachusetts. Seller has full corporate power
and authority and possesses all material governmental franchises, licenses,
permits, authorizations and approvals necessary to enable it to use its
corporate name and to own, lease or otherwise hold its properties and assets and
to carry on its business in all material respects as presently conducted. The
Company has full corporate power and authority and possesses all material
governmental franchises, licenses, permits, authorizations and approvals
necessary to enable it to use its corporate name and to own, lease or otherwise
hold its properties and assets and to carry on its business (the "Business") in
all material respects as presently conducted. The Company is duly qualified or
registered as a foreign corporation to do business, and is in good standing in
the jurisdictions set forth on Schedule 4.1(b), which constitute all
jurisdictions in which the character of the properties owned, operated or leased
by it or the nature of its activities is such that such qualification is
required by applicable law, except where the failure to so qualify and be in
good standing would not, individually or in the aggregate, have a Material
Adverse Effect. The Company has delivered to Buyer true and complete copies of
the Articles of Organization, as amended to date, and the Bylaws, as in effect
on the date hereof, of the Company.
(c) Capital Structure of the Company; Ownership of Securities. The
authorized capital stock of the Company consists of which 3OO,000 shares of
Common Stock, of which 300,000 shares are duly authorized, validly issued and
outstanding, fully paid and nonassessable. Except as described on Schedule
4.l(c), there are no outstanding warrants, options, agreements, subscriptions,
convertible or exchangeable securities or other commitments pursuant to which
the Company is or may become obligated to issue, sell, purchase, return or
redeem any shares of capital stock or other securities of the Company and no
equity securities of the Company are reserved for issuance for any purpose.
Seller owns of record and beneficially the Securities, free and clear of any
claims, liens, encumbrances, security interests, options, charges or
restrictions whatsoever ("Encumbrances"). At the Closing, Seller will convey to
Buyer good and marketable title to the Securities free and clear of all
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Encumbrances other than any Encumbrance (i) created by Buyer or (ii) of which
Buyer has knowledge as of the Closing Date.
(d) Subsidiaries of the Company. The Company does not,
directly or indirectly, own any stock of, or any other interest in, any other
corporation or business entity other than those entities listed on Schedule
4.1(d).
(e) Financial Statements. Schedule 4.1(e) sets forth the
unaudited balance sheet of the Company as of December 31, 1996 (the "Financial
Statements Date"), and the related statement of income for the year then ended,
together with the notes to such financial statements (collectively, the "Annual
Financial Statements"). The Annual Financial Statements have been prepared in
accordance with the books and records of the Company. Except as set forth on
Schedule 4.1(e), the Annual Financial Statements fairly present, in all material
respects, the financial position of the Company as of December 31, 1996 and the
results of operations of the Company for the year then ended, in conformity with
United States generally accepted accounting principles as applied by Seller
("GAAP") and in a manner consistent with prior practice.
(f) Taxes.
(i) For purposes of this Agreement, (A) "Tax" or "Taxes"
shall mean all Federal, state, local and foreign income, franchise, sales and
use and other taxes and assessments, including all interest, penalties and
additions imposed with respect to such amounts and (B) "Code" shall mean the
Internal Revenue Code of 1986, as amended.
(ii) Except as set forth on Schedule 4.1(f): (A) the
Company has filed or caused to be filed in a timely manner (within any
applicable extension periods) all Tax returns, reports and forms required to
have been filed by the Code or by applicable state, local or foreign Tax laws
(collectively, "Returns") other than those which the failure to file would not
have a Material Adverse Effect; (B) all Taxes shown to be due on such Returns
have been timely paid in full; and (C) no Tax liens have been filed and no
material claims are being asserted in writing with respect to any Taxes. Except
as set forth on Schedule 4.1(f), no presently effective waivers or extensions of
statutes of limitation with respect to Taxes have been given by the Company for
any taxable years. Except as set forth above or on Schedule 4.1(f), as of the
date of this Agreement, the Returns filed by, or with respect to, the Company
are not being examined by, and no written notification of intention to examine
has been received from the Internal Revenue Service or, to Seller's Knowledge,
any other taxing authority with respect to Taxes. Except as set forth on
Schedule 4.1(f), no currently pending issues involving the Company have been
raised in writing by the Internal Revenue Service or, to Seller's Knowledge, any
other taxing authority in connection with any Return. Except as set
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forth in Schedule 4.1(f), the Company has no agreement with Seller or any of its
Affiliates or, to the Knowledge of Seller, with any other Person regarding the
filing of Returns or relating to the sharing of Tax benefits or liabilities with
such Persons.
(g) Properties. (i) The Company has good and valid title to all its
owned properties and assets, real and personal, tangible and intangible
(including those reflected on the Annual Financial Statements or acquired by the
Company since the Financial Statements Date, except property sold or otherwise
disposed of since the Financial Statements Date), and (ii) Seller has good and
valid title to the those certain assets identified on Schedule 4.1(g) as the
foreign assets of the Business (the "Foreign Assets"), in each case free and
clear of all mortgages, liens, attachments, pledges, encumbrances or security
interests of any nature whatsoever, except (a) those disclosed in the Annual
Financial Statements, (b) any liens for current Taxes not yet due and payable or
which may thereafter be paid without penalty, (c) encumbrances described in
Schedule 4.1(g) hereto, (d) zoning, building and other similar governmental
restrictions and liens imposed by operation of law (including without limitation
mechanics', carriers', workmen's, repairmen's, landlord's or other similar liens
arising from or incurred in the ordinary course of business and for which the
underlying payments are not yet delinquent), and (e) easements, covenants,
rights-of-way or other similar restrictions and imperfections of title, none of
which items referred to in clauses (d) and (e) materially impair the use of the
property to which they relate in the Business taken as a whole. Set forth on
Schedule 4.1(g) hereto is a list of all real estate owned or leased by the
Company in the United States.
(h) Intellectual Property. Schedule 4.1(h) sets forth a true and
complete list of all (i) patents owned by or licensed to the Company, (ii)
trademarks, trade names, and service marks currently in use by the Company in
the Business and (iii) material copyrights and applications therefor owned by or
licensed to the Company. Except as set forth in Schedule 4.1(h), Seller has no
notice or Knowledge of any objections or claims being asserted in writing by any
Person with respect to the ownership, validity, enforceability or use of any
such patents, trademarks, trade names, copyrights and applications therefor or
challenging or questioning the validity or effectiveness of any such license
which would have a Material Adverse Effect.
(i) Contracts. Except as described in Schedule 4.1(i) or the other
Schedules hereto (and except for purchase order agreements (other than
requirements contracts) for inventory purchased in the ordinary course of
business consistent with past practice), the Company is not as of the date of
this Agreement party to or bound by any of the following written agreements:
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15
(i) employee collective bargaining agreement or other contract
with any labor union;
(ii) employment agreements with any director, officer or
employee (excluding any such contracts or arrangements for which the total
compensation during each of the last two (2) years was less than fifty thousand
dollars ($50,000) per person);
(iii) (A) lease or similar agreement under which the Company
is lessee of, or holds or uses, any machinery, equipment, vehicle or other
tangible personal property owned by a third party, (B) continuing contract for
the future purchase of materials, supplies or equipment, (C) management,
service, consulting or other similar type of contract, (D) distribution or sales
agency agreement or arrangement, or (E) advertising agreement or arrangement, in
any such case which has an aggregate future liability in excess of fifty
thousand dollars ($50,000) or which is not terminable by the Company (x) on not
more than ninety (90) days' notice without penalty or premium or (y) for a cost
of less than twenty five thousand dollars ($25,000);
(iv) agreement or contract under which the Company has
borrowed or loaned any money or issued any note, bond, indenture or other
evidence of indebtedness or guaranteed indebtedness, liabilities or obligations
of others, in each case for an amount in excess of twenty five thousand dollars
($25,000) (other than (A) endorsements for the purpose of collection in the
ordinary course of business, and (B) advances to employees of the Company in the
ordinary course of business);
(v) mortgage, pledge, security agreement, deed of trust or
other document, in each case granting a lien (including liens upon properties
acquired under conditional sales, capital leases or other title retention or
security devices) securing obligations in excess of twenty five thousand dollars
($25,000).
(vi) license of any patent, trademark, trade name, or
copyright by or to the Company involving a royalty or similar payment by or to
the Company during the immediately preceding or succeeding twelve (12) months,
in each case in excess of ten thousand dollars ($10,000) for such twelve (12)
month period;
(vii) lease or similar agreement under which the Company is
lessee of any real property; and
(viii) any other agreement, license, undertaking, covenant or
understanding involving a payment by the Company during the immediately
preceding or succeeding twelve (12) month period, in each case in excess of
fifty thousand dollars ($50,000) in the aggregate for such twelve (12) month
period.
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16
To the Knowledge of Seller after reasonable investigation, each
agreement, contract, lease, license, commitment or instrument of the Company
described on Schedule 4.1(i) or the other Schedules hereto (collectively, the
"Contracts") is in full force and effect, except as disclosed on Schedule 4.1(i)
or the other Schedules hereto. To the Knowledge of Seller after reasonable
investigation, the Company is not (with or without the lapse of time or the
giving of notice, or both) in breach or default in any material respect
thereunder and no other party to any of the Contracts is (with or without the
lapse of time or the giving of notice, or both) in breach or default in any
material respect thereunder.
(j) Litigation; Compliance with Laws.
(i) Except as set forth in Schedule 4.1(j) or otherwise
described in Section 4.1(r) hereto, there is no action, suit, proceeding or
investigation pending or, to the Knowledge of Seller, threatened, against or
involving the Company or its assets (whether or not covered by insurance)(except
for matters relating to Environmental Laws described in Section 4.1(n) hereto)
which would, individually or in the aggregate, have a Material Adverse Effect.
To the knowledge of Seller, there exists no basis for the commencement of any
action, proceeding or investigation against the Company which would,
individually or in the aggregate, have a Material Adverse Effect. Except as set
forth on Schedule 4.1(j), there is no outstanding judgment, order, writ,
injunction or decree against the Company or related to its assets, other than
any such judgment, order, writ, injunction or decree which would not,
individually or in the aggregate, have a Material Adverse Effect.
(ii) There is no action, suit, investigation or proceeding
pending against, or to the Knowledge of Seller threatened against or affecting,
the Company before any court or arbitrator or any Authority which in any manner
challenges or seeks to prevent, enjoin, alter or delay the transactions
contemplated by this Agreement.
(iii) Except as set forth on Schedule 4.1(j) (or, with
respect to matters described in either Section 4.1(n) or Section 4.1(r) hereto),
the Company is in compliance with all applicable laws, statutes, rules,
regulations, ordinances, orders, judgments and decrees, local, Federal, state,
domestic or foreign (including, without limitation, applicable insurance
requirements, requirements of any Board of Fire Underwriters or similar body,
building, zoning, occupational safety and health, pension, fair employment,
equal opportunity, safety, health, procurement, reimbursement, consumer
protection or similar laws, rules, regulations and ordinances), other than any
such failure which would not have a Material Adverse Effect. No notice has been
received by the Company or Seller, and neither the Company nor Seller has
Knowledge of any notice being given, with respect to any violation of any such
legal requirements. There is no
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17
action or proceeding by the U.S. Food and Drug Administration (the "FDA"), the
Health Care Financing Agency or other agency or part of the U.S. Department of
Health & Human Services or any other Authority, including, but not limited to,
recall procedures, pending or, to Seller's or the Company's Knowledge,
threatened against the Company relating to the safety or efficacy of or use or
charges for any of its products developed or sold in connection with the
Business.
