EXECUTION COPY
AGREEMENT
FOR
PURCHASE AND SALE OF ASSETS
THIS AGREEMENT is entered into this 1st day of December, 2003, by and
among Young OS LLC, a Delaware limited liability company ("BUYER"), Earth City
Technologies, Inc., a Missouri corporation d/b/a Spartan Marketing Group
("SELLER"), the Stockholders (as defined below) and the Beneficiary (as defined
below).
WHEREAS, Seller, together with Obtura Corporation, a Missouri
corporation ("OBTURA") is engaged in the manufacture, development and
distribution of endodontics and related products, in each case for the dental
industry (the "BUSINESS").
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to
sell to Buyer the Purchased Assets (as defined below) on the terms and
conditions set forth herein;
WHEREAS, simultaneously with the Closing (as defined below), Buyer is
purchasing certain assets of Obtura pursuant to an Agreement for Purchase and
Sale of Assets dated the date hereof by and among Buyer, Obtura and the
stockholders listed therein (the "OBTURA AGREEMENT");
WHEREAS, Xxxxxxx X. Xxxxx and Xxxxxx Xxxxx, as joint tenants
(collectively, "XXXXX") and the Xxxxxx X. Xxxxxxxx Revocable Living Trust dated
October 29, 1999 (the "TRUST" and together with Xxxxx, collectively, the
"STOCKHOLDERS") and Xxxxxx X. Xxxxxxxx, the beneficiary of the Trust (the
"BENEFICIARY"),will benefit from the sale of the Purchased Assets.
NOW, THEREFORE, in consideration of the premises and promises herein
contained, the parties agree as set forth below:
ARTICLE I
THE TRANSACTION
1.1 Purchase and Sale of Assets. At the Closing (as defined below),
Seller shall sell, transfer, assign and deliver to Buyer (or its designated
affiliate), and Buyer (or its designated affiliate) shall purchase, accept and
receive, all right, title and interest in, to or arising from the Purchased
Assets (as defined below).
1.2 Purchased Assets. The "PURCHASED ASSETS" are all of the assets,
properties, rights and claims acquired for, used in, held for use in, relating
to or arising from the conduct of the Business that are owned by Seller or
Seller has the right to, including the following:
(a) cash, cash equivalents and marketable securities;
(b) all accounts and notes receivables;
(c) all inventories (including raw materials, work in process,
samples, supplies, service parts, and finished goods) located at Seller's
facilities, in transit to or from Seller's facilities, held by Seller or vendors
on consignment;
(d) all tools, dies, jigs, molds, patterns, machinery and
equipment, whether owned or leased, whether in the possession of Seller or
vendors;
(e) all xxxxx cash, prepaid expenses, refunds (excluding any
refund in respect of Taxes), advances, deposits and similar amounts;
(f) all office furnishings, display racks, shelves,
decorations, equipment, telephone and telecopy numbers, fixtures and supplies;
(g) all technical, processing, manufacturing or marketing
information, including new developments, inventions, know how, processes, ideas
and trade secrets and documentation thereof (including related papers,
blueprints, drawings, chemical compositions, formulae, diaries, notebooks,
specifications, designs, methods of manufacture and data processing software)
and all claims and rights related thereto;
(h) all safe deposit boxes and the contents thereof which are
maintained for use in the conduct of the Business or which contain any assets of
the Business;
(i) all performance and other bonds, to the extent assignable,
security and other deposits, and advances maintained for use in the conduct of
the Business;
(j) all patents, trademarks, trade names, trade styles, logos
and service marks and all applications and registrations therefor and all of the
goodwill of the business appurtenant thereto and licenses thereof and the use of
the "SPARTAN", "SPARTAN MARKETING GROUP" AND "EARTH CITY TECHNOLOGIES" names;
(k) all copyrights and author's rights, whether published or
unpublished, including rights to prepare, reproduce and distribute copies,
compilations and derivative works;
(l) all customer files, all lists of customers, suppliers and
vendors, all rights and claims under sales contracts, customer orders, purchase
orders, dealer and distributorship agreements and other similar commitments;
(m) all rights in, to and under the Assumed Contracts (as
defined below);
(n) all documents and records relating to the Purchased
Assets, or the operations or products of the Business (including historical
costing and pricing data), and employment and personnel records for all
Designated Employees of the Business;
(o) all accounting books, records, ledgers and electronic data
processing materials;
(p) rights under contracts, instruments and other agreements;
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(q) rights under agreements with employees concerning
confidentiality and the assignment of inventions, but excluding any obligations
pursuant thereto, and the asset reserves and accruals of or related to any
employee benefit plan of Seller being assumed by Buyer in accordance with
Article VI;
(r) all information systems, programs, software and
documentation thereof (including all electronic data processing systems, program
specifications, source codes, logs, input data and report layouts and formats,
record file layouts, diagrams, functional specifications and narrative
descriptions, flow charts and other related material) which are used or intended
to be used in the conduct of the Business;
(s) prepaid expenses, deferred charges and cash advanced by
customers of the Business and rights to volume rebates due from suppliers;
(t) to the extent assignable, all permits, licenses, product
registrations, filings, authorizations, approvals and indicia of authority (and
pending applications for any thereof) (i) to conduct the operations of the
Business and to own, manufacture, construct, operate and maintain any product,
fixture, facility, equipment, vehicle, machinery or installation of the Business
or (ii) to store, transport, dispose of, market or sell any goods or any
substance (including, without limitation, materials classified as "HAZARDOUS
MATERIALS" or "HAZARDOUS SUBSTANCES" or "HAZARDOUS WASTE") used, handled,
produced, disposed of, marketed or sold in the operation of the Business, as
issued by any governmental agency or instrumentality;
(u) e-mail addresses, internet user names, addresses and
sites; and
(v) all other assets, properties, rights and claims related to
the operations of the Business or which arise in or from the conduct thereof;
provided, however, that the definition of Purchased Assets shall not include any
items defined as Excluded Assets in Section 1.3 below.
1.3 Excluded Assets. The following assets (the "EXCLUDED ASSETS") shall
not be sold or transferred to Buyer:
(a) refunds pertaining to Tax obligations of Seller;
(b) any rights of Seller under this Agreement (or under any
other agreement between Seller and Buyer entered into on or after the date
hereof);
(c) the corporate minute book and stock records of Seller;
(d) assets listed on Schedule 1.3(d).
1.4 Assumed Liabilities and Obligations. At Closing, Buyer shall assume
and discharge the following liabilities (the "ASSUMED LIABILITIES"):
(a) liabilities for accounts payable which arose in the
ordinary course of business for goods or services actually received by Seller
prior to the Closing Date but only to the extent accrued on the Closing Date
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Balance Sheet in accordance with GAAP (as defined below) and in the ordinary
course of business consistent with past practice;
(b) liabilities and obligations for accrued vacation, sick
leave and holiday pay to employees of the Business who are retained by Buyer but
only to the extent accrued on the Closing Date Balance Sheet in accordance with
GAAP and in the ordinary course of business consistent with past practice;
(c) liabilities pursuant to the warranty policies set forth on
Schedule 4.22 for repair or replacement of products or to refund the purchase
price therefor or otherwise to provide credits for or adjustments with respect
thereto, as a result of defects in materials or workmanship but only to the
extent accrued on the Closing Date Balance Sheet in accordance with GAAP and in
the ordinary course of business consistent with past practice;
(d) liabilities and obligations under the contracts listed on
Schedule 1.4(d) (the "ASSUMED CONTRACTS"), other than liabilities and
obligations resulting from a breach or default of Seller or any of its
Affiliates under any Assumed Contract occurring on or before the Closing; and
(e) liabilities and obligations under any employee benefit
plan being assumed by Buyer in accordance with Article VI but only to the extent
accrued on the Closing Date Balance Sheet in accordance with GAAP and in the
ordinary course of business consistent with past practice.
Buyer shall forever defend, indemnify and hold harmless Seller, and its
officers, directors, agents, representatives, parents, subsidiaries, affiliates,
successors and assigns from and against any and all liabilities, obligations,
losses, claims, damages (including incidental and consequential damages), costs
and expenses (including court costs and reasonable attorneys' fees) related to
or arising from Buyer's failure to fully perform and discharge the
responsibilities of Seller (to the extent assumed as provided herein) with
respect to the foregoing. Buyer further agrees to pay and discharge all such
liabilities as they come due.
1.5 Excluded Liabilities and Obligations. Buyer shall not be the
successor to Seller, and except as expressly set forth in Section l.4 above,
Buyer shall not assume and shall not be liable or responsible for any debt,
obligation or liability of the Business, Seller or any Affiliate (as defined
below) of Seller or related to the Purchased Assets, the Business, the
facilities from which the Business is or was conducted, or any claim against any
of the foregoing, of any kind, whether known or unknown, contingent, absolute,
or otherwise all of which are retained by Seller (the "EXCLUDED LIABILITIES").
Without limiting the foregoing, the term "EXCLUDED LIABILITIES" shall include:
(a) liabilities and obligations related to or arising from
transactions with any Affiliate of Seller on or prior to the Closing Date;
(b) liabilities and obligations for Taxes (as defined below)
of any kind arising on or prior to the Closing Date;
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(c) liabilities and obligations for damage or injury (real or
alleged) to person or property arising from the ownership, possession or use of
any product manufactured, assembled, processed, treated, distributed, sold or
serviced, directly or indirectly, or any service rendered by the Business in
each case through the Closing Date, including any product liability and product
warranty claims for products sold or services rendered on or prior to the
Closing Date;
(d) liabilities and obligations to employees, including those
for accident, disability, health (including unfunded medical liabilities) and
worker's compensation insurance or benefits, and all other liabilities and
obligations to employees arising from events or occurrences through the Closing
Date;
(e) liabilities and obligations arising from or relating to
claims or liabilities for benefits or pay under any employee benefit plan not
being assumed by Buyer in accordance with Article VI or under any compensation
policy, individual employment contract or collective bargaining agreement, or
any severance payment, including those related to any alleged termination of
employment solely as a result of the transactions contemplated hereby;
(f) liabilities and obligations for expenses, Taxes or fees
incurred by Seller, incidental to the preparation of this Agreement, preparation
or delivery of materials or information requested by Buyer, and the consummation
of the transactions contemplated hereby, including all broker, counsel and
accounting fees and transfer Taxes;
(g) liabilities and obligations relating to or arising from
litigation or any other disputes with third parties, if any, pending at the
Closing or, to the knowledge of Seller, threatened, on or prior to the Closing
Date, including those matters set forth on Schedule 4.24;
(h) liabilities and obligations due to products sold or
services rendered by Seller or any of its predecessors or Affiliates on or prior
to the Closing Date with respect to patent, trademark or copyright litigation or
disputes, including actions for infringement;
(i) liabilities and obligations arising from or in connection
with any administrative ruling or other order, stipulation or decree of any
Federal, state or local agency, or the violation of any Federal, state or local
Law;
(j) liabilities and obligations relating to the operation
prior to Closing of the facilities of the Business or any other real property,
buildings, improvements or other premises utilized by Seller and its Affiliates,
including liabilities arising from any Environmental Laws (as defined below);
(k) liabilities and obligations to any of Seller's, officers
or stockholders;
(l) liabilities and obligations relating to indebtedness for
borrowed money or accounts payable or guarantees of the obligations or
liabilities of Seller or any of its Affiliates or other persons;
(m) liabilities and obligations relating to or arising from
any expense (including court costs, amounts paid in settlement, judgments,
damages, attorneys' fees or other expenses for investigating and defending)
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relating to or arising from any claim (i) in connection with that certain
Agreement dated January 1, 1989, as amended May 1, 1997 between Spartan U.S.A.,
Inc., a Missouri corporation ("SPARTAN USA") and Seller (the "SPARTAN USA
AGREEMENT"), whereby Seller was named as the exclusive agent for the assembly,
marketing and sales of Spartan USA's product line; or (ii) by Spartan USA
against Buyer or the Business;
(n) liabilities and obligations relating to or arising from
any expense (including court costs, amounts paid in settlement, judgments,
damages (including enhanced damages, punitive damages, and attorney fee awards),
attorneys' fees or other expenses for investigating and defending) arising from
the matter of Earth City Technologies, Inc., et al. v. Dentsply International
Inc., et al, Civil Action No. 4:01CV00173HEA in the United States District Court
for the Eastern District of Missouri, (Eastern Division), including that certain
Settlement Agreement related thereto dated November 21, 2003;
(o) liabilities and obligations related to Excluded Assets;
and
(p) all other liabilities and obligations related to the
operation of the Business prior to Closing.
Seller, the Stockholders and the Beneficiary, shall, jointly and severally,
forever defend, indemnify and hold harmless Buyer, its officers, directors,
agents, representatives, parents, subsidiaries, affiliates, successors and
assigns from and against any and all liabilities, obligations, losses, claims,
damages (including incidental and consequential damages), costs and expenses
(including court costs and attorneys' fees) related to or arising from any and
all Excluded Liabilities or related to or arising from the conduct of the
Business prior to the Closing Date. Seller, the Stockholders and the
Beneficiary, further agree to pay and discharge all such liabilities and
obligations as they become due.
1.6 Nonassignable Contracts.
(a) To the extent that the assignment by Seller of any sales
order, purchase order, lease or other contract included in the Assumed
Liabilities or Purchased Assets is not permitted without (i) the consent of the
other party to the contract, (ii) the approval of Buyer as a source of the
products or services called for by such contract or (iii) the approval of Buyer
as a lessee, then this Agreement shall not be deemed to constitute an assignment
or an attempted assignment of the same, if such assignment or attempted
assignment would constitute a breach thereof. However, unless otherwise agreed
as to any particular contract or order (or class thereof), Seller shall use its
best efforts to obtain any and all such consents, approvals and novations before
and after Closing.
(b) If any necessary consent, approval or novation is not
obtained, Seller shall cooperate with Buyer in any reasonable arrangement
designed to provide Buyer with all of the benefits under such contract, lease or
order as if such consent, approval or novation had been obtained, including
subleases from Seller and, undertakings by Buyer of the work necessary to
complete contracts as the agent of Seller with the understanding that Seller
shall then invoice the customer for services rendered and promptly remit the
amount of the receivable to Buyer. Nothing herein shall excuse Seller from
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responsibility for any of their representations and warranties or covenants
hereunder.
ARTICLE II
PURCHASE PRICE
2.1 Consideration for Purchased Assets. The aggregate consideration to
be paid for the Purchased Assets shall be as follows:
(a) Six Million Three Hundred Forty-Seven Thousand Dollars
($6,347,000) (the "PURCHASE PRICE"). The Purchase Price is subject to the
adjustment as set forth in Section 2.3; and
(b) the assumption of the Assumed Liabilities.
