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EXHIBIT 2.01
ASSET PURCHASE AGREEMENT
This asset purchase agreement ("Agreement") is entered into by
Xxxxxxxxx Industries L.P., a Texas limited partnership ("Seller"), and
Rehab Plus Therapeutic Products, Inc., a Texas corporation
("Purchaser"), (collectively the "Parties").
WHEREAS, Seller and Purchaser have reached an understanding with
respect to the sale by Seller and the purchase by Purchaser of certain
assets and business of Seller, as same are more particularly described
in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations,
warranties, and covenants herein contained, the Parties agree as
follows.
1. DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings indicated below:
(a) "Affiliate" shall mean, with respect to any individual,
partnership, limited liability company, corporation, unincorporated
organization or association, trust (including the trustees thereof in
their capacity as such) or other entity (collectively a "Person"), any
other Person which either directly or indirectly controls, is controlled
by or is under common control with the first Person. The current
Affiliates of Seller are set forth on EXHIBIT 1(A).
(b) "Assets" shall mean the Inventory, Equipment, Other Assets,
and Contract Rights.
(c) "Business" shall mean Seller's orthopedic division located
in Lubbock, Texas with its related business defined as industrial,
medical and rehabilitation products, but excluding from the foregoing
Seller's business related to its fitness line of products. The
foregoing definition of Business is intended to include the entire
business operations of such division and its related goodwill, including
but not limited to all tradenames and registered marks, copyrighted
materials, proprietary information, client lists, business plans and
information, etc., specific to such business division.
(d) "Closing" shall mean the closing of the sale and purchase of
assets contemplated in this Agreement, as same is more particularly
described in SECTION 7 of this Agreement.
(e) "Confidential Information" shall mean any information
concerning the businesses and affairs of Seller that is not already
generally available to the public.
(f) "Contract Deposit" shall mean the Fifty Thousand Dollars
($50,000) payable to Seller by check, which shall be subject to
collection, on execution of this Agreement by Purchaser,
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with such amount to be held in escrow as provided for in SECTION 8 and applied
to the Purchase Price as set forth in this Agreement.
(g) "Contract Rights" shall mean maintenance agreements, service
contracts, and warranties related to any of the Assets being purchased
under this Agreement as same are more particularly described in SECTION
3(I).
(h) "Effective Date" shall mean the date on which the Inventory
audit is conducted as provided for in SECTION 2(D), but possession of
the Assets and delivery of the Business to Purchaser shall not occur
until the Closing.
(i) "Equipment" shall mean the items of furniture, equipment and
other personal property utilized in the Business as more particularly
described on EXHIBIT 1(I) to this Agreement.
(j) "Inventory" shall mean the inventory, finished goods, raw
materials, work in process, packaging, parts, and supplies related to
the Business as more particularly described on EXHIBIT 1(J) to this
Agreement.
(k) "Liabilities" shall mean the liabilities and payables of
Seller that are specifically identified on EXHIBIT 1(K) to this
Agreement and as provided for in SECTION 14(E).
(l) "Other Assets" shall mean the trade show booth used in
connection with the Business and the art work, photography, plates, and
graphics used in connection with the Business for customer
presentations, trade shows, advertising, and customer brochures.
(m) "Prepaid Expenses" shall mean the prepaid material,
supplies, and inventory purchases and other expenses that have been
prepaid by Seller that are specifically identified on EXHIBIT 1(M) to
this Agreement.
(n) "Purchase Price" shall mean the total of the consideration
to be paid by Purchaser as set forth in SECTION 2(B).
2. SALE AND PURCHASE.
(a) PURCHASE AND SALE OF ASSETS. On and subject to the terms
and conditions of this Agreement and in reliance on the representations
and warranties of Seller and Purchaser contained in this Agreement,
Purchaser agrees to purchase from Seller, and Seller agrees to sell,
transfer, convey, and deliver to Purchaser, all of the Assets and the
Business as of the Effective Date for the Purchase Price.
(b) PURCHASE PRICE. The total consideration for the Business
and the Assets is One Million Six Hundred Fifty-Five Thousand Dollars
($1,655,000), subject to the following adjustments (the "Purchase
Price"):
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(1) increased, or decreased, by the amount the Inventory as
finally calculated by the Parties is greater, or less, than $375,000;
(2) increased, or decreased, by the amount the Equipment as
finally calculated by the Parties is greater, or less, than $50,000, but
with such calculation to be not less than $30,000 or more than $60,000;
and
(3) increased by the Prepaid Expenses as finally calculated
by the Parties.
(c) PAYMENT OF PURCHASE PRICE. The Purchase Price shall be paid
to Seller as follows:
(1) Purchaser's assumption of the Liabilities as of the
Closing;
(2) the delivery to Seller at the Closing of a promissory
note (the "Note"), a copy of which is attached as EXHIBIT 2(C)(2),
payable to Seller in the amount of Three Hundred Seventy-Five Thousand
Dollars ($375,000); and
(3) a cash payment to Seller of the balance of the Purchase
Price, with such cash payment to be made on or before September 3, 1996
by wire transfer and with such cash payment being reduced by the
Contract Deposit (which shall be released to Seller on the date of its
receipt of the wire transfer of funds).
(d) AUDIT OF INVENTORY. A physical audit of the Inventory shall
be taken on or before August 28, 1996 in accordance with mutually
agreeable audit procedures. For purposes of this audit, Seller and
Purchaser shall designate representatives to carry out the audit
procedures and arrive at a value for the Inventory. The value of the
Inventory shall be reasonably determined by the mutual agreement of
Seller and Purchaser, and such reasonable determination shall take into
account obsolete inventory items. After these determinations have been
made, EXHIBIT 1(J) shall be completed, initialed by the parties and
attached to this Agreement on or prior to the Closing.
