EXECUTION COPY
ASSET PURCHASE AGREEMENT
BETWEEN
CASTEL HOLDINGS, INC.,
XXXX X. XXXXXX
AND
SUNDANCE REHABILITATION CORPORATION
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of April 3,
1997 is made and entered into between CASTEL HOLDINGS, INC., a
Kansas corporation ("Seller"), XXXX X. XXXXXX, an individual
("Castel") and SUNDANCE REHABILITATION CORPORATION, a Connecticut
corporation ("Buyer").
R E C I T A L S
WHEREAS, Seller has previously acquired, or prior to
the closing provided for herein will acquire, all of the assets
of PTI, Inc., a Kansas corporation ("PTI") pursuant to K.S.A. Section
17-6703 (the "Kansas short-form merger statute"); and
WHEREAS, Seller desires to sell to Buyer, and Buyer
desires to purchase from Seller, the Assets (as defined below),
upon the terms and subject to the conditions set forth herein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises and of
the mutual covenants and conditions hereinafter set forth, the
parties hereto hereby agree as follows:
1 PURCHASE AND SALE; REIMBURSEMENT FOR LIABILITIES
1.1 Assets. Subject to the terms and conditions contained
in this Agreement, on the Closing Date (as hereinafter defined),
Seller shall sell, convey, assign, transfer and deliver to Buyer,
and Buyer shall purchase, acquire and accept from Seller, the
assets, properties, rights, privileges, claims and contracts of
Seller reflected on the December 31, 1996 balance sheet of PTI
attached as Schedule 1.1 and those acquired either by PTI or
Seller in the ordinary course of business thereafter, but not
including any obligations receivable from Castel (the "Assets"),
free and clear of all security interests, mortgages, liens,
charges or other adverse claims ("Encumbrances") other than
Permitted Encumbrances (as hereinafter defined), and including,
without limitation, the assets described in Sections 1.1.1
through 1.1.8 below.
1.1.1 Property and Equipment. All property and
equipment listed on Schedule 1.1.
1.1.2 Intellectual Property. All of Seller's
right, title and interest in and to the copyrights, service
marks, trademarks and logos, and registrations and applications
for registration therefor, the patents, patent applications,
licenses (including without limitation patent licenses) and
royalty rights, and the inventions, processes, know-how,
formulae, trade secrets, compositions, designs, drawings,
specifications, patterns, blueprints, plans, files, notebooks and
records relating to research, engineering and development
activities, production data and shop rights described on Schedule
1.1.2 (the "Intellectual Property").
1.1.3 Trade Accounts. All trade accounts of the
Seller.
1.1.4 Inventory. All inventory of raw materials
and finished goods of Seller.
1.1.5 Prepaid Expense. Prepaid expenses described
on Schedule 1.1.5.
1.1.6 Manufacturing and Distribution Agreements.
All of Seller's rights under manufacturing and distribution
agreements as described in Schedule 1.1.6.
1.1.7 Goodwill. All of Seller's goodwill, customer
lists and other intangibles.
1.1.8 Cash. All of Seller's cash, except for
(a) cash paid to Seller by Castel after December 31, 1996, and
(b) a cash advance made by Buyer concurrently with the execution
of this Agreement in the amount of $245,000 to the extent the
total of such payments exceed the sum of (x) payments made to
minority shareholders in the merger referred to in Section 6.5
and expenses related to such merger and (y) any amount paid to
settle the Promatek dispute.
1.2 Reimbursement For Liabilities. Buyer shall reimburse
Seller for those liabilities or obligations of Seller reflected
on the December 31, 1996 balance sheet of PTI attached as
Schedule 1.1, those acquired in the ordinary course of business
thereafter, those reflected on the schedules attached hereto, and
obligations payable to HC, Inc. acquired by Seller in the Merger
(as defined in Section 6.5 hereof); provided, however, the Buyer
shall not reimburse Seller for any liabilities or obligations of
Seller or PTI to Promatek, Inc. ("Promatek") as to which Seller
shall retain all responsibility and Buyer shall not reimburse
Seller for any liability relating to PTI's or Seller's corporate
affairs, including any liability to minority shareholders of PTI.
The liabilities Seller is to be reimbursed for hereunder are
hereinafter referred to as the "Reimbursable Liabilities". Buyer
shall not assume any liabilities of Seller.
1.3 Asset Purchase Price. As full consideration for the
sale, conveyance, transfer, and delivery of the Assets and
subject to the terms and conditions of this Agreement, Buyer
shall:
1.3.1 Pay to Seller on the Closing Date cash in an
amount sufficient to reimburse Seller for the estimated amount of
the Reimbursable Liabilities as set forth in Section 1.2 of this
Agreement; and
1.3.2 Upon the Closing Date, forgive an advance
made by the Buyer to the Seller in the amount of Two Hundred
Forty-Five Thousand Dollars ($245,000) which Buyer agrees to make
concurrently with the execution of this Agreement; and
1.3.3 With respect to Reimbursable Liabilities, the
exact amount of which will not be known on the Closing Date,
Buyer shall pay to Seller cash in an amount sufficient to
reimburse Seller for such Reimbursable Liabilities immediately
upon the determination of the exact amount of such Reimbursable
Liabilities, less any estimated amount of such Reimbursable
Liabilities already paid to Seller pursuant to Section 1.3.1
hereof.
