DEFINITIVE AGREEMENT
This Definitive Agreement is made effective the 21st day of December, 2005
among Wellstar International, Inc., a Nevada corporation, ("Wellstar"), and
Micro Health Systems Inc., a Florida corporation ("MHS"), Xxxxxx X. Xxxxxx, an
individual residing in the State of Florida ("Xxxxxx") and Xxxxx Xxxxxx, an
individual residing in the State of Florida ("Cmorey") (MHS, Xxxxxx and Cmorey
are collectively referred to in this Agreement as the " Sellers").
RECITALS:
A. MHS holds the exclusive rights to market, sell and otherwise promote
thermal imaging cameras and related software manufactured by Mikron Instrument
Co., Inc. in the medical and veterinary markets within the United States,
Canada, Mexico and Middle East and has developed and owns proprietary software
for use with the Mikron Instrument Co. thermal imaging cameras with supporting
manuals which it has utilized in the marketing and distribution of the Mikron
Instrument Co. thermal imaging cameras (the Mikron Instrument Co. thermal
imaging cameras with all related software and manuals are hereinafter referred
to as the "Thermal Imaging System").
B. MHS has developed a customer base, relationships with preferred vendors
and relationships with physicians qualified to interpret images produced through
use of the Thermal Imaging System.
X. Xxxxxx and Cmorey are the sole shareholders of MHS.
D. Wellstar and Sellers entered into a Term Sheet dated September 2, 2005
and a Letter of Intent dated September 21, 2005 setting forth the essential
terms and conditions whereby Wellstar agreed to purchase the assets of MHS (said
assets are more fully defined below) from Seller and Seller agreed to sell the
MHS assets to Wellstar.
E. In accordance with the terms of the Term Sheet and the Letter of Intent
Sellers desire to transfer to the Wellstar the assets described above, and those
additional assets as more fully defined herein used in the operation of Sellers'
business, free and clear of all liens and encumbrances (other than those
specifically assumed by Wellstar pursuant to this Agreement).
F. Wellstar and Sellers intend that this Agreement represent the entire
agreement of the parties; and that all previous agreements, understandings, term
sheets, and letters of intent, written, oral or otherwise, are superseded by and
incorporated into this Agreement.
NOW, THEREFORE, in consideration of the payment by Wellstar to Sellers of
cash consideration set forth below and the premises and mutual promises,
representations, warranties and covenants contained herein, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 "Definitions" Certain terms are defined in the text of this Agreement
and such terms shall have the meaning so defined. In addition the following
terms as used in this Agreement, shall have the following meanings:
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"Agreement" shall mean this Agreement, as it may be subsequently modified,
amended or supplemented.
"Assumed Liabilities" is defined in Section 2.3.
"Closing" shall mean the transfer by Sellers to Wellstar of the Sellers'
Assets pursuant to this Agreement and by Wellstar to Sellers of the
consideration set forth herein and the consummation of the other transactions
contemplated by this Agreement.
"Closing Date" shall mean the day of the Closing as specified in Section
2.1.
"Contracts" shall mean the contracts or agreements between Sellers and
third parties listed on Exhibit A, which relate to the supply and exclusive
rights to market the Thermal Imaging Cameras.
"Disclosure Schedule" shall mean the schedule attached to this Agreement
incorporating certain disclosures by Sellers to Wellstar, as referenced in this
Agreement.
"Excluded Assets" shall mean the assets of Seller or its affiliates
identified in Exhibit B.
"Force Majeure Event" means any (i) fire, explosion, strike, lockout,
casualty or accident; (ii) act of God, including, without limitation, epidemic,
hurricane, typhoon, earthquake, cyclone or flood; (iii) war, revolution, civil
commotion, act of enemies, blockade or embargo; or (iv) other similar
occurrences or acts beyond the reasonable control of a party hereto, which act
or occurrence shall make it impossible for the party concerned to carry out the
obligations of such party under this Agreement (but lack of financial ability
shall not be a Force Majeur Event). Those provisions in this Agreement regarding
Force Majeur Event shall only be applicable in a specific situation(s) in which
this Agreement expressly provides they shall apply and in no other situations.
"Intellectual Property" shall include any and all licenses, trademarks,
patents, patent rights, engineering and shop drawings, architectural drawings,
plans and specifications, sales literature, supplies, computer software,
copyrights, computer software license rights and any and all trade secrets,
proprietary products and processes or similar property used in or necessary or
desirable in connection with the MHS business.
"Knowledge" shall mean all facts and information within the actual
knowledge of Xxxxxx X. Xxxxxx (President and Chief Executive Officer), Xxxxx
Xxxxxx (Executive Vice President and Secretary).
"Liability" means any liability, obligation, debt or commitment of any kind
(whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due), including any liability for Taxes.
"Material Contract" shall mean any contract or other agreement if it
involves, relates to or affects the Sellers' Assets or was entered into with
respect to the Sellers' Business and if any one or more of the following
applies: (i) it involves, or may reasonably be expected to involve, the payment
or receipt of $15,000 or more (whether in cash or in goods or services of an
equivalent value) over its term, including renewal options, or during any one
year of its term, (ii) it imposes restrictions on the conduct of the Sellers'
business, or (iii) it is not cancelable on notice of not longer than 30 days and
it has a term that will expire more than 3 years after the Closing Date.
"Note" is defined in Section 2.2.
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"Sellers' Assets" shall mean any and all assets owned by MHS, Xxxxxx or
Cmorey which are used in the MHS business, excluding only the assets detailed as
Excluded Assets, along with cash and liquid assets, and specifically including
MHS's Intellectual Property, customer lists and records, all thermal images
obtained by Sellers existing and potential customer databases, research
documents and studies, vendor lists, marketing materials, templates and video
clips, web site, all domain names, business name, phone and fax numbers, all FDA
registrations and communications including but not limited to applications and
responses thereto, provided the foregoing shall not in any event include
Excluded Assets.
"Sellers' Business" shall mean all business operated by MHS in the
marketing, sale, distribution and operation of thermal imaging cameras pursuant
to MHS's "Manufacturing and Distribution Agreement" entered into the 4th day of
June 2001 by and between MHS and Mikron Instrument Co., Inc.
"Sellers' Records" means MHS's, or its affiliates', books and records, in
any form or media, operational, maintenance, construction, environmental and
technical records related to the MHS business. For the avoidance of doubt,
Sellers' Records specifically excludes (i) any of MHS's, or its affiliates',
business plans, strategies and financial records which address or reflect
activities outside of the MHS business; and (ii) any of Sellers', or their
affiliates', company minute books or records, tax returns or other materials
which do not pertain to the MHS business or ongoing day-to-day operation of the
MHS business.
"Required Consents" is defined in Section 3.1.2.
"Retained Liabilities" shall mean the liabilities, obligations and
responsibilities of Sellers to be retained by Sellers pursuant to Section 2.4
hereof.
"Stock" shall mean the common stock, $.001 par value, voting shares of
Wellstar International, Inc.
"Stock Pledge" is defined in Section 2.2.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest.
"Tax" and "Taxes" mean any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Sec. 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
ARTICLE 2
THE CLOSING
2.1 The Closing. The Closing shall take place on December ___ at the
offices of Xxxxxx X. Xxxxxxx, P.A., 0000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000 at
9:00 a.m. or at such other time and place as the parties may otherwise agree.
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2.2 Sale of Assets and Purchase Price. At the Closing, the Sellers shall
sell, assign and transfer to Wellstar all the Sellers' Assets. The transfer of
the Sellers' assets shall be free and clear of all liens and encumbrances, any
and all defects, liabilities or security interests, other than the Permitted
Encumbrances. Sellers shall execute and deliver all such conveyance documents as
shall be specified herein and any additional documents reasonably deemed
necessary by Wellstar. Wellstar agrees to pay the Sellers as full consideration
the sum of Six Hundred Thousand Dollars ($600,000.00) and Two Million shares
(2,000,000) of the Stock, payable as follows:
(i) Upon execution of the Agreement, the sum of Twenty Five Thousand
Dollars ($25,000.00) to be held in trust by the Law Offices of Xxxxxx X.
Xxxxxxx, P.A. pursuant to the terms of this Agreement.
(ii) At closing, a cash payment from Wellstar to the Sellers in the
amount of Three Hundred Seventy Five Thousand Dollars ($375,000.00). The cash
payment shall be made by a wire transfer of immediately available unrestricted
funds to MHS at closing to such account as MHS shall designate; and
(iii) The deferred portion of Two Hundred Thousand Dollars ($200,000.00)
shall be evidenced by a negotiable Promissory Note (the "Note") executed and
delivered by Wellstar at Closing. The Note shall be substantially in the form
acceptable to the Sellers as attached hereto as Exhibit "D". The Note shall bear
interest at the rate of 8% per annum, payable One Hundred Thousand Dollars
($100,000.00) with accrued interest thereon on or before the 180th day following
the date of the Note, with the balance of the principal and interest due and
payable on or before the 365th day following the date of the Note, time being of
the essence. The Note may be prepaid in whole or in part without penalty or
premium, and shall contain standard waivers of notice of default, presentment or
dishonor. The Note shall be fully secured by a pledge of additional Wellstar
International, Inc. one year restricted voting common stock in such a number of
shares as, based upon the closing bid price of the Wellstar International, Inc.
unrestricted publicly traded common stock at the time of closing equates to the
face value of the Note. The pledged stock along with executed stock powers "in
blank" shall be held in escrow pursuant to a Stock Pledge Agreement, a copy of
which is attached as Exhibit "E".
(iv) At Closing, Two Million (2,000,000) shares of unregistered
restricted Stock issued in the name of the Sellers or it designees. Said Stock
shall be ordered at Closing or immediately following the Closing for issuance by
Wellstar issuing its letter of instruction to its Transfer Agent and the Stock
shall have the following characteristics:
(a) Certificate Legend. The stock certificates issued to the
Sellers shall bear the following restrictive legend:
THE SECURITIES REPRESENTED HEREBY HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER
THE ACT OR UNLESS THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT
REQUIRED.
(b) Registration of Stock. On or after the three hundred sixty
fifth (365th) day from the Closing date, (the time period commencing
after said 365th day is hereafter referred to as the "registration
period") Wellstar, in good faith and at its expense, shall promptly
cause the Two Million (2,000,000) shares of Stock described above to be
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registered in the name of the Sellers or its designee by preparing and
filing a Registration Statement on a Form SB-2 or its equivalent with
the U. S. Securities & Exchange Commission.. Wellstar agrees to prepare
and file all the additional amendments and revisions, forms, statements
and other papers necessary and appropriate to complete the registration
process to effectively register the Stock. When the registration becomes
effective, the restrictive legend placed on the stock certificates
issued to the Sellers shall be null and void.
(c) Blue Sky Requirements. Wellstar shall satisfy all the "Blue
Sky Law" requirements in the states where the Seller's shares of stock
may be sold through a broker transaction or directly with a market
maker.
