ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is hereby executed as of this 31st day of
May, 1996 by and between Surgical Marketing Specialists, Inc. a/k/a SMS, Inc.
f/k/a Sales and Marketing Services, Inc. ("SMS" or the "Business"), a Maryland
Corporation with its principal place of business at 0000 Xxxxxxxxxx Xxxx,
Xxxxxx, Xxxxxxxx 00000, W. Xxxxxxx Xxxxx ("X.X. Xxxxx"), Xxxxxx Xxxxx, adults
residing at 0000 Xxx Xxxx Xxxx, Xxxxxxx, Xxxxxxxx 00000, Xxxxx Xxxxx Xxxxxxx,
and SICLAR CORPORATION ("Xxxxx" or "Buyer'1), a Pennsylvania Corporation with
its principal place of business at 000 Xxxxxxx Xxxxxx, Xxxx Xxxxxxx,
Xxxxxxxxxxxx 00000.
WHEREAS, SMS is in the business of importing and marketing medical and
surgical instruments and products; and
WHEREAS, Xxxxx desires to acquire the assets of SMS; and
WHEREAS, Xxxxx and SMS have reached an agreement whereby SMS will sell to
Xxxxx all of its assets, as more fully identified herein, except such assets as
may be specifically excluded herein.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
and for other good and valuable consideration, the parties, intending to be
legally bound, agree as follows:
1. Sale and Purchase of Assets. At the closing hereinafter provided for,
SMS shall sell, transfer and assign to Xxxxx, and Xxxxx shall purchase from SMS
all of SMS's right, title and interest in and to the assets of the Business (all
but the Excluded Assets) ("Assets"), including, without limitation, all of the
assets set forth below, free and clear of all liens, claims and encumbrances,
all as adjusted for changes occurring in the ordinary course of business as
permitted hereunder between the date hereof and the date of Closing. The Assets
shall not include assets specifically excluded herein.
1.1 All Assets. All property and assets of SMS of every kind and
description wherever located, including, without limitation, claims, rights,
choses in action, whether xxxxxx or inchoate, licenses, trademarks, contracts of
employees and sales representatives as indicated on Exhibit E, technology,
tradenames, inventory, equipment and other assets described generally in the
attached Exhibits, except the Excluded Assets. The inventory shall include all
inventory listed in Exhibit A (hereinafter the "INVENTORY"). The Assets which
are not included in this sale are listed in Exhibits B- 1 and B-2 (the "Excluded
Assets"). In addition to the Assets, Xxxxx shall have purchased all X.X. Xxxxx'x
stock of Sales and Marketing Services, Inc. prior to closing.
1.2 SMS Customer Lists and Business Records. All customer files,
customer lists and customer records and other business records of SMS. SMS and
X.X. Xxxxx agree not to use any copies of said Customer lists, files and
records, or to use said Customer
'p either directly or indirectly, except as allowed in Exhibits B. B-1 and B-2
and X.X. Xxxxx'x disclosure document.
1.3 SMS Telenhone Numbers. SMS's business telephone numbers, to wit,
(000) 000-0000, (000) 000-0000, (000) 000-0000 (Fax) and 0000000 (Telex). SMS
will assist in the immediate transfer of said telephone numbers, and execute all
assignments of said telephone numbers reasonably requested by Xxxxx in order to
effectuate the transfer of said telephone numbers without delay. Xxxxx will
answer the above phone numbers as "SMS" for a period of six (6) months (and
SMS/Xxxxx thereafter), and shall refer customers to O.R. Marketing, Inc. for
service and sales of items detailed on Exhibit B-1 and otherwise to the Xxxxx
sales department.
1.4 Non-Competition Agreement. The agreements of SMS, X.X. Xxxxx,
Xxxxx Xxxxx Xxxxxxx and Xxxx Xxxxxxx not to disclose confidential information
concerning SMS, Xxxxx or their respective businesses, and not to compete with
Xxxxx, as set forth in the Confidentiality and Non-Competition agreement
attached hereto as Exhibit F. SMS and X.X. Xxxxx understand and agree that the
foregoing agreements are a material part of the consideration and inducement to
Xxxxx to execute this agreement.
1.5 Trademarks and Tradenames. All right title and interest of SMS,
X.X. Xxxxx and any affiliate thereof in and to any and all trademarks,
tradenames, and copyrights, including, without limitation, licenses and
marketing rights of any nature whatsoever, as set forth in Exhibit D.
1.6 Contracts. All rights under SMS's written contracts which are
material to the business specifically identified in Exhibit E. and accepted by
Xxxxx herein, and such other assets, tangible or intangible, including but not
limited to contract rights, agreements, intellectual property, catalogues, art
work, literature, and licenses, oral or written, relating to the business of
SMS.