2.2 Payment of the Purchase Price. At Closing, Buyer shall:
(a) pay Seller Five Million Eight Hundred Forty Seven Thousand
Dollars ($5,847,000) in immediately available funds; and
(b) deposit Five Hundred Thousand ($500,000) (the "ESCROW
AMOUNT") with X.X. Xxxxxx Trust Company, National Association (the "ESCROW
AGENT") pursuant to the terms of the Escrow Agreement, in substantially the form
attached hereto as Attachment I (the "ESCROW AGREEMENT").
2.3 Allocation of Purchase Price. Within 60 days of the Closing, Buyer
shall prepare and deliver to Seller a schedule allocating the Purchase Price and
Assumed Liabilities among the Purchased Assets (the "ALLOCATION SCHEDULE"). The
Allocation Schedule shall constitute the definitive schedule allocating the
Purchase Price and Assumed Liabilities among the Purchased Assets, unless Seller
shall deliver to Buyer a written objection to the Allocation Schedule within 10
days after the delivery by Buyer to Seller of the Allocation Schedule, pursuant
to which Buyer and Seller shall negotiate in good faith to finalize the
Allocation Schedule in a manner reasonably acceptable to both parties. If the
parties cannot agree on the Allocation Schedule, the Independent Auditor shall
determine the final Allocation Schedule pursuant to Section 2.3(b) of the Obtura
Agreement. Buyer and Seller, agree to complete and file Form 8594, and any other
required reports in accordance with Section 1060 of the Internal Revenue Code of
1986, as amended, and the regulations promulgated thereunder, with their
respective federal income tax returns for the tax year in which the Closing Date
occurs (and any amended Form 8594, if necessary) in accordance with the
Allocation Schedule.
2.4 Other Transactions. Simultaneously with the execution and
consummation of this Agreement, Buyer, Obtura and the stockholders listed
therein will enter into and consummate the Obtura Agreement.
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ARTICLE III
CLOSING AND TRANSFER OF ASSETS
3.1 Closing. The transfer of assets contemplated by this Agreement (the
"CLOSING") shall take place at the offices of XxXxxxxxx, Will & Xxxxx, 000 Xxxx
Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000-0000 on the date hereof, commencing at
9:00 a.m., local time, such date being hereinafter referred to as the "CLOSING
DATE." Upon consummation, the Closing shall be deemed to take place as of the
opening of business on the Closing Date.
3.2 Deliveries by Seller. At the Closing, Seller shall deliver to Buyer
the following:
(a) Trademark Assignments in substantially the forms attached
hereto as Attachment II;
(b) Patent Assignment in substantially the form attached
hereto as Attachment III;
(c) Copyright Assignment in substantially the form attached
hereto as Attachment IV;
(d) assignments and consents to assignment with respect to all
of the Assumed Contracts;
(e) payoff and release letters from creditors of Seller
together with UCC-3 termination statements with respect to financing statements
filed against the Business or any of the Purchased Assets;
(f) certificate of active status for Seller, certified by the
Secretary of State of its jurisdiction of incorporation and the jurisdiction
where the Business is qualified to do business as of a recent date prior to the
Closing Date;
(g) certified charter of Seller as of a recent date;
(h) any third-party consents required to consummate the
transactions contemplated hereby;
(i) tax clearance certificate for the state of Missouri for
Seller as of a recent date; and
(j) such other instruments, agreements or documents as may be
reasonably requested by Buyer to carry out the transactions contemplated hereby.
At Closing, Seller, shall take all steps necessary to place Buyer in actual
possession and operating control of the Business and the Purchased Assets.
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3.3 Deliveries by Buyer. At Closing, Buyer shall deliver the following:
(a) certified or bank cashier's check or wire transfer in the
aggregate amount of Five Million Eight Hundred Forty Seven Thousand Dollars
($5,847,000) to the account of Seller as set forth in Schedule 3.3;
(b) wire transfer to the Escrow Agent, in the aggregate amount
of Five Hundred Thousand Dollars ($500,000); and
(c) such other instruments, agreements or documents as may be
reasonably requested by Seller or appropriate to carry out the transactions
contemplated hereby.
3.4 Closing Agreements. At Closing, the parties shall execute,
acknowledge and deliver the following:
(a) the Escrow Agreement;
(b) General Assignment, Xxxx of Sale and Assumption of
Liabilities in substantially the form attached hereto as Attachment V (the "XXXX
OF SALE");
(c) the Obtura Agreement; and
(d) such other instruments, agreements or documents as may be
necessary or appropriate to carry out the transactions contemplated hereby.
3.5 Title; Risk of Loss. Legal title and risk of loss with respect to
the Purchased Assets shall not pass to Buyer (or its designated affiliate) until
the Purchased Assets are transferred at Closing. If prior to the Closing any of
the Purchased Assets are destroyed or damaged by fire or other casualty, Buyer
may, at its option, (a) include an amount equal to a mutually agreed upon cost
of completing the replacement or repair of such property as a deduction in the
calculation of the Purchase Price or (b) if the estimated cost of such
replacement or repair exceeds $100,000, terminate this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER,
THE STOCKHOLDERS AND THE BENEFICIARY
Seller, the Stockholders and the Beneficiary, jointly and severally,
hereby represent and warrant to Buyer as of the Closing Date, as set forth
below:
4.1 Authority. Seller, the Stockholders and the Beneficiary have full
capacity, right, power and authority, without the consent of any other person,
to execute and deliver this Agreement and to carry out the transactions
contemplated hereby. All acts or proceedings required to be taken by Seller, the
Stockholders and the Beneficiary to authorize the execution, delivery and
performance of this Agreement, the documents to be delivered at Closing and all
transactions contemplated hereby and thereby have been duly and properly taken.
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4.2 Validity. This Agreement has been, and the documents to be
delivered, by Seller, the Stockholders and the Beneficiary, at Closing will be,
duly executed and delivered and constitute lawful, valid and legally binding
obligations of Seller, the Stockholders and the Beneficiary, enforceable in
accordance with their terms. The execution and delivery of this Agreement, the
documents to be delivered at Closing and the consummation of the transactions
contemplated hereby and thereby will not result in the creation of any lien,
charge or encumbrance of any kind or the termination or acceleration of any
indebtedness or other obligation of the Business, the Purchased Assets, the
Stockholders or the Beneficiary and are not prohibited by, do not violate or
conflict with any provision of, do not constitute a default under or a breach of
and do not impair any rights under (a) the charter or by laws of Seller, (b) any
note, bond, indenture, contract, agreement, permit, license or other instrument
to which Seller, any Stockholder or the Beneficiary is a party or by which
Seller, any Stockholder or the Beneficiary or the Business or any of their
assets are bound, (c) any order, writ, injunction, decree or judgment of any
court or governmental agency, or (d) any federal, state or local law, rule,
regulation, judgment, code, ruling, statute, order, act, decree, ordinance or
other requirement (collectively, "LAWS") applicable to Seller, the Stockholders,
the Beneficiary, the Business or the Purchased Assets. No approval,
authorization, registration, consent, order or other action of or filing with
any person, including any court, administrative agency or other governmental
authority, is required for the execution and delivery by Seller, any Stockholder
or the Beneficiary of this Agreement, the documents to be delivered at Closing
or the consummation by Seller, or the Stockholders or the Beneficiary of the
transactions contemplated hereby and thereby, except as set forth on Schedule
4.2.
4.3 Due Organization. (a) Seller is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, and has full power and authority and all requisite rights,
licenses, permits and franchises to own, lease and operate its assets and to
carry on the business in which it is engaged. Seller is duly licensed,
registered and qualified to do business as a foreign corporation and is in good
standing in all jurisdictions in which the ownership, leasing or operation of
its assets or the conduct of its business requires such qualification. Schedule
4.3 sets forth each state or other jurisdiction in which Seller is licensed or
qualified to do business. Seller has delivered to Buyer an accurate, correct and
complete copy of its charter and by-laws and each agreement, trust, proxy or
other arrangement among its stockholders.
(b) The books of account and other financial records of the
Business and Seller are accurate, correct and complete and have been maintained
in accordance with good business practices. The minute books of Seller contain
accurate, correct and complete records of all meetings and accurately reflect
all material corporate action of the stockholders and directors and any
committees of the Board of Directors of Seller.
4.4 Subsidiaries. Seller does not own stock or have any equity
investment or other interest in, does not have the right to acquire any such
interest, and does not control, directly or indirectly, any corporation,
association, partnership, joint venture or other entity and has not had such an
ownership or control relationship with any such entity.
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4.5 Transactions with Affiliates. Since December 31, 2002, there have
not been any dividends or other distribution of assets by Seller which have been
declared or effected. Except as set forth in Schedule 4.5, no Affiliate:
(a) owns, directly or indirectly, any debt, equity or other
interest or investment in any corporation, association or other entity which is
a competitor, lessor, lessee, customer, supplier or advertiser of the Business;
(b) has any cause of action or other claim whatsoever against
or owes any amount to, or is owed any amount by, Seller or the Business;
(c) has any interest in or owns any property or right used in
the conduct of the Business;
(d) is a party to any contract, lease, agreement, arrangement
or commitment used in the Business; or
(e) received from or furnished to the Business any goods or
services.
The term "AFFILIATE" shall mean (i) any Stockholder and any officer, director or
stockholder of Seller and any member of the immediate family (including spouse,
brother, sister, descendant, ancestor or in-law) of any Stockholder, officer,
director or stockholder of Seller or (ii) any corporation, partnership, trust or
other entity in which Seller, any Stockholder or any such family member has a
five percent (5%) or greater interest or is a director, officer, partner or
trustee. The term Affiliate shall also include any entity which controls, or is
controlled by, or is under common control with any of the individuals or
entities described in the preceding sentence.
4.6 Financial Statements. The financial statements of the Business for
the two years ended December 31, 2002 and the ten (10) months ended October 31,
2003 attached hereto as Schedule 4.6 (collectively, the "FINANCIAL STATEMENTS")
are (a) accurate, correct and complete in all material respects, (b) in
accordance with the books of account and records of Seller, and (c) present
fairly the financial condition and results of operations of Seller as of the
dates and for the periods indicated. The books of account and other records
(financial and otherwise) of Seller and the Business are complete and correct
and are maintained in accordance with good business practices and are accurately
reflected on the Financial Statements. Schedule 4.6 sets forth all outstanding
debt of Seller for borrowed money and all outstanding equipment and capital
leases of Seller as of the Closing Date.
4.7 Interim Change. Except as set forth in Schedule 4.7, since December
31, 2002, Seller has operated the Business only in the ordinary course,
consistent with past practices, and there has not been:
(a) any adverse change in the financial condition, assets,
liabilities (fixed or contingent), personnel, prospects or business affairs of
Seller or the Business or in its relationships with suppliers, vendors,
customers, lessors, employees or others (in each case, as a group or class) nor
has there occurred any event or condition which could reasonably be expected to
have such an effect;
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(b) any damage, destruction or loss, whether or not covered by
insurance, adversely affecting the Business or assets of Seller;
(c) any forgiveness, cancellation or waiver of any rights of
Seller;
(d) any disposition of assets of Seller, other than sales of
inventory in the ordinary course of business on terms consistent with past
practice;
(e) any increase in the compensation or benefits payable or to
become payable by Seller (other than for general increases applicable to most
employees in an amount consistent with past practice);
(f) any declaration, authorization or payment of dividends or
distributions to the Stockholders;
(g) any issuance or repurchase by Seller of any shares of its
capital stock;
(h) any grant by Seller of any option to purchase shares of
capital stock;
(i) any change in credit practices as to customers of the
Business;
(j) any incurrence of any security interest, lien, charge,
encumbrance or claim on, or any material damage or loss of $10,000 or more to,
Seller or the Business; or
(k) any event or condition of any character materially
adversely affecting the Business or assets of Seller which has not been
disclosed to Buyer in the other Schedules to this Agreement.
Since December 31, 2002, neither Seller nor the Business has incurred or become
subject to, or agreed to incur or become subject to, any liability or
obligation, contingent or otherwise, except current liabilities and contractual
obligations in the ordinary course of business and in amounts consistent with
past practices. Except as set forth in Schedule 4.7, since December 31, 2002,
there has not been any agreement, commitment or understanding by Seller or the
Stockholders to do any of the foregoing.
4.8 Accounts Receivable. Schedule 4.8 sets forth accurate, correct and
complete aging of all outstanding accounts receivable included in the Purchased
Assets (the "ACCOUNTS RECEIVABLE") as of the Closing Date. Except as set forth
on Schedule 4.8, all outstanding Accounts Receivable are and will be on the
Closing Date due and valid claims against account debtors for goods or services
delivered or rendered, collectible in full in accordance with their respective
terms and subject to no defenses, offsets or counterclaims, except as reserved
against on the Closing Date Balance Sheet. All Accounts Receivable arose in the
ordinary course of business. Except as set forth on Schedule 4.8, no Accounts
Receivable are subject to prior assignment, claim, lien or security interest.
Except as accrued on the October 31, 2003 balance sheet of Seller, Seller has no
liability for any refunds, liability allowances or returns in respect of
products manufactured, processed, distributed or sold by or for the account of
Seller on or prior to the Closing Date. Where Accounts Receivable arose out of
secured transactions, all financing statements and other instruments required to
be filed or recorded to perfect the title or security interest of Seller have
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been properly filed and recorded except where failure to do so would not have an
adverse effect on the collectibility and value of the Accounts Receivable in the
aggregate. Schedule 4.8 contains an accurate, correct and complete list of the
names and addresses of all banks and financial institutions in which Seller has
an account, deposit, safe-deposit box, line of credit or other loan facility or
relationship, or lock box or other arrangement for the collection of Accounts
Receivable, with the names of all persons authorized to draw or borrow thereon
or to obtain access thereto.
4.9 Inventory. All inventories reflected on the Financial Statements
delivered to Buyer are, except as reserved against on the October 31, 2003
balance sheet of Seller, (a) properly valued at the lower of cost or market
value as described in the Financial Statements; (b) of good and merchantable
quality and contain no material amounts that are not salable and usable for the
purposes intended in the ordinary course of the Business and meet the current
standards and specifications of the Business and are not obsolete; (c) in
conformity with warranties customarily given to purchasers of like products; and
(d) at levels adequate and not excessive in relation to the circumstances of the
Business and which are at levels commercially reasonable based on the historical
sales of Seller. All inventories disposed of subsequent to December 31, 2002,
have been disposed of only in the ordinary course of business and at prices and
under terms that are normal and consistent with past practice.