1.4 Purchase of Additional Inventory. PTI is currently in
litigation with Promatek. If the litigation with Promatek is
resolved or otherwise settled, and pursuant to such resolution or
settlement, Seller or PTI acquires any inventory previously sold
by PTI to Promatek, then Buyer shall purchase such Inventory for
a purchase price equal to the lesser of (i) the realizable cash
value of thereof or (ii) the amount (not less than zero) by which
the payment made by Seller or PTI in the resolution or settlement
exceeds $130,000. If the amount of the payment required
hereunder is zero, such inventory shall be purchased by Buyer for
One Dollar ($1.00).
1.5 Manner of Payment and Allocation of Consideration. Any
amount payable pursuant to Section 1.3 or 1.4 shall be payable in
immediately available funds by means of wire transfer to the
account as shall be directed in writing by Seller. The
consideration for the Assets paid pursuant to Section 1.3 or 1.4
shall be allocated among the Assets in accordance with Schedule
1.5.
2 CLOSING
2.1 Closing Date. Subject to the conditions set forth in
this Agreement, the closing of the transactions contemplated by
this Agreement shall take place at the offices of Xxxxxxx, Mag &
Fizzell, P.C. at 10:30 a.m. Central Standard Time on the third
business day following the consummation of the Merger (as defined
in Section 6.5 hereof), or at such time and place as the parties
shall mutually agree in writing (the "Closing Date").
2.2 Closing Transactions and Related Matters. On the
Closing Date:
2.2.1 Seller shall deliver to Buyer a Xxxx of Sale
executed by Seller in the form attached hereto as Exhibit A (the
"Xxxx of Sale").
2.2.2 Seller shall deliver to Buyer such additional
consents, releases, authorizations, transfers and other documents
as may be reasonably requested by Buyer to carry out the
provisions of this Agreement and to fully accomplish their
purpose and intent.
2.2.3 Buyer shall deliver to Seller the funds as
set forth in Section 1.3.1.
2.2.4 For all purposes as between the parties, the
closing of the transactions contemplated by this Agreement shall
be deemed to have taken place as of the close of business on
February 28, 1997.
2.3 Post Closing Transactions. Not later than the later of
(i) the Closing Date or (ii) the date of the resolution or
settlement of the Promatek litigation:
2.3.1 Seller shall deliver to Buyer a Xxxx of Sale
covering the Inventory executed by Seller in a form satisfactory
to Buyer.
2.3.2 Buyer shall deliver to Seller the funds as
set forth in Section 1.4.
3 REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Seller. As used in
this Agreement, "Seller's knowledge" or "to the best knowledge of
Seller" shall mean the knowledge of Seller or Castel. Seller and
Castel each represent and warrant to Buyer, both upon execution
and as of the Closing Date, as follows:
3.1.1 Organization, Good Standing and Corporate
Power. Seller is, and prior to the Merger (as defined in
Section 6.5 hereof), PTI was, a corporation duly incorporated,
validly existing, and in good standing under the laws of the
State of Kansas and is qualified to do business and in good
standing as a foreign corporation under the laws of each
jurisdiction in which such qualification is required, except
where the failure to be so qualified could not reasonably be
expected to have a material adverse effect on Seller's or PTI's
business or financial condition. Seller has the corporate power
and authority to own, lease, and operate its properties and to
carry on its business as currently conducted. Prior to the
Merger, PTI had the corporate power and authority to own, lease,
and operate its properties and to carry on its business as
previously conducted.
3.1.2 Authorization. Seller has full corporate
power and authority to execute and deliver this Agreement and the
Xxxx of Sale and to perform its obligations hereunder and
thereunder. The execution, delivery and performance of this
Agreement and the Xxxx of Sale have been duly authorized by all
necessary corporate action on the part of Seller. Seller has
duly executed and delivered this Agreement and this Agreement
does and the Xxxx of Sale, when executed will, constitute legally
valid and binding obligations of Seller, enforceable in
accordance with their respective terms.
3.1.3 Title to Assets. Seller has good and
marketable title to the Assets free and clear of all
Encumbrances, except for the Encumbrances set forth in Schedule
3.1.3 attached hereto (the "Permitted Encumbrances").
3.1.4 Books and Records. The books of account and
other financial records of Seller, including those acquired from
PTI, are in all material respects complete and correct and have
been maintained in accordance with good business practices. The
minute books of Seller and PTI contain accurate and complete
records of all meetings of and accurately reflect all corporate
actions of the shareholders and directors of PTI and Seller.
Copies of all such records will be furnished to Buyer upon
request.
3.1.5 Assets. Upon the consummation of the Merger
(as defined in Section 6.5 hereof), Seller will own or have
rights to all of the assets, as reported in the Financial
Statements (as defined in Section 3.1.6), subject to such
limitations as are disclosed in the Financial Statements. To the
best knowledge of Seller, the assets are in good condition,
excepting reasonable wear and tear, are usable in the ordinary
course of Seller's business and were usable in the ordinary
course of PTI's business as conducted on February 28, 1997.
3.1.6 Financial Statements; No Undisclosed
Liabilities. Seller has delivered to Buyer a copy of PTI's
audited financial statements for the period ended June 30, 1996
and its unaudited financial statements for the six months ended
December 31, 1996, including any related notes, supplementary
information, and exhibits thereto (the "Financial Statements").
