PURCHASE AGREEMENT
This Agreement is made January 9, 2004 (the "Effective Date") between
Derma Sciences, Inc. with principal offices at 000 Xxxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxx, XX 00000 ("Buyer") and Xxxxxxxx-Xxxxx Corporation with principal
offices at 0000 Xxxxxxx Xxxxxx Xxxx, Xxxxxxx, Xxxxxxx 00000 ("Seller").
WHEREAS, Seller desires to sell and Buyer desires to buy certain
equipment and rights to wound care products as described herein.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereby agree as follows:
1. Sale. As of the Effective Date, Seller will sell and Buyer will buy
equipment described in Exhibit A (the "Equipment"), together with all of
Seller's right, title and interest, including, without limitation, trade
secrets, designs, formulations and related intellectual property, in and to
those wound care products heretofore manufactured, distributed and sold by
Seller's Tecnol Wound Care Division and set forth in Exhibit A of the Supply
Agreement between the parties of even date herewith (such products, the "Wound
Care Products") (collectively, the "Assets").
2. Purchase Price. The purchase price of the rights to the Wound Care
Products as described in Section 1 is One Hundred Dollars ($100) and the
purchase price of the Equipment is One Million Eight Hundred Sixty Six Thousand
Dollars ($1,866,000).
3. Payment. On the Effective Date, Buyer will deliver to Seller:
(a) a bank cashiers check payable to the order of, or by wire transfer
to an account specified by, Seller in the amount of Three Hundred Thousand One
Hundred Dollars ($300,100) of which $100 shall be applied to the purchase price
of the Wound Care Products and $300,000 shall be applied to the purchase price
of the Equipment; and
(b) a promissory note in favor of Seller in the original principal
amount of One Million Five Hundred Sixty Six Thousand Dollars ($1,566,000) in
the form set forth in Exhibit B.
4. Grant of Security Interest. The Buyer hereby grants to the Seller a
purchase money security interest in the Equipment for the purpose of securing
the unpaid balance of the purchase price of the Equipment that is evidenced by
the promissory note delivered pursuant to Section 3(b) hereof.
5. Delivery. Seller will deliver and Buyer will accept delivery of the
Equipment at Seller's Fort Worth, Texas facility on the Effective Date. Delivery
shall be made by Seller FOB Seller's facility located in Fort Worth, Texas. On
or before five (5) days after termination or expiration of the Equipment Lease
Agreement between the parties dated as of the Effective Date, Buyer shall remove
the Equipment from Seller's Fort Worth, Texas facility. Seller shall place the
Equipment in "safe" condition with all utilities disconnected and Buyer shall
pay all costs
associated with such activity in an amount not to exceed $7,500. Buyer shall be
responsible for all costs, risks and liability associated with the disassembly
of the Equipment at Seller's Fort Worth, Texas facility and with removal and
transportation of the Equipment from such facility. Without limiting the
foregoing, Buyer agrees to repair, at its expense, any damage to Seller's
facility resulting from Buyer's removal of the Equipment saving and excepting
therefrom damage, if any, necessarily incident to the severance of the Equipment
from the facility's floor, walls, ceilings or utility services.
6. Warranty. Buyer hereby accepts the title to and possession of the
Equipment as of the Closing and acknowledges that the Equipment is transferred
by Seller and received by Buyer in an "AS IS" condition without any
representation or warranty save as to title; and, that Buyer assumes all risk
and liability arising from such Equipment and shall make or secure an
independent determination as to the condition of the Equipment and the
appropriateness of its use for any purpose whatsoever. OTHER THAN THE WARRANTY
OF TITLE, NO WARRANTIES, EXPRESS OR IMPLIED, ARE MADE BY SELLER WITH RESPECT TO
THE EQUIPMENT, INCLUDING BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
In consideration of the transfer as set forth herein, Buyer agrees to
defend, indemnify and hold harmless Seller, its directors, officers, employees
and agents from any and all claims, judgments, fines, penalties, costs or
expenses (including attorneys' fees) howsoever suffered or incurred as a result
of Buyer's use, possession or other disposition of the Equipment.
