PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (hereinafter the Agreement) is made, executed
and entered into on this 30th day of October, 1997 by and between Dayhill
Corporation, a California corporation (hereinafter "Dayhill"), DAYHILL
ACQUISITION CORP., a Delaware corporation (hereinafter "Acquisition") and
MEDICAL ACTION INDUSTRIES INC., a Delaware corporation (hereinafter "Medical
Action").
WITNESSETH:
WHEREAS, Dayhill is engaged in the business of marketing a variety of
specialty packaging products described in Exhibit "A" attached hereto
(hereinafter the "Products"); and
WHEREAS, Acquisition wishes to purchase or acquire from Dayhill and
Dayhill wishes to sell, assign and transfer to Acquisition, certain selected
assets and properties held in connection with, necessary for, or material to the
business and operations of Dayhill, upon the basis of representations and
warranties of Dayhill, subject to the exceptions set forth in the disclosure
schedule (hereinafter the "Schedule").
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, agreements and conditions contained herein, and of the
mutual benefits to be derived hereby, the parties hereto agree as follows:
1. Transfer of Dayhill Assets.
(a) Dayhill shall transfer and deliver to Acquisition and
Acquisition shall receive from Dayhill, free from all liabilities and
encumbrances (except as to those assigned to and assumed by Acquisition as
specified in Exhibit "C" attached hereto), certain of Dayhill's assets, owned
and operated by Dayhill (hereinafter the "Assets") at the business premises
located at 0000 X. Xxxxxx Xxxxxx, Xxxxx Xxx, Xxxxxxxxxx 00000 (hereinafter the
"Premises"), more particularly described as follows:
(i) All know-how, technology, formulae, trade secrets,
processes and confidential information regarding manufacture,
production, quality control and government registrations and
documentation of those certain Products, and patent documentation for
the Products;
(ii) All related marketing materials and brochures,
advertising rights and customer lists;
(iii) All fixtures, furniture, business equipment and all
other tangible personal property of Dayhill used to market and
distribute the Products and product lists sold herein, all as more
specifically described in Schedule 1 attached hereto;
(iv) Dayhill's rights under or to all contracts, licenses,
leases, governmental permits, and arrangements, if transferrable, and
other agreements, including without limitation any right to receive
payment for Products sold and to receive goods and services, pursuant
to such agreements;
(v) Dayhill's rights to the name "Dayhill", and all other
trade names, trademarks, copyrights and patents which it owns or uses
in connection with the business;
(vi) An assignment of Dayhill's rights, title and interest as
lessee under the lease of the Premises, a copy of which is attached
hereto as Exhibit "B";
(vii) All inventory, raw materials, work-in-process, packaging
materials, and finished goods of Dayhill on hand at the Premises on the
date of closing, all as more specifically described in Schedule 2
attached hereto; and
(viii) All cash, notes, certificates of deposit, marketable
securities, other evidences of indebtedness, and accounts receivable as
of the date of closing; and
(ix) All credits, prepaid expenses, deferred charges, advance
payments, security deposits and prepaid items.
(b) Excluded Assets. Dayhill assets not subject to transfer under
Paragraph 1(a) above, including the following:
(i) Dayhill corporate records, minute books, stock transfer
records, etc.;
(ii) Rights and interest obtained pursuant to the terms of
this Agreement; and
(iii) The assets listed on Schedule 3.
2. No Assumption of Dayhill's Liabilities by Acquisition. It is
specifically acknowledged by Dayhill that Acquisition shall not, except as set
forth in Exhibit "C" and by reference made a part hereof, be responsible for the
payment of any debts, liens, causes of action, obligations and other liabilities
arising or incurred in connection with the operation of the Dayhill business up
to and including the date of closing. Dayhill agrees to hold Acquisition
harmless from the claims of creditors with respect to all debts, loans, causes
of action, obligations and liabilities of Dayhill (other than those assigned and
assumed by Acquisition on Exhibit "C") relating to its business prior to the
closing date.