The Financial Statements have been prepared in accordance with
GAAP and are accurate, complete and correct in all material
respects and present fairly the financial position of PTI as of
their respective dates. The Financial Statements make full and
adequate provision for all fixed or contingent obligations,
liabilities and commitments of PTI as of December 31, 1996. As
of the Closing Date, Seller, as acquiror of PTI's assets or
otherwise, will not have, and prior to the Merger (as defined in
Section 6.5 hereof), PTI did not have, any liabilities, whether
fixed or contingent, except as disclosed on the Financial
Statements or as incurred in the ordinary course of business
subsequent to December 31, 1996 or as set forth in Schedule 3.1.6
hereto.
3.1.7 Absence of Certain Changes or Events. Except
as disclosed in Schedule 3.1.7, the other Schedules attached
hereto, or as may have been consented to by Buyer in writing,
neither PTI nor Seller has, since December 31, 1996:
3.1.7.1 Incurred any fixed or contingent
obligation, liability, or commitment except trade or business
obligations incurred in the ordinary course of its business, none
of which is materially adverse or was entered into for an
inadequate consideration.
3.1.7.2 Discharged or satisfied any lien or
encumbrance or paid any fixed or contingent obligation
or liability, except for current obligations or
liabilities reflected or reserved against on the
Financial Statements or current obligations or
liabilities incurred in the ordinary course of
business.
3.1.7.3 Transferred, leased, licensed or
disposed of any of its assets or properties, except in the
ordinary course of business and except the transfer of
assets by PTI to Seller.
3.1.7.4 Suffered any adverse change in, or any
event or events which, have had or to the best knowledge of
Seller will cause a material adverse effect on its or PTI's
financial condition, results of operations, properties,
business or prospects.
3.1.7.5 Made any loan to or entered into any
other transaction with any of its officers, directors,
employees, or shareholders giving rise to any claim or right
of, by, or against any such person.
3.1.8 Tax Matters. Seller and PTI have
(i) prepared and filed with the appropriate governmental
authorities all tax returns required to be filed by them under
all applicable laws or regulations, which returns were prepared
in conformity with such applicable laws and regulations;
(ii) paid all taxes indicated as being due and owing either by
such returns or by any assessment, deficiency notice, 30-day
letter, or similar notice received by them; and (iii) made
sufficient provision in the Financial Statements for all accrued
but unpaid taxes, interest and penalties (if any), whether or not
disputed, for all periods ended on or before December 31, 1996.
There is no basis for any assessment, deficiency notice, 30-day
letter, or similar notice with respect to income tax, sales tax
or any other taxes to be issued to Seller or PTI by the Internal
Revenue Service or any other taxing authority with respect to any
taxable period ending on or before the Closing Date. Except as
disclosed in Schedule 3.1.8, neither Seller nor PTI has executed
or filed with the Internal Revenue Service or any other taxing
authority any agreement extending the period for assessment or
collection of any income or other taxes or any consent to have
the provisions of Section 341(f) of the Code, applied to it.
Neither PTI nor Seller is a party to any pending action or
proceeding by any governmental authority for assessment or
collection of taxes and no claim for assessment or collection of
taxes has been asserted against them. Copies of all federal and
state income tax returns and all schedules and other supporting
documents thereto filed by Seller or PTI with the Internal
Revenue Service and all state taxing authorities for each of its
last three fiscal years and all communications relating thereto
have been provided to Buyer and are true, accurate and complete
copies thereof.
3.1.9 Litigation. Except as disclosed on Schedule
3.1.9, no claim, action, suit, proceeding, litigation,
arbitration, or investigation is pending or overtly threatened
against Seller or PTI, its properties, assets or operations
(including the properties of others used in its business), or the
transactions contemplated by this Agreement, and no basis
therefor is known to Seller. Neither Seller nor its properties,
assets or operations is subject to any continuing injunction,
judgment, or other order of any court, arbitrator, or
governmental agency. To the best of Seller's knowledge, neither
it nor PTI is in default under any order, license, regulation, or
demand of any federal, state, municipal or other governmental
agency or regulatory body or with respect to any order, writ,
injunction, or decree of any court.
3.1.10 Insurance. All policies of insurance against
casualty and other losses, public liability insurance and
worker's compensation insurance carried by Seller or PTI are
listed in Schedule 3.1.10 hereto (including pending claims
thereunder) and are in full force and effect. Neither Seller nor
PTI has failed to give any notice or present any claim under any
insurance policy in due and timely fashion. Except as may be set
forth on such schedule, there are no actual, pending or, to the
best knowledge of Seller, threatened claims against Seller or PTI
which would not come within the scope of such coverages
(excluding deductibles) nor are any such policies currently
threatened with cancellation. Seller has no knowledge of any
material proposed increase in the contributions for worker's
compensation or unemployment insurance by Seller.
3.1.11 Contracts and Agreements. All material
agreements and commitments (written or oral) to which Seller or
PTI is a party are listed or identified in Schedule 3.1.11
attached hereto. Each of these contracts and agreements is
valid, binding and enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or
similar laws affecting creditors rights generally and general
principles of equity. Neither Seller nor PTI, and to the
knowledge of Seller, no other party is, in arrears in respect of
the performance or satisfaction of the terms and conditions to be
performed or satisfied on its part under any of these contracts
and agreements.
3.1.12 Real Property. Neither Seller nor PTI owns or
leases any real property.
3.1.13 Compensation of Employees. Schedule 3.1.13
hereto lists the name and current annual compensation (including
bonuses and commissions) of each director and officer of Seller
or PTI and each other employee of or consultant to Seller or PTI;
and the name of each retired employee, officer, or director, if
any, of Seller or PTI who is receiving or is entitled to receive
any payments not covered by any Employee Benefit Plan and his or
her age, sex, and current unfunded pension benefits.
