Exhibit (2)
ASSET PURCHASE AGREEMENT
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Between
MAXXIM MEDICAL, INC.
and
MEDICAL ACTION INDUSTRIES INC.
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Dated as of August 30, 2002
TABLE OF CONTENTS
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ARTICLE I
SALE AND PURCHASE OF THE ASSETS
1.1. Assets.................................................................................... 1
1.2. Assumed Liabilities....................................................................... 4
1.3. Excluded Liabilities...................................................................... 4
1.4. Purchase Price............................................................................ 5
1.5. Consent of Third Parties.................................................................. 5
ARTICLE II
THE CLOSING
2.1. Place and Date............................................................................ 6
2.2. Inventory Value........................................................................... 6
2.3. Purchase Price Adjustments................................................................ 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties
of Maxxim................................................................................. 7
3.1.1. Authorization, etc............................................................ 7
3.1.2. Corporate Status.............................................................. 7
3.1.3. No Conflicts, etc............................................................. 8
3.1.4. Financial Statements.......................................................... 8
3.1.5. Extent of Knowledge........................................................... 8
3.1.6. Taxes......................................................................... 9
3.1.7. Absence of Changes............................................................ 10
3.1.8. Litigation.................................................................... 11
3.1.9. Compliance with Laws;
Governmental Approvals and Consents;
Governmental Contracts........................................................ 11
3.1.10. Sale of the Products.......................................................... 12
3.1.11. Assets........................................................................ 12
3.1.12. Contracts..................................................................... 12
3.1.13. Territorial Restrictions...................................................... 14
3.1.14. Inventories................................................................... 14
3.1.15. Customers..................................................................... 14
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3.1.16. Suppliers; Raw Materials...................................................... 14
3.1.17. Product Warranties............................................................ 14
3.1.18. Absence of Certain Business Practices......................................... 15
3.1.19. Intellectual Property......................................................... 15
3.1.20. Insurance..................................................................... 16
3.1.21. Real Property................................................................. 17
3.1.22. Environmental Matters......................................................... 18
3.1.23. Employees, Labor Matters, etc................................................. 19
3.1.24. Employee Benefit Plans and Related Matters.................................... 20
3.1.25. Confidentiality............................................................... 20
3.1.26. No Guarantees................................................................. 20
3.1.27. Brokers, Finders, etc......................................................... 21
3.1.28. Disclosure.................................................................... 21
3.1.29. Accounts Payable.............................................................. 21
3.1.30. No Other Representations and Warranties....................................... 21
3.2. Representations and Warranties of Buyer................................................... 21
3.2.1. Authorization, etc............................................................. 22
3.2.2. Corporate Status............................................................... 22
3.2.3. No Conflicts, etc.............................................................. 22
3.2.4. Litigation..................................................................... 22
3.2.5. Brokers, Finders, etc.......................................................... 22
3.2.6. Reporting Obligations of Buyer................................................. 23
3.2.7. Available Funds................................................................ 23
ARTICLE IV
COVENANTS
4.1. Covenants of Maxxim....................................................................... 23
4.1.1. Conduct of Business............................................................ 23
4.1.2. Further Assurances............................................................. 24
4.1.3. Liability for Transfer Taxes................................................... 24
4.1.4. Transfer of Clarksburg, West Virginia Facility................................. 24
4.1.5. Use of Business Name........................................................... 25
4.1.6. Financial Statements........................................................... 25
4.1.7. Returns and Rebates............................................................ 25
4.1.8. Transition..................................................................... 25
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4.2. Covenants of Buyer........................................................................ 26
4.2.1. Further Actions................................................................ 26
4.2.2. Further Assurances............................................................. 26
4.2.3. Use of Business Names by the Buyer............................................. 26
4.2.4. Investigation by Buyer; Confidentiality........................................ 26
4.2.5. Employee Matters............................................................... 27
4.2.6. Allocation of Purchase Price................................................... 27
4.2.7. Treatment of Inventories....................................................... 28
ARTICLE V
CONDITIONS PRECEDENT
5.1. Conditions to Obligations of Each Party................................................... 28
5.1.1. No Injunction, etc............................................................. 28
5.2. Conditions to Obligations of the Buyer.................................................... 28
5.2.1. Representations, Performance................................................... 28
5.2.2. Consents....................................................................... 29
5.2.3. No Material Adverse Effect.................................................... 29
5.2.4. Collateral Agreements.......................................................... 29
5.2.5. Opinion of Counsel............................................................. 29
5.2.6. Corporate Proceedings.......................................................... 29
5.2.7. Transfer Documents............................................................. 30
5.2.8. Additional Conditions to Obligations of Buyer.................................. 30
5.3. Conditions to Obligations of Maxxim....................................................... 30
5.3.1. Representations, Performance, etc.............................................. 30
5.3.2. Opinion of Counsel............................................................. 31
5.3.3. Corporate Proceedings.......................................................... 31
5.3.4. Consents and Approvals......................................................... 31
5.3.5. Collateral Agreements.......................................................... 31
5.3.6. Assumption Agreements.......................................................... 31
5.3.7. Appraisal of the Assets........................................................ 31
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ARTICLE VI
MISCELLANEOUS
6.1. Indemnification........................................................................... 31
6.2. Survival of Representations and Warranties, etc........................................... 34
6.3. Expenses.................................................................................. 35
6.4. Severability.............................................................................. 35
6.5. Notices................................................................................... 35
6.6. Miscellaneous............................................................................. 36
6.6.1. Headings....................................................................... 36
6.6.2. Entire Agreement............................................................... 36
6.6.3. Counterparts................................................................... 37
6.6.4. Governing Law, etc............................................................. 37
6.6.5. Binding Effect................................................................. 37
6.6.6. Assignment..................................................................... 37
6.6.7. No Third Party Beneficiaries................................................... 37
6.6.8. Amendment; Waivers, etc........................................................ 37
6.6.9. Public Announcements.......................................................... 38
ARTICLE VII
TERMINATION
7.1. Termination............................................................................... 38
7.2. Effect of Termination..................................................................... 39
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SCHEDULES
SCHEDULE 1.1(a) Machinery, Equipment, etc.
SCHEDULE 1.1(b) Inventories
SCHEDULE 1.1(d) Intellectual Property
SCHEDULE 1.1(i) Real Property
SCHEDULE 2.2 Inventory Value
SCHEDULE 3.1.3 Conflicts
SCHEDULE 3.1.6(a) Contested Covered Taxes
SCHEDULE 3.1.6(b) Tax Extensions
SCHEDULE 3.1.6(c) Current Audits and Deficiencies
SCHEDULE 3.1.6(e) Tax Litigation
SCHEDULE 3.1.7 Absence of Changes
SCHEDULE 3.1.8 Litigation
SCHEDULE 3.1.9(a) Compliance with Laws
SCHEDULE 3.1.9(b) Governmental Approvals and Other Consents
SCHEDULE 3.1.9(c) Governmental Contracts
SCHEDULE 3.1.11 Asset Exceptions
SCHEDULE 3.1.12(a) Contracts
SCHEDULE 3.1.12(c) Defaults and Consents Under Contracts
SCHEDULE 3.1.13 Territorial Restrictions
SCHEDULE 3.1.14 Inventory Exceptions; Locations
SCHEDULE 3.1.15 Customers
SCHEDULE 3.1.16 Suppliers
SCHEDULE 3.1.17 Product Warranties
SCHEDULE 3.1.19(d) Intellectual Property Licensing Arrangements
SCHEDULE 3.1.19(f) Restrictions on Use of Name
SCHEDULE 3.1.20 Insurance
SCHEDULE 3.1.22(a) Environmental Permits
SCHEDULE 3.1.22(c) Environmental Liabilities
SCHEDULE 3.1.22(d) Environmental Investigations
SCHEDULE 3.1.23 Employees, Labor Matters, etc.
SCHEDULE 3.1.24(a) Employee Benefit Plans
SCHEDULE 3.1.25 Confidentiality Exceptions
SCHEDULE 3.1.27 Brokers, Finders, etc.
SCHEDULE 3.2.3 Governmental Approvals and Other Consents
SCHEDULE 4.1.7(b) Rebates
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EXHIBITS
EXHIBIT A List of Products
EXHIBIT B List of Employees with Knowledge
EXHIBIT C Form of Trademark Assignment Agreement
EXHIBIT D Form of Non-Competition Agreement
EXHIBIT E Form of Supply Agreement
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (hereinafter the "Agreement") is made,
executed and entered into on this 30th day of August, 2002 by and between MAXXIM
MEDICAL, INC., a Delaware corporation (hereinafter "Maxxim") and MEDICAL ACTION
INDUSTRIES INC., a Delaware corporation (hereinafter "Buyer").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Maxxim is engaged in the business of manufacturing and
marketing a broad range of single-use specialty medical products primarily used
in the operating rooms of hospitals and surgery centers. Maxxim also
manufactures and sells a line of biosafety containment products (the "Products")
a list of which is attached hereto as Exhibit "A"; and
WHEREAS, Buyer wishes to purchase or acquire from Maxxim and Maxxim
wishes to sell, assign and transfer to Buyer, substantially all of its inventory
of the Products and assets and properties used in the manufacture and sale of
the Products, and Buyer has agreed to assume certain liabilities incurred in
connection with the manufacture and sale of the Products, all for the purchase
price and upon the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, representations and warranties made herein, and of the mutual
benefits to be derived hereby, the parties hereto agree as follows:
ARTICLE I
SALE AND PURCHASE OF THE ASSETS
1.1. Assets. Subject to and upon the terms and conditions set forth in
this Agreement, at the Closing (as hereinafter defined), Maxxim will sell,
transfer, convey, assign and deliver to Buyer and Buyer will purchase or acquire
from Maxxim all right, title and interest of Maxxim in and to the properties,
assets and rights described below (hereinafter, the "Assets"), as the same may
exist on the Closing Date (as hereinafter defined):
(a) the machinery, equipment, furniture, furnishings, tools, dies,
molds and parts and similar property, specifically described in
Schedule 1.1(a) attached hereto;
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(b) the inventories of the Products, raw materials, work in process,
goods, spare parts, replacement and component parts, and office
and other supplies (collectively, the "Inventories"),
specifically described in Schedule 1.1(b) to be attached hereto
at the Closing;
(c) all of the rights of Maxxim under contracts for the sale of the
Products where the Products have not been shipped prior to the
Closing Date;
(d) all United States and foreign: (i) patents (including design
patents and industrial designs) and patent applications
(including docketed patent disclosures awaiting filing, reissues,
divisions, continuations-in-part and extensions), patent
disclosures awaiting filing determination, inventions and
improvements thereto; (ii) trademarks, service marks, trade
names, and product names; (iii) copyrights and registrations
thereof but excluding the name "Maxxim"; (iv) inventions,
processes, designs, formulae, trade secrets, know-how,
confidential and technical information, manufacturing,
engineering and technical drawings, product specifications and
confidential business information, which are held by Maxxim and
which relate to the Assets and the manufacture and sale of the
Products (hereinafter collectively referred to as "Intellectual
Property"), all as more specifically described in Schedule 1.1(d)
attached hereto, together with all rights thereunder or in
respect thereof, including, but not limited to, rights to xxx and
receive remedies for past, present and future infringements
thereof, and rights of priority and protection of interests
therein under the laws of any jurisdiction worldwide and all
tangible embodiments thereof (together with all Intellectual
Property rights included in the other clauses of this Section
1.1, the "Intellectual Property Assets");
(e) except as specifically provided herein, all of the rights of
Maxxim relating to the Assets under all contracts, arrangements,
licenses, leases and other agreements, including, without
limitation, any right to receive payment for Products shipped on
or after (but not before) the Closing Date, and to receive goods
and services, pursuant to such agreements and to assert claims
and take other rightful actions in respect of breaches, defaults,
and other violations of such contracts, arrangements, licenses,
leases and other agreements and otherwise in connection with the
Assets, to the extent the same are assignable under such
contracts, arrangements, licenses, leases and other agreements;
provided, however, that Maxxim shall retain the rights to receive
payment for Products shipped before the Closing Date pursuant to
such agreements and to assert claims and take other rightful
actions in respect of breaches, defaults, and other violations of
such contracts, arrangements, licenses, leases and other
agreements relating to
2
or arising out of actions taken, goods delivered or services
performed prior to the Closing Date which do not involve the
physical assets transferred to Buyer hereunder;
(f) all books, records, manuals and other materials relating to the
Assets (in any form or medium), including, without limitation,
advertising matter, catalogues, price lists, correspondence,
mailing lists, lists of customers, distribution lists,
photographs, production data, sales and promotional materials and
records, purchasing materials and records, manufacturing and
quality control records and procedures, research and development
files, records, data and laboratory books, Intellectual Property
disclosures, media materials and plates and sales order files
(provided that Maxxim may retain a copy of any such materials for
its historical files);
(g) to the extent their transfer is permitted by law, all consents of
any government, any state or other political subdivision thereof,
any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to any
government which relate to the Assets, including, without
limitation, any government authority, agency, department, board,
commission or instrumentality of the United States or any
political subdivision thereof, and any tribunal or arbitrator(s)
of competent jurisdiction, and any self-regulatory organization,
including all applications therefor;
(h) except as specifically provided herein, all guarantees,
warranties, indemnities and similar rights in favor of Maxxim
relating to the Assets, provided, however, that Maxxim shall
retain the right to assert claims and take other rightful actions
in respect of the same relating to or arising out of actions
taken, goods delivered or services performed prior to the Closing
Date which do not involve the physical assets transferred to
Buyer hereunder; and
(i) all of the rights of Maxxim under the Real Estate Lease and the
Equipment Lease, dated December 6, 1990, and the First Amendment
to Real Estate Lease, dated December 6, 1990, between Maxxim, as
successor to Winfield Medical, Inc., and the West Virginia
Economic Development Authority, relating to the real property,
building and equipment comprising the manufacturing facility of
Maxxim in Clarksburg, West Virginia, specifically described in
Schedule 1.1(i) attached hereto (referred to herein as the
"Clarksburg, West Virginia Facility") and all licenses, permits,
approvals and qualifications relating thereto.
