Exhibit 3.1
ASSET PURCHASE AGREEMENT
AMONG
PRESTO DISPOSABLE PRODUCTS, INC., A WISCONSIN CORPORATION
("BUYER" OR "COMPANY")
AND
RMED INTERNATIONAL, INC., A COLORADO CORPORATION
("SELLER" OR "RMED")
DATED NOVEMBER 19, 2001
TABLE OF CONTENTS
ARTICLE I - Purchase and Sale of Assets; Closing; and
Assumption of Liabilities
1.1 Purchase of Assets ..........................................2
1.1.1 Excluded Assets .............................................3
1.2 Purchase Price ..............................................3
1.3 Disputes ....................................................4
1.4 Estimated Financial Statements ..............................4
1.5 Payment of Purchase Price ...................................4
1.6 Closing .....................................................5
1.7 Tax Allocation of Purchase Price ............................5
ARTICLE II - Liabilities
2.1 Assumed Liabilities; Executory Contracts ....................5
2.2 Non-Assumption of Liabilities ...............................6
2.3 Labor Relations; Pension Plan ...............................6
ARTICLE III - Covenants, Representations and Warranties of RMED
3.1 Legal Status ................................................6
3.2 Capitalization ..............................................7
3.3 Authorization ...............................................7
3.4 Financial Statements ........................................8
3.5 Absence of Changes ..........................................8
3.6 Undisclosed Liabilities .....................................9
3.7 No Violation of Statute or Contract ........................10
3.8 Accounts Receivable ........................................10
3.9 Notes Receivable ...........................................10
3.10 Inventories ................................................11
3.11 Real Property Owned or Leased ..............................11
3.12 Regulatory Approvals .......................................12
3.13 Tangible Personal Property .................................12
3.14 Intellectual Property ......................................12
3.15 Material Contracts .........................................13
3.16 Permits and Licenses .......................................15
3.17 Insurance Coverages ........................................15
3.18 Claims and Litigation ......................................15
3.19 Tax Matters ................................................15
3.20 Benefit Plans ..............................................17
3.21 ERISA Matters ..............................................17
3.22 Environmental Matters ......................................18
3.23 Compliance with Applicable Law .............................19
3.24 Bank Accounts ..............................................19
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3.25 Full Disclosure ............................................19
3.26 Disclosure on Schedules ....................................19
3.27 Knowledge and Notice .......................................19
3.28 Brokers or Finders .........................................20
ARTICLE IV - Representation and Warranties of Buyer
4.1 Buyer Status ...............................................20
4.2 Authorization ..............................................20
4.3 Claims and Litigation ......................................20
4.4 Brokers or Finders .........................................20
4.5 Employees ..................................................20
4.6 Payment of Creditors .......................................21
ARTICLE V - Conditions Precedent to Buyer's Obligation to Close
5.1 Corporate and Shareholder Action ...........................21
5.2 Representations and Warranties .............................21
5.3 Performance of Obligations .................................21
5.4 No Adverse Change ..........................................21
5.5 Governmental Approvals .....................................22
5.6 Litigation .................................................22
5.7 Appraisal Rights ...........................................22
5.8 Non-Competition Agreement ..................................22
5.9 Access .....................................................22
5.10 Assignment of Leases .......................................22
5.11 Financing ..................................................22
5.12 Key Employees ..............................................22
5.13 Release ....................................................22
5.14 Accounts Receivable ........................................22
5.15 Due Diligence ..............................................22
5.16 Legal Opinion ..............................................23
5.17 Amended Sales and
Marketing Agreement ........................................23
5.18 Employment Agreement .......................................23
5.19 Settlement of Outstanding Payables .........................23
5.20 Supplemental Shareholders Meeting ..........................23
ARTICLE VI - Conditions Precedent to RMED's Obligation to Close
6.1 Corporate and Shareholder Action ...........................23
6.2 Representations and Warranties .............................24
6.3 Performance of Obligations .................................24
6.4 TenderCare Agreement .......................................24
6.5 Delivery/Shipping Services .................................24
6.6 Website ....................................................24
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6.7 Manufacture of Rockabye Diapers ............................24
6.8 Non-competition Agreement ..................................24
ARTICLE VII - Operation of RMED to the Closing Date
7.1 Ordinary Course of Business ................................25
7.2 Charter Documents ..........................................25
7.3 Merger or Mergers ..........................................25
7.4 Sale or Encumbrance ........................................25
7.5 Dividends or Distributions .................................25
7.6 Capitalization .............................................25
7.7 Indebtedness ...............................................25
7.8 Compensation ...............................................25
7.9 Disclosure .................................................26
7.10 Government Regulation ......................................26
7.11 Obtain Consents ............................................26
7.12 Litigation .................................................26
7.13 Accounting Practices .......................................26
ARTICLE VIII - Survival of Representations, Warranties And Covenants;
Indemnification
8.1 Survival ...................................................26
8.2 Indemnification by RMED ....................................26
8.3 Indemnification by Buyer ...................................28
8.4 Third Party Claim ..........................................29
8.5 Guaranty ...................................................29
ARTICLE IX - Termination; Modification or Waiver
9.1 Termination ................................................29
9.2 Waiver .....................................................30
ARTICLE X - Parties in Interest
and Assignment ...................................................30
ARTICLE XI - General Provisions
11.1 Notices ....................................................30
11.2 Entire Agreement ...........................................31
11.3 Waiver .....................................................31
11.4 Applicable Law .............................................31
11.5 Savings Clause .............................................31
11.6 Action by Shareholders of Buyer ............................31
11.7 Headings ...................................................31
11.8 Counterparts ...............................................31
11.9 Public Announcements .......................................31
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11.10 Arbitration ................................................32
11.11 Further Assurances .........................................32
11.12 Waiver .....................................................32
11.13 Severability ...............................................32
11.14 Section Headings, Construction .............................33
11.15 Time of Essence ............................................33
11.16 Governing Law ..............................................33
11.17 Counterparts ...............................................33
Signatures ...................................................................34
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made and entered into as
of the 19th day of November, 2001, by and between PRESTO DISPOSABLE PRODUCTS,
INC., a Wisconsin corporation and wholly-owned subsidiary of National Presto,
Inc. (hereinafter referred to as the "Buyer" or "Company") and RMED
INTERNATIONAL, INC., a Colorado corporation (hereinafter referred to as "Seller"
or "RMED").
RECITALS:
WHEREAS, Seller previously entered into an Asset Purchase Agreement
with RMED Acquisition Co., Inc. (the "Original Buyer") on June 7, 2001 (the
"June Agreement") from which this Agreement is derived, and on September 13,
2001 the shareholders of Seller approved the transactions contemplated by the
June Agreement; and
WHEREAS, the Original Buyer was thereafter unable to close on the June
Agreement and on October 30, 2001, Seller's shareholders amended their approval
to authorize a sale of substantially all of the assets of Seller pursuant to the
terms described to the shareholders and to eliminate any reference to the
Original Buyer as a party to such sale; and
WHEREAS, Buyer has reviewed the June Agreement and determined that
Buyer desires to purchase the assets and part of the business of Seller
described in the June Agreement upon substantially all of the same terms and
conditions as are in the June Agreement, with representations made as of the
date of this Agreement and the amount of consideration updated to reflect
Seller's liabilities as of the date of this Agreement; and
WHEREAS, Seller's Board of Directors has determined that Seller may be
forced to seek protection under United States bankruptcy laws, to the detriment
of Seller's shareholders, creditors, employees, customers and other
constituents, if Seller is not able to complete the transactions contemplated by
this Agreement and has further determined that this Agreement is substantially
identical to the June Agreement and the terms described to Seller's shareholders
and thus has been approved by Seller's shareholders; and
WHEREAS, Seller's Board of Directors has further determined that Buyer
is an ideal purchaser of the assets and part of the business being sold
hereunder and an ideal party to the various agreements contemplated hereby; and
WHEREAS, the parties desire to enter into this Agreement for the
purpose of setting forth certain representations, warranties, covenants,
agreements, and conditions relating to the purchase and sale of the assets and
part of the business.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Buyer and Seller
agree as follows:
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ARTICLE I
PURCHASE AND SALE OF ASSETS; CLOSING;
AND ASSUMPTION OF LIABILITIES
1.1 PURCHASE OF ASSETS. On the Closing Date (as hereinafter defined),
Seller will sell, assign, convey, transfer, and deliver to Buyer and Buyer will
purchase and acquire from Seller the following properties and assets
(hereinafter the "Purchased Assets"):
(i) Inventory. All of Seller's inventory located at the
Eau Claire facility, including raw material, parts
and supplies, work in process and finished goods
inventory, which shall be valued at Seller's cost,
excluding any allocated overhead cost or factory
burden (the "Inventory"). A non-exclusive list of
inventory is set forth on a Schedule attached hereto.
(ii) Intangible Assets. All drawings, intangible assets,
trade names, trademarks, and interest therein, all
patents, patent applications, trade secrets, formula,
intellectual property, bills of materials, designs,
testing data, processes, specifications, operating
rights, licenses, permits, contract rights, operating
data, historical financial and production
information, contract files, brochures, photos,
slides, videos, recordings, promotional materials or
writings, projections, business plans, inventory
schedules, customer and vendor lists, dealer and
sales representative lists and contract, sales
records, shipping records, quotations, and all other
intangible assets relating to the Eau Claire division
diaper assets. Those intangible assets shall be
listed on a Schedule attached hereto.
(iii) Machinery; Equipment. All the machinery, equipment,
trailers, office equipment, furniture, furnishings,
trade fixtures, computer hardware, phone and fax
numbers, and vehicles located at Seller's principal
business, including all tangible personal property
utilized in the manufacture of the diaper product
line (including Diaper Machine Xx. 0, Xxxxxx Xxxxxxx
Xx. 0, forklift trucks, Optima Bagger, other
machinery and equipment). The equipment shall be
specifically identified and described on a schedule
prepared and attached hereto prior to or coincident
with Closing.
(iv) Contracts; Agreements. All contracts with customers,
agreements, customer orders, selected contracts with
suppliers, and leases which are specifically
identified on a schedule attached hereto and
incorporated herein as the "Assumed Liabilities".
This section shall specifically include customer
orders which have been placed prior to the Closing
Date and which have not been filled as of 8:00 a.m.
on the Closing Date (hereinafter "Customer Orders").
Buyer agrees to assume Customer Orders and fill such
orders and Buyer shall be entitled to retain any and
all profits with respect to such orders. Only
Customer Orders which were incurred in the Ordinary
Course of Business shall be placed on this schedule
prior to and/or coincident with Closing. This
schedule shall also include contracts
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with vendors and suppliers which are outstanding as
of the Closing Date (hereinafter "Vendor Contracts").