7. Customer Lists. Seller will transfer to Buyer on the Effective Date
a list of the customers, purchasing histories and contact information relative
to the Wound Care Products.
8. Audited Financial Statements. Seller will furnish to Buyer and its
auditors such historical financial information relative to Seller's Tecnol wound
care division as will enable Buyer to comply with the requirements of Item
310(c) of Regulation S-B promulgated under the Securities Act of 1933. Buyer and
Seller will share equally the costs of preparation of the foregoing financial
statements, provided, however Seller's obligation shall not exceed $50,000.
9. Liabilities. Anything herein contained to the contrary
notwithstanding, Buyer shall assume and maintain responsibility for all claims
and liabilities relative to the Assets, of whatsoever nature, which accrue after
the Effective Date and Seller shall assume and maintain responsibility for all
claims and liabilities relative to the Assets, of whatsoever nature, which
accrue prior to the Effective Date. Without limiting the generality of the
foregoing, such claims and liabilities shall include, but shall not necessarily
be limited to, claims and liabilities incident to returns, rebates, refunds,
product liability, breach of contract and breach of warranty. Seller and Buyer
shall indemnify and save harmless each other, together with their respective
employees, agents, successors and assigns, from and against any such claims and
liabilities.
An indemnitor's indemnity obligation pursuant to this section shall be
conditioned upon (a) indemnitee providing the indemnitor timely written notice
of the claim, (b) indemnitee providing complete and timely assistance in
investigating and defending such claim, (c) indemnitee not settling, releasing
or otherwise disposing of such claim without indemnitor's
prior written consent, and (d) indemnitor having exclusive control of the
defense of any such claim, if it so elects, including selection of counsel. If
indemnitee objects to indemnitor's selection of counsel, indemnitee may hire
counsel of its own choosing, and indemnitor's obligation to Indemnitee pursuant
to this section shall cease. Prior to the settlement, release or other
disposition ("Disposition") of any such claim as it relates to indemnitee,
indemnitor shall give written notice to Indemnitee of the proposed terms and
conditions of the proposed Disposition. Within 10 days of indemnitor's notice,
indemnitee shall either give written notice to indemnitor of its consent to the
proposed Disposition or its objection to the proposed Disposition. If indemnitee
objects to the proposed Disposition of such claim, indemnitor shall not settle,
release, or otherwise dispose of such claim as it relates to indemnitee, but
shall withdraw from and promptly surrender to indemnitee the defense of such
claim, as it relates to indemnitee. Upon such withdrawal, indemnitor's
obligation to indemnitee pursuant to this section shall cease.
10. Non-competition and Nondisclosure. Save as authorized by the Supply
Agreement between the parties of even date herewith, Seller covenants and agrees
that it: (i) will not, either directly or indirectly, engage in the manufacture,
sale or distribution of the Wound Care Products or substantially similar wound
care products competitive therewith in the institutional care market in United
States and Canada for a period of five (5) years from the Effective Date.
Notwithstanding the foregoing, Seller shall not be prevented from engaging in
the manufacture, sale or distribution of products substantially similar to Wound
Care Products in the event Seller acquires the rights to such products via a
stock or asset acquisition after the Effective Date, provided that, in the event
of such acquisition, Seller agrees to notify Buyer in a timely fashion of its
intent to sell the rights to such products if Seller decides to divest its
interest in the acquired wound care product line within five (5) years from the
Effective Date; and (ii) will hold in confidence and not make use of, or
disclose, divulge, transmit or cause to be disclosed, divulged or transmitted,
to any third party at any time any Confidential Information (as defined below)
until such time as such Confidential Information becomes generally available to
the public, provided that such public knowledge was not caused by a breach of
this Agreement or disclosure by Seller. Notwithstanding clause (ii) above,
Confidential Information may be disclosed by Seller (A) pursuant to a court
order issued by a court of appropriate jurisdiction, or (B) to Seller's
professional advisors, provided that such advisors agree to maintain in strict
confidence the confidentiality of any Confidential Information disclosed to
them. The term "Confidential Information" means all information in any way
directly related to the Wound Care Products, including, without limitation,
technical data, financial, marketing and business data, pricing and cost
information, business and marketing plans, customer and supplier lists and
information, and all copies and embodiments thereof.