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1.2. Assumed Liabilities. Subject to and upon the conditions set forth
in this Agreement, at the Closing, Buyer shall, by the execution and delivery of
agreements in form and content satisfactory to Maxxim, assume and become
responsible for the payment, performance and/or discharge of (i) all obligations
and liabilities under the contracts, arrangements, licenses, leases and other
agreements described in Section 1.1(e) insofar as those obligations are to be
performed on or after the Closing Date, including without limitation, all of
Maxxim's contracts or purchase orders that exist on the Closing Date for the
purchase of goods or services relating to the Assets and all of Maxxim's sales
orders and obligations that exist on the Closing Date relating to the Assets and
providing for the delivery of Products to customers and (ii) all liabilities of
Maxxim to the employees at the Clarksburg, West Virginia Facility for (i) any
remaining vacation benefits for 2002 (days of vacation not yet taken) and (ii)
all paid sick leave days to which such employees are entitled under Maxxim's
Personal Approved Absences benefit plan, as set forth in Schedule 3.1.24 (the
"Assumed Liabilities").
1.3. Excluded Liabilities. Unless otherwise provided for herein, Buyer
shall not assume any liabilities, obligations or commitments of Maxxim relating
to or arising out of or incurred in connection with the transactions
contemplated by this Agreement or the ownership of the Assets prior to the
Closing Date (the "Excluded Liabilities"), including but not limited to:
(a) any liabilities or obligations of Maxxim incurred in
connection with the transactions contemplated by this Agreement to
attorneys, accountants, brokers, or others for services rendered or
expenses incurred by or on behalf of Maxxim;
(b) any wages, salary bonuses, commissions, vacation or holiday
pay, retiree benefits, severance pay, or other amounts due to any
employees or former employees of Maxxim, and any duties, obligations or
liabilities arising under any employee benefit plan, policy or
practice, whether defined by Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended, or otherwise, relating to the
employees of Maxxim;
(c) any tax (including, without limitation, any federal, state
or local income, franchise, sales, transfer, recording, documentary or
ther tax) imposed upon or incurred by Maxxim arising out of or in
onnection with the negotiation and preparation of this Agreement and
he consummation and performance of the transactions contemplated
hereby;
(d) any liabilities, losses and damages and alleged liabilities,
losses and damages arising out of or resulting from: personal injury,
sickness, death, property damage, property destruction or loss of use
of property, or any violation of federal, state or local laws or
regulations relating to the protection of
4
the environment which, in either case, is the result, in whole or in
part, of any environmental impairment, condition existing, or action
taken or omitted by Maxxim, prior to the Closing Date and which is not
attributable to Buyer's ownership, operation or use of the Assets on
or after the Closing Date resulting in personal injury, sickness,
death, property damage, property destruction or loss of use of
property or arising out of the sale of Products by Maxxim prior to the
Closing Date;
(e) any warranty and product liabilities and obligations of
Maxxim which exist on the Closing Date arising out of the sale of the
Products prior to the Closing Date;
(f) any liabilities for trade accounts payable, other than those
relating to the purchase of goods or services relating to the Assets
which goods or services are not received by or performed for Maxxim
before the Closing Date; and
(g) any liabilities under the Real Estate Lease and the
Equipment Lease relating to the Clarksburg, West Virginia Facility,
which liabilities shall be paid in full by Maxxim on or before the
Closing Date.
1.4. Purchase Price. On the terms and subject to the conditions set
forth in this Agreement, in consideration of the sale and transfer of the Assets
and the execution and delivery of the other agreements entered into in
connection herewith, Buyer agrees to pay or cause to be paid to Maxxim an
aggregate of up to U.S. $20,500,000.00 (the "Purchase Price") and to expressly
assume the Assumed Liabilities. The Purchase Price shall be payable as follows:
(i) $19,500,000 payable in cash on the Closing Date by wire transfer in
immediately available funds to such bank account or accounts as Maxxim shall
direct in writing at least five days prior to the Closing Date, and (ii) an
amount payable in cash on February 15, 2003, by wire transfer in immediately
available funds to such bank account or accounts as Maxxim shall direct in
writing, calculated as follows:
the lesser of (a) $1,000,000 or (b) 80% of any difference between (1)
the amount determined by (A) dividing the aggregate net sales of the
Products by Maxxim for the period from September 3, 2002 to the Closing
and by Buyer for the period from the Closing through December 27, 2002,
by 81 (to obtain the average net sales per shipping day), and (B)
multiplying the amount determined under subclause (A) by 252 (to obtain
annualized net sales), and (2) $23,694,000. No payment will be required
under clause (ii) if the amount determined under subclause (1) is less
than $23,694,000. Net sales will be calculated on a basis consistent
with Maxxim's calculation of this statistic at the time of the
execution of this Agreement.
5
1.5. Consent of Third Parties. Notwithstanding anything to the
contrary in this Agreement, this Agreement shall not constitute an agreement to
assign or transfer any consent, instrument, contract, lease, permit or other
agreement or arrangement or any claim, right or benefit arising thereunder or
resulting therefrom if an assignment or transfer or an attempt to make such an
assignment or transfer without the consent of a third party would constitute a
breach or violation thereof or affect adversely the rights of Buyer or Maxxim
thereunder; and any transfer or assignment to Buyer by Maxxim of any interest
under any such instrument, contract, lease, permit or other agreement or
arrangement that requires the consent of a third party shall be made subject to
such consent or approval being obtained. In the event any such consent or
approval is not obtained prior to the Closing Date, each of Maxxim and Buyer
shall continue to use commercially reasonable efforts to obtain any such
approval or consent after the Closing Date until such time as such consent or
approval has been obtained, and Maxxim will cooperate with Buyer, at Buyer's
request and expense, in any lawful and economically feasible arrangement to
provide that Buyer shall receive the interest of Maxxim, as the case may be, in
the benefits under any such instrument, contract, lease or permit or other
agreement or arrangement, including performance by Maxxim, as the case may, as
agent, if economically feasible, provided that Buyer shall undertake to pay or
satisfy the corresponding liabilities for the enjoyment of such benefits to the
extent Buyer would have been responsible therefor hereunder if such consent or
approval had been obtained. Nothing in this Section 1.5 shall be deemed a waiver
by Buyer of its right to receive at the Closing an effective assignment of all
of the Assets, to the extent they are assignable by Maxxim, nor shall this
Section 1.5 be deemed to constitute an agreement to exclude from the Assets any
assets described under Section 1.1.
ARTICLE II
THE CLOSING
2.1. Place and Date. The closing of the sale and purchase of the
Assets (the "Closing") shall take place at 10:00 A.M. local time on the 25th day
of October, 2002 at the offices of Maxxim Medical at 00 Xxxxxxxx Xxxx.,
Xxxxxxxxxx, Xxxx Xxxxxxxx, or such other time and place upon which the parties
may agree, after satisfaction or waiver of the conditions set forth in Article V
(other than those that are to be satisfied on the Closing Date); provided,
however, that Maxxim and Buyer hereby agree to use their commercially reasonable
best efforts to close as soon as practicable after the execution of this
Agreement at such place and time as may be mutually agreed. The day on which the
Closing actually occurs is herein referred to as the "Closing Date."
2.2. Inventory Value.
(a) Maxxim shall provide Buyer with access to its inventory
cycle counts relating to the Products upon Buyer's request. Buyer shall have the
right to perform spot tests to verify the accuracy of such cycle counts to its
satisfaction. If Buyer is not
6
satisfied with the accuracy of such cycle counts, it shall notify Maxxim of such
fact at least twenty (20) days prior to Closing, and Maxxim shall undertake
thereafter a physical count of the Inventories being transferred to Buyer
hereunder. Maxxim shall give Buyer at least 72 hours notice of the time and date
on which it plans to commence such physical count and Buyer will have the right
to have its representatives present if it so elects. Maxxim shall determine the
value of the Inventories in accordance with the criteria set forth in Schedule
2.2. The value of the Inventories shall be adjusted on the Closing Date to
eliminate the value of any Inventories sold and shipped between the date of the
physical count of the Inventories and the Closing Date and the value of the
number of each Product in excess of a 12 months' supply of such Product, and to
add the value of any Inventories received between the date of the physical count
of the Inventories and the Closing Date ("Adjusted Inventories").
(b) Maxxim shall prepare for shipping, arrange to have shipped
by such carrier as Buyer shall designate, at Buyer's cost, and have loaded onto
such carrier's truck for shipment to Buyer, at Buyer's cost, all of the
Inventories located at facilities other than the Clarksburg, West Virginia
Facility. Maxxim shall count the Inventories prior to shipment to Buyer. Maxxim
shall obtain a receipt from the carrier shipping such Inventories for the
quantities of the Inventories counted by Maxxim and shall promptly provide a
copy to Buyer. Maxxim shall take reasonable precautions to ensure that the
Inventories will not be damaged prior to shipment. All of the Inventories shall
be delivered F.O.B. Maxxim's facility. Title to the Inventories will pass to
Buyer at the time such Inventories is delivered F.O.B. at Maxxim's facility for
shipment to Buyer.
2.3. Purchase Price Adjustments. In the event that the value of the
Adjusted Inventories is less than $850,000.00, the Purchase Price shall be
decreased, on a dollar for dollar basis, for the decrease in the Adjusted
Inventories. In the event that the value of the Adjusted Inventories is greater
than $950,000.00, the Purchase Price shall be increased, on a dollar for dollar
basis, for the increase in the Adjusted Inventories.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of Maxxim. Maxxim represents and
warrants to Buyer as follows:
3.1.1. Authorization, etc. Maxxim has the corporate power and
authority to execute and deliver this Agreement and each of the collateral
agreements described herein (the "Collateral Agreements") to which it will be a
party, to perform fully its obligations thereunder, and to consummate the
transactions contemplated thereby. This Agreement and each of the Collateral
Agreements to which Maxxim is a party will be, on the Closing Date after due
execution and delivery by Buyer, legal, valid and
7
binding obligations of Maxxim, enforceable against it in accordance with their
respective terms.