(k) Benefit Plans.
(i) Schedule 4.1(k) sets forth a complete and correct list
of all "employee benefit plans", as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and any other
pension plans or employee benefit arrangements or payroll practices (including,
without limitation, severance pay, vacation pay, company awards, salary
continuation for disability, sick leave, deferred compensation, bonus or other
incentive compensation, stock purchase arrangements or policies) maintained, or
contributed to, by the Company for the benefit of any employees of the Company
or to which the Seller or the Company contributes or is obligated to contribute
with respect to employees of the Company ("Employee Benefit Plans"). Schedule
4.1(k) identifies, in separate categories, Employee Benefit Plans that are (i)
subject to Section 4063 and 4064 of ERISA ("Multiple Employer Plans"), (ii)
multiemployer plans (as defined in Section 4001(a) of ERISA) ("Multiemployer
Plans") or (iii) welfare plans providing continuing benefits after the
termination of employment (other than as required by Section 4980B of the Code
and at the former employee's own expense).
(ii) To the Knowledge of Seller, none of the Company or
any ERISA Affiliate (defined as any trade or business which, with the Company,
is treated as a single employer under Section 414(b), (c) or (m) of the Code)
has incurred any liability to the Pension Benefit Guaranty Corporation ("PBGC")
under, arising out of or by operation of Title IV of ERISA (other than any
liability for premiums to the PBGC arising in the ordinary course of business),
including, without limitation, any material liability in connection with (i) the
termination or reorganization of any employee pension benefit plan subject to
Title IV of ERISA or (ii) the withdrawal from any Multiemployer Plan or Multiple
Employer Plan, and no fact or event exists which could reasonably be expected to
give rise to any such material liability. Except as set forth on Schedule
4.1(k), to Seller's Knowledge, no complete or partial termination has occurred
within the five (5) years preceding the date hereof with respect to any Employee
Benefit Plan.
(iii) Each of the Employee Benefit Plans intended to
qualify under Section 401 of the Code ("Qualified Plans") has received a
favorable determination letter from the Internal Revenue Service ("IRS") that
such plan is so qualified,
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18
and, to the Knowledge of Seller, since the date of such IRS determination,
except as disclosed on Schedule 4.1(k), nothing has occurred with respect to the
operation of any such plan which, either individually or in the aggregate, would
likely cause the loss of such qualification.
(iv) To the Knowledge of Seller, all contributions and
premiums required by law or by the terms of any Employee Benefit Plan or any
agreement relating thereto have been timely made (without regard to any waivers
granted with respect thereto) and, except as disclosed on Schedule 4.1(k), no
accumulated funding deficiencies exist in any of the Employee Benefit Plans
subject to Section 412 of the Code.
(v) To the Knowledge of Seller, the liabilities of each
Employee Benefit Plan that has been terminated or otherwise wound up within the
two (2) years preceding the date hereof, have been fully discharged in
compliance with applicable law.
(vi) Except as disclosed on Schedule 4.1(k), to the
Knowledge of Seller, there has been no "reportable event" as that term is
defined in Section 4043 of ERISA and the regulations thereunder with respect to
any of the Employee Benefit Plans subject to Title IV of ERISA which would
require the giving of notice, or any event requiring notice to be provided under
Section 4063(a) of ERISA.
(vii) To the Knowledge of Seller, there has been no
violation of ERISA with respect to the filing of applicable returns, reports,
documents and notices regarding any of the Employee Benefit Plans with the
Secretary of Labor or the Secretary of the Treasury or the furnishing of such
notices or documents to the participants or beneficiaries of the Employee
Benefit Plan which, either individually or in the aggregate, could result in
material liability to the Company.
(viii) Complete and correct copies of the following
documents, with respect to each of the Employee Benefit Plans (as applicable),
have been delivered to Buyer: (i) any plan documents and related trust
documents, and all amendments thereto; (ii) the most recent Forms 5500 and
schedules thereto; (iii) the most recent IRS determination letter; (iv) the most
recent summary plan descriptions; and (v) written descriptions of all nonwritten
agreements relating to the Employee Benefit Plans.
(ix) To the Knowledge of Seller, there are no pending
legal proceedings which have been asserted or instituted against any of the
Employee Benefit Plans, the assets of any such plans or the Company or the plan
administrator or any fiduciary of the Employee Benefit Plans with respect to the
operation of such plans (other than routine, uncontested benefit claims), which
either individually or in the aggregate could reasonably be expected to result
in a Material Adverse Effect.
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19
(x) To the Knowledge of Seller, each of the Employee Benefit
Plans has been maintained, in all material respects, in accordance with its
terms and all provisions of applicable laws and regulations, except where
noncompliance would not have a Material Adverse Effect. To the Knowledge of
Seller, all amendments and actions required to bring each of the Employee
Benefit Plans into conformity in all material respects with all of the
applicable provisions of ERISA and other applicable laws and regulations have
been made or taken except to the extent that such amendments or actions are not
required by law to be made or taken until a date after the Closing Date.
(xi) Except as disclosed on Schedule 4.1(k), none of the
Company or any ERISA Affiliate maintains a welfare benefit plan providing
continuing benefits to Company employees after the termination of employment
(other than as required by Section 4980B of the Code and at the former
employee's own expense), and the Company and each of the ERISA Affiliates have
complied in all material respects with the notice and continuation requirements
of Section 4980B of the Code and the regulations thereunder.
(xii) To the Knowledge of Seller, none of the Company or any
ERISA Affiliate has divested any business or entity maintaining or sponsoring a
defined benefit pension plan having unfunded benefit liabilities (within the
meaning of Section 4001(a)(18) of ERISA) or transferred any such plan to any
Person other than the Company or any ERISA Affiliate during the five-year period
ending on the Closing Date in a transaction that could reasonably be expected to
result in a Material Adverse Effect.
(xiii) Except as disclosed on Schedule 4.1(k), no Employee
Benefit Plan will require the payment by the Company of material amounts of
severance benefits, separation pay or any similar pay as a result of the
consummation of the transactions contemplated by this Agreement.
(l) Absence of Changes or Events. Except as set forth in Schedule
4.1(1) or any other Schedule to this Agreement, from the Financial Statements
Date until the Closing Date, the Business has been conducted in the ordinary
course consistent with past practice and there has not been any change in the
financial condition or results of operations of the Company taken as a whole
(other than changes relating to the economy in general or industry conditions),
which would, individually or in the aggregate, have a Material Adverse Effect.
(m) Licenses; Permits. To the Knowledge of Seller, all material
governmental licenses, permits or authorizations of the Company are validly held
by the Company, the Company has complied in all material respects with all
requirements in connection therewith and the same will not be subject to
suspension, modification or revocation as a result of
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20
this Agreement or the consummation of the transactions contemplated hereby,
except as set forth on Schedule 4.l(m) or which relate to matters described in
Section 4.1(r) hereto. To the Knowledge of Seller, the Company has all of the
governmental licenses, permits or authorizations which are required to carry on
the Business as such business is now conducted, except for such licenses,
permits or authorizations the failure to obtain which would not have a Material
Adverse Effect.
(n) Environmental Matters. Except as set forth on Schedule 4.1(n)
hereto or as described in Section 4.1(n) hereto:
(i) The Company has all material permits, licenses, and other
authorizations required for the operations, or conduct of the Business under
applicable Environmental Laws (the "Environmental Permits"). The Company is, and
at all times since the Company has been owned by the Seller, or to Seller's
Knowledge, prior to Seller's ownership of the Company, has been, in compliance
with all terms and conditions of the Environmental Permits, and with all
applicable Environmental Laws, except for such noncompliance which would not
have a Material Adverse Effect. Set forth in Schedule 4.1(n) hereto is a list of
the Environmental Permits.
(ii) Since the Company has been owned by Seller or, to Seller's
Knowledge, prior to Seller's ownership of the Company, the Company has received
no written notice of any citation, summons, order, complaint, penalty,
investigation, or review by any Authority or other Person with respect to any
violation by the Company of any Environmental Law (including, without
limitation, any violation by the Company with respect to items 1, 2 and 3 listed
on Schedule 4.1(n), which are excluded from all other representations of Seller
and the Company hereunder), except for such violations which would not have a
Material Adverse Effect, and there is no action, suit, investigation or
proceeding pending, or to Seller's Knowledge, threatened, against or involving
the Company involving or arising out of any alleged violation of Environmental
Law except for such actions or proceedings which would not have a Material
Adverse Effect.
(iii) Since the Company has been owned by Seller or, to
Seller's Knowledge, prior to Seller's ownership of the Company, the Company has
received no written requests for information, notice of claim, demand, or
notification that it is, or may be, potentially responsible with respect to any
investigation or cleanup of any threatened or actual release of any Hazardous
Substance or with respect to any personal injury or property damage arising from
or caused by exposure to, or the threatened or actual release of, any Hazardous
Substance, and there is no action, suit, investigation or proceeding pending, or
to Seller's Knowledge, threatened, against or involving the
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21
Company involving any potential liability caused by or relating to Hazardous
Substances.
(iv) To Seller's Knowledge, there are no above-ground or
underground storage tanks, no friable asbestos and no polychlorinated biphenyls
on property currently leased by the Company.
(v) Since the Company has been owned by Seller or, to Seller's
Knowledge, prior to Seller's ownership of the Company, no employees of the
Company have been exposed to any Hazardous Substances in connection with
employment with the Company which exposure is reasonably likely to give rise to
liability of the Company under Environmental Laws or other statutory or common
law, except for such liability which would not have a Material Adverse Effect.
(vi) To Seller's Knowledge, no site assessment, audit or other
investigation has been conducted by or on behalf of the Company by a third party
professional engineer as to environmental matters at any property owned, leased,
operated or occupied by the Company.
(vii) To Seller's Knowledge, no disposal, release or burial of
any Hazardous Substances has occurred on any facilities or properties owned,
leased or operated by the Company which require remediation by the Company under
applicable Environmental Laws except for such remediation which would not have a
Material Adverse Effect.
(o) Employee and Labor Relations. Except as set forth in Schedule
4.1(o) hereto:
(i) there is no labor strike, dispute, slowdown or work
stoppage, boycott, picketing, handbilling or lockout actually pending or, to the
Knowledge of Seller, threatened against or affecting the Company which would
have a Material Adverse Effect and during the past year there has not been any
such action; and
(ii) there is no unfair labor practice charge, petition,
application or complaint against the Company pending or, to the Knowledge of
Seller, threatened before the National Labor Relations Board or the
Massachusetts Labor Relations Commission which would have a Material Adverse
Effect; and
(iii) there is no complaint against the Company pending, or to
the Knowledge of Seller, threatened before the Equal Employment Opportunity
Commission, the Massachusetts Commission Against Discrimination or the
Department of Labor and Workplace Development which would have a Material
Adverse Effect.
