STOCK PURCHASE AND SALE AGREEMENT
(Albuquerque)
AGREEMENT dated as of December 17, 1996, by and between the individuals
named in Section 1.1 below (referred to herein individually as "Seller" and
collectively as "Sellers") and HEALTHCARE HEARING CLINICS, INC., a Washington
corporation ("Purchaser").
RECITALS
A. FHC, Inc., a New Mexico corporation (the "Company"), operates an
audiology and hearing aid clinic in Albuquerque, New Mexico, which performs
testing and evaluation of patients' hearing, prescribes and fits hearing aids,
and provides related services and products.
X. Xxxxxxx own all shares of the issued and outstanding capital stock
of the Company (the "Shares").
C. Purchaser is a wholly owned subsidiary of HealthCare Capital Corp.,
a corporation organized under the laws of the Province of Alberta, Canada
("HCC").
D Purchaser and Sellers desire that Purchaser acquire ownership of the
Company through a purchase of the Shares.
TERMS
In consideration of the premises and of the mutual covenants,
representations, warranties and agreements contained herein, the parties agree
as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 OWNERSHIP OF SHARES. The Shares are owned by Sellers as follows:
SELLERS SHARES PERCENTAGE
Xxxx X. and Xxxxxxx X.X. Xxxxx 537 52.647
Xxxxx X. and Xxxxxx X. Xxxxxxxxx 250 24.510
Xxxxx X. and Xxxxx X. Xxxxx 67 6.569
Xxxxxxxxx Worth 53 5.196
Xxxxxxx X. and Xxxxxxx X. Xxxxxxxx 35 3.431
Xxxxx-Xxxxx X. and
Xxxxxx X. Xxxxxxxxx 34 3.333
Xxxxx X. and Xxxxxxx X. Xxxxxxxx 20 1.961
Xxxx X. Xxxxxx 17 1.667
Xxxxxx X. and Xxxx X. Xxxxxxxxx 5 0.490
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Xx X. Xxxxxxxxx 2 0.196
--- -------
1,020 100.00
1.2 PURCHASE AND SALE OF SHARES. At the Closing (as defined in Section
2.1), on the terms and subject to the conditions set forth in this Agreement,
Sellers shall sell and deliver to Purchaser, and Purchaser shall purchase the
Shares from Sellers.
1.3 PURCHASE PRICE. Subject to adjustment as set forth in Sections 1.5
and 1.6 hereof, the purchase price for the Shares (the "Purchase Price") shall
be a total of $300,000 payable as provided in Section 1.4 hereof.
1.4 PAYMENT OF PURCHASE PRICE. The Purchase Price shall be paid as
follows:
(a) At Closing, Purchaser shall pay to Sellers $150,000
allocated as set forth in subsection (c) below by wire transfer to such
accounts as Sellers shall designate in writing to Purchaser at least
three business days prior to Closing; and
(b) At Closing, Purchaser shall deliver to Sellers Purchasers'
three year unsecured subordinated promissory notes (the "Notes") in the
aggregate principal amount of $150,000 which Notes shall be in the form
of SCHEDULE 1.4(B)-A (attached hereto); the principal amount of the
Notes for each Seller shall be as set forth in subsection (c) below;
the Notes shall be subject to set-off as provided in Section 1.5 hereof
and shall be guaranteed by HCC pursuant to a Guaranty in the form of
SCHEDULE 1.4(B)-B attached hereto.
(c) The amounts due Sellers pursuant to subsections 1.4(a) and
(b) shall be allocated among them as follows:
CASH NOTES TOTAL
Xxxx S and Xxxxxxx
X.X. Xxxxx $78,970.58 $ 78,970.58 $157,941.16
Xxxxx X. & Xxxxxx X. Xxxxxxxxx 36,764.71 36,764.71 73,529.42
Xxxxx X. & Xxxxx X. Xxxxx 9,852.94 9,852.94 19,705.88
Xxxxxxxxx Worth 7,794.12 7,794.12 15,588.24
Xxxxxxx X. & Xxxxxxx X.
Xxxxxxxx 5,147.06 5,147.06 10,294.12
Xxxxx-Xxxxx X. &
Xxxxxx X. Xxxxxxxxx 5,000.00 5,000.00 10,000.00
Xxxxx X. & Xxxxxxx X. Xxxxxxxx 2,941.18 2,941.18 5,882.36
Xxxx X. Xxxxxx 2,500.00 2,500.00 5,000.00
Xxxxxx X. & Xxxx X. Xxxxxxxxx 735.29 735.29 1,470.58
Xx X. Xxxxxxxxx 294.12 294.12 588.24
------------ ------------ ------------
$150,000.00 $150,000.00 $300,000.00
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1.5 POST-CLOSING ADJUSTMENTS TO NOTES. On the payment dates of the
Notes, Purchaser shall pay to the Sellers the respective principal and interest
due them less the set-offs (if any) which result from the following provisions.
(a) EARN-OUT. The income of the business being acquired from
the Company hereunder (the "Business") shall be separately determined
for each of the three 12-month periods ending on November 30, 1997,
1998 and 1999 (the "Earn-Out Years"). Such income shall be determined
in accordance with generally accepted accounting principles applied on
a basis consistent with Purchaser's accounting practices. If for any
Earn-Out Year the income of the Business before interest, taxes,
depreciation and amortization but after the corporate overhead
allocation specified below falls below an amount equal to 20 percent of
the net revenues of the Business for such year, then for each dollar of
the shortfall one dollar shall be set-off pro rata against the
principal and accrued interest due on the Notes. The total maximum
reduction on the Notes for any Earn-Out Year, pursuant to this Section
1.5(a), shall be $12,500. For purposes of this Section 1.5(a), "net
revenues" shall mean gross revenues less returns and allowances. The
corporate overhead allocation to be charged against the Business shall
equal 6 percent of its net revenues.
(b) ACCOUNTS RECEIVABLE. On the 200th day following the
Closing, Purchaser shall set-off pro rata against the principal and
interest due on Notes the total amount of accounts receivable reflected
on the Statement of Net Working Capital (as defined in subsection
1.6(b) below) net of the allocable portion of the reserve for bad
debts, which remain uncollected as of such date. Upon such set-off, the
uncollected accounts shall be assigned to Sellers. During such 200-day
period, Sellers may participate in the collection process of such
accounts receivable.
(c) LIABILITIES. To the extent that the Company has long-term
liabilities, including any amounts owed to Sellers which will be repaid
at Closing pursuant to Section 5.2(b) hereof, in excess of $100,000 as
of the Closing date, each dollar of such excess shall be set-off pro
rata against the principal amounts of the Notes effective as of the
Closing date.
1.6 NET WORKING CAPITAL ADJUSTMENT.
(a) For purposes of this Agreement, "Net Working Capital"
shall equal (i) cash, money market accounts, accounts receivable (net
of reasonable provisions for doubtful accounts), inventory, prepaid
expenses and all other current assets of the Company as of Closing less
(ii) all current liabilities of the Company as of Closing, including
but not limited to liabilities for inventory, office supplies, ordinary
compensation payables, employee benefits and taxes (including, but not
limited to, accrued paid time off for vacation and sick leave), bonuses
(including all related payroll taxes and employee benefits), personal
and real property taxes, water, gas, electric and other utility
charges, business and other license fees and taxes, merchants'
association dues, rental payments under any leases, any customer
refunds for hearing aids delivered
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prior to Closing, and all other operating liabilities (including legal,
accounting, and other professional fees and expenses incurred in the
ordinary course of business), and vendor accounts payable.
(b) As promptly as practicable following the Closing, but in
no event later than 45 days thereafter, Sellers and Purchaser shall
cooperate in preparing a mutually agreeable statement of the Net
Working Capital which shall set forth the computation and components
thereof in reasonable detail (the "Statement of Net Working Capital").