4.10 Insurance. Schedule 4.10 sets forth an accurate and complete list
and summary description (including name of the insurer, coverage, premium and
expiration date) of all binders, policies of insurance, self insurance programs,
and fiduciary or fidelity bonds related to the Business and the Purchased Assets
("INSURANCE"). To Seller's and the Stockholders' knowledge, all Insurance has
been issued by financially sound insurance companies under valid and enforceable
policies or binders for the benefit of Seller and all such policies or binders
are in full force and effect and in such types and are in amounts and for risks,
casualties and contingencies customarily insured against by enterprises in
operations similar to the Business. Except as set forth on Schedule 4.10, there
are no pending or asserted claims against any Insurance as to which any insurer
has denied liability or reserved rights, and there are no claims under any
Insurance that have been disallowed or improperly filed within the last three
fiscal years for which the Business may be liable. Schedule 4.10 sets forth the
claims experience for the last three full fiscal years and the interim period
through the date hereof with respect to the Business (both insured and self
insured). No notice of cancellation or nonrenewal with respect to, or material
increase of premium for, any Insurance has been received by Seller within the
last three fiscal years. Neither Seller nor the Stockholders has any knowledge
of any facts or the occurrence of any event which (a) reasonably might form the
basis of any claim against Seller relating to the conduct or operations of the
Business and which will materially increase the insurance premiums payable under
any insurance, (b) otherwise could reasonably be expected to increase the
insurance premiums payable under any insurance, (c) reasonably could be expected
to lead to a retroactive premium adjustment, or (d) reasonably would not be
covered by insurance but for which the Business reasonably might be liable.
4.11 Title to Assets. Seller is the sole and exclusive legal and
equitable owner of all right, title and interest in and has good and marketable
title to all of the Purchased Assets. Except as set forth on Schedule 4.11 none
of the Purchased Assets which Seller purports to own are subject to (a) any
title defect or objection; (b) any contract of lease, license or sale; (c) any
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security interest, mortgage, pledge, lien, charge or encumbrance of any kind or
character, direct or indirect, whether accrued, absolute, contingent or
otherwise, except those disclosed in the Financial Statements; (d) any royalty
or commission arrangement; or (e) any claim, covenant or restriction. The
Purchased Assets are in good operating condition and repair (reasonable wear and
tear excepted), are not obsolete, are suitable for the purposes for which they
are presently being used, and are adequate to meet all present requirements of
the Business as presently conducted. The Purchased Assets will furnish Buyer
with all of the capacity and rights to manufacture, produce, develop, use, sell,
distribute, install and service the products and to perform the same services in
the same manner as presently being manufactured or performed by Seller. Schedule
4.11 sets forth an accurate, correct and complete list of all depreciable assets
included in the Purchased Assets.
4.12 Real Estate. (a) Schedule 4.12(a) sets forth the street addresses
of all real property or any interest therein (including without limitation any
option or other right or obligation to purchase any real property or any
interest therein) used or to be used in the operations of the Business (such
parcels of real property and all improvements, facilities and fixtures thereon,
are referred to herein collectively as the "REAL ESTATE"), and, for each parcel
of Real Estate leased or subleased by Seller, Schedule 4.12(a) shall also
include identification of the lease or sublease, and a list of all contracts,
agreements, leases, subleases, options and commitments, oral or written,
affecting such real property or any interest therein to which Seller is a party
or by which any of their interests in real property is bound (collectively, the
"REAL ESTATE LEASES"). Seller has been in peaceable possession of the premises
covered by each Real Estate Lease since the commencement of the original term of
such Real Estate Lease. Seller has delivered to Buyer accurate, correct and
complete copies of each Real Estate Lease. At the Closing, Seller shall deliver
to Buyer any consents or approvals of any parties required in connection with
the transactions contemplated hereby with respect to the Real Estate Leases
listed on Schedule 4.12(a). Except as set forth on Schedule 1.3, Seller does not
own any real property used in connection with the Business.
(b) With respect to each parcel of Real Estate: (i) there are
no pending or, to the knowledge of Seller or the Stockholders, threatened
condemnation proceedings, suits or administrative actions relating to any such
parcel or other matters affecting adversely the current use, occupancy or value
thereof; (ii) all improvements, buildings and systems on any such parcel are in
good operating condition, normal wear and tear excepted, and are safe for their
current occupancy and use; (iii) except as set forth on Schedule 4.12(b), there
are no contracts relating to service, management or similar matters to which
Seller or the Stockholders is a party which affect any such parcel; (iv) Seller
has not received any notice of any special tax, levy or assessment for benefits
or betterments that affect any parcel of the Real Estate and, to the knowledge
of Seller or the Stockholders, no such special taxes, levies or assessments are
pending or contemplated; (v) there are no contracts granting to any party or
parties the right of use or occupancy of any such parcel, and there are no
parties (other than Seller) in possession of any such parcel; (vi) all
facilities located on each such parcel are supplied with utilities and other
services necessary for their operation or use, all of which services are
adequate in accordance with all applicable Laws; and (vii) each such parcel
abuts on and has adequate direct vehicular access to a public road and there is
no pending or, to the knowledge of Seller or the Stockholders, threatened
termination of such access.
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4.13 Personal Property Leases. Schedule 4.13 sets forth an accurate,
correct and complete list of all leases or bailments of personal property used
in the Business (the "PERSONAL PROPERTY LEASES"). Seller has been in peaceable
possession of the property covered by each Personal Property Lease since the
commencement thereof. Seller has delivered to Buyer an accurate, correct and
complete copy of each Personal Property Lease.
4.14 Intellectual Property. Schedule 4.14 sets forth an accurate,
correct and complete list and summary description of all Intellectual Property.
"INTELLECTUAL PROPERTY" means all patents, trademarks, trademark rights, trade
names, trade styles, trade dress, trade secrets, logos, product designations,
service marks, copyrights, know-how and applications for any of the foregoing
utilized in the Business. During the preceding five (5) years, Seller has not
been known by or done business under any name other than those listed in
Schedule 4.14. Schedule 4.14 sets forth an accurate, correct and complete list
and summary description of all licenses and other agreements relating to any
Intellectual Property. None of the Intellectual Property is subject to any
extensions, renewals, taxes or fees due within ninety (90) days after Closing.
Except as set forth in Schedule 4.14, (a) Seller is the sole and exclusive owner
or has the sole and exclusive right to use the Intellectual Property in the
endodontics field; (b) no action, suit, proceeding or investigation is pending
or, to the knowledge of Seller or the Stockholders, threatened with respect to
the Intellectual Property; (c) none of the Intellectual Property interferes
with, infringes upon, conflicts with or otherwise violates the rights of others
or, to the knowledge of Seller or the Stockholders, is being interfered with or
infringed upon by others, and none is subject to any outstanding order, decree,
judgment, stipulation or charge; (d) there are no royalty, commission or similar
arrangements, and no licenses, sublicenses or agreements, pertaining to any of
the Intellectual Property; (e) Seller has not agreed to indemnify any person for
or against any infringement of or by the Intellectual Property; (f) neither
Seller nor the Stockholders have knowledge of any patent, invention or
application therefor or similar property which would infringe upon any of the
Intellectual Property or render obsolete or adversely affect the manufacture,
processing, distribution or sale of products or services relating to the
Business; (g) all items of Intellectual Property are properly registered under
applicable Law; and (h) the Intellectual Property constitutes all such assets,
properties and rights which are used in or necessary for the conduct of the
Business as it is being conducted as of the date hereof. Except as set forth on
Schedule 4.14, all rights of Seller in and to the Intellectual Property are
transferable to Buyer as contemplated herein without any consent or other
approval which has not been obtained. To the knowledge of Seller and the
Stockholders, the operation of the Business by Buyer after the Closing in the
manner and geographic areas in which the Business is currently conducted by
Seller will not interfere with or infringe upon any patent or trademark or any
intellectual property right of others. Neither Seller nor the Stockholders is
subject to any judgment, order, writ, injunction or decree of any court or any
Federal, state, local or other governmental agency or instrumentality, domestic
or foreign, or any arbitrator, or has entered into or is a party to any contract
which restricts or impairs the use of any Intellectual Property.
4.15 Trade Secrets. Except as set forth on Schedule 4.15, all
information in the nature of know how, trade secrets or proprietary information
which provides Seller with an advantage over competitors who do not know or use
it, including formulae, patterns, molds, tooling, inventions, industrial models,
processes, designs, devices, engineering data, cost data, compilations of
information, copyrightable material and technical information, if any, relating
to the Business (the "TECHNICAL INFORMATION"):
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(a) is owned solely and exclusively by Seller, and Seller is
solely responsible for the development of such Technical Information;
(b) is documented and readily usable by Buyer; and
(c) has been subject to Seller's reasonable precautions to
protect the secrecy of all Technical Information and prevent disclosure to
unauthorized parties.
All Technical Information and any copies thereof shall be delivered to Buyer at
Closing. Neither Seller nor the Stockholders have knowledge of any violation of
any trade secret rights with respect to Seller's operation of the Business.
4.16 Customers and Suppliers. All contracts or agreements with
customers and suppliers of the Business were entered into by or on behalf of
Seller in the ordinary course of business at usual and normal quantities, prices
and terms. Schedule 4.16 sets forth an accurate, correct and complete list of
the 15 largest customers and 10 largest suppliers of the Business, determined on
the basis of revenues from items sold (with respect to customers) or costs of
items purchased (with respect to suppliers) for each of the two (2) fiscal years
ended December 31, 2002. Neither Seller, nor Stockholders have any reason to
believe that any customer or supplier will cease to do business or materially
reduce their business with Seller after, or as a result of, the consummation of
any transactions contemplated hereby or that any customer or supplier is
threatened with bankruptcy or insolvency. Seller does not know of any fact,
condition or event which would adversely affect its relationship with any
customer or supplier. Since December 31, 2002, there has been no cancellation of
backlogged orders in excess of the average rate of cancellation prior to such
date.
4.17 Employees.
(a) Contracts. Schedule 4.17 sets forth an accurate, correct
and complete list and summary description of all agreements, arrangements or
understandings, written or oral, with the officers, directors and employees of
the Business regarding services to be rendered, terms and conditions of
employment, compensation, bonus, commission, profit sharing, stock options,
severance, termination, golden parachute or other similar agreements (the
"EMPLOYMENT CONTRACTS").
(b) Compensation. Seller has provided to Buyer an accurate,
correct and complete list of all employees of the Business, including name,
title or position, the present annual compensation (including bonuses,
commissions and deferred compensation) and years of service. Schedule 4.17 sets
forth an accurate, correct and complete list of each employee who may become
entitled to receive supplementary retirement benefits or allowances, whether
pursuant to a contractual obligation or otherwise, and the estimated amounts of
such payments. Except as set forth on Schedule 4.17, since December 31, 2002,
Seller has not (i) paid, or made any accrual or arrangement for the payment of,
bonuses or special compensation of any kind, including any severance or
termination pay, to any present or former officer or employee, (ii) made any
general wage or salary increases or (iii) increased or altered any other
benefits or insurance provided to any employee. No employee of the Business is
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eligible for payments that would constitute "PARACHUTE PAYMENTS" under Section
280G of the Internal Revenue Code of 1986, as amended (the "CODE").
(c) Labor Relations. There are no controversies pending or, to
the knowledge of Seller and the Stockholders, threatened involving any group of
employees. Seller has not suffered or sustained any work stoppage and no such
work stoppage is threatened. None of the current employees of Seller are members
of a union or subject to any collective bargaining agreement. No union
organizing or election activities involving any nonunion employees of Seller are
in progress or threatened. Neither Seller nor the Stockholders are aware of any
reason why any employee of Seller would not continue employment after
consummation of the transactions contemplated hereby.
(d) Other Employment Matters. Except as set forth on Schedule
4.17 the Business is currently in compliance with all applicable Laws relating
to the employment of labor, including those related to wages, hours, collective
bargaining and the payment and withholding of taxes and other sums as required
by any appropriate governmental authority and has withheld and paid to the
appropriate governmental authority or is holding for payment not yet due to such
governmental authority all amounts required to be withheld from employees of the
Business and is not liable for any arrears of wages, taxes, penalties or other
sums for failure to comply with any of the foregoing; (ii) the Business has paid
in full to all their respective employees or adequately accrued for in
accordance with GAAP all wages, salaries, commissions, bonuses, benefits and
other compensation due to or on behalf of such employees; (iii) the Business is
not liable for any payment to any trust or other fund or to any governmental or
administrative authority, with respect to unemployment compensation benefits,
social security or other benefits or obligations for employees (other than
routine payments to be made in the normal course of business and consistent with
past practice); (iv) there is no claim with respect to payment of wages, salary
or overtime pay that has been asserted or is now pending or threatened before
any governmental authority with respect to any persons currently or formerly
employed by the Business; (v) Seller is not a party to, or otherwise bound by,
any consent decree with, or citation by, any governmental authority relating to
employees or employment practices; (vi) there is no charge or proceeding with
respect to a violation of any occupational safety or health standard that has
been asserted or is now pending or threatened with respect to the Business;
(vii) there is no charge of discrimination in employment or employment
practices, for any reason, including, without limitation, age, gender, race,
religion or other legally protected category, which has been asserted or is now
pending or threatened before the United States Equal Employment Opportunity
Commission, or any other governmental authority in any jurisdiction in which
Seller has employed or currently employs any person; and (viii) there are no
controversies pending or, to the knowledge of Seller or the Stockholders,
threatened, between Seller and any of the Business' respective employees, which
controversies have or could reasonably be expected to result in an action, suit,
proceeding, claim, arbitration or investigation before any agency, court or
tribunal, foreign or domestic.
(e) Breach of Noncompetition Agreements. To the knowledge of
Seller or the Stockholders, no employees of the Business are in violation of any
term of any employment contract, patent disclosure agreement, enforceable
noncompetition agreement, or any enforceable restrictive covenant to a former
employer relating to the right of any such employee to be employed by Seller for
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the Business because of the nature of the Business conducted or presently
proposed to be conducted or to the use of trade secrets or proprietary
information of others.