(d) Rule 144. The Stock may only be disposed of in compliance
with state and federal securities laws. Sellers and Wellstar are aware
of the provisions of Rule 144 promulgated under the Securities Act which
permit the limited resale of restricted shares subject to the
satisfaction of certain conditions enabling the Sellers to trade their
stock.
(e) Leak Out. Following the Stock being registered in the name
of the Sellers, the Sellers are restricted for the next twelve
consecutive months to only sell its Stock each thirty (30) day period in
an amount equal to the lesser of: (i) one (1%) percent of the then
trading volume for that thirty (30) day period; or (ii) 400,000 shares
during that thirty (30) day period.
(f) Election to Pay Value. Wellstar may, but is not required to,
irrevocably elect not to register the Two Million (2,000,000) shares of
Stock transferred to Sellers pursuant to this Agreement by giving
written notice to Sellers of its intentions to pay for the value, as
defined herein below, of all, but not less than all, of the Stock. The
notice shall be mailed to Sellers within Ten (10) business days
following the first day of the registration period. However, the Sellers
reserve the absolute right to reject the election made by Wellstar, by
giving written notice of its intentions to continue to hold and retain
the unregistered Stock. The notice shall be given within the following
Ten (10) business days from receipt of Wellstar notice.
(i) The value of the Stock shall be equal to the closing
bid price of the unrestricted publicly traded Stock as of the
closest trading day from the first day of the registration
period with a minimum of Fifty Thousand (50,000) shares of Stock
publicly traded. Wellstar shall have Forty five (45) days from
the date of its notice to pay the value to the Sellers.
2.3 Purchase Price Allocation. The purchase price shall be allocated in the
following proportions for federal income tax purposes only:
Customer lists and intangible assets $600,000.00 plus 1.0 million
shares of Stock;
Tangible Assets 800,000 shares of Stock;
Covenant Not to Compete 200,000 shares of Stock.
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2.4 Assumed Liabilities. In further consideration for the transfer of the
Sellers' Assets, at the Closing, Wellstar will assume, and agree to perform and
discharge those obligations of Seller as set forth in the contracts listed in
Exhibit A hereto.
2.5 Retained Liabilities. Except for the Assumed Liabilities, Sellers shall
retain and have full responsibility and obligation with respect to all other
liabilities and obligation arising from or with respect to the ownership of the
Sellers' Assets and the operation of Sellers' business on or prior to the
Closing, or to the Excluded Assets at any time (the "Retained Liabilities").
2.6 Other Actions. Further, each of the parties agrees to take or cause to
be taken any and all other actions required to be taken by such party at the
Closing in order to consummate the transaction contemplated by this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Sellers. Except as set forth in the
Disclosure Schedule, Sellers hereby represent and warrant to Wellstar that:
3.1.1 Due Organization. MHS is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida and
has all necessary corporate powers to own its property and to operate
its business as now owned and operated by it.
3.1.2 Authority and Consents. The execution, delivery and performance by
Sellers of this Agreement, and each and every agreement, document and
instrument provided for herein or contemplated hereby, have been duly
authorized and approved by the Board of Directors of MHS. MHS has all
requisite corporate power and authority to enter into, perform and
comply with this Agreement and any and all other such documents. This
Agreement and any and all such documents to which MHS currently is or
shall become a party has been or will be, as the case may be, duly
executed and delivered by Sellers and constitute, or will constitute
upon execution and delivery, a legal, valid and binding obligation of
Sellers in accordance with its terms. Exhibit G sets forth each Material
Contract, the transfer or conveyance of which to Wellstar hereunder
shall require the consent of any person not a party to this Agreement
(collectively, the "Required Consents").
3.1.3 Absence of Conflict. Neither the execution and the delivery of
this Agreement, nor the execution of any documents or consummation of
the transactions contemplated hereby (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any government, governmental agency, or
court to which Sellers are subject under laws of State of Florida (ii)
violate or conflict with any provision of the charter or bylaws of MHS,
or (iii) assuming receipt of any Required Consent, conflict with, result
in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or
cancel, or require any notice under any Material Contract.
3.1.4 Brokers' Fees. Sellers have not engaged nor has any liability or
obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement.
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3.1.5 All Sellers' Assets. With the exception only of the Excluded
Assets, the Sellers' Assets constitute any and all rights, assets and
property, tangible and intangible, used in the Sellers' Business, as
currently being conducted, except for the consulting services to be
offered to Wellstar and the training services as referenced in Section 6
below, which services are retained by the Sellers. All tangible assets
are to be transferred in an "as is" condition and in good operating
order and repair.
3.1.6 Title to Assets. MHS has good and marketable title to all Sellers'
Assets or the right to use all Sellers' Assets free and clear of all
liens and encumbrances other than the Permitted Encumbrances.
3.1.7 Condemnation. There is no pending or threatened condemnation or
similar proceeding affecting the Sellers' Assets or any portion thereof,
and Sellers have not received any written notice and has no knowledge
that any such proceeding is contemplated.
3.1.8 Subsidiaries. Sellers have no subsidiaries or related persons or
entities which own or have any claim upon the Sellers' Assets.
3.1.9 Financial Statements. MHS has provided Income Tax Returns to
Wellstar for the fiscal years ending December 31, 2002, December 31,
2003 and December 31, 2004, with respect to Sellers' Business (the "MHS
Financial Statements"). The MHS Income Tax Returns (including the notes
thereto, if any) have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout
the periods covered thereby.
3.1.10 Undisclosed Liabilities. Sellers have no Liability which would or
could be binding upon Wellstar after Closing, except for the Assumed
Liabilities.
3.1.11 Legal Compliance. Sellers have complied in all material respects
with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all
agencies thereof) the violation of or noncompliance with which would
have a material adverse effect on Sellers, the Sellers' Assets or The
Sellers' Business or on Wellstar's ownership or use of the Sellers'
Assets. No action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been given to or commenced
against Sellers alleging any failure so to comply.
3.1.12 Intellectual Property.
a. MHS owns and has the unencumbered ownership, right to use all
Intellectual Property used in the conduct of the Sellers'
Business, as presently conducted, and each such item of
Intellectual Property owned or used by MHS immediately prior to
Sellers' sale of the Sellers' Assets to Wellstar will be owned
or available for use by Wellstar free and clear of any claims
arising from any third parties or Sellers' use prior to Closing;
and
b. Exhibit A, Part 2 sets forth each item of Intellectual Property.
Sellers have made available and shall at Closing transfer to
Wellstar correct and complete copies of all Intellectual
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Property either on disk or fully printed. Exhibit A, Part 2 also
identifies each trade name or unregistered trademark used in the
Sellers' Business. With respect to each item of Intellectual
Property required to be identified in Exhibit A, Part 2:
(i) Sellers possess all right, title, and interest in and to
the item, free and clear of any Security Interest;
(ii) The item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge; and
(iii) No action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to
Sellers' Knowledge, is threatened which challenges the
legality, validity, enforceability, use, or ownership of
the item.
3.1.13 Material Contracts. Disclosure Schedule, Section 3.1.14 lists all
Material Contracts. Sellers have delivered to Wellstar a correct and
complete copy of each written Material Contract listed in Disclosure
Schedule, Section 3.1.13. With respect to each Material Contract: (i) to
Sellers' Knowledge, such Material Contract is legal, valid, binding,
enforceable, and in full force and effect; (ii) to Sellers' Knowledge,
such Material Contract will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms immediately
following the closing of the transactions contemplated hereby; (iii)
Seller is not and, to Sellers' Knowledge, no other party is in breach or
default, and no event has occurred which with notice or lapse of time
would constitute a breach or default, or permit termination,
modification, or acceleration, under such Material Contract; and (iv) to
Sellers' Knowledge, no party has repudiated any provision of such
Material Contract. Except as set forth in Exhibit G, all Material
Contracts that are included in Assumed Liabilities are assignable to
Wellstar by Sellers without the consent of any third party.
3.1.14 Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of Sellers with regard to the Sellers' Assets or the
Sellers' Business.
3.1.15 Disclosure Litigation. Neither Sellers' Business nor Sellers'
Assets are subject to any outstanding injunction, judgment, order,
decree, ruling, or charge nor to Sellers' Knowledge, is MHS, Xxxxxx or
Cmorey threatened to be made a party to any action, suit, proceeding,
hearing, or investigation of, in, or before any court or quasi-judicial
or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator which either involves an amount in
controversy of $15,000 or more, or involves or affects the Sellers'
Business, the Sellers' Assets, or in any manner seeks to prevent,
enjoin, alter or materially delay the transactions contemplated by this
Agreement.
3.1.16 Product Warranty. All products manufactured, sold, leased, or
delivered by the Sellers' Business have been in material conformity with
all applicable contractual commitments and all express and implied
warranties.
3.1.17 Product Liability. To Sellers' knowledge it has no liabilities
arising out of any injury to individuals or property as a result of the
ownership, possession, or use of any product or by-product manufactured,
sold, leased, transported, exchanged, swapped, conveyed or delivered by
the Sellers' he me Business.
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3.1.18 Transferable Permits. Each governmental license, franchise,
permit or other similar authorization, required in Sellers' Business or
relating to the Sellers' Assets, together with the name of the
governmental agency or entity issuing such license or permit
(collectively the "Permits") are accurately described in Disclosure
Schedule, Section 3.1.18. Except as noted in the Disclosure Schedule,
Section 3.1.18, such Permits are in full force and effect and are
transferable by Sellers to Wellstar as contemplated herein. Upon the
consummation of such transaction Wellstar will, assuming the applicable
Required Consents, if any, have been obtained prior to the Closing Date,
have all the right title and interest of Sellers in all the Permits
which are transferable by Sellers to Wellstar.
3.1.19 Shareholder Qualifications. With respect to the Stock acquired by
Sellers pursuant to the terms and conditions of this Agreement, Sellers
represent as follows:
a. Accredited Investors. MHS, Xxxxxx and Cmorey each individually
and/or collectively represent that the individual(s) or entity
acquiring the Stock to be transferred to Sellers pursuant to the
terms of this Agreement shall be an "Accredited Investor" as
that term is defined in Rule 501 (a), Regulation D promulgated
under the Securities and Exchange Act of 1933, that said Stock
is being acquired for the designees own account and not with a
view towards resale in connection with the public sale or
distribution thereof.
b. Information. Sellers and their advisors, if any, have been
furnished with all materials relating to the business, finances
and operations of Wellstar and the transfer of Stock
contemplated herein which Sellers or their advisors have
requested. Sellers understand that the value, current and
ongoing, of the Stock to be transferred to Sellers pursuant
hereto involves a high degree of risk
c. Government Review. Sellers understand that no United States
federal or state agency or any other government or governmental
agency has passed upon or made any recommendation or endorsement
of the Stock; and that the Stock to be transferred to Sellers
pursuant hereto is not and as of the date of Closing will not be
registered.
3.1.20 Survival of Representations and Warranties. Sellers'
representations, warranties and covenants shall survive the termination,
expiration or cancellation of the Agreement and the transfer and
registration of the 2,000,000 shares of Stock to the Sellers.