The parties agree that only contracts with vendors
and suppliers which have been incurred in the
Ordinary Course of Business will be included on this
schedule. The completed schedule shall be prepared
and consented to in writing by both parties. All
contracts shall include the right to retain any and
all profits with respect to said contracts and the
corresponding obligations thereunder.
(v) Prepaids. All prepaid expenses, prepaid insurance,
and security deposits.
(vi) Accounts Receivable. All accounts receivable (except
for the B&G Diaper Factory accounts receivable which
is presumed non-collectible and will be written off
by Seller prior to Closing), less an allowance for
bad debt.
1.1.1 EXCLUDED ASSETS. Notwithstanding any other provision of this
Agreement to the contrary, the Seller shall not sell and Buyer shall not
purchase or acquire hereunder any of the following:
(i) Minute books, corporate documents, corporate records,
claims to refunds (tax or otherwise, including
proceeds of pending litigation), and other books and
records which Seller may be required by law to
retain;
(ii) All intangible assets relating to the Tushies,
TenderCare, and natural/environmental products,
including current websites;
(iii) The Warehouse Property located at 000 Xxxxxxxxxx
Xxxxxxxxx, Xxxxx, Xxxxxxxx; and
(iv) All contracts, whether customer orders or vendor
contracts relating to the Tushies, TenderCare,
natural/environmental products.
1.2 PURCHASE PRICE.
(a) Purchase Price.
(i) Calculation. The purchase price (the "Purchase
Price") shall be equal to the sum of SEVEN MILLION
SIX HUNDRED FIFTY-SIX THOUSAND FIVE HUNDRED
SEVENTY-ONE AND 28/100 DOLLARS ($7,656,571.28) as of
October 31, 2001, reduced to the current outstanding
balance of the Assumed Liabilities at Closing as
described in Sections 1.5 and 2.1, below. Said
Purchase Price reflects the same purchase price as in
the June Agreement, updated to reflect the current
value of the Purchased Assets.
The Purchase Price is based upon the assumption that
the value of the Purchased Assets at Closing will not
be less than the value of the
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Purchased Assets as set forth on the Company's
balance sheet for the period ending October 31, 2001.
The Purchase Price shall be adjusted at Closing to
reflect any decrease in the actual value of the
Purchased Assets as of the day of Closing compared to
this value.
In the event there has been a decrease in the
Purchased Assets, then liabilities to be assumed as
set forth at Section 1.5 shall be further reduced
accordingly. If the Purchased Assets have increased,
then the liabilities to be assumed shall be
proportionately increased or a payment in cash shall
be made, in the discretion of the Buyer.
(ii) Financial Statements. The financial statements to be
used in calculating the value shall be those which
are internally generated by Seller's controller, Xxx
Xxxxx, which shall be prepared in accordance with
generally accepted accounting principles and in a
manner acceptable to Buyer.
1.3 DISPUTES. In the event Buyer disputes any matters in the financial
statements as presented, Buyer may, at its expense, retain an independent
accounting firm to render a second opinion on the disputed matters, following
which Buyer and Seller shall attempt to mutually resolve the disputed matters.
Such second opinion, if not available on the Closing Date, shall be completed
within thirty (30) days following the Closing Date. If Buyer and Seller cannot
mutually resolve the disputed matters, the matter shall then be referred to an
independent accounting firm mutually agreed to by the parties which shall act as
final arbitrator of any disputed matters pertaining to the financial statements.
The arbitrator's fee will be paid jointly, one-half (1/2) by Buyer and one-half
(1/2) by Seller.
1.4 ESTIMATED FINANCIAL STATEMENTS. If, upon the Closing Date, the
parties are unable to determine a mutually agreeable value, the parties may
utilize estimated financial statements, taking into account the parties best
efforts in estimating the proper Purchase Price. Upon resolution of the dispute,
the appropriate party shall promptly pay the required balance then due, if any,
without interest.
1.5 PAYMENT OF PURCHASE PRICE. The payment of the Purchase Price shall
be completed as follows:
(a) The Purchase Price shall be paid by:
(i) Buyer assuming the following liabilities at Closing:
-----------------------------------------------------
Diaper Machine No. 1 $ 1,230,964.59
-----------------------------------------------------
Diaper Machine No. 2 1,914,457.03
-----------------------------------------------------
Optima Bagger 241,265.29
-----------------------------------------------------
Forklift Leases 5,139.11
-----------------------------------------------------
Xxxxx Fargo Loan 713,534.31
-----------------------------------------------------
Accounts Payable 2,928,210.95
-----------------------------------------------------
Billbacks, sales discounts,
brokerage fees, and slotting fees 123,000.00
-----------------------------------------------------
Notes Payable:
Xxxxxx X. Xxxxxx 250,000.00
Xxxx X. Xxxxx 250,000.00
----------
-----------------------------------------------------
Total Assumed Liabilities $ 7,656,571.28
-----------------------------------------------------
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The above values for the assumed liabilities are as
of October 31, 2001, and shall be subject to
adjustments at Closing equal to the then current
outstanding balances.
(ii) In addition to the foregoing, Buyer agrees to assume the
Eau Claire, Wisconsin real estate lease.
1.6 CLOSING. The purchase (the "Closing") provided for in this
Agreement shall take place at the offices of Buyer in Eau Claire, Wisconsin at
10:00 a.m. on November 19, 2001, or such other time and place as the parties may
mutually agree upon (the "Closing Date").
1.7 TAX ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated to the Purchased Assets as determined by the Buyer and both Buyer and
Seller agree to file the required Form 8594 with respect to the allocation of
the Purchase Price.
ARTICLE II
LIABILITIES
2.1 ASSUMED LIABILITIES; EXECUTORY CONTRACTS. Buyer will assume, pay,
and discharge, when and as due, only those liabilities of Seller as follows:
-----------------------------------------------------
Diaper Machine No. 1 $ 1,230,964.59
-----------------------------------------------------
Diaper Machine No. 2 1,914,457.03
-----------------------------------------------------
Optima Bagger 241,265.29
-----------------------------------------------------
Forklift Leases 5,139.11
-----------------------------------------------------
Xxxxx Fargo Loan 713,534.31
-----------------------------------------------------
Accounts Payable 2,928,210.95
-----------------------------------------------------
Billbacks, sales discounts,
Brokerage fees, and slotting fees 123,000.00
-----------------------------------------------------
Notes Payable:
Xxxxxx X. Xxxxxx 250,000.00
Xxxx X. Xxxxx 250,000.00
----------
-----------------------------------------------------
Total Assumed Liabilities $ 7,656,571.28
-----------------------------------------------------
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The above values for the assumed liabilities are as
of October 31, 2001, and shall be subject to
adjustments at Closing equal to the then current
outstanding balances.
In addition to the foregoing, Purchaser agrees to assume the Eau
Claire, Wisconsin real estate lease.
Buyer agrees to indemnify and hold harmless Seller with respect to
payment of the Assumed Liabilities.
2.2 NON-ASSUMPTION OF LIABILITIES. Except only as provided above, Buyer
is not assuming and shall not be obligated or liable for any liabilities, debts,
or obligations of Seller of any kind whatsoever, whether actual, contingent,
accrued, known or unknown, rising now or in the future, including, without
limitation, any product liability claims, taxes, employee compensation, pension,
profit-sharing, vacation, health insurance, disability insurance, or other
employee benefit programs, worker's compensation, notes payable, funded
indebtedness (such as line of credit) notes, breach or negligent performance of
any contract, or breach of warranty relating thereto, liabilities resulting from
breach of contract, torts, illegal activity, unlawful employment or business
practice, or any other deduction that is not realized at the time of sale, the
Q&R claim, and three (3) employment-related claims at the Eau Claire facility,
or any other liability or obligation whatsoever. All such non-assumed
liabilities, debts and obligations shall remain the responsibility of Seller
which shall pay and discharge the same when and as due. Seller agrees to
indemnify, defend, and hold Buyer harmless from all non-assumed liabilities,
debts, and obligations.
2.3 LABOR RELATIONS; PENSION PLAN. Buyer shall not assume any
obligation for the employee pension benefit plan of Seller. Seller shall be
solely responsible for satisfying all obligations (whether arising under
federal, state, or local law or pursuant to contract) which may arise or which
may have arisen prior to or after the Closing in connection with Seller's
employment of Seller's employees, the creation, funding, or operation of any
employee pension benefit plan, or which may arise in connection with the
transactions described in this Agreement.
Notwithstanding the foregoing to the contrary, employees of Seller
continuing in the employ of Buyer shall be allowed to rollover current account
balances and participate in Buyer's 401(k) benefit plan.
ARTICLE III
COVENANTS, REPRESENTATIONS AND
WARRANTIES OF RMED
On the date hereof and the Closing Date, RMED makes the following
covenants, representations and warranties to Buyer:
3.1 LEGAL STATUS.
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(a) RMED is a corporation duly organized, validly existing and in
good standing under the laws of the State of Colorado. Except
as set forth on Schedule 3.1(a), RMED is qualified as a
foreign corporation to do business in all other jurisdictions
where the character of RMED's properties and the nature of its
activities make qualification necessary and where the failure
to be so qualified would have a material adverse effect on its
business, financial condition or results of operations.
(b) RMED has previously delivered to Buyer complete and correct
copies of its Certificate of Incorporation (certified by the
Secretary of State of the State of Colorado) and Bylaws
(certified by its Secretary). Such Certificate of
Incorporation and Bylaws are valid and in effect as of the
date hereof.
(c) RMED has the power and authority to own and lease its
properties and to carry on its businesses.
3.2 CAPITALIZATION.
(a) Common Stock. RMED is authorized to issue 52,500,000 shares of
common stock consisting of 2,500,000 shares of preferred stock
and the balance of common stock, with $1.00 par value per
share, of which the treasury shares and validly issued and
outstanding shares, all of which are fully paid and
non-assessable, are set forth on Schedule 3.2(a). Except as
set forth on Schedule 3.2(a), no holder of any shares of RMED
shares has asserted any claim or action against RMED,
including any claim or action with respect to the transactions
contemplated by this Agreement.
(b) Options and Rights. Except as set forth on Schedule 3.2(b)
there are no outstanding subscriptions, options, warrants,
contracts, calls, commitments, preemptive rights or demands of
any nature relating to the capital stock of RMED or obligating
the Company to buy, sell or issue shares of RMED's capital
stock.