(c) On the fifteenth day after the date on which the Statement
of Net Working Capital is completed (or such earlier date as such
statement is mutually agreed upon by Sellers and Purchaser in writing),
(i) in the event that the Net Working Capital exceeds $15,000, then
Purchaser shall pay to Sellers pro rata an amount equal to the excess,
or (ii) in the event that Net Working Capital is less than $15,000,
then Sellers shall pay to Purchaser, pro rata, the amount of such
deficiency.
The party obligated to make the adjusting payment required pursuant to
this paragraph shall have the option either to make the payment in cash or by
delivering a promissory note due and payable not more than 180 days after its
date, with interest at the rate of 9 percent per annum. If Sellers are obligated
to make the adjusting payment, Sellers shall also have the option to request
that the amounts they are obligated to pay Purchaser be offset against their
respective Notes.
ARTICLE II
CLOSING
2.1 CLOSING. The closing of the transaction provided for herein (the
"Closing") shall occur on December 17, 1996, or on such other date as the
parties may mutually agree. The Closing shall take place at such time and place
as the parties shall mutually agree.
2.2 CLOSING TRANSACTIONS. The following actions shall be taken at
Closing, each of which shall be conditional on completion of all the others and
all of which shall be deemed to have taken place simultaneously:
(a) DELIVERIES BY SELLERS. Sellers shall deliver to Purchaser:
(i) Certificates representing the Shares;
(ii) An opinion of counsel to Sellers, dated
as of the Closing date, substantially in the form of SCHEDULE
2.2(A)(II) attached hereto; and
(iii) The stock and minute books of the
Company;
(iv) All consents required in connection
with the transactions contemplated hereunder.
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(b) DELIVERIES BY PURCHASER. Purchaser shall deliver to
Sellers:
(i) The payments provided for in Sections
1.4(a) and 5.2(b);
(ii) The Notes;
(iii) The Guaranties of HCC; and
(iv) An opinion of counsel to Purchaser, dated as of
the Closing date, substantially in the form of SCHEDULE
2.2(B)(III) attached hereto.
(c) JOINT DELIVERY. Purchaser and Sellers shall deliver to
each other counterparts of the Noncompetition and Confidentiality
Agreement provided for in subsection 6.5(a). Purchaser and the Sellers
named in Subsections 6.5(b) and (c) hereof shall deliver to each other
counterparts of the Employment Agreements provided for in such
Subsections.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Except as otherwise set forth in the Disclosure Statement attached
hereto as SCHEDULE III, Sellers hereby jointly and severally represent and
warrant to Purchaser as follows:
3.1 CORPORATE.
(a) ORGANIZATION. The Company is a corporation duly organized
and existing under the laws of the state of New Mexico.
(b) CAPITALIZATION. The authorized capital stock of the
Company consists of 500,000 shares of a single class of common stock,
of which 1,020 shares are issued and outstanding. All issued and
outstanding Shares have been validly issued and are fully paid and
nonassessable and are owned (beneficially and of record) by Sellers as
set forth in Section 1.1 hereof free and clear of all liens, claims,
and encumbrances whatsoever. The Shares constitute all the outstanding
shares of capital stock of the Company. No person has any agreement,
option or other right, present or future, to purchase or otherwise
acquire any shares of the capital stock of the Company.
(c) CORPORATE POWER. The Company has all requisite corporate
power and authority to own, operate and lease its assets and properties
and to carry on its business as and where such is now being conducted.
(d) NO SUBSIDIARIES. The Company does not own an interest in
any corporation, partnership or other entity.
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(e) ARTICLES OF INCORPORATION; BYLAWS. The copies of the
Company's articles of incorporation and bylaws which have heretofore
been delivered to Purchaser are complete and correct as amended or
restated to the date hereof.
(f) ASSUMED BUSINESS NAME. To the best of Sellers' knowledge,
the Company is authorized to transact business in the state of New
Mexico under the assumed business name "Family Hearing Centers."
3.2 NO VIOLATION. Neither the execution and delivery of this Agreement
or the other documents and instruments to be executed and delivered by the
Sellers pursuant hereto, nor the consummation by the Sellers of the transactions
contemplated hereby and thereby (a) will violate any statute or law or any rule,
regulation, order, writ, injunction or decree of any court or governmental
authority, (b) will require any authorization, consent, approval, exemption or
other action by or notice to any court, administrative or governmental agency,
instrumentality, commission, authority, board or body or (c) will violate or
conflict with, or constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, or will result in the
termination of, or accelerate the performance required by, or result in the
creation of any material Lien (as defined in Section 3.18(b)) upon any of the
assets of the Company under, any term or provision of the articles of
incorporation or bylaws of the Company or of any material contract, commitment,
understanding, arrangement, agreement or restriction of any kind or character to
which the Company is a party or by which the Company or the Company's assets or
properties or the Shares of the Company may be bound or affected.
3.3 FINANCIAL STATEMENTS. The Sellers have heretofore delivered to
Purchaser the following financial statements of the Company including balance
sheets and statements of income (the "Financial Statements"):
(a) Financial Statements for the Company's fiscal years ended
December 31, 1993, 1994, and 1995; and
(b) Financial Statements for the interim period ended October
31, 1996.
The Financial Statements are correct and complete in all material respects and
fairly present the financial condition of the Company at the dates indicated and
results of its operations for the periods then ended in accordance with
generally accepted accounting principles consistently applied.
3.4 RECORDS. The books of account of the Company reflect all items of
income and expense and the assets, liabilities, and accruals of its business and
operations. The minute books and stock transfer records of the Company contain
records which are complete and accurate in all material respects of all minutes,
consents of shareholders and directors, all corporate actions, and all stock
transfers of the Company.
3.5 ABSENCE OF CERTAIN CHANGES. Since the date of the most recent
balance sheet included in the Financial Statements, there has not been:
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(a) ADVERSE CHANGE. Any material adverse change in the
financial condition, assets, liabilities, business, prospects or
operations of the Company;
(b) DAMAGE. Any material loss, damage or destruction, whether
covered by insurance or not, affecting the Company's business or
assets;
(c) INCREASE IN COMPENSATION. Any increase in the
compensation, salaries or wages payable or to become payable to any
employee or agent of the Company (including, without limitation, any
increase or change pursuant to any bonus, pension, profit sharing,
retirement or other plan or commitment), or any bonus or other employee
benefit granted, made or accrued;
(d) LABOR DISPUTES. Any labor dispute or disturbance, other
than routine individual grievances which are not material to the
business, financial condition or results of operations of the Company;
(e) COMMITMENTS. Any commitment or transaction by the Company
(including, without limitation, any capital expenditure) other than in
the ordinary course of business consistent with past practice;
(f) DIVIDENDS. Any declaration, setting aside, or payment of
any dividend or any other distribution in respect of the Company's
capital stock; any stock split; any redemption, purchase or other
acquisition by the Company of any capital stock of the Company, or any
security relating thereto; or any other payment to any Seller as a
shareholder;
(g) DISPOSITION OF PROPERTY. Any sale, lease or other transfer
or disposition of any properties or assets of the Company except for
sales of inventory, consumption of supplies, and nonmaterial
dispositions of worn or broken parts and equipment all in the ordinary
course of business;
(h) INDEBTEDNESS. Any indebtedness for borrowed money
incurred, assumed or guaranteed by the Company other than changes in
the Company's lines of credit in the ordinary course of business,
except for loans to the Company by the Sellers which loans shall be
treated as provided in Section 5.2(b) hereof;
(i) AMENDMENT OF CONTRACTS. Any entering into, amendment or
termination by the Company of any contract, or any waiver of material
rights thereunder, other than in the ordinary course of business;
(j) LOANS, ADVANCES, OR CREDIT. Any loan or advance or any
grant of credit by the Company; or
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(k) UNUSUAL EVENTS. Any other event or condition specifically
related to the Company not in the ordinary course of business which
would have a material adverse effect on the assets or the business of
the Company.