3.2 Representations and Warranties of Wellstar. Wellstar hereby represents
and warrants to MHS that:
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3.2.1 Due Organization. Wellstar is duly organized, validly existing and
in good standing under the laws of Nevada and has all necessary
corporate powers and authority to comply with the terms of this
Agreement.
3.2.2 Authority and Consents. The execution, delivery and performance by
Wellstar with the terms of this Agreement, and each and every agreement,
document, Note and instrument provided for herein or contemplated
hereby, have been duly authorized and approved by the Board of Directors
of Wellstar. Wellstar has all requisite power and authority to enter
into, perform and comply with this Agreement and any and all other such
documents. This Agreement and any and all such documents to which
Wellstar currently is or shall become a party has been or will be, as
the case may be, duly executed and delivered by Wellstar and
constitutes, or will constitute upon execution and delivery, a legal,
valid and binding obligation of Wellstar in accordance with its terms.
3.2.3 Absence of Conflict. Neither the execution and the delivery of
this Agreement, nor the execution of any documents or the consummation
of the transactions contemplated hereby (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any government, governmental agency, or
court to which Wellstar is subject; (ii) violate or conflict with any
provision of the organizational documentation of Wellstar, or (iii)
conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement to which
Wellstar is a party or by which it is bound or to which any of its
assets is subject. 3.2.4 Brokers' Fees. Wellstar has not engaged nor
does it have any liability or obligation to pay any fees or commissions
to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.
3.2.5 Subsidiary. Trillenium Medical Imaging, Inc., is a wholly owned
subsidiary of Wellstar International, Inc., and duly organized, validly
existing and in good standing under the laws of Nevada, and has released
and assigned to Wellstar all rights, claims and/or interests arising
from the term Sheet and/or Letter of Intent between Trillennium and
Sellers relative to the purchase and sale of Sellers' Assets.
3.2.6 Litigation or Administrative Proceedings. There are no disputes,
claims, legal, administrative or other actions, suits or proceedings
pending, to the knowledge of Wellstar, which is threatened against, or
which may prevent, interfere or enjoin the consummation of the
transaction contemplated hereby.
3.2.7 Survival of Representations and Warranties. The representations,
warranties and covenants shall survive the termination, expiration or
cancellation of the Agreement and the transfer and registration of the
2,000,000 shares of Stock to the Sellers.
3.2.8 Due Diligence. Wellstar acknowledges that it has thoroughly
reviewed to its satisfaction all contracts, books, records, Income Tax
Returns for 2002, 2003 and 2004, financial documents and related
information; and inspected all tangible and intangible assets as part of
the due diligence review under the Letter of Intent dated September 21,
2005.
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3.2.9 Transfer of Stock. The shares of Stock required per Section 2.2
above, shall be delivered within fifteen (15) days of Closing and shall
be of the same class of common stock presently listed and outstanding,
which shares Wellstar shall have full and lawful authority to deliver,
and when so delivered, will have full and equal voting rights and will
be fully paid and non-assessable to the Sellers.
3.2.10 Wellstar Loan Documents. Wellstar's existing loan documents
effectively preclude the current registration of Stock to Sellers as the
loan document provides: "the Company shall not, and shall not agree to
allow the holders of any securities of the Company to include any of
their securities, in excess of 250,000 shares of common stock in any
registration statement under section 2(a) hereof or any amendment or
supplement thereto under section 3(b) hereof without the consent of the
holders of a majority in interest of the registrable securities."
ARTICLE 4
PRE-CLOSING COVENANTS OF PARTIES
4.1 Sellers Pre-Closing Covenants. Sellers hereby covenant and agree as
follows:
4.1.1 Operation of Sellers' Business. From the date of execution of this
Agreement to the Closing shall operate the Sellers' Business in
generally the same manner as the Sellers' Business was operated prior to
the execution of this Agreement, and Sellers shall use reasonable
efforts to:
a. Preserve the Sellers' Business;
b. Maintain the Sellers' Assets in their current state and
condition subject to requirements in the ordinary course
of business; and
x. Xxxxxxx' shall not, except in the ordinary course of
business, sell, mortgage, transfer or convey any of the
Sellers' Assets, or waive or relinquish any material
right under any contracts, permits leases and/or
license.
4.1.2 No Shopping. During the term hereof, neither Sellers nor anyone
acting on Sellers behalf shall solicit or conduct any negotiation or
discussion with any other party regarding the possible sale of the
Sellers' Assets.
4.1.3 Permits and Consents. Sellers shall use reasonable efforts to
obtain all Required Consents and cooperate with Wellstar to obtain all
Consents or Permits, if any, necessary to transfer any and all of the
Sellers' Assets to Wellstar.
4.1.4 Sellers' Deliveries. Sellers hereby agrees to deliver, or cause to
be delivered, each of the documents, property or items to be delivered
by Sellers at Closing, including, without limitation, appropriate
documents to make the transfers provided for in Section 2.2 hereof.
4.1.5 Sales and Transfer Taxes. The Sellers shall be responsible for and
agree to pay when due all Florida sales, use and transfer taxes arising
out of the transfer of the Sellers' Assets to Wellstar.
11
4.2 Wellstar's Pre-Closing Covenants. Wellstar hereby covenants and agrees
as follows:
4.2.1 Stock Commitments. Immediately upon Wellstar learning of any
revocation, change, amendment, modification, breach or other material
development relating to the Stock Commitment set forth in Section 2.2
above or of any proposal for any such revocation, change, amendment or
modification or of facts which could reasonably lead to any of the
foregoing, Wellstar shall notify Sellers of such development, including
in such notice all of the relevant facts relating to any such
development.
4.2.2 Wellstar's Deliveries. Wellstar hereby agrees to deliver, or cause
to be delivered, each of the documents, property or items to be
delivered by Wellstar as conditions to Closing by Seller.
4.2.3 Assumption of Contracts. Wellstar agrees to assume the obligations
and Liabilities of Sellers' under the Contracts at Closing.
4.2.4 Permits and Consents. Wellstar shall diligently seek and obtain
all Permits, if any, and shall cooperate with Sellers to obtain all
Required Consents necessary to transfer any or all Sellers Assets to
Wellstar.
ARTICLE 5
CONDITIONS TO CLOSING
5.1 Conditions to Closing by Wellstar. Wellstar shall be under no
obligation to close the transactions contemplated by this Agreement unless and
until each of the following additional conditions precedent have occurred:
5.1.1 Representations and Warranties of Sellers True at Closing. Each
and every representation or warranty of Sellers shall be true and
correct in all material respects as of the Closing Date.
5.1.2 Performance by Sellers. Sellers shall have performed or complied
with each of its covenants and obligations under this Agreement which
are to be performed or complied with by Sellers prior to Closing.
5.1.3 Deliveries to Wellstar. The following original documents, property
and items, in form and content reasonably satisfactory to Wellstar,
shall have been delivered to Wellstar:
a. Xxxx of sale executed by Sellers transferring to
Wellstar the Sellers' Assets as contemplated herein and
substantially in the form of the Xxxx of Sale attached
hereto as Exhibit C (the "Xxxx of Sale").
b. Any and all transferable Permits, executed by the
appropriate entity.
c. Any and all Required Consents from any third party,
including but not limited to Mikron Instrument Co. or
governmental or quasi governmental agency which shall be
required in order to transfer the Sellers' Assets to the
Wellstar, executed by the appropriate entity.
12
d. Certificate of Good Standing of MHS issued by the
Secretary of State of Florida not more than ten days
prior to the Closing Date.
e. Incumbency Certificate of the Officers of MHS executed
by such Officers and certified by the Secretary of MHS.
f. Certified Resolution of the Board of Directors of MHS
authorizing the execution and delivery of this Agreement
and the following of any and all other actions necessary
and proper to consummate the transaction contemplated by
this Agreement, certified by the Secretary of MHS.
g. Officers Certificate of MHS executed by the President,
Chief Financial Officer and Secretary of MHS,
representing and warranting that all representations and
warranties of Sellers contained in this Agreement remain
true, accurate and not misleading as of the Closing Date
and that the Articles of Incorporation, MHS Resolutions
and Incumbency Certificate delivered to Wellstar remain
true and unmodified as of the date of Closing.
h. Original titles of any and all titled Sellers' Assets,
duly endorsed for transfer by MHS, and revealing no
liens or encumbrances with respect to such assets.
5.2 Conditions to Closing by Sellers. Sellers shall not be under any
obligation to close the transaction contemplated by this Agreement unless and
until each of the following additional conditions precedent have occurred:
5.2.1 Representations and Warranties of Wellstar True at Closing. Each
and every representation or warranty of Wellstar shall be true, accurate
and not materially misleading as of the Closing Date.
5.2.2 Performance by Wellstar. Wellstar shall have performed or complied
with each of their respective covenants and obligations under this
Agreement which are to be performed or complied with by Wellstar prior
to Closing.
5.2.3 Deliveries to Sellers. The following original documents, property
and items, in form and content reasonably satisfactory to Sellers, shall
have been delivered to Sellers:
a. Certificate of Good Standing of Wellstar by the
Secretary of State of Nevada not more than thirty days
prior to the Closing Date.
b. Assignment and Assumption of Contracts executed by
Wellstar.
c. Acceptance of the Xxxx of Sale executed by Wellstar.
d. Incumbency Certificate of the Officers of Wellstar
executed by such Officers and certified by the Secretary
of Wellstar.
e. Certified Resolution of the Board of Directors of
Wellstar authorizing the execution and delivery of this
Agreement and the following of any and all other actions
necessary and proper to consummate the transaction
contemplated by this Agreement, certified by the
Secretary of Wellstar.
13
f. Officers Certificate of Wellstar executed by the
President, Chief Financial Officer and Secretary of
Wellstar, representing and warranting that all
representations and warranties of Wellstar contained in
this Agreement remain true, accurate and not misleading
as of the Closing Date and that the Articles of
Incorporation, Wellstar Resolutions and Incumbency
Certificate delivered to Sellers remain true and
unmodified as of the date of Closing.
g. True and accurate copies of letters of instruction
executed by Wellstar directing its Transfer Agent to
immediately issue:
(i) Two million shares of Stock pursuant to the
terms of Section 2.2 (iv) of this Agreement, one
million thereof to be issued in the name of
Xxxxxx X. Xxxxxx, ss # ###-##-####, to be
delivered to 0000 Xxxxxxx Xxxx, Xxxxxxxx Xxxxxxx
00000 and one million thereof to be issued in
the name of Xxxxx Xxxxxx, ss: # 000-00-000, to
be delivered to 0000 Xxxxx Xxxxx Xxxx, Xxxxxxxxx
Xxxxx Xxxxxxx 00000, all said shares to be
delivered no later than fifteen (15) days from
the date of Closing;
(ii) Such number of shares of Stock as are required
to satisfy the Pledge requirements set forth in
Section 2.2 (iii) above, divided equally into
two certificates, both to be issued in the name
of Xxxxxx X. Xxxxxxx, Esq., Escrow Agent,
federal tax identification number 00-0000000,
along with Wellstar executing stock powers "in
blank" for each certificate, to be delivered to
0000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx 00000
within fifteen (15) days of Closing.