2. Purchase Price. As full consideration for the Assets sold and purchased
hereunder including, without limitation, the Inventory and Confidentiality and
Non-Competition Agreements, Xxxxx shall pay to SMS and/or for the account of SMS
the total sum set forth below, subject to the adjustments set forth in Paragraph
3. Xxxxx shall make payments to SMS or for the account of SMS as follows:
2.1 ONE MILLION SEVEN HUNDRED THOUSAND DOLLARS ($1,700,000.00) payable
at closing via wire transfer to Columbia Bank, Park View Building, 00000 Xxxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx, Xxxxxxxx 00000-0000, to be paid on account of
inventory.
2.2 ONE HUNDRED NINETY ONE THOUSAND TWO HUNDRED THIRTY ONE DOLLARS and
Sixty Cents ($191,231.60) plus interest at nine percent (9%) per annum totaling
Two Hundred Thousand Dollars ($200,000.00) principal and interest, payable
2
to SMS in cash or certified bank check six (6) calendar months following
closing, to be paid on account of inventory.
2.2.1 The principal payable to SMS under this provision shall be
increased/decreased by the following:
2.2.1.1 The amount of credits from suppliers not
specifically accounted for in any exhibits to this Agreement, but which credit
is acknowledged to be due SMS after the close of business on May 31, 1996 and is
assigned to Xxxxx by Exhibit A.
2.2.1.2 The value of replacement inventory from vendors not
accounted for specifically in any exhibits, and which replacement inventory is
delivered to Xxxxx.
2.2.1.3 The value of all merchandise returned by customers
for which SMS issues a credit to that customer subsequent to May 31, 1996, and
which merchandise is delivered to Xxxxx.
2.2.1.4 Any and all draws and advances to SMS sales
representatives and any expense reimbursement incurred after May 31, 1996, which
cover the period after May 31, 1996 and which Xxxxx has acknowledged as ordinary
and necessary.
2.2.1.5 All SMS salaries and expenses which are related to
the management and relocation of records, equipment and inventory after May 31,
1996.
2.2.1.6 The cost of maintaining voice mail after May31,
1996.
2.2.1.7 The verified cost of all goods, including freight
and customs charges of goods consigned to SMS which are received, or released
from customs, after May 31, 1996 and which are thereafter delivered to Xxxxx,
which cost shall not exceed $10,000.00 more than the values shown in Exhibit U,
attached hereto
2.3 Xxxxx shall assume only such of SMS's trade accounts payable as
are specified in Exhibit C hereto, $900,386.06 relating to the business and
assets acquired hereunder. The assumption of said accounts payable is payment
paid on account of inventory, to extent inventory is not paid in lull by
payments under Paragraphs 2.1 and 2.2, the balance of such assumed payments is
allocated to goodwill. Providing Xxxxx complies with its duty to indemnify for
accounts payable assumed it provided under Paragraph 16, then Xxxxx shall be
deemed to have satisfied this obligation.
2.4 FIVE HUNDRED FIFTEEN THOUSAND ONE HUNDRED SEVENTY THREE DOLLARS
and Sixteen Cents ($515,173.16) plus interest at the rate of nine
3
percent (9%) payable to SMS in eighteen (18) equal consecutive monthly
installments of THIRTY THREE THOUSAND THREE HUNDRED THIRTY THREE DOLLARS and
Thirty-Three Cents ($33,333.33) each commencing on the first of the thirteenth
calendar month after closing and on the first of each month thereafter,
allocated to goodwill. This Note shall be subject to adjustment under Paragraph
7.5 to the extent set forth therein.
2.5 The Purchase Price shall be secured by a Security Agreement in the
form of the Security Agreement attached hereto and incorporated herein as
Exhibit 0, and evidenced by Promissory Notes in the form of the Promissory Notes
attached hereto and incorporated herein as Exhibits P1 P2 and perfected by UCC 1
Financing Statements, in the form of the UCC 1 Financing Statements attached
hereto and incorporated herein as Exhibits 01. 02 and 03. The form of Exhibits,
0, Q1, Q2, and Q3 shall be satisfactory to Xxxxx'x Bank secured creditor,
Meridian Bank, which shall be determined by Xxxxx prior to closing. Any
subordination agreement entered into between Meridian Bank and SMS shall contain
a provision that Meridian Bank may not unreasonably withhold its consent to
Xxxxx punctually making the payments required hereunder providing Xxxxx is not
then in default with its obligations to the Bank. Collection of the Purchase
Price shall further be guaranteed by Xxx Xxxxxx ("Guarantor") as set forth in
Paragraph 2.6 below.
2.6 Guaranty of Collection. Subject to the prior and senior rights of
Meridian Bank, the Guarantor (Xxx Xxxxxx) hereby irrevocably guarantees
collection by the SMS of all Xxxxx'x obligations hereunder. If, after reasonable
collection efforts by SMS following the occurrence of an Event of Default under
the this Agreement, Xxxxx'x obligations hereunder remain due and owing in whole
or in part, Guarantor agrees to pay such Xxxxx'x obligations hereunder to the
SMS upon demand. Guarantor further agrees to render reasonable assistance to SMS
in its collection efforts under the this Agreement. During the course of such
collection efforts, Guarantor will not sell, transfer or otherwise dispose of
any material asset of Guarantor other than as required pursuant to any document,
agreement or instrument by and between Meridian Bank and Guarantor. As set forth
in the Subordination Agreement and the Intercreditor Agreement SMS acknowledges
its ability to be paid by Xxxxx and is junior and subordinate to Meridian Bank.