(c) Conflicts of Interest. Except as set forth in Schedule 3.2(c),
to the best of its knowledge, RMED nor any of the
shareholders, directors or officers of RMED nor any of their
spouses or children owns directly or indirectly any interest
in (other than a minority interest in a publicly traded
corporation), or is a director, officer or employee of, any
corporation, partnership, firm, association or business
organization which manufactures, distributes or sells, any
product or service which is manufactured, sold or furnished by
RMED, or is a competitor, potential competitor, supplier or
customer of RMED.
3.3 AUTHORIZATION. RMED has full corporate power and authority to enter
into this Agreement and any agreements related hereto and to perform its
respective obligations hereunder and thereunder. The Board of Directors and
shareholders of RMED have taken all actions required by law, its Certificate of
Incorporation and Bylaws or otherwise to be taken by them to authorize the
execution and delivery of this Agreement and related agreements and the
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consummation of the purchase and the other agreements and transactions
contemplated hereby and thereby, and no other corporate proceedings on the part
of the Board of Directors or shareholders of RMED is necessary to authorize this
Agreement and related agreements and the other transactions contemplated thereby
and hereby. This Agreement and the agreements related hereto have been duly and
validly executed and delivered by RMED and constitute valid and binding
agreements enforceable in accordance with their respective terms.
3.4 FINANCIAL STATEMENTS.
(a) Financial Statements. RMED has delivered to Buyer the balance
sheets for RMED as of December 31, 1999 and 2000 and the
related statements of income, stockholders' equity, and cash
flows for the years then ended (and the accompanying footnotes
which are an integral part thereof) together with the attached
Independent Accountants Audit Reports as filed with the
Securities & Exchange Commission, whose reports thereon are
included therein (the "Financial Statements"). Subject to the
qualifications contained in such audit reports, the Financial
Statements present fairly in all material respects the
financial position of RMED as of such dates and the results of
its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.
(b) Current Financial Statements. Prior to Closing, RMED will
deliver current Securities and Exchange Commission Reports for
the nine (9) month period ending September 30, 2001, together
with the monthly interim financial reports prepared by the
controller of RMED (the "Current Financial Statements").
3.5 ABSENCE OF CHANGES. Except as set forth in Schedule 3.5 or in the
Current Financial Statements, and except for general economic conditions and
other conditions generally affecting the retail sales which are known to the
general public, since December 31, 2000 there has not been with respect to RMED:
(i) any material adverse change in the condition
(financial or other), properties, assets or business
of RMED;
(ii) any damage, destruction or loss (whether covered by
insurance or not) which materially and adversely
affects the business, properties, assets or business
of RMED;
(iii) any declaration, setting aside or payment of any
dividend or any distribution with respect to Schedule
3.5 RMED's capital stock other than as provided in
RMED's Shareholder Agreement, if any, or any direct
or indirect redemption, purchase or other acquisition
by RMED;
(iv) any increase of more than ten percent (10%) in the
compensation payable or to become payable by RMED to
any employee earning Twenty-five Thousand Dollars
($25,000.00) per annum or more, or any general
increase in the compensation or rates of compensation
payable or to
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become payable by RMED to hourly employees, except as
required by any collective bargaining agreement, or
to salaried officers or employees earning less than
Twenty-five Thousand Dollars ($25,000.00) per year;
(v) any change in the accounting principles, methods or
practices followed by RMED;
(vi) any debt, obligation or liability, whether accrued,
absolute or contingent and whether due, incurred or
entered into by RMED, except liabilities and
obligations incurred or entered into in the ordinary
course of business;
(vii) any sale, lease, abandonment or other disposition by
RMED of any interest in real property or any
machinery, equipment, inventory or other operating
property other than in the ordinary course of
business as reflected in Schedule 3.5;
(viii) any sale, assignment, transfer, license or other
disposition by RMED of any patent, trademark, trade
name, brand name, copyright (or any application for
any patent, trademark or copyright), invention,
process, know-how, formula or trade secret or
interest thereunder or other intangible asset, except
as implied for use in connection with the sale of its
products in the ordinary course of business as
reflected in Schedule 3.5;
(ix) any agreement, understanding or undertaking by RMED,
the performance of which would result in any of the
items described in subparagraphs 3.5(i) through
3.5(viii), above.
3.6 UNDISCLOSED LIABILITIES. Except as set forth on Schedule 3.6:
(a) RMED has no liabilities or obligations, either accrued,
absolute, contingent or otherwise, except:
(i) to the extent reflected or reserved in the Financial
Statements for December 31, 2000 which have not
heretofore been paid or discharged;
(ii) to the extent disclosed in this Agreement or in any
of the Schedules to this Agreement;
(iii) those incurred in or as a result of the ordinary
course of business since the date of the Financial
Statements for December 31, 2000, including normal
warranty claims and executory contracts, all of which
have been consistent with past practice and none of
which, either individually or in the aggregate, would
have a material adverse effect on RMED; or
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(iv) those incurred pursuant to or contemplated by this
Agreement, Schedules hereto and the various related
or ancillary documents and agreements contemplated
hereby or executed in connection herewith.
(b) Except as set forth on Schedule 3.6(b), RMED has not received
any notice of any claim against RMED of any liability of any
nature or in any amount required to be set forth or disclosed
in the Financial Statements, the Current Financial Statements,
this Agreement or the Schedules hereto, which is not or will
not be set forth in the Financial Statements, the Current
Financial Statements, or otherwise disclosed in this Agreement
or in the Schedules hereto.
3.7 NO VIOLATION OF STATUTE OR CONTRACT. Except as set forth on
Schedule 3.7, neither the execution and delivery of this Agreement, nor the
compliance with the terms and provisions of this Agreement on the part of RMED
will:
(i) conflict with or result in a breach or violation of
any of the terms, conditions or provisions of, or
constitute a default (or any event which, with notice
or lapse of time or both, would constitute a default)
under their Certificate of Incorporation or Bylaws
or, assuming that the approvals described in Section
3.12, below, are duly obtained, any statute, code,
ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable, or any of their
respective properties, assets, licenses or permits,
which would have a material adverse effect on the
condition (financial or other), results of operations
or business, or
(ii) violate, conflict with, result in a breach of any
provisions of, constitute a default (or any event
which, with notice or lapse of time or both, would
constitute a default) under, result in the
termination of, accelerate the performance required
by, or result in the creation of any lien, security
interest, charge or other encumbrance upon any of the
property under any of the terms, conditions or
provisions of any note, bond, mortgage, indentures,
deed of trust, license, lease, agreement or other
instrument or obligation to which RMED is a party, or
by which their properties or assets may be bound or
affected which would have a material adverse effect
on the condition (financial or other), results of
operations or business.
3.8 ACCOUNTS RECEIVABLE. Except as set forth in Schedule 3.8, the
accounts receivable of RMED arose from valid sales in the ordinary course of
business, and, subject to applicable reserves, are good and collectible. The
reserves for bad debts and uncollected accounts is adequate.
3.9 NOTES RECEIVABLE. Schedule 3.9 sets forth all notes receivable and
other receivables in excess of Five Thousand Dollars ($5,000.00), which are not
included in the accounts receivable, reflected on the most recent balance sheet
included in the Financial Statements or will be reflected in the Current
Financial Statements. RMED has no notice of any
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defect, defense, counterclaim, or setoff to payment which the maker of any note
receivable may claim or assert or of any fact or circumstance which would give
rise to denial of payment thereof by the maker of any note receivable. Also
included on Schedule 3.9 is a list of all loans, advances or other payments in
excess of Five Thousand Dollars ($5,000.00) receivable from directors, officers
and employees of RMED (the "Employee Receivables") setting forth the name of the
individual, the amount receivable by RMED from such individual, and the terms on
which such Employee Receivable is to be repaid. RMED has provided to Buyer true
and complete copies of all promissory notes or other documents evidencing the
Employee Receivables. RMED agrees to cause all individuals that are obligated
for an Employee Receivable that is not evidenced by a document, to execute and
deliver to RMED promissory notes or other documents satisfactory to Buyer
evidencing the obligation to pay such Employee Receivable prior to Closing.
3.10 INVENTORIES. Except as provided in Schedule 3.10, all of RMED's
inventories reflected on the Financial Statements for December 31, 2000 and that
will be reflected in the Current Financial Statements are or will be good and
usable and salable in the ordinary course of RMED's business.
3.11 REAL PROPERTY OWNED OR LEASED.
(a) RMED owns real property at 000 Xxxxxxxxxx Xxxxxxxxx, Xxxxx,
Xxxxxxxx (the "Warehouse Property").
(b) RMED leases real property located at 0000 Xxxxx Xxxxxxxx Xxx,
Xxx Xxxxxx, Xxxxxxxxx (the "Manufacturing Property").
(c) RMED represents that:
(i) RMED has the right of quiet enjoyment to each parcel
of Warehouse Property and the Manufacturing Property.
(ii) All improvements, fixtures, structures, machinery and
equipment used by RMED in carrying on its business
are located on the Warehouse Property and the
Manufacturing Property.
(iii) RMED has the right to use the Warehouse Property and
Manufacturing Property for all of the operations now
conducted therefrom and RMED, by virtue of its
ownership, possesses all easements, licenses, rights
of way and rights in, to, and over the Property which
are necessary for the conduct of the business in the
ordinary course. The Warehouse Property,
Manufacturing Property and Improvements thereon are
adequate and sufficient for all operations now
conducted by RMED.
(iv) Neither the whole nor any portion of any of the
Warehouse Property or Manufacturing Property is the
subject of a pending condemnation or eminent domain
proceeding, and RMED does not know nor has any
11
grounds to believe that any such condemnation or
taking is threatened or contemplated.
(v) No portion of the Warehouse Property and
Manufacturing Property is occupied by any entity or
person other than Seller, nor does any other person
or entity have any rights to occupy any portion of
the Warehouse Property or the Manufacturing Property.
(vi) Except for the Warehouse Property and the
Manufacturing Property, RMED neither leases nor owns
any other real property.
(vii) RMED's occupancy of the Warehouse Property and
Manufacturing Property is not in material violation
of any law or regulation applicable thereto, nor has
RMED received any notice of any such violation.
(viii) RMED has not received any notice of any violation of
any law, ordinance, regulation, building, zoning or
fire code or requiring or calling attention to the
need for any work, repairs, construction, alterations
or installations with respect to the Warehouse
Property or the Manufacturing Property, nor has any
such notice been posted on any portion of the
Warehouse Property or the Manufacturing Property.