5.2.4 Payment to MHS. Contemporaneously with Closing, Wellstar shall pay
to MHS the cash required to be so paid under Section 2.2 above, such
payment to be in immediately available funds.
5.2.5 Note and Stock Pledge Agreement. Wellstar shall have executed and
delivered to MHS the Note and Stock Pledge Agreement.
5.2.6 Releases. Third parties to Contracts and other obligations that
are Assumed Liabilities and are identified on Exhibit F as Contracts and
obligations where Sellers will require such releases shall have released
Sellers.
ARTICLE 6
POST CLOSING COVENANTS
6.1 Sellers Post-Closing No-Competition Covenants. MHS, Xxxxxx and Cmorey,
jointly and severally covenant and agree that they shall not, directly or
indirectly, jointly or individually, or as members, owners, directors, advisors,
officers, agents, employees of or consultants to any entity, compete with
Wellstar in the marketing, sale or distribution of thermal imaging cameras,
thermal imaging technology, thermal imaging devices or any services related
14
thereto, regardless of the source or manufacturer of any such thermal imaging
cameras, technology or devices except as expressly allowed by the Exception set
forth below. MHS, Xxxxxx and Cmorey, jointly and severally acknowledge and agree
that this Covenant Not to Compete shall extend for a period of two (2) years
post-closing and shall be effective throughout the territory as defined in the
"Manufacturing and Distribution Agreement" assigned by Sellers to Wellstar
pursuant to the terms of this Agreement, i.e., throughout the United States,
Canada, Mexico, and the Middle East. Further, MHS, Xxxxxx and Cmorey, jointly
and severally acknowledge and agree that this Covenant Not to Compete is an
essential element of the consideration passing from Sellers to Wellstar without
which Wellstar would not enter into this Agreement and that breach by either
MHS, Xxxxxx and Cmorey, individually or jointly will cause Wellstar irreparable
harm, which cannot be compensated by money damages alone such as shall entitle
Wellstar to issuance of an immediate injunction, without the necessity of
posting bond the requirement of which MHS, Xxxxxx and Cmorey hereby expressly
waive, from any Court of competent jurisdiction, as well as to an award of
attorney fees and costs incurred in seeking such injunction, which remedies
shall be non-exclusive and in addition to any and all other remedies available
to Wellstar in law or in equity.
6.2 Exception. Notwithstanding the terms and conditions set forth in
Section 6.1 above, nothing therein shall be construed to prohibit Sellers from
continuing to engage in the business, either individually, jointly, and/or for a
corporation, partnership or entity, of providing training of thermal imaging
technology by the Sellers on a worldwide basis; and/or forming and operating up
to ten (10) privately owned thermal imaging laboratories, provided Wellstar
provides the thermal imaging equipment for the laboratories at a favorable price
of its cost plus ten percent (10%). Sellers agree individually and collectively
that in the event they decide to sell any thermal imaging equipment purchased
from Wellstar pursuant to the terms hereof, they shall offer Wellstar a right of
first refusal to purchase such equipment on the same terms and conditions as
accepted by Sellers from any bona fide third party. Sellers understand and agree
not to locate any such clinic within a radius of less than fifteen (15) miles
from any facility utilizing or having a right to utilize Wellstar's and/or
Trillennium's thermal imaging technology. The training services will include all
the information that are commonly referred to as "Boot Camp" programs and the
"AMIA" programs provided the Sellers do not offer, recommend, market,
merchandise, promote, or sell through these training programs or otherwise,
thermal imaging cameras, technology or related devices or services in
competition with Wellstar.
6.3 Consulting and Training. Xxxxxx and Cmorey agree to individually or
together provide Wellstar and its designees with such assistance as Wellstar may
request in marketing Wellstar's thermographic products and/or services, and
provide training to Wellstar employees, agents, users and/or customers on a fee
basis only. Sellers jointly agree to continue to provide "Boot Camp" training
and advanced "Physician/AMIA" training at quality levels equal to or exceeding
those currently provided during a period of one (1) year following the closing
date. The services will be on an "as needed" basis, with Wellstar providing MHS,
Xxxxxx and Cmorey with a monthly schedule of training dates and locations
furnished at least fifteen (15) days before the beginning of each month, with no
more than two (2) consecutive days for training each week during the month. The
training will be upon a fee basis at currently prevailing scheduled rates to
Wellstar and its customers, together with the cost of travel, lodging and food.
MHS, Xxxxxx and Cmorey shall submit its monthly fees and costs of travel,
lodging and food to Wellstar, which shall be due and payable within ten (10)
business days.
15
6.4 Access to Records. Upon closing, Wellstar shall have the right to have
access to the day-to-day operations of the Sellers' business, and shall have
full and complete access to:
a. any and all records relating to the Sellers' Business,
including without limitation all Leases, contracts, reports,
data processing files, Intellectual Property, research and
records, Tax Returns, books, records and/or accountant
worksheets;
b. any and all reports or studies relating to the Sellers'
Business, the thermal imaging cameras, their use,
maintenance or repair or compliance with existing laws and
regulations.
ARTICLE 7
INDEMNIFICATION
7.1 Indemnification by Sellers to Wellstar. Sellers hereby agree to
protect, defend, indemnify and hold harmless Wellstar and its subsidiaries,
affiliates, transferees, successors and assigns, along with the directors,
officers, shareholders, partners, attorneys, agents and employees thereof
(collectively the "Wellstar Indemnified Parties"), from and against any and all
losses, damages, charges, claims, suits, actions, proceedings, demands,
assessments, judgments, costs, expenses, liabilities, indebtedness or
obligations, including without limitation reasonable attorneys' fees and court
costs and the right of set-off against any of Sellers' assets or property owed,
held or controlled by Wellstar (collectively "Claims") incurred by a Wellstar
Indemnified Party as a result of:
a. A breach by Sellers or any of them individually of or with
respect to any of its material representations, warranties
or covenants provided in this Agreement, including but not
limited to any misrepresentations or breach of warranty,
covenant or agreement by Sellers made or contained in this
Agreement or in any certificate or other instrument,
contract or agreement furnished or to be furnished to
Wellstar under this Agreement;
b. Any and all Claims incident to or arising from the Sellers'
Assets or the Sellers' business relative to the period of
time prior to and including the Closing Date.
7.1.1 Notice of Claim. In the event of the assertion of any Claim by a
third party against the Wellstar Indemnified Party the Wellstar Indemnified
Party shall give Sellers prompt notice in writing of any such Claim against the
Wellstar Indemnified Party, and Sellers shall, at their own cost and expense,
through counsel designated by it, defend any such Claim. The Wellstar
Indemnified Party shall have the right (but not the duty) to retain its own
counsel (at its own expense) and participate in the defense of any such Claim or
the settlement of any such Claim. Sellers shall have the right to defend in
appropriate proceedings, which proceedings shall be promptly settled or
prosecuted to a final conclusion; provided that the Sellers shall reimburse,
indemnify, and forever hold Wellstar harmless with respect to any and all
damages arising out of any settlement or final conclusion.
7.2 Indemnification by Wellstar to Sellers. Wellstar hereby agree to
protect, defend, indemnify and hold harmless MHS and its parents, subsidiaries,
affiliates, transferees, successors and assigns, along with the directors,
officers, shareholders, partners, attorneys, agents and employees thereof
(collectively the "MHS Indemnified Parties"), from and against any and all
losses, damages, charges, claims, suits, actions, proceedings, demands,
assessments, judgments, costs, expenses, liabilities, indebtedness or
obligations, including without limitation reasonable attorneys' fees and court
costs (collectively "Claims") incurred by MHS or a MHS Indemnified Party as a
result of:
a. A breach by Wellstar of or with respect to any of its
material representations, warranties or covenants provided
in this Agreement, including but not limited to any
misrepresentations or breach of warranty, covenant or
agreement by Wellstar made or contained in this Agreement or
in any certificate or other instrument furnished or to be
furnished to Sellers under this Agreement.Any and all Claims
incident to or arising, directly or indirectly, from the
Sellers assets or Sellers business operations, including use
of the name of Micro Health Systems, for the period after
the Closing Date.
7.2.1 Notice of Claim. The MHS Indemnified Party shall give Wellstar prompt
notice in writing of any such Claim against the MHS Indemnified Party, and
Wellstar shall, at its own cost and expense, through counsel designated by them,
jointly and severally defend any such Claim. The MHS Indemnified Party shall
have the right (but not the duty) to retain its own counsel (at its own expense)
16
and participate in the defense of any such Claim or the settlement of any such
Claim. Wellstar shall have the right to defend in appropriate proceedings, which
proceedings shall be promptly settled or prosecuted to a final conclusion;
provided that the Wellstar shall reimburse, indemnify, and forever hold Seller
harmless with respect to any and all damages arising out of any settlement or
final conclusion.
ARTICLE 8
TERMINATION
8.1 Conditions to Wellstar's Closing Not Satisfied. This Agreement may be
terminated by Wellstar in the event Sellers fail to perform any of its covenants
or obligations under this Agreement or in the event the conditions to Closing by
Wellstar set forth in Section 5.1 have not been satisfied on or prior to the
Closing Date by Sellers (a "Failure of Condition"). In the event there has been
a Failure of Condition by Sellers, Wellstar shall give Sellers written notice of
the specific nature of such failure and of Wellstar's exercise of its right to
terminate.
8.2 Conditions to Sellers' Closing Not Satisfied. This Agreement may be
terminated by Sellers in the event Wellstar fails to perform any material
covenant or obligation of Wellstar under this Agreement or in the event the
conditions to Closing by Sellers set forth in Section 5.2 have not been
satisfied on or prior to the Closing Date by Wellstar (a "Failure of
Condition"). In the event there has been a Failure of Condition by Wellstar,
Sellers shall give Wellstar written notice of the specific nature of such
failure and of Wellstar's exercise of its right to terminate.
8.3 Effect of Termination. In the event this Agreement is terminated in
accordance with Sections 8.1, 8.2, 8.3, no party shall have any further
obligation to perform its obligations under this Agreement (other than the
obligations under this section). No termination of this Agreement shall affect
any rights and remedies afforded to any party at law or in equity with respect
to a breach of this Agreement by any other party hereto, and all such rights and
remedies shall be cumulative and not mutually exclusive. In the event any party
obtains a judgment against the other in any action or proceeding arising out of
this Agreement, a reasonable attorney's fee as fixed by the court shall be
included in such judgment.
17
ARTICLE 9
MISCELLANEOUS
9.1 Survival of Representations and Warranties. All warranties,
representations and agreements, including the representations set forth in the
Recitals hereto, which are hereby specifically incorporated by reference as
material representations of this Agreement as if fully rewritten herein,
contained herein or arising out of the sale or transfer of the Sellers' Assets
shall survive Closing and transfer of Wellstar's stock.