4.18 Employee Benefit Plans.
(a) Benefit Plans. As used herein, the term "BENEFIT PLANS"
includes "WELFARE PLANS" (as defined in Section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), "PENSION PLANS" (as defined
in Section 3(2) of ERISA), bonus, profit sharing, deferred compensation,
incentive, bonus, stock option, employee stock purchase or other compensation
plans or arrangements, and other employee fringe benefit plans whether funded or
unfunded, qualified or unqualified, exclusive of multiemployer plans (as defined
in Section 3(37) of ERISA), and maintained or contributed to by Seller or any
other organization ("COMMON CONTROL ENTITY") which is a member of a controlled
group of organizations (within the meaning of Sections 414(b), (c), (m) or (o)
of the Code) for the benefit of any of the employees of the Business. Schedules
4.17 and 4.18 set forth an accurate and complete list of each Benefit Plan
maintained or contributed to by Seller or any other Common Control Entity, since
August 1996 (each such plan referred to as a "SCHEDULED BENEFIT PLAN"). Except
as set forth in Schedule 4.18, Seller has delivered to Buyer accurate and
complete copies of (i) each Scheduled Benefit Plan (or, in the case of any
unwritten Scheduled Benefit Plans, descriptions thereof) and any amendments
thereto exclusive of terminated Employment Agreements, (ii) the three most
recent annual reports on Form 5500 and attached Schedule B (including any
related actuarial valuation reports), if any, filed with the Internal Revenue
Service with respect to any Benefit Plan being assumed by Buyer in accordance
with Article VI (if any such report was required), (iii) each trust agreement
and insurance contract or group annuity contract (including any related
certificates of coverage, riders, amendments and notices) relating to any
Scheduled Benefit Plan, if any, (iv) each determination letter from the Internal
Revenue Service, and each outstanding request for such a letter, on the tax
qualified status of any Pension Plan that is intended to be qualified under
Section 401(a) of the Code and is a Scheduled Benefit Plan, if any, (v) each
form of general notification to employees of their rights to continuation
coverage under Sections 601 through 608 of ERISA for each Scheduled Benefit Plan
and (vi) the most recent "SUMMARY PLAN DESCRIPTION" and all subsequent
"SUMMARIES OF MATERIAL MODIFICATIONS" (all as defined in ERISA) for each Welfare
Plan and Pension Plan. Seller and each Common Control Entity have never
sponsored, contributed to, nor been obligated to contribute to, (A) an employee
pension benefit plan that is subject to Title I, Subtitle B, Part 3 of ERISA
(relating to "FUNDING") or a Benefit Plan that is a multiemployer plan (as
defined in Section 3(37) of ERISA), or (B) a voluntary employees' beneficiary
association ("VEBA").
(b) Funding. All contributions to, and payments from, the
Benefit Plans that have been required to be made in accordance with the Benefit
Plans have been timely made. All such contributions to, and payments from, the
Benefit Plans, except those payments to be made from a trust qualified under
Section 401(a) of the Code, for any period ending before the Closing Date that
are not yet, but will be, required to be made, will be timely made or, in the
case of any Benefit Plan that is being assumed by Buyer in accordance with
Article VI, properly accrued and reflected in the Financial Statements in
accordance with GAAP.
(c) Compliance With the Code and ERISA. Except as set forth in
Schedule 4.18, Seller, each Common Control Entity and each Benefit Plan (and any
related trust agreement or annuity contract, if any, or any other funding
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instrument) comply currently, and have complied in the past, both as to form and
operation, with the terms of each Benefit Plan and with the applicable
provisions of the Code and ERISA and all other applicable laws, rules and
regulations in all respects; and all necessary governmental approvals for the
Benefit Plans have been obtained. Except as set forth in Schedule 4.18, the
Benefit Plans that are Pension Plans have received determination or opinion
letters from the Internal Revenue Service to the effect that such Benefit Plans
are qualified and exempt from Federal income taxes under Sections 401(a) and
501(a), respectively, of the Code, and no such determination letter has been
revoked nor, to the knowledge of Seller and the Stockholders, has revocation
been threatened, nor has any such Benefit Plan been amended since the date of
its most recent determination letter or application therefor in any respect
which would adversely affect its qualification or materially increase its cost.
(d) Administration. Except as set forth in Schedule 4.18, each
Benefit Plan has been administered to date in compliance with its terms and the
requirements of the Code and ERISA in all respects. The remaining provisions of
this subparagraph (d) apply only to those Benefit Plans being assumed by Buyer
in accordance with Article VI. Except as set forth in Schedule 4.18, all
reports, returns, summaries, notices and similar documents with respect to the
Benefit Plans required to be filed with any government agency or distributed to
any Benefit Plan participant have been duly and timely filed or distributed.
Except as set forth in Schedule 4.18, there are no investigations by any
governmental agency, termination proceedings or other claims (except claims for
benefits payable in the normal operation of the Benefit Plans), suits or
proceedings against or involving any Benefit Plan or asserting any rights or
claims to benefits under any Benefit Plan that could give rise to any liability,
nor, to the knowledge of Seller and the Stockholders, are there any facts that
could give rise to any liability in the event of any such investigation, claim,
suit or proceeding. Seller's financial statements reflect all of Seller's
employee benefit liabilities in a manner satisfying the requirements of FAS 35,
87, 88, 112 and 132. No event has occurred and no condition exists under any
Benefit Plan that would subject Seller or any Common Control Entity to any tax
under Code Sections 4971, 4972, 4976, 4977, 4978, 4979, 4979A, 4980, 4980B,
4980C, 4980D and 4980E or to a fine under ERISA Section 502(c). Except as set
forth in Schedule 4.18, there are no leased employees (as defined in Section
414(l) of the Code) that must be taken into account under any Benefit Plan.
(e) Prohibited Transactions. No "PROHIBITED TRANSACTION" (as
defined in Section 4975 of the Code or Section 406 of ERISA) has occurred which
involves the assets of any Benefit Plan being assumed by Buyer in accordance
with Article VI and which could subject Seller, any Common Control Entity or any
of their employees, or a trustee, administrator or other fiduciary of any trusts
created under any Benefit Plan to the tax or penalty on prohibited transactions
imposed by Section 4975 of the Code or the sanctions imposed under Title I of
ERISA. Neither Seller nor any Common Control Entity nor any trustee,
administrator or other fiduciary of any such Benefit Plan nor any agent of any
of the foregoing has engaged in any transaction or acted or failed to act in a
manner which could subject Seller or any Common Control Entity to any liability
for breach of fiduciary duty under ERISA or any other applicable law.
4.19 Licenses and Permits. Schedule 4.19 contains an accurate, correct
and complete list and summary description of each license, permit, certificate,
approval, exemption, franchise, registration, variance, accreditation or
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authorization currently issued to Seller and used in the Business or that are
known by Seller or the Stockholder to be required in the future (collectively,
the "LICENSES AND PERMITS"). The Licenses and Permits are valid and in full
force and effect and there are not pending, or, to the knowledge of Seller and
the Stockholders, threatened, any proceedings which could result in the
termination, revocation, modification, limitation or impairment of any License
or Permit. Seller has not received any notices relating to the withdrawal of any
such Licenses or Permits or requiring any modification of a product in order to
preserve any such approval. Seller has all licenses, permits, certificates,
approvals, franchises, registrations, accreditations and other authorizations as
are necessary or appropriate to own and conduct the Business as it is presently
conducted and to own, occupy and lease their real property. To Seller's and the
Stockholders' knowledge, no third party has asserted that any other licenses,
permits, certificates, approvals, franchises, registrations, accreditations and
other authorizations are required. Except as set forth on Schedule 4.19, all
Licenses and Permits will continue to be in full force and effect after the
consummation of the transactions contemplated hereby. No violations have been
recorded in respect of any Licenses and Permits, and there is no meritorious
basis therefor.
4.20 Material Contracts. Schedule 4.20 sets forth an accurate, correct
and complete list of all instruments, commitments, agreements, arrangements and
understandings related to the Business or the Purchased Assets to which Seller
is a party or bound, or by which any of its assets are subject or bound, or
pursuant to which Seller is a beneficiary (the "CONTRACTS"), meeting any of the
descriptions set forth below (the "MATERIAL CONTRACTS"):
(a) Real Estate Leases, Insurance, licenses of Intellectual
Property, Technical Information, Employment Contracts, Benefit Plans and
Licenses and Permits;
(b) any contract for capital expenditures or for the purchase
of goods or services in excess of $25,000;
(c) any purchase order, agreement or commitment obligating
Seller to sell or deliver any product or service at a price which does not cover
the cost (including labor, materials and production overhead) plus the customary
profit margin associated with such product or service;
(d) any financing agreement or other agreement for borrowing
money, any instrument evidencing indebtedness, any liability for borrowed money,
any obligation for the deferred purchase price of property in excess of $25,000
(excluding normal trade payables), or any instrument guaranteeing any
indebtedness, obligation or liability;
(e) any joint venture, partnership, cooperative arrangement or
any other agreement involving a sharing of profits;
(f) any contract with any government or any agency or
instrumentality thereof;
(g) any contract with respect to the discharge, storage or
removal of effluent, waste or pollutants;
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(h) any distribution, license or royalty agreement;
(i) any power of attorney, proxy or similar instrument;
(j) any contract for the purchase or sale of any assets of
Seller (whether or not completed) other than in the ordinary course of business
or granting an option or preferential rights to purchase or sell any assets;
(k) any contract to indemnify any party or to share in or
contribute to the liability of any party;
(l) any contract containing covenants not to compete in any
line of business or with any person in any geographical area;
(m) any contract relating to the acquisition of a business or
the equity of any other person (whether or not completed);
(n) any contract relating to the purchase or sale of a portion
of its requirements or output;
(o) any other contract, commitment, agreement, arrangement or
understanding related to the Business (other than those excluded by an express
exception from the descriptions set forth in the subsections above) which
provides for payment or performance by either party thereto having an aggregate
value of $25,000 or more (unless terminable without payment or penalty on sixty
(60) days (or less) notice);
(p) any proposed arrangement of a type that if entered into
would be a Material Contract; and
(q) any plan document, or related trust agreement or group
insurance contract, under any of the Benefit Plans being assumed by Buyer as of
the Closing Date in accordance with Article VI.
Accurate, correct and complete copies of each Material Contract have been
delivered to Buyer. Each Contract is in full force and effect and is valid,
binding and enforceable against Seller and to Seller's and the Stockholders'
knowledge, the other parties to the Contract in accordance with its terms.
Seller, and to Seller's and the Stockholders' knowledge the other parties to
each Contract, has complied with all commitments and obligations on its part to
be performed or observed under each Contract. No event has occurred which is or,
after the giving of notice or passage of time, or both, would constitute a
default under or a breach of any Contract by Seller, or, to the knowledge of
Seller and the Stockholders, by any other party. Seller has not received or
given notice of an intention to cancel or terminate a Contract or to exercise or
not exercise options or rights under a Contract. Seller has not received any
notice of a default, offset or counterclaim under any Contract, or any other
communication calling upon Seller to comply with any provision of any Contract
or ascertaining noncompliance. Except as set forth on Schedule 4.20, none of the
rights of Seller under any Contract will be impaired by the consummation of the
transactions contemplated by this Agreement, and all of such rights will be
enforceable by Buyer after the Closing Date without the consent or agreement of
any other party, including all rights to renew the applicable Xxxxxxxx. Xx
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Xxxxxxx, Xxxxxx shall deliver to Buyer any consents or approvals of any parties
required with respect to the assignment of the Assumed Contracts in connection
with the transactions contemplated hereby. Seller has delivered accurate,
correct and complete copies of each Contract to Buyer. Except as set forth on
Schedule 4.20, no Contract permits or requires Seller (A) to obtain goods,
services or benefits on terms substantially more favorable than fair market
terms or (B) to provide goods, services or benefits on terms substantially less
favorable than fair market terms. With respect to each Contract which is to be
assigned to Buyer pursuant to the terms hereof, except as set forth on Schedule
4.20, Buyer will succeed to all the rights and benefits of Seller. Seller has
not granted any powers of attorney with respect to the Business. The
consummation of the transactions contemplated hereby, without notice to or
consent or approval of any party, will not constitute a default under or a
breach of any provision of a Contract, and Buyer will have and may enjoy and
enforce all rights and benefits under each Contract in the same manner as if the
transactions contemplated hereby were not consummated. There is no security
interest, lien, encumbrance or claim of any kind on Seller's interest under any
Contract.
4.21 Taxes.
(a) Filings. Each of Seller and any partnership or trust in
which Seller directly or indirectly owns an interest (collectively, the
"TAXPAYERS") have filed, been included in or sent, or will file, be included in
or send, all returns, declarations and reports and all information returns and
statements (collectively, "RETURNS") required to be filed or sent with respect
to all foreign, federal, state, county, local and other taxes of every kind and
however measured, including income, gross receipts, excise, franchise, property,
value added, import duties, employment, payroll, sales and use taxes and any
additions to tax and any interest or penalties thereon (collectively, "TAXES")
for any period beginning before and ending on or before the Closing Date and any
period beginning before and ending after the Closing Date. As of the time of
filing, the Returns correctly reflected, and Returns not yet filed as of the
date hereof will correctly reflect, the income, business, assets, operations,
activities and status of the relevant Taxpayers and any other information
required to be shown thereon. Each Taxpayer has timely paid or made provision
for all Taxes shown as due and payable on its Returns required to be filed or
sent prior to the date hereof and will timely pay all Taxes that will be shown
as due and payable on its Returns required to be filed or sent after the date
hereof. All required Tax estimates, deposits, prepayments and similar reports or
payments for current periods have been properly made. No Taxpayer is delinquent
in the filing of any Return or the payment of any Tax or has requested any
extension of time within which to file any Return. Seller has delivered to Buyer
accurate, correct and complete copies of all federal and state income Tax
Returns of Seller for the last three (3) fiscal years.
(b) Compliance. Seller has obtained all appropriate sales Tax
exemption certificates for all sales made without charging or remitting a sales
Tax. Each Taxpayer has withheld amounts from employees and others working in the
Business, as required under applicable law, and has filed all Returns with
respect to employee income Tax withholding and social security and unemployment
Taxes in compliance with the tax withholding provisions of the Code and other
applicable foreign, Federal, state or local Laws.
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(c) Disputes. There are no Tax liens on any Purchased Assets
of any Taxpayer and no basis exists for the imposition of any such liens. No
adjustment of or deficiency for any Tax or claim for additional Taxes has been
proposed, asserted, assessed or to Seller's, and the Stockholders' knowledge
threatened against any Taxpayer or any member of any affiliated or combined
group of which any Taxpayer is or was a member for which Seller could be liable.
No Taxpayer has any dispute with any taxing authority as to Taxes of any nature.