11. Entire Understanding. This Agreement, together with the Lease
Agreement and Supply Agreements between the parties of even date therewith,
contain the entire understanding between Buyer and Seller and supersede all
previous agreements regarding the Equipment whether oral or in writing. This
Agreement cannot be modified or terminated except in accordance with its terms
or by a writing signed by both parties.
12. Choice of Law. The term and provision of this Agreement shall be
construed in accordance with the laws of the State of Texas.
13. Severability. If any of the terms or this Agreement are found to be
illegal or unconscionable by a court of competent jurisdiction, the remaining
terms and conditions of this Agreement shall stay in full force and effect.
14. Public Announcements. Neither Buyer nor Seller shall make any
publicity release or announcement concerning this Agreement or the transactions
contemplated hereby without the prior written approval thereof of Buyer or
Seller, as the case may be, as to the substance of such announcement except as
required by law (including the Securities and Exchange Act of 1934 and
regulations thereunder), in which case the party issuing the release shall so
advise the other parties in writing, including a copy of such release, in
advance of issuance.
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the date first above written.
DERMA SCIENCES, INC. XXXXXXXX-XXXXX CORPORATION
By: _________________________ By: ________________________________
Title: President and Title: President, Business-to-Business
Chief Executive Officer
Purchase Agreement Exhibit A (Equipment List)
---------------------------------------------
ASSET CATEGORY ASSET# ASSET DESCRIPTION
-------------- ------ -----------------
Low Volume Bottle Filling T003986AA 305-A UNIV.FILL.SYST
Emplex Sealer T001370AA EMPLEX BAG SEALER
Emplex Sealer T002833AA IMC SEALER UPGR#309
Large Circle/Oil Emulsion T002723AA LRG CIRCL MACH UPGRA
Large Circle/Oil Emulsion T002859AA CHEVRON SINGLE XXXXX
Large Circle/Oil Emulsion T002959AA LARGE CIRCLE MACHINE
Large Circle/Oil Emulsion T003022AA KNIFE ASSEMLY
Large Circle/Oil Emulsion T002926AA REFURB CIRCLE MACHIN
Large Circle/Oil Emulsion T002851AA ADDITION TO XXXXX XXXXXX - X000000
Impregnator T004415AA #S114 OIL EMULS.IMP
Impregnator T005010AA OIL EMULSION AUTOMATION S153
Impregnator T003641AA OIL EMULSION IMPREGNATOR
Impregnator T004372AA #000 XXXXXXX XXXX XX
Xxxxxxxxxxx X000000XX "6CON,7BAR&ROL,1CLOTH"
Impregnator T003927AA IMPREGNATION ASSBLY
Impregnator T004858AA S159 OIL EMULSION PR
Impregnator T003042AA CUSTOM XXXXX-XXX XXX
Xxxxxxx Xxxxx 0 T003147AA XXXXXXX PKGMACHMD573
Xxxxxxx Xxxxx 1 T002836AA CHEVRON SEALS
Xxxxxxx Xxxxx 1 T003146AA HYDROGEL DISPENSERS
T003665AA DISPENSING SYSTEM
