ASSET ACQUISITION AGREEMENT
THIS ASSET ACQUISITION AGREEMENT ("Agreement") is made and entered into
upon the 27th day of December, 1996 and shall be effective as of January 1,
1997, by and between IOMED, INC., ("Seller") and FILLAUER, INC., ("Purchaser").
WITNESSETH:
WHEREAS, Seller is a corporation, duly organized and existing under the
laws of the State of Utah, owning and operating a research, development,
manufacturing and selling division devoted to prosthetics and products derived
therefrom known as "Motion Control" located at 0000 Xxxx 0000 Xxxxx, Xxxx Xxxx
Xxxx, Xxxx 00000 ("Location");
WHEREAS, Purchaser is a corporation, duly organized and existing under
the laws of the State of Delaware, and desires to purchase from Seller the
assets of Motion Control;
WHEREAS, Seller is willing to sell the assets of and associated with
Motion Control to Purchaser;
NOW, THEREFORE, in consideration of the mutual agreements, covenants,
terms and conditions herein contained the parties hereto agree as follows:
ARTICLE I.
Purchase and Sale of Assets
1.1 Purchase and Sale of Assets. Subject to the terms and conditions
set forth in this Agreement, Seller shall sell, transfer and convey to
Purchaser, and Purchaser shall purchase and acquire from Seller, on the
Effective Date (as hereinafter defined), the following tangible assets of the
Seller used by Seller exclusively in the operation of Seller's Motion Control
division (such assets, excluding, however, those listed in Section 1.3 hereof,
collectively, the "Assets"), all said Assets being owned by Seller on the
Effective Date:
(a) All Accounts Receivable as set forth on Schedule 1.1(a);
(b) All inventory of materials, work in process, finished
goods and overhead as set forth on Schedule 1.1(b);
(c) All machinery, equipment, furniture and fixtures as set
forth on Schedule 1.1(c); (d) All demonstrators and loaners as
set forth on Schedule 1.1(e); and (e) All customer files and
records as set forth on Schedule 1.1(f).
1.2 Transfer of Government Equipment. The Seller has disclosed to the
Purchaser that Seller utilizes certain property and equipment owned by various
governmental agencies and authorities in connection with the business of Motion
Control. Such property and equipment is referred to herein as the "Government
Equipment" and is more particularly described on Schedule 1.2 hereto. On or
promptly after the Effective Date, the Seller will transfer control and
possession of the Government Equipment to the Purchaser; provided, however, that
the Seller makes no representation or warranty, whatsoever, concerning the right
of the Purchaser to retain possession of or to continue to use the Government
Equipment, and the Purchaser shall assume all risks associated with or
attributable to its possession of and continued use of the Government Equipment.
At the Purchaser's request, the Seller shall provide the Purchaser with
reasonable assistance in connection with any efforts undertaken by the Purchaser
to secure consents and approvals from the appropriate governmental agencies for
the continued possession and use of the Government Equipment. The Seller shall
have no obligation or liability to the Purchaser in regard to the Government
Equipment except as specifically set forth in this paragraph 1.2, and it is
specifically agreed that no adjustment in the Purchase Price (as hereinafter
defined) for the Assets shall be required in the event the Purchaser is unable
to continue to use all or any portion of the Government Equipment.
1.3 Excluded Assets. Seller shall not sell or transfer and Purchaser
shall not purchase or accept any of the property or assets used in connection
with Motion Control which are set forth on Schedule 1.3 attached hereto and
incorporated herein, and which are specifically excluded from the Assets
(collectively, "Excluded Assets").
1.4 Consideration for Tangible Assets. As consideration for the Assets
purchased hereunder, Purchaser shall pay Seller the amount of One Million
Dollars, (the "Purchase Price"). The Purchase Price shall be paid at the Signing
(as hereinafter defined) by transfer of immediately available funds to an
account designated by Seller.
1.5 License Agreement. Purchaser and Seller have in good faith
negotiated a License Agreement in the form attached hereto as Schedule 1.5 and
incorporated herein by reference (the "License Agreement"), pursuant to which
the Seller will authorize the Purchaser to utilize certain proprietary,
intellectual property rights in connection with its continued operation of
Motion Control. As provided in paragraph 1.9 hereof, the Seller and the
Purchaser shall execute and deliver the License Agreement in connection with the
Signing.