3.6 ADVERSE CONDITIONS. There are no conditions known to any Seller
with respect to the markets, products, facilities, or personnel of the Company
which might materially adversely affect its business or prospects after the
Closing other than such conditions as may affect the industry in which the
Company participates as a whole.
3.7 NO LITIGATION. There is no action, suit, arbitration, proceeding,
investigation or inquiry pending or to the knowledge of the Sellers threatened
against the Company, its directors (in such capacity), its business or any of
its assets. SCHEDULE 3.7 identifies all actions, suits, proceedings,
investigations and inquiries to which the Company or the Sellers have been a
party since January 1, 1990. Neither the Company nor its business or assets are
subject to any judgment, order, writ or injunction of any court, arbitrator or
federal, state, foreign, municipal or other governmental department, commission,
board, bureau, agency or instrumentality.
3.8 COMPLIANCE WITH LAWS.
(a) COMPLIANCE. To the best of Sellers' knowledge, the Company
(including each and all of its operations, practices, properties and
assets) is in material compliance with all applicable federal, state,
local and foreign laws, ordinances, orders, rules and regulations
(collectively, "Laws"), including, without limitation, those applicable
to discrimination in employment, occupational safety and health, trade
practices, environmental protection, competition and pricing, product
warranties, zoning, building and sanitation, employment, retirement and
labor relations, and product advertising except to the extent any
noncompliance would not have a material adverse effect upon the assets
or the business of the Company taken as a whole. The Company has not
received notice of any violation or alleged violation of, and are not
subject to liability for past or continuing violation of, any Laws. All
reports and returns required to be filed by the Company with any
governmental authority have been filed, and were accurate and complete
when filed except to the extent any deficiency would not have a
material adverse effect upon the assets or the business of the Company
taken as whole.
(b) LICENSES AND PERMITS. The Company has obtained all
licenses, permits, approvals, authorizations and consents of all
governmental and regulatory authorities and all certification
organizations required for the conduct of its business as presently
conducted except to the extent failure to do so would not have a
material adverse effect upon the assets or the business of the Company
taken as a whole. All such licenses, permits, approvals, authorizations
and consents are described in SCHEDULE 3.8(B) and are in full force and
effect. The Company (including its operations, properties and assets)
is and has been in compliance with all such permits and licenses,
approvals, authorizations and consents, except to the extent any
noncompliance would not have a material adverse effect upon the assets
or the business of the Company taken as a whole.
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3.9 ENVIRONMENTAL COMPLIANCE. Sellers have delivered to Purchaser a
copy of every written communication given or received by the Company to or from
any environmental agency with respect to the Company or with respect to any
property which is now being used or which has heretofore been used by the
Company in the operation of its business. Sellers have at all times operated the
Company, in compliance with all applicable federal, state and local laws and
regulations relating to pollution control and environmental contamination
including, without limitation, all laws and regulations governing the
generation, use, collection, treatment, storage, transportation, recovery,
removal, discharge or disposal of hazardous materials (as defined below) and all
laws and regulations with regard to record keeping, notification and reporting
requirements respecting Hazardous Materials (as defined below), except for such
noncompliance as would not cause a material adverse effect on the Company's
business or assets. The Company has not received notice of any administrative or
judicial proceeding pursuant to such laws or regulations. There is no basis for
the assertion of a valid claim against the Company relating to environmental
matters including, without limitation, any claim arising from past or present
environmental practices, asserted under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended from time to time
("CERCLA"), the Resource Conservation and Recovery Act, as amended from time to
time ("RCRA") or any other federal, state, or local statute, code, rule,
regulation, ordinance, order, decree, or other governmental authority as now or
at any time hereafter in effect. For purposes of this Section 3.9, the term
"Hazardous Materials" means materials defined as "hazardous wastes" or "solid
wastes" in CERCLA, RCRA or in any similar federal, state, or local statute,
code, rule, regulation, ordinance, order, decree, or other governmental
authority as now or at any time hereafter in effect.
3.10 NO UNDISCLOSED LIABILITIES. Except (a) as described on the
Schedules attached hereto as an item which can be reasonably construed as a
liability or obligation or (b) items not required to be disclosed on the
Schedules by reason of exceptions, exclusions, or other qualifications contained
in the representations and warranties of this Agreement, the Company has no
liabilities or obligations of any nature (absolute, accrued, contingent or
otherwise) which are not properly reflected or reserved against in the Financial
Statements (except for liabilities or obligations which have been incurred in
the ordinary course of business since the date of the most recent Financial
Statements) in a manner consistent with past practice; and the reserves
reflected in the Financial Statements are adequate, appropriate and reasonable.
3.11 TAX MATTERS.
(a) Except with respect to Taxes (as defined below) for which
adequate reserves are included in the Financial Statements, the Company
has timely paid all federal, state, county, local and foreign taxes,
including, without limitation, income taxes, excise taxes, sales taxes,
use taxes, gross receipts taxes, franchise taxes, employment and
payroll taxes, withholding taxes, property taxes, import duties, and
all other taxes of any nature whatsoever and however denominated
together with all penalties, additions to tax, interest, assessment or
other damages imposed thereon with respect to the Company
(collectively, "Tax" or "Taxes") required to be paid or deposited by
the Company through the Closing. For purposes of this Section 3.11(a),
timely
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payment shall include payment in accordance with any available
extensions and recording of balances due as trade payable.
(b) The Company has filed on or before the applicable due date
(including extensions) all tax returns which it is required to have
filed through the date hereof and has timely paid all amounts shown as
payable thereon, as well as any deficiencies or other additional
amounts subsequently assessed by any taxing authority with respect to
each such tax return. All such returns are true, correct and complete
in all material respects.
(c) The Company has not waived any statute of limitations in
respect of Taxes of the Company or agreed to any extension of time with
respect to a Tax assessment or deficiency of the Company, and the
assessment of any additional Taxes of the Company with respect to
periods for which returns have been filed is not expected.
(d) There are no proposed deficiencies or unresolved claims
concerning the Company's liability for Taxes.
(e) All federal and state income tax returns (including all
attachments and amendments thereto) of the Company for all taxable
years for which the limitation periods (including any extensions or
waivers thereof) applicable to deficiencies have not expired have been
made available to Purchaser.
(f) Complete and correct copies of the Company's federal and
New Mexico income tax returns for 1993, 1994, and 1995 have been
delivered by the Sellers to Purchaser.
3.12 PRODUCT WARRANTY. Set forth in SCHEDULE 3.12 is a true, correct
and complete copy of the Company's standard warranty or warranties for sales of
its products.
3.13 PRODUCT LIABILITY. No action is pending or, to the knowledge of
Sellers, threatened against or involving the Company relating to any product
alleged to have been sold by the Company and alleged to have been defective, or
improperly designed or manufactured.
3.14 INSURANCE. The Company maintains policies of fire, liability,
product liability, malpractice, workers compensation, health and other forms of
insurance with such coverage limits and deductible amounts as have been
disclosed to Purchaser. A summary description of the Company's coverage and
effect is attached as SCHEDULE 3.14. The Company has received no notification of
cancellation, modification or denial of renewal of any material policies of
fire, product liability, malpractice or other forms of insurance.
3.15 SUPPLIERS. The Company has received no notice of termination or an
intention to terminate the relationship with the Company, from any material
supplier.