3.12 REGULATORY APPROVALS. Except as contemplated by this Agreement, or
any related agreement, or as set forth on Schedule 3.12, no consent, approval or
authorization of, or declaration, filing or registration with, any government or
regulatory authority is required to be obtained or made by RMED in connection
with the execution, delivery and performance of this Agreement or any related
agreement.
3.13 TANGIBLE PERSONAL PROPERTY. Except as disclosed on Schedule 3.13,
all machinery, equipment and other personal property used by RMED in the
operation of its business either owned or leased by RMED under valid leases, is,
in all material aspects, in good operating condition and repair and is adequate
and sufficient for all operations now conducted by RMED. Except as disclosed in
Schedule 3.13, RMED has good and marketable title to all personal property owned
by it, free and clear of restrictions on or conditions to transfer or
assignment, and free and clear of mortgages, liens, pledges, security interests,
charges, encumbrances, equities, claims, easements, rights of way, covenants,
conditions, or restrictions and has valid leases pursuant to which it leases all
personal property used in connection with the operation of its business which is
not owned by RMED. All such leases are valid and binding, in full force and
effect and no defaults (or conditions or events which with the giving of notice
or the passage of time, or both, would constitute a default) exist thereunder.
3.14 INTELLECTUAL PROPERTY. As to the Intellectual Property to be
purchased by Buyer:
(a) Schedule 3.14(a) sets forth a description of all trademarks,
trademark registrations and trademark applications, trade
names, assumed names, service marks, service xxxx
registrations and applications, service names, copyrights,
patents and patent
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applications, and patent, and copyright and trademark
licenses, owned or used by RMED in the conduct of its business
(collectively "Intellectual Property"). Except as set forth on
Schedule 3.14(a), RMED owns, is licensed or otherwise has the
right to use all Intellectual Property and all trade secrets,
shop rights and know-how used in or necessary for the conduct
of its business.
(b) Except as set forth in Schedule 3.14(b), no claim has been
asserted against RMED by any person with respect to the
ownership, use, transfer, license or other disposition by RMED
of any Intellectual Property or any trade secrets, shop rights
or know-how or challenging any license or agreement with
respect thereto, and RMED does not know of any basis for any
such claim. To the best of the knowledge of RMED, the use of
Intellectual Property and the trade secrets, shop rights and
know-how by RMED, the practice of any process or the use of
any apparatus, or the making or selling of any product by
RMED, does not, and is not reasonably expected to, infringe on
the rights of any person.
(c) No third party is known by RMED to be infringing on any
Intellectual Property or any trade secrets, shop rights or
know how owned or used by RMED.
3.15 MATERIAL CONTRACTS. Schedule 3.15 sets forth a true and correct
list or description of:
(a) Each contract, agreement or binding commitment in respect of
the procurement, purchase, processing, storage or sale of
material, products, supplies, utilities or services to which
RMED is a party or by which it is bound other than contracts,
agreements or binding commitments which:
(i) involve payments or receipts by RMED of less than
Five Thousand Dollars ($5,000.00),
(ii) are terminable by RMED without penalty upon not more
than thirty (30) days notice,
(iii) which are substantially performed except for standard
warranty, guaranty, non-compete or indemnification
obligations, or
(iv) relate to sales order or purchase order contracts
which individually are for an amount which is less
than Five Thousand Dollars ($5,000.00) or a series of
related contracts are for an amount in the aggregate
which is more than Ten Thousand Dollars ($10,000.00).
(b) Each sales agency or distributorship agreement or franchise to
which RMED is a party or by which it is bound.
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(c) Each collective bargaining, union, employment, consulting,
independent contractor, non-competition or secrecy agreement
to which RMED is a party or by which it is bound.
(d) Each pension, profit sharing, retirement, bonus, group life,
health and accident insurance or other employee benefit plan,
agreement, arrangement or binding commitment for the employees
at the Manufacturing Property to which RMED is a party,
whether or not legally binding, including, but not limited to,
each union plan or arrangement to which RMED is a party or
makes contributions.
(e) Each material contract, agreement, binding commitment or
license relating to any Intellectual Property, trade secrets,
shop rights or know-how to which RMED is a party except rights
which are implied for use in connection with the sale of
RMED's products in the ordinary course of business.
(f) Each loan or credit agreement, security agreement, guaranty,
indenture, mortgage, pledge, conditional sale or title
retention agreement, equipment obligation, lease or lease
purchase agreement or other documents evidencing secured
indebtedness to which RMED is a party or by which it or any of
its properties is bound.
(g) Each partnership, joint venture, joint operating or similar
agreement or agreement for the performance of services as an
independent contractor to which RMED is a party or by which it
is bound.
(h) Each contract, agreement or binding commitment other than
those covered above (including the Eau Claire telephone,
lease, and computer hardware and software contracts) which:
(i) involve payments or receipts by RMED of Twenty-five
Thousand Dollars ($25,000.00) or more and not made in
the ordinary course of business, or
(ii) is not terminable by RMED without penalty, or
(iii) which otherwise is reasonably expected to materially
affect the condition (financial or other),
properties, assets or business of RMED.
(i) Each such contract, agreement or binding commitment is legally
valid and binding on RMED and the Parties thereto, and each
constitutes a legal, valid and binding obligation of RMED and
the Shareholders, enforceable in accordance with its terms,
except as limited by bankruptcy, insolvency, reorganization,
moratorium, and other similar laws affecting creditors' rights
generally, is in full force and effect, and there are no
defaults thereunder known to RMED by any party thereto. Except
as set forth on Schedule 3.15, under the terms of the
foregoing, none of the rights of RMED thereunder will be
impaired by the purchase/sale, and all of the rights of RMED
thereunder will be enforceable immediately after the Closing
Date to the extent enforceable immediately prior
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thereto without the consent or agreement of any other party,
except as indicated on Schedules. True and complete copies of
all documents described in the aforesaid Schedule have or will
be made available by RMED to Buyer, including all amendments
and supplements thereto and modifications thereof.
3.16 PERMITS AND LICENSES. To the best of its knowledge, RMED possesses
all governmental permits, licenses and certifications which are necessary for
the conduct of the business by RMED, and all of such permits, licenses and
certifications are in full force and effect. No violations are known to RMED to
exist or, to its knowledge, have been recorded with respect to any of such
permits, licenses or certifications and no proceeding is pending (other than
reapplication pursuant hereto) or known to RMED to be threatened which, if
adversely determined, could result in the revocation, termination or limitation
of any such permits, licenses or certifications. Except as set forth in Schedule
3.16, the purchase/sale will not cause the revocation, termination, limitation,
non-renewal or expiration of any such permit, license or certification currently
issued to RMED.
3.17 INSURANCE COVERAGES. Schedule 3.17 refers to all of RMED's
insurance coverages and carriers (specifying the insurer, the amount of the
coverage, the type of insurance, the policy number, the annual premium, the
expiration date and any pending claims thereunder not otherwise disclosed
pursuant to this Agreement). Except as disclosed on Schedule 3.17, RMED has and
maintains insurance coverage with retentions which insurance and retentions are
reasonably believed by RMED to be adequate for the protection of RMED in the
conduct of its business. RMED has not failed to give any notice or present any
claim known to it under any insurance policy covering the same in proper form
and timely fashion. RMED will use all reasonable efforts to assure that all such
coverages will be in full force and effect at the Closing Date. RMED shall
continue to provide directors and officers coverage for a period of six (6)
years post-closing for all prior acts or to procure a comparable "tail" policy.
3.18 CLAIMS AND LITIGATION. Except as set forth on Schedule 3.18, RMED
is not a party to any litigation, proceeding, arbitration, demand, action or
claim either pending or, to the best knowledge of RMED, threatened against RMED
before any court or governmental or other regulatory or administrative agency or
commission or arbitration panel. Except as set forth on Schedule 3.18, RMED has
no knowledge of any pending items in dispute or any injury that it believes is
likely to give rise to a claim against RMED. RMED does not believe that any
action, proceeding or investigation set forth on Schedule 3.18, will have a
material adverse effect on the condition (financial or other), properties,
assets or business of RMED, except for matters for which reserves have been
reflected on the Financial Statements.
3.19 TAX MATTERS.
(a) Except as set forth on Schedule 3.19(a) RMED or any affiliate
of RMED, as the case may be, has:
(i) filed when due with the appropriate federal, state,
local, foreign and other governmental agencies, all
tax returns, estimates and reports required to be
filed by it,
15
(ii) paid when due and payable all requisite federal,
state, local or foreign taxes, levies, imposts,
duties, licenses and registration fees and charges of
any nature whatsoever, including interest and
penalties thereon and unemployment and social
security taxes ("Taxes") or has established reserves
in the Financial Statements adequate therefor; and
(iii) has established, or will have established as of the
Closing Date, reserves that, in the aggregate, are
adequate for the payment of all Taxes not yet due and
payable on the results of operation through the
Closing Date as if the taxable year of RMED ended on
the Closing Date, and in each such case, will
immediately notify the Company of such setting aside.
(b) Except as set forth on Schedule 3.19(b), there are no taxes,
interest, penalties, assessments or deficiencies claimed to be
due in respect of any tax returns filed by RMED, or otherwise
that are not reserved for on the Financial Statements. Except
as set forth on Schedule 3.19(b), RMED has not executed nor
filed with the Internal Revenue Service or any other taxing
authority any agreement or other document extending, or having
the effect of extending, the period of assessment or
collection of any Taxes, and no power-of-attorney of RMED is
outstanding or will be outstanding on the Closing Date. RMED
has not reported any item of income, deduction or credit on
any income tax return or reported any other item on any other
return in a manner which is contrary to the specific
recommendation or advice of RMED's accountants and RMED has
not made any disclosures on any tax return pursuant to Section
6662 of the Internal Revenue Code of 1986, as amended (the
"Code").
(c) RMED has not filed a consent pursuant to Section 341(1) of the
Code or agreed to have Section 341(f)(2) of the Code apply to
any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by RMED.
(d) No property of RMED is property that RMED is or will be
required to treat as being owned by another person pursuant to
the provisions of Section 168(f)(8) of the Code or is "tax
exempt use property" within the meaning of Section 168(f)(3)
of the Internal Revenue Code, as it existed prior to January
1, 1984.
(e) RMED has not agreed to, and has not been requested by the
Internal Revenue Service to, make any adjustment under Section
481(a) of the Code by reason of a change in accounting method
or otherwise except as required by the Tax Reform Act of 1986,
which adjustments, if any, have previously been recognized in
the income of RMED and in tax returns of RMED for years ending
prior to 2000.
(f) RMED has withheld from employee wages and paid over to the
proper governmental authorities all amounts required to be so
withheld and paid over.