3.1.2. Corporate Status. (a) Maxxim is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware, with full corporate power and authority to carry on its business and
to own or lease and to operate its properties as and in the places where such
business is conducted and such properties are owned, leased or operated.
(b) Maxxim is duly qualified or licensed to do business and is
in good standing in West Virginia.
(c) Maxxim is not in violation of any of the provisions of its
certificate of incorporation or by-laws or other organizational documents.
3.1.3 . No Conflicts, etc. The execution, delivery and
performance by Maxxim of this Agreement and each of the Collateral Agreements to
which it is a party, and the consummation of the transactions contemplated
thereby, do not and will not conflict with or result in a violation or a default
under (with or without the giving of notice or the lapse of time or both) (i)
any applicable law, (ii) the certificate of incorporation or by-laws of Maxxim
or (iii) except as set forth in Schedule 3.1.3, any contract, agreement or other
instrument to which Maxxim is a party or by which any of the Assets may be bound
or affected, except in the case of this clause (iii), for violations and
defaults that, individually and in the aggregate, have not and will not affect
the Assets or the Buyer's rights therein or materially impair the ability of
Maxxim to perform its obligations under this Agreement or under any of the
Collateral Agreements. Except as specified in Schedule 3.1.3, no governmental
approval or other consent is required to be obtained or made by Maxxim in
connection with the execution and delivery of this Agreement and the Collateral
Agreements or the consummation of the transactions contemplated hereby and
thereby.
3.1.4. Financial Statements. Maxxim has (or within sixty (60)
days of the Closing Date, provided the Closing Date is on or before October 31,
2002, will have) delivered to the Buyer (a) the following audited financial
statements of the Products business prepared in accordance with accounting
principles generally accepted in the United States of America and in accordance
with Regulation S-X and the applicable Staff Accounting Bulletins: (i) balance
sheets as of December 30, 2001, October 28, 2001 and October 29, 2000, (ii)
statements of income and cash flows for the two month period ended December 30,
2001, and each of the three years in the period ended October 28, 2001 and (iii)
all related required footnotes with respect to (a) (i) and (ii) above (the
"Annual Financial Statements") and (b) the following unaudited financial
statements of the Product business prepared in accordance with accounting
principles generally accepted in the United States of America for interim
financial information and in
8
accordance with Regulation S-X and the applicable Staff Accounting Bulletins:
(i) balance sheet as of September 29, 2002, (ii) statements of income and cash
flows for the six and nine month periods ended September 29, 2002 and September
24, 2001, and for the period from October 30, 2000 through December 24, 2000 and
(iii) all required footnotes with respect to (b) (i) and (ii) above (the
"Interim Period Financial Statements"). The Annual Financial Statements, the
Interim Financial Statements and, from and after the date of delivery thereof
the Subsequent Monthly Financial Statements (as defined herein), are referred to
collectively herein as the "Financial Statements."
3.1.5. Extent of Knowledge. For purposes of this Agreement,
the phrase "to the best of its knowledge after due inquiry" or words of like
import shall mean to the knowledge of the employees of Maxxim set forth in
Exhibit "B" attached hereto.
3.1.6. Taxes.
(a) Maxxim has duly and timely filed all tax returns relating to the
Assets with respect to taxes ("Covered Taxes") required to be filed on or before
the Closing Date ("Covered Returns"). Except for Covered Taxes set forth on
Schedule 3.1.6(a), which are being contested in good faith and by appropriate
proceedings, the following Covered Taxes, to the best of its knowledge after due
inquiry, have been duly and timely paid: (i) all Covered Taxes shown to be due
on the covered Returns, (ii) all deficiencies and assessments of Covered Taxes
of which notice has been received by Maxxim that are or may become payable by
Buyer or chargeable as a lien upon the Assets, and (iii) all other Covered Taxes
due and payable on or before the Closing Date for which neither filing of
Covered Returns nor notice of deficiency or assessment is required of Maxxim, or
reasonably should be aware that are or may become payable by Buyer or chargeable
as a lien upon the Assets. All taxes required to be withheld as of the date
hereof by or on behalf of Maxxim in connection with amounts paid or owing to any
employee, independent contractor, creditor or other party with respect to the
Clarksburg, West Virginia Facility ("Withholding Taxes") have been withheld, and
such withheld taxes have either been duly and timely paid or set aside in
accounts for such purpose.
(b) Except as set forth on Schedule 3.1.6(b), no agreement or other
document extending, or having the effect of extending, the period of assessment
or collection of any Covered Taxes or Withholding Taxes, and no power of
attorney with respect to any such taxes, has been filed with the Internal
Revenue Service (the "IRS") or any other governmental authority.
(c) Except as set forth on Schedule 3.1.6(c), (i) there are no
Covered Taxes or Withholding Taxes asserted in writing by any governmental
authority to be due and (ii) no issue has been raised in writing by any
governmental authority in the course of any
9
audit with respect to Covered Taxes or Withholding Taxes. Except as set forth on
Schedule 3.1.6(c), no Covered Taxes and no Withholding Taxes are currently under
audit by any governmental authority. Except as set forth on Schedule 3.1.6(c),
neither the IRS nor any other governmental authority is now asserting or, to the
best knowledge of Maxxim, threatening to assert against Maxxim any deficiency or
claim for additional Covered Taxes or any adjustment of Covered Taxes that
would, if paid by Buyer, have a material adverse effect, and there is no
reasonable basis for any such assertion of which Maxxim is or reasonably should
be aware.
(d) Buyer will not be required to deduct and withhold any amount
pursuant to Section 1445(a) of the Code upon the transfer of the Assets to
Buyer.
(e) Except as set forth on Schedule 3.1.6(e), there is no litigation
or administrative appeal pending or, to the best knowledge of Maxxim, threatened
against or relating to Maxxim in connection with Covered Taxes.
3.1.7. Absence of Changes. Except as set forth in Schedule 3.1.7, since
December 31, 2001 (except with respect to clause (j), which representation shall
be for the period since July 31, 2002), to the best of its knowledge after due
inquiry, Maxxim has used the Assets and sold the Products only in the ordinary
course consistent with prior practice and has not, in connection with or
relating to the Assets:
(a) incurred any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, except current
liabilities for trade or business obligations incurred in connection with the
purchase of goods or services in the ordinary course of business consistent with
prior practice, none of which liabilities, in any case or in the aggregate,
could reasonably be expected to have a material adverse effect on the Assets or
the Buyer;
(b) discharged or satisfied any lien other than those then
required to be discharged or satisfied, or paid any obligation or
liability, absolute, accrued, contingent or otherwise, whether due or
to become due, other than current liabilities incurred in the ordinary
course of business consistent with prior practice;
(c) sold, transferred, leased to others or otherwise disposed
of any of the Assets, except for inventory sold in the ordinary course
of business, or cancelled or compromised any debt or claim, or waived
or released by right of substantial value;
(d) received any notice of termination of any contract, lease
or other agreement or suffered any damage, destruction or loss (whether
or not covered
10
by insurance) which could reasonably be expected to have a material
adverse effect on the Assets or the Buyer;
(e) transferred or granted any rights under, or entered into
any settlement regarding the breach or infringement of, any
Intellectual Property, or modified any existing rights with respect
thereto, which could reasonably be expected to have a material adverse
effect on the Assets or the Buyer;
(f) encountered any labor union organizing activity, had any
actual or, to the best of its knowledge after due inquiry, threatened
employee strikes, work stoppages, slowdowns or lockouts;
(g) failed to replenish the inventories of the Products and
supplies relating thereto in a normal and customary manner consistent
with its prior practice and prudent business practices prevailing in
the industry, or made any purchase commitment in excess of the normal,
ordinary and usual requirements of its business or at any price in
excess of the then current market price or upon terms and conditions
more onerous than those usual and customary in the industry, or made
any change in its selling, pricing, advertising practices inconsistent
with its prior practice and prudent business practices prevailing in
the industry, which could reasonably be expected to have a material
adverse effect on the Assets or the Buyer;
(h) instituted, settled or agreed to settle any litigation,
action or proceeding before any court or governmental body relating to
the Assets other than in the ordinary course of business consistent
with past practices but not in any case involving amounts in excess of
$25,000.00;
(i) entered into any transaction, contract or commitment
other than in the ordinary course of business;
(j) to the best of its knowledge after due inquiry, had
any material change in its relations with its customers or suppliers;
or
(k) to the best of its knowledge after due inquiry, taken any
action or omitted to take any action that would result in the
occurrence of any of the foregoing.
3.1.8. Litigation. Except as set forth on Schedule 3.1.8, to
the best of its knowledge after due inquiry, there is no action, claim, demand,
suit, proceeding, arbitration, grievance, citation, summons, subpoena, inquiry
or investigation of any nature, civil, criminal, regulatory or otherwise, in law
or in equity, pending or threatened against or relating to Maxxim in connection
with the Assets or against or
11
relating to the transactions contemplated by this Agreement, and Maxxim does not
know or have reason to be aware of any basis for the same. Except as set forth
in such Schedule 3.1.8, no citations, fines or penalties have been asserted
against Maxxim with respect to the Assets since January 1, 1999, under any
environmental law, by the Food and Drug Administration, or any foreign, federal,
state or local law relating to occupational health or safety.
3.1.9. Compliance with Laws; Governmental Approvals and Consents;
Governmental Contracts.
(a) Except as disclosed in Schedule 3.1.9(a), since January 1,
1999, to the best of its knowledge after due inquiry, Maxxim has complied in all
material respects with all applicable laws applicable to the Assets, and has not
received any notice alleging any such conflict, violation, breach or default.
(b) To the best of its knowledge after due inquiry, Schedule
3.1.9(b) sets forth all governmental approvals and other consents necessary for,
or otherwise material to, the manufacture and sale of the Assets. Except as set
forth in Schedule 3.1.9(b), all such governmental approvals and consents have
been duly obtained and are in full force and effect, and Maxxim has complied and
is complying in all material respects with each of such governmental approvals
and consents held by it with respect to the Assets.
(c) Schedule 3.1.9(c) sets forth all contracts with any
governmental authority.
(d) To the best of its knowledge after due inquiry, there are
no proposed laws, rules, regulations, ordinances, orders, judgments, decrees,
governmental takings, condemnations or other proceedings which would be
applicable to the Assets and which might adversely affect the Assets after the
Closing Date.
3.1.10. Sale of the Products. Maxxim has sold the Products only through
Maxxim and not through any entity other than Maxxim.
3.1.11. Assets. Except as disclosed in Schedule 3.1.11, Maxxim
has good title to all the Assets free and clear of any and all liens. Except for
the Inventories, the Assets are being transferred in "as is" condition and, to
the knowledge of Maxxim, there are no facts or conditions affecting the Assets
which could, individually or in the aggregate, interfere in any material respect
with the use, occupancy or operation thereof as currently used, occupied or
operated, or their adequacy for such use.
12
3.1.12. Contracts.
(a) To the best of its knowledge after due inquiry, Schedule
3.1.12(a) contains, except with respect to open purchase orders, which shall be
provided at Closing, a complete and correct list of all agreements, contracts,
commitments and other instruments and arrangements (whether written or oral) of
the types described below by which any of the Assets are bound or affected (the
"Contracts"):
(i) licenses, licensing arrangements and other contracts
providing in whole or in part for the use of, or limiting the use of,
any Intellectual Property;
(ii) employment, collective bargaining or other similar
contracts, agreements and other arrangements relating to or for the
benefit of current or former employees of Maxxim employed at the
Clarksburg, West Virginia Facility;
(iii) brokerage or finder's agreements;
(iv) joint venture, partnership and similar contracts
involving a sharing of profits or expenses (including but not limited
to joint research and development and joint marketing contracts);
(v) orders and other contracts for the purchase or sale of
materials, supplies, products or services, each of which involves
aggregate payments in excess of $20,000.00 in the case of purchases or
$5,000.00 in the case of sales;
(vi) sales agency, manufacturer's representative, marketing
or distributorship agreements;
(vii) contracts, agreements or arrangements with respect to
the sale of the Products in foreign countries, each of which involves
aggregate payments in excess of $5,000.00; and
(viii) any other contracts, agreements or commitments that are
material to the manufacture and sale of the Products.