2.7 Financing Contingency. Notwithstanding anything contained herein
to the contrary, this entire Agreement, all other Agreements executed pursuant
hereto and parties' obligations and duties thereunder, are contingent upon
Xxxxx'x obtaining one hundred percent (100%) financing from Meridian Xxxx on or
before Closing for the payment required under Paragraph 2.1 above
($1,700,000.00). Such funding from Meridian Bank shall not require any changes
to this Agreement or the Exhibits unless such change is consented to in writing
by SMS and be a condition precedent to the parties' obligations under this
Agreement and all agreements attached hereto. If Xxxxx does not obtain such
funding from Meridian despite its best efforts to acquire same on or before
Closing, this Agreement and all agreements executed pursuant hereto, but not the
Confidentiality Agreement entered into prior to this Agreement, shall be null
and void, and there shall be no further liabilities between the parties.
4
3. Adjustments to Purchase Price. The purchase price shall be adjusted by
netting out the following:
3.1 The purchase price shall be reduced by the amount of the decrease
or discrepancy in the value of the INVENTORY at time of closing compared to the
value of said INVENTORY of Two Million Dollars ($2,000,000.00) reflected in
Exhibit A. The value of the inventory shall be determined in accordance with the
following formula: Average Cost per generally accepted accounting principles
(GAAP) plus freight and dutv of eight percent (8%). Inventory value shall exceed
One Million Seven Hundred Thousand Dollars ($1,700,000.00)
3.2 The purchase price shall be adjusted by the amount by which face
value of trade accounts payable on the date of closing, assumed by Xxxxx at
closing are in excess of $900,000.00.
3.3 SMS acknowledges that the INVENTORY sold hereunder may contain
slow moving, outdated, obsolete or excess items. The parties shall use their
best efforts to sell all of the INVENTORY in the ordinary course of business.
Any INVENTORY remaining unsold one (1) year after the Closing date ("Excess
Inventory") shall be computed on or about June 30, 1997. The purchase price
shall be reduced by the value in excess of $75,000.00 of any inventory remaining
unsold one (1) year after the closing date, except that the slow-moving
laparoscopic inventory may not exceed $25,000.00 of such slow-moving inventory.
The value of such excess inventory shall be the same formula as is found under
Paragraph 3.1.
3.4 Any said adjustments may, at Xxxxx'x option, be deducted from any
payment due to SMS under Paragraph 2.4 above.
4. Liabilities. Other than the payables listed in Exhibit E attached
hereto, Xxxxx is assuming no liabilities hereunder. SMS shall, at closing, give
an affidavit of accounts payable to Xxxxx, representing and warranting the same
to be accurate as of closing. The parties agree to waive compliance with the
Bulk Sale law. SMS warrants that upon Closing, its payables will not exceed
$150,000.00. SMS indemnifies and holds Xxxxx harmless as to any claims made
arising out of any trade payables other than the accounts payable Xxxxx
expressly assumes per Exhibit X. XXxx indemnifies SMS and holds it harmless as
to any claim arising out of Xxxxx'x failure to satisfy the accounts payable it
expressly assumes per Exhibit C.
5. Closing. The date of Closing of this transaction ("Closing") shall he on
or before May 31, 1996, time being of the essence, or on such date mutually
agreed to by the parties in writing. At closing, title to and possession of the
assets shall be transferred, conveyed and delivered from SMS to XXXXX. The
closing shall be at the offices of Xxxxx or at such other location as the
parties may agree in writing.
5.1 Xxxxx shall remove all of the assets sold hereunder from the SMS
facility in Jessup, Maryland within a reasonable period of time following the
closing, but in any
5
event not later than thirty (30) days after the Closing Date, unless otherwise
agreed in writing by the parties.
6. Xxxxx'x Conditions of Closing. Xxxxx'x obligations hereunder shall be
subject to the satisfaction of the conditions set forth below:
6.1 Xxxxx shall have received from counsel for SMS a favorable opinion
dated as of the Closing date, in form and substance satisfactory to Xxxxx and
its counsel, to the effect that to the best of their knowledge:
6.1.1 SMS is a duly organized and validly existing corporation in
good standing under the laws of the state of Maryland.
6.1.2 No provisions of SMS's Articles of Incorporation or
By-Laws, and to the best of SMS's knowledge, no provision of any contract,
agreement or other agreement to which it is a party prevent SMS from delivering
good and marketable title to the Assets in the manner contemplated by this
Agreement, or would otherwise be breached by the consummation of the
transactions contemplated hereunder.
6.1.3 SMS, X.X. Xxxxx, Xxxxxx Xxxxx and Xxxxx Xxxxx Xxxxxxx have
the full power, right and authority to execute this Agreement and consummate the
transactions contemplated herein.