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(g) RMED is not a party to, nor is bound by nor has any obligation
under any tax sharing or similar agreement.
(h) RMED is not a foreign person within the meaning of Section
1445(b)(2) of the Code.
3.20 BENEFIT PLANS.
(a) For the purposes of this Agreement, the term "Employee Plan"
includes all pension, retirement, disability, medical, dental
or other health plans, life insurance or other death benefit
plans, profit sharing, deferred compensation, stock option,
bonus or other incentive plans, vacation benefit plans,
severance plans, or other employee benefit plans or
arrangements, including, without limitation, any "pension
plan" as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974 ("ERISA") and any "welfare plan"
as defined in Section 3(1) of ERISA, whether or not funded,
and whether or not oral, as it relates to the employees of the
Manufacturing Property, to which RMED is a party or bound or
with respect to which RMED may otherwise have any liability
(including any such plan maintained by RMED within the last
three calendar years) or with respect to which RMED has made
any payments or contributions covering any employee of RMED
within the last three (3) calendar years.
(b) Except as set forth on Schedule 3.20(b),
(i) RMED has not been since its inception and is not now
the sponsor of any additional Employee Plan; RMED has
no legally binding commitment to create any
additional Employee Plan.
(ii) no separate trust is maintained in conjunction with
any such plan. A separate trust is a trust the assets
of which enjoy protection from the claims of RMED's
creditors or any trust maintained in conjunction with
a promise of deferred compensation (commonly known as
a "Rabbi Trust").
3.21 ERISA MATTERS.
(a) Except as provided in Schedule 3.21(a) hereof, each Employee
Plan that is an employee pension benefit plan qualifiable
under Section 401 or 403(a) of the Code has been determined by
the Internal Revenue Service to be "qualified" within the
meaning of the Code.
(b) Each Employee Plan of RMED and the administrators and
fiduciaries of each Employee Plan of RMED have at all times
complied in all material respects with all applicable
requirements of ERISA and of any other applicable law
(including regulations and rulings thereunder) governing each
Employee Plan, and each Employee Plan has at all times been in
material respects properly administered in accordance with all
such requirements of law and in accordance with its terms to
17
the extent consistent with all such requirements of law.
Except as set forth in Schedule 3.21(b), no lawsuits or
complaints material to the Company to, or by, government
agencies have been filed, are pending or are expected with
respect to any Employee Plan.
(c) No "prohibited transaction" (as defined in Section 4975 of the
Code or Section 406 of ERISA) has occurred, or as of the
Closing Date, shall have occurred, with respect to any
Employee Plan or trust of RMED, unless such prohibited
transaction shall have been corrected and any excise tax
liability discharged; no notice of termination has been filed
by any Plan Administrator pursuant to Section 4041 of ERISA or
been issued by the PBGC pursuant to Section 4042 of ERISA with
respect to any Plan subject to ERISA and relating to RMED,
unless any liability under Title IV of ERISA occasioned in
connection therewith shall have been discharged; except as
disclosed on Schedule 3.21(c); no Employee Plan has
outstanding, or as of the Closing Date, shall have outstanding
any "accumulated funding deficiency" (as defined in Section
412 of the Code), whether or not waived and has not applied
for or received any waivers of minimum funding standards under
Section 3.12; to the extent required by generally accepted
accounting principles, RMED has made or has accrued or, on or
before the Current Financial Statements date, shall have made
or shall have accrued on its books and records, all
contributions required to be made by it under the terms of all
pension, profit sharing and other Employee Plans covering its
employees; and all premiums due to the PBGC have been paid.
(d) Other than with respect to retired or former employees of
RMED, no person is a participant in, or eligible for
participation in, any Employee Plan who is not an employee of
RMED.
(e) To the best of RMED's knowledge, RMED does not currently
maintain or contribute to nor has it ever maintained or
contributed to, or been required by any agreement to maintain
or contribute to, any multi-employer plan as defined in
Section 3(37) of ERISA.
3.22 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 3.22, RMED
has obtained all material permits, licenses and other authorizations which are
required under federal, state and local laws ("Environmental Laws") relating to
pollution or protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial hazardous or toxic materials or wastes
into the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, hazardous or toxic materials
or wastes. Except as set forth in Schedule 3.22, RMED has procured and is in
material compliance with all terms and conditions of the required permits,
licenses and authorizations, and all other applicable limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in all Environmental Laws or contained in any regulation,
code, plan, order, decree, judgment, notice or demand letter issued, entered,
promulgated or approved thereunder. Except as set forth in Schedule 3.22, and
18
excluding the effects of any future modifications of Environmental Laws, RMED
has no knowledge of and has received no notice of, any past or present events,
conditions, circumstances, activities, practices, incidents, actions or plans
which may reasonably be expected to interfere with or prevent continued
compliance in all material respects, or which may reasonably be expected to give
rise to any liability, or otherwise form the basis of any claim, action, suit,
proceeding, hearing or investigation, based on or related to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling, or the emission, discharge, release or threatened release into the
environment, of any pollutant, contaminant, or hazardous or toxic material or
waste, and no claim, action, suit, hearing, proceeding or investigation is
currently pending or to its knowledge threatened with respect thereto. RMED will
make available to Buyer complete copies of any internal or external reports or
studies conducted for or by RMED in conjunction with or relating to
environmental matters.
3.23 COMPLIANCE WITH APPLICABLE LAW. RMED has complied and is
complying, in all material respects, with all applicable laws, rules,
regulations, orders, ordinances, judgments and decrees of all governmental
authorities (federal, state, or local) (collectively "Laws"), including but not
limited to (i) the Federal Occupational Safety and Health Act and all Laws
relating to the safe conduct of business and environmental protection and
conservation including, but not limited to, noise abatement requirements and
emission control standards; and (ii) all Laws regulating water use. Except as
indicated in Schedule 3.23 hereto, RMED has not received notification from any
governmental authority of any asserted present or past material failure to
comply with Laws which have not been remedied or resolved.
3.24 BANK ACCOUNTS. Schedule 3.24 sets forth a true and complete
listing of the following: (i) the name of each bank in which RMED has an account
or safe deposit box and the names of all persons authorized to draw thereon or
to have access thereto; and (ii) the names of all persons, firms or
corporations, if any, holding general or specific powers of attorney from RMED
and a summary statement of the terms thereof.
3.25 FULL DISCLOSURE. After due inquiry of its officers, no
representation, warranty or covenant in this Agreement, nor any statements,
financial statements, certificates or schedules furnished to Buyer pursuant
hereto, or in connection with the transactions contemplated hereby, contains any
untrue statement of a material fact, or omits to state a material fact necessary
to make the statements contained therein in the light of the circumstances under
which they were or are to be made, not misleading. Except for economic
conditions and those generally affecting the disposable baby diaper industry and
information known to Buyer, RMED is unaware of any specific information which
lead them to believe that there is any impending material adverse change in the
business of RMED.
3.26 DISCLOSURE ON SCHEDULES. Disclosure of information on any Schedule
hereto shall be deemed to satisfy the disclosure requirements of any other
Schedule hereto to which such information may also be applicable.
3.27 KNOWLEDGE AND NOTICE. RMED shall be deemed to have knowledge or
best knowledge or awareness of a matter or notice only if such matter or notice
is, at the time of Closing, actually known to any officer or director of RMED.
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3.28 BROKERS OR FINDERS. RMED and its officers and agents have incurred
no obligation or liability, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other similar payment in connection with this
Agreement and will indemnify and hold Buyer harmless from any such payment
alleged to be due by or through RMED as a result of the action of RMED or its
officers or agents.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 BUYER STATUS. Buyer is a Wisconsin corporation, duly authorized and
existing under the laws of the State of Wisconsin.
4.2 AUTHORIZATION. Buyer has full corporate power and authority to
enter into this Agreement and any agreements related hereto and to perform its
respective obligations hereunder and thereunder. The Board of Directors of Buyer
has taken all actions required by law, its Articles of Incorporation and Bylaws
or otherwise to be taken by them to authorize the execution and delivery of this
Agreement and related agreements and the consummation of the purchase and the
other agreements and transactions contemplated hereby and thereby, and no other
corporate proceedings on the part of the Board of Directors of Buyer is
necessary to authorize this Agreement and related agreements and the other
transactions contemplated thereby and hereby. This Agreement and the agreements
related hereto have been duly and validly executed and delivered by Buyer and
constitute a valid and binding agreement enforceable in accordance with its
respective terms.
4.3 CLAIMS AND LITIGATION. Except as set forth on Schedule 4.3, Buyer
is not a party to any litigation, proceeding, arbitration, demand, action or
claim either pending or, to the best knowledge of Buyer, threatened against
Buyer before any court or governmental or other regulatory or administrative
agency or commission or arbitration panel. Except as set forth on Schedule 4.3,
Buyer has no knowledge of any pending items in dispute or any injury that it
believes is likely to give rise to a claim against Buyer. Buyer does not believe
that any action, proceeding or investigation set forth on Schedule 4.3, will
have a material adverse effect on the condition (financial or other),
properties, assets or business of Buyer.
4.4 BROKERS OR FINDERS. Buyer and its officers and agents have incurred
no obligation or liability, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other similar payment in connection with this
Agreement and will indemnify and hold Seller harmless from any such payment
alleged to be due by or through Buyer as a result of the action of Buyer or its
officers or agents.
4.5 EMPLOYEES. Buyer agrees to hire substantially all of the employees
of Seller at the Eau Claire diaper division and to provide health care benefits
for all such employees, at substantially similar wage rates and health care
benefits as were being provided by Seller as of the date of Closing. Any such
employees not hired by Buyer on the date of Closing shall be
20
terminated by Seller, and Seller shall be responsible for any severance pay,
other termination costs, and liabilities related to or arising out of any
employment relationship with the Seller.
4.6 PAYMENT OF CREDITORS. Buyer agrees to pay those assumed creditors
that are currently represented by notes payable and to continue to make payment
in accordance with the terms and conditions of said notes payable. As to other
accounts payable assumed by the Buyer hereunder, the payments shall be made
within terms, but in any event not later than sixty (60), unless otherwise
agreed to by any creditor, days post-closing of the transaction. Buyer also
agrees to pay any expenses necessary to assign the leases with respect to the
diaper machines, the Optima bagger, fork-lifts, and the Manufacturing Property.