Xxxxxxx Xxxxx 2 T003178AA BODPRAT MD12 PKGMACH
Xxxxxxx Xxxxx 2 T005012AA LABELING MACHINE S166
Xxxxxxx Xxxxx 2 T004861AA S138 SSD PROJECT #1
Prodo-Pak T003179AA PRPAK FORM/FILL/SEAL
Prodo-Pak T004417AA #S116 PRODO PAK TOOL
Auto Pleater 1 T004184AA SP ACQ:91 STD GAUZE
Tiromat 2000 (Kutter 1) T004185AA SP ACQ:91 ALPHA LAVA
Tiromat 2000 (Kutter 1) T004860AA S145 SSD PROJECT #2
Tiromat 2000 (Kutter 1) T005221AA TRAVERSING UNTI 2
Tiromat 2000 (Kutter 2) T004186AA SP ACQ:92 ALPH LAVAL
Tiromat 2000 (Kutter 2) T004485AA KUTTER MACHINE TOOLS
Tiromat 2000 (Kutter 2) T004801AA SEAL BRILLE PLATE
Tiromat 2000 (Kutter 2) T004859AA S146 SSD PROJECT #3
Tiromat 2000 (Kutter 2) T005220AA TRAVERSING XXXX 0
Xxxxx Xxxxxx T004192AA SMALL CIRCLE MACHINE
Xxxx Xxxx (Silk Strips) T004450AA 3 DIECUTTING ROLLS
Xxxx Andy (Silk Strips) T001653AA SILK STRIPS MACHINE
Xxxx Xxxx (Silk Strips) T003096AA 4 ROTARY DIE-7MAPRES
Bottling Line T004606AA X000 XXXXXX XXX.XXXX
Xxxxxxxx Xxxx X000000XX #S103 DISP.SYST.HYDR
Bottling Line T004411AA #S109 PACK.STRIP PRO
Xxxxxxxx Xxxx X000000XX #S113 BOTTLE XXXX.XX
Bottling Line (Auto) T005007AA PACKING STRIP AUTOMATION X000
Xxxxxxxx Xxxx (Xxxx) X000000XX PACKING STRIP PHASE III X000
Xxxxxxxx Xxxx (Xxxx) X000000XX CONVEYOR BELT
Mech Pleater T004857AA S161 XXXXXXXX PLEATR
Auto Pleater 2 T005008AA GAUZE PLEATER - D&B S127
Printers T005013AA INK JET PRINTER - XXXXXXX S169
Printers T005218AA WILLET460 PRINTER #99291406302
Printers T005219AA WILLET460 PRINTER #99291406305
Exhibit A Page 1 of 2
ASSET CATEGORY ASSET# ASSET DESCRIPTION
-------------- ------ -----------------
Printers T004416AA #S115 INK JET PRINTE
Printers T004925AA PRINTHEAD UNIT
Mixing Kettles T005011AA Kette L - 60 GALLON KETTLE S164
Mixing Kettles Kettle K - Xxxxx 10 gallon Mixer
Mixing Kettles Kettle G -325 g Vessel w/Lightning Mixer
Mixing Kettles Kettle H - 300lbs - No heater
Mixing Kettles Kettle F - 150 lbs Vessel w/Silverson Mixer
Mixing Kettles Kettle X - 500 lb capacity
Mixing Kettles Kettle A - 500 lb capacity (warehouse)
Mixing Kettles Stainless steel cabinets (mixing parts room)
Mixing Kettles Mixing Spare Parts
Mixing Kettles Silverson Mixer
Mixing Kettles Wakashaw Recycling Pump
Mixing Kettles Control Units for Kettle Heaters (in walls)
Mixing Kettles Remaining Mixing Equipment
Mixing Kettles T005015AA Kettle C - 60 GALLON KETTLE S164
Mixing Kettles T005016AA Kettle D - 60 GALLON KETTLE S164
Mixing Kettles T005017AA Kettle E - 60 GALLON KETTLE S164
Mixing Kettles T003635AA Kettle N - MIXING KETTLS FOR OE
Mixing Kettles T003141AA Kettle B - HEATING & DISPENSING
Miscellaneous Equipment T004353AA ANALYTICAL BALANCE
Miscellaneous Equipment T004227AA 42 LABEL BINS
Miscellaneous Equipment T005305AA ROLL STOCK LIFT
Miscellaneous Equipment T003879AA SHELV.SYST.FOR PROD.