1.6 Assumption of Obligations. Except as otherwise specifically
provided herein, Purchaser shall assume no liability or obligation whatsoever
arising out of or connected with the Assets or any other liabilities or
obligations the Seller, except for those liabilities set forth on Schedule 1.6
attached hereto and incorporated herein ("Assumed Liabilities").
1.7 UCC Searches. Purchaser, at Seller's expense, shall obtain a report
of a recognized search firm of a search of the records of the Utah Secretary of
State and the appropriate county Recorder of Deeds regarding financing
statements and tax liens filed against the Assets and/or Seller in connection
with the Assets, (the "UCC Search").
ARTICLE II.
Signing and Effective Date
2.1 Time and Place. The execution and delivery of this Agreement (the
"Signing") will take place on the 27th day of December, 1996, at the offices of
Xxxxxxx, Xxxxx & Xxxxxxx, located in Salt Lake City, Utah, at a time mutually
agreeable to the parties. The transactions contemplated by this Agreement shall
be effective upon January 1, 1997 (the "Effective Date").
2.2 Seller's Obligation at Signing. At the Signing, Seller shall
deliver or cause to be delivered to Purchaser executed counterparts of the
following instruments of transfer and other documents in form and substance
reasonably satisfactory to Purchaser's counsel, effectively vesting in Purchaser
title to the Assets upon the Effective Date and evidencing compliance with the
terms and conditions of this Agreement:
(a) A Xxxx of Sale conveying the Assets listed on Schedule
1.1(a) through and including Schedule 1.l(e) to Purchaser and
a General Assignment; and
(b) Such other instruments of assignment, transfer,
conveyance, endorsement, direction or authorization as will be
sufficient or requisite to vest in Purchaser full, complete,
legal and equitable right, title and interest in and to all
the Assets to be acquired pursuant to this Agreement as may
reasonably be requested by Purchaser's counsel; and
(c) The License Agreement; and
(d) A Temporary Use Agreement with Purchaser for Purchaser's
continued operation of the Motion Control operations at the
Location, in the form of Schedule 2.2(d) (the "Use
Agreement"); and
(e) An Administrative Services Agreement, in the form of
Schedule 2.2(e) hereto, pursuant to which the Seller shall
provide the Purchaser with certain services in connection with
the Purchaser's operation of the business of Motion Control
(the "Administrative Services Agreement").
2.3 Purchaser's Obligations at Signing. At the Signing, Purchaser shall
deliver or cause to be delivered to Seller:
(a) The sum of $1,000,000 in immediately available funds, by
wire transfer, to an account designated by the Seller; and
(b) An executed counterpart of the License Agreement; and
(c) An executed counterpart of the Use Agreement; and
(d) An executed counterpart of the Administrative Services
Agreement; and
(e) An Assumption Agreement in form and substance reasonably
satisfactory to Seller's counsel pursuant to which the
Purchaser specifically assumes those obligations and
liabilities of the Seller specified on Schedule 1.6 hereto.
2.4 Possession of the Assets. On the Effective Date the Seller shall
deliver possession and control of the Assets to the Purchaser, and the Purchaser
shall assume possession and control thereof.
ARTICLE III.
Representations and Warranties
3.1 Representation and Warranties of Seller. Seller represents and
warrants to Purchaser as follows:
(a) Authorization. This Agreement has been duly authorized
and approved by the Board of Directors of the Seller in
accordance with State law. No other approval or
authorization is necessary for Seller to execute, deliver
and perform this Agreement. The execution, delivery and
performance of this Agreement by Seller will not result in
any breach of or conflict with any of the terms, conditions
or provisions of the Articles of Incorporation or the Bylaws
of Seller, any material agreement, indenture, mortgage,
lease, license, research, development or other instrument by
which Seller is a party or by which Seller is bound.
(b) Customer Files and Records. To the knowledge of Seller,
the customer files and records specified on Schedule 1.1(e)
contain materially complete records (including the names,
addresses, and telephone numbers) of all customers of Motion
Control for at least the twelve month period prior to the
Effective Date.
(c) Title to Assets. Seller has, and upon the execution and
delivery by Seller at the Signing of the documents referred
to in Section 2.2 hereof, Purchaser, upon the Effective
Date, will be vested with, good and marketable title to the
Assets, free and clear of all liens and charges of
encumbrance, other than the Assumed Liabilities set forth on
Schedule 1.6.