(b) Maxxim has delivered to Buyer complete and correct
copies of all written Contracts, together with all amendments thereto, and
accurate descriptions of all material terms of all oral Contracts, set forth or
required to be set forth in Schedule 3.1.12(a).
(c) To the best of its knowledge after due inquiry, all
Contracts are in full force and effect and enforceable against each party
thereto. To the best of its
13
knowledge after due inquiry, there does not exist under any Contract any event
of default or event or condition that, after notice or lapse of time or both,
would constitute a violation, breach or event of default thereunder on the part
of Maxxim or, to the best knowledge of Maxxim, any other party thereto except as
set forth in Schedule 3.1.12(c) and except for such events or conditions that,
individually and in the aggregate, (i) has not had or resulted in, and could not
reasonably be expected to have or result in, a material adverse effect on the
Assets or the Buyer, and (ii) has not and will not materially impair the ability
of Maxxim to perform its obligations under this Agreement and under the
Collateral Agreements. Except as set forth in Schedule 3.1.12(c), no consent of
any third party is required under any Contract as a result of or in connection
with, and the enforceability of any Contract will not be affected in any manner
by, the execution, delivery and performance of this Agreement, any of the
Collateral Agreements or the consummation of the transactions contemplated
thereby.
3.1.13. Territorial Restrictions. Except as set forth on
Schedule 3.1.13, Maxxim is not restricted by any written agreement to which it
is a party or any understanding between it and any other person from selling the
Products anywhere in the world.
3.1.14. Inventories. All Inventories are of good, usable and
merchantable quality in all material respects and, except as set forth on
Schedule 3.1.14, (a) all Inventories are of such quality as to meet the quality
control standards of Maxxim and any applicable governmental quality control
standards, (b) all Inventories that are finished goods are saleable as current
inventories at the current prices thereof in the ordinary course of business,
and (c) all Inventories are recorded on the books of Maxxim at the lower of cost
or market value determined in accordance with GAAP. Schedule 3.1.14 lists the
locations of all Inventories.
3.1.15. Customers. To the best of its knowledge after due
inquiry, Schedule 3.1.15 sets forth (a) the names and addresses of the ten (10)
largest purchasers of the Products (ranked by sales dollars) that ordered
Products from Maxxim during the twelve month period ended June 30, 2002 and (b)
the amount for which each such customer was invoiced for Products during such
period. To the best of its knowledge after due inquiry, except as set forth on
Schedule 3.1.15, no such significant customer (i) has ceased, or will cease, to
use the Products or (ii) has sought, or is seeking, to reduce the price it will
pay for the Products, including in each case after the consummation of the
transactions contemplated hereby.
3.1.16. Suppliers; Raw Materials. To the best of its knowledge
after due inquiry, Schedule 3.1.16 sets forth (a) the names and addresses of
Maxxim's ten (10) largest suppliers (and any affiliate thereof) (ranked by
dollars) from which Maxxim ordered raw materials, supplies, merchandise and
other goods and services needed in the manufacture of the Products, during the
twelve month period ended December 30,
14
2001, and the six month period ended June 30, 2002 and (b) the amount for which
each such supplier invoiced Maxxim during such periods. Maxxim has not received
any notice or has any reason to believe that there has been any material adverse
change in the price of such raw materials, supplies, merchandise or other goods
or services, or that any such supplier will not sell raw materials, supplies,
merchandise and other goods to Buyer at any time after the Closing Date on terms
and conditions similar to those used in its current sales to Maxxim, subject to
general and customary price increases.
3.1.17. Product Warranties. To the best of its knowledge after
due inquiry, except as set forth in Schedule 3.1.17 and for warranties under
applicable law, (a) there are no warranties, express or implied, written or
oral, with respect to the Products and (b) there are no pending or threatened
claims with respect to any such warranty, whether absolute, accrued, contingent
or otherwise and whether due or to become due in excess of $5,000.00
individually or $50,000.00 in the aggregate.
3.1.18. Absence of Certain Business Practices. To the best of
its knowledge after due inquiry, neither Maxxim, any officer, employee or agent
of Maxxim, or any other person acting on their behalf, has, directly or
indirectly, within the past five years given or agreed to give any gift or
similar benefit to any customer, supplier, governmental employee or other person
who is or may be in a position to help or hinder Buyer in connection with the
purchase of Products (i) which if not given in the past, might have had a
material adverse effect on Buyer's prospects to sell the Products, (ii) which if
not continued in the future, might have a material adverse effect on Buyer's
prospects to sell the Products.
3.1.19. Intellectual Property.
(a) Title. Schedule 1.1(d) contains, to the best of its
knowledge after due inquiry, a complete and correct list of all Intellectual
Property that is owned by Maxxim and related solely to the manufacture and sale
of the Products (the "Owned Intellectual Property") other than (i) inventions,
trade secrets, processes, formulas, compositions, designs and confidential
business and technical information and (ii) Intellectual Property that is both
not registered or subject to application for registration and not material to
the manufacture and sale of the Products. Maxxim owns or has the exclusive right
to use pursuant to license, sublicense, agreement or permission all Intellectual
Property Assets, free from any liens and free from any requirement of any past,
present or future royalty payments, license fees, charges or other payments, or
conditions or restrictions whatsoever. The Intellectual Property Assets comprise
all of the Intellectual Property necessary for Buyer to manufacture and sell the
Products for the purposes for which they are presently being sold by Maxxim.
15
(b) Transfer. Immediately after the Closing, Buyer will own
all of the Owned Intellectual Property and will have a right to use all other
Intellectual Property Assets, free from any liens and on the same terms and
conditions as in effect prior to the Closing.
(c) No Infringement. The manufacture and sale of the Products
for the purposes for which they are presently being sold by Maxxim does not
infringe or otherwise conflict with any rights of any person in respect of any
Intellectual Property. To the knowledge of Maxxim after due inquiry, none of the
Intellectual Property Assets is being infringed by any other person.
(d) Licensing Arrangements. Schedule 3.1.19(d) sets forth all
agreements, arrangements or laws (i) pursuant to which Maxxim has licensed
Intellectual Property Assets to, or the use of Intellectual Property Assets is
otherwise permitted (through non-assertion, settlement or similar agreements or
otherwise) by, any other person and (ii) pursuant to which Maxxim has had
Intellectual Property licensed to it, or has otherwise been permitted to use
Intellectual Property (through non-assertion, settlement or similar agreements
or otherwise). All of the agreements or arrangements set forth on Schedule
3.1.19(d) (x) are in full force and effect in accordance with their terms and no
default exists thereunder by Maxxim, or to the knowledge of Maxxim after due
inquiry, by any other party thereto, (y) are free and clear of all liens, and
(z) do not contain any change in control or other terms or conditions that will
become applicable or inapplicable as a result of the consummation of the
transactions contemplated by this Agreement. Maxxim has delivered to the Buyer
true and complete copies of all licenses and arrangements (including amendments)
set forth on Schedule 3.1.19(d). All royalties, license fees, charges and other
amounts payable by, on behalf of, to, or for the account of, Maxxim in respect
of any Intellectual Property are disclosed in the Financial Statements.
(e) No Intellectual Property Litigation. No claim or demand of
any person has been made nor is there any proceeding that is pending, or to the
knowledge of Maxxim after due inquiry, threatened, nor is there a reasonable
basis therefor, which (i) challenges the rights of Maxxim in respect of any
Intellectual Property Assets, (ii) asserts that Maxxim is infringing or
otherwise in conflict with, or is, except as set forth in Schedule 3.1.19(e),
required to pay any royalty, license fee, charge or other amount with regard to,
any Intellectual Property, or (iii) claims that any default exists under any
agreement or arrangement listed on Schedule 3.1.19(e). None of the Intellectual
Property Assets is subject to any outstanding order, ruling, decree, judgment or
stipulation by or with any court, arbitrator, or administrative agency, nor has
been the subject of any litigation within the last five years, whether or not
resolved in favor of Maxxim.
16
(f) Use of Name and Xxxx. Except as set forth in Schedule
3.1.19(f), there are no contractual restrictions or limitations pursuant to any
orders, decisions, injunctions, judgements, awards or decrees of any
governmental authority on the Buyer's right to use the names and marks listed on
Schedule 1.1(d) in connection with the manufacture and sale of the Products for
the purposes for which they are presently sold by Maxxim.
3.1.20. Insurance. Schedule 3.1.20 contains a complete and
correct list and summary description of all product liability insurance policies
maintained by Maxxim in connection with the Assets and all property and casualty
insurance policies maintained by Maxxim relating to the Clarksburg, West
Virginia Facility. Such policies are in full force and effect, and all premiums
due thereon have been paid. Maxxim agrees to maintain its current insurance
program for a period of three (3) years from the Closing Date ("Extended
Insurance Period"). In the event of the cancellation of its current claims-made
insurance, or in the event the insurance is written on an Occurrence policy form
in the future, Maxxim shall maintain an Extended Reporting period in connection
with such policy for the remainder of the Extended Insurance Period. Schedule
3.1.20 sets out all claims made by Maxxim under any policy of insurance during
the past two years with respect to the Assets and the Clarksburg, West Virginia
Facility.
3.1.21. Real Property.
(a) Other than the Clarksburg, West Virginia Facility, there
are no real property interests included in the Assets. Maxxim has provided Buyer
with a true and correct copy of the Real Estate Lease, dated December 6, 1990,
between the West Virginia Economic Development Authority and Maxxim, as
successor in interest to Winfield Industries (the "Lease"), and the First
Amendment to Real Estate Lease, dated December 6, 1990, under which Maxxim holds
a leasehold interest in the Clarksburg, West Virginia Facility and has the right
to purchase the Facility upon not less than 10 days prior written notice. The
Lease is legal, valid, binding, enforceable, and in full force and effect,
except as may be limited by bankruptcy, insolvency, reorganization and similar
laws affecting creditors generally and by the availability of equitable
remedies. Maxxim has good and valid title to the leasehold estate under the
Lease free and clear of all liens, other than those which will be released at
Closing. Maxxim enjoys peaceful and undisturbed possession under the Lease.
(b) No Proceedings. There are no eminent domain or any other
similar proceedings pending or, to the knowledge of Maxxim after due inquiry,
threatened, affecting any portion of the Clarksburg, West Virginia Facility.
There is no writ, injunction, decree, order or judgement outstanding, nor any
action, claim, suit or proceeding, pending or, to the knowledge of Maxxim after
due inquiry, threatened,
17
relating to the ownership, lease, use, occupancy or operation of the Clarksburg,
West Virginia Facility.
(c) Current Use. The use and operation of the Clarksburg, West
Virginia Facility does not violate in any material respect any instrument of
record or agreement affecting it. There is no violation of any covenant,
condition, restriction, easement or order of any governmental authority having
jurisdiction over such property or of any other person entitled to enforce the
same affecting the Clarksburg, West Virginia Facility or the use or occupancy
thereof. No material damage or destruction has occurred with respect to the
Clarksburg, West Virginia Facility since January 1, 2002.
(d) Compliance with Real Property Laws. The Clarksburg, West
Virginia Facility complies in all material respects with all applicable
building, zoning, subdivision and other land use and similar applicable laws
affecting it (collectively, the "Real Property Laws"), and Maxxim has not
received any notice of violation or claimed violation of any Real Property Law.