3.1.14 Bank Accounts; Safe Deposit Boxes. Schedule
3.1.14 attached hereto lists the name of each bank in which
Seller has an account or safe deposit box and the names of all
persons authorized to draw thereon or to have access thereto.
3.1.15 Benefits Plans. Schedule 3.1.15 attached
hereto is a complete list of all employee benefit plans, as such
term is defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), life insurance,
hospitalization, medical and dental plans, severance, executive
compensation, bonus, deferred compensation, pension, retirement,
profit sharing, excess benefit, stock purchase and option plans
(including multi-employer and multiple employer plans), and all
other plans, arrangements or practices whether written or oral,
qualified or nonqualified, sponsored, maintained, contributed to
or required to be contributed to by Seller or any trade or
business whether or not incorporated that together with Seller is
treated as a "single employer" under Code Section 414(b), (c),
(m) or (o) and the rules and regulations promulgated thereunder
(referred to as "ERISA Affiliate") (each such plan is hereinafter
referred to as an "Employee Benefit Plan"). Neither Seller nor
its ERISA Affiliates maintains or has any liability in respect of
any Employee Benefit Plan which is not disclosed on Schedule
3.1.15. Each Employee Benefit Plan has been operated and
administered in accordance with its provisions and is in
compliance in all respects with all applicable federal and state
laws, rules and regulations governing each such plan including
but not limited to ERISA, the Code, and COBRA. There have been
no non-exempt "prohibited transactions" within the meaning of
Section 4975 of the Code or Section 406 of ERISA. Neither Seller
nor any ERISA affiliates has sponsored, ever maintained, or
contributed to an Employee Benefit Plan that is subject to Title
IV of ERISA. Each Employee Benefit Plan intended to be
"qualified" within the meaning of Section 401(a) of the Code is
so qualified and the trusts maintained thereunder are exempt from
taxation under Section 501(a) of the Code. No Employee Benefit
Plan provides benefits, including without limitation, death or
medical benefits (whether or not insured), with respect to
current or former employees of Seller or any ERISA affiliate
beyond their retirement or other termination of service other
than coverage mandated by COBRA. There is no pending or
threatened assessment, complaint, proceeding, voluntary
compliance application or investigation of any kind in any court
or government agency with respect to any Employee Benefit Plan.
All benefits, expenses and other amounts due and payable under
any Employee Benefit Plan and all contributions, transfers, or
payments required to be made to any Employee Benefit Plan, have
been paid or made, accrued, and booked. With respect to each
Employee Benefit Plan, Seller has heretofore delivered to the
Buyer true and complete copies of any documents requested by the
Buyer.
3.1.16 Permits and Licenses; Compliance with
Applicable Laws. To the best of Seller's knowledge, Seller and
PTI have all permits, licenses, orders, and approvals of federal,
state, local or foreign governmental or regulatory bodies (if
any) that are required in order to permit them to carry on their
respective businesses as presently conducted. All licenses and
permits held by Seller are listed on Schedule 3.1.16. The
conduct by Seller and PTI of their businesses and the use of
their properties does not violate any law, ordinance, rule or
regulation currently in effect, or, to the knowledge of Seller,
to be in effect, the enforcement of which would have a material
adverse effect on the business or properties of Seller or PTI.
3.1.17 Environmental Matters. Seller, PTI, and any
other person or entity for whose conduct they are or may be held
responsible have no liability under, have never violated, and are
presently in compliance with all Environmental Laws applicable to
the properties owned, leased or used by such parties
("Properties") and any facilities and operations thereon, and, to
the best of Seller's knowledge, there exists no Environmental
Condition with respect to the Properties or any facilities or
operations thereon. Neither the Seller, PTI, nor Castel, nor to
the best of Seller's knowledge any other person, has generated,
manufactured, refined, transported, treated, stored, handled,
disposed, transferred, produced, or processed any Hazardous
Material or any solid waste on, under or about the Properties.
Seller has no knowledge of the Release or threat of Release of
any Hazardous Material at or in the vicinity of the Properties.
Neither the Seller, PTI, nor Castel has received notice under the
citizen suit provision or any Environmental Law in connection
with the Properties or any facilities or operations thereon. As
used in this Agreement, "Environment" means soil, surface waters,
strata, ambient air, and any environmental medium; "Environmental
Condition" means any condition with respect to the Environment on
or off the Properties, whether or not yet discovered, that could
or does result in any damage, loss, cost, expense, claim, demand,
order, or liability to or against Seller, PTI, Castel or Buyer by
any third party (including, without limitation, any government
entity), including, without limitation, any condition resulting
from the operation of Company business or any activity or
operation in the vicinity of the Properties or any activity or
operation formerly conducted by any person or entity on or off
the Properties; "Environmental Law" means any environmental or
health and safety related law, regulation, rule, ordinance, by-
law, order or determination of any governmental or judicial
authority at the federal, state or local level, whether existing
as of the date hereof, previously enforced or subsequently
enacted; "Hazardous Material" includes, without limitation, any
pollutant, contaminant, toxic substance, hazardous waste,
hazardous material, hazardous substance, petroleum or petroleum
product, asbestos, polychlorinated biphenyls, underground storage
tanks and the contents thereof or any other material defined in
or regulated pursuant to any Environmental Law, whether existing
as of the date hereof, previously enforced, or subsequently
enacted, including, without limitation, the Resource Conservation
and Recovery Act, as amended, the Comprehensive Environmental
Response, Compensation and Liability Act, as amended, the Federal
Clean Water Act, as amended, the Toxic Substances Control Act, as
amended, and the Hazardous Materials Transportation Act, as
amended; and "Release" means any releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, disposing, dumping or migrating into the
Environment.