6.1.4 This Agreement constitutes a valid and binding obligation
of the parties in accordance with its terms, subject to limitations with respect
to enforcement imposed by law in connection with bankruptcy or similar
proceedings.
6.1.5 The Assets sold, transferred and conveyed pursuant to the
terms of this Agreement, on delivery to Xxxxx, will be free and clear of any
liens, claims, charges or encumbrances.
6.2 No action or proceeding shall have been instituted before any
court, agency or other governmental body to restrain or prohibit the
transactions contemplated hereby.
6.3 The representations and warranties of SMS, X.X. Xxxxx, Xxxxxx
Xxxxx, and Xxxxx Xxxxx Xxxxxxx, contained in this Agreement shall be true and
correct in all respects as of the date of closing, and all covenants and
agreements of SMS to be performed on or before the Closing shall have been duly
performed.
6.4 There shall have been no material adverse change or damage to the
Assets or the business of SMS.
6
6.5 SMS and X.X. Xxxxx, Xxxxx Xxxxx Xxxxxxx and Xxxx Xxxxxxx shall
have delivered to Xxxxx the fully executed Confidentiality and Non-Competition
Agreement in the form attached hereto as Exhibit F.
6.6 W. Xxxxxxx Xxxxx, Xxxxx Xxxxx Xxxxxxx and Xxxx Xxxxxxx shall have
delivered to Xxxxx the folly executed Employment Agreements in the form attached
hereto as Exhibit G.
7 Sellers' Representations and Warranties. SMS and X.X. Xxxxx hereby
represent and warrant the following to be true and correct to the best of their
knowledge, information and belief as of the time of closing (unless otherwise
specified herein):
7.1 SMS owns all Assets sold hereunder, including, without limitation,
the INVENTORY, free and clear of all liens, claims, demands, security interests
and encumbrances of any nature whatsoever.
7.2 SMS, Inc. is a corporation duly organized and existing under the
laws of the State of Maryland with its principal place of business at 0000
Xxxxxxxxxx Xxxx, Xxxxxx, Xxxxxxxx 00000, and is and shall be duly authorized and
empowered to execute this Asset Purchase Agreement, and to do any and all things
required to consummate all of the transactions contemplated hereunder.
7.3 The execution and performance of this Asset Purchase Agreement and
all transactions contemplated hereunder, have been and will be duly authorized
by SMS's Board of Directors and stockholders, and shall be legally binding upon
SMS. SMS is not bound by or subject to any contractual or other obligation which
would be violated by SMS's execution or performance of this Asset Purchase
Agreement.
7.4 To the best of SMS's and X.X. Xxxxx'x knowledge, information and
belief, SMS's and X.X. Xxxxx'x execution and delivery of this Asset Purchase
Agreement and consummation of the transactions contemplated hereunder do not
conflict with or result in the breach of SMS's certificate of
incorporation/charter, by-laws, or any statute, regulation, or court or
administrative order or process, or any agreement to which SMS or X.X. Xxxxx is
a party or by which they or either of them is bound. SMS must, however, receive
consent of PHARMA-PLAST International A/S, which is bound to not unreasonably
withhold its consent to the assignment of its Distribution Agreement with
Seller.
7.5 SMS represents and warrants that the INVENTORY sold hereunder
meets the requirements of all applicable laws and regulations of the United
States and all regulatory agencies thereof, including but not limited to the
U.S. Food and Drug Administration. Without limiting the generality of the
foregoing, SMS represents and warrants that the INVENTORY meets all applicable
metallurgical requirements and labeling requirements for surgical grade
stainless steel, if so described or designated in the catalogs, sales
literature, labels, packaging, or other literature. SMS further represents and
warrants that all
7
representations relating to the inventory which are set forth in labels,
packaging, catalogs, and sales literature are true and correct. SMS agrees to
replace any INVENTORY item(s) found to be misbranded, adulterated, otherwise in
violation of any applicable laws or regulations, or otherwise subject to recall,
seizure or injunction by, inter alia, the U.S. Government or any regulatory
agency thereof including, but not limited to, the U.S. Food and Drug
Administration. SMS agrees to defend, indemnify, and hold Xxxxx harmless from
and against any claims, that the INVENTORY, or any item therefrom does not meet
the requirements of any applicable laws and regulations of the United States or
any regulatory agency thereof, including, but not limited to, the U.S. Food and
Drug Administration, provided that Xxxxx reasonably notifies SMS and X.X. Xxxxx
of such claim in writing, and fully cooperates in SMS's and X.X. Xxxxx'x
investigation and defense of such claims, and further providing that Xxxxx shall
limit its total recourse against SMS to the extent of $600,000.00 including
replacement of inventory, fines, penalties, loss of business, consequential and
all other damages of any type or nature. SMS shall supply to Xxxxx all violation
notices received from FDA, U.S. Customs service or from any other U.S. or other
regulatory agency, for the past three (3) years relating to SMS, suppliers, or
products sold by SMS. This documentation attached hereto as Exhibit S. Any
adjustment made under this Paragraph shall be made as an adjustment to the
absolute dollars payable whether principal and/or interest, due under Exhibit
P2.