There is no pending or, or to the knowledge of Maxxim, anticipated change in any
Real Property Law that will have or result in a material adverse effect upon the
ownership, alteration, use occupancy or operation of the Clarksburg, West
Virginia Facility or any portion thereof. No current use by Maxxim of the
Clarksburg, West Virginia Facility is dependent on a nonconforming use or other
governmental approval the absence of which would materially limit the use of
such property.
(e) Real Property Taxes. The Clarksburg, West Virginia Facility
is assessed for real property tax purposes as a wholly independent tax lot,
separate from adjoining land or improvements not constituting a part of that
parcel.
3.1.22. Environmental Matters.
(a) Permits. All environmental permits relating to the
Clarksburg, West Virginia Facility are identified in Schedule 3.1.22(a), and
Maxxim currently holds, and at all times has held, all such environmental
permits necessary to the operation of the Clarksburg, West Virginia Facility,
and all such environmental permits shall be validly transferred to Buyer on the
Closing Date (the "Environmental Permits"). Maxxim has not been notified by any
relevant governmental authority that any Environmental Permit will be modified,
suspended, cancelled or revoked, or cannot be renewed in the ordinary course of
business.
(b) No Violations. Maxxim has complied and is in compliance in
all material respects with all Environmental Permits and all applicable
Environmental Laws pertaining to the Clarksburg, West Virginia Facility (and the
use, ownership or transferability thereof by Maxxim). To the knowledge of Maxxim
after due inquiry, no
18
person has alleged any violation by Maxxim of any Environmental Permits or any
applicable environmental law relating to the use, ownership or transferability
by Maxxim of the Clarksburg, West Virginia Facility.
(c) No Actions. Except as set forth in Schedule 3.1.22(c),
Maxxim has not caused or taken any action that has resulted or may result in, or
has been or is subject to, any liability or obligation relating to (i) the
environmental conditions on, under, or about the Clarksburg, West Virginia
Facility; or (ii) the past or present use, management, handling, transport,
treatment, generation, storage or release of any hazardous substances at the
Clarksburg, West Virginia Facility, except for any such liabilities and
obligations that, individually and in the aggregate, are not material.
(d) Other. Except as set forth in Schedule 3.1.22(d):
(i) To the knowledge of Maxxim after due inquiry, none of
the Assets is related to or subject to any investigation or evaluation
by any governmental authority, as to whether any remedial action is
needed to respond to a release or threatened release of any hazardous
substances.
(ii) Maxxim is not subject to any outstanding order,
judgement, injunction, decree or writ from, or contractual or other
obligation to or with, any governmental authority or other person in
respect of which Buyer may be required to incur any environmental
liabilities and costs arising from the release or threatened release
of a hazardous substance.
(iii) The Clarksburg, West Virginia Facility is not, and
Maxxim has not transported or arranged for transportation (directly or
indirectly) of any hazardous substances relating to the Assets or the
Clarksburg, West Virginia Facility to any location that is, listed or
proposed for listing under CERCLA, or any similar state list, or the
subject of federal, state or local enforcement or remedial action or,
to the knowledge of Maxxim after due inquiry, investigation.
(iv) No work, repair, construction or capital expenditure is
required or planned in respect of the Clarksburg, West Virginia
Facility pursuant to or to comply with any environmental law, nor has
Maxxim and its respective affiliates received any notice of any such
requirement, except for such work, repair, construction or capital
expenditure as is not material to the Clarksburg, West Virginia
Facility and is in the ordinary course of business.
(e) Full Disclosure. Maxxim has disclosed and made available
to the Buyer all information, including without limitation, all studies,
analyses and test
19
results, in the possession, custody or control of Maxxim relating to (i) the
environmental conditions on, under or about the Clarksburg, West Virginia
Facility; and (ii) hazardous substances used, managed, handled, transported,
treated, generated, stored or released by Maxxim at any time at the Clarksburg,
West Virginia Facility.
3.1.23. Employees, Labor Matters, etc. Except as set forth in
Schedule 3.1.23, Maxxim is not a party to or bound by an collective bargaining
agreement relating to any employee employed at the Clarksburg, West Virginia
Facility and there are no labor unions or other organizations representing,
purporting to represent or attempting to represent any employee employed at the
Clarksburg, West Virginia Facility. Since January 1, 1999, there has not
occurred or, to the best knowledge of Maxxim after due inquiry, been threatened
any material strike, slowdown, picketing, work stoppage, concerted refusal to
work overtime or other similar labor activity with respect to any employees
employed at the Clarksburg, West Virginia Facility. There are no labor disputes
currently subject to any grievance procedure, arbitration or litigation and
there is no representation petition pending or, to the best knowledge of Maxxim
after due inquiry, threatened with respect to any employee employed at the
Clarksburg, West Virginia Facility. Maxxim has complied with all provisions of
applicable law pertaining to the employment of employees at the Clarksburg, West
Virginia Facility, including, without limitation, all such laws relating to
labor relations, equal employment, fair employment practices, entitlements,
prohibited discrimination or other similar employment practices or acts, except
for any failure so to comply that, individually or together with all such other
failures, has not and will not result in a material liability or obligation on
the part of Buyer, and has not had or resulted in, and will not have or result
in, a material adverse effect on the Assets.
3.1.24. Employee Benefit Plans and Related Matters. Schedule
3.1.24 sets forth a true and complete list of each "employee benefit plan", as
such term is defined in Section 3(3) of the ERISA, whether or not subject to
ERISA, and each bonus, incentive or deferred compensation, severance,
termination, retention, change of control, stock option, stock appreciation,
stock purchase, phantom stock or other equity-based, performance or other
employee or retiree benefit or compensation plan, program, arrangement,
agreement, policy or understanding, whether written or unwritten, that provides
or may provide benefits or compensation in respect of any employee or former
employee employed or formerly employed at the Clarksburg, West Virginia Facility
or the beneficiaries or dependents of any such employee or former employee (such
employees, former employees, beneficiaries and dependents collectively, the
"Employees") or under which any Employee is or may become eligible to
participate or derive a benefit and that is or has been maintained or
established by Maxxim or any other trade or business, whether or not
incorporated, which, together with Maxxim is or would have been at any date of
determination occurring within the preceding six (6) years treated as a single
employer under Section 414 of the Code (such other trades and businesses
collectively, the "Related Persons"), or to which Maxxim or any Related
20
Person contributes or is or has been obligated or required to contribute or with
respect to which Maxxim or Buyer may have any liability or obligation
(collectively, the "Plans"). With respect to each such Plan, Maxxim has provided
Buyer complete and correct copies of all written Plans and descriptions of all
unwritten Plans.
3.1.25. Confidentiality. Except as set forth on Schedule
3.1.25, to the best of its knowledge after due inquiry, Maxxim has taken
commercially reasonable steps to preserve the confidential nature of all
material confidential information (including, without limitation, any
proprietary information) with respect to the Assets, including but not limited
to the manufacturing or marketing of any of the Products.
3.1.26. No Guarantees. To the best of its knowledge after due
inquiry, none of the obligations or liabilities of Maxxim incurred in connection
with the ownership or use of the Assets is guaranteed by or subject to a similar
contingent obligation of any other person.
3.1.27. Brokers, Finders, etc. Except as set forth on Schedule
3.1.27, all negotiations relating to this Agreement, the Collateral Agreements,
and the transactions contemplated thereby, have been carried on without the
participation of any person acting on behalf of Maxxim in such manner as to give
rise to any valid claim against the Buyer or any of its subsidiaries for any
brokerage or finder's commission, fee or similar compensation.
3.1.28. Disclosure. To the best knowledge of Xxxx Xxxxxxx,
Xxxx Xxxxx, Xxxxx Xxxxxx, Paulee Day and Xxxx Xxxxxx, no representation or
warranty by Maxxim contained in this Agreement contains any untrue statement of
a material fact, or omits to state any material fact required to make the
statements contained herein not misleading. There is no fact (other than matters
of a general economic or political nature which do not affect the Assets
uniquely) known to such individuals that has not been disclosed by Maxxim to
Buyer that might reasonably be expected to have or result in a material adverse
effect on the Assets.
3.1.29. Accounts Payable. Prior to the Closing Date, Maxxim shall pay
all accounts payable and other obligations relating to the Assets when they
become due and payable in the ordinary course of business consistent with prior
practice.
3.1.30. No Other Representations and Warranties. Except for
the representations and warranties contained in this Agreement (including the
Schedules and Exhibits hereto), neither Maxxim nor any of its agents, affiliates
or representatives, nor any other person, makes or shall be deemed to make any
representation or warranty to Buyer, express or implied, at law or in equity, on
behalf of Maxxim, and Maxxim hereby disclaims any such representation or
warranty whether by Maxxim or any of its respective officers, directors,
employees, agents or representatives or any other person, with respect to the
Assets or the execution and delivery of this Agreement or the Collateral
Agreements or the transactions contemplated hereby or thereby, notwithstanding
the delivery or disclosure to Buyer or any of its officers, directors,
employees, agents or representatives or any
21
other person of any documentation or other information by Maxxim or any of its
officers, directors, employees, agents or representatives or any other person
with respect to any one or more of the foregoing. Buyer hereby acknowledges and
agrees that, except to the extent specifically set forth in this Agreement
(including the Schedules and Exhibits hereto), Buyer is purchasing the Assets on
an "AS IS, WHERE IS" basis. Without limiting the generality of the foregoing,
Maxxim makes no representation or warranty regarding any assets other than the
Assets and any liabilities other than the Assumed Liabilities, and none shall be
implied at law or in equity.
3.2. Representations and Warranties of Buyer. Buyer represents and
warrants to Maxxim as follows:
3.2.1. Authorization, etc. All required corporate action has
been taken so as to duly authorize Buyer to enter into this Agreement and each
of the Collateral Agreements and legally bind it to the terms and provisions
each of such agreements. Buyer has the corporate power and authority to execute
and deliver this Agreement and each of the Collateral Agreements, to perform
fully its obligations thereunder, and to consummate the transactions
contemplated hereby and thereby. This Agreement and each of the Collateral
Agreements will be, on the Closing Date, legal, valid and binding obligations of
Buyer, enforceable against it in accordance with their respective terms.
3.2.2. Corporate Status. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware, with full corporate power and authority to carry on its business and
to own or lease and to operate its properties as and in the places where such
business is conducted and such properties are owned, leased or operated. Buyer
is not in violation of any of the provisions of its certificate of incorporation
or by-laws.
3.2.3. No Conflicts, etc. The execution, delivery and
performance by the Buyer of this Agreement and the Collateral Agreements and the
consummation of the transactions contemplated hereby and thereby do not and will
not conflict with or result in a violation of or under (with or without the
giving of notice or the lapse of time, or both) (i) the certificate of
incorporation or by-laws of Buyer, (ii) any applicable law applicable to Buyer
or any of its properties or assets or (iii) any contract, agreement or other
instrument applicable to Buyer or any of its properties or assets, except, in
the case of clause (iii), for violations and defaults that, individually and in
the aggregate, have not and will not materially impair the ability of Buyer to
perform its obligations under this Agreement or under any of the Collateral
Agreements. Except as specified in Schedule 3.2.3, no governmental approval or
other consent is required to be obtained or
22
made by Buyer in connection with the execution and delivery of this Agreement or
the Collateral Agreements or the consummation of the transactions contemplated
hereby and thereby.
3.2.4. Litigation. There is no action, claim, suit or
proceeding pending, or to Buyer's knowledge threatened, in connection with or
relating to the transactions contemplated by this Agreement or of any action
taken or to be taken in connection herewith or the consummation of the
transactions contemplated hereby.
3.2.5. Brokers, Finders, etc. All negotiations relating to
this Agreement the Collateral Agreements and the transactions contemplated
hereby and thereby have been carried on without the participation of any person
acting on behalf of Buyer in such manner as to give rise to any valid claim
against Maxxim or Buyer for any brokerage or finder's commission, fee or similar
compensation.