9.2 Confidentiality; Publicity. The parties hereto have entered into that
certain Confidentiality Agreement incorporated in the terms and condition of the
Letter of Intent between the parties dated September 21, 2005 (the
"Confidentiality Agreement"). The provisions of the Confidentiality Agreement
shall remain in full force and effect and shall survive the execution of this
Agreement and shall remain in full force and effect up to and through the
completion of Closing, at which time the Confidentiality Agreement shall cease
to be of any further force or effect. Except as may be required in order to
obtain necessary Consents or Permits, neither party shall disclose the terms and
conditions of this Agreement to any other person. The foregoing notwithstanding,
either party may disclose the terms and conditions of this Agreement to their
attorneys, accountants and professional consultants, provided they agree to
maintain such confidentiality. In the event any governmental agency shall
request or require production of a copy of this Agreement in connection with any
audit, review or investigation, the party from whom the copy is sought may
provide a copy of this Agreement to such governmental entity. In the event any
party determines that a public announcement of the negotiation, execution or the
closing of this Agreement is required, necessary or appropriate in connection
with applicable securities laws prior to Closing, it shall so notify the other
party, in writing at least ten (10) business days prior to the proposed public
announcement with a copy of the press release which must be mutually acceptable
to all parties that will be drafted and disseminated.
9.3 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and the successors or assigns thereof. The
foregoing notwithstanding, no party hereto shall have the right, power or
authority to assign its rights or delegate its duty hereunder without the
express written consent of all of the other parties to this Agreement.
9.4 Written Amendment; Waiver/Consent. This Agreement may only be amended
or modified in writing executed by each of the parties hereto. No waiver or
consent, express or implied, by any party to or of any breach or default by any
party in the performance by such other party of its obligations hereunder, shall
be deemed or construed to be a consent or waiver to or of any other subsequent
breach or default in the performance by such other party of the same or any
other obligations of such other party hereunder. Failure on the part of a party
to exercise its rights or to complain of any act of the other party or to
declare the other party in default, irrespective of how long such failure
continues, shall constitute a waiver by such party of its rights hereunder until
the applicable statute of limitation, if any, has run.
9.5 Entire Agreement. Except for the Confidentiality Agreement, this
Agreement, and the documents executed in connection with this Agreement, contain
the entire agreement between the parties respecting the matters herein set forth
and supersede all prior agreements and understandings of the parties, either
oral or written, respecting such matters.
9.6 Governing Law; Jurisdiction; Venue. The laws of the State of Florida
shall govern the validity, enforcement and interpretation of the Sellers'
representations, covenants, warranties and obligations hereunder, provided
however that Sellers expressly consent to jurisdiction for the enforcement
thereof in the Courts located in the State of Ohio; and the laws of the State of
18
Ohio shall, except to the extent required by the laws of the State of Nevada,
govern the validity, enforcement and interpretation of the Wellstar's
representations, covenants, warranties and obligations hereunder, provided
however that Wellstar expressly consents to jurisdiction for the enforcement
thereof in the Courts located in the State of Florida.
9.7 Expenses. Each party hereto shall bear all the expenses incurred by
them in connection with this Agreement.
9.8 Brokers. The parties hereto represent and warrant to each other that
neither has dealt with any agent, broker, investment banker or finder in
connection with the transaction contemplated by this Agreement. Any party to
this Agreement through whom a claim to any brokers, finders or other fee is
made, does hereby indemnify and agree to defend and hold harmless, the other
parties to this Agreement from any loss, Liability, damage, cost or expense,
including without limitation, reasonable attorney's fees, court costs and other
legal expenses paid or incurred by the other party, that is in any way related
to such a claim.
9.9 No Third-Party Beneficiaries. The terms and conditions of this
Agreement are solely for the benefit of the parties hereto and shall not in any
manner be construed or interpreted to convey any benefits, contractual or
otherwise, on any persons not party to this Agreement.
9.10 Notices. All notices, demands, requests and other communications
required hereunder shall be in writing and sent by ordinary mail, certified
mail-return receipt requested, overnight delivery service (such as Federal
Express or United Postal Service) or delivered in person. Any communication
hereunder shall be deemed to be received on the earlier of (i) three (3) days
following posting in the mail, with proper postage attached, addressed to the
addressee at its address set forth below (or such other address as such party
may have specified by notice delivered in accordance with this section), or (ii)
actual receipt by the addressee. All notices shall be addressed as follows:
If to Wellstar:
Wellstar International, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxx, Xxxx
Attention: Xxxx X. Xxxxxxx
With a copy to:
Xxxxxx X. Xxxxx, Esq.
0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxx 00000
If to Sellers:
Micro Health Systems, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
With a copy to:
Xxxxxx X. Xxxxxxx, P.A.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
19
9.11 Headings: Construction. The headings which have been used through-out
this Agreement have been inserted for convenience of reference only and do not
constitute matter to be construed in interpreting this Agreement. Words of any
gender used in this Agreement shall be held to include the other gender and
words of the singular number shall be held to include the plural, and vice
versa, unless the context requires otherwise. The words "herein," "hereof;"
"hereunder," and compounds of the word "here" when used in this Agreement shall
refer to the entire Agreement and not to any particular provision or section. If
the last day of any time period stated herein shall fall on a Saturday, Sunday
or legal holiday, then the duration of such time period shall be extended so
that it shall end on the next succeeding day which is not a Saturday, Sunday or
legal holiday. Any exhibit or schedule referenced herein shall be attached
hereto and incorporated herein by this reference. In the event of conflict
between the main body of this Agreement and the terms and conditions of any
exhibits, the terms and conditions of the main body of this Agreement shall
control.
9.12 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be fully effective as an original and all of which together
shall constitute one and the same instrument.
9.13 Savings Clause. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future laws, such
provision shall be fully severable; this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of this Agreement and the remaining provisions of this
Agreement shall remain in full force and effect, un-effected by the illegal,
invalid or unenforceable provision, or by its severance from this Agreement. In
lieu of such illegal, invalid or unenforceable provision, there shall be added
automatically as a part of this Agreement a provision as similar in terms to
such illegal, invalid or unenforceable provision as may be possible and legal,
valid and enforceable.
9.14 Time of Essence. Time and exact performance are of the essence of this
Agreement. The duly authorized representatives of the entities listed below
hereby execute this Agreement with the intent of legal binding such entities as
of the date above written.
9.15 Further Assurances. Sellers and Wellstar shall each execute and
deliver or cause to be executed and delivered such further instruments of
transfer, assignment and conveyance and take such action as is reasonably
required to more effectively carry out the transfer of the Sellers' Assets and
the consummation of the matters contemplated by this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
Micro Health Systems, Inc. Wellstar International, Inc.
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxx X. Antonio
------------------------------ -------------------------
Xxxxxx X. Xxxxxx, President Xxxx X. Antonio, President
/s/ Xxxxxx X. Xxxxxx
--------------------------------
Xxxxxx X. Xxxxxx, Individually
(Only as to individual and Sellers' representations, warranties,
indemnification, consulting agreement and covenant not to compete)
20
/s/ Xxxxx Xxxxxx
---------------------------
Xxxxx Xxxxxx, Individually
(Only as to individual and Sellers' representations, warranties,
indemnification, consulting agreement and covenant not to compete) -
21
LIST OF EXHIBITS
---------------- ---------------------------------------------------------------
Exhibit A - List of Sellers' Assets
---------
Part 1 - List of Contracts
Part 2 - List of Intellectual Property
Exhibit B - List of Excluded Assets
---------
Exhibit C - Form of Xxxx of Sale
---------
Exhibit D - Form of Promissory Note
---------
Exhibit E - Form of Stock Pledge
Exhibit F - Assumed Liabilities and Required Releases
---------
Exhibit G - List of Required Consents
---------
22
DISCLOSURE SCHEDULE TABLE OF CONTENTS
Section 3.1.13 - List of Material Contracts
Section 3.1.18 - List of Permits
EXHIBIT "A"
LIST OF SELLER'S ASSETS
-----------------------
Part 1- List of Contracts
-------------------------
1. Micron Manufacturing and Distribution Agreement dated June 7, 2001
Part 2- List of Intellectual Property
-------------------------------------
1. MHS Image Med 5.0 Disk in Section 9 of Manual.
2. MHS Marketing Information Disk in Section 11 of Manual.
3. Training Manual Disk in Section of Manual.
4. FDA 510K Approval Letters in Sections 5,6,and 7 of Manual
EXHIBIT "B"
LIST OF EXCLUDED ASSETS
1. Cash and Cash Equivalents.
2. Computer Furniture and a thermal imaging and other camera and other equipment
and fixtures.
Xxxx of Sale
For Value Received, the undersigned Sellers do hereby sell, transfer and convey
to Wellstar International, Inc. the assets more fully described below, free and
clear of all liens and encumbrances pursuant to the terms of the Definitive
Agreement between the parties dated the 21st day of December 2005.
The assets covered by this Xxxx of Sale are defined as follows:
Any and all assets owned by Micro Health Systems, inc. ("MHS"), Xxxxxx X. Xxxxxx
or Xxxxx Xxxxxx which are used in the MHS business, excluding only the assets
detailed as Excluded Assets, along with cash and liquid assets, and specifically
including MHS's Intellectual Property, customer lists and records, all thermal
images obtained by Sellers existing and potential customer databases, research
documents and studies, vendor lists, marketing materials, templates and video
clips, web site, all domain names, business name phone and fax numbers, all FDA
registrations and communication including but not limited to applications and
responses thereto, provided the foregoing shall not in any event include
Excluded Assets.
"Intellectual Property" shall include any and all licenses, trademarks, patents,
patent rights, engineering and shop drawings, architectural drawings, plans and
specifications, sales literature, supplies, computer software, copyrights,
computer software license rights and any and all trade secrets, proprietary
products and processes or similar property used in or necessary or desirable in
connection with the MHS business.
"Excluded Assets" are defined as follows:
1. Cash and Cash Equivalents.
2. Computer, furniture and a thermal imaging camera and other equipment and
fixtures.
IN WITNESS WHEREOF, the parties hereto have duly executed the Agreement as of
the date first above written.
Micro Health Systems, Inc.
By: /s/ Xxxxxx X. Xxxxxx /s/ Xxxxx Xxxxxx
-------------------- ----------------
Xxxxxx X. Xxxxxx, President Xxxxx Xxxxxx
EXHIBIT "D"
PROMISSORY NOTE
Two Hundred Thousand Dollars Fort Lauderdale Florida
[$200,000.00] January 31, 2006
FOR VALUE RECEIVED, the undersigned, WELLSTAR INTERNATIONAL, INC., a Nevada
Corporation, promises to pay to the Order of MICRO HEALTH SYSTEMS, INC., a
Florida corporation, the principal sum of Two Hundred Thousand Dollars
($200,000.00) with interest accruing at the rate of eight percent (8%) per annum
on the unpaid balance of the principal.
The first payment shall be due and payable in lawful money of the United States
in the sum of One Hundred Thousand Dollars ($100,000.00) together accrued
interest on or before the one hundred and eighth (180th) day from the date
hereof; and the balance of the principal and interest of One Hundred Thousand
Dollars ($100,000.00) together with accrued interest is due and payable on or
before the three hundred and sixty fifth (365) day from the date hereof, time
being of the essence. This note may be prepaid in whole or in part, without
penalty or premium.