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3.16 PATENTS; TRADEMARKS; ETC. Set forth in SCHEDULE 3.16 is a list of
all United States and foreign trademarks, service marks, trade names, brand
names, copyrights, including registrations and applications, patent and patent
applications, and employee covenants and agreements respecting intellectual
property ("Trade Rights") in which the Company now has any interest, specifying
the basis on which such Trade Rights are owned, controlled, used or held (under
license or otherwise) by the Company, and also indicating which of such Trade
Rights are registered. All Trade Rights shown as registered in SCHEDULE 3.16
have been properly registered, all pending registrations and applications have
been properly made and filed and all annuity, maintenance, renewal and other
fees relating to registrations or applications are current. To the best of
Sellers' knowledge, the Company is not infringing and has not infringed on any
Trade Rights of another in the operation of its business, nor to the knowledge
of the Sellers is any other person infringing on the Trade Rights of the
Company. The Company has not granted any license or made any assignment of any
Trade Right and no other person has any right to use any Trade Right owned or
held by the Company. The Company does not pay any royalties or other
consideration for the right to use any Trade Rights of others. Except as set
forth in SCHEDULE 3.16, to the knowledge of Sellers, there are no inquiries,
investigations or claims or litigation challenging or threatening to challenge
the Company's right, title and interest with respect to its continued use and
right to preclude others from using any Trade Rights of the Company. To the
knowledge of Sellers, all Trade Rights of the Company are valid, enforceable and
in good standing, and there are no equitable defenses to enforcement based on
any act or omission of the Company.
3.17 CONTRACTS AND COMMITMENTS.
(a) LEASES.
(i) Set forth in SCHEDULE 3.17(A)(I) is a list of all
real and personal property leases (the "Leases") to which the
Company is party. Complete and correct copies of each lease
listed on the schedule, and all amendments thereto, have
heretofore been delivered to Purchaser. The Leases are
currently in full force and effect.
(ii) The Company is not in default under the Leases;
to the knowledge of Sellers, there are no defaults by the
lessors under any of the Leases; and no event has occurred
which with the passage of time or the giving of notice would
constitute a default under any of the Leases. The Company has
not knowingly waived any rights under any of the Leases.
(b) PURCHASE COMMITMENTS. Set forth in SCHEDULE 3.17(B) is a
list of all agreements (written or oral) between the Company and third
parties for the purchase of goods and supplies by the Company which
individually call for the payment by the Company after the date hereof
of more than $5,000 or which obligate the Company for a period
extending over a period of more than 90 days after the Closing date.
Complete and correct copies of all such written agreements have
heretofore been delivered to Purchaser.
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(c) SALES COMMITMENTS. Set forth in SCHEDULE 3.17(C) is a list
and description of all presently effective agreements (written or oral)
between the Company and third parties for the distribution and sale of
its products. Complete and correct copies of all such written contracts
have heretofore been delivered to Purchaser.
(d) CONTRACTS WITH SELLERS AND CERTAIN OTHERS. Except for the
debentures and promissory notes owed by Company to Sellers and the
employment relationships which exist between certain of the Sellers and
the Company, the Company has no agreement, understanding, contract or
commitment (written or oral) with any Seller, or any relative of a
Seller.
(e) COLLECTIVE BARGAINING AGREEMENTS. The Company is not party
to any collective bargaining agreement with any union.
(f) LOAN AGREEMENTS. Except as set forth on SCHEDULE 3.17(F),
the Company is not obligated under any loan agreement, promissory note,
letter of credit, or other evidence of indebtedness as signatories,
guarantors or otherwise.
(g) GUARANTEES. Except as disclosed herein, the Company has
not under any instrument which is presently effective guaranteed the
payment or performance of any person, firm or corporation, agreed to
indemnify any person or act as a surety, or otherwise agreed to be
contingently or secondarily liable for the obligations of any person.
(h) RESTRICTIVE AGREEMENTS. The Company is not party to nor is
it bound by any agreement requiring it to assign any interest in any
trade secret or proprietary information, or prohibiting or restricting
it from competing in any business or geographical area or soliciting
customers or otherwise restricting them from carrying on its business
anywhere in the world.
(i) OTHER MATERIAL CONTRACTS. The Company is not a party to
any lease, license, contract (including without limitation contracts
with health maintenance organizations) or commitment of any nature
involving consideration or other expenditure in excess of $5,000, or
involving performance over a period of more than 90 days, or which is
otherwise individually material to the operations of the Company,
except as set forth in SCHEDULE 3.17(I).
(j) NO DEFAULT. The Company is not in default under any lease,
agreement, contract or commitment, nor has any event or omission
occurred which through the passage of time or the giving of notice, or
both, would constitute a default thereunder or cause the acceleration
of any of the Company's obligations or result in the creation of any
Lien (as defined in Section 3.18(b) below) on any of the assets owned,
used or occupied by the Company. To the knowledge of the Sellers, no
third party is in default under any lease, agreement, contract or
commitment to which the Company is a party, nor has any event or
omission occurred which, through the passage of time or the giving
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of notice, or both, would constitute a default thereunder or give rise
to an automatic termination, or the right of discretionary termination
thereof.
3.18 TITLE TO AND CONDITION OF PROPERTIES.
(a) REAL PROPERTY. The Company does not own any interest in
any real property other than its lessee<018>s interests under the real
property leases referred to in Section 3.17(a)(i) hereof.
(b) ITEMS OF TANGIBLE PERSONAL PROPERTY. Set forth on SCHEDULE
3.18(B) is a list of all items of tangible personal property owned by
the Company with an individual value of $100 or more. Except as set
forth on SCHEDULE 3.18(B), the Company has good and marketable title to
all its assets, free and clear of all mortgages, liens (statutory or
otherwise), security interests, claims, pledges, equities, options,
conditional sales contracts, assessments, levies, easements, covenants,
reservations, restrictions, exceptions, limitations, charges or
encumbrances of any nature whatsoever (collectively, "Liens"). All the
Company's tangible assets are located at its business premises and all
tangible assets located at such premises are owned by the Company
except for leased property described in SCHEDULE 3.17(A)(I).
(c) CONDITION. All the Company's tangible assets are, taken as
a whole, in good operating condition and repair, normal wear and tear
excepted.
(d) LAND USE REGULATIONS. To the best of Sellers' knowledge,
there are no condemnation, environmental, zoning, land use, or other
regulatory proceedings, pending or, to the knowledge of the Sellers,
planned to be instituted, that could detrimentally affect the
ownership, use, or occupancy of the real property presently occupied by
the Company or the continued operation of the Company's business as
they are presently being conducted.
3.19 EMPLOYEE BENEFIT PLANS. Set forth in SCHEDULE 3.19, is a
description of all pension, profit sharing, retirement, bonus, executive or
deferred compensation, hospitalization and other similar fringe or employee
benefit plans, programs and arrangements, and any employment or consulting
contracts, "golden parachutes", severance agreements or plans, vacation and sick
leave plans including, without limitation, all "employee benefit plans" (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), all employee manuals, and all written or binding oral
statements of policies, practices or understandings relating to employment,
which are provided to, for the benefit of, or relate to, any persons employed by
the Company. The items described in the foregoing sentence are hereinafter
sometimes referred to collectively as "Employee Plans/Agreements." True and
correct copies of all written Employee Plans/Agreements, including all
amendments thereto, have heretofore been provided to Purchaser. The Company is
in compliance with and has made all payments due under all Employee
Plans/Agreements and with respect thereto the Company is in compliance with all
applicable federal and state laws and regulations. The
- 13 -
Company is not a contributor to any multi-employer pension plan which has an
unfunded liability with respect to benefits due its participants.
3.20 EMPLOYMENT COMPENSATION. Set forth in SCHEDULE 3.20 is a true and
correct list of:
(a) All employees to whom the Company is paying compensation;
and in the case of salaried employees such list identifies the current
annual rate of compensation for each employee and in the case of hourly
or commission employees identifies certain reasonable ranges of rates
and the number of employees falling within each such range; and
(b) All amounts owed to employees of the Company (including
the Sellers) for accrued sick pay, vacation pay, and bonus pay.
3.21 KEY EMPLOYEES; BANK; ETC. Set forth in SCHEDULE 3.21 is a list
showing:
(a) The names of all the Company's officers and directors;
(b) The name of each bank at which the Company has (i) an
account and the numbers of all accounts, (ii) a line of credit, or
(iii) a safe deposit box and the name of each person authorized to draw
thereon or have access thereto; and
(c) The name of each person holding a power of attorney from
the Company and a summary of the terms thereof.