There are no audit examinations being conducted or threatened, and there is no
deficiency or refund litigation or controversy in progress or threatened, with
respect to any Taxes previously paid by any Taxpayer or with respect to any
Returns previously filed by or on behalf of any Taxpayer. Seller has not been
included in any unitary, affiliated, combined or otherwise consolidated Returns
filed by any person.
(d) S Corporation Election. Seller, with the consent of the
Stockholders, properly elected to be taxed as an "S corporation" under Section
1362 of the Code and any corresponding state or local Tax provision effective
July 22, 1987. No such election has been terminated or revoked in any taxable
year subsequent thereto.
4.22 Product Warranty.
(a) All products manufactured, processed, distributed, shipped
or sold by Seller and any services rendered by them have been in conformity with
all applicable contractual commitments, all expressed or implied warranties and
all Laws. No liability exists or will arise for repair, replacement or damage in
connection with such sales or deliveries, in excess of the reserve therefor
reflected in the October 31, 2003 balance sheet of Seller. All warranties are in
compliance with all applicable Laws. Schedule 4.22 sets forth an accurate,
correct and complete statement of all written warranties, warranty policies,
service and maintenance agreements of the Business. No products heretofore
manufactured, processed, distributed, sold, delivered or leased by Seller are
now subject to any guarantee, warranty, claim for product liability, or patent
or other indemnity, other than those set forth in Schedule 4.22. The product
warranty reserves on Financial Statements were prepared in accordance with GAAP
and are adequate in light of the circumstances of which Seller and the
Stockholders are now aware.
(b) Seller warrants and represents to Buyer that all products
developed, investigated, manufactured, processed, advertised or promoted,
distributed, shipped or sold have been free from material defects, have complied
with all applicable laws and regulations including State, Federal and
International, have not been adulterated or misbranded in any manner within the
meaning of the Federal Food, Drug and Cosmetic Act ("FD&C ACT"), or the Federal
Insecticide, Fungicide, and Rodenticide Act ("FIFRA") and are not articles,
which may not, under the provisions of the FD&C Act, be introduced into
interstate commerce.
4.23 Product Liability. Schedule 4.23 sets forth an accurate, correct
and complete list and summary description of all existing claims, duties,
responsibilities, liabilities or obligations arising from or alleged to arise
from any injury to person or property or economic damage as a result of the
ownership, possession or use of any product manufactured, processed,
distributed, shipped or sold by Seller prior to the Closing Date. Except as set
forth in Schedule 4.23, the Business will not be subject to any claim, expense,
liability or obligation arising from any injury to person or property or
economic damage as a result of ownership, possession or use of any product
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manufactured, processed, distributed, shipped or sold by Seller prior to the
Closing Date. All such claims are adequately covered by product liability
insurance in the amount of $2,000,000 or otherwise accrued on the October 31,
2003 balance sheet of Seller. There have been no recalls with respect to any
products of the Business under the Consumer Product Safety Act, as amended, or
under any other Law. To the knowledge of Seller and the Stockholders, no
circumstances exist involving the safety aspects of the Business' products which
would give rise to any obligation to report to any foreign, Federal, state or
local agency.
4.24 Legal Proceedings. Except as set forth in Schedule 4.24, Seller is
not engaged in or a party to or to Seller's, and the Stockholders' knowledge,
threatened with any action, suit, proceeding, complaint, charge, hearing,
investigation or arbitration or other method of settling disputes or
disagreements; and neither Seller nor the Stockholders knows, anticipates or has
notice of any reasonable basis for any such action. Seller has not received
notice of any investigation threatened or contemplated by any foreign, Federal,
state or local governmental or regulatory authority, including those involving
the safety of products, the working conditions of employees, the employment
practices or policies of the Business, or compliance with environmental
regulations. Except as set forth in Schedule 4.24, neither Seller, the Business
nor any of the Purchased Assets is subject to any judgment, order, writ,
injunction, stipulation or decree of any court or any governmental agency or any
arbitrator.
4.25 Environmental Matters.
(a) The ownership, use and operation by Seller and its
predecessors of all real property and each facility used in the Business has
been and on the Closing Date will be in compliance with all federal, state and
local environmental and anti-pollution statutes, laws, ordinances, rules,
standards, orders, moratoria and regulations, including the Resource
Conservation and Recovery Act, as amended ("RCRA"), the Clean Air Act, as
amended, the Clean Water Act, as amended, the Safe Drinking Water Act, as
amended, the Toxic Substances Control Act, as amended, the Emergency Planning
and Community Right-to-Know Act, as amended, the Hazardous Material
Transportation Act, as amended, the Federal Insecticide, Fungicide and
Rodenticide Act, as amended, the Oil Pollution Control Act, as amended, the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended, ("CERCLA") and the Occupational Safety and Health Act, as amended, any
state or local counterpart thereof and all rules and regulations implementing
any of the foregoing (collectively referred to as "ENVIRONMENTAL LAWS").
(b) Except as set forth in Schedule 4.25, no action, suit,
claim, demand, proceeding, investigation, complaint, arbitration or charge
alleging failure to comply with, violation of or liability under any
Environmental Laws (collectively, an "ENVIRONMENTAL Claim") has been made and
Seller has not received any notice alleging an Environmental Claim and to the
knowledge of Seller and the Stockholders, there is no meritorious basis
therefor. Seller has not received a request for information pursuant to an
Environmental Law. Except as set forth in Schedule 4.25, there has not been, and
is not occurring, at any facility or site operated, or previously owned or
operated, by Seller, any Release or threatened Release of any Hazardous
Substance or petroleum, including crude oil or any fraction thereof, nor has
such a Release occurred. Seller has not applied or disposed of any Hazardous
Substance or petroleum, including crude oil or any fraction thereof, in any
manner which may form the basis for any present or future Environmental Claim at
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any facility currently or previously owned or operated by Seller, site currently
or previously owned or operated by Seller, location or body of water, surface or
subsurface currently or previously owned or operated by Seller nor, to the
knowledge of Seller and any Stockholders, has such an application or disposal
occurred.
(c) Seller has not ever sent, arranged for disposal or
treatment, arranged with a transporter for transport for disposal or treatment,
transported, or accepted for transport any Hazardous Substance, Solid Waste or
petroleum, including crude oil or any fraction thereof, to a facility, site or
location, which, pursuant to CERCLA or any similar state or local Law, (i) has
been placed, or is proposed to be placed, on the National Priorities List or its
state equivalent or (ii) is subject to a claim, administrative order or other
request to effect Removal or take Remedial Action.
(d) Except as set forth in Schedule 4.25, there has not been
any contamination of groundwaters, surface waters, soils or sediments, as a
result of the manufacture, storage, processing, loss, leak, escape, spillage,
disposal or other handling or disposition by or on behalf of Seller of any
product or substance on or prior to the Closing Date in violation of
Environmental Laws at any facility or site currently owned or operated by Seller
or at any location previously owned or operated by Seller during Seller's
ownership or operation of the facility or site.
(e) Schedule 4.25 sets forth an accurate and complete list of
all environmental audits or assessments or occupational health studies
undertaken by or on behalf of Seller, a governmental agency with respect to
Seller or its assets, employees, facilities, sites or other properties, the
results of groundwater and soil testing, the results of underground fuel, water
or waste tank tests and soil samples, notices of violations and orders with
Federal, state or local governments on environmental matters, and OSHA
citations.
(f) Except as set forth in Schedule 4.25, there are no
Hazardous Substances, Hazardous Wastes, Solid Wastes, tanks, containers,
cylinders, drums or cans buried, stored or deposited in or on any real property
facility or site currently or formerly owned or operated by Seller and no such
materials were buried, stored or deposited on any real property, facility or
site formerly owned or operated by Seller during Seller's ownership or operation
of the real property, facility or site. There has not been located on or
disposed of on any facility or site owned or operated by Seller during any
period of such ownerships or operations, or, to the knowledge of Seller and the
Stockholders, at any other time: any polychlorinated biphenyl; any compound or
material containing any polychlorinated biphenyl; or any equipment, article or
item using, containing, or made up in whole or in part of any polychlorinated
biphenyl.
(g) Schedule 4.25 lists all permits, certificates, approvals,
authorizations, licenses and registrations required to own or operate the
Business or any currently owned or operated facility or site under any
Environmental Law ("ENVIRONMENTAL PERMITS"). Seller has all Environmental
Permits and is in compliance with all terms and conditions thereof. All
Environmental Permits are in full force and effect, and Seller has not received
any notice alleging an Environmental Claim with respect thereto. Seller has not
breached, defaulted under or violated any of the Environmental Permits.
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(h) Except as set forth in Schedule 4.25, no underground
storage tanks, as defined in RCRA or under applicable state law, are present and
in current use on any property currently operated by or on behalf of Seller at
any location, and, to Seller's and the Stockholders' knowledge, no such tanks
were previously abandoned or removed.
(i) There is no environmental substance or other condition or
use of any property at which Seller currently operates the Business, whether
natural or manmade, which if used in compliance with all Environmental Laws
poses a present or potential threat of damage to the health of persons, to
property, to natural resources, or to the environment in violation of
Environmental Laws.
As used in this Agreement, the terms "REMOVAL," "REMEDIAL ACTION," "FACILITY,"
"RELEASE," "HAZARDOUS SUBSTANCE," "HAZARDOUS Materials," "NATIONAL PRIORITIES
LIST," "HAZARDOUS WASTE" and "SOLID WASTE" shall have the same meaning as those
terms are given in Environmental Laws.
4.26 Absence of Undisclosed Liabilities. Except to the extent reflected
on the balance sheet for the year ended December 31, 2002 or a Schedule attached
hereto, the Business has no indebtedness, duty, responsibility, liability or
obligation of any nature, whether absolute, accrued, contingent or otherwise,
related to or arising from the operation of the Business or the ownership,
possession or use of the Purchased Assets through the Closing Date, other than
in the ordinary course of its business on terms and conditions and in amounts
consistent with past practices.
4.27 Compliance with Law. The Business and the Purchased Assets conform
in all respects to all applicable Laws. Seller has complied in all respects with
all licensing requirements, decrees, awards, orders or the like applicable to
the Business or its operations; and there is not and will not be any liability
arising from or related to any violations thereof existing on or prior to
Closing. To the knowledge of Seller and the Stockholders, there is no proposed
or pending change in any Law which would adversely affect the Business. No
notice from any governmental body or other person of any violation of any Law or
requiring or calling attention to the necessity of any repairs, installation or
alteration in connection with the Business has been served, and neither Seller
nor the Stockholders knows of any basis therefor. Neither Seller nor any
officer, agent or employee of Seller, nor, to the knowledge of Seller or the
Stockholders, any other person acting on behalf of Seller, (a) has made any
unlawful domestic or foreign political contributions, (b) has made any payment
or provided services which were not legal to make or provide or which Seller or
any such officer, employee or other person should have known were not legal for
the payee or the recipient of such services to receive, (c) has received any
payments, services or gratuities which were not legal to receive or which Seller
or such person should have known were not legal for the payor or the provider to
make or provide, (d) has had any transactions or payments which are not recorded
in its accounting books and records or disclosed in its financial statements,
(e) has had any off-book bank or cash accounts or "SLUSH FUNDS", (f) has made
any payments to governmental officials in their individual capacities for the
purpose of affecting their action or the action of the government they represent
to obtain special concessions, or (g) has made payments or expenditures to
obtain or retain business or obtain favorable treatment from vendors, other than
the customary business entertainment.
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4.28 Software. Schedule 4.28 sets forth an accurate and complete list
and summary description of all the Software (as defined below) owned, licensed
or otherwise used by Seller. Schedule 4.28 identifies or describes (i) Software
of or relating primarily to the Business which is owned by Seller; and (ii)
Software of or relating primarily to the Business which is licensed to Seller by
third parties. With respect to the Software:
(a) all documentation for Software licensed to Seller is
current (to the extent any third party owner supplies updated documentation to
licensees), accurate and sufficient in detail and content to identify and
explain the nature thereof, and to allow its full and proper use by Buyer
without reliance on the special knowledge or memory of others; and
(b) Seller owns all right, title and interest in the Software
that is not designated as licensed free and clear of any liens, encumbrances,
restrictions, or legal or equitable claims of others.
"SOFTWARE" means all electronic data processing systems, information systems,
computer software programs, program specifications, charts, procedures, source
codes, object codes, input data, routines, data bases and report layouts and
formats, record file layouts, diagrams, functional specifications and narrative
descriptions, flow charts and other related material and documentation and any
and all licenses and copies thereof and rights thereto.
4.29 Motor Vehicles. Except as set forth on Schedule 4.13, Seller does
not own or lease any motor vehicles.
4.30 Regulatory and Product Matters. Except as set forth on Schedule
4.30:
(a) Seller has all licenses in connection with the products of
the Business ("PRODUCT LICENSES") and establishment registrations in connection
with the products of the Business ("ESTABLISHMENT REGISTRATIONS") necessary to
manufacture and market the products of the Business in the United States and to
perform contract manufacturing services under the Material Contracts included in
the Purchased Assets. All such Product Licenses and Establishment Registrations
are in full force and effect and are listed on Schedule 4.30. No such Product
License or Establishment Registration contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except where such untruth or omission could not reasonably be
expected to have a adverse effect on the Business or the Purchased Assets.
(b) As to each product of the Business that is developed,
manufactured, tested, distributed and/or marketed by Seller, and is subject to
the FD&C Act, 21 U.S.C. xx.xx. 201 et seq., the U.S. Food and Drug
Administration ("FDA") regulations ("FDA REGULATIONS") promulgated thereunder,
or FDA's policies and guidelines, each such product is being developed,
manufactured, tested, distributed and marketed in full compliance with all
applicable requirements under the FD&C Act, FDA Regulations, and FDA policies
and guidelines.
(c) Each product of the Business that has been introduced into
interstate commerce, or is being developed with the intent that it be so
introduced, satisfies the statutory definition of "device" under the FD&C Act
(21 U.S.C. ss. 201(h)). To the extent that any product of the Business does not
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meet the statutory definition of "device," said product(s) is being developed,
manufactured, tested, distributed and marketed in full compliance with all
applicable requirements under the FD&C Act, FDA Regulations, and FDA policies
and guidelines.
(d) For each product of the Business that has been introduced
into interstate commerce, Seller timely and effectively obtained from FDA, to
the extent applicable, the appropriate marketing authorization for the product,
21 U.S.C. ss. 360(k) (premarket notification) or 21 U.S.C. ss. 000x (xxxxxxxxx
xxxxxxxx), based on (but not limited to) the classification of the device, 21
U.S.C. ss. 360c, and any related provisions under the FD&C Act, including (but
not limited to) any applicable performance standards, 21 U.S.C. ss. 360d.