(p) Undisclosed Liabilities. To the Knowledge of Seller, after
reasonable investigation, the Company does not have
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22
any material liabilities or obligations or any nature (whether accrued,
absolute, contingent, unasserted or otherwise) required by GAAP to be reflected
on a balance sheet or in notes thereto, except (i) as set forth or reflected on
the Annual Financial Statements (or described in the notes included therein),
(ii) for items disclosed in the Schedules hereto or for which Buyer shall be
otherwise indemnified by Seller hereunder, including, without limitation, Losses
arising from those items identified on Schedule 7.1(a), (iii) for purchase
contracts and orders for inventory in the ordinary course of business and (iv)
for liabilities and obligations incurred in the ordinary course of business
consistent with past practice since the Financial Statements Date and not in
violation of this Agreement.
(q) Accounts; Safe Deposit Boxes; Powers of Attorney; Officers and
Directors. Attached hereto as Schedule 4.1(q) are (i) a true and correct list of
all bank and savings accounts, certificates of deposit and safe deposit boxes
and outstanding powers of attorney of the Company and those Persons authorized
to sign thereon, (ii) true and correct copies of all corporate borrowing,
depository and transfer resolutions and those Persons entitled to act
thereunder, and (iii) a true and correct list of all officers and directors of
the Company.
(r) Regulatory Matters. Except as set forth on Schedule 4.1 (r), the
Company, and the products sold by the Company, are in compliance with all
current and otherwise applicable statutes, rules, regulations, standards, guides
or orders administered or issued by the FDA and all other Authorities (except
for environmental Authorities) having regulatory authority over the products of
the Company (except as relates to Environmental Laws described in Section
4.l(n) hereto) and the Business, other than any such failure to comply which,
individually or in the aggregate, would not have a Material Adverse Effect.
Except as set forth on Schedule 4.l(r) hereto, since January 1, 1994
no Notice of Adverse Findings, Warning Letter, Section 305 notice, subpoena, or
other similar communication by any Authority has been given with respect to the
Company or the Business, and there have been no recalls, field notifications,
alerts or seizures requested or threatened relating to the products sold by the
Company.
Except as set forth on Schedule 4.1(r) hereto, the Company has made
available to Buyer a copy of all currently active investigational device
exemptions ("IDE") filed with or approved by FDA by or on behalf of the Company
and all premarket approval ("PMA") and premarket notification ("510(k)")
clearance or concurrence letters received from the FDA and comparable
communications received from any other applicable Authority and provided Buyer
with access to all related documents and information, including device master
files and post-market studies.
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23
Except as set forth on Schedule 4.1(r) hereto, the Company has made
available to Buyer in a manner so as to provide Buyer an opportunity to review
all FDA inspection reports ("Forms 483s") or comparable reports of a foreign
Authority, the Company's Responses to such Form 483s or comparable foreign
reports and the FDA Establishment Inspection Reports which the Company has
obtained for all FDA inspections of the Company's facilities since January 1,
1994. The Company has also furnished Buyer with access to all internal
inspection reports (as required by 21 C.F.R. Section 820.20) conducted by the
Company since January 1, 1994, as well as the written procedure for such audits.
The Company has made available to Buyer in a manner so as to provide
Buyer an opportunity to review copies of all complaint files (as required by 21
C.F.R. Section 820.198) and foreign vigilance reports as well as all Medical
Device Reports filed by the Company, and maintained by such person (as required
by 21 C.F.R. Section 803) as well as copies of all related documents and a copy
of the Company's corporate policy for maintaining such files and filing such
reports.
The Company has made available to Buyer in a manner so as to provide
Buyer an opportunity to review copies of all labels and the label history for
all of the Company's products in the Company's possession.
The Company has made available to Buyer in a manner so as to provide
Buyer an opportunity to review copies of all regulatory approvals obtained from
any foreign regulatory agency related to the products distributed and sold by
the Company.
The Company has offered to make available to Buyer in a manner so as to
provide Buyer an opportunity to review all information pertaining to the matter
that was resolved pursuant to the November 24, 1993 consent agreement between
the Company and the FDA and the payment by the Company to the FDA of the civil
penalty specified therein.
The Company has made available to Buyer in a manner so as to provide
Buyer an opportunity to review and has otherwise disclosed to Buyer all material
information related to the voluntary recall (the "Recall") by the Company of its
Infuse-A-Port Implantable Port System (the "Device") initiated on or about April
30, 1997 through notification to FDA and all affected distributors and
customers. RELEVANT INFORMATION PROVIDED OR MADE AVAILABLE TO BUYER INCLUDES,
BUT IS NOT LIMITED TO, THOSE ITEMS CONTAINED IN SCHEDULE 4.1 (r)(i). Buyer
acknowledges that the Recall, which impacted over two thousand nine hundred
(2,900) units and has been designated by FDA as a Class II recall (FDA
#Z-578/579-7), was conducted as a result of the discovery that the catheters or
ports of certain lots of the Device may contain stainless steel spheres which
could result in metallic spheres
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24
flushing from the catheter or port. Buyer acknowledges that the Recall was
necessitated by a process utilized by a contract vendor who supplied catheters
to the Company and that the impact of the Recall and the resulting delay in the
Company's ability to provide replacement products conforming to product
specifications and Company standards to the Company's sales representatives may
have caused a Material Adverse Effect on sales of the Company's products in
Japan, the principal market for the Device. Buyer further acknowledges that the
Recall may also have had a material adverse impact on the operations of the
Company's exclusive distributor of the Device in Japan.
(s) Assignment of Assets of M1000 Business. The transfer by
the Company of those assets identified in Schedule A to that certain Joint
Assignment and License Agreement dated on or prior to the Closing Date between
the Company and Programmable Pump Technologies, Inc. will not have a material
adverse impact on the Company's ability to manufacture, market and sell any of
the Company's existing products as of the date hereof (other than the M1000
programmable pump) and none of those assets are required in the manufacture of
such products.
4.2 Representations and Warranties of Horizon and Arrow. Each
Buyer (for itself only) hereby severally, and not jointly, represents and
warrants to the Company and Seller as follows:
(a) Authority. Such Buyer has all requisite corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. All corporate acts and other proceedings required to be
taken by such Buyer to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and properly taken. This Agreement has been duly executed and delivered by
such Buyer and constitutes the legal, valid and binding obligation of such
Buyer, enforceable against such Buyer in accordance with its terms. The
execution, delivery and performance by such Buyer of this Agreement and the
consummation by such Buyer of the transactions contemplated hereby will not (i)
violate any provision of law, rule or regulation to which such Buyer is subject,
(ii) conflict or violate any order, judgment, injunction, award or decree
applicable to such Buyer, (iii) violate or conflict with the certificate or
articles of incorporation, bylaws or other similar governing documents of such
Buyer, (iv) constitute a default under or give rise to a right of termination,
cancellation or acceleration of any right or obligation of such Buyer under any
provision of any agreement, contract or other instrument binding upon such Buyer
or any license, franchise, permit or other similar authorization held by such
Buyer, or (v) result in the creation or imposition of any lien, encumbrance,
charge or claim upon any of the assets of such Buyer, except in the case of any
of the foregoing clauses (i)-(v) for any such violation, conflict, default,
right or lien which would not individually or
- 20 -
25
in the aggregate have a Material Adverse Effect. The execution, delivery and
performance by such Buyer of this Agreement and the consummation by such Buyer
of the transactions contemplated hereby do not require any consent from or
filing with any Authority except for (i), with respect to Horizon only, the
filing of a report under the HSR Act and the expiration of the applicable
waiting period; (ii) any consent or filing that the Company or Seller is
required to obtain or make; and (iii) consents and filings which, if not
obtained or made, will not individually or in the aggregate have a Material
Adverse Effect or have a material adverse effect on the ability of the parties
hereto to consummate the transactions contemplated hereby.
(b) Sufficient Funds. Such Buyer has sufficient funds to pay
its share of the Purchase Price in full as specified on Schedule 2.1(b).
(c) Organization and Standing of Buyer. Horizon (but not
Arrow) represents and warrants that it is a corporation duly organized and
validly existing under the laws of the State of Georgia. Arrow (but not Horizon)
represents and warrants that it is a corporation duly organized and validly
existing under the laws of the Commonwealth of Pennsylvania. Such Buyer has full
corporate power and authority and possesses all material governmental
franchises, licenses, permits, authorizations and approvals necessary to enable
it to use its corporate name and to own, lease or otherwise hold its properties
and assets and to carry on its business in all material respects as presently
conducted.
(d) Litigation; Decrees. Schedule 4.2(d) sets forth a list as
of the date of this Agreement of all lawsuits, claims, proceedings or
investigations pending or, to the knowledge of such Buyer, threatened by or
against or affecting such Buyer or any of its subsidiaries or any of its
properties, assets, operations or businesses or which challenge the legality of
this Agreement or any action to be taken in connection herewith. To the
knowledge of such Buyer, neither it nor any of its subsidiaries is in default
under any judgment, order or decree having a Material Adverse Effect.
(e) Securities Act. The Securities purchased by such Buyer
pursuant to this Agreement are being acquired for investment purposes only and
not with a view to any public distribution thereof, and such Buyer will not
offer to sell or otherwise dispose of the Securities so acquired by it in
violation of any of the registration requirements of the Securities Act of 1933,
as amended, or any applicable state securities laws.
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26
ARTICLE V
COVENANTS
5.1 Covenants of Seller. Seller covenants and agrees as
follows:
(a) Access. Prior to the Closing, Seller will, and will
cause the Company to, give Buyer and its representatives, employees, counsel and
accountants reasonable access to the properties, books and records of the
Company during mutually agreeable business hours; it being understood that
Seller, in its sole discretion may deny or restrict any access involving
possible breaches of applicable confidentiality agreements with third parties,
environmental reviews not previously approved by Seller in its sole discretion
or possible waivers of any applicable attorney-client privileges.
(b) Ordinary Conduct. From and after the date hereto and
prior to Closing, and unless Buyer shall otherwise consent or agree in writing
and except as contemplated by this Agreement or as disclosed on Schedule 5.1(b)
hereto, Seller covenants and agrees that the Company:
(i) will use its reasonable best efforts to conduct
the Business in the ordinary course and shall not sell or convey any assets
owned by the Company and utilized in the Business other than in the ordinary
course;
(ii) will use its Best Efforts to preserve its
business organization intact, to maintain the services of its present key
employees and to preserve the goodwill of the suppliers, customers and others
having business dealings with the Company;
(iii) will not amend its Articles of Organization,
Bylaws or other similar governing documents;
(iv) will not issue any capital stock or rights,
warrants or options to acquire shares of such capital stock or issue any
securities convertible into such shares or convertible into securities in turn
so convertible, or grant any options, warrants or rights to acquire any such
convertible securities;
(v) will not split, combine or reclassify its
outstanding capital stock;
(vi) will not declare or pay any dividend or other
distribution in respect of any class of its capital stock, or make any payment
to redeem, purchase or otherwise acquire, or call for redemption, any of such
stock; (it being understood that Seller and the Company shall be permitted to
maintain and adjust the intercompany payable owed by the Company to Seller and
its Affiliates); and
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(vii) will not merge or consolidate with any other
corporation or, except in the ordinary course of business, acquire any property
or assets of any other Person.