(e) ALLOCATIONS OF PURCHASE PRICE. The Parties agree to
mutually agree upon an allocation of the Purchase Price to the Assets
and to complete EXHIBIT 2(E) with such allocation as so determined.
Seller and Purchaser further agree that (1) these allocations have been
made as provided in Section 1060 of the Internal Code of 1986 (the
"Code"), (2) each shall file Form 8594 (Asset Allocation Statement Under
Section 1060) on a timely basis for reporting the allocation, (3) the
filing shall be consistent with the allocations set forth on EXHIBIT
2(E), and (d) neither will take any position on its respective income
tax return that is inconsistent with the allocation.
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3. SELLER'S REPRESENTATIONS AND WARRANTIES. Seller represents and
warrants to Purchaser that the statements contained in this Section are
correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section, unless another date for such representation and
warranty is specifically set forth in this Agreement).
(a) ORGANIZATION OF SELLER. Seller is a limited partnership
duly organized and validly existing under the laws of Texas and such
other states or jurisdictions where the failure to so qualify would have
a material, adverse affect on the Business or the Assets.
(b) AUTHORIZATION OF TRANSACTION. Seller has full power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder. Without limiting the generality of the foregoing,
the board of directors of the general partner of Seller have duly
authorized the execution, delivery, and performance of this Agreement by
Seller.
(c) NONCONTRAVENTION. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, will (1) violate any statute, regulation, order, or other
restriction of any government, governmental agency, or court to which
Seller is subject or any provision of the limited partnership agreement
of Seller, or (2) cause a breach, default, or termination with regard to
the Contract Rights.
(d) BROKERS' FEES. Seller has no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which Purchaser
could become liable or obligated.
(e) TITLE TO ASSETS. Seller has good and marketable title to,
or a valid leasehold interest in, the Assets, free and clear of all
liens, security interests, obligations, or encumbrances, other than
liens, liabilities, obligations, or encumbrances that will be satisfied
in full, or released, prior to or contemporaneous with the Closing,
except statutory tax liens that are not due and payable on or before the
Closing.
(f) FINANCIAL DATA. All financial data of Seller relating to
the Business previously supplied to Purchaser, and that supplied to
Purchaser prior to or at the Closing, have been prepared in accordance
with consistent accounting practices, and present fairly the results of
operations of the Business; provided, however, that, to the extent such
information includes profit and loss statements requested by Purchaser
with regard to Seller's prior operation of the Business, Seller
represents and warrants that such profit and loss statements were
prepared in good faith as excerpts from Seller's consolidated books and
records, and Seller
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makes only a good faith representation or warranty with regard to same.
(g) LEGAL COMPLIANCE. Seller has complied 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) with
regard to the Business and Assets, and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has
been filed or commenced against Seller alleging any failure so to
comply.
(h) TAX MATTERS. Seller has filed, within the applicable time
period including extensions, all local, state, and federal income,
informational, franchise, sales, and other tax returns of any nature and
type that it is required to file, all such tax returns were correct and
complete in all respects, and all taxes, fees, penalties, interest, or
other expenses related thereto have been paid in full or appropriate
reserves have been made for same.
(i) CONTRACTS RIGHTS. Seller has delivered to Purchaser a
correct and complete copy of each written agreement, and associated
security filings if applicable, related to the Assets and the Business
that requires a payment, loan, advance, investment, capital expenditure,
ordinary expenditure, or other obligation (1) in excess of $300.00 per
month whether or not payable or properly accrued monthly, quarterly,
annually, or otherwise, and (2) extending more than six months after the
Effective Date. With respect to each such agreement delivered to
Purchaser: (1) the agreement is legal, valid, binding, enforceable, and
in full force and effect, (2) no event has occurred which with notice or
lapse of time would constitute a breach or default, or permit
termination, modification, or acceleration under the agreement, and (3)
no party has repudiated any provision of the agreement. A list of the
Contract Rights is set out on EXHIBIT 3(I).
(j) LITIGATION. With respect to Seller's operation of the
Business, Seller (1) is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (2) is not a party, or to
the knowledge of Seller's directors or officers 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.
(k) PRODUCT LIABILITY. Other than that for which Seller has
provided its indemnity under SECTION 11, there is no currently pending,
and Seller does not have any knowledge of any threatened, action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand
against Seller giving rise to any liability that arises out of any
injury to individuals or property as a result of the ownership,
possession, or use of any product
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manufactured, sold, leased, or delivered by Seller in the course of its prior
operations of the Business.
(l) DISCLOSURE. The representations and warranties contained in this
Section do not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements and information
contained in this Section not misleading.
4. PURCHASER'S REPRESENTATIONS AND WARRANTIES. Purchaser
represents and warrants to Seller that the statements contained in this
Section are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then
and as though the Closing Date were substituted for the date of this
Agreement throughout this Section, unless another date for such
representation and warranty is specifically set forth in this
Agreement).
(a) ORGANIZATION OF THE PURCHASER. Purchaser is duly organized,
validly existing, and in good standing under the laws of Texas and
authorized to conduct its business in such other jurisdictions as are
necessary for the consummation of this Agreement.
(b) AUTHORIZATION OF TRANSACTION. Purchaser has full power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally
binding obligation of the Purchaser, enforceable in accordance with its
terms and conditions.