3.1.18 Approvals and Consents; Effect of this
Agreement. Except as disclosed on Schedule 3.1.18, no consent,
authorization or waiver by, or filing with, any governmental
agency or any other person not a party to this Agreement is
required to be obtained or made by Seller or PTI in connection
with the execution or performance of this Agreement or the taking
of any action contemplated hereby. The execution, delivery and
performance of this Agreement, and the consummation of the
transactions contemplated hereby, will not, with or without the
giving of notice or the passage of time: (i) violate any law,
ordinance, rule or regulation applicable to Seller or PTI; (ii)
violate any judgment, writ, injunction or order of any court,
arbitrator or governmental agency applicable to Seller or PTI;
(iii) conflict with any provision of the Articles of
Incorporation or By-Laws of Seller or PTI; or (iv) conflict with,
result in the breach of any provision of, result in the
modification or termination of, require the consent of any other
parties to, or impose any lien or constitute a default under, any
contract or other agreement of any private or governmental
license or franchise held by, or any other agreement or
instrument to which Seller or PTI is a party, by which Seller or
PTI or any of their properties or assets is bound, or from which
Seller or PTI derives benefit.
3.1.19 Finder. There is no firm, corporation,
agency or other person that is entitled to a finder's fee or any
type of commission in relation to or in connection with
transactions contemplated by this Agreement as a result of any
agreement or understanding with Seller.
3.1.20 Amounts Due from Officers. Except as set forth
on Schedule 3.1.20 hereto, there will be no accounts receivable,
notes receivable or any other amount due from officers or
directors of Seller at the Closing Date.
3.1.21 Ownership of PTI. Seller is the owner of at
least 90% of the stock of PTI.
3.1.22 Title to Assets. On the Closing Date, Seller
will have full right and title to all of the Assets, free and
clear of any liens or claim of right other than those reflected
in the Financial Statements. There are no claims of any
shareholder of PTI against such Assets.
3.1.23 Effectiveness of the Merger. On the Closing
Date, the Merger (as defined in Section 6.5 hereof) will be
effective under applicable state law and Seller and PTI will have
complied with all relevant federal, state, and local laws for
which compliance is necessary to consummate the Merger (as
defined in Section 6.5 hereof) and the transactions contemplated
by this Agreement.
3.2 Representations and Warranties of Buyer. Buyer
represents and warrants to Seller as follows:
3.2.1 Good Standing, Corporate Power. Buyer is a
corporation duly organized, validly existing, and in good
standing under the laws of Delaware and has all requisite
corporate power to enter into this Agreement and perform its
obligations hereunder.
3.2.2 Finder. There is no firm, corporation,
agency or other person that is entitled to a finder's fee or any
type of commission in relation to or in connection with the
transactions contemplated by this Agreement as a result of any
agreement or understanding with Buyer.
3.2.3 Execution, Delivery, Performance and Effect
of Agreement. The execution, delivery and performance of this
Agreement by Buyer and consummation of the transactions
contemplated hereby by Buyer have been approved or will be
approved prior to the Closing Date by all requisite corporate
action by Buyer. This Agreement has been duly and validly
executed and delivered on behalf of Buyer and constitutes a valid
and binding obligation of Buyer enforceable in accordance with
its terms.
3.2.4 Litigation. There is no injunction, order or
decree of any court or administrative agency or any such action
or proceeding pending or, to the Buyer's knowledge, threatened
against the Buyer to restrain or prohibit the consummation of the
transactions contemplated hereby.
3.2.5 Approvals and Consents; Effect of this
Agreement. No consent, authorization or waiver by, or filing
with, any governmental agency or any other person not a party to
this Agreement is required to be obtained or made by Buyer in
connection with the execution or performance of this Agreement or
the taking of any action contemplated hereby. The execution,
delivery and performance of this Agreement, and the consummation
of the transactions contemplated hereby, will not, with or
without the giving of notice or the passage of time: (i) violate
any law, ordinance, rule or regulation applicable to Buyer; (ii)
violate any judgment, writ, injunction or order of any court,
arbitrator or governmental agency applicable to Buyer;
(iii) conflict with any provision of the Certificate of
Incorporation or By-Laws of Buyer; or (iv) conflict with, result
in the breach of any provision of, result in the modification or
termination of, require the consent of any other parties to, or
impose any lien or constitute a default under, any contract or
other agreement of any private or governmental license or
franchise held by, or any other agreement or instrument to which
Buyer is a party, by which Buyer or any of its properties or
assets is bound, or from which Buyer derives benefit, other than
violations, defaults or conflicts which would not materially
affect the ability of Buyer to consummate the transactions
provided for in this Agreement.
4 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions
contemplated at the closing are subject to the fulfillment on the
Closing Date of each of the conditions set forth in this Article
4. In the event each of the conditions set forth in this Article
4 is not fulfilled on the Closing Date, the Closing Date shall be
delayed until such time as any unsatisfied conditions are
satisfied; provided, however, that if all unsatisfied conditions
are not satisfied or waived by January 1, 1998 for any reason
other than a breach hereof by Buyer, this Agreement shall
terminate and $130,000.00 of the advance made by Buyer pursuant
to Section 1.3.2 hereof shall be refunded to Buyer. Buyer may
waive any or all of these conditions in whole or in part in
writing without prior notice; provided, however, that no such
waiver of a condition shall constitute a waiver by Buyer of any
of its other rights or remedies if Seller shall be in default of
any of its representations, warranties or covenants under this
Agreement.