(d) Litigation and Violations. No claim, litigation,
investigation or other proceeding is pending, or to the best
knowledge of Seller, threatened against Seller, which
relates to or affects the Assets, or Motion Control, except
as set forth in Schedule 3.1(d).
(e) Employees. None of the employees of Seller who are
identified on Schedule 3.1(e) (the "Motion Control
Employees") are covered by or subject to any employment
contract, collective bargaining agreement, union contract,
labor agreement or conciliation agreement.
(f) Taxes. For all periods prior to the Effective Date,
proper and accurate amounts have been withheld by Seller
from the Motion Control Employees for all such periods to
insure full and complete compliance with tax withholding
provisions of applicable federal, State and local tax laws;
proper and accurate federal, State and local tax returns
have been filed by Seller for all periods for which returns
were due with respect to sales, withholding, F.I.C.A. and
unemployment taxes, in the amount shown thereunder to be due
and payable and all such amounts have been paid in full. For
all periods up to and including the Effective Date, Seller
has duly filed or will file when due all federal, State and
local tax returns and reports, and all tax returns and
reports of all government units having jurisdiction with
respect to taxes imposed on Seller which might create a lien
or encumbrance on any of the Assets, which would be a valid
and subsisting lien thereon after transfer thereof to
Purchaser hereunder or affect adversely Purchaser's ability
to operate the business of Motion Control through the use of
the Assets after the Effective Date, and Seller has paid or
will pay when due all such taxes shown thereon to be due and
payable.
(g) Employee Benefit Plans. Seller has no unfunded
liabilities to the Motion Control Employees under any
pension or other employee benefit plan. Seller, not
Purchaser, shall make any required contribution to such
plans as to the Motion Control Employees. Seller, not
Purchaser, is legally responsible in regard to all matters
involving such plans.
(h) Binding Effect. This Agreement has been duly executed
and delivered by Seller and constitutes the legal, valid and
binding obligation of Seller enforceable in accordance with
its terms, except as limited by bankruptcy, insolvency,
reorganization, or other laws affecting the rights of
creditors generally.
3.2 Representations and Warranties of Purchaser. Purchaser represents
and warrants to Seller as follows:
(a) Authorization. This Agreement has been duly authorized
and approved by the Board of Directors of the Purchaser in
accordance with State law. No other approval or
authorization is necessary for Purchaser to execute, deliver
and perform this Agreement. The execution, delivery and
performance of this Agreement by Purchaser will not result
in any breach of or conflict with any of the terms,
conditions or provisions of the Articles of Incorporation or
the Bylaws of Purchaser, any material agreement, indenture,
mortgage, lease, license, research, development or other
instrument by which Seller is a party or by which Purchaser
is bound.
(b) Binding Effect. This Agreement has been duly executed
and delivered by Purchaser and constitutes the legal, valid
and binding obligation of Purchaser enforceable in
accordance with its terms, except as limited by bankruptcy,
insolvency, reorganization, or other laws affecting the
rights of creditors generally.
ARTICLE IV.
Covenants, of Seller and Purchaser
4.1 Liability for Expenses.
(a) Seller. With the exception of the Assumed Liabilities,
Seller shall be responsible for the payment of all
liabilities incurred in connection with the operation of
Motion Control up to the Effective Date and shall promptly
pay all such obligations.
(b) Purchaser. Purchaser shall be responsible for the
payment of all liabilities incurred in connection with the
operations of Motion Control from and after the Effective
Date and shall promptly pay all such obligations.
Additionally, the Purchaser shall be responsible for and
shall promptly pay all of the Assumed Liabilities as set
forth on Schedule 1.6.
4.2 Seller's Maintenance of Insurance. Seller shall maintain
appropriate insurance coverage which provides continuing coverage of its
manufacturing and product liability up to the Effective Date. Seller shall
provide evidence of such insurance to Purchaser upon request.
4.3 Collection of Accounts Receivable. Except as specifically provided
in the Administrative Services Agreement, the collection of all accounts
receivable specified on Schedule 1.l(a), and of all accounts receivable arising
on or after the Effective Date as the result of the Purchaser's operation of
Motion Control, shall, on and after the Effective Date be the sole
responsibility of Purchaser.
ARTICLE V.
Condition of Assets
5.1 AS-IS SALE. THE ASSETS BEING SOLD HEREUNDER ARE BEING SOLD AS-IS,
AND SELLER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH
RESPECT TO THE CONDITION OR FITNESS OF THE ASSETS.
ARTICLE VI.