7.6 [Intentionally left blank]
7.7 The Exhibits to this Agreement set forth true, complete and
accurate information describing the matters set forth therein.
7.8 There has been no event prior to closing which has materially and
adversely affected any of the Assets sold or transferred hereunder.
7.9 There is no suit, claim, action or proceeding now pending, or
threatened, nor is SMS or X.X. Xxxxx aware of any grounds therefor, to which SMS
is a party or which may result in any judgment, order, decree, liability or
other determination which will or could have any material adverse effect upon
any of the Assets sold or transferred hereunder, or upon SMS's ability to
perform this agreement. No such judgment, order or decree has been entered
against SMS, nor has SMS incurred any liability which could have such effect.
7.10 SMS has furnished to Xxxxx its financial statements for the years
ended 1994 and 1995, respectively, and its financial statement for the three (3)
month period ended March 31, 1996. There are no liabilities of SMS, contingent
or otherwise, including, without limitation, any tax liability of any nature
whatsoever, which are not disclosed by or reflected fully in such financial
statements or disclosed in a schedule provided by SMS to Xxxxx. SMS has duly
filed all federal, state, county and city income tax returns and other tax
returns of every kind and description, and there are presently no claims for tax
deficiencies pending against SMS by any taxing authority, nor does SMS know of
any basis for the making of any claim by any taxing authority for any tax
deficiency against SMS. SMS further warrants and
8
represents that all of its tax returns have been filed when due and that it has
not concealed material facts regarding its business from Xxxxx.
7.11 Since the date of its most recent financial statement referred to
in Paragraph 7.10 hereof, except as disclosed in this Agreement, SMS has not had
any change in its financial condition, assets, business or its customer list,
other than changes in the ordinary course of business, none of which changes in
the ordinary course of business has been materially adverse.
7.12 Neither SMS nor X.X. Xxxxx are aware of any condition or
circumstance within or without SMS which would have a material adverse effect
upon Xxxxx, SMS or the business and assets sold hereunder.
7.13 The inventories set forth on the financial Statements referred to
in Paragraph 7.10 and in Exhibit A hereto are properly valued. Except for
obsolete items which have been fully written off, inventories consist of items
of quality and quantity currently usable and salable in the ordinary course of
business without markdown or discount. Seller holds no materials on consignment
and has title to no materials in the possession of others except as on Exhibit
K.
7.14 No purchase commitment for materials, supplies, component parts
or other items of inventory to which Seller is a party, is in excess of normal,
ordinary, usual and current requirements of its business or at a price in excess
of the current reasonable market price. All such purchase commitments are listed
on Exhibit R.
7.15 The Assets sold hereunder include, without limitation, all assets
necessary to the operation of the current business of SMS, excluding the
Excluded Assets.
7.16 Except as set forth in Exhibit L, SMS is not in default under any
of the contracts sold hereunder and, to the best of SMS's knowledge. no event
has occurred which with the passage of time or the giving of notice, or both,
would constitute a default under any such contract which individually or in the
aggregate would have a material adverse effect upon the financial condition or
the Business. (None)
7.17 SMS and X.X. Xxxxx represent and warrant that the rights or other
interests with respect to trademarks, tradenames and copyrights sold,
transferred and assigned hereunder are assignable. SMS and X.X. Xxxxx shall not
market, promote or sell any products bearing or reflecting any such trademarks,
tradenames or copyrights without the express written approval of Xxxxx.
7.18 Intentionally left blank
7.19 Intentionally left blank
9
7.20 SMS and X.X. Xxxxx represent and warrant that the gross profit
achieved by SMS for the period January, 1995 through December, 1995 is as
reflected in the "Customer/item/class multi-period analysis delivered by SMS to
Xxxxx during the negotiation of this transaction as set forth in Exhibit M. SMS
and X.X. Xxxxx further represent and warrant that there no material adverse
changes have occurred which would limit Xxxxx'x ability to achieve the same
profit in its future operation of the business sold hereunder.
7.21 SMS, X.X. Xxxxx, Xxxxx Xxxxx Xxxxxxx, and Xxxx Xxxxxxx will use
their best efforts to insure the continuity and seamless transition to Xxxxx of
SMS's relationships with all SMS customers, vendors, suppliers, and sales
representatives.
7.22 Intentionally left blank
7.23 For the period set forth in their respective Non-Competition
Agreements, Xxxxx Xxxxx Xxxxxxx and Xxxxxxx Xxxxxxx and X.X. Xxxxx shall not:
7.23.1 Compete with Xxxxx, any affiliate of Xxxxx, or the SMS
business sold hereunder within the Continental U.S. (the 'Territory"), except as
specifically permitted under the respective Confidentiality and Non-Competition
Agreements.
7.23.2 Engage in any business substantially similar to the
businesses of Xxxxx within the territory except as specifically permitted under
the Confidentiality and Non-Competition Agreements.
7.23.3 Request any customers, vendors or suppliers of Xxxxx or
the business sold hereunder to curtail or cancel their business with Xxxxx.