(c) Confidentiality. Except as described in Schedule
5.1(c), for a period of three (3) years from the Closing, Seller will keep
confidential and cause its Affiliates and instruct its and their officers,
directors, employees and advisors to keep confidential all non-public
information relating to the Company and the Business, except as required by
applicable law, legal process or securities exchange requirements and except for
information which becomes public other than as a result of a breach of this
Section 5.1(c).
(d) Other Transactions. Prior to the Closing, none of
Seller, the Company nor any of their Affiliates shall, nor shall they permit any
of their respective officers, directors or other representatives to, directly or
indirectly, encourage, solicit, initiate or participate in discussions or
negotiations with, or provide any information or assistance to, any Person
(other than Buyer and its representatives) concerning any merger, sale of
securities, sale of substantial assets or similar transaction involving the
Company.
(e) Other Seller Obligations. Seller shall defend and pay
all amounts owing, and reasonable expenses incurred by Seller, in connection
with (i) any claim asserted against the Company in any litigation, arbitration,
suit or proceeding commenced on or prior to the Closing Date or in any written
notice delivered to the Company prior to the Closing Date, regardless of the
nature of the claim, including, without limitation, the claims and litigation
described in Schedule 4.1(j) attached hereto, (ii) any claim involving
liabilities or obligations of the Company involving death or bodily injury to a
third party as and to the extent involving products of the Company sold prior to
the Closing Date, regardless of whether such claim is asserted prior to or
following the Closing Date and (iii) any claim asserted for indemnification
(whether under the articles of incorporation or bylaws of the Company or under
the laws of the Commonwealth of Massachusetts) by a director, officer or
employee of the Company who served in such capacity prior to the Closing Date
where such claim is based upon events which occurred prior to the Closing Date.
Horizon, Arrow and the Company shall cooperate with Seller in connection with
Seller's defense and resolution of such claims, including, without limitation,
by providing Seller with access to the records, files and other information of
Horizon, Arrow or the Company, as the case may be, as reasonably requested by
Seller in connection therewith.
(f) Non-competition. As a further inducement to Buyer to
purchase the Securities, Seller agrees that, for a period beginning on the
Closing Date and ending on the third anniversary of the Closing Date (the
"Non-competition Period"), neither
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Seller nor any of its controlled Affiliates, whether by ownership in the
aggregate of at least twenty percent (20%) of the outstanding voting capital
stock or other comparable equity interests, contract, management or otherwise
("Controlled Entities"), will, directly or indirectly, compete with the Company
by engaging, other than with respect to the Permitted Activities described
below, in the development, license manufacture, sale or distribution, on a
worldwide basis, of (i) implantable infusion pumps or (ii) access devices which
compete with ports or catheters presently sold or in development by the Company
as of the date hereof (the products referred to in clauses (i) and (ii),
"Restricted Products"). Notwithstanding anything to the contrary contained in
this Section 5.1(f), none of the following (each, a "Permitted Activity") shall
be deemed a breach of this Section 5.1(f):
(i) the development, license, manufacture, sale and
distribution of Restricted Products (other than nonprogrammable implantable
infusion pumps) by Seller and its Controlled Entities, other than any Restricted
Products manufactured, sold or distributed by the Company or any Person other
than Seller and its Controlled Entities, substantially in the manner as in
effect on the date hereof; or
(ii) the M1000 (as such term is defined in the Joint
Assignment and License Agreement between the Company and Programmable Pump
Technologies, Inc. (the "Joint Agreement") attached as Exhibit I to Schedule
5.1(b) hereto) in the Field of Use (as such term defined in the Joint
Agreement); or
(iii) investments in or ownership of any class of equity
securities of any Controlled Entity for whom less than the lower of (i) ten
million dollars ($10,000,000.00) and (ii) ten percent (10%) of such Controlled
Entity's gross revenues are derived from the manufacture, sale and distribution
of Restricted Products during the twelve (12) calendar months prior to initial
investment by Seller (the "Restricted Sales Cap"); it being understood and
agreed that in the event that Seller acquires any Controlled Entity which
exceeds the foregoing Restricted Sales Cap, (A) Seller shall have twelve (12)
calendar months to divest or alter the operations of such Controlled Entity such
that the gross revenues of the Controlled Entity derived from the manufacture,
sale and distribution of Restricted Products during the twelve (12) calendar
months following initial investment by Seller do not exceed the Restricted Sales
Cap and (B) the Non-competition Period shall be extended for a period of time
equal to the time between investment in or ownership of equity securities of the
Controlled Entity and such divestment or alteration of operations.
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5.2 Covenants of Buyer. Each of Horizon and Arrow severally, and
not Jointly (except with respect to Section 5.2(b), for which Horizon and Arrow
jointly and severally), covenant and agree as follows:
(a) Confidentiality. Buyer acknowledges that all information
being provided to it by Seller and the Company is subject to the terms of
certain confidentiality agreements dated February 7, 1997 between Horizon and
Seller and dated January 24, 1997 between Arrow and Seller (together the
"Confidentiality Agreement"). Effective upon, and only upon, the Closing, the
Confidentiality Agreement shall terminate.
(b) Financial and Other Information. Buyer will (i) hold all
of the books and records of the Company existing on the Closing Date (or copies,
microfiche or other comparable reproductions thereof) (collectively, "Books and
Records") and not destroy or dispose of any thereof for a period of eight (8)
years from the Closing Date or such longer time as may be required by law, and
thereafter, if it desires to destroy or dispose of any of such Books and
Records, will offer first in writing at least sixty (60) days prior to such
destruction or disposition to surrender them to Seller and (ii) provide to
Seller financial information with respect to the Company for the portion of the
current fiscal year during which the Securities were owned by Seller in
accordance with past practice to allow Seller to comply with securities law,
financial and tax reporting and accounting requirements. Buyer shall reasonably
cooperate with Seller after the Closing Date so that Seller has access to the
business records, contracts, regulatory filings and related materials, and other
information relating to the Company and the Business as is reasonably necessary
for (a) the preparation for or the prosecution or defense of any suit, action,
litigation or administrative, arbitration or other proceeding or investigation
by or against Seller, (b) the preparation and filing of any tax return or
election relating the Company and the Business and any audit by any taxing
authority of any Returns of Seller relating thereto, and (c) the preparation and
filing of any other documents required by any Authority. The access to Books and
Records contemplated by this Section 5.2(b) shall be during normal business
hours and upon not less than two (2) Business Days prior written request.
(c) Solicitations of Employees. If this Agreement is
terminated in accordance with Section 8.3, each of Horizon and Arrow agrees that
neither of them nor any of their Affiliates will solicit, entice or offer
employment to any employees of the Company for a period of three (3) years from
the date of this Agreement; provided, that the foregoing shall not prohibit
either of Horizon or Arrow from employing any individuals who have received
notice of termination from, or ceased to be employed by, the Company prior to
the first time such individuals discussed, with any representative of either of
Horizon or Arrow, employment by either of them.
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(d) Employees and Employee Benefits.
(i) Offer of Employment; Continued Employment; Severance.
Each of Horizon and Arrow agrees to continue the employment as of the Closing
Date of each Employee at a rate of pay at least equal to the Employee's rate of
pay in effect on the Business Day immediately preceding the Closing Date and
with such other benefits as are set forth in Schedule 5.2(d). Such employment
shall be at a location within a twenty-five (25) mile radius of the Facility.
Schedule 5.2(d)(i) (which shall be updated by Seller on the Closing Date) shall
set forth each Employee's current rate of pay, position and date of hire. For
purposes of this covenant, Buyer shall be entitled to rely on the accuracy
thereof and, with respect to such Employee's benefits under the Company's
Benefit Plans, on the materials referred to in Schedule 4.1(k). Each of Horizon
and Arrow shall have no obligation whatsoever with regard to any employees or
former employees of Seller, including but not limited to (a) retired or inactive
employees, who are not or shall have ceased to be Employees as of the Business
Day immediately preceding the Closing Date, (b) those individuals listed on
Schedule 5.2(d)(ii) or (c) Employees who do not accept the offer of employment
given by either of Horizon or Arrow in accordance with this Section 5.2(d) and
do not work for Horizon or Arrow, as the case may be at least one day. Each of
Horizon or Arrow, as the case may be, shall be solely responsible for all
salaries or wages accruing on or after the Closing Date with respect to the
Employees. Each of Horizon and Arrow may, at its discretion, change the
conditions of employment after the Closing Date except for (x) the location
requirement described in the second sentence of this Section 5.2(d)(i) and (y)
pay and benefits comparability requirements, employee separation plan
obligations and other benefits described in Schedule 4.1(k), all of which
matters described in clauses (x) and (y) shall remain unchanged until the date
immediately following the second anniversary of the Closing Date.
Notwithstanding the foregoing sentence, either of Horizon or Arrow may terminate
an Employee during such two (2) year period due to "Performance-Related
Terminations" or "Curtailment or Cessation of Operations/Reorganization/Position
Elimination Terminations" (as those terms are described in Seller's Employee
Separation Plan attached as Schedule 4.1(k) hereto) so long as Horizon or Arrow
(i) first offers such Employee the opportunity to sign a release agreement in
substantially the form attached hereto as Exhibit C, (ii) pays or otherwise
provides severance benefits to such Employee in accordance with Seller's
Employee Separation Plan as described in Schedule 4.1(k) and (iii) provides
continuation of medical and dental benefits for six (6) months thereafter;
provided, however, that either of Horizon or Arrow may terminate an Employee
without paying or otherwise providing severance benefits to such Employee in
accordance with such policy if such Employee is terminated, in Horizon or
Arrow's reasonable discretion, as the case may be, "for cause" (as such term is
defined in Seller's Employee Separation Plan attached as Schedule 4.1(k)
hereto). Seller agrees to reimburse either Buyer
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for the actual cost of benefits provided by such Buyer pursuant to clause (iii)
in the foregoing sentence within thirty (30) days following receipt by Seller of
a quarterly written statement for each three (3) month period following the
Closing Date identifying those Employees terminated by such Buyer during such
three (3) month period and such Buyer's actual cost to provide such benefits;
provided that such Buyer shall, upon written request of Seller, provide Seller
or its designee with reasonable access to the books and records of the Company
and its Affiliates during normal business hours reasonably necessary to confirm
the termination of any such Employee and/or such Buyer's actual cost of
providing such Employee with the benefits described in clause (iii) of the
foregoing sentence. Notwithstanding anything to the contrary herein, on the date
immediately following the second anniversary of the Closing Date, Horizon and
Arrow shall provide pay and benefits and severance plans, programs and policies
(other than those relating to internal procedures for approval of group
terminations or curtailments) which are substantially comparable to those
provided to other similarly situated employees of either of them, as the case
may be. Employees shall also be provided credit for all service with Seller and
its Affiliates, to the same extent as such service was credited for such purpose
by Seller and its Affiliates, under (x) all of the Company's Benefits Plan
described in Schedule 4.1(k) for purposes of eligibility, vesting and benefit
accrual and (y) severance plans, programs and policies for purposes of
calculating the amount of each Employee's severance benefits described in
Schedule 4.1(k). In reliance upon the covenants of each Buyer contained in this
Section 5.2(d)(i), Seller represents and warrants that the sale of the
Securities and Foreign Assets contemplated by this Agreement will not give rise
to any severance or termination benefits under any of the Benefit Plans
described in Schedule 4.1(k) hereto for which Buyer shall be responsible. Seller
acknowledges that the benefits to be provided by each Buyer as described in
Schedule 5.2(d) hereto are substantially comparable to the benefits offered by
Seller to such Employees immediately prior to the date hereof.