3.22 ACCOUNTS RECEIVABLE. Each of the accounts receivable of the
Company (a) arose from a bona fide sale in the ordinary course of business, (b)
was entered into under circumstances and by methods usual and customary in the
Company's business and the collection practices used with respect thereto have
been in all respect legal and proper and (c) was entered into, and credit
granted pursuant thereto, consistent with the Company's historical credit
policies and practices. The books of the Company correctly record the principal
balance of all accounts receivable and each of the security instruments securing
any account receivable, if any, constitutes a valid lien in favor of the Company
upon the property which it describes, and is enforceable by the Company and its
transferees. The reserves for doubtful accounts shown or reflected on the
Financial Statements are adequate and were calculated consistent with past
practice.
3.23 INVENTORY. The inventories of the Company are of a quality and
quantity usable and salable in the ordinary course of business, have a
commercial value at least equal to the value shown on the Company's books of
account.
- 14 -
3.24 DISCLOSURE. To the best of Sellers' knowledge, no representation
or warranty by the Sellers in this Agreement, nor any statement, certificate,
schedule, or exhibit hereto furnished or to be furnished by or on behalf of the
Sellers pursuant to this Agreement, nor any document or certificate delivered to
Purchaser pursuant to this Agreement or in connection with transactions
contemplated hereby, contains or shall contain any untrue statement of material
fact or omits or shall omit a material fact necessary to make the statements
contained therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Sellers as follows:
4.1 CORPORATE.
(a) ORGANIZATION. Purchaser is a corporation duly organized
and validly existing under the laws of the state of Washington.
Purchaser is a wholly owned subsidiary of HCC.
(b) CORPORATE POWER. Purchaser has all requisite corporate
power and authority to own, operate and lease its properties, to carry
on its business as and where such is now being conducted, to enter into
this Agreement and the other documents and instruments to be executed
and delivered by Purchaser pursuant hereto and to carry out the
transactions contemplated hereby and thereby.
(c) AUTHORIZATION. The execution and delivery of this
Agreement and the other documents and instruments to be executed and
delivered by HealthCare pursuant hereto in the consummation of the
transactions contemplated hereby and thereby have been duly authorized
by the board of directors of HealthCare. This Agreement constitutes,
and when executed and delivered, the other documents and instruments to
be executed and delivered by Purchaser pursuant hereto will constitute,
valid and binding agreements of Purchaser, enforceable in accordance
with their respective terms.
(d) QUALIFICATION. Purchaser is duly licensed or qualified to
do business as a foreign corporation, and is in good standing, in each
jurisdiction wherein the character of the properties owned or leased by
it, or the nature of its business, makes such licensing or
qualification necessary.
4.2 NO VIOLATION. Neither the execution and delivery of this Agreement
or the other documents and instruments to be executed and delivered by Purchaser
pursuant hereto, nor the consummation by Purchaser of the transactions
contemplated hereby and thereby (a) will violate any statute or law or any rule,
regulation, order, writ, injunction or decree of any court or governmental
authority, (b) will require any authorization, consent, approval, exemption or
other action by or notice to any court, administrative or governmental agency,
instrumentality,
- 15 -
commission, authority, board or body, or (c) will violate or conflict with, or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or will result in the termination of, or
accelerate the performance required by, or result in the creation of any
material Lien upon any of the assets of Purchaser under, any term or provision
of the Articles of Incorporation or By-laws of Purchaser or of any material
contract, commitment, understanding, arrangement, agreement or restriction of
any kind or character to which Purchaser is a party or by which Purchaser or any
of its assets or properties may be bound or affected.
4.3 DISCLOSURE. No representation or warranty by Purchaser in this
Agreement nor any statement, certificate, schedule or exhibit hereto furnished
or to be furnished by or on behalf of Purchaser pursuant to this Agreement, nor
any document or certificate delivered to Purchaser pursuant to this Agreement or
in connection with transactions contemplated hereby, contains or shall contain
any untrue statement of material fact or omits or shall omit a material fact
necessary to make the statements contained therein not misleading.
ARTICLE V
COVENANTS
5.1 COVENANTS OF SELLERS.
(a) ACCESS TO INFORMATION AND RECORDS. The Sellers agree that
during the period after the date hereof and prior to the Closing,
Purchaser, its counsel, accountants and other representatives shall be
provided (i) reasonable access during normal business hours to all of
the properties, books, records, contracts and documents of the Company
for the purpose of such inspection, investigation and testing as
Purchaser deems appropriate (and Sellers shall furnish or cause to be
furnished to Purchaser and its representatives all information with
respect to the business and affairs of the Company as Purchaser may
reasonably request); (ii) reasonable access to employees and agents of
the Company for such meetings and communications as Purchaser
reasonably desires; and (iii) with the prior consent of the Company in
each instance (which consent shall not be unreasonably withheld),
access to vendors, customers, and others having business dealings with
the Company.
(b) CONDUCT OF BUSINESS PENDING THE CLOSING. The Sellers agree
that from the date hereof until the Closing, except as otherwise
approved in writing by Purchaser:
(i) NO CHANGES. The Company will carry on its
business diligently and in the same manner as heretofore and
will not make or institute any changes in its methods of
purchase, sale, management, accounting or operation.
(ii) MAINTAIN ORGANIZATION. The Company will use its
best efforts to maintain, preserve, renew and keep in force
and effect the existence, rights and franchises of the Company
and to preserve the business organization of the Company
intact, to keep available to Purchaser the present officers
and employees
- 16 -
of the Company, and to preserve for Purchaser its present
relationships with suppliers and customers and others having
business relationships with the Company.
(iii) NO BREACH. The Company will use its best
efforts to avoid any act, or any omission to act, which may
cause a breach of any material contract, commitment or
obligation, or any breach of any representation, warranty,
covenant or agreement made by the Sellers.
(iv) NO MATERIAL CONTRACTS. No contract or commitment
will be entered into, and no purchase of assets (tangible or
intangible) will be made, by or on behalf of the Company,
except contracts, commitments, purchases or sales which are in
the ordinary course of business and consistent with past
practice.
(v) NO CORPORATE CHANGES. The Company shall not amend
its Articles of Incorporation or Bylaws or make any changes in
its authorized or issued capital stock; the Company shall not
grant any option or other right to acquire any share of its
authorized capital stock;
(vi) MAINTENANCE OF INSURANCE. The Company shall
maintain all of its insurance in effect as of the date hereof
or replace such insurance with comparable coverage and shall
procure such additional insurance as shall be reasonably
requested by Purchaser at Purchaser's expense.
(vii) MAINTENANCE OF PROPERTY. The Company shall use,
operate, maintain and repair all its assets and properties in
a normal business manner consistent with the Company's past
practices.
(viii) INTERIM FINANCIALS. The Company will provide
Purchaser with interim monthly financial statements and other
management reports as and when they are available.
(ix) NO DIVIDENDS. The Company shall not declare or
pay any dividend (whether in cash, stock or property) or make
any other distribution to the Sellers, except for the
repayment of loans made by the Sellers to the Company.
(x) COMPENSATION. The Company shall not increase the
compensation or benefits of any of its employees nor make any
other change in the terms of their employment.
5.2 COVENANTS OF PURCHASER.
(a) RELEASE OF SELLERS' PERSONAL GUARANTEES. Certain Sellers
have provided personal guarantees or have otherwise become individually
liable with respect to certain leases, line of credit agreements,
purchase agreements with manufacturers, or other
- 17 -
agreements for the benefit for the Company, including, without
limitation, those described on SCHEDULE 5.2(A). Following the Closing,
Purchaser will use its best efforts to obtain the release of the
Sellers from all such personal liabilities. To the extent that any such
release cannot be obtained, Purchaser will indemnify and hold the
Sellers harmless with respect to any loss, cost, or expense the Sellers
may incur as a result of not being released. Notwithstanding any other
provision of this Agreement, Sellers may cancel as of the Closing date
any continuing guaranties with respect to future purchases by the
Company.