(e) No product of the Business manufactured and/or distributed
by Seller is adulterated within the meaning of the FD&C Act (21 U.S.C. ss. 351)
or misbranded within the meaning of the FD&C Act (21 U.S.C. ss. 352).
(f) No product of the Business manufactured and/or distributed
by Seller is a "banned device" within the meaning of the FD&C Act, 21 U.S.C. ss.
360f.
(g) Seller is duly registered as required by the FD&C Act, 21
U.S.C. ss. 360.
(h) At no time has Seller failed to file with the FDA, when
required to do so, any filings, declarations, listings, registrations, reports,
notices or submissions of any kind, all such filings, declarations, listings,
registrations, reports, notices or submissions of any kind were timely and
otherwise in compliance with all applicable laws, regulations, policies and
guidelines when filed and no deficiencies have been asserted by the FDA with
respect to any such filings, declarations, listings, registrations, reports,
notices or other submissions.
(i) Except as specifically identified on Schedule 4.30, Seller
has not received any material notice or other communication from the U.S.
Department of Justice ("DOJ") or the FDA, such as a Warning Letter, Notice of
Violation Letter, Cyber Letter, Form FDA 483 or Establishment Inspection Report,
contesting the uses of or the labeling or promotion of any products of the
Business or otherwise alleging any material violation by Seller of any Law
applicable to any of the products or products under investigation.
(j) Neither Seller, nor, to the knowledge of Seller and the
Stockholders, any officer, employee or agent of Seller, has ever made an untrue
statement of material fact or fraudulent statement to the FDA, failed to
disclose a material fact required to be disclosed to the FDA, or committed an
act, made a statement, or failed to make a statement that, at the time such
disclosure was made, would reasonably be expected to provide a basis for the FDA
to conclude that such disclosure was false or misleading in any regard.
(k) No product of the Business is under consideration for or
has been recalled, withdrawn, suspended or discontinued (other than for
commercial or business reasons) by Seller (whether voluntarily or otherwise).
(l) The clinical, pre-clinical and other studies and tests
conducted by or on behalf of or sponsored by Seller were and, if still pending,
are being conducted in accordance with all FDA requirements, including (but not
limited to) those pertaining to informed subject consent (21 C.F.R. Part 50) and
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oversight of the study by an appropriate Institutional Review Board (21 C.F.R.
Part 56). Seller has not received any notices or other correspondence from the
FDA with respect to any ongoing clinical or pre-clinical studies or tests
requiring the termination, suspension or modification of such studies or tests.
(m) To the knowledge of Seller and the Stockholders, there are
no facts, circumstances or conditions that would reasonably be expected to form
the basis of any material investigation, suit, claims, action (legal or
regulatory) or proceeding (legal or regulatory) against or affecting Seller
relating to or arising under the FD&C Act, FDA Regulations, or FDA policies and
guidelines.
4.31 Brokers. Neither Seller nor the Stockholders has retained any
broker, finder or agent or incurred any liability or obligation for any
brokerage fees, commissions or finders fees with respect to this Agreement or
the transactions contemplated hereby.
4.32 Disclosure. Neither this Agreement nor any agreement, attachment,
schedule, exhibit, certificate or other statement delivered pursuant to this
Agreement or in connection with the transactions contemplated hereby omits to
state a material fact necessary in order to make the statements and information
contained herein or therein, not misleading. Neither Seller nor the Stockholders
are aware of any information which has not been expressly disclosed herein that
would be necessary to enable a prospective purchaser of the Purchased Assets or
the Business to make an informed decision with respect to the purchase of the
Purchased Assets and the assumption of the Assumed Liabilities. Buyer has been
provided full and complete copies of all documents referred to on the Schedules
to this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as of the date hereof
and as of the Closing Date, as follows:
5.1 Authority. Buyer has full right, power and authority, without the
consent of any other person, to execute and deliver this Agreement and to carry
out the transactions contemplated hereby. All acts or proceedings required to be
taken by Buyer to authorize the execution, delivery and performance of this
Agreement, the documents to be delivered at Closing and all transactions
contemplated hereby and thereby have been duly and properly taken.
5.2 Validity. This Agreement has been, and the documents to be
delivered at Closing will be, duly executed and delivered by Buyer and
constitute lawful, valid and legally binding obligations of Buyer, enforceable
in accordance with its terms. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby will not result in the
creation of any lien, charge or encumbrance or the acceleration of any
indebtedness or other obligation of Buyer and are not prohibited by, do not
violate or conflict with any provision of, and do not result in a default under
or a breach of (a) the limited liability company agreement of Buyer, (b) any
contract, agreement, permit, license or other instrument to which Buyer is a
party or by which it is bound, (c) any order, writ, injunction, decree or
judgment of any court or governmental agency, or (d) any Law applicable to
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Buyer. No approval, authorization, consent or other order or action of or filing
with any court, administrative agency or other governmental authority is
required for the execution and delivery by Buyer of this Agreement or the
consummation by Buyer of the transactions contemplated hereby.
5.3 Due Organization. Buyer is a duly organized limited liability
company, validly existing and in good standing under the laws of the State of
Delaware, with full power and authority and all requisite licenses, permits and
franchises to own, lease and operate its assets and to carry on the business in
which it is engaged.
ARTICLE VI
EMPLOYEES
6.1 Continued Association With the Business. Buyer will offer
employment, effective as of the Closing Date, to all employees of Seller who are
listed on Schedule 6.1 and who remain actively at work including employees on
vacation with Seller on the Closing Date (the "DESIGNATED EMPLOYEES"). Seller
agrees to use its best efforts to encourage the Designated Employees to accept
employment with Buyer.
6.2 Severance. Concurrently with the Closing, Seller shall terminate
all Designated Employees of the Business, and shall pay to each such employee
any amounts owing through the Closing Date including earned but unused vacation.
Any employee of Seller who is on long-term or short-term disability or maternity
leave (or any unpaid long-term leave of absence greater than 12 weeks) on the
Closing Date shall remain the sole responsibility of Seller, unless and until
such time as the employee commences and continues to work for Buyer on a
consistent basis; provided, that Buyer shall not be obligated to offer
employment to any employee of Seller who is not actively at work with Seller on
the Closing Date and who does not become available for active work with Buyer
within 12 weeks after the Closing Date. Buyer does not assume any liability for
any claim for severance made by an employee of Seller who terminates employment
with Seller at any time.
6.3 Employee Benefit Plans.
(a) Welfare Plans. Seller maintains certain Welfare Plans
listed as such on Schedule 4.18. Seller will retain responsibility for, by
insurance or otherwise, all Welfare Plan expenses and benefits for each Seller
employee in accordance with the terms of Seller's Welfare Plans with respect to
claims incurred by each such employee and/or his or her covered dependents
through the Closing Date, in accordance with the terms of Seller's Welfare
Plans. Expenses are deemed incurred with respect to hospital, medical, dental or
other welfare benefit expenses when the services or products generating such
expenses are performed or provided to the employee (or covered dependent).
Notwithstanding anything in this Agreement to the contrary, Seller and Buyer
acknowledge and agree that Buyer shall not assume any liability incurred under
Seller's worker's compensation insurance policy or work related injury not
covered by Seller's insurance policy incurred on or prior to the Closing Date,
including but not limited to Claims by Xxxx XxXxxxxx. Seller shall assign and
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Buyer shall assume Seller's workers' compensation insurance policy and Seller's
medical and dental plan effective on the Closing Date.
(b) Profit Sharing Plan. Seller maintains a Profit Sharing
Plan listed on Schedule 4.18 pursuant to the adoption of a prototype plan
sponsored by The Equitable Life Assurance Society of the United States. Buyer
shall assume and maintain such Profit Sharing Plan on and after the Closing Date
for employees of the Business only.
6.4 Resolution of Pending Matters. Seller shall resolve all pending
grievances, employee complaints or outstanding citations or other pending
matters with due regard for not generating changes in work practice or
precedents which will have a significant impact on the future operations. Seller
shall notify Buyer in advance of any such settlements and Buyer shall have the
right to approve or reasonably withhold approval of such settlements and
resolutions.
6.5 COBRA Obligations. Within fifteen (15) business days after Closing,
Seller shall take the necessary steps to assign to Buyer all insurance policies
and agreements relating to Seller's group health and dental plans. If the above
contracts are assigned to Buyer within such fifteen business day period, Buyer
shall be solely responsible for providing any required notices under federal or
state COBRA to all Seller employees (and their eligible dependents) whose
employment with Seller has been terminated in connection with the contemplated
transaction and who do not become Designated Employees. All eligible Seller
employees (and their eligible dependents) who have terminated employment prior
to Closing shall be eligible for COBRA coverage under Seller's existing medical
insurance plan and , to the extent required by law, dental insurance plan;
provided, however, that if Buyer assumes Seller's medical and dental plans, then
Buyer will provide COBRA coverage to Seller employees (and their eligible
dependents) as required by COBRA. Seller shall be responsible for satisfying
obligations under Section 601 et seq. of ERISA and Section 4980B of the Code, to
provide continuation coverage to or with respect to all employees and former
employees of Seller in accordance with Law with respect to any "QUALIFYING
EVENT" occurring before the Closing. Seller agrees to pay and be liable to Buyer
for and shall assume, indemnify, defend and hold harmless Buyer from and against
any and all losses, damages, liabilities, Taxes, sanctions, interest and
penalties, costs and expenses (including, without limitation, disbursements and
reasonable legal fees incurred in connection therewith, and any amounts or
expenses required to be paid or incurred in connection with any action, suit,
proceeding, claim, appeal, demand, assessment or judgement) imposed upon,
incurred by, or assessed against Buyer arising by reason of or relating to any
failure by Seller to comply with the continuation health care coverage
requirements of Section 4980B of the Code and Sections 601 through 608 of ERISA,
which failure occurred with respect to any current or prior employee of Seller
or any qualified beneficiary of such employee before the Closing. Seller shall
provide Buyer with copies of creditable coverage certificates provided to each
Designated Employee on or prior to Closing in compliance with the Health
Insurance Portability and Accountability Act of 1996, as amended.
6.6 Workers Compensation. Seller shall be responsible for all workers'
compensation benefits, occupational diseases claims and employer liability
claims payable to current employees of the Business with respect to (a) claims
filed prior to the Closing; (b) claims filed after the Closing resulting from a
discrete event or injury occurring prior to the Closing; and (c) employees other
than Designated Employees regardless of when the claims were filed or the injury
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occurred. With respect to workers' compensations claims of Designated Employees
that relate to circumstances, exposures, conditions or occurrences that began
before the Closing and continued after the Closing, including occupational
diseases, repetitive trauma, hearing loss and similar items, Buyer shall
administer the claims and Seller shall indemnify Buyer for the proportionate
share of the loss, damage and expense (including administration expenses)
attributable to the period prior to the Closing based on the number of days
prior to the Closing that such circumstances, exposures, conditions or
occurrences were in existence with respect to the affected employee, compared to
the total number of days such circumstances, exposures, conditions or
occurrences were in existence with respect to the affected employee. Buyer shall
be responsible for the administration and payment of all workers' compensation
liabilities and benefits with respect to Designated Employees resulting from
discrete events or injuries occurring after the Closing Date during employment
with Buyer. With respect to employee Xxxx XxXxxxxx, Seller retains all
liability, including any claim not covered by workers' compensation.
6.7 No Third Party Beneficiaries. Nothing in this Agreement expressed
or implied is intended to confer upon any employee of Seller or Buyer or his or
her legal representatives any rights as a third party beneficiary or otherwise
or any remedies of any nature or kind whatsoever under or by reason of this
Agreement, including, without limitation, any rights of employment or continued
employment.
6.8 Documents and Forms. Seller and Buyer agree to use commercially
reasonable efforts to execute all necessary documents, file all required forms
with any governmental agencies and take all other actions that may be necessary
or appropriate to implement expeditiously the actions contemplated by this
Article VI.
ARTICLE VII
ADDITIONAL COVENANTS
7.1 Collection of Receivables. After the Closing, Seller shall permit
Buyer to collect, in the name of Seller or otherwise, all receivables and other
items which shall be transferred hereunder, and to endorse with the name of
Seller any checks, receivables or other items. Seller shall transfer and deliver
to Buyer any cash or other property which Seller may receive in respect of such
receivables or other items. To effectuate the terms and provisions of this
Agreement, Seller hereby designates and appoints Buyer and its designees or
agents as attorney-in-fact effective as of the Closing Date, irrevocably and
with power of substitution, to do all other acts and things any of them may deem
necessary and advisable to realize upon the accounts receivable. Buyer shall use
commercially reasonable efforts to collect the accounts receivable in a manner
consistent with Buyer's current practices.
7.2 Continued Assistance.
(a) Following the Closing, Seller shall refer to Buyer as
promptly as practicable any telephone calls, letters, orders, notices, requests,
inquiries and other communications relating to the Business. Seller shall
cooperate in an orderly transfer of the Business and the continuation thereof by
Buyer. From time to time, at Buyer's request and without further consideration,
Seller and the Stockholders shall execute, acknowledge and deliver such
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documents, instruments or assurances and take such other action as Buyer may
reasonably request to more effectively assign, convey and transfer any of the
assets, properties, rights or claims of the Business and will assist Buyer in
the vesting, collection or reduction to possession of such assets, properties,
rights and claims. Buyer shall reimburse Seller and the Stockholders for any
reasonable out-of-pocket expenses incurred by either or both of them in
connection with the obligations under this Section 7.2(a).
(b) From time to time, at Seller's request and without further
consideration, Buyer shall execute, acknowledge and deliver such documents,
instruments or assurances and take such other action as Seller may reasonably
request to more effectively assign, convey and transfer any of the Excluded
Assets and will assist Seller in the vesting, collection or reduction to
possession of the Excluded Assets. Seller shall reimburse Buyer for any
reasonable out-of-pocket expenses incurred by Buyer in connection with the
obligations under this Section 7.2(b).
7.3 Certain Payments. Promptly following Closing, Seller shall pay and
fully discharge all amounts owed to employees, all Taxes or amounts withheld
from employees or paid on behalf of employees, all sales Taxes collected in the
conduct of the Business, and all liabilities and obligations to customers and
suppliers of the Business which are not assumed by Buyer as and when due, and
shall otherwise pay, discharge or make adequate provision for all other
liabilities and obligations of the Business, including all Excluded Liabilities.