(ii) No Third-Party Beneficiaries; No Buyer Limitations.
Nothing expressed or implied in this Section 5.2 shall create any third-party
beneficiary or other rights in any employee or former employee (including any
beneficiary or dependent thereof) of the Company with respect to continued
employment (or resumed employment) with Horizon or Arrow, as the case may be, or
any Affiliate of either of them. Further, no provision of this Section 5.2 shall
create any such rights in any employee or former employee (including any
beneficiary or dependent thereof) of the Company with respect to any benefits
that may be provided, directly or indirectly, under any employee compensation
and benefits plans, programs, policies or arrangements or any plan or
arrangement which may be established by either of Horizon or Arrow.
Notwithstanding anything contained herein to the contrary, no provision of this
Agreement shall constitute a limitation on rights to amend, modify or
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terminate, after the Closing Date, any specific plan or arrangement of either or
Horizon or Arrow, except to the extent that comparability requirements as to a
type of plan or arrangement (or a group of plans or arrangements) may create
such a limitation.
(iii) Qualified Plans.
(1) Seller sponsors the following qualified
plans under Section 401(a) of the Code (collectively the "Pfizer Qualified
Plans"): the Pfizer Savings and Investment Plan (the "Savings Plan") and the
Pfizer Retirement Annuity Plan (the "Retirement Plan"). Effective as of the
Closing Date, Seller shall cause each Employee who is a participant in each
Pfizer Qualified Plan to become one hundred percent (100%) vested in his or her
accrued benefit under such plan.
(2) Effective on the Closing Date, each
participant in a Pfizer Qualified Plan who is an Employee shall cease to be an
active participant under each such plan, and shall become a participant of the
Horizon or Arrow's Qualified Plans as listed in Schedule 5.2(d)(iii)(2) (such
plans being collectively referred to as the "Buyer Qualified Plans"), as the
case may be. The Buyer Qualified Plans will recognize the accrued service of
Employees with Seller, the Company and each of their Affiliates prior to the
Closing Date for all purposes, to the extent credited under the terms of the
corresponding Pfizer Qualified Plan as in effect on the Closing Date. As soon as
practicable after the date hereof, Seller shall deliver such service data to
either of Horizon or Arrow.
(3) Seller shall cause as soon as practicable
after the Closing Date, the Savings Plan to transfer the account balance of each
Employee to the corresponding Buyer Qualified Plan as of the valuation date next
preceding the date of transfer. Horizon and Arrow, on the one hand, and Seller,
on the other hand, each agree to use its Best Efforts and to cooperate with the
other to effect as promptly as possible the transfers of assets contemplated
under this Section 5.2(d)(iii)(3) subject to the Seller's receipt of
satisfactory evidence that the Buyer Qualified Plans are in compliance with all
relevant tax and labor laws; such evidence shall include, but not be limited to,
a current determination letter from the IRS, if available, and satisfactory
representations from the administrators of the Buyer Qualified Plans. If a
current determination letter has not been obtained, Horizon or Arrow, as the
case may be, and such party's counsel shall each provide a representation that
the Buyer Qualified Plans are qualified under Section 401(a) of the Code and
that a timely application for a determination letter is pending and that Horizon
or Arrow, as the case may be, will take all necessary steps to secure a
determination letter.
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(4) Seller will give Horizon and Arrow
reasonable access to any records of Seller necessary to administer the
retirement benefits of Employees transferred to the Buyer Qualified Plans.
(iv) Accrued Entitlements. Seller shall provide to
Horizon and Arrow a statement of all accrued entitlements for Employees,
including but not limited to vacation days, wages and other compensation
consistent with past practice.
(v) Medical and Welfare Plan Obligations. On the
Closing Date, Horizon or Arrow, as the case may be, shall include the Employees
in its welfare plans and agrees to waive any waiting periods or limitations for
preexisting conditions under its medical, dental, and short-term and long-term
disability plans. Claims by an Employee for medical and dental services rendered
on or after the Closing Date shall be the responsibility of the medical and
dental plans provided by Horizon or Arrow, as the case may be, to the Employees.
Claims incurred for medical and dental services for Employees rendered prior to
the Closing Date shall be the responsibility of the group medical and dental
plans of Seller which covered such Employees prior to the Closing Date.
(vi) Closing of the Facility. Buyer agrees that
after the Closing if Buyer elects to terminate the Employees who are employed at
the Facility, Buyer will provide any and all notices required by the Worker
Adjustment and Retraining Notification Act, 29 U.S.C. ss. 2101 et. seq. and its
applicable regulations, and its Massachusetts counterpart, Mass Gen. L. ch. 151
ss.71A et seq. Buyer further agrees that it will indemnify Seller and hold
Seller harmless against any loss, expense, damage, claim, liability, obligation,
judgment or injuries suffered or sustained by Seller by reason of any act,
omission or alleged act or omission arising out of Buyer's obligations under
this Section 5.2 (d)(vi), including without limitation, any judgment, award,
settlement, attorneys' fees and other costs and expenses incurred in connection
with the defense of any actual or threatened action, proceeding or claims, all
costs of which shall be paid by Buyer as incurred.
(e) Ongoing Programs. Arrow shall cause the Company to
continue those programs as described on Schedule 5.2(e).
(f) No Impact on Seller's Indemnity. Horizon and Arrow
shall not, and shall not permit the Company or any other Affiliate to, act or
fail to act where such action or inaction could or does materially adversely
impact or otherwise materially increase Seller's indemnification obligations
described in Section 7.1(a) of this Agreement relating to any Loss arising from
the Joint Development and Consulting Agreement dated March 5, l989 between ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇, M.D. and Strato Medical Corporation (the "Loiterman Agreement") as
in effect on the date
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hereof. In addition, Horizon shall, upon the mutual written request of Seller
and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, M.D., take all reasonable steps necessary to cause the
Company to assign, without recourse, the Loiterman Agreement to Seller or its
designee as soon as reasonably practicable following receipt of such written
request.
(g) Extraordinary Transactions. On or after the Closing Date,
Buyer shall not permit the Company to effect any extraordinary transactions that
could reasonably result in Tax liability to the Seller (other than as a result
of the sale of the Securities and the Foreign Assets as contemplated by this
Agreement).
(h) Lease of the Facility. (i) Arrow shall not, and shall not
permit the Company or any Affiliate of either of them, to (i) exercise or enter
into any extension or renewal of the term of the Lease dated March 1, 1994
between ▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life Insurance Company (together with its successors
and assigns, the "Landlord") and Infusaid, Inc. (the "Lease") relating to
certain real property located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
(the "Facility") beyond February 28, 1999 (the "Normal Termination Date")
pursuant to any option, right of first offer or otherwise, (ii) expand the
premises leased under the Lease pursuant to any option, right of first offer or
otherwise, (iii) assign, other than to Arrow or an Affiliate of Arrow, the Lease
or any right thereunder prior to the Normal Termination Date without the prior
written consent of Seller, (iv) holdover or (v) otherwise remain in possession
of the Facility or the premises leased under the Lease following the Normal
Termination Date unless and until Arrow has provided Seller with an absolute,
unconditional written termination from the Landlord of Seller's guarantee and
indemnity obligations under the Lease (collectively, the "Obligations").
(ii) On or as soon as reasonably practicable
following the Closing Date, the Company shall obtain and thereafter utilize a
new EPA identification number for the generation of Hazardous Substances
disposed of after the Closing Date.
5.3 Mutual Covenants. Each of Seller and Buyer covenants and agrees as
follows:
(a) Antitrust Notification. Seller and Horizon agree to file
or cause to be filed all necessary documentation with the appropriate
Authorities as soon as practicable to obtain as soon as possible all consents
required by any Authorities in order to consummate the transactions contemplated
by this Agreement. Without limiting the generality of the foregoing, Seller and
Horizon agree to file or cause to be filed, respectively, as soon as practicable
after the date hereof, but in no event more than five (5) Business Days after
the date hereof, an acquired person's and acquiring person's HSR Act
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notification and report form with respect to the transactions contemplated by
this Agreement required by the HSR Act. Seller and Horizon further agree to use
their Best Efforts to comply promptly with and, where appropriate, to respond in
cooperation with each other to, all requests or requirements which applicable
Federal, state, local, foreign or other applicable law or governmental officials
may impose on them with respect to the transactions which are the subject of
this Agreement.
(b) Publicity. Prior to the Closing, Seller on the one hand,
and Horizon or Arrow, severally and not jointly, on the other hand, agree that
no public release or announcement concerning the transactions contemplated
hereby shall be issued by any of them without the prior consent (which consent
shall not be unreasonably withheld) of the other, except as such release or
announcement may be required by law or the rules or regulations of any United
States or foreign securities exchange or The Nasdaq Stock Market, in which case
the party required to make the release or announcement shall allow the other
party reasonable time to comment on such release or announcement in advance of
such issuance. Notwithstanding the foregoing, Arrow may issue a public release
or announcement concerning the transactions contemplated hereby on or prior to
June 30, 1997 upon receipt of the prior written approval of such release or
announcement by Seller, which approval shall not be unreasonably withheld.
(c) Reasonable Diligent Efforts. Subject to the terms and
conditions of this Agreement, each party will, severally, use its reasonable
diligent efforts to cause the Closing to occur as promptly as reasonably
possible.
(d) Cooperation. Horizon, Arrow and Seller shall cooperate
with each other and shall cause their officers, employees, agents, auditors and
representatives to cooperate with the others during the period prior to the
Closing and for a period of one hundred twenty (120) days after the Closing to
ensure the orderly transition of the Company from Seller and its Affiliates to
Buyer and reasonably to minimize any disruption to the respective businesses of
the Company, Seller, Buyer and any of their Affiliates that might result from
the transactions contemplated hereby. With respect to the period after the
Closing each of Horizon, Arrow and Seller shall reimburse the others for
reasonable out-of-pocket costs and expenses incurred in assisting such party
pursuant to this Section 5.3(d). Neither of Horizon, Arrow, Seller nor any of
their Affiliates shall be required by this Section 5.3(d) to take any action
that would unreasonably interfere with the conduct of its business. In addition,
after the Closing Date, Arrow shall utilize its Best Efforts to assist Seller in
its efforts to secure the release of Seller from the Obligations as soon as
reasonably practicable after the Closing Date (it being understood that Arrow
shall not be obligated to pay any monetary sums in connection with the
foregoing).
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(e) Tax Treatment. Seller, on the one hand, and Horizon and
Arrow, on the other hand, agree to treat the sale of the Securities contemplated
by this Agreement in accordance with its form as a sale of capital stock of the
Company for tax purposes.