(b) REPAYMENT OF SELLERS' LOANS. As of the date hereof, the
Company is indebted to the Sellers as set forth on SCHEDULE 5.2(B).
Notwithstanding any other provision of this Agreement, the Sellers
shall have the option, prior to the Closing, to (i) contribute such
indebtedness to the capital of the Company or (ii) cause the Company to
repay such indebtedness to the extent the Company has funds available
for such purpose. In the event any indebtedness of the Company to the
Sellers remains unpaid as of the Closing date, Purchaser shall pay or
contribute sufficient funds to the Company to permit the Company to
repay such indebtedness in full at the Closing.
ARTICLE VI
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS
Each and every obligation of Purchaser to be performed at Closing shall
be subject to the satisfaction prior to or at the Closing (or the waiver by
Purchaser) of each of the following conditions:
6.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. Each of the
representations and warranties made by the Sellers in this Agreement, or in any
instrument, schedule, list, certificate or writing delivered by Sellers pursuant
to this Agreement, shall be true and correct when made and shall be true and
correct in all material respects at and as of the Closing as though such
representations and warranties were made as of the Closing.
6.2 COMPLIANCE WITH AGREEMENT. The Sellers shall have in all material
respects performed and complied with all of their agreements and obligations
under this Agreement which are to be performed or complied with by them prior to
or on the Closing, including the delivery of the closing documents specified in
Section 2.2(a) hereof.
6.3 ABSENCE OF SUIT. No action, suit, investigation or proceeding
before any court or any governmental authority shall have been commenced or
threatened, against Purchaser, the Company or any of the affiliates, officers or
directors of any of them, seeking to restrain, prevent or change the
transactions contemplated hereby, or questioning the validity or legality of any
such transactions, or seeking damages in connection with, or imposing any
condition on, any such transactions; provided that the obligations of Purchaser
shall not be affected unless there is a reasonable likelihood that as a result
of such action, suit, investigation, or proceeding Purchaser will be unable to
retain substantially all the practical benefits of the transaction to which it
is entitled under this Agreement.
- 18 -
6.4 APPROVALS; CONSENTS. All consents, permits, approvals, licenses or
orders from any governmental or regulatory body or other third party required to
be obtained by Sellers for the consummation of the transactions contemplated by
this Agreement shall have been obtained except where failure to obtain such
consents, permits, approvals, licenses or orders would not have a material
adverse effect (whether or not such effect is referred to or described in any
Schedule) on the business, prospects, financial conditions, assets, reserves or
operations of the Company taken as a whole.
6.5 AGREEMENTS.
(a) NONCOMPETITION AND CONFIDENTIALITY AGREEMENT. Sellers
shall have executed and delivered to Purchaser a Noncompetition and
Confidentiality Agreement substantially in the form attached hereto as
SCHEDULE 6.5(A).
(b) EMPLOYMENT AGREEMENT. Xxxxxxx X.X. Xxxxx shall have
executed and delivered to Purchaser an Employment Agreement
substantially in the form of SCHEDULE 6.5(B) hereto;
(c) EMPLOYMENT AGREEMENT. Xxxx Xxxxxxxxx Xxxxx shall have
executed and delivered to Purchaser an Employment Agreement
substantially in the form of SCHEDULE 6.5(C) hereto.
ARTICLE VII
CONDITIONS PRECEDENT TO THE SELLERS' OBLIGATIONS
Each and every obligation of the Sellers to be performed at Closing
shall be subject to the satisfaction prior to or at the Closing (or the waiver
by the Sellers) of the following conditions:
7.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. Each of the
representations and warranties made by Purchaser in this Agreement, or in any
instrument, list, certificate or writing delivered by Purchaser pursuant to this
Agreement, shall be true and correct when made and shall be true and correct at
and as of the Closing as though such representations and warranties were made as
of the Closing.
7.2 COMPLIANCE WITH AGREEMENT. Purchaser shall have in all material
respects performed and complied with all of Purchaser's agreements and
obligations under this Agreement which are to be performed or complied with by
Purchaser prior to or on the Closing, including the delivery of the closing
documents specified in Section 2.2(b) hereof.
- 19 -
7.3 ABSENCE OF SUIT. No action, suit, investigation, or proceeding
before any court or any governmental authority shall have been commenced or
threatened against Purchaser, the Company or any of the affiliates, officers or
directors of any of them, seeking to restrain, prevent or change the
transactions contemplated hereby, or questioning the validity or legality of any
such transactions, or seeking damages in connection with, or imposing any
condition on, any such transactions; provided that the obligations of the
Sellers shall not be affected unless there is a reasonable likelihood that as a
result of such action, suit, proceeding or investigation, the Sellers will be
unable to retain substantially all the consideration to which they are entitled
under this Agreement.
7.4 EMPLOYMENT AGREEMENT.
(a) Purchaser shall have executed and delivered to Xxxxxxx
X.X. Xxxxx an Employment Agreement substantially in the form of
SCHEDULE 6.5(B) hereto.
(b) Purchaser shall have executed and delivered to Xxxx
Xxxxxxxxx Xxxxx an Employment Agreement substantially in the form of
SCHEDULE 6.5(C) hereto.
7.5 HCC GUARANTIES. Purchaser shall have delivered to Sellers
guaranties in the form of SCHEDULE 7.5 attached hereto respecting the payment of
the Notes executed on behalf of HCC.
ARTICLE VIII
INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS
8.1 INDEMNIFICATION BY THE SELLERS.
(a) The Sellers hereby agree to indemnify, defend, and hold
Purchaser (and its directors, officers, shareholders, employees,
affiliates, agents and assigns) harmless from and against all Claims
(as defined below) asserted against, resulting to, imposed upon, or
incurred by Purchaser directly or indirectly by reason of, arising out
of, or resulting from (a) the inaccuracy or breach of any
representation or warranty of the Sellers contained in or made pursuant
to this Agreement or in any of the documents delivered pursuant hereto,
or (b) the non-performance or breach of any covenant, term or provision
to be performed by the Sellers contained in this Agreement or in any of
the documents delivered pursuant hereto. The indemnification obligation
of Sellers hereunder is with respect to the full amount of the Claims
(as defined below). As used in this Article VIII, the term "Claim"
shall include any and all losses, liabilities, damages, deficiencies,
assessments, judgments, awards, settlements, costs, and expenses
including without limitation penalties, court costs, and attorney fees
and expenses at trial and on appeal. Notwithstanding the foregoing:
(i) each Seller shall be responsible for indemnifying
Purchaser only for such Seller's pro rata share of any Claim;
and
- 20 -
(ii) no Seller shall be responsible for indemnifying
Purchaser in the aggregate for any amount in excess of the
portion of the Purchase Price received by such Seller.
(b) Notwithstanding paragraph (a) above, Purchaser shall not
have the right to indemnification with respect to Claims arising from
the inaccuracy or breach of any representation or warranty of Sellers
to the extent that Purchaser had actual knowledge of such inaccuracy or
breach prior to Closing.
(c) Purchaser may, at its option, offset, by notice to
Sellers, any amount due from Sellers pursuant to the indemnification
provisions of this Agreement against any payment due to Sellers under
the Notes, any non-compete agreement, or otherwise. If Sellers disputes
the validity of the offset, the matter shall be resolved by arbitration
under Section 9.12. Any undisputed portion shall be paid to the
obligee.