Solicit or divert any customers or potential customers of Xxxxx or the business
sold hereunder to any other person, company, firm or business.
7.23.4 Disclose to any person, firm, corporation or any other
entity, any confidential information concerning Xxxxx or the business sold
hereunder.
7.23.5 Induce, or attempt to influence, any employee of Xxxxx to
terminate employment with Xxxxx or to enter into any employment or other
business relationship with any other person, firm, or corporation; or
7.24 Act or conduct themselves in any manner which is clearly inimical
or contrary to the best interests of Xxxxx.
7.25 Engage in any practice the purpose of which is to evade the above
provisions, or commit any act which detrimental to the successful continuation
of Xxxxx or the SMS business, sold under the Asset Purchase Agreement.
10
8. Representations and Warranties of Buyer. Buyer hereby represents and
warrants the following to be true as of the date of closing:
8.1 Xxxxx Corporation is a corporation duly organized and existing
under the laws of the Commonwealth of Pennsylvania with its principal place of
business at 889 5. Xxxxxxx Xxxxxx, Xxxx Xxxxxxx, Xxxxxxxxxxxx 00000, and is and
shall be duly authorized and empowered to execute this Asset Purchase Agreement,
and to do any and all things required to consummate all of the transactions
contemplated hereunder.
8.2 The execution and performance of this Asset Purchase Agreement and
all transactions contemplated hereunder, have been and will be duly authorized,
and shall be legally binding upon Xxxxx. Xxxxx is not bound by or subject to any
contractual or other obligation which would be violated by its execution or
performance of this Asset Purchase Agreement.
8.3 To the best Xxxxx'x knowledge, information and belief, Xxxxx'x
execution and delivery of this Asset Purchase Agreement and consummation of the
transactions contemplated hereunder do not conflict with or result in the breach
of Xxxxx'x certificate of incorporation/charter, by-laws, or any statute,
regulation, or court or administrative order of process, or any agreement to
which Xxxxx is a party or by which it is bound.
8.4 There is no suit, claim, action or proceeding now pending, or
threatened, nor is Xxxxx aware of any grounds therefor, to which Xxxxx is a
party, or which may result in any judgment, order, decree, liability or other
determination which will or could have any material adverse effect upon Skiar's
ability to perform this agreement. No such judgment, order or decree has been
entered against Xxxxx, nor has Xxxxx incurred any liability which could have
such effect.
9 Representations and Warranties to Survive Closing. All of the
representations and warranties contained herein (including all statements
contained in any exhibit or schedules hereto), are a material part of the
consideration for the sale of the assets, and shall survive closing.
10. Oneration Pending Closing. During the period from the date hereof to
the Date of Closing:
10.1 SMS shall:
10.1.1 Conduct the Business according to the ordinary and usual
curse and maintain and preserve the organization of the Business, its employees
and relationships with suppliers, customers and others; and
10.1.2 Inform Xxxxx in writing immediately of the development of
any material matters relating to the business, including, without limitation,
any adverse changes
11
in the results of operations or financial position of the Business, or any
litigation, proceeding or government investigation instituted or threatened
against Seller relating to the Business or the occurrence of any factor which
might give rise to any litigation, proceeding or investigation as aforesaid.
10.2 SMS shall not, without the prior written consent of Xxxxx:
10.2.1 Mortgage, pledge or subject to lien, security interests or
other obligations or encumbrance any of the Assets;
10.2.2 Sell or otherwise transfer any of the assets; not in the
usual contracts; or
10.2.3 Enter into any contract or agreement relating to the
business ordinary course or terminate or make any material change in any of such
10.2.4 Increase or agree to increase in any manner the
compensation of any of the employees of the Business or commit the Business to
any pension, retirement or profit sharing plan or agreement or employment
agreement with or for the benefit of any employee or other person.
10.3 SMS shall keep the Assets adequately insured against fire and
casualty until the Date of Closing.
11. Liabilities. Xxxxx assumes no liabilities other than those expressly
assumed herein. SMS agrees to indemnify, defend and hold Xxxxx harmless from and
against any and all liabilities imposed upon Xxxxx as a result of this
Agreement, other than those expressly assumed herein. In addition to such
remedies as Xxxxx may have at law or in equity, Xxxxx shall be permitted to set
off any liability incurred as a result of SMS not satisfying the accounts
payable not assumed by Xxxxx as set forth in Exhibit C against the Promissory
Notes, Exhibits P1 and 1)2 attached hereto.
12. Third Party Consents and Governmental Approval. No consent or approval
of any third party or of any court or governmental agency or instrumentality is
required for the parties to execute and deliver this Agreement and any related
documents or to consummate the transactions contemplated herein or therein.
13. No Brokers or Finders. Neither party has retained a broker to assist in
consummating this transaction. No person has or will have, as a result of the
transactions contemplated by this Agreement and the related documents, any
right, interest, or valid claim against or upon either party for any commission,
fee, or other compensation as a finder or broker because of any act or omission
of either party.