(f) Transition Services. On or prior to the Closing Date,
Horizon, Arrow and the Company shall execute and deliver to Seller and Seller
shall execute and deliver to Horizon, Arrow and the Company a transition
services agreement in a form reasonably acceptable to each of them (the
"Transition Agreement") relating to certain services to be provided by the
parties to this Agreement. Notwithstanding any other provision of this
Agreement, Horizon, Arrow and the Company, on the one hand, and Seller, on the
other hand, covenant to utilize Best Efforts to comply with any and all
provisions of the Transition Agreement.
ARTICLE VI
OTHER AGREEMENTS
6.1 Certain Understandings. Each of the parties is sophisticated
and was advised by experienced counsel and, to the extent it deemed necessary,
other advisors in connection with this Agreement. Each Buyer acknowledges that,
solely as of the signing of this Agreement, it has performed a comprehensive due
diligence investigation of the business and operations of the Company and has no
actual knowledge of any misrepresentation or breach of a warranty of Seller
herein (as contrasted with actual knowledge of a fact underlying a
misrepresentation or breach). Buyer also acknowledges that pursuant to Section
5.l(a) hereof Buyer will have access to the properties, books and records of the
Company so that Buyer may conduct any additional due diligence it deems
necessary (other than with respect those items specified on Schedule 5.1(b)
hereto). Each of the parties hereby acknowledges that (i) no party has relied or
will rely in respect of this Agreement or the transactions contemplated hereby
upon any document or written or oral information previously furnished to or
discovered by it or its representatives, other than this Agreement (including
the Schedules hereto) and other documents delivered at the Closing, (ii) there
are no representations or warranties by or on behalf of any party hereto or any
of its respective Affiliates or representatives other than those expressly set
forth in this Agreement or in documents delivered at the Closing, and (iii) the
parties' respective rights and obligations with respect to this Agreement and
the events giving rise thereto will be solely as set forth in this Agreement.
Subject to the last sentence of Section 7.6, none of Seller, the Company, nor
any other Person will have or be subject to any liability to Buyer or any other
Person resulting from the distribution to Buyer, or Buyer's use of, any
information not contained in this Agreement (including, without limitation, any
offering memorandum, brochure or other publication provided to Buyer, and any
other document or information provided to Buyer in
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connection with the sale of the Securities). Notwithstanding anything contained
herein to the contrary, neither the Company nor Seller makes any representation,
warranty or covenant of any kind with respect to any projections, estimates or
budgets heretofore delivered to or made available to Buyer, except as set forth
in Sections 4.1(a), 4.1(c), 4.1(j), 4.1(l) and 4.1(p) of this Agreement, of
future revenues, expenses or expenditures, future results of operations (or any
component thereof), future cash flows or future financial condition (or any
component thereof) of the Company or the future business and operations of the
Company.
6.2 Further Assurances. From time to time, as and when requested
by either party hereto, the other party shall execute and deliver, or cause to
be executed and delivered, all such documents and instruments and shall take, or
cause to be taken, all such further or other actions as such other party may
reasonably deem necessary or desirable to consummate the transactions
contemplated by this Agreement.
6.3 Tax Matters. (a) Seller shall be responsible for the
preparation, on a basis consistent with Returns filed for previous periods, and
filing of all Federal, state and local income Tax Returns of the Company for all
taxable periods ending on or before the Closing Date and all other Returns of
the Company that are due (giving effect to valid extensions) on or before the
Closing Date ("Seller's Tax Returns"). Seller shall make all payments required
with respect to Seller's Tax Returns.
(b) Buyer will be responsible for the timely (i) preparation and filing
of all other Returns of the Company and (ii) payment of all Taxes related
thereto, including Returns for periods beginning before the Closing Date but
ending after the Closing Date ("Straddle Returns") which shall be prepared and
filed by Buyer in a manner consistent with Seller's Tax Returns for previous
periods. In the case of such Straddle Returns, Buyer shall provide Seller with
copies of such Returns as filed, after which Seller shall reimburse Buyer for
the portion of Taxes shown to be due on such Returns which is accruable to
pre-Closing periods. Buyer shall also be responsible for all sales, use,
documentary, stamp or other transfer Taxes incurred in connection with the sale
of the Company and the Foreign Assets (collectively, "Transfer Taxes").
(c) Seller and Buyer shall provide reasonable cooperation to each other
in connection with (i) the preparation or filing of any Return, Tax election,
Tax consent or certification, or any claim for a Tax refund, (ii) any
determination of liability for Taxes, and (iii) any audit, examination or other
proceeding in respect of Taxes related to the Company. Such cooperation shall
include making available, on a reasonable basis, employees of the Seller, Buyer,
or the Company, as the case may be, whose out-of-pocket costs, if any, shall be
reimbursed by the party to which such employees are made
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available. After the Closing Date, Seller and Buyer shall make available to each
other, as reasonably requested, all information, records or documents of the
Company for all periods prior to and including the Closing Date and shall
preserve all such information, records and documents until the expiration of any
applicable statute of limitations, including extensions thereof, provided that
notice of such extension is given to the party which did not grant the
extension, but in all events such information, records and documents shall be
preserved for a period of not less than eight (8) years.
(d) Seller shall have the right, at its own expense, to control any
audit or examination by any Authority, to initiate any claim for refund, to
amend any Seller's Tax Return or Straddle Return or to contest, resolve and
defend against any assessment, notice of deficiency, or other adjustment or
proposed adjustment relating to Seller's Tax Returns (whether or not a Tax
Return was actually filed). Buyer shall notify Seller within ten (10) days
following receipt of notice from any taxing or other Authority relating to any
proposed investigation, audit or other proceeding that may affect Seller's Tax
Returns or Straddle Returns.
(e) Seller shall be entitled to any refund or credit of Taxes of the
Company with respect to (i) any taxable period that ends on or prior to the
Closing Date and (ii) its portion of Taxes paid with respect to Straddle
Returns.
(f) Tax Indemnity - Notwithstanding the provisions of Article VII of
this Agreement, Seller agrees to indemnify Buyer for and hold Buyer harmless
from any Taxes of the Company with respect to Seller's Tax Returns or otherwise
with respect to any Taxes relating to the ownership and operation of the
Business prior to the Closing Date (including, without limitation, all interest,
penalties, reasonable costs of defense and reasonable legal fees and expenses
incurred by Buyer). Notwithstanding the provisions of Article VII of this
Agreement, Horizon and Arrow shall be jointly and severally liable to indemnify
and hold Seller harmless for all Tax liabilities of the Company, including,
without limitation, all interest, penalties, reasonable costs of defense and
reasonable legal fees incurred by Seller, payable with respect to any period
after the Closing Date or with respect to any Straddle Returns (other than
amounts that are the responsibility of Seller pursuant to Section 6.3(b) of this
Agreement), including any such liabilities incurred as a result of the transfer
either (i) by the Company of any Company assets to Arrow, Horizon or both of
them; or (ii) of any Company assets among Horizon and Arrow, whether such
liabilities are considered attributable to any period before, after or including
the Closing Date.
6.4 Liabilities and Causes of Action Relating to Furon. (a) As of the
date hereof there exists an unresolved dispute between Seller and Furon Company,
Inc. ("Furon") relating
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to the quality of catheters supplied by Furon to the Company. In that dispute
Seller alleges (i) that Furon breached its warranties by supplying catheters
contaminated with steel deflashing beads; (ii) that the presence of the beads
rendered the catheters and the finished ports into which they were incorporated
adulterated; (iii) that the Company was obliged to recall adulterated product;
(iv) that the Company was unable to obtain cover for the contaminated catheters
in sufficient time to supply its distributors to enable them to meet their
demands; (e) and that both (A) the losses incurred as a result of Furon's
breaches of warranty and (B) the pendency of Seller's dispute with Furon
resulted in a lower price for the sale of the Company by Seller.
(b) In the dispute with Furon, Seller seeks recovery of (i) damages for
the costs of the Recall; (ii) the cost of cover; (iii) the lost profits on sales
unrealized as a result of Furon's breach; (iv) the reduction in the sale price
for the Company occasioned by the foregoing; and (v) any other damages arising
from Furon's breach. In addition, Seller seeks (vi) indemnification for any
claims made against Seller by its distributors as a result of their lost sales;
and (vii) indemnification for products liability claims made against Seller
and/or its distributors resulting from contaminated catheters.
(c) The Company shall retain all liabilities arising from the breaches
by Furon (the "Furon Liabilities"), including (i) liabilities resulting from
claims by distributors for lost sales or profits resulting from the Company's
inability to ship product due to inadequate supplies of catheters; and (ii)
other liabilities attributable to Furon's breaches (other than those described
in clause (ii) of Section 5.1(e) of this Agreement).
(d) The Company shall retain all claims and causes of action against
Furon arising from Furon's supply of catheters and its breaches of the supply
agreement and all damages caused thereby to Buyer, the Company or Seller. Seller
will take such actions and execute such documents as will enable the Company to
perfect and pursue such claims and causes of action against Furon, and will
perform such additional acts as are specified in Sections 8.7 and 5.3(d) of this
Agreement.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification by Seller. (a) Seller hereby agrees to indemnity
Buyer, its Affiliates and, after the Closing Date, the Company and their
respective officers and directors against and hold them harmless on a net
after-Tax basis from any loss, liability, claim, damage or expense (including
reasonable legal fees and expenses and costs of enforcing any right to
indemnification pursuant to this Agreement but excluding unforeseen or other
consequential damages and punitive damages other than unforeseen or other
consequential damages and punitive
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damages suffered or incurred by or otherwise awarded in favor of any Person,
other than Buyer, Seller, the Company or any of their Affiliates, who initiates
a Third Party Claim in connection with any of the obligations identified in
clauses (i), (ii) and (iii) of the first sentence of Section 5.1(e) of this
Agreement or on Schedule 7.1(a)) (a "Loss") suffered or incurred by any such
indemnified party (other than any relating to Taxes, for which indemnification
provisions are set forth in Section 6.3 of this Agreement) as a direct
consequence of (i) any breach of any representation or warranty of Seller
contained in this Agreement which by the terms of Section 8.4 survives the
Closing, or (ii) any breach of any covenant of Seller contained in this
Agreement or (iii) those matters specifically identified on Schedule 7.1(a) (the
"Covered Obligations") or (iv) the release or threatened release of any
Hazardous Substance during the Company's ownership, lease or operation of real
property now or formerly owned, leased or operated by the Company (or with
respect to the Facility, during or prior to the Company's lease of the Facility)
to the extent arising prior to the Closing Date at, on, in or under any portion
of such real property which requires remediation under applicable Environmental
Laws or which constitutes a violation of applicable Environmental Laws or the
off-site disposal or shipment for disposal by the Company prior to the Closing
Date of any Hazardous Substance; provided, however, that Seller shall not have
any liability hereunder (other than with respect to clauses (ii) and (iii)
above) unless and until the aggregate of all Losses, for which Seller would, but
for this proviso, be liable exceeds on a cumulative basis a dollar amount equal
to four hundred and twenty-five thousand dollars ($425,000) (the "Basket"), and
then only to the extent of any amount which, in the aggregate, exceeds the
Basket; provided, further, that Seller shall not have any liability hereunder
unless and until the amount of Loss with respect to each individual matter, or
series of related matters, exceeds twenty five thousand dollars ($25,000) (the
"Sub-limit"); provided, further, that the maximum aggregate obligation of Seller
to Buyer (including, but not limited to, liabilities of Seller for costs,
expenses and attorneys' fees paid or incurred in connection therewith or in
connection with the curing of any or all breaches of the Seller's
representations and warranties) collectively pursuant to this Section 7.1(a)(i)
shall not exceed three and one half million dollars ($3,500,000) (the "Cap");
provided, further that (i) the Basket, the Sub-limit and the Cap shall not apply
to Seller's indemnity obligations under this Section 7.1 relating to the Covered
Obligations and no Losses relating to the Covered Obligations shall be included
in any way in determining the Basket, the Sub-limit and the Cap and (ii) the Cap
shall not apply to Seller's indemnity obligations under this Section 7.1
relating to Seller's representations and warranties in the first three sentences
of Section 4.1(a), in Section 4.1(c) of this Agreement and the first sentence of
Section 4.1(g) and no Losses relating to such representations and warranties
shall be included in any way in determining the Cap.