IN CASE DEFAULT OCCURS, the unpaid balance of the Note shall be immediately
due and payable without presentment, demand, protest, notice of acceleration or
for non-payment and all other requirements necessary to hold the Makers and
Endorsers liable. Default shall occur upon nonpayment of a payment. Upon
default, the interest shall be at the highest rate allowable by law on the
unpaid balance due from the date of default until the default is cured. In the
event the Holder is required to enforce this Note, whether suit is brought or
not, the Holder is entitled to all costs and expenses incurred including
reasonable attorney's fees.
This Note shall be enforced and construed in accordance with the laws
of the State of Florida with venue in Broward County, Florida. Waiver of breach
by the Holder of any provision of this Note shall not constitute a waiver of any
subsequent breach.
IN WITNESS WHEREOF, the Maker has signed this Promissory Note the day and
year first above written.
WELLSTAR INTERNATIONAL, INC.
By: /s/ John Antonio
------------------
John Antonio, President
[SEAL]
All moneys are payable at: 0000 Xxxxxxx Xxxx Xxxxxxxx, XX 00000 or such other
place as the Holder may advise.
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT entered into this 21st day of December, 2005,
between WELLSTAR INTERNATIONAL, INC., a Nevada corporation, referred to as
"Company", MICRO HEALTH SYSTEMS, INC., a Florida corporation, XXXXXX X. XXXXXX
and XXXXX XXXXXX, referred to collectively as "Sellers", WELLSTAR INTERNATIONAL,
INC., a Nevada corporation, referred to as "Buyer" and XXXXXX X. XXXXXXX,
ESQUIRE, referred to as "Escrow Agent".
W I T N E S S E T H:
WHEREAS, the Buyer has a contractual obligation pursuant to the Definitive
Agreement to acquire substantially all the assets of the Sellers in
consideration for Six Hundred Thousand Dollar ($600,000.00) and Two Million
shares of stock of the Company; and
WHEREAS, the Buyer has executed and delivered a Note that evidences the
deferred portion of the purchase price owed to Sellers in the amount of Two
Hundred Thousand Dollars ($200,000.00); and
WHEREAS, the parties desire to provide that additional shares of stock of
the Company be held in escrow by the Escrow Agent to provide for security for
the faithful payment of the principal and interest under the Note; and
WHEREAS, the parties acknowledge this Stock Pledge Agreement was entered
into as an integral part of that certain Definitive Agreement; and
NOW, THEREFORE, for and in consideration of the mutual covenants and
conditions to be kept herein, and other good and valuable consideration, it is
agreed as follows:
1. Delivery of Shares of Stock. Subject to the terms and conditions
contained herein, the Company shall deliver a certain number of shares of the
Company to be held in escrow to secure the faithful payment and compliance with
the terms of the Note accompanied with executed stock powers "in blank" for each
stock certificate held in escrow pursuant to the term of this agreement. The
stock powers and stock certificates shall be delivered to the Escrow Agent at
closing to be held pursuant to this agreement.
2. Payment of Promissory Note. The payment of the Note, including all
principal and interest payments, shall be payable to the Sellers pursuant to the
terms of the Note. Upon full payment of the principal and interest of the Note,
a copy of which is attached hereto as Exhibit "A", the Sellers shall deliver the
original Note to the Escrow Agent and the Escrow Agent shall forward the
original Note marked "canceled" together with the stock certificates and stock
powers to the Buyer. Upon return of the Note, stock certificates and stock
powers, the Escrow Agent shall have no further responsibility hereunder.
3. Notice of Default. In the event there is a default in the payment of any
of the principal and interest under the Note, the Sellers shall instruct the
Escrow Agent to notify the Buyer in writing that it is being held in default
unless compliance is made within ten (10) days following receipt of the notice
from the Escrow Agent.
4. Effect of Default. In the event of a default in the payment of the
principal or interest under the Note, the Escrow Agent after providing ten (10)
days written notice of default to the Buyer, shall surrender the shares of stock
to the Sellers to be sold at a public or private sale. No action on the part of
the Company or the Buyer may take place that will interfere, render or delay the
Escrow Agent's obligation to deliver the stock to the Seller.
5. Rights During Continuance of Escrow. The Buyer shall have the power and
authority to exercise its voting rights with respect to the shares of stock held
in escrow and the Sellers shall have no authority to exercise voting rights
unless and until a default occurs.
6. Duties of Escrow Agent. The Escrow Agent shall receive the stock
certificates and stock powers and shall place such shares and the stock powers
in a place for safekeeping and shall deal with such shares only as set forth in
this Pledge Agreement. The Escrow Agent shall provide the notice requirements as
set forth in this Agreement. The release of the security to the Sellers or the
Buyer shall depend upon the payment of the Note and register stock or pay value.
The Escrow Agent shall not be requested or demanded by the Company, the Buyer or
the Sellers to act in any respect other than as set forth in the Pledge
Agreement. The Sellers, the Company and the Buyer expressly indemnify and
forever hold harmless the Escrow Agent from all liabilities, demands, causes of
action and costs, including reasonable attorneys' fees that may result with
respect to the conduct of the Escrow Agent pursuant to the terms of this Pledge
Agreement.
7. Expenses. Expenses incurred by the performance of this Pledge Agreement
in providing notices to the parties shall be paid equally by the Sellers and
Buyer. It is acknowledged that the Escrow Agent shall not be compensated for
services rendered as the Escrow Agent. However the Escrow Agent may be
reimbursed for verified expenses incurred in the exercise of his duties.
8. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by certified or
registered mail, return receipt requested, to the following address:
2
If to Wellstar:
Wellstar International, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxx, Xxxx
Attention: Xxxx X. Xxxxxxx
With a copy to:
Xxxxxx X. Xxxxx, Esq.
0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxx 00000
If to Sellers:
Micro Health Systems, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
With a copy to:
Xxxxxx X. Xxxxxxx, P.A.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
If to Escrow Agent:
Xxxxxx X. Xxxxxxx, Esquire
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx 00000
Telephone: 000-000-0000
9. Benefit. The rights created by this Pledge Agreement inure to the
benefit of and the obligations created hereby shall be binding upon the heirs,
assigns, successors and personal representatives of the parties.
10. Venue. This Pledge Agreement shall be enforced and construed in
accordance with the laws of the State of Florida and venue shall be exclusively
within Broward County, Florida.
IN WITNESS WHEREOF, the parties have executed this Pledge Agreement the day
and year first above written.
3
"Company"
Wellstar International, Inc.
Attest: a Nevada corporation
______________________________ By: /s/ Xxxx X. Xxxxxxx
------------------------
Secretary Xxxx X. Antonio, President
(Seal)
"Sellers"
Micro Health Systems, Inc.
Attest: a Florida Corporation
______________________________ By: /s/ Xxxxxx X. Xxxxxx
----------------------------
Secretary Xxxxxx X. Xxxxxx, President
(Seal)
______________________________ /s/ Xxxxxx X. Xxxxxx
----------------------------
Witness Signature Xxxxxx X. Xxxxxx
------------------------------
Printed Witness Name
------------------------------
Witness Signature
------------------------------
Printed Witness Name
______________________________ /s/ Xxxxx Xxxxxx
----------------------------
Witness Signature Xxxxx Xxxxxx
------------------------------
Printed Witness Name
4
------------------------------
Witness Signature
------------------------------
Printed Witness Name
"Buyer"
Wellstar International, Inc.
Attest: a Nevada corporation
______________________________ By: /s/ Xxxx X. Xxxxxxx
----------------------------
Secretary Xxxx X. Antonio, President
(Seal)
ESCROW AGENT
The Escrow Agent hereby agrees to comply with the terms and conditions
contained in this Stock Pledge Agreement.
/s/ Xxxxxx X. Xxxxxxx
--------------------------
Xxxxxx X. Xxxxxxx, Esquire
Escrow Agent
EXHIBIT "F"
ASSUMED LIABILITIES AND REQUIRED RELEASES
No outstanding liabilities at closing.
ASSIGNMENT
THIS ASSIGNMENT entered into this 19th day of December 2005 by and between
MICRO HEALTH SYSTEMS, INC., a Florida Corporation, (the "Assignor), WELLSTAR
INTERNATIONAL, INC, a Nevada Corporation, (the "Assignee") and MIKRON INSTRUMENT
COMPANY, INC, a New Jersey Corporation, (the "Manufacturer').
WITNESSETH:
WHEREAS, this Assignment of rights to the Manufacturing and Distribution
Agreement is an integral part of the sale of substantially all the assets of the
Assignor entered into simultaneous herewith; and
NOW, THEREFORE, for and in consideration for the sum of ten ($10.00)
Dollars and other good and valuable consideration, the parties agree as follows:
ASSIGNMENT Assignor hereby assigns, sells, transfers and forever releases
to the Assignee all its rights, obligations, interests and right to renewal, to
that certain MANUFACTURING AND DISTRIBUTION AGREEMENT (the "contract") dated
June 7, 2001 between Micro Health Systems, Inc as Distributor, and Mikron
Instrument Company, Inc., as Manufacturer, a ropy of contract is attached as
Exhibit "A'.
REPRESENTATIONS.
Assignor represents to the Assignee that:
1) The rights to the contract are assignable and the obligations delegable,
and that this assignment and delegation is a valid exercise of the rights of the
Assignor under the contract with the prior written consent of Mikron Instrument
Company, Inc.
2) The contract is valid, genuine and legally enforceable obligations of
the parties thereto; and the contract is not in default and is in full force and
affect
3) It has no knowledge of any pending litigation or threatened litigation
with respect to the rights or obligations under the contract.
4) The copy of the contract attached as Exhibit "A" is a true, correct and
accurate copy of the original contract which has not been altered, modified,
revised ar amended.
5) No Assignment of the contract has been made to any other party.
JAN-26-2006 THU 04:04 PM FAX NO.
BENEFIT. The Assignment shall inure to the benefit of the successors and
assigns of the Assignee.
IN WITNESS WHEREOF, the Assignor and Assignee have executed this Assignment
the day and year first above written.
Attest to: MICRO HEALTh SYSTEMS, INC.
XXXXX XXXXXX By: /s/ Xxxxxx Xxxxxx
------------------ -------------------
Secretary Xxxxxx Xxxxxx President
(Corporate seal)
STATEOF FLORIDA )
)ss:
COUNTY OF BROWARD )
I HEREBY CERTIFY that on this day, before me, an officer duly authorized in
the State and County aforesaid to take acknowledgments, personally appeared
XXXXXX XXXXXX, as President and XXXXX XXXXXX as Secretary of MICRO HEALTH
SYSTEMS. INC., to me known to be the persons described in and who executed the
foregoing instrument and they acknowledged before me that they executed the
Same.
WITNESS my hand and in the County and State last aforesaid this 19th day of
November 2005...........................