(c) NONCONTRAVENTION. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, will (1) violate any statute, regulation, order, or other
restriction of any government, governmental agency, or court to which
Purchaser is subject or any provision of the charter or bylaws of
Purchaser, or (2) cause a breach, default, or acceleration of any
contracts or agreements by which it is bound.
(d) BROKERS' FEES. Purchaser has no liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect
to the transactions contemplated by this Agreement for which Seller
could become liable or obligated.
5. PRE-CLOSING COVENANTS. The Parties agree as follows with
respect to the period between the execution of this Agreement and the
Closing.
(a) GENERAL. Each of the Parties will use its reasonable best
efforts to take all action and to do all things necessary, proper, or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver,
of the closing conditions set forth in SECTION 6).
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(b) NOTICES AND CONSENTS. Seller will give any notices to third
parties (with copies of such notices furnished to Purchaser), and Seller
will use its best efforts to obtain any third party consents, that are
required to consummate the purchase and sale transaction. Each of the
Parties will give any notices to, make any filings with, and use its
best efforts to obtain any authorizations, consents, and approvals of
governments and governmental agencies required to consummate the
purchase and sale.
(c) OPERATION OF BUSINESS. Seller will not engage in any
practice, take any action, or enter into any transaction outside the
ordinary course of the Business.
(d) PRESERVATION OF BUSINESS. Seller will keep its business and
properties substantially intact, including its present operations,
physical facilities, working conditions, and relationships with lessors,
licensors, suppliers, customers, and employees.
(e) FULL ACCESS.
(1) Seller will permit representatives of Purchaser to have
full access at all reasonable times, and in a manner so as not to
interfere with the normal business operations of Seller, to all
premises, properties, personnel, books, records (including tax records),
contracts, and documents of or pertaining to Seller. Purchaser will
treat and hold as such any Confidential Information it receives from
Seller in the course of the reviews contemplated by this subsection,
will not use any of the Confidential Information except in connection
with this Agreement, and, if this Agreement is terminated for any reason
whatsoever, will return to Seller all tangible embodiments (and all
copies) of the Confidential Information which are in its possession.
(2) To the extent not inconsistent with the provisions under
subsection (1) above, the terms of the confidentiality agreement dated
August 5, 1996 and entered into by Xxxxxxxxx Industries, Inc. and
Purchaser shall continue to apply until the Closing, and thereafter in
the event Closing does not occur, with Seller being substituted therein
for Xxxxxxxxx Industries Inc.
(f) AUDIT OF ASSETS. A physical audit of the Inventory will be
conducted in accordance with the provisions of SECTION 2(d).
(g) NOTICE OF DEVELOPMENTS. Each Party will give prompt written
notice to the other Party of any material adverse development causing a
breach of any of its own representations and warranties in SECTION 3 and
SECTION 4. No disclosure by any Party pursuant to this subsection,
however, shall be deemed to amend or supplement any disclosures or
representations set forth in this Agreement or to prevent or cure any
misrepresentation, breach of
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warranty, or breach of covenant, unless so mutually agreed by the Parties.
6. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO OBLIGATION OF PURCHASER. The obligation of
Purchaser to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions, provided however, that Purchaser may waive any condition
specified in this subsection if it executes a writing so stating at or
prior to the Closing:
(1) the representations and warranties of Seller set forth
in SECTION 3 shall be true and correct in all material respects at and
as of the Closing Date;
(2) Seller shall have performed and complied with all its
covenants hereunder in all material respects through the Closing;
(3) Seller shall have procured all the third party consents
provided for in this Agreement;
(4) Purchaser shall have received an assignment of, or be
permitted to continue the use of, Seller's License Agreement with
Xxxxxxx Xxxxxxxx covering the Universal Ankle Support under Patent
Application Serial No. 477,058 filed February 7, 1990;
(5) Purchaser shall be permitted, by separate agreement or
as otherwise determined by the Parties, to use the trademark
"Enlightened Rubber" in the same manner Seller is currently using same;
(6) Purchaser shall have received releases of any third
party liens that encumber the Assets and the Business, if any;
(7) no action, suit, or proceeding against the Seller shall
be pending or threatened before any court or quasi-judicial or
administrative agency of any federal, state, or foreign jurisdiction or
before any arbitrator wherein an unfavorable injunction, judgment,
order, decree, ruling, or charge would (1) prevent consummation of any
of the transactions contemplated by this Agreement, (2) cause any of the
statements to be rescinded following consummation, or (3) affect
adversely the right of Purchaser to own the Assets and to operate the
Business; and
(8) all actions to be taken by Seller in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Purchaser.
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(b) CONDITIONS TO OBLIGATION OF SELLER. The obligation of
Seller to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions, provided however, that Seller may waive any condition
specified in this subsection if it executes a writing so stating at or
prior to the Closing:
(1) the representations and warranties set forth in SECTION
4 shall be true and correct in all material respects at and as of the
Closing Date;
(2) Purchaser shall have performed and complied with all its
covenants hereunder in all material respects through the Closing;
(3) no action, suit, or proceeding against Purchaser shall
be pending or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (1) prevent
consummation of any of the transactions contemplated by this Agreement
or (2) cause any of the transactions contemplated by this Agreement to
be rescinded following consummation (and no such injunction, judgment,
order, decree, ruling, or charge shall be in effect);
(4) Seller shall have secured the consent of its primary
lender for the sale of the Assets and the Business and the release of
any liens held by such lender against the Assets and the Business; and
(5) all actions to be taken by Purchaser in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Seller.