4.1 Representations, Warranties and Agreements. On the
Closing Date, all the representations and warranties of Seller
contained in this Agreement shall be true and correct as of that
date, and all of the agreements of Seller which are provided in
this Agreement to be performed at or prior to the closing shall
have been performed.
4.2 Authorization of Agreements. All action on the part of
Seller to authorize the execution, delivery and performance of
this Agreement and the other agreements contemplated by this
Agreement, and the consummation of the transactions contemplated
herein and therein, shall have been duly and validly taken by
Seller.
4.3 No Adverse Change or Loss. During the period from
December 31, 1996 to the Closing Date, there shall not have been
any material adverse change or any material loss or damage to the
assets or business of Seller.
4.4 Governmental or Private Actions. No action, suit or
proceeding by any governmental body or authority, or by any
private third party, seeking to restrain the transactions
contemplated by this Agreement or its consummation, shall have
been threatened or instituted and remain pending on or before the
Closing Date. No order of any court of competent jurisdiction
shall be effective on the Closing Date restraining the
transactions contemplated by this Agreement.
4.5 Agreements and Consents. All consents of any persons,
which are necessary to be obtained by Seller for the consummation
of the transactions contemplated by this Agreement, shall have
been obtained and delivered to Buyer on or before the Closing
Date.
4.6 Cal-Med Stock Purchase Agreement. The Stock Purchase
Agreement, dated of even date herewith, between Xxxx Xxxxx,
Xxxxxx Beach and Buyer (the "Cal-Med Stock Purchase Agreement")
shall have been consummated.
4.7 HC Stock Purchase Agreement. The Stock Purchase
Agreement, dated of even date herewith, between Xxxx X. Xxxxxx,
Xxxx Xxxxxx and Buyer (the "HC Stock Purchase Agreement") shall
have been consummated.
4.8 The Merger. The Merger (as defined in Section 6.5
hereof) shall have been consummated.
4.9 Contribution of Funds. The funds referred to in
Section 6.6 hereof shall have been contributed to Seller.
5 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller to consummate the transactions
contemplated at the closing are subject to the fulfillment at the
closing of each of the conditions set forth in this Article 5.
In the event each of the conditions set forth in this Article 5
is not fulfilled on the Closing Date, the Closing Date shall be
delayed until such time as any unsatisfied conditions are
satisfied; provided, however, that if all unsatisfied conditions
are not satisfied or waived by January 1, 1998, this Agreement
shall terminate and $130,000.00 of the advance made by Buyer
pursuant to Section 1.3.2 hereof shall be refunded to Buyer.
Seller may waive any or all of these conditions in whole or in
part in writing without prior notice; provided, however, that no
such waiver of a condition shall constitute a waiver by Seller of
any of its other rights or remedies if Buyer shall be in default
of any of its representations, warranties or covenants under this
Agreement.
5.1 Representations, Warranties and Agreements. On the
Closing Date, all the representations and warranties of Buyer
contained in this Agreement shall be true and correct as of that
date, and all of the agreements of Buyer which are provided in
this Agreement to be performed at or prior to the closing shall
have been performed.
5.2 Authorization of Agreements. All action on the part of
Buyer necessary to authorize the execution, delivery and
performance of this Agreement and the other agreements
contemplated by this Agreement, and the consummation of the
transactions contemplated herein and therein, shall have been
duly and validly taken by Buyer.
5.3 Governmental or Private Actions. No action, suit or
proceeding by any governmental body or authority or any private
third party, seeking to restrain the transactions contemplated by
this Agreement, shall have been threatened or instituted and
remain pending on or before the Closing Date. No order of any
court of competent jurisdiction shall be effective on the Closing
Date restraining the transactions contemplated by this Agreement.
5.4 Agreements and Consents. All consents of any persons,
which are necessary to be obtained by the Buyer for the
consummation of the transactions contemplated by this Agreement,
shall have been obtained and delivered to Buyer on or before the
Closing Date.
5.5 Cal-Med Stock Purchase Agreement. The Cal-Med Stock
Purchase Agreement shall have been consummated.
5.6 HC Stock Purchase Agreement. The HC Stock Purchase
Agreement shall have been executed and delivered by the Castels
and Buyer and shall be in full force and effect.
6 COVENANTS OF THE PARTIES
6.1 Conduct. Except as provided by this Agreement or as
Buyer may otherwise consent in writing, prior to the Closing
Date, Seller will not enter into any transaction, take any action
or permit any event to occur which would result in any of the
representations and warranties contained in this Agreement not
being true and correct immediately after such transaction has
been entered into or consummated or such event has occurred.
Except as provided by this Agreement or as Seller may otherwise
consent in writing, prior to the Closing Date, Buyer will not
enter into any transaction, take any action or permit any event
to occur which would result in any of the representations and
warranties contained in this Agreement not being true and correct
immediately after such transaction has been entered into or
consummated or such event has occurred.
6.2 Further Assurances. At the request of Buyer, Seller
will promptly execute and deliver to Buyer all such further
assignments, endorsements, and other documents as Buyer may
reasonably request in order to consummate the transactions
contemplated by this Agreement. At the request of the Seller,
Buyer will execute and deliver to Seller all such further
documents as Seller may reasonably request in order to consummate
the transactions contemplated by this Agreement.