Notary Public
State of Florida at Large
My Commission Expires:
CONSENT OF MAUFACTURER
IN CONSIDERATION OF THE FOREGOING, the Manufacturer hereby Consents to the
assignment of the Manufacturing and Distribution Agreement dated June 4, 2001
with Micro Health Systems, Inc., to the Assignee, but upon the expressed
condition that Assignee assumes and covenants to perform all the duties and
obligations of the Distributor under the contract. The
Manufacturer hereby releases the Assignor from any further obligation to perform
under the contract and from any further liability thereto.
DATED this 30th day of NOVEMBER 2005
MICRON INSTRUMENT COMPANY, INC.
A New Jersey Corporation
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Xxxxxx X. Xxxxxx
Assumed and accepted by Wellstar International, Inc. this 21st day of December
2005.
Wellstar International, Inc
By: /s/ Xxxx X. Antonio
---------------------
Xxxx X. Xxxxxxx
President
Manufacturing And Distribution Agreement
Between
Micro Health Systems
And
Mikron Instruments Company Inc.
June 11th. 2001
Manufacturing And Distribution Agreement
This Manufacturing And Distribution Agreement (this "Agreement") is made and
entered into as of this 4th day of June 2001 by and between Micro Health
Systems, Inc. a Florida Corporation ("Distributor") and Mikron Instrument
Company, Inc. ("Manufacturer").
WHEREAS, Mikron manufacturers and markets certain products (as hereinafter
defined) and desires to increase the sales of such products in the Medical and
Veterinary markets.
WHEREAS, MHS possesses the necessary expertise, financial resources and
marketing organization to promote and sell such products and desires to acquire
from Mikron the right to resell, market, and distribute the Products separately
or as part of a package with other components in the Territory (as hereinafter
defined);
WHEREAS, the parties hereto believe that the business relationship regarding the
products will be of mutual advantage;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties agree as follows:
ARTICLE 1.
Definitions
1.1 For purposes of this agreement the following words, terms and phrases, when
used herein with an initial capital letter, shall have the meanings herein
assigned to them unless the context otherwise requires:
"Contract Term" shall mean the Effective Date June 4, 200]. This agreement will
be effective for ten years Date June 4,2011.
"Effective Date" shall mean the date on which this Agreement shall have entered
into force as first above written.
"Field of Use" shall mean usage or application within the medical and veterinary
field.
MHS 5000 shall mean the camera system consisting of the MHS custom software and
5104I (white) with handles to MHS specifications.
"Product" or "Products" shall mean the MHS 5000 thermal imaging unit as designed
and manufactured by Mikron.
"Product Software" shall mean an computer software instruction manuals and
software (MHS MED 5.0), regardless of the medium or form on or in which they are
encoded, that are supplied by Manufacturer to MHS.
"Purchase Price" shall mean the amount which MHS will pay to Mikron for the
products as provided in Section 4.2 hereof
"System" shall mean any system developed by MHS in which the Product or Product
Software is incorporated in the field of use.
"System Component" shall mean any part of a System provided by MHS
"Territory" shall mean the USA, Canada, Mexico, Middle East
1.2 Accounting Terms. All accounting terms employed in this agreement shall,
unless the context otherwise requires, have the meanings assigned to them under
generally accepted accounting principles recognized in the United States of
America.
Article 2
Appointment
2.1 Scope. Subject to Section 2.3 Mikron hereby appoints MHS and MHS hereby
accepts appointment as Mikron's exclusive distributor in the Field of use during
the Contract Term, with the right to sell or otherwise distribute products in
the territory, as part of a system, subject to all the terms and conditions of
this Agreement.
Notwithstanding any other provision of this Agreement, Mikron shall have no
responsibility for and shall make no representations or warranties of any kind
with respect to the system or any part thereof other than the products.
2.2 Subdistributors. MHS may appoint any sub distributors or agents to promote
and/or distribute the Systems within the Territory. MHS shall at all times
remain responsible for the performance of its sub distributors and/or agents,
and MHS hereby agrees to indemnify and hold harmless Mikron from all damages,
losses, liabilities or expenses arising in any manner from any act or omission
on the part of its sub distributors or agents.
2.3 Exclusivity. MHS distribution rights shall be exclusive as the Field of Use.
Mikron shall not market or sell any of its present or future Products to
customers in the Field of Use in the Territory. Mikron shall not appoint another
distributor for any of its present or future Products in the Field of Use in the
Territory except pursuant to sales that have not yet been performed or
distributor obligations predating this agreement as disclosed. During or after
the Term of this agreement, Mikron shall not manufacture or sell the MHS 5000,
or any related products designed or developed specifically for MHS, to any third
party.
ARTICLE 3
General Obligations of Distributor
3.1 Best Efforts. MHS agrees to use its best efforts to sell the Systems in a
manner that preserves the existing goodwill and promotes the good image of the
products and the Manufacturer within the Territory.
3.2 Marketing. Without limiting the generality of section 3.1, MHS shall have
the following specific obligations with respect to the marketing and
distribution of the system:
a. To use its best efforts to further the promotion, marketing, sale and or
other distribution of Systems in the Territory;
b. To respond promptly to all inquiries from customers, including complaints and
requests for additional features, or performance
enhancements, and bug fixes and to advise Mikron promptly of all such inquiries
to the extent they relate to the product
c. To investigate diligently all leads with respect to potential customers
referred to it by any source, including Manufacturer;
d. To maintain, or make provisions for, an adequate staff or trained and
qualified sales personnel dedicated on a full-time basis to the sale of the
Systems:
e. MHS shall at all times maintain an accurate and up to date record of the
installation of each product, such record to include the installation date,
customer name and address, and serial number of the unit installed:
f. To carry out the marketing, sales, technical sales support and technical
product support functions in respect of the Systems sold to customers in the
Territory by MHS.
g. To obtain all necessary licenses, authorizations and approvals, including
without limitation from the FDA or similar authorities throughout the Territory,
for the sale and distribution of the Systems within the Field of Use.
3.3 Cooperative Customer/Software Support. Manufacturer and Distributor shall
use commercially reasonable efforts to reach an agreement with respect to
providing maintenance and other customer support service to customers. There
shall be a separate service and support agreement document that describes
service, recalibration and support matters pursuant to software issues.
3.4 Governmental Requirements. MHS shall be responsible for compliance with all
approvals and requirements established by governmental authorities within the
Territory.
3.5 Expenses. Except as otherwise expressly provided herein, each party assumes
full responsibility for all costs and expenses which it incurs in carrying out
its obligations under this Agreement, including but not limited to all rentals,
salaries, commissions, advertising,
demonstration, travel and accommodation expenses without the right to
reimbursement for any portion thereof from the other party:
ARTICLE 4
Sale of Products
4.1 Notice Of Sales. MHS shall notify Manufacturer in writing of all sales or
licenses of Products which notice shall be sent by mail or facsimile and shall
set forth (1) quantities or products (2) requested delivery dates and shipping
information; (3) information with respect to any System Components.
4.2 Terms of Purchase. MHS shall make all payments in immediately available
funds on account to Mikron within (30) days of shipment (net 30 days).
Manufacturer reserves the right to charge interest of 15% per month on past due
amounts. Mikron reserves the right, in its sole discretion, to delay shipping
additional Product or Systems in the event the past due amount (exclusive of any
cure period) exceeds $50,000 until such times as all past due amounts and any
interest thereon are paid in full. The price to the Distributor of the MHS 5000
inclusive of shipping to the Parkland Florida address, shall not exceed USD. As
security for its obligations hereunder, MHS shall grant Mikron a security
interest in all receivables payable to MHS or any affiliate thereof to the
Products or the Systems.
4.3 Product Changes. Manufacturer shall not make changes that materially affect
or alter the product specifications for the MHS 5000 without the written
concurrence of MHS.
4.4 Resale Prices. MHS may resell Products as a component of the System, at such
prices, as MHS, in its sole discretion, shall determine.
4.5 Packaging. In the event MHS requests Mikron to ship a system, MHS shall
supply Mikron with all system components, provided however, that Mikron shall
not be required to integrate the MHS SOOO and the System Components into a
system.
4.6 Intellectual Property. MHS acknowledges Mikron's claim that it owns all
right, title and interest in and to the underlying proprietary technology of the
MHS 5000 and that MHS shall not acquire any right, title, or interest in and to
the underlying proprietary technology, except as expressly set forth in this
Agreement. Mikron acknowledges
MHS claims that it owns right, title and interest in and to the particular
configuration and calibration of the MHS 5000 of the operating software. Mikron
shall not acquire any right, title, or interest in and to the System Components.
Except as provided herein for the creation of the Systems, MHS shall not modify,
adapt, translate, prepare derivative works from, reverse engineer, disassemble,
decompile or otherwise attempt to derive source code from any Products and
Product Software. Mikron shall not modify, adapt, translate, prepare derivative
works from, reverse engineer, dissemble, decompile or otherwise attempt to
derive source code from any system component. MHS will not remove, obscure or
alter Manufacturer's copyright notices, trademarks or other proprietary rights
notices affixed to or contained within any products and product software. Mikron
will not remove, obscure or alter MHS copyright notices, trademarks or other
proprietary rights notices affixed to or contained within any System Components.
Article 5
Purchase Requirement
5.1 Purchase Commitment. MHS shall use its best efforts to sell 30 systems in
the first year. With potential blanket orders for the future.
5.2 Guarantee of Supply. Mikron shall use commercially reasonable efforts to
manufacture the Med 5000 in quantities sufficient to meet the bona fide
reasonable demands of MHS.
5.3 Essence of Agreement. MHS understands and agrees that agreement upon and
achievement of selling equipment is of the essence of this Agreement and that
failure to meet such condition shall constitute grounds for termination of the
Agreement by Manufacturer under section 14.1 (b) hereof. Mikron understands and
agrees that it will uphold and operate the exclusivity provisions of section 2.3
and 10.2 within the Field of Use and the Territory.
Article 6
Acceptance and Warranties
6.1 Acceptance of Products. In the event of any shortage, damage or discrepancy
in or to a shipment of Products, MHS shall promptly report the same to Mikron
and furnish such written evidence or other documentation, as Mikron may deem
appropriate. Mikron shall not be liable for any such shortage, damage or
discrepancy unless Mikron has received notice and substantiating evidence
thereof from MHS within (30) days after delivery of the products. If the
substantiating evidence delivered by MHS shall demonstrate to Mikron's
satisfaction that Mikron is responsible for such shortage, damage or
discrepancy, Mikron shall promptly deliver additional or substitute products to
MHS in accordance with the delivery procedures set forth herein, but in no event
shall Mikron be liable for any additional costs, expenses or damages incurred by
MHS directly or indirectly as a result of such shortage, damage or discrepancy
in or to a shipment.
6.2 Warranties: Mikron Warrants:
a. It has full corporate power and authority to grant the licenses in this
Agreement and that the Products and Product Software are free from claims of
third parties for ownership of infringement.
b. Mikron is the sole owner of all rights, or license to sell, title of interest
in the products, and it has not assigned, transferred, licensed, pledged or
otherwise encumbered any product or underlying technology or intellectual
property rights with the terms of this Agreement.
c. The products are free from defects in design, material and workmanship
substantially conform to Manufacturer's current documentation for such products,
will perform substantially in accordance with the user manuals accompanying the
products, and the user manuals are substantially free of material errors.