7. THE CLOSING.
(a) DATE OF CLOSING. The Closing shall take place on or before
August 29, 1996 (the "Closing Date") at the offices of Seller, unless
the parties have mutually agreed in writing to extend such date on or
prior to August 29, 1996.
(b) ITEMS TO BE DELIVERED AT THE CLOSING.
(1) BY SELLER. At the Closing, Seller shall deliver to
Purchaser, at Seller's sole cost and expense, each of the following
items:
(A) A certificate of existence issued by the appropriate
state office and dated within fifteen (15) days of the Closing, and a
copy of the board of director consents approving this Agreement;
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(B) Xxxx of Sale conveying title to all the Assets on a
form acceptable to the Parties; and
(C) Any and all other assignments of warranties,
contracts, etc. called for in this Agreement.
(2) BY PURCHASER. At the Closing, Purchaser shall deliver
to Seller each of the following items:
(A) A certificate of good standing issued by the
appropriate state office and dated within fifteen (15) days of the
Closing, and a copy of the board of director consents approving this
Agreement;
(B) the Note required under SECTION 2;
(C) a continuing guaranty of Xxxxx X. Xxxxxx and Xxxxxx
Xxxxx of the Note, with such guaranty to be in the form of EXHIBIT
7(B)(2)(C);
(D) such other instruments called for in this Agreement.
(c) CASH PAYMENT. The cash payment provided for under SECTION 2
shall be made to Seller on or before September 3, 1996, and the receipt
by Seller of such cash payment shall be a condition precedent to the
final closing and consummation of the sale and purchase contemplated by
this Agreement. If such cash payment is not received by Seller on or
before September 3, 1996 as provided for in SECTION 2, Purchaser shall
be deemed to be in default under this Agreement and, in addition to any
other remedies that Seller may have under this Agreement, Seller shall
be entitled to receive the Escrow Amount as provided for in the Escrow
Agreement and to immediately take possession of and assume full
ownership of the Assets and the Business.
b
(d) SALES AND TRANSFER TAXES. Following the Closing, Purchaser
shall pay when due all sales and transfer taxes, if any, payable in
connection with this Agreement and the conveyances, assignments,
transfers, and deliveries to be made to Purchaser under this Agreement.
8. CONTRACT DEPOSIT. Purchaser has paid Seller the sum of $50,000
cash as a deposit (the "Contract Deposit") with Purchaser's delivery to
Seller of this Agreement signed by Purchaser. The Contract Deposit
shall be held in escrow until the Closing or the termination of this
Agreement, with such escrow to be in the form attached as EXHIBIT 8. As
provided for in the Escrow Agreement, should the Closing fail to occur
due to the breach of this Agreement by Purchaser, Seller shall retain
the Contract Deposit as liquidated damages for such breach.
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9. OTHER AGREEMENTS BY THE PARTIES.
(a) PRODUCT LIABILITY INSURANCE COVERAGE.
(1) Seller agrees that it will continue to maintain its
existing product liability insurance coverage on the following
conditions: (1) The insurance will cover Inventory that was manufactured
by Seller prior to the Effective Date; and (2) Seller shall have no
obligation to continue any of the foregoing coverage after one hundred
twenty (120) days following the Effective Date.
(2) Seller will use its reasonable efforts to secure "tail"
product liability insurance coverage for the Inventory, but Seller's
obligations in this regard shall be governed, based on Seller's
reasonable determination, by the cost, availability, and reasonable
business need of such coverage. The period of such "tail" coverage
shall be reasonably determined by Seller. If Seller elects to not
obtain such tail coverage, Seller shall notify Purchaser of such
decision.
(3) To the extent Seller is not required to carry product
liability insurance coverage under subsections (1) and (2) above,
Purchaser shall secure and keep in force product liability insurance
coverage for all of its operations after the Effective Date. On written
request by Seller, Purchaser shall provide Seller with evidence of such
coverage.
(b) EMPLOYEES OF SELLER.
(1) Purchaser may, in its sole discretion, hire Seller's
existing employees who are full-time employees located at the Lubbock,
Texas facility of the Business.
(2) If the transactions contemplated by this Agreement are
consummated and Purchaser extends an offer of employment to any of
Seller's employees on or prior to the Closing Date and Seller's employee
accepts such offer of employment from Purchaser, Seller agrees that it
will not solicit the employment of such former employee for a period of
three years after the Closing Date.
(c) PRODUCT WARRANTY AND RETURNS AFTER EFFECTIVE DATE.
Purchaser agrees to perform all warranty work related to the products
sold by Seller in Seller's Business operations prior to the Effective
Date and similarly agrees to accept all customer returns of products
sold by Seller in the Business prior to the Effective Date. Purchaser's
obligations under the foregoing shall apply to warranty work or product
returns that are less than $1,000 (based on the actual cost of such
warranty work or returned product) as determined on an occurrence by
occurrence basis. If a warranty claim equals or exceeds $1,000,
Purchaser shall immediately notify Seller of same and Seller shall
provide such warranty work at Seller's cost or Seller shall pay
Purchaser to provide such warranty work on a mutually agreeable basis.
If a
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product return equals or exceeds $1,000 and Purchaser replaces the product or
refunds the purchase price for same, Purchaser shall immediately notify Seller
of same and Seller shall reimburse Purchaser for the cost of the replacement
items or for the refunded purchase price.