Seller shall promptly pay and fully discharge any income, excise, employment,
unemployment, sales or use Taxes arising as a result of the sale, transfer,
conveyance or assignment of the Purchased Assets. Seller shall retain
responsibility after the Closing Date for all pending litigation and disputes
related to the Business and liability for claims therein asserted against Buyer,
the Purchased Assets or the Business. Seller shall keep Buyer apprised of the
status and all aspects of such litigation and disputes which might affect Buyer,
the Purchased Assets or the Business, either directly or indirectly, and Seller
shall comply with all court orders relating directly or indirectly to such
litigation or disputes. Buyer shall provide reasonable cooperation to Seller in
handling such litigation and disputes; provided, however, that Seller shall
reimburse Buyer for its out-of-pocket expenses incurred in connection with such
cooperation. Seller shall retain all rights to recover moneys due or damages
being sought by Seller under any such litigation or disputes.
7.4 Records and Documents. For four (4) years following the Closing
Date, Seller shall grant to Buyer and its representatives, at Buyer's request,
access to and the right to make copies of those records and documents related to
the Business, possession of which is retained by Seller as may be necessary or
useful in connection with Buyer's conduct of the Business after the Closing. If
during such period Seller elects to dispose of such records, Seller shall first
give Buyer 60 days' written notice, during which period Buyer shall have the
right to take such records without further consideration. Buyer shall reimburse
Seller and the Stockholders for any reasonable out-of-pocket expenses incurred
by either or both of them in connection with the obligations under this Section.
7.5 Covenants Not To Compete Or Solicit.
(a) For a period five (5) years from the Closing Date, except
with respect to the activities contemplated in the Distribution Agreement, each
of Seller, the Stockholders and the Beneficiary agree not to, directly or
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indirectly, by or for themselves or as the employee or agent of another or
through others as their agent:
(i) produce, promote, sell, lease, license,
distribute, install or service anywhere in North America, South
America, Asia, Japan, Australia and Europe (the "TERRITORY") products
or services in existence or under development, which are similar to or
in competition with those of the Business anywhere in the Territory;
(ii) own, manage, operate, fund, be compensated by,
participate in, render advice to, have any right to or interest in any
other business directly or indirectly engaged in the production,
promotion, sale, lease, license, distribution or servicing of products
or services competitive with those of the Business anywhere in the
Territory;
(iii) divulge, communicate, use or disclose any
nonpublic information concerning the Business or Buyer or any of their
affiliates, their personnel, business and affairs;
(iv) interfere with the business relationships or
disparage the good name or reputation of the Business, Buyer, or any of
their affiliates or take any action which brings the Business, Buyer or
any of their affiliates or its business into public ridicule or
disrepute;
(v) solicit or accept any business competitive with
the Business from customers or suppliers of the Business, or request,
induce or advise customers or suppliers of the Business to withdraw,
curtail or cancel their business with the Business or Buyer;
(vi) solicit for employment or employ any present or
future employee of the Business, Buyer or any of their affiliates, or
request, induce or advise any employee to leave the employ of the
Business, Buyer or any of their affiliates; or
(vii) use or disclose the names and/or addresses of
any customer, supplier or employee of the Business or Buyer to any
person for any purpose whatsoever.
The ownership of less than one (1) percent of a publicly traded corporation
shall not in and of itself be deemed to be a violation of this covenant.
(b) If Seller, the Stockholders or the Beneficiary violate the
provisions of this Section, Buyer shall not, as a result of the time involved in
obtaining relief, be deprived of the benefit of the full period of the
restrictive covenant with respect to Seller, the Stockholders or the
Beneficiary. Accordingly, the restrictive covenant of this Section as it applies
to Seller, the Stockholders and the Beneficiary shall be deemed to have the
duration specified in Subsection 7.5(a) hereof, computed from the date the
relief is granted, but reduced by the time between the period when the
restriction began to run and the date of the first violation of the covenant by
Seller, the Stockholders or the Beneficiary.
(c) Seller, the Stockholders and the Beneficiary agree that,
if they shall violate any of the provisions of this Section, Buyer shall be
entitled to an accounting and repayment of all profits, compensation,
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commission, remuneration or other benefits that Seller, the Stockholders and the
Beneficiary, directly or indirectly, may realize arising from or related to any
such violation. These remedies shall be in addition to, and not in limitation
of, any injunctive relief or other rights to which Buyer or Seller may be
entitled.
(d) The parties agree and acknowledge that the duration, scope
and geographic areas applicable to the covenant not to compete described in this
Section are fair, reasonable and necessary, that adequate compensation has been
received by Seller, the Stockholders and the Beneficiary for such obligations.
If, however, for any reason any court determines that the restrictions in this
Section are not reasonable, that consideration is inadequate or that the
Stockholders or the Beneficiary have been prevented from earning a livelihood
and therefore the restrictions are unenforceable, such restrictions shall be
interpreted, modified or rewritten to include as much of the duration, scope and
geographic area identified in this Section as will render such restrictions
valid and enforceable.
(e) Seller, the Stockholders and the Beneficiary acknowledge
that they have carefully read and considered the terms of this Agreement.
Seller, the Stockholders and the Beneficiary hereby waive any requirement of
proof that a breach of this Section 7.5 will cause serious or irreparable injury
to Buyer, or that there is an adequate remedy at law. In any proceeding, either
at law or in equity, between the parties hereto, Seller, the Stockholders and
the Beneficiary hereby agree that they shall not raise as a defense (i) that the
duration, scope or geographical area in which Seller, the Stockholders and the
Beneficiary are prohibited from competition is unfair, unnecessary or
unreasonable, or (ii) that this Agreement is in restraint of trade. Further, the
existence of any claim or cause of action of Seller, the Stockholders and the
Beneficiary against Buyer or any of its affiliates, whether or not predicated on
the terms of this Agreement, shall not constitute a defense to the enforcement
of Seller's, the Stockholders' and the Beneficiary's obligations under this
Agreement. In the event of any dispute between the parties, the prevailing party
shall be entitled to receive its court costs and reasonable attorneys' fees
incurred by the prevailing party in enforcing its rights and remedies hereunder.
7.6 Notices and Consents. Seller, the Stockholders and the Beneficiary
will cause Seller to give any notices to third parties, and Seller will obtain
any third-party consents, that Buyer may reasonably request in connection with
the matters referred to in Section 4.2 and Schedule 4.2 above. Each of the
parties will give any notices to, make any filings with, and use its best
efforts to obtain any authorizations, consents, and approvals of governments and
governmental agencies in connection with the matters referred to in Section 4.2
and Schedule 4.2 above.
7.7 Bulk Sales Act Compliance. Buyer and Seller hereby waive compliance
with the provisions of any applicable bulk transfer laws. Seller, the
Stockholders and the Beneficiary, jointly and severally, shall forever indemnify
and hold harmless Buyer against any and all expense, loss, damage or liability,
including reasonable attorneys fees and court costs, which Buyer may suffer as a
result of claims asserted by third parties against Buyer due to any
noncompliance by Seller and Buyer with applicable bulk transfer and tax laws.
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7.8 Confidentiality; Publicity.
(a) Except as may be required by Law, as expressly
contemplated herein or as expressly consented to by Buyer, no party hereto or
their respective Affiliates, employees, agents and representatives (including
Seller) shall disclose to any third party this Agreement, the subject matter or
terms hereof or any confidential information or other proprietary knowledge
concerning the business or affairs of any other party which it may have acquired
from such party in the course of pursuing the transactions contemplated by this
Agreement or use or knowingly permit the use of such confidential information or
other proprietary knowledge for any purpose other than in connection with the
transactions contemplated hereby without the prior written consent of the other
parties hereto; provided, however, that any information that is otherwise
publicly available, without breach of this provision, or has been obtained from
a third party without a breach of such third party's duties, shall not be deemed
confidential information. No press release or other public announcement related
to this Agreement or the transactions contemplated hereby shall be issued by
Seller or the Stockholders without the prior written approval of the other
parties hereto (which approval shall not be unreasonably withheld or delayed);
provided, however, that this provision shall not prohibit Buyer from making any
public disclosure which Buyer's counsel advises is required under rules and
regulations promulgated by the Securities and Exchange Commission, the NASD or
the Nasdaq Stock Market.
(b) After the Closing, except as may be required for tax
purposes or other regulatory purposes, Seller, the Stockholders and the
Beneficiary and their Affiliates and respective successors and assigns shall not
(a) retain any document, databases or other media embodying any confidential or
proprietary information which relate to the Business or constitute a part of the
Purchased Assets or use, publish or disclose to any third person any such
confidential or proprietary information or (b) use, publish or disclose any
information concerning Buyer, its affiliates, the Business, the customers or
suppliers of the Business or the terms of this Agreement or the transactions
contemplated hereby.
7.9 Licenses and Permits. To the extent permitted by the applicable
governmental and/or regulatory authorities, Seller shall cooperate with Buyer
and shall use its best efforts to transfer, assign and pass to Buyer all of its
rights under each of the Licenses and Permits listed in Schedule 4.19 as soon as
possible. Seller's obligations under this Section shall include, but not be
limited to, the following:
(a) executing all assignments and other documents necessary to
effect transfer or assignment of the Licenses and Permits from Seller to Buyer;
(b) providing the governmental authorities responsible for the
Licenses and Permits and Buyer with whatever information and documentation that
may be reasonably required in connection with the transfer of the Licenses and
Permits;
(c) complying with its obligations under the Licenses and
Permits, and under applicable Law relating thereto, prior to the Closing;
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(d) on, prior to, or subsequent to the Closing, remedying any
non-compliance with any of the Licenses and Permits, or with applicable Laws
relating thereto, that has occurred before the Closing; and
(e) taking such further actions relating to the Licenses and
Permits as the governmental authorities, or Buyer, may reasonably require.
7.10 Cooperation. The Stockholders agree to cooperate and assist Buyer
in connection with the resolution of all claims and disputes pending at Closing
or that arise after Closing but relate to the period prior to Closing.
7.11 Appointment of Representative. Seller, each of the Stockholders
and the Beneficiary hereby appoints Xxxxxxx Xxxxx (the "REPRESENTATIVE") the
attorney-in-fact of Seller, each Stockholder and the Beneficiary, with full
power and authority, including power of substitution, acting in the name of and
for and on behalf of Seller, each Stockholder and the Beneficiary (i) to amend
or waive any provision of this Agreement, (ii) to terminate this Agreement
pursuant to the provisions hereof, (iii) to do all other things and to take all
other action under or related to this Agreement that the Representative may
consider necessary or proper to effectuate the transactions contemplated hereby,
(iv) to resolve any dispute with Buyer over any aspect of this Agreement and (v)
on behalf of Seller, any Stockholder and the Beneficiary to enter into any
agreement to effectuate any of the foregoing which shall have the effect of
binding Seller, each Stockholder and the Beneficiary as if Seller, each
Stockholder and the Beneficiary had personally entered into such an agreement.
The Representative shall have the exclusive right, power and authority, on
behalf of Seller, the Stockholders and the Beneficiary, to pursue, defend, and
settle any matters set forth in this Agreement and to do all things and to take
all other actions Representative may consider necessary or proper to resolve any
indemnification claims after the Closing. This appointment and power of attorney
shall be deemed as coupled with an interest and all authority conferred hereby
shall be irrevocable and shall not be subject to termination by operation of
law, whether by the death or incapacity or liquidation or dissolution of Seller,
each Stockholder and the Beneficiary's or the occurrence of any other event or
events and the Representative may not terminate this power of attorney with
respect to any of Seller's, any of the Stockholders' or the Beneficiary's or
such Seller's, Stockholder's or the Beneficiary's successors or assigns without
the consent of Buyer. Upon the death, disability or resignation of the
Representative, his successor shall be Xxxxxx X. Xxxxxx, Xx. Any notice given to
the Representative pursuant to this Agreement or any other agreements
contemplated hereby shall constitute effective notice to Seller, the
Stockholders and the Beneficiary, and any other party to this Agreement or any
other person may rely on any notice, consent, election or other communication
received from the Representative as if such notice, consent, election or other
communication had been received from Seller, the Stockholders and the
Beneficiary. Seller, the Stockholders and the Beneficiary agree to hold the
Representative harmless from any and all loss, damage or liability and expenses
(including legal fees) which such Representative may sustain as a result of any
action taken in good faith by the Representative.
7.12 Name Change. Within forty-five (45) days of the Closing, Seller
and the Stockholders shall cause Seller to prepare and deliver to Buyer a
Certificate of Amendment to Seller's Articles of Incorporation changing its
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corporate title to one dissimilar to each of Earth City Technologies, Inc.,
Spartan and Spartan Marketing Group.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
Each and all of the obligations of Buyer to consummate the transactions
contemplated by this Agreement are subject to fulfillment prior to or at the
Closing of the following conditions (unless waived in writing in the sole
discretion of Buyer):
8.1 Accuracy of Warranties and Performance of Covenants. The
representations and warranties of Seller and the Stockholders contained herein
shall be true and correct as of the Closing Date. Seller and the Stockholders
shall have performed all obligations and complied with each and all of the
covenants, agreements and conditions required to be performed or complied with
by Seller and the Stockholders on or prior to the Closing in all respects.
8.2 No Pending Action. No action, suit, proceeding or investigation
before any court, administrative agency or other governmental authority shall be
pending or threatened wherein an unfavorable judgment, decree or order would
prevent the carrying out of this Agreement or any of the transactions
contemplated hereby, declare unlawful the transactions contemplated hereby,
cause such transactions to be rescinded, or would adversely affect the right of
Buyer to own, operate or control the Purchased Assets.
8.3 Consents. All notices to, consents, approvals, authorizations and
waivers from third parties and governmental agencies that are required for the
transfer of the Purchased Assets or that are otherwise required for the
consummation of the transactions contemplated hereby upon the terms hereof shall
have been obtained or provided for and shall remain in effect.
8.4 Conditions of Business and Assets. There shall have been no fact,
event, condition or circumstance which does or could reasonably be expected to
result in a material adverse effect.
8.5 Closing Documents. All of the certificates, assignments and other
documents required to be delivered pursuant to Section 3.3 shall have been
executed and delivered.
8.6 Other Actions. All actions to be taken by Seller and the
Stockholders in connection with consummation of each of the transactions
contemplated hereby and all certificates, instruments, and other documents
required to effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Buyer.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
Each and all of the obligations of Seller to consummate the
transactions contemplated by this Agreement are subject to fulfillment prior to
or at the Closing of the following conditions (unless waived in writing in the
sole discretion of Seller):
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9.1 Accuracy of Warranties and Performance of Covenants. The
representations and warranties of Buyer contained herein shall be true and
correct as of the Closing Date. Buyer shall have performed all of its
obligations and complied with each and all of the covenants, agreements and
conditions required to be performed or complied with by Buyer on or prior to the
Closing in all respects.