8.2 INDEMNIFICATION BY PURCHASER. Purchaser hereby agrees to indemnify,
defend, and hold harmless the Sellers from and against all Claims asserted
against, resulting to, imposed upon, or incurred by the Sellers directly or
indirectly by reason of, arising out of, or resulting from (a) the inaccuracy or
breach of any representation or warranty of Purchaser contained in or made
pursuant to this Agreement or in any of the documents delivered pursuant hereto,
or (b) the non-performance or breach of any covenant, term or provision to be
performed by Purchaser contained in this Agreement or in any of the documents
delivered pursuant hereto. The indemnification obligation of Purchaser hereunder
is with respect to the full amount of the Claims.
8.3 NOTICE; DEFENSE OF CLAIMS. If a claim is to be made by a party
entitled to indemnification hereunder, the party entitled to such
indemnification shall give written notice to the indemnifying party immediately
after the party entitled to indemnification becomes aware of any fact, condition
or event which may give rise to a matter for which indemnification may be
sought; provided that the failure of any indemnified party to give timely notice
shall not affect the rights to indemnification hereunder except to the extent
that the indemnifying party demonstrates actual damage caused by such failure.
If any lawsuit or enforcement action is filed against any party entitled to the
benefit of indemnity hereunder, and if the indemnifying party shall acknowledge
in writing to the indemnified party that the indemnifying party shall be
obligated under the terms of its indemnity hereunder in connection with such
lawsuit, action or claim, then the indemnifying party shall be entitled, if it
so elects, to take control of the defense and investigation of such lawsuit or
action and to employ and engage attorneys of its own choice to handle and defend
the same, at the indemnifying party's cost, risk and expense provided that the
indemnifying party and its counsel shall proceed with diligence and in good
faith with respect thereto. The indemnified party shall cooperate in all
reasonable respects with the indemnifying party and such attorneys in the
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom; provided, however, that the indemnified party may, at its own
cost, participate in the investigation, trial and defense of such lawsuit or
action and any appeal arising therefrom.
- 21 -
8.4 SURVIVAL OF REPRESENTATIONS. All representations and warranties
made by the parties in this Agreement are made only as of the date of this
Agreement but will survive the consummation of the transactions contemplated by
this Agreement for a period ending 90 days after the second fiscal year end
(July 31) of Purchaser which occurs after the Closing (except for the
representations and warranties of the Sellers set forth in Section 3.11 hereof
which shall expire 90 days after the applicable statutes of limitation shall
have run with respect to all tax returns filed by the Company for all periods
ended on or before the Closing) after which all such representations and
warranties shall expire except with respect to claims asserted in writing prior
to such date.
ARTICLE IX
MISCELLANEOUS
9.1 TERMINATION.
(a) RIGHT OF TERMINATION WITHOUT BREACH. This Agreement may be
terminated without further liability of any party at any time prior to
the Closing:
(i) By mutual written agreement of the parties, or
(ii) By either Purchaser or the Sellers if the
Closing shall not have occurred on or before the 90th day
after the date hereof, provided the terminating party has not,
through breach of a representation, warranty or covenant,
prevented the Closing from occurring on or before such date.
(b) TERMINATION FOR BREACH.
(i) TERMINATION BY PURCHASER. If there has been a
material breach by the Sellers of any of their agreements,
representations or warranties contained in this Agreement
which has not been waived in writing by Purchaser, then
Purchaser may, by written notice to Sellers at any time prior
to the Closing that such breach is continuing, terminate this
Agreement with the effect set forth in Section 9.1(b)(iii)
hereof.
(ii) TERMINATION BY SELLERS. If there has been a
material breach by Purchaser of any of its agreements,
representations or warranties contained in this Agreement
which has not been waived in writing by the Sellers, then the
Sellers may, by written notice to Purchaser at any time prior
to the Closing that such breach is continuing, terminate this
Agreement with the effect set forth in Section 9.1(b)(iii).
(iii) EFFECT OF TERMINATION. Termination of this
Agreement pursuant to this Section 9.1 shall not in any way
terminate, limit or restrict the rights and remedies of any
party hereto against any other party which has breached or
failed
- 22 -
to perform any of the representations, warranties, covenants,
or agreements of this Agreement prior to termination hereof.
9.2 WAIVER. Sellers or Purchaser may (a) extend the time for the
performance of any of the obligations or other acts of the other, (b) waive any
inaccuracies in the representations and warranties of the other contained herein
or in any document delivered pursuant hereto and (c) waive compliance with any
of the agreements of the other or satisfaction of any of the conditions to its
obligations contained herein. Any extension or waiver made pursuant to this
Section 9.2 must be by an instrument in writing signed on behalf of the party
granting the extension or waiver. A waiver by any party of any provision hereof
or breach hereof shall not operate or be construed as the waiver of any other
provision or any subsequent breach.
9.3 BINDING EFFECT; NO ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
legal representatives. This Agreement is not assignable and any purported
assignment shall be null and void. Nothing contained in this Agreement shall be
deemed to confer any right or benefit upon any person other than the parties
hereto to the extent herein provided.
9.4 DOLLARS. "Dollars" and "$" mean lawful money of the United States
of America, which shall be legal tender on the date of payment for all public
and private debts.
9.5 BROKERS AND FINDERS. Sellers on the one hand and Purchaser on the
other, each agree to indemnify and hold the other harmless from and against any
claim made for a broker<018>s or a finder's fee or other similar compensation
(and all related costs and expenses) asserted against an indemnified party which
arises out of or results from an action taken by an indemnifying party.
9.6 HEADINGS; SEVERABILITY. The headings in this Agreement are for
reference only, and shall not affect the interpretation of this Agreement. Each
and every provision of this Agreement shall be treated as separate and distinct
and, in the event of any provision hereof being declared invalid, such invalid
provision shall be deemed to be severable and all other provisions hereof shall
remain in full force and effect.
9.7 SCHEDULES. The Schedules are a part of this Agreement as if fully
set forth herein.
9.8 DISCLOSURES AND ANNOUNCEMENTS. Both the timing and the content of
all disclosures to third parties and public announcements concerning the
transactions provided for in this Agreement by either Sellers or Purchaser shall
be subject to the approval of the other in all essential respects, except that
the Sellers' approval shall not be required as to any announcements or filings
Purchaser may be required to make under applicable laws or regulations.
9.9 CONFIDENTIAL INFORMATION. Following the Closing, Sellers shall use
their best efforts to cause all of their agents, officers, directors and
employees to treat and safeguard all Confidential Information concerning the
Business and, except as required by law, agree not to
- 23 -
disclose or reveal any Confidential Information to any third party or otherwise
use such Confidential Information. For purposes of this Agreement, "Confidential
Information" shall mean information of a valuable, proprietary and confidential
nature relating directly to the Business, asset lists and valuations of any
kind, customer lists, trade secrets, formulae, methods or processes, channels of
distribution, pricing policies and records. The term "Confidential Information"
does not include information that (a) is or becomes generally available to the
public other than through any disclosure by the Sellers or is a recognized
standard industry practice; or (b) becomes available subsequent to the date
hereof to Sellers on a non-confidential basis from a source other than Purchaser
or from records of the business.
9.10 EXPENSES. Sellers agree that all fees and expenses incurred by
them in connection with this Agreement shall be borne by Company including,
without limitation, all fees of counsel and accountants; and Purchaser agrees
that all fees and expenses incurred by it in connection with this Agreement
shall be borne by it, including, without limitation, all fees of counsel and
accountants.
9.11 NOTICE. All notices, requests, demands and other communications
hereunder shall be given in writing and shall be: (a) personally delivered; (b)
sent by telecopier, facsimile transmission or other electronic means of
transmitting written documents; or (c) sent to the parties at their respective
addresses indicated herein by private overnight courier service. The respective
addresses and telephone numbers to be used for all such notices, demands or
requests are as follows:
If to Purchaser: HealthCare Hearing Clinics, Inc.