Miscellaneous Equipment T005303AA DRUM HEATER S/N 201922
Miscellaneous Equipment T005304AA RODI TOC ANALYZER S/N 9912643
Miscellaneous Equipment T002928AA AIR COMPRESSOR
Miscellaneous Equipment T001356AA ARO BURST TESTER - MODEL 2600
Miscellaneous Equipment T001357AA ARO TEST FIXTURE NEEDLE
Miscellaneous Equipment T003921AA 8 SECT.OF SHELVING
Miscellaneous Equipment T004323AA MECHANICAL TORQUE TESTER
Miscellaneous Equipment T004412AA #S110 PETRO/XERO MAN
Miscellaneous Equipment T003170AA INSTRON - MOD 4411 SN C1514
Miscellaneous Equipment T003722AA INSTRON LOAD CELL FOR ASSET T003336
Untagged Assets Particulate Tester (Innovation by Climate)
Untagged Assets Vacuum Pouch Tester
Untagged Assets Density Tester (oil)
Untagged Assets Brookfield Viscometer (Wet Lab)
Untagged Assets Xxxx Xxxxxx Stability Chamber (oven)
Untagged Assets 1 Stainless shelf w/ measuring tape
Untagged Assets Baking racks with trays (4-5 racks)
Untagged Assets Azco Cutter for gauze cutting
Untagged Assets 2 Tables & 10 chair inventory
Untagged Assets 3 Bug killers
Untagged Assets "Maintenance area tools, equipment, tables"
Untagged Assets Spare Parts @ Wound Care Facility
Untagged Assets Spare Parts @ 6625 in stores
Exhibit A Page 2 of 2
Exhibit B
PROMISSORY NOTE
$1,566,000 January 9, 2004
----------
FOR VALUE RECEIVED, the undersigned ("Maker") hereby promises to pay to
the order of Xxxxxxxx-Xxxxx Corporation ("Payee") at the principal office of
Payee in Roswell, Georgia or such place as the holder may from time to time
designate, the principal sum of One Million Five Hundred Sixty Six Thousand
Dollars ($1,566,000), payable in thirty-six (36) equal installments of principal
and interest each in the amount of Forty Nine Thousand Four Hundred Thirty Four
Dollars and Seventy Six Cents ($49,434.76) beginning February 1, 2004 and
continuing on the first day of each month thereafter.
The unpaid principal balance hereof shall bear interest, payable
monthly commencing February 1, 2004 and continuing the first day of each month
thereafter and a final payment with the final payment of principal computed at a
rate equal to 8.5% per annum. Principal amounts unpaid at the maturity thereof
(whether by fixed maturity or acceleration) shall bear interest from and after
maturity until paid, payable on demand, computed at a rate equal to 2% per annum
plus the rate otherwise payable hereunder. Principal of and interest on this
Note shall be payable in lawful money of the United States of America.
This Note may be prepaid in full or in part at any time without premium
or penalty. All prepayments shall be applied against installments of principal
due hereunder in the inverse order of their maturity.
This Note is secured by all existing and future mortgages and security
agreements between Payee and Maker, between Payee and any indorser or guarantor
of this Note, and between Payee and any other person providing collateral
security for Maker's obligations, and payment may be accelerated according to
any of them. Maker grants to Payee a security interest and lien in any credit
balance or other money now or hereafter owed Maker by Payee, and agrees that
Payee may, at any time and without notice or demand, set off against any such
credit balance or other money any amount unpaid under this Note, whether or not
due.
Without affecting the liability of any maker, indorser, surety or
guarantor, the holder may, from time to time and without notice, renew or extend
the time for payment, accept partial payments, release or impair any collateral
security for payment of this Note, or agree not to xxx any party liable on it.
If any payment is not made when due or if there is any default under
any mortgage or security agreement which secures this Note, the unpaid balance
of this Note shall, at the option of the holder and without notice or demand,
mature and become immediately payable. The unpaid balance shall automatically
mature and become immediately payable in the event any maker, surety, indorser
or guarantor becomes the subject of bankruptcy or other insolvency proceedings.
Payee's receipt of any payment after the occurrence of an event of default shall
not constitute a waiver of such default or of any of Payee's rights and
remedies.
The Maker and any indorsers, sureties or guarantors waive presentment,
demand, notice of dishonor and protest, and agree to pay all costs of
collection, before and after judgment, including reasonable attorneys' fees and
legal expenses.
The Note constitutes the Note under the Purchase Agreement dated
January 9, 2004, between Maker and Payee, to which Agreement reference is hereby
made for a statement of the terms under which the loan evidenced hereby was made
and for a description of the collateral securing this Note.
This Note is governed by the internal laws of the State of Delaware,
except to the extent superseded by federal law.
DERMA SCIENCES, INC.
By: ________________________________
Title: President and Chief Executive Officer
Attest: _____________________________
Title: ______________________________