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41
(b) Buyer acknowledges and agrees that Seller shall not have
any liability under any provision of this Agreement for any Loss to the extent
that such Loss relates to actions taken by or omitted to be taken by Buyer, the
Company or their respective Affiliates after the Closing Date. Buyer shall take
and cause its Affiliates (including the Company) to take all reasonable steps to
mitigate any Loss upon becoming aware of any event which would reasonably be
expected to, or does, give rise thereto, including incurring costs only to the
minimum extent necessary to remedy the breach which gives rise to the Loss.
7.2 Indemnification by Buyer. (a) Each Buyer and, after the
Closing, the Company, hereby agrees to indemnify Seller and its Affiliates and
their respective officers and directors against and hold them harmless on a net
after-Tax basis from any Loss suffered or incurred by any such indemnified party
(other than any relating to Taxes, for which indemnification provisions are set
forth in Section 6.3 of this Agreement) as a direct consequence of (i) any
breach of any representation or warranty of such Buyer contained in this
Agreement which by the terms of Section 8.4 survives the Closing, (ii) any
breach of any covenant of such Buyer contained in this Agreement, (iii) any
obligation or liability of the Company arising on or after the Closing Date
(except to the extent, but only to the extent, Seller is obligated to indemnify
Buyer pursuant to Section 7.1(a) of this Agreement), (iv) any Obligations, (v)
any Furon Liabilities (other than those described in clause (ii) of Section
5.1(e) of this Agreement) and (vi), without limiting the indemnity provided in
clause (iii) of this Section 7.2(a), the release or threatened release, or the
exacerbation of any pre-Closing release (but only to the extent of such
exacerbation), of any Hazardous Substance, to the extent arising after the
Closing Date at, on or under any portion of the real property owned, leased or
operated by the Company which requires remediation under applicable
Environmental Laws or which constitutes a violation of applicable Environmental
Laws or the off-site disposal or shipment for disposal by the Company on or
after the Closing Date of any Hazardous Substance; provided, however, that such
Buyer shall not have any liability hereunder (other than with respect to clauses
(ii), (iii), (iv) and (v) above) unless and until the aggregate of all Losses,
for which Horizon and Arrow together would, but for this proviso, be liable
exceeds on a cumulative basis the Basket, and then only to the extent of any
amount which, in the aggregate, exceeds the Basket; provided, further, that such
Buyer shall not have any liability hereunder unless and until the amount of Loss
with respect to each individual matter, or series of related matters, exceeds
the Sub-Limit; provided, further, that the maximum aggregate obligation of
Horizon and Arrow together to Seller (including, but not limited to, liabilities
of Horizon or Arrow for costs, expenses, attorneys' fees paid or incurred in
connection therewith or in connection with the curing of any or all breaches of
Horizon or Arrow's representations or warranties) collectively pursuant to
clause (i) of this Section 7.2(a) shall not exceed the Cap. Notwithstanding any
provision of this
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42
Agreement to the contrary, neither Horizon nor Arrow shall be liable or
otherwise responsible under this Agreement for the other's failure to close the
transactions contemplated by, or perform the other obligations under, this
Agreement. Notwithstanding anything to the contrary in this Section 7.2(a),
Arrow shall have no liability pursuant to clause (v) of the first sentence of
this Section 7.2(a).
(b) Seller shall take all reasonable steps to mitigate any Loss
upon becoming aware of any event which would reasonably be expected to, or does,
give rise thereto, including incurring costs only to the minimum extent
necessary to remedy the breach which gives rise to the Loss.
7.3 Losses Net of Insurance, Etc. The amount of any Loss for which
indemnification is provided under this Article VII shall be net of (i) in the
case of Section 7.1, any accruals or reserves on the Annual Financial Statements
which relate specifically to such Loss, (ii) any amounts recovered by the
indemnified party pursuant to any indemnification by or indemnification
agreement with any third party, (iii) the positive difference, if any, between
(a) any insurance proceeds or other cash receipts or sources of reimbursement
recovered as an offset against such Loss and (b) the net present value of any
increase in insurance premiums payable by the Indemnified Party (as such term is
defined in Section 7.5 of this Agreement) which such party is able to
demonstrate to the Indemnifying Party (as such term is defined in Section 7.5 of
this Agreement) is directly attributable to any insurance proceeds paid on
account of such Loss (each such Person named in clauses (i), (ii) and (iii), a
"Collateral Source") and (iv) an amount equal to the Tax benefit, if any,
attributable to such Loss. If the amount to be netted hereunder from any payment
required under Sections 7.1 or 7.2 is determined after payment by the
indemnifying party of any amount otherwise required to be paid to an indemnified
party pursuant to this Article VII, the indemnified party shall repay to the
indemnifying party, promptly after such determination, any amount that the
indemnifying party would not have had to pay pursuant to this Article VII had
such determination been made at the time of such payment.
7.4 Termination of Indemnification. The obligations to indemnify and
hold harmless a party hereto, pursuant to Sections 7.1(a)(i) and 7.2(a)(i),
shall terminate when the applicable representation or warranty terminates
pursuant to Section 8.4; provided; however, that the obligation of Seller to
indemnify and hold harmless Buyer pursuant to Sections 7.1(a)(iv) with respect
to the Facility shall terminate on the third anniversary of the date hereof;
provided, further, that the obligation of Seller to indemnify and hold harmless
Buyer pursuant to Sections 7.1(a)(iv) with respect to the real property owned,
leased or operated by the Company, other than the Facility shall terminate on
the tenth anniversary of the date hereof; provided, further, that the obligation
of Seller to indemnify and
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hold harmless Buyer pursuant to Sections 7.1(a)(iv) with respect to (i) the
off-site disposal or shipment for disposal by the Company prior to the Closing
Date of any Hazardous Substance and (ii) the real property located outside of
the United States owned by Seller or its Affiliates and utilized by the Company
shall survive indefinitely; provided, further, that such obligations to
indemnify and hold harmless shall not terminate with respect to any item as to
which the person to be indemnified (or the related party thereto) shall have,
before the expiration of the applicable period, previously made a claim by
delivering a notice (stating in reasonable detail the basis of such claim) to
the party providing the indemnification.
7.5 Procedures Relating to Indemnification under Sections 7.1 and 7.2.
In order for a party (the "Indemnified Party") to be entitled to any
indemnification provided for under Sections 7.1 or 7.2 of this Agreement in
respect of, arising out of or involving a claim or demand made by any Person
against the Indemnified Party (a "Third Party Claim"), such Indemnified Party
must notify the party from whom indemnification is sought (the "Indemnifying
Party") in writing of the Third Party Claim within ten (10) Business Days after
receipt by such Indemnified Party of written notice of the Third Party Claim;
provided, however, that failure to give such notification shall not affect the
indemnification provided hereunder except to the extent the Indemnifying Party
shall have been prejudiced as a result of such failure (except that the
Indemnifying Party shall not be liable for any expenses incurred during the
period in which the Indemnified Party failed to give such notice). Thereafter,
the Indemnified Party shall deliver to the Indemnifying Party, within five (5)
Business Days after the Indemnified Party's receipt thereof, copies of all
notices and documents (including court papers) received by the Indemnified Party
relating to the Third Party Claim.
If a Third Party Claim is made against an Indemnified Party, the
Indemnifying Party will be entitled to participate in the defense thereof and,
if it so chooses, assume at any time the defense thereof with counsel selected
by the Indemnifying Party and reasonably acceptable to the Indemnified Party.
Should the Indemnified Party so elect to assume and control the defense and
settlement of a Third Party Claim, the Indemnifying Party will not be liable to
the Indemnified Party for legal expenses subsequently incurred by the
Indemnified Party in connection with the defense or settlement thereof. If the
Indemnifying Party assumes such defense, the Indemnified Party shall have the
right to participate in, but not control, the defense thereof and to employ
counsel, at its own expense, separate from the counsel employed by the
Indemnifying Party. The Indemnifying Party shall be liable for the fees and
expenses of counsel employed by the Indemnified Party for any period during
which the Indemnifying Party has not assumed the defense thereof (subject to the
first sentence of the first paragraph of this Section 7.5). Whether or not the
Indemnifying Party chooses to defend or prosecute any
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Third Party Claim, both parties hereto shall cooperate in the defense or
prosecution thereof. Such cooperation shall include the retention and (upon the
Indemnifying Party's written request) the provision to the Indemnifying Party of
records and information which are reasonably relevant to such Third Party Claim,
and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder.
Whether or not the Indemnifying Party shall have assumed the defense of a Third
Party Claim, the Indemnifying Party shall not admit any liability with respect
to, or settle, compromise or discharge, such Third Party Claim without the
Indemnifying Party's prior written consent.
7.6 Exclusive Remedy. The indemnification provided in this Article VII
shall be the sole and exclusive remedy after the Closing Date for monetary
damages available to Buyer and Seller for breach of any of the terms,
conditions, representations or warranties contained herein. As between Seller,
on the one hand, and Buyer and its Affiliates, including without limitation
after the Closing, the Company, on the other hand, the rights and obligations
set forth in this Agreement will be the exclusive rights and obligations with
respect to this Agreement, the events giving rise to this Agreement and the
transactions provided for herein or contemplated hereby (other than, prior to
the Closing, the Confidentiality Agreement). Without limiting the generality or
effect of the foregoing, as a material inducement to the other parties hereto
entering into this Agreement, and in light of, among other factors, the
acknowledgements contained in this Section 7.6, each of the parties to this
Agreement hereby waives any claim or cause of action, known and unknown,
foreseen and unforeseen, which exists or may arise in the future, or which it
otherwise might assert, including without limitation under the common law or
Federal or state securities laws, trade regulation laws, Environmental Laws
(including CERCLA or any other statutes now or hereafter in effect) or other
laws, by reason of this Agreement, the events giving rise to this Agreement and
the transactions provided for herein or contemplated hereby or thereby (other
than in respect of the Confidentiality Agreement), except for (i) claims or
causes of action brought under and subject to the terms and conditions of this
Agreement, or (ii) injunctive or other equitable relief (other than for
rescission or rescissory or similar damages). Notwithstanding any other
provision contained in this Section 7.6, none of the parties to this Agreement
shall be deemed to have waived or otherwise limited such party's rights on
account of any fraudulent act by any of the other parties hereto.