3.2.6. Reporting Obligations of Buyer. Buyer has duly filed on
a timely basis all reports and registration statements to be filed by Buyer
under the Exchange Act of 1934, as amended and the Securities Act of 1933, as
amended and the rules and regulations adopted by the Securities and Exchange
Commission ("SEC") thereunder. No filings by Buyer with the SEC contain an
untrue statement of a material fact necessary in order to make the statements
contained therein or in any related documents not misleading in light of the
circumstances under which they were made.
3.2.7. Available Funds. Buyer has sufficient funds available to
it to consummate the transactions contemplated herein, including the payment of
the Purchase Price.
ARTICLE IV
COVENANTS
4.1. Covenants of Maxxim.
4.1.1. Conduct of Business. From the date hereof to the Closing
Date, except as expressly permitted or required by this Agreement or as
otherwise consented to by the Buyer in writing, Maxxim will:
(a) carry on its business relating to the Assets in,
and only in, the ordinary course, in substantially the same
manner as heretofore conducted, and use commercially
reasonable efforts to maintain the Assets in good operating
condition and repair, keep available the service of its
significant employees at the Clarksburg, West Virginia
Facility, and preserve its relationship with its customers
who purchase the Products and its suppliers who supply
materials for the manufacture of the
23
Products and others having business dealings with it relating
to the Assets, to the end that its goodwill relating to the
Products shall be unimpaired in all material respects on the
Closing Date;
(b) pay accounts payable and other obligations relating
to the Assets when they become due and payable in the ordinary
course of business consistent with prior practice;
(c) perform in all material respects all of its
obligations under all contracts and other agreements and
instruments relating to or affecting the Assets, and comply in
all material respect with all applicable laws applicable to the
Assets;
(d) not enter into or assume any material agreement,
contract or instrument relating to the Assets, or enter into or
permit any material amendment, supplement, waiver or other
modification in respect thereof; and
(e) not take any action or omit to take any action,
which action or omission would result in a breach of any of the
representations and warranties set forth in Section 3.1.7.
4.1.2. Further Assurances. Following the Closing, Maxxim
shall, from time to time, execute and deliver such additional instruments,
documents, conveyances or assurances and take such other actions as reasonably
shall be necessary, or otherwise reasonably requested by Buyer, to confirm and
assure the rights and obligations provided for in this Agreement and in the
Collateral Agreements and render effective the consummation of the transactions
contemplated thereby.
4.1.3. Liability for Transfer Taxes. Maxxim shall be
responsible for the timely payment of, and shall indemnify and hold harmless
Buyer against, all sales (including, without limitation, bulk sales), use, value
added, documentary, stamp, gross receipts, registration, transfer, conveyance,
excise, recording, license and other similar taxes and fees ("Transfer Taxes"),
if any, arising out of or in connection with or attributable to the transactions
effected pursuant to this Agreement and the Collateral Agreements. Maxxim shall
prepare and timely file all tax returns required to be filed in respect of
Transfer Taxes (including, without limitation, all notices required to be given
with respect to bulk sales taxes), provided that Buyer shall be permitted to
prepare any such Tax Returns that are its primarily responsibility under
applicable law. Buyer's preparation of any such tax returns shall be subject to
Maxxim's approval, which approval shall not be withheld unreasonably.
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4.1.4. Transfer of Clarksburg, West Virginia Facility. On the
Closing Date, Maxxim shall exercise its rights under the Real Estate Lease and
the Equipment Lease, each dated December 6, 1990, and the First Amendment to
Real Estate Lease dated December 6, 1990, between Maxxim, as successor to
Winfield Medical, Inc., and the West Virginia Economic Development Authority, to
purchase, on behalf of Buyer, the real property, building and equipment covered
by such leases at the Clarksburg, West Virginia Facility. Maxxim shall pay the
full purchase price, and all costs and expenses, due to the West Virginia
Economic Development Authority in connection with such purchase, as well as any
unpaid real estate taxes payable with respect to the Clarksburg, West Virginia
Facility for the period prior to the Closing Date. Buyer shall pay for any title
insurance, recording fees, surveys and inspections required or requested by it
or its lenders, and well as any other miscellaneous closing costs payable to
persons or entities other than the West Virginia Economic Development Authority.
4.1.5. Use of Business Name. After the Closing, except as
otherwise provided for herein, Maxxim will not, directly or indirectly, use or
do business, or allow any affiliate to use or due business, or assist any third
party in using or doing business, under the names and marks set forth in
Schedule 1.1(d) (or any other name confusingly similar to such names and marks).
4.1.6. Financial Statements. Until the Closing, on or before
the 25th day of each month, Maxxim shall deliver to Buyer unaudited financial
information as at and for the monthly period ending the last day of the
preceding month (the "Subsequent Monthly Financial Statements"), which shall
include the same information included in the Financial Statements as set forth
in section 3.1.4(a)(i)-(v). At the time that the Subsequent Monthly Financial
Statements are delivered to Buyer, Maxxim shall by such delivery be deemed to
have made the representations and warranties to Buyer with respect to such
Subsequent Monthly Financial Statements set forth in Section 3.1.4.
4.1.7. Returns and Rebates.
(a) Maxxim accepts the financial responsibility for all
product returns of the Products which occurred prior to the Closing Date;
provided, however, that Buyer hereby agrees to purchase from Maxxim any returned
products which have a remaining shelf life of not less than 12 months (except
for products that have been returned for quality reasons) which are resalable in
the ordinary course of business at the same prices at which other similar
products sold, provided that the value of the products so returned does not
exceed $25,000;
(b) Maxxim agrees to reimburse Buyer on February 15, 2003,
for any rebate amount claimed by any customer in connection with (and limited
to) sales of the Products made and invoiced by such customers to end-user
purchasers within sixty (60) days after the Closing Date, provided, however,
that Maxxim shall have no such
25
liability except to the extent the rebate amount claimed is properly documented
to Maxxim and would be properly payable under Maxxim's rebate policy existing on
the date of this Agreement. Buyer shall be solely responsible for paying any
such rebate amounts in respect of sales of the Products sold and invoiced to
end-user purchasers sixty-one (61) or more days after the Closing Date.
(c) Each of the parties shall cooperate fully with the other
in resolving any conflicts with customers regarding the proper party to pay
rebates and forwarding to the other party any misdirected rebate requests that
it receives.
4.1.8. Transition. Contemporaneously with the execution of this
Agreement, the parties will enter into an agreement providing for the supply of
certain of the Products and raw materials for a specified period after the
Closing Date.
4.2. Covenants of Buyer.
4.2.1. Further Actions.
(a) Buyer agrees to use all reasonable good faith efforts to
take all actions and to do all things necessary, proper or advisable to
consummate the transactions contemplated hereby and by the Collateral
Agreements.
(b) Buyer will, as promptly as practicable, file or supply,
or cause to be filed or supplied, all applications, notifications and
information required to be filed or supplied by it pursuant to applicable law in
connection with this Agreement, the Collateral Agreements and the consummation
of the transactions contemplated hereby and thereby.
(c) Buyer will coordinate and cooperate with Maxxim in
exchanging such information and supplying such reasonable assistance as may be
reasonably requested by Maxxim in connection with the filings and other actions.
4.2.2. Further Assurances. Following the Closing, Buyer shall
execute and deliver such additional instruments, documents, conveyances or
assurances and take such other actions as reasonably shall be necessary, or
otherwise reasonably requested by Maxxim, to confirm and assure the rights and
obligations provided for in this Agreement and in the Collateral Agreements and
render effective the consummation of the transactions contemplated hereby and
thereby.
4.2.3. Use of Business Names by Buyer. To the extent the
trademarks, service marks, brand names or trade, corporate or business names of
Maxxim or of any of Maxxim's divisions are printed on the Assets ("Marked
Materials"), Buyer may use or sell such Marked Materials after Closing for a
period of six (6) months without
26
altering or modifying such Marked Materials, or removing such trademarks,
service marks, brand names, or trade, corporate or business names, but Buyer
shall not otherwise or thereafter use such trademarks, service marks, brand
names or trade, corporate or business names in any other manner without the
prior written consent of Maxxim, provided however that Buyer maintains the
traceability as to its purchase, manufacture and subsequent sale of all such raw
materials, components and finished goods as the case may be.
4.2.4. Investigation By Buyer; Confidentiality. Prior to the
date hereof, Maxxim has allowed (and between the date hereof and the Closing
Date Maxxim will continue to allow) Buyer and its Representatives, at Buyer's
own expense during regular business hours, to inspect the Assets and to inspect
and make copies of contracts, books and records or information requested by
Buyer and reasonably related to the Assets, including historical financial
information. All information will be provided to Buyer in the form that the
information may presently exist or be readily available. Buyer acknowledges and
agrees that it has completed such investigation as it deems necessary to enter
into this Agreement.
Except as otherwise agreed to by Maxxim, until the Closing of
the transactions contemplated hereby, and notwithstanding termination of this
Agreement, Buyer shall keep, and shall instruct its officers, employees,
independent accountants, counsel, financial advisers and other representatives
and affiliates (i) to keep all Confidential Information (as defined below)
confidential, (ii) not to disclose any Confidential Information to any person or
entity other than the directors, officers, employees, affiliates or agents of
Buyer, and then only on a confidential basis, and (iii) to use Confidential
Information solely in connection with the evaluation of, preparation for, and
consummation of the transactions contemplated hereby; provided, however, that
Buyer may disclose Confidential Information (a) as required by law, rule
regulation or judicial process, (b) to its financing sources and to Buyer's and
such financing sources' attorneys, accountants, and financial advisors or (c) as
requested or required by any governmental agency. For purposes of this
Agreement, "Confidential Information" shall include all confidential information
about Maxxim and the Assets which has been furnished by Maxxim to Buyer or the
directors, officers, employees, affiliates or agents of Buyer or persons or
entities controlling Buyer pursuant to or in connection with the negotiation,
execution and consummation of this Agreement; provided, however, that
Confidential Information does not include information which (x) is or becomes
generally available to the public other than as a result of a disclosure by
Buyer not permitted by this Agreement, (y) was available to Buyer on a
non-confidential basis from a person or entity (other than Maxxim) who, to the
knowledge of Buyer, is not otherwise bound by a confidentiality agreement with
Maxxim or is not otherwise prohibited from transmitting the relevant information
to Buyer. The provisions of this paragraph are referred to herein as the
"Confidentiality Provisions".
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4.2.5. Employee Matters. Buyer shall offer employment to all
persons employed by Maxxim as of the Closing Date at the Clarksburg, West
Virginia Facility. Buyer will be responsible for all salary and benefits of such
persons employed by Buyer from and after the date they become employees of
Buyer, as well as for (i) any remaining vacation benefits for 2002 (days of
vacation not yet taken) and (ii) all paid sick leave days to which such
employees are entitled under Maxxim's Personal Approved Absences benefit plan,
as set forth in Schedule 3.1.24. All employees shall be entitled to participate
in all applicable benefit plans of Buyer immediately upon employment by Buyer,
and for purposes of qualifying for such plans and other benefits, such as
vacation, their length of service with Buyer shall be deemed to include the
period of their employment with Maxxim.
4.2.6. Allocation of Purchase Price. Buyer and Maxxim shall,
at or before the Closing, complete and execute Form 8594, Asset Acquisition,
under Section 1060 of the Internal Revenue Code and deliver a copy of such form
to the other party. In addition, each party will file such form in its tax
returns for all periods which include the Closing Date and cause all tax returns
filed by it to be consistent with the information on such form agreed to by the
parties.
4.2.7. Treatment of Inventories. Buyer and Maxxim acknowledge
that the Inventories included as part of the Assets to be sold and transferred
to Buyer pursuant to this Agreement are being sold and transferred to Buyer for
resale purposes only, and each party shall cause any tax returns or other
reports or related documents filed, or otherwise provided to any other party
(including, without limitation, a governmental agency) to be consistent with
such understanding. At the Closing, Buyer shall provide a resale certificate to
Maxxim with respect to the Inventories.