ARTICLE V
CONDITIONS PRECEDENT TO BUYER'S
OBLIGATION TO CLOSE
The obligations of Buyer to enter into this Agreement and to consummate
the transactions set forth in this Agreement are subject to the satisfaction or
waiver, in writing, on or prior to the Closing Date, of each of the following
conditions:
5.1 CORPORATE AND SHAREHOLDER ACTION. All corporate, shareholder and
other actions necessary to authorize the Agreement and to effectuate the
consummation of the transactions contemplated hereby by the Seller shall have
been duly taken on or prior to the Closing Date, and the Seller shall have
delivered to Buyer a certificate of the Seller to that effect together with a
certified copy of resolutions of the Board of Directors and Shareholders of
Seller authorizing the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, all in form and substance
reasonably satisfactory to Buyer and its counsel.
5.2 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Seller set forth in this Agreement shall be true and correct in all
material respects on and as of the Closing Date with the same effect as though
all such representations and warranties had been made as of such date except to
the extent that such representations and warranties are expressly made as of
another specified date and as to such representation, the same shall be true as
of such specified date and except for any changes resulting from activities or
transactions which may have taken place after the date hereof which are
permitted or contemplated by this Agreement or which have been entered into in
the ordinary course of business. Seller shall deliver to Buyer a certificate
validly executed by an authorized officer of Seller to that effect, dated the
Closing Date.
5.3 PERFORMANCE OF OBLIGATIONS. Each and all of the covenants and
agreements of the Seller to be performed or complied with pursuant to this
Agreement shall have been duly performed and complied with in all material
respects or duly waived by Buyer and there shall have been delivered to Buyer a
certificate validly executed by an authorized officer of Seller to that effect,
dated the Closing Date.
5.4 NO ADVERSE CHANGE. There shall have been no material adverse change
in the condition (financial or otherwise), properties, assets, business or
prospects of Seller since December 31, 2000, and there shall have been delivered
to Buyer a certificate validly executed by an authorized officer of the Company
to that effect.
21
5.5 GOVERNMENTAL APPROVALS. Any and all approvals and authorizations
of, filings and registrations with, and notifications to, any governmental or
regulatory authority required for the execution and delivery of this Agreement
by RMED, and the consummation of the transactions contemplated hereby and the
performance of its obligations under this Agreement, shall have been duly
obtained or made and shall be in full force and effect.
5.6 LITIGATION. At the Closing Date, there shall be no litigation
pending or threatened in which any injunction is or may be sought against or
seeking damages from the Buyer, RMED or the Shareholders in connection with the
transactions contemplated hereby.
5.7 APPRAISAL RIGHTS. The holders of not more than twenty percent (20%)
of the Seller's Shares shall have exercised their appraisal rights with respect
to the purchase/sale as contemplated herein in accordance with the Corporation
Laws.
5.8 NON-COMPETITION AGREEMENT. As part of the purchase price, RMED,
Xxxxxx Xxxxxx and Xxxxxx Xxxxx agree to enter into the Non-competition Agreement
in substantially the form and manner attached hereto as Exhibit "A-1".
5.9 ACCESS. Seller shall provide Buyer (and advisors), together with
the presence of a Seller's representative, Xxx Xxxxx or Xxxx Xxxxxx, with access
to the Purchased Assets, customers, vendors, lessors, and creditors to discuss
ongoing prospects of the business, as well as discuss the possible
re-negotiation of current terms and conditions.
5.10 ASSIGNMENT OF LEASES. Buyer's performance hereunder shall be
specifically subject to the consent of the Lessors to the assignment and
assumption of, or, at the option of Buyer, the buy-out by, Buyer of the current
diaper machine leases (Diaper Machine No. 1 and Diaper Machine No. 2) and
consent of the Lessors to an assignment of the Manufacturing Property lease and
the Optima bagger lease, as well as any other equipment leases that are deemed
necessary by Buyer.
5.11 FINANCING. [INTENTIONALLY OMITTED]
5.12 KEY EMPLOYEES. The services of certain key employees determined in
the sole discretion of Buyer shall be retained under employment contracts with
terms and conditions determined in the sole discretion of Buyer.
5.13 RELEASE. [INTENTIONALLY OMITTED]
5.14 ACCOUNTS RECEIVABLE. Buyer shall verify, prior to Closing, the
balances outstanding on accounts receivable.
5.15 DUE DILIGENCE. Seller has provided to Buyer (and advisors) access
to the Purchased Assets, the schedules to be appended to this Agreement, and
such contracts, purchase
22
orders, lease agreements, licenses, and other relevant documents requested by
Buyer and its lender to conduct appropriate due diligence. Buyer's obligation to
close is conditioned upon its review of such matters and finding the same
acceptable to proceed to Closing.
5.16 LEGAL OPINION. A legal opinion satisfactory to Buyer in its sole
discretion shall be provided to Buyer from RMED's counsel, to the effect that
all corporate actions necessary to consummate the transactions contemplated
herein have been taken.
5.17 AMENDED SALES AND MARKETING AGREEMENT. An amended sales and
marketing agreement between Buyer and Hospital Specialty Company, satisfactory
to Buyer in its sole discretion shall be entered into between Buyer and Hospital
Specialty Company.
5.18 EMPLOYMENT AGREEMENT. An employment agreement, satisfactory to
Buyer in its sole discretion, with a term of at least two (2) years, shall be
entered into between by Buyer and Xxxx X. Xxxxxx.
5.19 SETTLEMENT OF OUTSTANDING PAYABLES. Buyer and Seller, as
applicable, shall have entered into all agreements with creditors deemed
necessary by Buyer, in its sole discretion, with respect to liabilities assumed
by Buyer hereunder, each upon terms and conditions acceptable to Buyer in its
sole discretion.
5.20 SUPPLEMENTAL SHAREHOLDERS MEETING. Notwithstanding that Seller and
its legal counsel believe that the shareholders' approval obtained on September
13, 2001 and October 30, 2001, constitutes approval of the transactions
contemplated by this Agreement, as a precautionary measure, Seller shall,
immediately following the Closing, prepare and file a proxy statement with the
Securities and Exchange Commission, and, as soon as practicable thereafter, call
a special meeting of its shareholders to ratify this Agreement and the
transactions contemplated hereby, which meeting shall be held as soon as
practicable following the Closing, but in no event later than one hundred twenty
(120) days after the Closing. Prior to the Closing, the shareholders of Seller
identified on Schedule 5.20 (which Schedule will reflect ten (10) or fewer
persons and an aggregate number of shares in excess of 50% of Seller's
outstanding shares) shall have delivered to Buyer voting proxies, in form and
substance satisfactory to Buyer in its sole discretion, representing their
approval of the ratification of this Agreement and the transactions contemplated
hereby.
ARTICLE VI
CONDITIONS PRECEDENT TO
RMED'S OBLIGATION TO CLOSE
The obligations of RMED to enter into this Agreement and to consummate
the transactions set forth in this Agreement are subject to the satisfaction or
waiver, in writing, on or prior to the Closing Date, of each of the following
conditions:
6.1 CORPORATE AND SHAREHOLDER ACTION. All corporate, shareholder and
other actions necessary to authorize the Agreement and to effectuate the
consummation of the transactions contemplated hereby by the Buyer shall have
been duly taken on or prior to the Closing Date,
23
and the Buyer shall have delivered to Seller a certificate of the Buyer to that
effect together with a certified copy of resolutions of the Board of Directors
of Buyer authorizing the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, all in form and substance
reasonably satisfactory to Seller and its counsel.
6.2 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Buyer set forth in this Agreement shall be true and correct in all
material respects on and as of the Closing Date with the same effect as though
all such representations and warranties had been made as of such date except to
the extent that such representations and warranties are expressly made as of
another specified date and as to such representation, the same shall be true as
of such specified date and except for any changes resulting from activities or
transactions which may have taken place after the date hereof which are
permitted or contemplated by this Agreement or which have been entered into in
the ordinary course of business. Buyer shall deliver to Seller a certificate
validly executed by an authorized officer of Buyer to that effect, dated the
Closing Date.
6.3 PERFORMANCE OF OBLIGATIONS. Each and all of the covenants and
agreements of the Buyer to be performed or complied with pursuant to this
Agreement shall have been duly performed and complied with in all material
respects or duly waived by Seller and there shall have been delivered to Seller
a certificate validly executed by an authorized officer of Buyer to that effect,
dated the Closing Date.
6.4 TENDERCARE AGREEMENT. Buyer and RMED will enter into an agreement
wherein Buyer will continue to manufacture Tushies and TenderCare diapers for
RMED over a period of ten (10) years upon such terms and conditions as are
mutually agreed upon by the parties.
6.5 DELIVERY/SHIPPING SERVICES. Buyer will provide home delivery
shipping service for RMED at cost for a period of not more than six (6) months
to enable RMED to establish that service at the Warehouse Property.
6.6 WEBSITE. RMED will retain and maintain ownership of the
"xxxxxxx0xxxx.xxx" and "xxxxxxx.xxx" websites.
6.7 MANUFACTURE OF ROCKABYE DIAPERS. Buyer will continue to manufacture
Rockabye Diapers and sell the same to RMED at mutually agreeable pricing, terms,
and conditions.
6.8 NON-COMPETITION AGREEMENT. As part of the Purchase Price, Buyer
agrees to enter into a Non-competition Agreement to prevent Buyer from
manufacturing or selling natural/environmental diapers similar to Tushies and
TenderCare Diapers, which agreement shall be in substantially the form and
manner attached hereto as Exhibit "A-2".
24
ARTICLE VII
OPERATION OF RMED
TO THE CLOSING DATE
During the period from the date of this Agreement to the Closing Date:
7.1 ORDINARY COURSE OF BUSINESS. RMED will carry on its business in the
usual, regular and ordinary course, in substantially the same manner as
heretofore conducted and use all reasonable efforts to preserve intact its
present business organization, keep available the services of its present
officers and employees, and preserve its relationships with customers, suppliers
and others having business dealings with it to the end that the goodwill and
ongoing business shall be unimpaired in all material respects at the Closing
Date.
7.2 CHARTER DOCUMENTS. RMED will not amend its Articles of
Incorporation or Bylaws or change the authorized number of directors nor shall
RMED enter into any agreements or arrangements to do so.
7.3 MERGER OR MERGERS. RMED will not acquire by merging or
consolidating with, or purchasing substantially all the assets of, or otherwise
acquiring any business or any corporation, partnership, association or other
business organization or division thereof nor shall RMED enter into any
agreements or arrangements to do so.
7.4 SALE OR ENCUMBRANCE. RMED will not, except in the ordinary course
of business, sell, lease or otherwise dispose of, nor voluntarily encumber, any
of its property nor shall RMED enter into any agreements or arrangements to do
so.