2
3. Purchase Price. In reliance upon the representations and warranties
of Dayhill contained herein, and subject to the conditions set forth in this
Agreement, Medical Action hereby agrees to purchase the Assets of Dayhill for a
total purchase price of $30,176.93, by way of check on the date of closing, and
to assume the liabilities as provided in Exhibit "C".
4. Dayhill represents and warrants to, and agrees with, Acquisition and
Medical Action as follows:
(a) Organization of Dayhill. Dayhill is duly incorporated and
is validly existing as a corporation in good standing under the laws of the
State of California with full corporate power and authority to own its
properties and to conduct its business as now conducted. Dayhill is duly
qualified to do business as a foreign corporation in good standing in all
jurisdictions where the nature of its assets or business requires such
qualification and such jurisdictions are listed in Part A of the Schedule.
Dayhill does not own, directly or indirectly, shares of capital stock in any
corporation. The Certificate of Incorporation and the By-Laws of Dayhill,
heretofore delivered by Dayhill to Acquisition, are complete and correct and
contain all amendments thereto.
(b) Authority of Dayhill. Dayhill has the corporate power to
enter into this Agreement and to carry out the transaction contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transaction contemplated hereby have been duly approved and authorized by the
board of Directors of Dayhill and has been unanimously approved by its
stockholders; except for the adoption of this Agreement and approval of the
transactions contemplated hereby by its stockholders, no other corporate acts or
proceedings on the part of Dayhill are necessary to authorize this Agreement or
the consummation of the transactions contemplated hereby. This Agreement
constitutes the valid and legally binding obligation of Dayhill enforceable
against Dayhill in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, moratorium or other similar laws affecting
creditors' rights generally or by general principles of equity. Except as set
forth in Part B of the Schedule, the execution and delivery of this Agreement by
Dayhill does not, and the consummation of the transactions contemplated hereby
will not, violate or constitute a default under (i) any provision of the
Certificate of Incorporation or By-Laws of Dayhill, (ii) any provision of (or
result in acceleration of any obligation under) any mortgage, note, lien, lease,
agreement, instrument, arbitration award, judgment or decree to which Dayhill is
a party or by which Dayhill is subject or (iii) any laws of the United States or
any state or jurisdiction in which Dayhill conducts business.
3
(c) Capitalization. The authorized capital stock of Dayhill
consists of shares of Common Stock. As of the date hereof, 196,078 shares of
Common Stock of Dayhill are validly issued and outstanding, fully paid and
nonassessable, and no Dayhill Shares were held in the treasury of Dayhill. As of
the date hereof, no Dayhill Shares were reserved for issuance pursuant to
options granted by Dayhill and no Dayhill Shares were reserved for issuance
pursuant to outstanding warrants. As of the date hereof, Dayhill has no
commitments to issue or sell any shares of its capital sock or any securities or
obligations convertible into or exchangeable for, or giving any person any right
to subscribe for or acquire from Dayhill any shares of capital stock of Dayhill
and no securities or obligations evidencing any such rights are outstanding.
(d) Consents, etc. No consent, authorization, order or
approval, or filing or recording with, any governmental commission, board or
other regulatory body is required for or in connection with the execution and
delivery of this Agreement by Dayhill and the consummation by Dayhill of the
transactions contemplated hereby.
(e) Financial Statements. Dayhill has previously furnished
Acquisition with a true and complete copy of the unaudited balance sheet of
Dayhill as of December 31, 1996 and the related unaudited statement of
operations, shareholders' equity and cash flows including the notes thereto, and
the unaudited balance sheet of Dayhill as of August 31, 1997 and the related
unaudited statements of operations, shareholders' equity and cash flows for the
seven months then ended (collectively the "Dayhill Financial Statements"). The
Dayhill Financial Statements present fairly the financial position of Dayhill
and the results of their operations and cash flows for the periods then ended.
Dayhill has no material liabilities, contingent or otherwise
(including liabilities for taxes) other than (i) liabilities which will be shown
or reflected in the unaudited financial statements referred to in Section 4(e)
hereof, (ii) liabilities incurred in the ordinary course of business since
August 31, 1997 and (iii) those liabilities described in Part E of the Schedule.