(d) SELLER MANUFACTURING AFTER EFFECTIVE DATE. Seller agrees
that, for a period of thirty (30) days after the Closing Date, it will
supply Purchaser with manufactured goods similar to the Inventory. These
goods will be supplied to Purchaser on an order by order basis, with the
cost of same to Purchaser being Seller's standard manufacturing cost and
payable on terms as determined by Seller and Purchaser on an order by
order basis. Seller's obligations under this subsection shall be
limited to goods that can be reasonably manufactured with Seller's
equipment in Lubbock, Texas that remains after the Closing under this
Agreement.
(e) PURCHASER'S USE OF XXXXXXXXX NAME. The Parties acknowledge
that certain of the Inventory and/or Inventory packaging incorporates
trademarks, copyright works, or other similar rights owned or held by
Seller or an Affiliate of Seller and the rights to which are not being
transferred to Purchaser under this Agreement (the "BLP Rights"). The
Parties agree that Purchaser's sale of Inventory that incorporates the
BLP Rights after the Effective Date shall be permitted, but Purchaser
shall not be permitted to use the BLP Rights in any products that it
might manufacture and Purchaser's right to use the BLP Rights shall be
limited to selling the Inventory transferred under this Agreement that
utilizes the BLP Rights.
(f) SELLER TO SUPPLY PURCHASER WITH CERTAIN PRODUCTS. A part of
the Inventory is comprised of gloves that Seller has purchased through
supply agreements with third parties. Seller agrees to supply these
gloves to Purchaser after the Effective Date for such reasonable period
as needed for Purchaser to secure a supply source for the product. These
goods shall be provided to Purchaser only on the basis that same are
available to Seller and at Seller's actual cost and freight charges for
same.
10. AGREEMENT NOT TO COMPETE.
(a) TERM, GEOGRAPHICAL AREA, AND CONSIDERATION. In
consideration of the benefits to be received by Seller under this
Agreement and a material portion of the Purchase Price to be paid to
Seller, Seller agrees that, for a period of five (5) years after the
Effective Date, or such shorter period of time in the event Purchaser
discontinues its operation of the Business, neither Seller or its
Affiliates will enter into a business that is competitive with the
Business conducted by Seller prior to the Effective Date with the
Assets. The geographical area of the noncompetition provisions in this
Section shall be the United States. Purchaser and Seller agree that the
covenant not to
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compete contained in this Section is a condition to Purchaser's entering into
this Agreement with Seller.
(b) PERSONS COVERED. This non-compete provision shall apply to
Seller and an Affiliate of Seller, and it shall include, but not be
limited to, participating in a competitive business as a shareholder,
joint venturer, limited or general partner, limited liability company
member, equity or debt owner, or in any other manner in which Seller or
a Seller Affiliate may participate or share in the profits or revenues
of the competitive business. Specifically excluded from this restriction
is participation by Seller or an Affiliate through the ownership of debt
or equity securities that are traded on an established securities
market, unless Seller or an Affiliate severally or in the aggregate own
more that 15% of the outstanding issue of such debt or equity security.
(c) COMPETITIVE BUSINESS. For purposes of this Section, a
competitive business shall mean the sale of the types of products
included in the Inventory to medical, industrial, and rehabilitation
distributors and wholesalers, but it shall not include Seller's sale of
such products to retailers (unless identified on EXHIBIT 10(C)) and as
fitness and athletic products.
(d) INDEPENDENT PROVISION. This covenant not to compete on the
part of Seller shall be construed as an agreement independent of any
other provision of this Agreement and the payment of the Purchase Price
provided for in SECTION 2, which shall constitute conditions precedent
to the enforceability of Seller's obligations under this Section. Except
as provided in the preceding sentence, the existence of any claim or
cause of action by Seller against Purchaser, whether predicated on this
Agreement or otherwise, shall constitute neither a defense to the
enforcement by the Purchaser of this covenant, nor a set-off or claimed
set-off against any remedies or benefits available or due to the
Purchaser pursuant to the terms of this Agreement.
(e) INJUNCTIVE AND EQUITABLE RELIEF. Seller agrees that a
breach or violation of this covenant not to compete by Seller or an
Affiliate shall entitle Purchaser, as a matter of right, to an
injunction, without the need for posting bond or other security, issued
by any court of competent jurisdiction which restrains any further or
continued violation of this covenant.
(f) DELAYS IN ENFORCEMENT. If Seller and/or an Affiliate
violates this covenant not to compete and Purchaser brings legal action
for injunctive or other relief, Purchaser shall not be deprived, as a
result of the time involved in obtaining the relief, of the benefit of
the full period of the restrictive covenant. For these purposes, the
five (5) year period, or shorter period if applicable, shall be
calculated as not including the period of time required for Purchaser to
petition for and be granted the relief sought.
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(g) REASONABLENESS AND SCOPE. The parties to this Agreement agree that
this covenant is reasonable in both time and scope. However, if any
court shall determine that the duration or geographical limit of any
restriction contained in this covenant not to compete is unenforceable,
it is the intention and agreement of the Parties that the covenant shall
be deemed amended to the extent required to render it valid and
enforceable. Such amendment, if any, shall apply only with respect to
the operation of this covenant not to compete and the jurisdiction of
the court that has made the adjudication.