6.3 Confidentiality. Pending consummation of the
transactions contemplated by this Agreement, all information
furnished by one party to another in connection with this
Agreement shall be kept confidential. If, for any reason, the
transactions contemplated by this Agreement are abandoned, Buyer
shall return to Seller all information furnished to Buyer and
none of such information shall be used or disseminated by Buyer
in any manner or for any purpose.
6.4 Payment of Reimbursable Liabilities. Within a
reasonable time after receipt of the payments referred to in
Sections 1.3.1 and 1.3.3 hereof, Seller will cause the
Reimbursable Liabilities of PTI and Seller, including, without
limitation, those reflected on Schedule 6.4 and those incurred in
the ordinary course of business after the date of such schedule,
to be paid. Furthermore, Seller hereby agrees to indemnify and
hold harmless Buyer against and in respect of any and all claims
relating to the Reimbursable Liabilities for which Seller
received payment pursuant to Section 1.3.1 or 1.3.3 hereof.
6.5 Merger. Upon completion of the necessary filings with
the Securities and Exchange Commission, Seller will cause PTI to
be merged with and into Seller pursuant to the Kansas short-form
merger statute (the "Merger").
6.6 Contribution of Funds. Castel hereby agrees to
contribute to Seller, before or upon the consummation of the
Merger, all funds necessary to pay any amounts required to be
paid to the minority shareholders of PTI as a result of the
Merger, including any amounts to which such shareholders might be
entitled pursuant to the exercise of dissenter's rights.
7 INDEMNIFICATION
7.1 Indemnification.
7.1.1 Scope of Indemnification. Each party (the
"Indemnifying Party") shall indemnify and hold harmless the other
party, and any agent, employee, affiliate, successor or nominee
of such party, or the officers, directors, shareholders,
subsidiary (which shall include ACP), affiliates, employees and
agents of each of the aforesaid (collectively referred to
hereinafter as "Indemnified Parties") against and in respect of
any and all claims, demands, losses, costs, expenses,
obligations, liabilities, damages, recoveries, and deficiencies,
including interest, penalties and actual attorneys' fees and
costs, that they shall incur or suffer, which arise, result from,
or relate to:
7.1.1.1 Any representation or warranty of the
Indemnifying Party contained in this Agreement or in any
schedule, certificate or exhibit furnished or to be furnished by
the Indemnifying Party under this Agreement being untrue or
inaccurate in any material respect.
7.1.1.2 Any breach of or failure by the
Indemnifying Party to perform any of such party's covenants,
or agreements in this Agreement.
7.1.1.3 In the case of Seller only, any tax
deficiencies arising out of tax returns filed by Seller or
PTI with the Internal Revenue Service, any state taxing
authority or any other governmental entity prior to the
Closing Date. This indemnification shall apply with respect
to any deficiencies assessed and any interest and penalties
due thereon and shall apply when such deficiency, interest
and/or penalty is assessed regardless of the expiration of
the general warranties hereunder.
7.12 Extent of Indemnities. The indemnities extended
hereby by an Indemnifying Party to each and all of the
Indemnified Parties shall be full and complete indemnities to the
extent permitted by law, including but not limited to, indemnity
against any sums paid or liabilities incurred in the settlement
of and expenses paid or incurred in connection with claims, suits
or judgments arising out of this Agreement, expenses paid or
incurred in enforcing the terms of this indemnity, in procuring
or attempting to procure release from liability or in recovering
or attempting to recover losses or expenses paid or incurred. In
no event, however, shall the total liability of the Seller and
Castel exceed the total payments received by Castel pursuant to
the HC Stock Purchase Agreement less any liability he may have
pursuant to the indemnification provisions of such agreement.
7.13 Obligations of Indemnifying Party. The
obligations of an Indemnifying Party hereunder shall arise at
such time, if any, that any claim is made, by suit or otherwise,
or loss is incurred in any manner whatsoever by any Indemnified
Party, and the entry of judgment or the litigation of any claim
shall not be a condition precedent to the obligations of Seller
arising under this indemnity.
7.14 Offsets. Any amount payable by Seller and Castel
to Buyer pursuant to this Article 7 or Section 6.4 hereof shall
be limited to, and may be offset by Buyer against, cash payments
due to Castel under the HC Stock Purchase Agreement at the time
such indemnity is due.
7.1.5 Limitation to Buyer's Loss - De Minimis. All
indemnification payments by Castel hereunder shall be limited to
Buyer's actual loss, net of any reimbursements by insurance
companies or other third parties. Buyer shall not be entitled to
recover any loss for breach of warranty unless aggregate losses
to which indemnification shall apply exceed $50,000, in which
event the full amount, including the first $50,000, shall be due.
7.2 Defense of Claim. The Indemnified Parties shall
promptly notify the Indemnifying Party of the existence of any
claim, demand, assessment or other matter to which the
indemnification obligations of the Indemnifying Party would
apply, and shall give the Indemnifying Party reasonable
opportunity to defend the same at its own expense and with
mutually acceptable counsel; provided that the Indemnified
Parties shall at all times also have the right to fully
participate in the defense at their own expense. If the
Indemnifying Party shall, within a reasonable time after this
notice, fail to defend, the Indemnified Parties shall have the
right, but not the obligation, to undertake the defense of and to
compromise or settle (exercising reasonable business judgment)
the claim or other matter on behalf, for the account, and at the
risk of the Indemnifying Party. If the claim is one that cannot
by its nature be defended solely by the Indemnifying Party then
the Indemnified Parties shall make available all information and
assistance that the Indemnifying Party may reasonably request in
connection with such defense.