(f) Absence of Certain Changes or Events. Except as set forth
in Part F of the Schedule, since August 31, 1997 there has not been any (i)
material adverse change in the financial condition, properties, business or
results of operations of Dayhill; (ii) any change in the authorized, issued or
outstanding capital sock or material change in the funded debt of Dayhill on a
consolidated basis, and other than changes due to payments in accordance with
the terms of such debt; (ii) any declaration, setting aside or payment of any
dividend on, or distribution in respect of, any shares of the capital stock of
Dayhill or the acquisition or value by Dayhill of any shares of capital stock of
Dayhill; or (iii) any grant by Dayhill of any warrant, option or right to
acquire any Dayhill Shares or other securities whatsoever. Except as set forth
in Part F of the Schedule, Dayhill is not currently in default on any
installment or installments on indebtedness for borrowed money, or on any rental
on any long-term lease.
4
(g) Governmental Authorization and Compliance with Laws.
Dayhill is in compliance in all respects with all applicable material
requirements of all governmental authorities (Federal, state, municipal or
other) with respect to the business engaged in by it and is not in default in
any material respect under any judgment, order, injunction, rule, ruling or
regulation of any governmental commission, agency or instrumentality. There are
noProducts manufactured, assembled or sold by Dayhill which would require any
approval of the Food and Drug Administration ("FDA") or any other United States
governmental body, whether Federal, state or local, prior to distribution of
such Products, for which such approval has not been obtained. All Products sold
by Dayhill in any jurisdiction meet the applicable legal requirements of such
jurisdiction and all requisite governmental approvals have been duly obtained
and are in full force and effect, and there is no basis known to Dayhill for the
FDA or any other governmental body, including, but not limited to, recall
procedures, pending or threatened against Dayhill relating to the safety or
efficacy of any of the Products of Dayhill and, to the best knowledge of Dayhill
there is no basis therefor. Dayhill has all material permits, certificates,
licenses, approvals and other authorizations required in connection with the
operation of their business, a complete list of which are set forth in Part G of
the Schedule.
(h) Tax Matters.
(A) The amounts shown as tax liabilities on the balance sheet of
Dayhill as of August 31, 1997 included in the Dayhill Financial Statements will
be sufficient for the payment of all federal, state, county, local and foreign
Taxes (as hereinafter defined) of Dayhill, whether or not disputed, which were
properly accruable at that date. There are no agreements by Dayhill for the
extension of the time for the assessment of any Taxes. Neither the Internal
Revenue Service (the "IRS") nor any other taxing authority is now asserting, or
to the knowledge of Dayhill threatening to assert, against Dayhill any claim for
additional Taxes, nor to Dayhill's knowledge is the IRS or any other taxing
authority auditing any tax return filed by Dayhill.
(B) Dayhill has timely filed (and until the date of closing will timely
file) all returns, declarations, reports, estimates, information returns and
statements ("Returns") required to be filed or sent by or with respect to them
in respect of any Taxes;
(C) As of the time of filing, such Returns were (and, as to Returns not
filed as of the date hereof, will be) true, complete and correct in all material
respects;
(D) Dayhill has timely paid or provided (and until the date of closing
will timely pay or in good faith contest) all Taxes that are due and payable;
(E) Dayhill has complied in all material respects will all applicable
laws, rules and regulations relating to the payment and withholding of Taxes and
have timely withheld from employee wages and paid over to the proper
governmental authorities all amounts required to be so withheld and paid over
under all applicable laws;
5
(F) Dayhill has not filed a consent pursuant to Section 341(f) of the
Internal Revenue Code of 1986 (the "Code") or agreed to have Section 341(f)(2)
of the Code apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by Dayhill.
(G) No property used by Dayhill is property that Dayhill is or will be
required to treat as being owned by another person pursuant to the provision of
Section 168(f)(8) of the Internal Revenue Code of 1954 as it existed prior to
the enactment of the Tax Reform Act of 1986 or is "tax-exempt use property"
within the meaning of Section 168(h) of the Code; and
(H) Dayhill is not required to include in income any adjustment
pursuant to Section 481(a) of the Code by reason of a voluntary change in
accounting method initiated by Dayhill, or for any other reason, nor does
Dayhill have any knowledge that the Internal Revenue Service has proposed any
such adjustment or change in accounting method.