ARTICLE V
CONDITIONS PRECEDENT
5.1. Conditions to Obligations of Each Party. The obligations of the
parties to consummate the transactions contemplated hereby shall be subject to
the fulfillment on or prior to the Closing Date of the following conditions:
5.1.1. No Injunction, etc. Consummation of the transactions
contemplated hereby shall not have been restrained, enjoined or otherwise
prohibited by any applicable law, including any order, injunction, decree or
judgment of any court or other governmental authority. No court or other
governmental authority shall have determined any applicable law to make illegal
the consummation of the transactions contemplated hereby or the Collateral
Agreements, and no proceeding with respect to the application of any such
applicable law to such effect shall be pending.
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5.2. Conditions to Obligations of Buyer. The obligations of Buyer to
consummate the transactions contemplated hereby shall be subject to the
fulfillment (or waiver by Buyer) on or prior to the Closing Date of the
following additional conditions, which Maxxim agrees to use reasonable good
faith efforts to cause to be fulfilled:
5.2.1. Representations, Performance. The representations and
warranties of Maxxim contained in Section 3.1 of this Agreement and in the
Collateral Agreements shall be true and correct in all respects (in the case of
any representation or warranty containing any materiality qualification) or in
all material respects (in the case of any representation or warranty without any
materiality qualification) at and as of the date hereof. Maxxim shall have duly
performed and complied in all material respects with all agreements and
conditions required by this Agreement and each of the Collateral Agreements to
be performed or complied with by it prior to or on the Closing Date. Maxxim
shall have delivered to Buyer a certificate, dated the Closing Date and signed
by its duly authorized officers, to the foregoing effect.
5.2.2. Consents. Maxxim shall have obtained and shall have
delivered to Buyer copies of all governmental approvals required to be obtained
by it in connection with the execution and delivery of this Agreement and the
Collateral Agreements and the consummation of the transactions contemplated
hereby or thereby.
5.2.3. No Material Adverse Effect. No event, occurrence, fact,
condition, change, development or effect shall have occurred, exist or come to
exist since the execution of this Agreement that, individually or in the
aggregate, has constituted or resulted in, or could reasonably be expected to
constitute or result in, a material adverse effect on the Assets.
5.2.4. Collateral Agreements. Maxxim shall have entered into
each of the following agreements with Buyer:
(a) a Trademark Assignment agreement, in the form attached
hereto as Exhibit "C", pursuant to which Maxxim will assign to
Buyer, the trademarks and other Intellectual Property
specified therein;
(b) a non-competition agreement, in the form attached hereto
as Exhibit "D", pursuant to which Maxxim agrees not, directly
or indirectly, to manufacture or sell any products competitive
with the Products for a period of five (5) years; and
(c) a supply agreement, containing customary terms and
conditions, pursuant to which Maxxim will provide the Products
listed in the term sheet attached hereto as Exhibit "E" to
Buyer during the period, in the quantities and for the prices,
specified in such term sheet.
29
5.2.5. Opinion of Counsel. Buyer shall have received an
opinion, addressed to it and dated the Closing Date, from Counsel to Maxxim, in
substance and form reasonably satisfactory to Buyer.
5.2.6. Corporate Proceedings. All corporate and other
proceedings of Maxxim in connection with this Agreement and the Collateral
Agreements and the transactions contemplated thereby, and all documents and
instruments incident thereto, shall be reasonably satisfactory in substance and
form to Buyer and its counsel, and Buyer and its counsel shall have received all
such documents and instruments, or copies thereof, certified if requested, as
may be reasonably requested.
5.2.7. Transfer Documents. Maxxim shall have delivered to
Buyer at the Closing all documents, certificates and agreements necessary to
transfer to Buyer good and marketable title to the Assets, free and clear of any
and all liens thereon, other than those included in the Assumed Liabilities,
including without limitation:
(a) a xxxx of sale, assignment and general conveyance, in
form and substance reasonably satisfactory to Buyer, dated the
Closing Date, with respect to the Assets;
(b) assignments of all contracts, Intellectual Property and
any other agreements and instruments constituting Assets,
dated the Closing Date, assigning to Buyer all of Maxxim's
right, title and interest therein and thereto, with any
required consent of Maxxim's lenders under its primary credit
facility and AmeriNet, Inc.
5.2.8. Additional Conditions to Obligations of Buyer. The
obligations of Buyer to consummate the transactions contemplated hereby shall be
further conditioned (unless waived) upon the following: (i) the average net
sales per shipping day of the Products for the period between July 29, 2002, and
the second business day preceding the Closing Date shall be in excess of $90,000
per shipping day, and (ii) the actual gross margin on the net sales of the
Products for the period described in clause (i) above shall be at least 30%.
5.3. Conditions to Obligations of Maxxim. The obligation of Maxxim
to consummate the transactions contemplated hereby shall be subject to the
fulfillment (or wavier) on or prior to the Closing Date, of the following
additional conditions, which Buyer agrees to use reasonable good faith efforts
to cause to be fulfilled.
5.3.1. Representations, Performance, etc. The representations
and warranties of the Buyer contained in Section 3.2 of this Agreement and the
Collateral Agreements shall be true and correct in all respects (in the case of
any representation or
30
warranty containing any materiality qualification) or in all material respects
(in the case of any representation or warranty without any materiality
qualification) at and as of the date hereof and shall be repeated and shall be
true and correct in all respects (in the case of any representation or warranty
containing any materiality qualification) or in all material respects (in the
case of any representation or warranty without any materiality qualifications)
on and as of the Closing Date with the same effect as through made at and as of
such time. Buyer shall have duly performed and complied in all material respects
with all agreements and conditions required by this Agreement and the Collateral
Agreements to be performed or complied with by it prior to or on the Closing
Date, including payment of the Purchase Price. Buyer shall have delivered to
Maxxim a certificate, dated the Closing Date and signed by its duly authorized
officer, to the foregoing effect.
5.3.2. Opinion of Counsel. Maxxim shall have received an
opinion, addressed to it and dated the Closing Date, of Xxxxxxx X. Satin, Esq.,
General Counsel for Buyer in form and substance reasonably satisfactory to
Maxxim.
5.3.3. Corporate Proceedings. All corporate proceedings of
Buyer in connection with this Agreement and the Collateral Agreements and the
transactions contemplated thereby, and all documents and instruments incident
thereto, shall be reasonably satisfactory in substance and form to Maxxim and
its counsel, and Maxxim and its counsel shall have received all such documents
and instruments, or copies thereof, certified if requested, as may be reasonably
requested.
5.3.4. Consents and Approvals. Maxxim shall have obtained the
consent of its lenders under its primary credit facility and all governmental
approvals necessary to consummate the transactions contemplated hereby.
5.3.5. Collateral Agreements. Buyer shall have entered into
each of the Collateral Agreements.
5.3.6. Assumption Agreements. Buyer shall have delivered to
Maxxim at the Closing all documents, certificates and agreements necessary for
Buyer to assume the Assumed Liabilities.
5.3.7. Appraisal of the Assets. Maxxim shall have received
prior to the Closing a written appraisal of the Assets from a nationally
recognized appraisal, accounting or investment banking firm, showing the fair
market value of the Assets, as they were constituted on the date of such
appraisal, to be equal to or less than the Purchase Price, as the same would
have been adjusted hereunder had the Closing occurred on the date of such
appraisal.
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ARTICLE VI
MISCELLANEOUS
6.1. Indemnification.
(a) By Maxxim. Maxxim covenants and agrees to defend,
indemnify and hold harmless Buyer, its officers, directors, employees, agents,
advisers, representatives and affiliates (collectively, the "Buyer Indemnitees")
from and against, and pay or reimburse Buyer for, any and all claims,
liabilities, obligations, losses, fines, costs, royalties, proceedings,
deficiencies or damages (whether absolute, accrued, conditional or otherwise and
whether or not resulting from third party claims), including out-of-pocket
expenses and reasonable attorney's and accountants' fees incurred in the
investigation or defense of any of the same or in asserting any of their
respective rights hereunder (collectively, "Losses"), resulting from or arising
out of:
(i) any inaccuracy of any representation or warranty made by
Maxxim in this Agreement;
(ii) any failure of Maxxim to perform any covenant or
agreement under this Agreement;
(iii) any Excluded Liabilities;
(iv) any and all taxes of Maxxim;
(v) any product liability claim with respect to products
sold by Maxxim prior to the Closing;
(vi) any failure of Maxxim to comply with applicable bulk
sales laws (in consideration of which indemnification
obligations Buyer hereby waives compliance by Maxxim with any
applicable bulk sales laws); and
(vii) any liability for infringement of any trademark, patent
or any other intellectual property of any third party arising
out of the manufacture or sale of the Products for the uses
for which they are presently being sold by Maxxim.
(b) By Buyer. Buyer covenants and agrees to defend,
indemnify and hold harmless Maxxim and its officers, directors, employees,
agents, advisers, representatives and affiliates (collectively, the "Maxxim
Indemnitees") from and against any and all Losses resulting from or arising out
of:
32
(i) any inaccuracy in any representation or warranty by
Buyer made or contained in this Agreement;
(ii) any failure of Buyer to perform any covenant or
agreement made or contained in this Agreement;
(iii) the Assumed Liabilities;
(iv) the use by Buyer of any Maxxim tradenames or trademarks
after the Closing Date as contemplated by Section 4.2.3;
(v) Buyer's ownership, operation, use or sale of the Assets
on and after the Closing Date; and
(vi) failure of Maxxim to give the notice required under the
Worker Adjustment, Retraining and Notification Act in reliance
upon Buyer's covenant in Section 4.2.5 hereof.
(c) Indemnification Procedures. In the case of any claim
asserted by a third party against a party entitled to indemnification under this
Agreement (the "Indemnified Party"), notice shall be given by the Indemnified
Party to the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought, and the Indemnified Party shall permit the
Indemnifying Party (at the expense of such Indemnifying Party) to assume the
defense of any claim or any litigation resulting therefrom, provided that (i)
the counsel for the Indemnifying Party who shall conduct the defense of such
claim or litigation shall be reasonably satisfactory to the Indemnified Party,
(ii) the Indemnified Party may participate in such defense at such Indemnified
Party's expense, and (iii) the omission by any Indemnified Party to give notice
as provided herein shall not relieve the Indemnifying Party of its
indemnification obligation under this Agreement, except to the extent that such
omission results in a failure of actual notice to the Indemnifying Party and
such Indemnifying Party is materially damaged as a result of such failure to
give notice. Except with the prior written consent of the Indemnified Party, no
Indemnifying Party, in the defense of any such claim or litigation, shall
consent to entry of any judgment or enter into any settlement that provides for
injunctive or other nonmonetary relief affecting the Indemnified Party or that
does not include as a unconditional term thereof the giving by each claimant or
plaintiff to such Indemnified Party of a release from all liability with respect
to such claim or litigation. In the event that the Indemnified Party shall in
good faith determine that the conduct of the defense of any claim subject to
indemnification hereunder or any proposed settlement of any such claim by the
Indemnifying Party might be expected to affect adversely the Indemnified Party's
Tax liability or the ability of the Indemnified Party to conduct its business,
or that the
33
Indemnified Party may have available to it one or more defenses or counterclaims
that are inconsistent with one or more of those that may be available to the
Indemnifying Party in respect of such claim or any litigation relating thereto,
the Indemnified Party shall have the right at all times to take over and assume
control over the defense, settlement, negotiations or litigation relating to any
such claim at the sole cost of the Indemnifying Party, provided that if the
Indemnified Party does so take over and assume control, the Indemnified Party
shall not settle such claim or litigation without the written consent of the
Indemnifying Party, such consent not to be unreasonably withheld. In the event
that the Indemnifying Party does not accept the defense of any matter as above
provided, the Indemnified Party shall have the full right to defend against any
such claim or demand and shall be entitled to settle or agree to pay in full
such claim or demand. In any event, the Indemnifying Party and the Indemnified
Party shall cooperate in the defense of any such claim or litigation subject to
this Section 6.1 and the records of each shall be available to the other with
respect to such defense.