9.2 No Pending Action. No action, suit, proceeding or investigation
before any court, administrative agency or other governmental authority shall be
pending wherein an unfavorable judgment, decree or order would prevent the
carrying out of this Agreement or any of the transactions contemplated hereby in
a way materially adverse to Seller, declare unlawful the transactions
contemplated hereby or cause such transactions to be rescinded.
9.3 Consents. All notices to, consents, approvals, authorizations and
waivers from third parties and governmental agencies set forth on Schedule 9.3
that are required for the transfer of the Purchased Assets or that are otherwise
required for the consummation of the transactions contemplated hereby upon the
terms hereof shall have been obtained or provided for and shall remain in
effect.
9.4 Closing Documents. All of the certificates, assignments and other
documents required to be delivered pursuant to Section 3.2 shall have been
executed and delivered.
ARTICLE X
SURVIVAL AND INDEMNIFICATION
10.1 Survival. All covenants and agreements contained in this Agreement
or in any document delivered pursuant hereto shall be deemed to be material and
to have been relied upon by the parties hereto and shall survive the Closing
until fully performed. All representations and warranties contained in this
Agreement or in any document delivered pursuant hereto or thereto shall be
deemed to be material and to have been relied upon by the parties hereto, and
shall survive the Closing and shall continue to be fully effective and
enforceable for a period of three (3) years from the Closing Date; provided,
however, that any representations and warranties set forth in Section 4.14,
4.18, 4.21, 4.27 and 4.30 shall survive for the longer of three (3) years or 90
days after the applicable statute of limitations period set forth in the Code or
other applicable Law, and the representations and warranties set forth in
Sections 4.1, 4.2, 4.3, 4.11 and 4.25 shall survive indefinitely.
Notwithstanding the foregoing, any claim for indemnification that is asserted by
written notice as provided in Section 10.2 within the applicable survival period
shall survive until resolved by the parties or pursuant to a final
non-appealable judicial determination. The representations and warranties
contained in this Agreement shall not be affected by any investigation,
verification or examination by any party hereto or by anyone on behalf of any
such party.
10.2 Indemnification.
(a) Seller, the Stockholders and the Beneficiary, jointly and
severally, shall defend, indemnify and hold harmless Buyer and its affiliates
and their officers, directors, employees, agents and representatives from and
against any and all loss, damage, cost (including allocable costs of employees),
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expense (including court costs, amounts paid in settlement, judgments,
reasonable attorneys' fees or other expenses for investigating and defending),
diminution in value, suit, action, claim, deficiency, liability or obligation
(collectively, "LOSS") related to, caused by or arising from any Excluded
Liability, misrepresentation, breach of warranty or failure to fulfill any
covenant or agreement contained herein or in any other agreement, instrument or
other document delivered pursuant hereto, and any and all claims made based upon
facts alleged that, if true, would have constituted any such misrepresentation,
breach or failure.
(b) Buyer shall defend, indemnify and hold harmless Seller,
the Stockholders and the Beneficiary and their respective officers, directors,
employees, agents and representatives from and against any Loss related to,
caused by or arising from any Assumed Liability, misrepresentation, breach of
warranty or failure to fulfill any covenant or agreement contained herein or in
any other agreement, instrument or other document delivered pursuant hereto, and
any and all claims made based upon facts alleged that, if true, would have
constituted any such misrepresentation, breach or failure.
(c) All rights herein are cumulative and are in addition to
all other rights and remedies which are otherwise available. All indemnification
obligations shall be deemed made in favor of and shall include Losses incurred
by, any party's officers, directors, agents, representatives, subsidiaries,
parents, affiliates, successors and assigns.
(d) All indemnification payments under this Article X shall be
net of any insurance proceeds from a third party insurer received by an
indemnified party resulting therefrom (after associated costs of collection),
after reduction for (i) any retroactive premium adjustment, and (ii) the
aggregate amount of the reasonably anticipated (based on written advice from
insurance brokers or providers) increased insurance premiums over the following
five policy years.
10.3 Limitation of Seller's, the Stockholders' and the Beneficiary's
Indemnification Obligation. Seller, the Stockholders and the Beneficiary shall
not be liable and Buyer agrees not to enforce any claim for indemnification for
breach of representation or warranty under this Agreement until the aggregate
amount of all such claims exceeds Fifty Thousand Dollars ($50,000) (the
"THRESHOLD AMOUNT"), and then Buyer shall be entitled to recover only the amount
of such claims in excess of the Threshold Amount. The maximum aggregate amount
recoverable from Seller and the Stockholders for claims for indemnification for
breach of representation and warranty under this Agreement shall not exceed an
amount equal to the Purchase Price (the "CAP"). Notwithstanding anything
contained herein to the contrary, the Threshold Amount and the Cap shall not be
applicable (a) to claims for breach of the representations and warranties
contained in Sections 4.1, 4.2, 4.3, 4.11 and 4.21 or (b) in the case of
intentional misrepresentation or gross negligence on the part of any
indemnifying party.
10.4 Joint Written Direction. At such time as Buyer is entitled to
indemnification hereunder, Seller, the Stockholders and the Beneficiary shall
provide a joint Instruction (as defined in the Escrow Agreement) to the Escrow
Agent directing the release of funds to Buyer in an amount to which Buyer is
entitled pursuant to the terms hereof.
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10.5 Other Indemnification Provisions. The foregoing indemnification
provisions under this Article X are in addition to, and not in derogation of,
any statutory, equitable or common law remedy any party may have for breach of
representation, warranty or covenant.
10.6 Setoff. Buyer shall be entitled to recover any indemnification
payments due hereunder by setting off such amount against the Escrow Amount, any
Earn-out Payment pursuant to the Obtura Agreement and any other amount due from
Buyer to Seller pursuant to this Agreement.
10.7 Procedure for Indemnification. A claim for indemnification for any
matter shall be asserted by notice to any party from whom indemnification is
sought pursuant to Section 12.2.
ARTICLE XI
TERMINATION, WAIVER, AMENDMENT AND CLOSING
11.1 Termination or Abandonment. Notwithstanding anything contained in
this Agreement to the contrary, this Agreement may be terminated and abandoned
at any time prior to the Closing Date:
(a) by the mutual written consent of Seller and Buyer;
(b) by Seller or Buyer, if any court of competent jurisdiction
or governmental body, authority or agency having jurisdiction shall have issued
an order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement and such
order, decree, ruling or other action shall have become final and nonappealable;
(c) by Buyer, if one or more of the conditions to the
obligation of Buyer to Close as provided in Article VIII has not been fulfilled
by December 31, 2003, or
(d) by Seller, if one or more of the conditions to the
obligation of Seller to Close as provided in Article IX has not been fulfilled
by December 31, 2003.
In the event of termination of this Agreement pursuant to this Section 11.1,
this Agreement shall terminate and there shall be no other liability on the part
of Seller or Buyer, to the other party hereto except liability arising out of a
breach of this Agreement, in which event, the non-breaching party reserves the
right to seek all available remedies. The termination of this Agreement pursuant
to this Section 11.1 shall become effective on the date (x) in the case of a
termination pursuant to Section 11.1(a), the consent is executed by both parties
and (y) in the case of a termination pursuant to Section 11.1(b), (c) or (d),
written notice is given by the terminating party to the other party hereto.
11.2 Extension of Time, Waiver, Etc. At any time prior to the Closing
Date, Seller and Buyer may by written instrument:
(a) extend the time for the performance of any of the
obligations or acts of the other party; and
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(b) waive compliance with any of the agreements of the other
party contained herein; provided, however, that no failure or delay by Seller or
Buyer in exercising any right hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof of the exercise of any other right hereunder.
ARTICLE XII
GENERAL PROVISIONS
12.1 Amendments and Waiver.
(a) No amendment, waiver or consent with respect to any
provision of this Agreement shall in any event be effective, unless the same
shall be in writing and signed by the parties hereto, and then such amendment,
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
(b) The failure of any party at any time or times to require
performance of any provisions hereof shall in no manner affect that party's
right at a later time to enforce the same. No waiver by any party of the breach
of any term or covenant contained in this Agreement in any one or more instances
shall be deemed to be, or construed as, a further or continuing waiver of any
such breach, or a waiver of the breach of any other term or covenant contained
in this Agreement.
12.2 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be personally delivered, sent by
overnight carrier (such as Express Mail, Federal Express, etc.) or sent by
facsimile transmission with confirming copy sent by overnight courier and a
delivery receipt obtained and addressed to the intended recipient as follows:
(a) If to Seller, the Stockholders and the Beneficiary:
Xx. Xxxxxxx Xxxxx
000 Xxxxx Xxxxxx
X.X. Xxx 00000
Xxxxxx Xxxx, XX 00000
Telephone No.: (000) 000-0000
With a copy to:
Xxxxxxx, Xxxxxxx Xxxxx & Hamburg, P.C.
0000 Xxxxx Xxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
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(b) If to Buyer:
c/o Young Innovations, Inc.
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Xx.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy to:
XxXxxxxxx, Will & Xxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000 5096
Attention: Xxxx X. Xxxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000 0000
Any party may change its address or add or change parties for receiving notice
by giving the other party notice in the manner set forth above.
12.3 Expenses. Except as otherwise expressly provided herein, each
party to this Agreement shall pay its own costs and expenses in connection with
the transactions contemplated hereby. Any sales, transfer or other Taxes or fees
applicable to the conveyance and transfer from Seller to Buyer of the Purchased
Assets shall be borne by Seller. The provisions of this Section shall survive
any termination of this Agreement.
12.4 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
12.5 Right of Setoff. Buyer shall have the right to setoff any amounts
owed to Seller pursuant to this Agreement against any amounts owed to Buyer from
Seller pursuant to any other agreements between the parties, including, but not
limited to the payment of the Earn-Out Payment, or any payments owed by Buyer to
Obtura pursuant to the Obtura Agreement; provided, however, that to the extent
the amount Buyer claims to be owed by Seller is an Indemnifiable Amount as
defined in the Escrow Agreement, Buyer shall not exercise the right of setoff
hereunder unless the Buyer's claim exceeds the amount which at that time is
being held in the Escrow Fund as defined in and established pursuant to the
Escrow Agreement less the amount of any other pending indemnification claims of
Buyer hereunder and pursuant to the Obtura Agreement, and then only in the
amount of such excess. 12.6 Captions. The captions contained in this Agreement
are for convenience of reference only, shall not be given meaning and do not
form a part of this Agreement.
12.7 Successors and Assigns. This Agreement shall bind and inure to the
benefit of the parties named herein and their respective successors and
permitted assigns. Buyer shall be entitled to assign its rights and duties under
this Agreement to any affiliate of Buyer without the consent of Seller;
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provided, however, that Buyer shall in all events remain liable hereunder.
Except as provided in the foregoing sentence, this Agreement shall not be
assigned by either party hereto without the express prior written consent of the
other party and any attempted assignment, without such consents, shall be null
and void. This Agreement does not create any rights, claims or benefits inuring
to any person that is not a party hereto nor create or establish any third-party
beneficiary hereto.
12.8 Entire Transaction. This Agreement and the documents referred to
herein contain the entire agreement and understanding among the parties with
respect to the transactions contemplated hereby and supersede all other
agreements, understandings and undertakings among the parties on the subject
matter hereof. All exhibits and schedules hereto are hereby incorporated by
reference and made a part of this Agreement.
12.9 Applicable Law. This Agreement shall be governed by and construed
in accordance with the internal substantive laws of the State of Missouri. The
parties agree that all disputes, legal actions, suits and proceedings arising
out of or relating to this Agreement must be brought exclusively in a federal
district court located in the Eastern District of Missouri or the Missouri state
court in St. Louis County, Missouri. Each party hereby consents and submits to
the exclusive jurisdiction of the federal district court in the Eastern District
of Missouri or the Missouri state court in St. Louis County, Missouri. No legal
action, suit or proceeding with respect to this Agreement may be brought in any
other forum. Each party hereby irrevocably waives all claims of immunity from
jurisdiction and any right to object on the basis that any dispute, action, suit
or proceeding brought in the federal district court located in the Eastern
District of Missouri or the Missouri state court in St. Louis County, Missouri
has been brought in an improper or inconvenient forum or venue.
12.10 Other Rules of Construction. References in this Agreement to
sections, schedules and exhibits are to sections of, and schedules and exhibits
to, this Agreement unless otherwise indicated. Words in the singular include the
plural and in the plural include the singular. The word "OR" is not exclusive.
The word "INCLUDING" shall mean including, without limitation. The term
"ORDINARY COURSE OF BUSINESS" means the ordinary course of the Business
consistent with the past practice of the Business. References to the terms
"CONTRACTS" or "AGREEMENTS" shall each be deemed to include the other and shall
include understandings and arrangements of all types, whether written or oral,
and all amendments thereto. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
12.11 Partial Invalidity. In the event that any provision of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
12.12 Authorship. The parties hereto agree that the terms and language
of this Agreement were the result of negotiations between the parties and, as a
result, there shall be no presumption that any ambiguities in this Agreement
shall be resolved against either party. Any controversy over construction of
this Agreement shall be decided without regard to events of authorship or
negotiation.
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* * *
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MW&E
PROPRIETARY/CONFIDENTIAL
DRAFT 11/24/03
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by a duly authorized officer all as of the date first
written above.
------------------------------------- ------------------------------------------
YOUNG OS LLC EARTH CITY TECHNOLOGIES, INC.
By: /s/ Xxxx X'Xxxxxx By: /s/ Xxxxxxx X. Xxxxx
--------------------------------- -------------------------------
Name: Xxxx X'Xxxxxx Name: Xxxxxxx X. Xxxxx
-------------------------------
Its: Vice President Its: President
------------------------------------- ------------------------------------------
STOCKHOLDERS:
/s/ Xxxxxxx X. Xxxxx
-------------------------------
Xxxxxxx X. Xxxxx
/s/ Xxxxxx Xxxxx
-------------------------------
Xxxxxx Xxxxx
------------------------------------- ------------------------------------------
XXXXXX X. XXXXXXXX REVOCABLE
LIVING TRUST, dated October 29, 1999
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxxx
Its: Trustee
------------------------------------- ------------------------------------------
/s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxx X. Xxxxxxxx, Beneficiary under the
Xxxxxx X. Xxxxxxxx Revocable Living Trust,
dated October 29, 1999
------------------------------------- ------------------------------------------