For purposes of this Agreement, "Taxes" shall mean all taxes (except
those taxes arising from this transaction), charges, fees, levies or other
assessments, including, without limitation, all net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, occupation, property
or other taxes, customs duties, fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any tax authority (domestic or foreign) upon
Dayhill.
(i) Title to Properties; Absence of Liens and Encumbrances, etc. Except
for leased properties, Dayhill has good and marketable title to all of their
tangible properties and assets, real, personal and mixed, used in their
business, including without limitation those referred to in the balance sheet as
of August 31, 1997 referred to in paragraph (e) of this Section 4 (other than
properties or assets disposed of in the ordinary course of business since the
date of such balance sheet), free and clear of all liens, charges, pledges,
security interests or other encumbrances, except as reflected in the Dayhill
Financial Statements or in Part I of the Schedule.
(j) Contracts, etc. Part J of the Schedule contains a true and complete
list of all of the following described contracts and leases:
(i) all sales contracts of Dayhill having a sales price of
$5,000 or more or not to be performed within one year regardless of
amount and all purchase orders having a purchase price of $2,500 or
more;
(ii) all other contracts of Dayhill (other than sales
contracts and purchase orders), leases, mortgages, indentures,
promissory notes, deeds, loan or credit agreements, or similar
instruments involving amounts in excess of $5,000 or more or not to be
performed within one year regardless of amount;
6
(iii) all pension, profit-sharing or employee benefit plans,
employment contracts, contracts with unions and other agreements
relating to employees of Dayhill;
(iv) all Dayhill policies of insurance issued during the past
five years;
(v) all deeds to real property owned by Dayhill;
(vi) all license, licensing arrangements and other contract
providing in whole or in part for the use of, or limiting the use of,
any intellectual property;
(vii) joint venture, partnership and similar contracts
involving a sharing of profits or expenses; and
(viii) asset purchase agreements and other acquisition or
divestiture agreements including but not limited to any agreement
relating to the sale, lease or disposal of any assets (other than sale
of inventory in the ordinary course of business).
Except as set forth in Part J of the Schedule, Dayhill is not in
default, and no event has occurred which (whether with or without notice, lapse
of time or the happening or occurrence of any other event) would constitute a
default under any of the above described contracts and leases, and all such
contracts and leases are valid and binding.
(k) Litigation. Except as set forth in Park K of the Schedule, there is
no claim, action, suit or proceeding in or before any court or administrative or
regulatory agency pending, or to the knowledge of Dayhill contemplated or
threatened, against Dayhill or any of its properties.
(l) Patents, Copyrights, Trademarks, etc. Dayhill has good and
marketable title to all patents, patent applications, copyrights, trademarks and
trade names, brand names, proprietary and other technical information,
technology, inventions, discoveries, improvements, processes, know-how,
formulae, drawings, specifications, production data, trade secrets and computer
software and programs, and licenses thereof, which are necessary for the
operation of their businesses as presently conducted and as proposed to be
conducted, a true and complete list of which is included in Part L of the
Schedule and there are no claims or proceedings threatened or pending against
Dayhill asserting that Dayhill is infringing any such intellectual property
rights of any other person.
7
(m) Employee Benefit Plans. Other than those set forth in Part M of the
Schedule, Dayhill does not maintain, administer or contribute to any bonus,
profit-sharing, pension, retirement, stock purchase, stock option, deferred
compensation, hospitalization, medical, life insurance, disability, severance
pay or other benefit plan arrangement or program, including, but not limited to,
any employee benefit plan within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), covering any of
Dayhill's employees (the "Plans").
Dayhill has furnished Acquisition with (i) complete and accurate copies
of all documents comprising or pertaining to each Plan, including each amendment
and any trust agreement, insurance contract, or other arrangement for the
funding of benefits under such Plan, (ii) copies of all determination letters or
private rulings issued by the IRS with respect to each Plan and copies of all
applications and requests filed with the IRS for such determination or rulings,
(iii) a copy of the three (3) most recent annual reports (Form 5500) for each
Plan and (iv) a copy of the most recent summary plan description ("SPD"), and
all summaries of material modifications to such SPD, for each Plan.