Transition of Motion Control and Notice to Customers
6.1 Seller's Obligations. Seller will use reasonable efforts to
transfer the operations of Motion Control to Purchaser as soon as practicable
following the Effective Date by appropriate means, including the following:
(a) Notices to Customers. At Purchaser's direction and
expense, Seller and Purchaser will jointly author notices to
customers of Motion Control as soon as reasonably practical
after the Effective Date, informing them of Seller's transfer
of operations to Purchaser pursuant to the purchase and sale
of Assets hereunder (the "Notices").
(b) Notices to Other Interested Parties. At Purchaser's
direction and expense, Seller and Purchaser will jointly
author notices to other interested parties of Motion Control
as soon as reasonably practical after the Effective Date,
informing them of Seller's transfer to Purchaser pursuant to
the purchase and sale of Assets hereunder (the "Notices").
ARTICLE VII.
Employees of Seller
7.1 Termination. Effective at the close of business on December 31,
1996, Seller shall terminate the employment of all of the Motion Control
Employees. On the Effective Date, Purchaser shall offer employment to all of the
Motion Control Employees in the capacities, and for the compensation set forth
opposite their respective names on Schedule 3. l(e) hereto. Additionally, the
Purchaser shall provide the Motion Control Employees with benefits generally
comparable to those provided by the Seller. Purchaser shall not assume any
obligations and liabilities of Seller to any of the Motion Control Employees,
including, without limitation, any liability or obligation for wages, bonuses,
medical reimbursement, pension or profit sharing benefits, or any other
liability or obligation whatsoever of Seller to such employees arising out of or
in connection with their prior employment with Seller or with their termination
as employees of Seller. The Purchaser will not terminate the employment of any
of the Motion Control Employees, without good cause, for at least 90 days
following the Effective Date.
ARTICLE VIII.
Indemnification
8.1 Survival. The representations, warranties and covenants of each
party shall survive the Effective Date for a period of one year.
8.2 Of Purchaser.
(a) Seller hereby agrees to indemnify and hold Purchaser
harmless against each and every claim, demand, loss,
liability, damage, or expense (including, without limitation,
any settlement payment, reasonable attorneys' fees, and other
expenses incurred in litigation or settlement or any claims)
of whatever nature suffered by Purchaser or arising out of or
in connection with (i) the conduct of the business of Motion
Control up to the Effective Date (other than the Assumed
Liabilities set forth on Schedule 1.6), and (ii) any material
breach of warranty, covenant, or agreement or any material
misrepresentation of Seller contained in this Agreement or in
any Schedule or Exhibit attached-to or furnished pursuant to
this Agreement any other document furnished or required to be
furnished in connection with this Agreement or pursuant
hereto.
(b) Seller hereby agrees to indemnify and hold Purchaser
harmless against each and every claim, demand, loss,
liability, damage, or expense, based on or rising out of
environmental matters attributable to Seller's operation of
its business, including Seller's use and occupation of the
Location, including, without limitation, contamination or
cleanup of contamination (also including, without limitation,
any settlement payment, reasonable attorney's fees, and other
expenses incurred in litigation or settlement of any claims)
that may occur prior to the Effective Date.
8.3 Of Seller.
(a) Purchaser hereby agrees to indemnify and hold Seller
harmless against each and every claim, demand, loss,
liability, damage, or expense (including, without limitation,
any settlement payment, reasonable attorney's fees, and other
expenses incurred in litigation or settlement of any claims)
of whatever nature suffered by Seller arising out of or in
connection with (i) the conduct by the Purchaser of the
business of Motion Control or the use of the Assets by
Purchaser from and after the Effective Date, (ii) any material
breach of warranty, covenant, or agreement or any material
misrepresentation of Purchaser contained in this Agreement, or
(iii) the failure of the Purchaser to timely pay or otherwise
satisfy its obligations in connection with the Assumed
Liabilities, set forth on Schedule 1.6.
(b) Purchaser hereby agrees to indemnify and hold the Seller
harmless against each and every claim, demand, loss,
liability, damage or expense, based on or arising out of
environmental matters attributable to the Purchaser's
operation of its business, including the business of Motion
Control and the Purchaser use and occupation of the Location,
including, without limitation, contamination or cleanup of
contamination (also including, without limitation, any
settlement payment, reasonable attorneys' fees and other
expenses incurred in any litigation or settlement of any
claims) that may occur on or after the Effective Date.