12
14. Disclosure No representation or warranty made by SMS in this agreement
contains any untrue statement or fails to state a material fact necessary to
make the statements contained herein not misleading. From the Effective Date
through the Closing Date, each party shall give promptly to the other notice in
writing of any event, condition, or circumstance which would cause any
representation or warranty of the party contained in this Agreement to become
misleading or inaccurate or which would constitute a breach of this Agreement.
15. Transfer. Simultaneously with the payment on the Date of Closing as
specified hereinabove, SMS shall convey by xxxx of sale absolute, all personal
property other than the Excluded assets in Exhibit B to Xxxxx or by assignment
or endorsement of certificates of title, as the case may be, free of all liens,
encumbrances, conditions and limitations. Items in Exhibit D shall be
transferred by assignment.
16. Indemnity. Xxxxx and SMS shall indemnify, defend, and hold each other
and their respective directors, officers, agents and affiliates harmless from
and against any claim, demand, cause of action, judgment, loss, liability, cost,
or other expenses whatsoever, including, without limitation, reasonable expenses
of litigation and investigation and reasonable fees and costs of attorneys,
accountants and other professionals incurred in the defense thereof or the
enforcement of rights hereunder incurred as a result of any breach of any
representation, warranty, covenant, or agreement contained in this Agreement. In
addition, SMS shall indemnify Xxxxx from and against any product liability claim
or judgment based on or arising out of the sale of any product sold prior to the
close of business on May 31, 1996, and Xxxxx shall hold SMS harmless and
indemnify SMS from any act, transaction, or sale occurring after Closing. SMS
and Xxxxx each shall add the other as an "additional insured" to all insurance
policies that each carry respecting liability, property, and casualty insurance.
Policies for liability shall be maintained at their current levels for
twenty-four (24) months after closing. The contents of this covenant of
Indemnity and Hold Harmless shall remain secret and kept in confidence.
17. Defense and Settlement of Claims. If any person entitled to
indemnification hereunder is threatened in writing with any claim or lawsuit by
any third party, the indemnified party shall give written notice thereof as
promptly as reasonably practicable to the party required to provide
indemnification. The Indemnifying party shall not make any settlement of such
claim or lawsuit without the written consent of the Indemnified Party, which
consent shall not be unreasonably withheld, however, such consent shall not be
required regarding the settlement or compromise of accounts payable assumed
hereunder.
18. Confidentiality and Non-Competition. SMS and X.X. Xxxxx, Xxxxx Xxxxx
Xxxxxxx and Xxxx Xxxxxxx agree to execute confidentiality and non-competition
agreements in the form attached hereto as Exhibit F.
19. Employment of X.X. Xxxxx. Xxxxx Xxxxx Xxxxxxx and Xxxx Xxxxxxx. Xxxxx
shall employ X.X. Xxxxx, for an initial period of one (1) year and Xxxxx Xxxxx
Xxxxxxx and Xxxx Xxxxxxx for an initial period of eighteen (18) months pursuant
to the employment agreements attached hereto as Exhibit G subject to the terms
and conditions specified therein for
13
the first year following closing. Xxxxx Xxxxx Xxxxxxx and Xxxx Xxxxxxx shall
work to successfully integrate the operations and business of SMS into Xxxxx.
20. Termination. This agreement may be terminated prior to the closing Date
i) by mutual agreement of the parties; ii) by SMS by notice to the Xxxxx if the
Closing shall not have taken place on or before May 31, 1996; iii) by either
party if there has been a breach by the other party of any representation,
warranty, covenant, or agreement contained herein; iv) if any condition
contained in this agreement which must be met prior to the closing becomes
impossible to fulfill; v) if either party is unable to obtain any consent,
authorization, or approval necessary to consummate this agreement. If this
Agreement is terminated, it shall become wholly void and of no further force and
effect, but such termination shall not constitute a waiver by either party of
any claim it may have for damages caused by reason of breach of representation,
warranty, covenant, or agreement made by the other party in this Agreement.
21. Exnenses. Each of the parties shall bear its own expenses incident to
this Agreement and the Transactions contemplated hereby, including without
limitation, all fees and disbursements of counsel, accountants, and financial
advisors retained by such party, whether or not the transactions contemplated in
this agreement are consummated.
22. O.R. Marketing. Inc. With the exception of Jarit Brand instruments, for
a period of thirty-six (36) months after Closing (the "Restricted Period"), no
instruments other than Xxxxx brand instrument (as defined in the current Xxxxx
catalog) may be sold by O.R. Marketing, Inc. Additionally, during such
Restricted Period, O.R. Marketing, Inc. shall purchase all its requirements for
all Xxxxx Products and all substantially similar products except for Jarit Brand
from Xxxxx, providing Xxxxx shall not unreasonably withhold the sale of its
products from O.R. Marketing, Inc. During the Restricted Period, the territorial
limitations set forth in Exhibit X-x shall apply [to] O.R. Marketing, Inc.