Each Plan is, and at all times since its inception has been, in
compliance in all material respects with all the provisions of ERISA applicable
to such Plan, and with all other laws, rules and regulations applicable to such
Plan.
There is no pending, or to the best of the knowledge of Dayhill,
threatened, legal action, proceedings or investigations against Dayhill, or any
Plan, other than routine claims for benefits, which could result in liability
being imposed upon any of the Plans or upon Dayhill with respect to any of the
Plans and there is no basis for any such legal action or proceeding.
Except as set forth in Part M of the Schedule, there are no agreements
between Dayhill and any labor union and Dayhill is not, and has never been, a
participating employer in any multi-employer plan, as such term is defined in
Section 3(37) of ERISA, or in any multiple employer plan described in Section
413(c) of the Code. To the extent that Dayhill is or has been a participating
employer in any multi-employer plan (as so defined), Dayhill is not now, or
would upon withdrawal therefrom become, liable for any withdrawal liability to
or in respect of such multi-employer plan.
The execution and delivery of this Agreement and consummation of the
transaction contemplated hereby will not result in any payment (whether of
severance pay or otherwise) becoming due from any of the Plans, or from Dayhill
with respect to any of the Plans, to any individual, or result in the vesting,
acceleration or payment or increases in the amount of any benefit payable under
any of the Plans to any individual.
(n) Finder's Fee. No brokers or finders were employed by Dayhill in
connection with any of the transactions contemplated by this Agreement.
8
(o) Insider Interests. No officer or director of Dayhill has any
agreement with Dayhill or any interest in any property, real, personal or mixed,
tangible or intangible (including, without limitation, patents, patent
application, trademarks, trade names or other intellectual property), used in or
pertaining to the business of Dayhill except as a stockholder or employee and
except as set forth in Part O of the Schedule.
(p) Labor Controversies. Except as set forth in Part P of the Schedule,
there are no controversies between Dayhill and any employees of Dayhill or any
unresolved labor union grievances or unfair labor practices or labor arbitration
proceedings pending or threatened relating to Dayhill and there are not any
organizational efforts presently being made or threatened involving any of
Dayhill's employees. Dayhill has not received notice of any claim that it has
not complied with any laws relating to wages, hours, collective bargaining, the
payment of social security and similar taxes, equal employment opportunity,
employment discrimination or employment safety, or that it is liable for any
arrears of wages or any taxes or penalties for failure to comply with any of the
foregoing.
(q) Use of Real Property. The real properties leased by Dayhill are
used and operated in compliance and conformity in all material respects with all
applicable leases, contracts, commitments, licenses and permits. Dayhill has not
received notice of violation of any applicable zoning or building regulation,
ordinance or other law, order, regulation or requirement relating to the
operations of Dayhill and to Dayhill's knowledge there is no such violation .
All plants and other buildings which are leased by Dayhill conform in all
material respects with all applicable ordinances, codes, regulations and
requirements, and no law or regulation presently in effect or condition
precludes or restricts continuation of the present use of such properties.
(r) Accounts Receivable. The accounts receivable reflected on the
unaudited balance sheet of Dayhill included in the Dayhill Financial Statements,
and all accounts receivable of Dayhill arising since the date of such balance
sheet arose from bona fide transactions in the ordinary course of business, and
the materials or services involved have been provided to the account obligor,
and, except as contemplated by the relevant contract, no further materials or
services are required to be provided in order to complete the sales and to
entitle Dayhill, or their assignees, to collect the accounts receivable in full.
Except as set forth in Part R of the Schedule, no such account receivable has
been assigned or pledged to any other person, firm or corporation, and no
defense or setoff to any such account has been asserted by the obligor.
(s) Inventories. Intentionally left blank.
