AdvanSource Biomaterials Corp. recently announced the settlement of a dispute with MEDOS Medizintechnik AG (“MEDOS”), a German corporation. On July 6, 2007, MEDOS acquired Gish Biomedical Inc., the company’s former wholly owned subsidiary, for a purchase price of approximately $7.5 million. The company realized approximately $6.1 million in proceeds from the transaction and, pursuant to the terms of the purchase agreement, $1.0 million was placed in escrow for one year from the sale date as a reserve for any indemnity claims. On June 30, 2008, MEDOS notified the company of the assertion of certain claims aggregating $4.3 million, which the company disputed. On July 25, 2008, the company initiated arbitration procedures, which sought a declaration that the amounts claimed by MEDOS were without merit and unsupportable.
On August 6,
2009, the company entered into a settlement agreement and mutual release (the
“settlement”) with MEDOS whereby MEDOS agreed to repay to the company
approximately $580,000 of the escrow funds previously released to MEDOS in full
and final settlement of its indemnity claims. In addition, the company’s
obligation with respect to a previously acknowledged $149,000 post-closing
adjustment will be eliminated. The parties have also agreed to dismiss the
previously filed demand for arbitration.
The terms of
the settlement provided for MEDOS to (i) remit a cash payment of
approximately $87,000 upon the execution of the Settlement and (ii) issue a
promissory note to the company in the approximate amount of $493,000,
maturing on February 1, 2010 with equal monthly principal payments of
approximately $70,000 plus accrued interest at the rate of 3.25% per annum.
For more information, visit:www.advbiomaterials.com.