11. INDEMNIFICATION BY SELLER. Seller agrees to indemnify and hold
Purchaser harmless against, and will reimburse Purchaser on demand for,
any payment made by Purchaser in respect of the following items:
(a) LIABILITIES NOT ASSUMED. Any and all liabilities and
obligations of or claims against Seller not assumed by Purchaser under
the terms of this Agreement;
(b) DAMAGES. Any and all damage or deficiency resulting from
any misrepresentation, breach of warranty, or nonfulfillment of any covenant or
agreement on the part of Seller under this Agreement or from any
misrepresentation in, or omission from, any certificate or other instrument
furnished or to be furnished to Purchaser pursuant to this Agreement, or in
connection with the transactions contemplated hereby; and
(c) ACTIONS. Any and all actions, suits, proceedings, demands,
assessments, judgments, costs, and expenses incident to any of the
foregoing or incident to the operation of the Business prior to the
Effective Date.
In the event Purchaser receives notice of any claim against it
or Seller with respect to any of the foregoing, Purchaser shall promptly
notify Seller of same and Seller shall compromise or defend same, with
Seller further agreeing to inform Purchaser in writing from time to time
as is reasonable regarding the status of such claim.
12. INDEMNIFICATION BY PURCHASER. Purchaser agrees to indemnify and
hold Seller harmless against, and will reimburse Seller on demand for,
any payments made by Seller in respect of the following items:
(a) LIABILITIES ASSUMED. Any and all liabilities and
obligations of or claims against Seller that are assumed by Purchaser
under the terms of this Agreement, including but not limited to the
Liabilities;
(b) DAMAGES. Any and all damages or deficiencies resulting from
any misrepresentation, breach of warranty, or nonfulfillment of any
covenant or agreement on the part of
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Purchaser under this Agreement or from any misrepresentation in connection with
the transaction contemplated hereby; and
(c) CLAIMS. Any and all actions, suits, proceedings, demands,
assessments, judgments, costs, and expenses incident to any of the
foregoing or incident to the operation of the Business after the
Effective Date.
In the event that Seller receives notice of any claim against it
or Purchaser with respect to any of the foregoing, Seller shall promptly
notify Purchaser of same and Purchaser shall compromise or defend same,
with Purchaser further agreeing to inform Seller in writing from time to
time as is reasonable regarding the status of such claim.
13. RISK OF LOSS. Until the Effective Date Seller shall bear the risk of
loss should there be damage to any of the Assets by fire or other
casualty. If, prior to the Effective Date, any of the Assets shall be
damaged to the extent that there are insufficient Assets remaining for
Purchaser to conduct the Business as previously conducted by Seller, or
the Assets have been damaged to an extent that prevents such operations,
then Seller shall give Purchaser written notice thereof within three (3)
business days after such damage or loss by Seller. Upon receipt of such
written notice Purchaser shall have five (5) business days in which to
elect in writing to: (1) terminate this Agreement and its obligations
under this Agreement; (2) require Seller to expend the insurance
proceeds, if any, which it receives to place the Assets in the working
order necessary to conduct the business operations of Seller that relate
to the Assets or the business operations for which Purchaser is
purchasing the Assets; or (3) require Seller to pay to Purchaser all
insurance proceeds payable by reason of such loss or damage and allow
Purchaser to conduct Asset repairs.
14. POST-CLOSING SETTLEMENTS.
(a) SETTLEMENT STATEMENT. Within fifteen (15) days after the Closing,
Seller shall prepare a settlement statement (the "Settlement Statement")
and make available to Purchaser all records necessary for Purchaser to
review and confirm the accuracy of the Settlement Statement. The
Settlement Statement shall set forth any changes to results of the
pre-closing audit of the Assets by the Parties that are found to be
necessary, and any changes with regard to the amounts determined for
Closing with regard to the proration of taxes and expenses related to
the Business and with regard to the Liabilities. Within five (5) days
after Purchaser's receipt of the Settlement Statement, Purchaser shall
deliver to Seller a written report which contains any changes which
Purchaser proposes to the Settlement Statement and any requests for
additional information Purchaser requests. Within five (5) days after
Seller's receipt of Purchaser's written report, Seller shall respond in
writing to Purchaser's written report. If the Purchaser and Seller
reach an agreement with respect to the payment due to either Purchaser
or Seller under the Settlement Statement, then any
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amount owed shall be paid within five (5) days of such agreement. Amounts paid
after such five (5) days shall bear interest at the rate of fourteen percent
(14.0%) per annum.
(b) GOOD FAITH EFFORTS. Purchaser and Seller shall each use its
reasonable good faith efforts to agree with respect to any amounts due
pursuant to the Settlement Statement no later than thirty five (35) days
after the Closing. If an agreement has not been reached within thirty
five (35) days after the Closing, either party may seek to enforce any
rights it claims under this Agreement. In the event a party has used
its reasonable efforts to reach an agreement with respect to any amounts
due under the Settlement Statement and such party is successful in a
legal action for any amount due to it, the successful party shall be
entitled to reimbursement from the other party of all expenses and costs
related to the legal action and shall be entitled to interest at the
rate of fourteen percent (14.0%) per annum on the amount due. In such
event, the interest shall be calculated from thirty five (35) days after
the Closing.
(c) PRORATION OF TAXES. Any and all ad valorem and personal property
taxes on the Assets to be transferred under this Agreement shall be prorated to
the date of Closing based on the taxes for the immediately preceding tax
year.
(d) PRE-EFFECTIVE DATE RECEIVABLES. If Purchaser receives any funds
attributable to pre-Effective Date sales by Seller, such funds shall
belong to Seller, Purchaser shall hold same for the account of Seller,
and Purchaser shall remit same to Seller within ten (10) days of
Purchaser's receipt of same. Seller shall have access to the records of
Purchaser for purposes of verifying the foregoing.