8.4 Notice and Participation. Upon receipt of written notice of any
claim or the service of a summons or other initial legal process upon it in any
action instituted against it in respect of which indemnity may be sought under
this Agreement, Purchaser, or Seller, as the case may be, shall promptly give
written notice of such claim, or the commencement of such action, or threat
thereof, to Seller or Purchaser, as the case may be. The party required
hereunder to provide indemnification in regard to such claim or action shall
assume the defense thereof, at its expense and with counsel of its choice. Such
party shall control the defense of such claim or action, as well as the terms of
its settlement or other termination. The indemnified party shall be entitled, at
its own expense, to participate in the defense of such claim or action, but such
participation shall not include the right to control the defense or approve a
settlement.
ARTICLE IX.
Other Agreements
9.1 License Agreement. Seller and Purchaser agree that the
effectiveness of this Agreement shall be contingent upon the execution and
delivery by both parties of the License Agreement.
9.2 Use Agreement. Seller and Purchaser agree that the effectiveness of
this Agreement shall further be contingent upon the execution and delivery by
both parties of the Use Agreement.
9.3 Administrative Services Agreement. The Seller and the Purchaser
agree that the effectiveness of this Agreement shall further be contingent upon
the execution and delivery by both parties of the Administrative Services
Agreement.
ARTICLE X.
Miscellaneous Provisions
10.1 Expenses. Whether or not the transactions contemplated by this
Agreement are consummated, each of the parties hereto shall pay the fees and
expenses incurred by their own respective legal counsel, accountants, other
experts and all other expenses incurred by such party incidental to the
negotiation, preparation and execution of this Agreement.
10.2 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of all of the parties hereto and their successors in interest;
provided, however, that this Agreement may not be assigned by either party
without the prior written consent of the other.
10.3 Amendments. This Agreement may not be amended in whole or in part
at any time except by a written instrument setting forth such changes and signed
by each of the parties hereto.
10.4 Entire Agreement. This Agreement, the Schedules and the Exhibits
hereto, and the License Agreement, the Use Agreement and the Administrative
Services Agreement set forth the entire understanding between the parties
relating to the transactions described herein, there being no terms, conditions,
warranties or representations, other than those contained herein, and no change
or modification hereto shall be valid unless made in writing and signed by the
parties hereto.
10.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed-an original, but all of which shall
constitute one and the same instrument.
10.6 Governing Law. This Agreement shall be governed by the laws of the
State of Utah.
10.7 Headings. The headings contained herein are for reference only,
are not a part of this Agreement and shall have no substantive meaning.
10.8 Notices. All notices, requests or demands and other communications
from any of the parties hereto to the other shall be sufficient and shall be
deemed given, made or served, on personal delivery or seventy-two (72) hours
after deposit with the U.S. Postal Service if sent by certified mail, postage
prepaid, return receipt requested, to the other party at the address set forth
below, or at any other address as any party may later designate by written
notice.
As to Purchaser: Attn: President and Chief Operating Officer
FILLAUER, INC.
0000 Xxxxxxxx Xxxxxxx
X.X. Xxx 0000
Xxxxxxxxxxx, XX 00000-0000
with a copy to:
Xxxxxx X. Xxxxxxx, Esquire
Xxxxxxx & Bowling
The Financial Center at Capital Place
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
As to Seller:
Attn: President and Chief Executive Officer
IOMED, INC.
0000 Xxxx 0000 Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
with a copy to:
Xxxxxx X. Xxxxxxxxx, Esquire
Xxxxxxx, Xxxxx & Xxxxxxx
One Utah Center
000 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
X.X. Xxx 00000
Xxxx Xxxx Xxxx, Xxxx 00000-0000
10.9 Severability. If any portion or portions of this Agreement shall
be, for any reason, invalid or unenforceable, the remaining portion or portions
shall nevertheless be valid, enforceable and carried into effect, unless to do
so would clearly violate the present legal and valid intention of the parties
hereto.
10.10 Further Assurances. Seller agrees that after the Closing Date it
will execute and deliver such further instruments of conveyance and transfer as
Purchaser may reasonably request to effect the transfer of the Assets to
Purchaser.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date and year first written above.
IOMED, INC. FILLAUER, INC.
By: /s/ Xxx X. Xxxxxxxxxxx By:
Title: President & CEO Title:
SELLER'S FEIN: 00-0000000 PURCHASER'S FEIN: 00-0000000