8 GENERAL PROVISIONS
8.1 Survival. All of the representations, warranties and
agreements contained herein shall survive the closing date until
February 28, 2002.
8.2 Expenses. Whether or not the transactions contemplated
by this Agreement are consummated, except as otherwise expressly
agreed to, each of the parties hereto shall pay its or his own
expenses and the fees and expenses of its or his counsel and
accountants and representatives.
8.3 Waivers. No action taken pursuant to this Agreement,
including any investigation by or on behalf of any party hereto,
shall be deemed to constitute a waiver by the party taking such
action of compliance with any representation, warranty, covenant
or agreement contained herein. The waiver by any party hereto of
a breach of any provision of this Agreement shall not operate or
be construed as a waiver of any subsequent breach. The waiver by
Buyer or Seller of any of the conditions precedent to its or
their respective obligations under this Agreement shall not
preclude it or them from seeking redress for breach of this
Agreement.
8.4 Notices. All notices and other communications which
are required or may be given under this Agreement shall be in
writing and shall be deemed to have been duly given if delivered
personally, telecopied, or mailed, registered first class mail,
postage prepaid, return receipt requested, to the party to whom
the same is so delivered or mailed:
if to Seller, to:
CASTEL HOLDINGS, INC.
Attn: Xxxx X. Xxxxxx
0000 XxXxxxxx #000
Xxxxxx, Xxxxx 00000
Telephone:
Facsimile:
and
Xxxx X. Xxxxxx
0000 XxXxxxxx #000
Xxxxxx, Xxxxx 00000
Telephone:
with a copy to:
Xxxxxx Xxxx
Xxxxxxx, Mag & Fizzell, P.C.
0000 Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
if to Buyer, to:
SUNDANCE REHABILITATION CORPORATION
000 Xxx Xxxx, X.X.
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Telephone: ______________
Facsimile: ______________
Attn: Xxxxxx XxXxxxxx
with a copy to:
Xxxxxx Xxxxxxxxx
Xxxxx, Day, Xxxxxx & Xxxxx
000 Xxxx 0xx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or to such other address as any of the above shall have specified
by notice hereunder.
8.5 Assignment. In the event the obligations of any party
under this Agreement shall be assigned, the assigning party shall
continue to be responsible for the performance of such
obligations by the the assignee.
8.6 Entire Agreement; Amendments. This Agreement contains
the entire agreement between the parties hereto with respect to
the subject matter hereof, and supersedes all prior agreements
and undertakings, oral or written. This Agreement may not be
changed or terminated orally, and may only be changed or
terminated by a writing signed by the party against whom such
change or termination is sought.
8.7 Binding Effect; Benefits. This Agreement shall inure
to the benefit of and shall be binding upon the parties hereto
and their respective heirs, legal representatives, successors and
assigns. Nothing in this Agreement, expressed or implied, is
intended to or shall confer on any person other than the parties
hereto any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
8.8 Headings. The section and other headings contained in
this Agreement are for reference purposes only and shall not
affect the meaning or interpretation of this Agreement.
8.9 Counterparts. This Agreement may be executed in any
number of counterparts, each of which, when executed, shall be
deemed to be an original and all of which together shall be
deemed to be one and the same instrument.
8.10 Rules of Construction. In this Agreement, unless the
context otherwise requires, words in the singular include the
plural and in the plural include the singular, and words of the
masculine gender include the feminine and the neuter, and when
the sense so indicates words of the neuter gender may refer to
any gender.
8.11 Governing Law; Choice of Forum. The validity,
performance and enforcement of this Agreement shall be governed
by the laws of the State of New Mexico without regard to the
principles of conflict of laws thereof. The parties hereby
submit to the jurisdiction of the state and federal courts of New
Mexico.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement on the day and date first above written.
BUYER:
SUNDANCE REHABILITATION CORPORATION
a Delaware corporation
By: _____________________
Name:____________________
Its:_____________________
SELLER:
CASTEL HOLDINGS, INC.
a Kansas corporation
By: _____________________
Name:____________________
Its:_____________________
_________________________
Xxxx X. Xxxxxx
SCHEDULES
Schedule 1.1 - Balance Sheet
Schedule 1.1.1 - Property and Equipment
Schedule 1.1.2 - Intellectual Property
Schedule 1.1.5 - Prepaid Expenses
Schedule 1.1.6 - Manufacturing and Distribution
Agreements
Schedule 1.5 - Allocation of Consideration
Schedule 3.1.3 - Permitted Encumbrances
Schedule 3.1.6 - Accrued Liabilities
Schedule 3.1.7 - Disclosed Changes or Events
Schedule 3.1.8 - Agreements Extending Assessment Periods
Schedule 3.1.9 - Litigation
Schedule 3.1.10 - Insurance
Schedule 3.1.11 - Agreements and Contracts
Schedule 3.1.13 - Compensation of Employees and
Consultants
Schedule 3.1.14 - Bank Accounts
Schedule 3.1.15 - Employee Benefit Plans and Employment
Agreements
Schedule 3.1.16 - Licenses and Permits
Schedule 3.1.18 - Approvals & Consents Needed
Schedule 3.1.20 - Amounts Due from Officers
Schedule 6.4 - Liabilities to be Paid upon
Reimbursement