(e) LIABILITIES. The amounts set forth on EXHIBIT 1(K) and attributable
to commissions owed to manufacturers representatives for sales prior to the
Effective date were calculated on the basis of Seller's records as of the date
set forth on EXHIBIT 1(K). To the extent a manufacturers representative
has commissions owed for sales for the period after the date set forth
on EXHIBIT 1(K) to the Effective Date, Seller agrees that such amounts
are obligations payable by Seller and are not assumed by Purchaser under
this Agreement as a part of the Liabilities.
(f) POST-EFFECTIVE DATE RECEIVABLES. If Seller receives any funds
attributable to post-Effective Date sales by Purchaser, such funds shall
belong to Purchaser, Seller shall hold same for the account of
Purchaser, and Seller shall remit same to Purchaser within ten (10) days
of Seller's receipt of same. Purchaser shall have access to the records
of Seller for purposes of verifying the foregoing.
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15. TERMINATION.
(a) TERMINATION OF AGREEMENT. The Parties may terminate this Agreement
only as provided below:
(1) Purchaser and Seller may terminate this Agreement by mutual
written consent at any time prior to the Closing. In such event, the Contract
Deposit shall be paid as the Parties mutually agree.
(2) Purchaser may terminate this Agreement by giving written notice
to Seller if the Closing shall not have occurred on or before the scheduled
Closing Date by reason of the failure of any condition precedent under SECTION
6(A) (unless the failure results primarily from Purchaser itself breaching any
representation, warranty, or covenant contained in this Agreement). In such
event, the Contract Deposit shall be returned to Purchaser, and the return of
same shall constitute Purchaser's liquidated damages under this Agreement.
(3) Seller may terminate this Agreement by giving written notice to
Purchaser at any time prior to the Closing if the Closing shall not have
occurred on or before the scheduled Closing Date by reason of the
failure of any condition precedent under SECTION 6(B) hereof (unless the
failure results primarily from Seller itself breaching any
representation, warranty, or covenant contained in this Agreement). In
such event, unless the event is as provided for under SECTION 6(B)(4) OR
(5), the Contract Deposit shall be retained by Seller and the retention
of same shall constitute Seller's liquidated damages under this
Agreement.
(b) EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to this Section, all rights and obligations of the Parties
hereunder shall terminate and no Party shall have any liability to the
other for such termination; provided, however, that the confidentiality
provisions contained in SECTION 5(E) shall survive termination.
16. MISCELLANEOUS.
(a) RESOLUTION OF DISPUTES. For the resolution of any dispute
under this Agreement, the Parties agree to follow the procedures
outlined in this subsection.
(1) The Parties hereby acknowledge that they will first
attempt in good faith to resolve their disputes through direct
negotiation within thirty (30) days of the date either Party notifies
the other Party of the existence of a dispute. If a shorter time period
is indicated by the circumstances, the Parties agree that the time
period shall be reduced accordingly. This time period may be extended
by agreement, during which time neither Party shall institute legal
proceedings, unless the commencement of an action is necessary for
statute of limitations purposes.
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(2) In the event the Parties are unable to resolve their
dispute through direct negotiations within the applicable time period,
either Party may notify the other Party of its decision to submit the
dispute to mediation, to which each Party hereby consents, which
mediation shall be handled in the following manner:
(A) The mediator shall be selected by mutual agreement
of the Parties. If agreement cannot be reached within twenty (20) days
of the notification, the Parties shall request the senior (by number of
years of continuous service) sitting civil district judge of Dallas
County, Texas, acting in his individual capacity, to appoint a suitable
mediator, and the appointment of same shall be binding upon the Parties.
(B) The cost of mediation shall be paid one-half by
Seller and one-half by Purchaser. In determining costs, the mediator
may take into account all legal and legal assistant costs, out-of-pocket
expenses, reasonable photocopy charges, long distance phone calls,
travel expenses, depositions, court reporters, and other similar costs
and expenses.
(C) In no event shall the demand for mediation be made
after the date when the initiation of legal or equitable proceedings
based on such claim, dispute, or other matter in question would
otherwise be barred by the applicable statute of limitations.
(b) NATURE AND SURVIVAL OF REPRESENTATIONS. The
representations, warranties, covenants, indemnities, and other
provisions of this Agreement shall survive for a period of two (2) years
after the Closing, EXCEPT to the extent a claim for indemnification or
breach of contract has previously been asserted by or against Seller or
Purchaser, as appropriate, and such claim remains unsettled on the
second anniversary of the Closing (in which case the representations and
warranties on which such claim is based shall terminate on the
resolution of such claim, except that no new claim may be asserted on
any representation or warranty that survives as a result of a disputed
pending claim), and EXCEPT to the extent a longer period is specifically
provided for under the noncompetition provisions of SECTION 10.
(c) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall
issue any press release or make any public announcement relating to the
subject matter of this Agreement without the prior written approval of
the other Party; provided, however, that Seller may make any public
disclosure it believes in good faith is required by applicable law or
any listing or trading agreement concerning its publicly-traded
securities.
(d) NO THIRD-PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties,
and the successors and assigns of the Parties as permitted by this
Agreement.
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(e) ENTIRE AGREEMENT. It is expressly agreed by Seller and
Purchaser, as a material consideration for the execution of this
Agreement, that this Agreement is intended by the parties to be the
final, complete, and exclusive embodiment of their agreement regarding
the subject matter of this Agreement; that there are, and were, no oral
representations, warranties, understandings, stipulations, agreements,
or promises pertaining to this Agreement or any expressly mentioned
written documents that are not incorporated in writing in this
Agreement, and none shall be binding.