During the Restricted Period, Xxxxx and O.R. Marketing, Inc. will each receive
50% of the "Gross Profit" made on the sales of Xxxxx Products, "Gross Profit"
being defined in this Paragraph as 50% of the difference between O.R. Marketing,
Inc.'s selling price to its customers and Xxxxx'x cost of goods sold.
Distribution of such profits and an accounting for same shall occur with such
frequency as is reasonable, but no less frequently than each calendar quarter.
23. Miscellaneous. The following miscellaneous provisions shall apply to
this Agreement.
23.1 Counterpart Execution. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute and be the same instrument.
23.2 Severability. Any provision of this Agreement which is held to be
invalid, illegal or unenforceable in any jurisdiction, shall, as to that
jurisdiction, be ineffective to the extent of such invalidity, or illegality,
without effecting in any way the remaining provisions of this Agreement.
14
4 23.3 Governing Law. This Agreement shall be deemed to be made in the
Commonwealth of Pennsylvania and shall in all respects be interpreted,
construed, and governed by and in accordance with the laws of the Commonwealth
of Pennsylvania without any presumption or construction against the party
causing the Agreement to be drafted.
23.4 Headings. The headings and subheadings are inserted convenience
of reference only and shall not affect the interpretation of this Agreement.
23.5 Amendment. This Agreement may be amended only in writing, signed
by all of the parties.
23.6 No Waiver. The Failure of either party to enforce at any time any
of the provisions of this Agreement shall not be construed to be a waiver of the
right of such party thereafter to enforce each and every provisions of this
Agreement.
23.7 Independent Contractors. The parties are independent contractors,
and neither party shall act or attempt to at, or represent itself as, an agent
of the other party.
23.8 Successors and Assigns. This Agreement shall be binding upon.
shall insure to the benefit of, and shall be enforceable by the respective
successors of the parties.
23.9 Notices. Any notice due under this Agreement, including any
notice of termination, shall be in writing and delivered by certified mail,
return receipt requested, and mailed to each party at its address above,
addressed to "Chief Executive Officer," with a copy to the General Counsel.
23.10 Assignment and Transfer. This contract may not be assigned or
transferred to any other party.
23.11 Authorization. This Agreement is executed by an officer of each
party duly authorized by its Board of Directors to enter into the obligations
and commitments set forth in this Agreement. This Agreement represents a valid
and binding agreement of each party.
23.12 Entire Agreement. This Agreement constitutes understanding
between the parties with respect to the subject matter hereof, all prior or
understandings being merged into this Agreement or canceled.
24. SMS's Closing Obligations. At Closing, SMS shall deliver to Xxxxx the
following documents:
24.1 Assignments, Consents, Bills of Sale, Certificates of Title and
other documents or instruments of transfer and which shall contain full
warranties of title as shall be
15
effective to vest in Buyer all of Seller's right, title and interest in and to
all of the Assets being conveyed hereunder, free and clear of all liens,
charges, encumbrances and restrictions;
24.2 All contracts, files, commitments and rights pertaining to
Seller's Business and other data relating to is operations;
24.3 A release, in form satisfactory to counsel for Xxxxx, of any lien
or security interest in the Assets.
24.4 The Confidentiality and Non-Competition Agreements fully executed
by SMS, X.X. Xxxxx, Xxxxx Xxxxxxx and Xxxxxxx Xxxxxxx.
24.5 The fully executed Employment Agreements of W.R. Smith1 Xxxxx
Xxxxx Xxxxxxx and Xxxx Xxxxxxx.
24.6 Closing Statement; and
24.7 Opinion of Seller's counsel.
25. Xxxxx'x Closing Obligations. At Closing, Buyer shall deliver to Seller:
25.1 Payment of the sums due pursuant to this Agreement;
25.2 Resolution of Board of Directors of assignee of Buyer, if
appropriate, authorizing the execution of this Agreement and all documents
required for Closing;
25.3 Execution of all agreements executed by Seller which require
Buyer's agreement and execution;
25.4 Closing Statement.
26. Arbitration. The parties hereto shall take any and all disputes under
this Agreement and any of the Exhibits attached hereto to arbitration, before
the American Arbitration Association, which shall hold a hearing concluding such
issues within forty-five (45) days of submission. Three (3) Arbitrators shall be
selected, who shall sit within the West Chester, Pennsylvania Metropolitan area.
The Arbitration result shall be binding.
16
IN WITNESS WHEREOF, the parties have signed and dated this Agreement in the
spaces below.
SMS, INC. XXXXX CORPORATION
s\W Xxxxxxx Xxxxx, President s\ Xxx Xxxxxx, President
Date: June 4, 1996 Date: June 4, 1996
s\ W. Xxxxxxx Xxxxx
s\ Xxxxx Xxxxx Xxxxxxx
s\ Xxxxxx Xxxxx
Limited Joinder of O.R. Marketing Inc.
O.R. Marketing, Inc. joins in the above Asset Purchase Agreement for the
limited purpose of consenting to the provisions of Paragraph 22.
O.R. MARKETING, INC.
By: s\W. Xxxxxxx Xxxxx,
Sole Director and
Shareholder
17