7.5 DIVIDENDS OR DISTRIBUTIONS. RMED will not declare, set aside, make,
or pay any dividend or other distribution, of any shares of its capital stock
nor shall RMED enter into any agreements or arrangements to do so.
7.6 CAPITALIZATION. RMED will not issue or sell any shares of its
capital stock of any class or any options, warrants or rights to purchase any
such shares or any securities convertible into or exchangeable for such shares
nor declare any stock splits, stock dividends or other recapitalizations or
reclassifications nor will RMED enter into any agreements or arrangements to do
so.
7.7 INDEBTEDNESS. RMED will not incur any indebtedness for borrowed
money or issue or sell any debt securities nor will RMED enter into any
agreements or arrangements to do so provided that RMED may borrow for working
capital purposes, those items as shown on Schedule 7.7.
7.8 COMPENSATION. Except as contemplated by or provided in this
Agreement, RMED will not grant to any employee, officer or director any increase
in compensation in any form other than, in the case of employees currently
compensated at a base salary rate of less than Twenty-five Thousand Dollars
($25,000.00) per year, as is consistent with prior practices unless otherwise
required by union contract, or any severance or termination pay, or enter into
any employment agreement with any employee, officer or director, or amend the
terms of any existing option or other employee benefit plan as reflected in
Schedule 7.8 or arrangement or adopt any new option or other employee benefit
plan or arrangement nor will RMED enter into any agreements or arrangements to
do so.
25
7.9 DISCLOSURE. RMED will promptly advise Buyer in writing of any
change in the condition (financial or otherwise) in the properties, assets,
liabilities, operations, business or prospects of RMED which it believes will be
materially adverse to the business or financial condition of RMED and of any
material violation or breach known to RMED in any of the covenants,
representations or warranties contained herein.
7.10 GOVERNMENT REGULATION. RMED will use its best efforts to comply
with all requirements which Federal or state law may impose on RMED with respect
to the purchase/sale contemplated herein, including those imposed under the
notice filing requirements of the HSR Act.
7.11 OBTAIN CONSENTS. RMED will use its best efforts to obtain any
consent, authorization, approval or exemption required to be obtained or made by
it in connection with the purchase/sale, or the taking of any action in
connection with the consummation thereof.
7.12 LITIGATION. Except in the ordinary course of business, RMED will
not settle or compromise any litigation or administrative or similar proceeding
or claim involving the payment of, or an agreement to pay over time, an amount,
in cash, notes or other property, in excess of Ten Thousand Dollars
($10,000.00), exclusive of costs and fees.
7.13 ACCOUNTING PRACTICES. RMED will not change the accounting methods
or practices followed by RMED.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS, WARRANTIES
AND COVENANTS; INDEMNIFICATION
8.1 SURVIVAL. The representations, warranties, covenants, agreements
and certifications made by the parties hereto shall survive the closing of all
transactions pursuant to this Agreement and remain in full force and effect
after the Closing Date for a period (the "Warranty Period") of three (3) years
following such Closing Date.
8.2 INDEMNIFICATION BY RMED. RMED will indemnify Buyer and its
officers, directors, employees and agents, from and against all Damages, as
hereinafter defined, arising out of or resulting from any misrepresentation or
breach of any warranty or covenant or the failure of any representation or
warranty of RMED contained herein, in any Schedule hereto or in any statement,
financial statement, certificate or other document delivered pursuant hereto.
For purposes of this Section 8.2, Damages shall mean all damages, losses,
liabilities, deficiencies, reduction in value, costs, expenses, assessments,
taxes, penalties, fines, claims, demands, actions, suits and proceedings,
including, but not limited to, any losses or costs related to the violation of
any Law, including, but not limited to, any Environmental Law, and including, in
each such instance, the reasonable attorneys, accountants' and other
professionals' fees, costs and expenses and the expenses of investigation,
presentment, proof, collection or defense thereof and disbursements incurred
therewith. The obligation of RMED to indemnify Buyer shall be subject to all of
the limitations set forth below:
26
(a) Indemnity Threshold and Limitation on Amount. Buyer shall not
submit any claim for indemnification under this Section 8.2
unless and until the aggregate damages sustained by Buyer
exceed Twenty-five Thousand Dollars ($25,000.00) (the
"Indemnity Threshold"), with no right to recoup the initial
Twenty-five Thousand Dollars ($25,000.00) incurred.
Notwithstanding any provision to the contrary, the maximum
indemnified loss under this Section 8.2 shall be limited to a
maximum of One Hundred Fifty Thousand Dollars ($150,000.00)
(the "Indemnity Maximum"), except for any damages resulting
from Shareholder derivative actions or similar claims under
state or federal provisions, and Seller's obligations under
Section 2.2, all of which shall be unlimited.
(b) Duration. Buyer may recover Damages for a breach of a
representation or warranty contained in this Agreement, only
if Buyer has given written notice to RMED of the breach on or
prior to the expiration of the Warranty Period with respect to
such representation or warranty. Any written notice delivered
by Buyer to RMED pursuant to this Section 8.2 shall set forth
the basis for the claim of breach (including, without
limitation, reference to the specific details regarding the
manner in which this Agreement is alleged to have been
breached) and, if then determinable by Buyer, a reasonable
estimate of the amount of the Damages anticipated to be
incurred in connection therewith, which indemnity shall be
unlimited.
(c) Tax and Insurance Benefits. All Damages to be paid to Buyer
shall be reduced by the actual amount of any income or
franchise tax benefit resulting therefrom to Buyer or its
affiliates and any insurance proceeds paid to Buyer.
(d) No Indemnification for Known Breaches of Representations and
Warranties. Notwithstanding any other provisions to the
contrary set forth in this Agreement or the agreements entered
into in connection therewith, RMED shall not be deemed to have
misrepresented to Buyer nor breached a warranty or
representation set forth herein or the Schedules hereto, if
Buyer has knowledge as of the Closing Date of such facts or
circumstance that constitute the breach or misrepresentation
disclosed in the Agreement, or the agreements executed in
connection therewith, or schedules thereto delivered, by or on
behalf of RMED to Buyer, and Buyer nevertheless consummates
the transactions contemplated herein, in which case Buyer
shall be deemed to have waived any claim for Damages it may
have under this Article, this Agreement, or any agreement
executed in connection therewith, as it relates to such breach
of representation or warranty.
8.3 INDEMNIFICATION BY BUYER. Buyer will indemnify RMED and its
officers, directors, employees and agents from and against all Damages, as
hereinafter defined, arising out of or resulting from any misrepresentation or
breach of any warranty or covenant or the failure of any representation or
warranty of Buyer contained herein, in any Schedule hereto or in any statement,
financial statement, certificate or other document delivered pursuant hereto.
27
For purposes of this Section 8.3, Damages shall mean all damages, losses,
liabilities, deficiencies, reduction in value, costs, expenses, assessments,
taxes, penalties, fines, claims, demands, actions, suits and proceedings,
including, but not limited to, any losses or costs related to the violation of
any Law, and including, in each such instance, the reasonable attorneys',
accountants' and other professionals' fees, costs and expenses and the expenses
of investigation, presentment, proof, collection or defense thereof and
disbursements incurred therewith. The obligation of Buyer to indemnify RMED
shall be subject to all of the limitations set forth below:
(a) Indemnity Threshold and Limitation on Amount. RMED shall not
submit any claim for indemnification under this Section 8.3
unless and until the aggregate Damages sustained by RMED equal
or exceed Twenty-five Thousand Dollars ($25,000.00) (the
"Indemnity Threshold"), provided, however, that once such
Damages equal or exceed the Indemnity Threshold the
indemnification liabilities of Buyer and RMED shall include
the entire amount of the Indemnity Threshold. In no event
shall Buyer and Buyer's aggregate obligation to indemnify RMED
for Damages hereunder exceed One Hundred Fifty Thousand
Dollars ($150,000.00).
(b) Duration. RMED may recover Damages for a breach of a
representation or warranty contained in this Agreement, only
if RMED has given written notice to Buyer of the breach prior
to the expiration of the Warranty Period with respect to such
representation or warranty. Any written notice delivered by
RMED to Buyer pursuant to this Section 8.3 shall set forth the
basis for the claim of breach (including, without limitation,
reference to the specific details regarding the manner in
which this Agreement is alleged to have been breached) and, if
then determinable by RMED a reasonable estimate of the amount
of the Damages anticipated to be incurred in connection
therewith.
(c) Tax and Insurance Benefits. All Damages to be paid to RMED
shall be reduced by the actual amount of any income or
franchise tax benefit resulting therefrom to RMED or its
affiliates and any insurance proceeds paid to RMED.
(d) No Indemnification for Known Breaches of Representations and
Warranties. Notwithstanding any other provisions to the
contrary set forth in this Agreement or the agreements entered
into in connection therewith, Buyer shall not be deemed to
have misrepresented to RMED nor breached a warranty or
representation set forth herein or the Schedules hereto, if
RMED has knowledge as of the Closing Date of such facts or
circumstance that constitute the breach or misrepresentation
disclosed in the Agreement, or the agreements executed in
connection therewith, or schedules thereto delivered, by or on
behalf of Buyer to RMED, and RMED nevertheless consummates the
transactions contemplated herein, in which case RMED shall be
deemed to have waived any claim for Damages it may have under
this Article, this Agreement, or any agreement executed in
connection therewith, as it relates to such breach of
representation or warranty.
28
8.4 THIRD PARTY CLAIM. Promptly after service of notice of any written
claim or process on a party by any third person in any matter in respect of
which indemnity may be sought from the other party, the party so served shall
promptly notify the indemnifying party of the receipt thereof. The indemnifying
party shall have the right to participate in at its own expense, the defense of
any such claim or the settlement thereof. As long as the aggregate amount of
Damages claimed by the indemnified party with respect to all matters is greater
than the Indemnity Threshold, but less than the aggregate amount of Damages
which can be collected from the indemnifying party, the indemnified party shall
not settle, compromise or pay any claim without the consent of the indemnifying
party, which consent shall not be unreasonably withheld or delayed.
8.5 GUARANTY. In order to provide Buyer with security for the
performance of Seller's obligations of indemnity hereunder and in any other
provision of this Agreement, Xxxxxx Xxxxxx and Xxxxxx Xxxxx shall provide a
Limited Guaranty to be executed in such form and manner acceptable to Buyer at
Closing.