(d) Threshold; Maximum Liability. The foregoing
notwithstanding an Indemnifying Party shall be obligated to indemnify an
Indemnified Party only when the aggregate of all Losses suffered or incurred by
the Indemnified Party as to which a right of indemnification is provided under
this Section 6.1 exceeds $75,000.00 (the "Threshold Amount"). For purposes of
calculating the Threshold Amount, any qualification or limitation of a
representation or warranty by reference to the materiality of matters stated
therein or as to matters having or not having a "material adverse effect," or
words of similar effect, shall be disregarded. After the aggregate of all Losses
suffered or incurred by the Indemnified Party exceeds the Threshold Amount, the
Indemnifying Party shall be obligated to indemnify the Indemnified Party for all
such Losses without reduction by the Threshold Amount. Further, Maxxim shall
have no obligation to indemnify any one or more of the Buyer Indemnitees, as a
group, and Buyer shall have no obligation to indemnify any one or more of the
Maxxim Indemnitees, as a group, for Losses arising after the Closing which
exceed $10 million in the aggregate, whether such Losses arise out of one claim
or multiple related or distinct claims, other than Losses arising from a knowing
and willful misrepresentation of a fact covered by a representation set forth
herein or a products liability claim, in which event the maximum Losses for
which indemnification may be sought or had will be the amount of the Purchase
Price paid by Buyer.
(e) Time Limitation. All claims for indemnification under
clause (i) of the first sentence of Section 6.1(a) or clause (i) of the first
sentence of Section 6.1(b) must be asserted within 30 days of the termination of
the respective survival periods set forth in Section 6.2.
(f) Exclusive Remedy. Buyer and Maxxim agree that, following
the Closing a claim for indemnification under this Section 6.1 shall be the sole
and exclusive
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remedy for any of the matters for which a claim for indemnification against
Losses may be made under paragraphs (a) and (b) of this Section 6.1.
6.2. Survival of Representations and Warranties, etc. The
representations and warranties contained in this Agreement shall survive the
execution and delivery of this Agreement, any examination by or on behalf of the
parties hereto and the completion of the transactions contemplated herein, but
only to the extent specified below:
(a) except as set forth in clauses (b), (c) and (d) below,
the representations and warranties contained in Section 3.1 and
Section 3.2 shall survive for a period of one (1) year following the
Closing Date.
(b) the representations and warranties contained in Sections
3.1.1, 3.1.2, 3.1.3, 3.2.1, 3.2.2 and 3.2.3 shall survive for so long
as any applicable statute of limitations remains open, including
without limitation by reason of waiver of such statute of limitations;
(c) the representations and warranties of Maxxim contained
in Section 3.1.6 shall survive as to any tax covered by such
representations and warranties for so long as any statute of
limitations for such Tax remains open, in whole or in part, including
without limitation by reason of waiver of such statute of limitations;
and
(d) the representations and warranties contained in Section
3.1.20 shall survive for three (3) years following the Closing Date.
6.3. Expenses. Except as provided in Section 4.1.3 and this Section
6.3, Maxxim, on the one hand, and the Buyer, on the other hand, shall bear their
respective expenses, costs and fees (including attorneys', auditors' and
financing commitment fees) in connection with the transactions contemplated
hereby, including the preparation, execution and delivery of this Agreement and
compliance herewith (the "Transaction Expenses"). Notwithstanding the foregoing,
Buyer shall reimburse Maxxim for one-half of the fees of Maxxim's auditors for
their audit of the Annual Financial Statements (which in no event shall exceed
$75,000), such reimbursement to occur within five business days after the
delivery to Buyer of a copy of the xxxx of such auditors for their audit work.
6.4. Severability. If any provision of this Agreement, including any
phrase, sentence, clause, Section or subsection is inoperative or unenforceable
for any reason, such circumstances shall not have the effect of rendering the
provision in question inoperative or unenforceable in any other case or
circumstance, or of rendering any other provision or provisions herein contained
invalid, inoperative, or unenforceable to any extent whatsoever.
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6.5. Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly give if (a) delivered
personally, (b) mailed by first-class, registered or certified mail, return
receipt requested, postage prepaid, (c) sent by next-day or overnight mail or
delivery, or (d) sent by telecopy or telegram.
(i) if to Buyer, to: (ii) if to Maxxim, to:
Medical Action Industries Inc. Maxxim Medical, Inc.
000 Xxxxx Xxxxx 000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000 Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxx, Attention: Xxxxxxx X. Xxxx
Chief Executive Officer Chief Executive Officer
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Telecopier: (000) 000-0000 Telecopier: (000) 000-0000
with a copy to: with a copy to:
Xxxxxxx X. Satin, Esq. Xxxxxx X. Day, Esq.
General Counsel Vice President and General Counsel
Medical Action Industries Inc. Maxxim Medical, Inc.
000 Xxxxx Xxxxx 0000 000xx Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Telecopier: (000) 000-0000 Telecopier: (000) 000-0000
or, in each case, at such other address as may be specified in writing to the
other parties hereto.
All such notices, requests, demands, waivers and other communications
shall be deemed to have been received (w) if by personal delivery on the day
after such delivery, (x) if by certified or registered mail, on the seventh
business day after the mailing thereof, (y) if by next-day or overnight mail or
delivery, on the day delivered, (z) if by telecopy or telegram, on the next day
following the day on which such telecopy or telegram was sent, provided that a
copy is also sent by certified or registered mail.
6.6. Miscellaneous.
6.6.1. Headings. The headings contained in this Agreement are
for purposes of convenience only and shall not affect the meaning or
interpretation of this Agreement.
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6.6.2. Entire Agreement. This Agreement (including the
Schedules hereto) and the Collateral Agreements (when executed and delivered)
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
6.6.3. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
6.6.4. Governing Law, etc. This Agreement shall be governed in
all respects, including as to validity, interpretation and effect, by the
internal laws of the State of New York, without giving effect to the conflict of
laws rules thereof. Buyer and Maxxim hereby irrevocably submit to the
jurisdiction of the courts of the State of New York and the Federal courts of
the United States of America located in the State, City and County of New York
solely in respect of the interpretation and enforcement of the provisions of
this Agreement and of the documents referred to in this Agreement, and hereby
waive, and agree not to assert, as a defense in any action, suit or proceeding
for the interpretation or enforcement hereof or of any such document, that it is
not subject thereto or that such action, suit or proceeding may not be brought
or is not maintainable in said courts or that the venue thereof may not be
appropriate or that this Agreement or any of such document may not be enforced
in or by said courts, and the parties hereto irrevocably agree that all claims
with respect to such action or proceeding shall be heard and determined in such
a New York State or Federal court. Buyer and Maxxim hereby consent to and grant
any such court jurisdiction over the person of such parties and over the subject
matter of any such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
6.5, or in such other manner as may be permitted by law, shall be valid and
sufficient service thereof.
6.6.5. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns.
6.6.6. Assignment. This Agreement shall not be assignable or
otherwise transferable by any party hereto without the prior written consent of
the other parties hereto.
6.6.7. No Third Party Beneficiaries. Except as provided in
Section 6.1 with respect to indemnification of Indemnified Parties hereunder,
nothing in this Agreement shall confer any rights upon any person or entity
other than the parties hereto and their respective heirs, successors and
permitted assigns.
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6.6.8. Amendment; Waivers, etc. No amendment, modification or
discharge of this Agreement, and no waiver hereunder, shall be binding unless
set forth in writing and duly executed by the party against whom enforcement of
the amendment, modification, discharge or waiver is sought. Any such waiver
shall constitute a waiver only with respect to the specific matter described in
such writing and shall in no way impair the rights of the party granting such
waiver in any other respect or at any other time. Neither the waiver by any of
the parties hereto of a breach of or a default under any of the provisions of
this Agreement, nor the failure by any of the parties, on one or more occasions,
to enforce any of the provisions of this Agreement or to exercise any right or
privilege hereunder, shall be construed as a waiver of any other breach or
default of a similar nature, or as a waiver of any of such provisions, rights or
privileges hereunder. The rights and remedies herein provided are cumulative and
are not exclusive of any rights or remedies that any party may otherwise have at
law or in equity. The rights and remedies of any party based upon, arising out
of or otherwise in respect of any inaccuracy or breach of any representation,
warranty, covenant or agreement or failure to fulfill any condition shall in no
way be limited by the fact that the act, omission, occurrence or other state of
facts upon which any claim of any such inaccuracy or breach is based may also be
the subject matter of any other representation, warranty, covenant or agreement
as to which there is no inaccuracy or breach.
6.6.9. Public Announcements. Buyer and Maxxim, as the case may
be, will consult with each other before issuing any press release or otherwise
making any public statements with respect to the execution of this Agreement and
the transactions contemplated hereby, and shall not issue any such press release
or make any such public statement prior to such consultation (and shall give
reasonable consideration given to the comments of the other), in each case
except as may be required by applicable law or by obligations pursuant to any
listing agreement with any national securities exchange, as determined by Buyer
or Maxxim, as the case may be.
ARTICLE VII
TERMINATION
7.1. Termination. This Agreement may be terminated at any time
prior to the Closing Date:
(a) by the written agreement of Buyer and Maxxim;
(b) by either Maxxim or Buyer by written notice to the other
party if the transactions contemplated hereby shall not have been
consummated pursuant hereto by 5:00 p.m. New York City time on November
1, 2002, unless such date shall be extended by the mutual written
consent of Maxxim and Buyer;
38
(c) by Buyer by written notice to Maxxim if (i) the
representations and warranties of Maxxim shall not have been true and
correct in all respects (in the case of any representation or warranty
containing any materiality qualification) or in all material respects
(in the case of any representation or warranty without any materiality
qualification) as of the date when made or (ii) if any of the
conditions set forth in Section 5.1 or 5.2 shall not have been, or if
it becomes apparent that any of such conditions will not be, fulfilled
by 5:00 p.m. New York City time on November 1, 2002, unless failure
shall be due to the failure of Buyer to perform or comply with any of
the covenants, agreements or conditions hereof to be performed or
complied with by it prior to the Closing; or
(d) by Maxxim by written notice to Buyer if (i) the
representations and warranties of Buyer shall not have been true and
correct in all respects (in the case of any representation or warranty
containing any materiality qualification) or in all material respects
(in the case of any representation or warranty without any materiality
qualification) as of the date when made or (ii) if any of the
conditions set forth in Sections 5.1 or 5.3 shall not have been, or if
it becomes apparent that any of such conditions will not be, fulfilled
by 5:00 p.m. New York City time on November 1, 2002, unless such
failure shall be due to the failure of Maxxim to perform or comply with
any of the covenants, agreements or conditions hereof to be performed
or complied with by it prior to the Closing.
7.2. Effect of Termination. In the event of the termination of this
Agreement pursuant to the provisions of Section 7.1, this Agreement shall become
void and have no effect, without any liability to any person in respect hereof
or of the transactions contemplated hereby on the part of any party hereto, or
any of its directors, officers, employees, agents, consultants, representatives,
advisors or stockholders, except for the Confidentiality Provisions set forth in
Section 4.2.4, which shall survive the termination hereof, and as specified in
Section 6.3 and except for any liability resulting from such party's breach of
this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
MEDICAL ACTION INDUSTRIES INC. MAXXIM MEDICAL, INC.
By: /s/ Xxxxxxx X. Satin By: /s/ Xxxx X. Xxxxxxx
---------------------------------- -----------------------------
Xxxxxxx X. Satin Xxxx X. Xxxxxxx
Vice President-Operations and General Vice Chairman and Chief Financial
Counsel Officer
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