(f) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. This Agreement may not be
assigned without the written consent of the other Party.
(g) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(h) HEADINGS. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
(i) FORCE MAJEURE. Neither Purchaser nor Seller shall be
required to perform any term, condition, or covenant in this Agreement
so long as such performance is delayed or prevented by force majeure,
which shall mean acts of God, strikes, material or labor restrictions by
any governmental authority, civil riot, floods, and any other cause not
reasonably within the control of either Purchaser or Seller and that
either Purchaser or Seller, by the exercise of due diligence, is unable,
either wholly or in part, to prevent or overcome.
(j) NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request,
demand, claim, or other communication hereunder shall be deemed duly
given (1) after two (2) business days if it is sent by registered or
certified mail, return receipt requested, postage prepaid, and addressed
to the intended recipient as set forth below, (2) immediately if it is
hand delivered during normal business hours to the addresses set forth
below, and (3) on receipt by the receiving party of a telecopy, with
proof of such receipt being required:
If to Seller: Xx. Xxxxx Xxxxxxxxx
Xxxxxxxxx Industries L.P.
000 Xxxx Xxxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Telecopy: 000-000-0000
Telephone: 000-000-0000(Metro)
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With Copy To: Xx. Xxxxxx X. Xxxxx
Xxxxx & Xxxxxxx, L.L.P.
000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000
Telecopy: 000-000-0000
Telephone: 000-000-0000
If to Purchaser: Xx. Xxxxx X. Xxxxxx
Rehab Plus Therapeutic Products, Inc.
0000 00xx Xxxxxx, Xxxxx X
Xxxxxxx, Xxxxx 00000
Telephone: 000-000-0000
Telecopy: 806-791-2288
With a copy to: Mr. H. Xxxx Xxxxxxxxxx
McCleskey, Harriger, Xxxxxxx & Xxxx, L.L.P.
0000 Xxxxxxxxxx Xxxxxx
X. X. Xxx 0000
Xxxxxxx, Xxxxx 00000
Telephone: 000-000-0000
Telecopy: 806-796-7365
Any Party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered
by giving the other Party notice in the manner herein set forth.
(k) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Texas
without giving effect to any choice or conflict of law provision or rule
(whether of the State of Texas or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the
State of Texas.
(l) AMENDMENTS AND WAIVERS. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and
signed by Purchaser and Seller. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder
or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
(m) SEVERABILITY. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall
not affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction.
(n) EXPENSES. Purchaser and Seller will bear its own costs and
expenses (including legal fees and expenses) incurred in
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connection with this Agreement and the transactions contemplated hereby,
unless another provision for an expense or fee is specifically set forth in
this Agreement.
(o) GENERAL RULES OF CONSTRUCTION. This Agreement shall not be
strictly construed against either Purchaser or Seller. No remedy or
election given by any provision in this Agreement shall be deemed
exclusive unless so indicated, but each shall, wherever possible, be
cumulative with all other remedies in law or equity. The parties
acknowledge that each party (and its counsel, if any) has had the
opportunity to review and revise this Agreement and that the normal rule
of construction to the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation
of this Agreement or any amendments or exhibits thereto.
(p) INCORPORATION OF EXHIBITS. The Exhibits identified in this
Agreement are incorporated herein by reference and made a part hereof.
The Parties acknowledge that certain of the Exhibits referenced in this
Agreement have not been completed and attached at the time of the
Parties signing this Agreement. The Parties shall mutually agree to
these Exhibits on or before Closing and attach same to this Agreement
for the Closing. Any of such later determined Exhibits shall be deemed
to have been agreed to and attached hereto as of the signing of this
Agreement by the Parties.
(q) CROSS-COLLATERALIZATION. After the Closing:
(1) A default by Purchaser under either this Agreement or
the Note shall be deemed to be a default by Purchaser under both;
(2) A default by either guarantor under the Guaranty shall
be deemed to be a default by Purchaser under this Agreement and the
Note; and
(3) A default by Seller under this Agreement shall not be
deemed a reason for Purchaser's non-payment under the terms of the Note.
In the event of a default as provided for above in this
subsection, at the election of the non-defaulting Party, such default
shall be deemed to be a default under the other agreements as above
provided, whereupon such agreements shall, at non-defaulting Party's
election, terminate and the non-defaulting Party
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shall be entitled to
recover from the defaulting Party any damages to which it is entitled.
The Parties have executed this Agreement on August 29, 1996.
PURCHASER: SELLER:
Rehab Plus Therapeutic Xxxxxxxxx Industries L.P.
Products, Inc.
By /s/ XXXXXX X. XXXXX By: /s/ XXXXX X. XXXXXXXXX
------------------------ -------------------------
Xxxxx X. Xxxxxxxxx
Its President Chief Executive Officer of
--------------------- Xxxxxxxxx Operating Corp., its
General Partner
EXHIBITS:
EXHIBIT 1(a) Seller Affiliates
EXHIBIT 1(i) Equipment
EXHIBIT 1(j) Inventory
EXHIBIT 1(k) Liabilities
EXHIBIT 1(m) Prepaid Expenses
EXHIBIT 2(c)(2) Note
EXHIBIT 2(e) Purchase Price Allocation
EXHIBIT 3(i) Contract Rights
EXHIBIT 7(b)(2)(C) Guaranty
EXHIBIT 8 Escrow Agreement
EXHIBIT 10(c) Noncompetition Customer List
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