ARTICLE IX
TERMINATION; MODIFICATION OR WAIVER
9.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing Date:
(a) by mutual written agreement of Buyer and Seller; or
(b) by Buyer or Seller, by notice to the other party, if the
Closing Date shall not have taken place on November 30, 2001
(or such later date as elected to by Buyer and Seller in
writing), subject to any rights accruing to the date of such
notice on account of any breach of this Agreement by the
opposite party hereto; or
(c) by Buyer or Seller, if an order is issued by any court,
agency, governmental body or public authority of competent
jurisdiction to restrain, enjoin or prohibit the consummation
of the transactions contemplated by this Agreement.
Notwithstanding the foregoing to the contrary, Seller acknowledges that
Buyer has expended significant amounts of time and incurred significant expense
in the due diligence, analysis, negotiations, and drafting which resulted in the
execution of this Agreement. Based upon that premise, Buyer is unwilling to
execute this Agreement without an assurance from Seller that Seller is dealing
and will deal exclusively with Buyer prior to Closing. RMED, Xxxxxx Xxxxxx, and
Xxxxxx Xxxxx agree not to, directly or indirectly, solicit, initiate, or
encourage any inquiries or proposals from, discuss, or negotiate with, provide
any non-public information to or consider the merits of any unsolicited
inquiries or proposals from any party relating to any transaction involving the
sale of all or any part of the Purchased Assets herein described, until such
time that the Agreement is terminated.
In the event the transaction is terminated for any reason other than
above or the conditions precedent to Buyer's performance hereunder, and a sale
concludes to a higher bidder, then RMED shall pay to Buyer a one-time breakup
fee of One Hundred Thousand Dollars ($100,000.00) to offset Buyer's expenses
incurred with respect to this transaction.
29
9.2 WAIVER. Any failure of Seller to comply with any obligation,
covenant, agreement or condition contained herein may be expressly waived in
writing by Buyer in the case of any such failure by RMED, but such waiver or
failure to insist upon strict compliance shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing.
ARTICLE X
PARTIES IN INTEREST AND ASSIGNMENT
This Agreement shall be binding upon, and inure to the benefit of, the
parties hereto and their respective successors and permitted assigns and the
shareholders of RMED. This Agreement is not made for the benefit of any person,
firm, corporation or other entity not a party hereto (other than the
shareholders of RMED who are and shall be intended beneficiaries of this
Agreement), and nothing in this Agreement will be construed as giving any
person, firm, corporation or other entity, other than the parties hereto and the
shareholders of RMED and their respective successors and permitted assigns, any
right, remedy or claim under or in respect of this Agreement, or any provision
hereof. This Agreement may not be assigned by any party hereto without the prior
written consent of all of the other parties hereto.
ARTICLE XI
MISCELLANEOUS
11.1 NOTICES. Any notice, request, consent, waiver or other
communication required or permitted to be given hereunder shall be effective
only if in writing and shall be deemed sufficiently given only if delivered in
person, telefaxed with confirmed receipt, or sent by certified or express mail,
postage prepaid, return receipt requested, addressed as follows:
If to Buyer: Xxxxx X. Xxxxx, Esq.
Presto Disposable Products, Inc.
0000 Xxxxx Xxxxxxxx Xxx
Xxx Xxxxxx, XX 00000
Copy to: Xxxx X. Xxxxxxx, Esq.
Robins, Kaplan, Xxxxxx & Xxxxxx L.L.P.
0000 XxXxxxx Xxxxx
000 XxXxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
If to Seller: Xxxxxx Xxxxxx, President
RMED International, Inc.
X.X. Xxx 0000
Xxxxxxxx, XX 00000-0000
Copy to: Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxx Xxxx & Friedrich
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Fax: (000) 000-0000
30
or to such other person or address as either such party may have specified in a
notice duly given to the sender as provided herein. Such notice or communication
shall be deemed to have been given as of the date so delivered, telefaxed or
mailed.
11.2 ENTIRE AGREEMENT. This Agreement (including the related
agreements, Exhibits and Schedules attached hereto) and the documents referred
to herein as having been entered into by any of the parties hereto or delivered
by a party hereto to another party hereto constitute the entire agreement and
understanding of the parties relating to the subject matter hereof and supersede
all prior and contemporaneous agreements and understandings, representations and
warranties, whether oral or written, relating to the subject matter hereof. The
terms of this Agreement cannot be changed, modified, released or discharged
orally. Inclusion of or reference to matters in a Schedule does not constitute
an admission or indication of materiality of a matter.
11.3 WAIVER. [INTENTIONALLY OMITTED]
11.4 APPLICABLE LAW. [INTENTIONALLY OMITTED]
11.5 SAVINGS CLAUSE. [INTENTIONALLY OMITTED]
11.6 ACTION BY SHAREHOLDERS OF BUYER. [INTENTIONALLY OMITTED]
11.7 HEADINGS. [INTENTIONALLY OMITTED]
11.8 COUNTERPARTS. [INTENTIONALLY OMITTED]
11.9 PUBLIC ANNOUNCEMENTS. Neither Buyer nor Seller, nor the
shareholders or representatives of either of them, shall make any public
announcement or disclosure with respect to any of the Transaction Documents or
any of transactions contemplated thereby (except as required by law or by the
rules of the exchange upon which RMED's or Buyer's shares are traded, which
shall be reviewed by, and comment reserved for, the non-disclosing party prior
to such disclosure) without the prior written consent of the party affected
thereby, which consent shall not be unreasonably withheld or delayed.
11.10 ARBITRATION. Any controversy or claim arising out of or relating
to this Agreement, or the breach hereof or thereof, shall be settled by a single
arbitrator in arbitration conducted in Eau Claire, Wisconsin, in accordance with
the Commercial Arbitration Rules of the American Arbitration Association, and
judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. The arbitrator's decision shall be in writing and
shall be final and nonappealable. The arbitrator's authority shall include the
ability to render equitable types of relief and, in such event, any aforesaid
court may enter an order enjoining
31
and/or compelling such actions as found by the arbitrator. The arbitrator also
shall make a determination regarding which party's legal position in any such
controversy or claim is the more substantially correct (the "Prevailing Party")
and the arbitrator shall require the other party to pay the legal, expert
witness and consulting fees, and other professional fees and costs incurred by
the Prevailing Party in connection with such arbitration proceeding and any
necessary court action.
Notwithstanding the foregoing to the contrary, any action or proceeding
seeking injunctive relief may be brought directly against any of the parties in
the courts of the State of Wisconsin, County of Eau Claire, or, if it has or can
acquire jurisdiction, in the United States District Court for the Western
District of Wisconsin, and each of the parties consents to the jurisdiction of
such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any object to venue laid therein. Process in any action or
proceeding referred to in the preceding sentence may be served on any party any
where in the world.
11.11 FURTHER ASSURANCES. The parties agree (a) to furnish upon request
to each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
11.12 WAIVER. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
11.13 SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
11.14 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
32
11.15 TIME OF ESSENCE. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
11.16 GOVERNING LAW. This Agreement will be governed by the laws of the
State of Colorado without regard to conflicts of laws principles.
11.17 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
BUYER: PRESTO DISPOSABLE PRODUCTS, INC.
By: /s/ Xxxxx X. Xxxxx
---------------------------------------
Xxxxx X. Xxxxx,
Vice President and Secretary
SELLER: RMED INTERNATIONAL, INC.
By: /s/ Xxxxxx Xxxxx
---------------------------------------
Xxxxxx Xxxxx,
Co-Chief Executive Officer and Chairman
of the Board
33
AMENDED ASSET PURCHASE AGREEMENT
BETWEEN PRESTO DISPOSABLE PRODUCTS AND RMED INTERNATIONAL, INC.
Schedule 1.1(i) PURCHASE OF ASSETS - INVENTORY
Schedule 1.1(ii) PURCHASE OF ASSETS - INTANGIBLE ASSETS
INTELLECTUAL PROPERTY
FORMULA, BILLS OF MATERIAL, DESIGNS & SPECIFICIAITONS
MATERIAL CONTRACTS
CUSTOMER AND VENDOR LISTS
Schedule 1.1(iii) PURCHASE OF ASSETS - MACHINERY; EQUIPMENT
Schedule 1.1(iv) PURCHASE OF ASSETS - CONTRACTS; AGREEMENTS
Schedule 1.1(v) PURCHASE OF ASSETS - PREPAIDS
Schedule 1.1(vi) PURCHASE OF ASSETS - ACCOUNTS RECEIVABLE
Schedule 1.2(a)(i) PURCHASE PRICE/
Schedule 1.5(a)(i) PAYMENT OF PURCHASE PRICE
Schedule AP - ACCOUNTS PAYABLE
Schedule 2.1 ASSUMED LIABILITIES; EXECUTORY CONTRACTS
Schedule 2.3 LABOR RELATIONS; PENSION PLAN
Schedule 3.1(a) LEGAL STATUS
Schedule 3.2 (a) CAPITALIZATION - COMMON STOCK
Schedule 3.2(b) CAPITALIZATION - OPTIONS & RIGHTS
Schedule 3.2(c) CAPITALIZATION - CONFLICTS OF INTEREST
Schedule 3.4(a) & (b) FINANCIAL STATEMENTS
Schedule 3.5 ABSENCE OF CHANGES
Schedule 3.6 UNDISCLOSED LIABILITIES
Schedule 3.7 NO VIOLATIONS OF STATUTE OR CONTRACT
Schedule 3.8 ACCOUNTS RECEIVABLE
Schedule 3.9 NOTES RECEIVABLE
Schedule 3.10 INVENTORIES
Schedule 3.12 REGULATORY APPROVALS
Schedule 3.13 TANGIBLE PERSONAL PROPERTY
Schedule 3.14(a) INTELLECTUAL PROPERTY - OWNERSHIP
Schedule 3.14(b) INTELLECTUAL PROPERTY - CLAIMS
Schedule 3.15 MATERIAL CONTRACTS
Schedule 3.16 PERMITS AND LICENSES
Schedule 3.17 INSURANCE COVERAGES
Schedule 3.18 CLAIMS AND LITIGATION
Schedule 3.19 TAX MATTERS
Schedule 3.20 BENEFIT PLANS
Schedule 3.21 ERISA MATTERS
Schedule 3.22 ENVIRONMENTAL MATTERS
Schedule 3.23 COMPLIANCE WITH APPLICABLE LAW
Schedule 3.24 BANK ACCOUNTS
Schedule 4.3 CLAIMS AND LITIGATION
Schedule 5.8 (Exhibit A-1) NONCOMPETITION AGREEMENT
Schedule 5.20 SELLER'S SHAREHOLDERS SUBMITTING PROXIES
Schedule 6.8 (Exhibit A-2) NONCOMPETITION AGREEMENT
Schedule 7.8 COMPENSATION