000 X.X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxx 00000
Attn: President
Personal & Confidential
Facsimile: (000) 000-0000
with a copy to: Miller, Nash, Wiener, Hager & Xxxxxxx
000 X.X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxx 00000
Attn: G. Xxxx Xxxxxxx
Facsimile: (000) 000-0000
If to Sellers: Xxxxxxx X.X. Xxxxx and Xxxx Xxxxxxxxx Xxxxx
0000 Xxxxxx X.X., Xxxxx X
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Personal & Confidential
Facsimile: (000) 000-0000
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with a copy to: Xxxxxxx X. Xxxxxxx & Associates P.A.
0000 Xxx Xxxxx XX, Xxxxx X
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
If personally delivered, such communication shall be deemed delivered
upon actual receipt; if electronically transmitted, such communication shall be
deemed delivered the next business day after transmission (and the sender shall
bear the burden of proof of delivery); if sent by overnight courier pursuant to
this paragraph, such communication shall be deemed delivered upon receipt. Any
party to this Agreement may change its address for the purposes of this
Agreement by giving notice thereof in accordance with this section.
9.12 RESOLUTION OF DISPUTES.
(a) ARBITRATION. Any dispute, controversy or claim arising out
of or relating to this Agreement or the performance by the parties of
its terms shall be settled by binding arbitration held in Albuquerque,
New Mexico, in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect, except as specifically
otherwise provided in this Section 9.12. Notwithstanding the foregoing,
Purchaser, in its discretion, may apply to a court of competent
jurisdiction for equitable relief from any violation or threatened
violation of the provisions of the Sellers under any noncompetition and
confidentiality agreements executed pursuant to this Agreement.
(b) ARBITRATORS. If the matter in controversy (exclusive of
attorney fees and expenses) shall appear, as at the time of the demand
for arbitration, to exceed Fifty Thousand Dollars ($50,000), then the
panel to be appointed shall consist of three neutral arbitrators,
otherwise one neutral arbitrator.
(c) PROCEDURES; NO APPEAL. The arbitrator(s) shall allow such
discovery as the arbitrator(s) determine appropriate under the
circumstances and shall resolve the dispute as expeditiously as
practicable, and if reasonably practicable, within 120 days after the
selection of the arbitrator(s). The arbitrator(s) shall give the
parties written notice of the decision, with the reasons therefor set
out, and shall have thirty (30) days thereafter to reconsider and
modify such decision if any party so requests within ten (10) days
after the decision. Thereafter, the decision of the arbitrator(s) shall
be final, binding, and nonappealable with respect to all persons,
including (without limitation) persons who have failed or refused to
participate in the arbitration process.
(d) AUTHORITY. The arbitrator(s) shall have authority to award
relief under legal or equitable principles, including interim or
preliminary relief, and to allocate responsibility for the costs of the
arbitration and to award recovery of attorney fees and expenses in such
manner as is determined to be appropriate by the arbitrator(s).
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(e) ENTRY OF JUDGMENT. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having in personam and
subject matter jurisdiction. The Sellers and Purchaser hereby submit to
the in personam jurisdiction of the federal and state courts in New
Mexico for the purpose of confirming any such award and entering
judgment thereon.
(f) CONFIDENTIALITY. All proceedings under this Section 9.12,
and all evidence given or discovered pursuant hereto, shall be
maintained in confidence by all parties.
(g) CONTINUED PERFORMANCE. The fact that the dispute
resolution procedures specified in this Section 9.12 shall have been or
may be invoked shall not excuse any party from performing its
obligations under this Agreement, and during the pendency of any such
procedure all parties shall continue to perform their respective
obligations in good faith, subject to any rights to terminate this
Agreement that may be available to any party.
9.13 GOVERNING LAW. This Agreement may not be modified or terminated
orally, and shall be construed and interpreted according to the internal law of
the state of New Mexico, excluding any choice of law rules that may direct the
application of the laws of another jurisdiction.
9.14 COUNTERPARTS. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all, of the parties hereto.
9.15 ENTIRE AGREEMENT. This Agreement (including the Schedules) and the
agreements, certificates and other documents delivered pursuant hereto contain
the entire agreement between the parties hereto. All parties collaborated in the
preparation of this Agreement and it has been reviewed by attorneys for each
party. No one party should be considered the author of any specific language for
purposes of legal presumptions.
9.16 FURTHER ASSURANCES. Both before and after the Closing, each party
will cooperate in good faith with the others and will take all appropriate
action and execute any documents, instruments, or conveyances of any kind that
may be reasonable necessary or desirable to carry out any of the transactions
contemplated hereunder.
9.17 SELLERS ACTION. Whenever in this Agreement the Sellers are given
the discretion to take or not to take any action, the decision of the Sellers
shall be made pursuant to the vote of the Sellers holding a majority of the
Shares.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement effective as of the date first above written.
PURCHASER:
HEALTHCARE HEARING CLINICS, INC., a
Washington corporation
By:/S/ XXXXXXX X. XXXXXX Xxxxxxx X. Xxxxxx
President SELLERS:
/S/ XXXXXXX X.X. XXXXX /S/ XXXXXX X. XXXXXXXXX
Xxxxxxx X.X. Xxxxx Xxxxxx X. Xxxxxxxxx
/S/ XXXX XXXXXXXXX XXXXX /S/ XXXXX X. XXXXXXXXX
Xxxx Xxxxxxxxx Xxxxx Xxxxx X. Xxxxxxxxx
/S/ XXXXX X. XXXXX /S/ XXXXX X. XXXXX
Xxxxx X. Xxxxx Xxxxx X. Xxxxx
/S/ XXXXXXXXX WORTH /S/ XXXXXXX X. XXXXXXXX
Xxxxxxxxx Worth Xxxxxxx X. Xxxxxxxx
/S/ XXXXXXX X. XXXXXXXX /S/ XXXXXX X. XXXXXXXXX
Xxxxxxx X. Xxxxxxxx Xxxxxx X. Xxxxxxxxx
/S/ XXXXX-XXXXX X. XXXXXXXXX /S/ XXXXXXX X. XXXXXXXX
Xxxxx-Xxxxx X. Xxxxxxxxx Xxxxxxx X. Xxxxxxxx
/S/ XXXXX X. XXXXXXXX /S/ XXXX X. XXXXX
Xxxxx X. Xxxxxxxx Xxxx X. Xxxxxx
/S/ XXXX X. XXXXXXXXX /S/ XXXXXX X. XXXXXXXXX
Xxxx X. Xxxxxxxxx Xxxxxx X. Xxxxxxxxx
/S/ XX X. XXXXXXXXX
Xx X. Xxxxxxxxx
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SCHEDULES TO STOCK PURCHASE AND SALE AGREEMENT
Schedule 1.4(b)-A Note
Schedule 1.4(b)-B Guaranty
Schedule 2.2(a)(ii) Opinion of Sellers' Counsel
Schedule 2.2(b)(iii) Opinion of Purchaser's Counsel
Schedule III Disclosure Statement
Schedule 3.7 No Litigation
Schedule 3.8(b) Licenses and Permits
Schedule 3.12 Product Warranty
Schedule 3.14 Insurance
Schedule 3.16 Patents, Trademarks, etc.
Schedule 3.17(a)(i) Real and Personal Property Leases
Schedule 3.17(b) Purchase Commitments
Schedule 3.17(c) Sales Commitments
Schedule 3.17(f) Loan Agreements
Schedule 3.17(i) Other Material Contracts
Schedule 3.18(b) Personal Property
Schedule 3.19 Employee Benefit Plans
Schedule 3.20 Employment Compensation
Schedule 3.21 Key Employees, Bank, Etc.
Schedule 5.2(a) Sellers' Personal Guarantees
Schedule 5.2(b) Sellers' Loans
Schedule 6.5(a) Noncompetition and Confidentiality Agreement
Schedule 6.5(b) Employment Agreement - Xxxxxxx X.X. Xxxxx
Schedule 6.5(c) Employment Agreement - Xxxx Xxxxxxxxx Xxxxx
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