7.7 Collateral Sources. Indemnification under this Article VII shall
not be available to any Indemnified Party unless such Indemnified Party
concurrently seeks recovery from any Collateral Source for such claim. Any
Indemnifying Party may, in its sole discretion, require any Indemnified Party to
grant an assignment of the right of such Indemnified Party to assert a claim
against any Collateral Source. In the event of
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such assignment, the Indemnifying Party will pursue such claim at its own
expense.
7.8 Certain Limitations. Seller hereby agrees that if any payment by
Seller is made under the terms of this Agreement, Seller shall have no rights or
causes of action against the Company or any director, officer, employee or agent
thereof, whether by reason of contribution, indemnification, subrogation, set
off or otherwise (including, without limitation, by reason of the making of the
Company of representations and warranties hereunder, it being understood and
agreed that the Company made such representations and warranties for the benefit
of Seller), in respect of any such payments, any action or inaction at or prior
to the Closing Date, or in respect of any representation, warranty, covenant or
agreement made by the Company hereunder, and shall not take any action against
the Company or any director, officer, employee or agent thereof with respect
thereto. Any such rights which Seller may, by operation of law or otherwise,
have against the Company or any director, officer, employee or agent thereof
shall, at the Closing Date, be deemed to be hereby expressly and knowingly
waived.
ARTICLE VIII
MISCELLANEOUS
8.1 Assignment. This Agreement and the rights hereunder shall not be
assignable or transferable by Buyer at any time prior to the Closing Date or
Seller (including by sale of stock, operation of law in connection with a
merger, or sale of substantially all the assets of Buyer) without the prior
written consent of the other party hereto. This Agreement shall inure to the
benefit of, and be binding upon and enforceable against, the successors and
permitted assigns of the respective parties hereto.
8.2 No Third-Party Beneficiaries. Except as provided in Article VII,
this Agreement is for the sole benefit of the parties hereto and their permitted
assigns and nothing herein expressed or implied shall give or be construed to
give to any Person, other than the parties hereto and such assigns, any legal or
equitable rights hereunder.
8.3 Termination.
(a) This Agreement may be terminated by written notice given by
Buyer to Seller or Seller to Buyer (i) if the Closing shall not have occurred by
August 29, 1997, other than as a result of a material default by the party
seeking to terminate, or (ii) if Horizon is unable to provide by June 20, 1997
written confirmation to Seller reasonably sufficient to demonstrate that Horizon
has secured adequate financing to consummate the transactions contemplated by
this Agreement, which right must be exercised by June 25, 1997, or (iii) if (x)
the purchase and sale of the Securities contemplated hereby shall violate any
non-
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46
appealable final order, decree or judgment of any Authority having competent
jurisdiction or (y) there shall be a statute, rule or regulation which makes the
purchase and sale of the Securities contemplated hereby illegal or otherwise
prohibited.
(b) In the event of termination by Seller or Buyer pursuant to
paragraph (a) of this Section 8.3, written notice thereof shall forthwith be
given to the other and the transactions contemplated by this Agreement shall be
terminated, without further action by either. If the transactions contemplated
by this Agreement are terminated as provided herein:
(i) Buyer shall return all documents and other material
received from Seller, the Company, or any of their Affiliates relating to the
transactions contemplated hereby, whether so obtained before or after the
execution hereof, to Seller;
(ii) all confidential information received by Buyer with
respect to the Business shall be treated in accordance with the Confidentiality
Agreement, which shall remain in full force and effect notwithstanding the
termination of this Agreement;
(iii) only the provisions of Sections 5.2(a), 5.2(c), 8.5,
8.9, 8.10, 8.11 and 8.15 hereof shall remain in full force and effect; and
(iv) in no event shall any termination of this Agreement
limit or restrict the rights and remedies of any party hereto against any other
party which has willfully breached any of the agreements or other provisions of
this Agreement prior to termination hereof.
8.4 Survival of Representations. The representations and warranties in
this Agreement shall survive the Closing solely for purposes of Sections 7.1 and
7.2 of this Agreement and shall terminate at the close of business on the first
anniversary of the date hereof; provided, however that (i) the representations
and warranties in Section 4.1(c) of this Agreement shall survive indefinitely,
subject to any applicable statute of limitations, (ii) the representation and
warranties in Section 4.1(n) of this Agreement shall terminate at the close of
business on the day eighteen (18) months following the date hereof and (iii) the
representations and warranties contained in Section 4.1(k) and the first
sentence of Section 4.1(g) of this Agreement shall terminate at the close of
business on the fifth anniversary of the date hereof.
8.5 Expenses. Whether or not the transactions contemplated hereby are
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs or expenses, except as may otherwise be expressly provided
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in this Agreement. Notwithstanding the foregoing, Seller and Horizon shall each
be responsible for and pay one-half of the HSR Act filing fees to be incurred by
the parties in making the HSR Act filing required by Section 5.3(a) of this
Agreement.
8.6 Amendments. No amendment to or modification of this Agreement shall
be effective unless it shall be in writing and signed by each of the parties
hereto.
8.7 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given (a) on the date of delivery if delivered
personally; (b) on the date of transmission if sent via facsimile transmission
to the facsimile number given below, and telephonic confirmation of receipt is
obtained promptly after completion of transmission; (c) on the date after
delivery to a reputable nationally recognized overnight courier service or (d)
three (3) days after being mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(i) If to Horizon,
Horizon Medical Products, Inc.
Seven North Parkway Square
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With a required copy to:
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇.▇. ▇▇▇▇▇▇▇▇▇, III
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to Arrow,
Arrow International, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With a required copy to:
Nixon, Hargrave, Devans & ▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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(iii) If to the Company, to:
Strato/Infusaid
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(iv) If to Seller, to:
Pfizer Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With a required copy to:
Pfizer Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Office of the General
Counsel
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
and
Dechert Price & ▇▇▇▇▇▇
4000 ▇▇▇▇ Atlantic Tower
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Such addresses may be changed, from time to time by means of a notice given in
the manner provided in this Section (provided that no such notice shall be
effective until it is received by the other parties hereto).
8.8 Fees. Each party hereto hereby agrees that (a) the only brokers or
finders that have acted for such party in connection with this Agreement or the
transactions contemplated hereby or that may be entitled to any brokerage fee,
finder's fee or commission in respect thereof are Lazard Freres & Co. LLC with
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respect to Seller and (b) such party will pay all fees or commissions which may
be payable to the firms so named.
8.9 Consent to Jurisdiction. Buyer and Seller each irrevocably submits
to the non-exclusive jurisdiction of (a) the state courts of the State of New
York, New York County, and (b) the United States District Court for the Southern
District of New York, for the purposes of any suit, action or other proceeding
arising out of this Agreement or any transactions contemplated hereby. Buyer and
Seller consent to service of process in accordance with the procedures set forth
in Section 8.7 of this Agreement or as otherwise permitted by law.
8.10 Severability. If any provision of this Agreement or the
application of any such provision to any Person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof.
8.11 Interpretation. All references to immediately available funds or
dollar amounts contained in this Agreement shall mean United States dollars. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. The
parties acknowledge and agree that (i) each party and its counsel have reviewed
the terms and provisions of this Agreement and have contributed to its revision,
(ii) the normal rule of construction, to the effect that any ambiguities are
resolved against the drafting party, shall not be employed in the interpretation
of it, and (iii) the terms and provisions of this Agreement shall be constructed
fairly as to all parties hereto, regardless of which party was generally
responsible for the preparation of this Agreement. All information disclosed by
Seller in any Schedule hereto or any representation or warranty herein shall be
deemed to have been disclosed in any other Schedule hereto or any representation
or warranty herein where such disclosure of such information is required or
pertains to a representation or warranty made by Seller herein. Reference in
this Agreement to dollar amount thresholds (including such references in Article
VII of this Agreement) shall not, for purposes of this Agreement, be deemed to
be evidence of materiality or a Material Adverse Effect.
8.12 Waiver. Waiver of any term or condition of this Agreement by any
party shall be effective if in writing and shall not be construed as a waiver of
any subsequent breach or failure of the same term or condition, or a waiver of
any other term of this Agreement. No failure or delay by any party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
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8.13 Counterparts. This Agreement may be executed in any number of
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other parties.
8.14 Entire Agreement. This Agreement, including the Schedules hereto
and the other documents delivered pursuant to this Agreement, and the
Confidentiality Agreement, contain the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and
supersede all prior and contemporaneous agreements, negotiations,
correspondence, undertakings and understandings, oral or written, relating to
such subject matter.
8.15 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York applicable to
agreements made and to be performed entirely within the State of New York,
without regard to the conflicts of law principles thereof.
[Remainder of this Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
PFIZER INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Senior Vice President
Medical Technology Group
STRATO/INFUSAID, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
Vice President
HORIZON MEDICAL PRODUCTS, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Executive Officer
ARROW INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
Title: President
52
AMENDMENT TO PURCHASE AGREEMENT
This is an amendment to the Purchase Agreement dated as of June 20,
1997 among Pfizer Inc., Strato/Infusaid, Inc., Arrow International, Inc. and
Horizon Medical Products, Inc. (the "Purchase Agreement"). Each term utilized
herein but otherwise not defined shall have the meaning given to such term in
the Purchase Agreement.
For good and valuable consideration, and intending to be legally bound,
Seller, Buyer and the Company agree as follows:
A. The last sentence of Section 3.1 of the Purchase Agreement,
Closing Date, shall be amended and restated in its entirety as follows:
All transactions at the Closing shall be deemed to take place
simultaneously and effective as of 11:50 P.M. E.D.T. on the Closing
Date.
B. The last sentence of Section 5.2(d)(iii)(1) of the Purchase
Agreement shall be deleted in its entirety.
C. The first sentence of Section 8.1 of the Purchase Agreement,
Assignment, shall be amended and restated in its entirety as follows:
This Agreement and the rights hereunder shall not be
assignable or transferable by Buyer at any time prior to the Closing
Date or Seller (including by sale of stock, operation of law in
connection with a merger, or sale of substantially all the assets of
Buyer) without the prior written consent of the other party hereto;
provided, however that Arrow may transfer or assign, in whole or in
part, to Arrow Interventional, Inc., a Delaware corporation and
Affiliate of Arrow, its rights under this Agreement prior to the
Closing Date upon delivery of written notice to the parties to this
Agreement; provided, further, that any such transfer or assignment
shall not relieve Arrow of its obligations under this Agreement or
prejudice the rights of Seller to receive Arrow's share of the Purchase
Price to be paid to Seller pursuant to Article II of this Agreement.
All other terms of the Purchase Agreement shall remain in full force
and effect.
53
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed as of the 15 day of July, 1997.
PFIZER INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Senior Vice President
Medical Technology Group
STRATO/INFUSIAD, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
Vice President
HORIZON MEDICAL PRODUCTS, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
Chief Executive Officer
ARROW INTERNATIONAL, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
Vice President-Finance