Mikron's sole obligation in the event of a breach of such warranty shall be to
provide MHS product replacement or, if replacement is inadequate as a remedy or,
Mikron's opinion, impractical, to refund the purchase price.
6.3 Claims. Warranty claims hereunder must be made promptly and in writing must
recite the nature and details of the claim, the date the cause of the claim was
first observed; and must be received by Mikron no later that thirty (30) days
after such defect becomes known to MHS.
6.4 Limited Warranty. The warranties set forth in this article 6 are intended
solely for the benefit of MHS. All claims hereunder shall be made by MHS and may
not be made by MHS customers. The warranties set forth above are in lieu of all
other warranties, express or implied, which are hereby disclaimed and excluded
6
by Micron, including without limitation any warranty or merchantability or
fitness for a particular purpose or use and all obligations or liabilities on
the part of MHS for damages arising out of or in connection with the use, repair
or performance of the products or the systems.
Article 7
Limitation Of Remedy
7.0 Except fraud manufacturer or MHS's liability of any kind shall not include
any special, indirect, incidental or consequential losses or damages, even if
Mikron or MHS as the case may be, shall have been advised of the possibility of
such potential loss or damage.
Article 8
Indemnification and Insurance
8.0 Each party shall defend, indemnify and hold the other party harmless
against, any loss, liability or cost arising from any suit or proceeding brought
by any trial party, based upon any claim, whether in contract, tort (including
negligence or fault of any degree) or otherwise, to the extent that such claim
arises out of or results from alleged or actual acts of omissions of the
indemnifying party on connection with the production, distribution, marketing,
indemnify and hold Mikron harmless against any loss, liability or cost arising
from any suit or proceeding brought by any third party (including without
limitation any governmental entity), based upon any claim, whether in contract,
tort (including misrepresentation, negligence or fault of any degree) or
otherwise in connection with the production, distribution, marketing and/or use
of the system.
Article 10
Product Software
10.1 License. Mikron hereby grants to MHS the right and license to use the
Product for the contract terms and conditions of this Agreement. 10.2 Exclusive.
This license is exclusive in that Mikron agrees that it will not distribute or
appoint another person or entity with responsibility for distributing or
authority to distribute the Products in the Field of Use in the Territory. This
will not prevent Mikron from distributing products other that the MHS 5000 in
the Territory to users not within the Field of Use as provided in this
Agreement.
10.3 Modification. Adaptation and Copying. MHS may modify, adapt, prepare
derivative work and copy the product software solely for the purposes of
fulfilling its obligations hereunder.
10.4 Proprietary Rights in Product Software. Mikron further acknowledges and
agrees that during the term of this Agreement and thereafter, all Product
Software provided hereunder, is and shall remain the property of a proprietary
to MHS. Mikron shall not without the prior written consent of MHS disclose (1)
any design characteristics or implementation detail of the Product Software or
(2) any of the source code or the Product Software.
10.5 Public Information. Nothing herein shall prevent the parties from using,
disclosing or authorizing the disclosure of any proprietary information which is
or becomes part of the public domain; provided, however, that the existence of a
copyright notice shall not cause or be construed as causing any Product Software
to be deemed published or in the public domain or as evidencing MHS intent to
waive any rights under law with respect to the protection of Product Software.
10.6 Legal Action. At either party's request, the other party will cooperate
fully with the requesting party in any and all legal actions taken by or brought
against the requesting party to protect proprietary information.
Article 11
Taxes
11.0 MHS shall pay, or shall reimburse Manufacturer for all taxes, duties and
other governmental assessments if incurred with the knowledge and approval of
MHS (except income taxes assessed against Manufacturer) in connection with the
subject matter of this Agreement.
Article 12
Import And Export Of Products
12.1 Import Documentation. MHS shall be responsible for obtaining all licenses
and permits and for satisfying all formalities that may be required for the
implementation of this Agreement and or the importation of Products and/or the
System into the Territory in accordance with law or regulation in force in the
Territory.
12.2 Export Regulations. MHS shall supply Mikron on a timely basis with all
information and documentation represented by Mikron in order to permit Mikron to
obtain licenses for the exportation or re-exportation of the Products and/or the
Systems.
12.3 Written Assurances. :MHS hereby assures Mikron as follows:
a. MHS shall not, either directly or indirectly, re-export any on the products
and/or Systems from the Territory to any destination to which such re-export is
not permitted under a general license established under the United States Export
Administration Regulations unless and until Mikron shall have applied for and
obtained, at the request and expense of MRS, an individual validated license
from the Office Of Export Administration, United States Department of Commerce
for such re-export. b. MHS undertaking in subsection (a) of this Section shall
survive any termination of this Agreement, regardless of the reason for such
termination.
Article 13
Compliance With Applicable Laws
13.1 Compliance with Laws. The parties shall comply with all applicable laws
affecting this Agreement and its performance hereunder and, without limiting the
generality of the foregoing, shall maintain all registrations with governmental
agencies, commercial registries, xxxxxxxx of commerce, or any other offices
which may be required under local law in order to enable them to lawfully
conduct their business and perform their obligations under this Agreement. Upon
written notice from either party, the other party shall provide such information
as shall be reasonably considered necessary to verify compliance with the
provisions of the Section 13.1
13.2 Materiality. Noncompliance by either party with the provisions of this
article 13 shall constitute a material breach of this Agreement and shall
constitute grounds for its termination in accordance with Section 14.1.
Article 14
Terms and Termination
14.1 Term and Termination. This agreement shall commence as of the date first
above written and shall continue in force for the Contract Term unless earlier
terminated by one of the parties in accordance with the following provisions:
a. If Distributor fails during the Contract Term to pay the purchase price for
any Product within (30) days after written notice that such amount is past due.
b. Mikron and MHS shall have the right to terminate this Agreement at any time
by notice in writing to the other party in the event that any of the following
shall have occurred:
1. The other party shall be in material breach of its obligations hereunder and
shall have failed to cure such breach within (30) days after the receipt of
written notice thereof from the other party.
2. The other party shall have become insolvent or bankrupt, or seeks a
creditor's arrangement, composition or comparable proceeding, or if any such
proceeding is instituted against the other and not dismissed within sixty (60)
days, or shall have had a trustee or receiver or the legal equivalent appointed,
or shall otherwise have lost legal control of its business.
14.2 Rights and Obligations on Termination. In the event of termination of this
agreement for any reason, the parties shall have the following rights and
obligations:
a. Termination of the Agreement shall not release either party from the
obligation to make payment of all amounts then or thereafter due and payable. b.
Mikron shall have the right at its option to cancel any or all accepted purchase
orders which provide for delivery after the effective date of termination. c.
The obligation pursuant to Article 8 hereof shall survive termination of the
Agreement for any reason whatever.
Article 15
Disputes
15.1 Mediation. In the event of a dispute between the parties under this
agreement, the parties agree to meet in person within (30) days of written
notification of the dispute at a mutually agreeable location to attempt in good
faith to resolve such dispute. If such attempt fails, within (10) days
thereafter, the parties agree to appoint a mediator and, attempt in good faith
to resolve the dispute within (30) days from appointment of the mediator. If the
parties are unable to resolve such dispute in the manner described in this
section, they shall be free to pursue such other remedies as are provided under
this agreement. During this period of good-faith attempts to voluntarily resolve
the dispute, Mikron and MHS shall continue to perform their duties and
obligations under this agreement including without limitation maintenance and
support of the products.
15.2 Governing Law. This Agreement shall be governed by, and interpreted and
construed in accordance with, the laws of the State of New Jersey, USA, and the
United States without regard to conflicts of laws pre/visions thereof and
without regard to the United Nations Convention on Contracts for the
International Sale of Goods. Unless otherwise elected by Mikron, the sale
jurisdiction and venue for actions related to the subject matter hereof shall be
the state and US federal courts in Florida. Both parties consent to the
jurisdiction of such courts and agree that process may be served in the manner
provided herein for giving notices or otherwise as allowed by New Jersey or US
federal law .
Article 16
Miscellaneous
16.1 Relationship. This agreement does not make either party the employee, agent
or legal representative of the other party for any purpose whatsoever. Neither
party is granted any right of authority to assume or to create any obligation or
responsibility, express or implied, on behalf of or in the name of the other
party. In fulfilling its obligations pursuant to this Agreement each party shall
be acting as an independent contractor.
16.2 Assignment. Neither party shall have the right to assign or otherwise
transfer its rights and obligations under this agreement except with the prior
written consent of the other party which consent may be withheld in such party's
sole discretion; provided, however, that either party shall be entitled to
assign any or all of its rights and obligations hereunder to any other entity
controlled by, controlling or under common control with such assigning party, in
which event such assigning party shall remain liable as a guarantor for the
performance by such other entity of all of its obligations hereunder, and
provided further that a successor in interest by merger, operation of law,
assignment, purchase or otherwise of substantially all of the business and
assets of wither party shall acquire all rights and obligations of such party
hereunder. Any prohibited assignment shall be null and void.
16.3 Notices. Notices permitted or required to be given hereunder shall be
deemed sufficient if given by registered or certified are mail, postage prepaid,
return receipt requested, addressed to the respective addresses of the parties
as first above written or at such other addresses as the respective parties may
designate by like notice from time to time. Notices so given shall be effective
upon (a) receipt by the xxxxx to which notice is given, or (b) on the (5th) day
following the date such notice was posted, whichever occurs first.
16.4 Entire Agreement. This Agreement, including any exhibits attached hereto,
constitutes the entire Agreement of the parties with respect to the subject
matter hereof, and supersedes a11 previous agreements by and between the parties
as well as all proposals, oral or written, and all negotiations.
Article 17
Equipment Package
17.1 Camera package to consist of the following:
1. 5104 I Camera
2. Painted White
3. Two Handles
4. Carrying Case
5. Name Decal MHS 5000
6. Software MHS Med 5.0
7. Battery Pack And Charger
8. Mikron shall supply a National Instruments GPIB/PCMCIA at an
additional cost to MHS not to exceed $600.00
Signature Page
Manufacturer: Mikron Instrument Company Inc.
A New Jersey Corporation
00 Xxxxxxxx Xxxx
Xxxxxxx, Xxx Xxxxxx 00000
/s/ Xxx Xxxxxxxxx
--------------------------
By Xxx Xxxxxxxxx
Title - Vice President
Date June 14, 2001
Distributor: Micro Health Systems Inc.
A Florida Corporation
0000 Xxxxx Xxxx
Xxxxxxxx, Xxxxxxx 00000
/s/ Xxxxxx Xxxxxx
---------------------------
By Xxxxxx Xxxxxx
Title - President
Date June 12, 2001
/s/ Xxxxx Xxxxxx
----------------------------
By Xxxxx Xxxxxx
Title - Vice President
Date June 12, 2001