(t) Compliance with Environmental Laws. Except as set forth in Part T
of the Schedule:
9
(i) Dayhill is in compliance with all environmental laws,
regulations, permits and orders applicable to them, and with all laws,
regulation, permits and orders governing or relating to asbestos
removal or abatement.
(ii) Except for temporary storage on premises pending
arrangement for removal, Dayhill has not transported, stored, treated
or disposed of, nor has it allowed or arranged for any third parties to
transport, store, treat or dispose of, hazardous substances or other
waste to or at any location other than a site lawfully permitted to
receive such hazardous substances or other waste for such purposes; and
Dayhill has not performed, arranged for or allowed by any method or
procedure such transportation, storage, treatment or disposal in
contravention of any laws or regulations. Dayhill has not disposed, or
allowed or arranged for any third parties to dispose, of hazardous
substances or other waste upon property owned or leased by it.
(iii) To the best of Dayhill's knowledge, there has not
occurred, nor is there presently occurring, a Release of any hazardous
substance on, into or beneath a surface of any parcel of real property
in which Dayhill has or has had an ownership interest or any leasehold
interest. For purposes of this Section the term"Release" shall mean
releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, disposing, or dumping.
(iv) Dayhill has not transported or disposed of, nor have they
allowed or arranged for any third parties to transport of dispose of,
any hazardous substance or other waste to or at a site which, pursuant
to the U.S. Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA") or any similar state law,
(A) has been placed on the National Priorities List or its state
equivalent, or (B) the Environmental Protection Agency or the relevant
state agency has proposed or is proposing to place the National
Priorities List or its state equivalent. Dayhill has not received
notice, or has knowledge, of any facts which could give rise to any
notice that Dayhill is a potentially responsible party for a federal or
state environmental cleanup site or for corrective action under CERCLA
or any other applicable law or regulation. Dayhill has not submitted
nor was required to submit any notice pursuant to Section 103(c) of
CERCLA. Dayhill has not received any written or oral request for
information in connection with any federal or state environmental
cleanup site or has undertaken (or been requested to undertake) any
response or remedial actions or cleanup actions of any kind at the
request of any federal, state, or local governmental entity, or at the
request of any other person or entity.
(v) There are no laws, regulation, ordinances, licenses,
permits or orders relating to environmental or worker safety matters
requiring any work, repairs, construction or capital expenditures with
respect to the assets or properties of Dayhill.
10
(vi) Part T of the Schedule identifies (A) all environmental
audits, assessments or occupational health studies undertaken by
Dayhill or its agents or by any governmental agencies with respect to
the operations or properties of Dayhill; (B) the results of any
groundwater, soil air or asbestos monitoring undertaken with respect to
any real property owned or leased by Dayhill; (C) all written
communications of Dayhill with environmental agencies; and (D) all
citations issued with respect to Dayhill under the Occupational Safety
and Health Act (29 U.S.C. Sections 651 et seq.).
(u) Tools, Dies and Molds. Except as set forth in Part U of the
Schedule, all tools, dies and molds and electronic chip designs used in
connection with or required for the conduct of the business of Dayhill are owned
free and clear of any liens, claims or other encumbrances. Part U of the
Schedule sets forth the location of each such tool, die and mold which is not on
the Premises occupied by Dayhill.
(v) Representations and Warranties. All representations and warranties
set forth herein and each certificate furnished or to be furnished to Medical
Action or Acquisition pursuant hereto contains complete, accurate and true
statements of all material facts stated therein.
(w) Supplier's Raw Materials. Part W of the Schedule in connection with
the Products sets forth (a) the name and addresses of all suppliers (including,
without limitation, Dayhill and any facilities thereof) from which Dayhill
ordered raw materials, supplies, merchandise and other goods and services with
an aggregate purchase price for each such supplier of $2,500 or more during the
twelve month period ended August 31, 1997, and (b) the amount for which each
such supplier invoiced Dayhill during such period. Dayhill has not received any
notice or has any reason to believe that there has been any material adverse
change in the price of such raw materials, supplies, merchandise orother goods
or services, or that any such supplier will not sell raw materials, supplies,
merchandise and other goods to Acquisition at any time after the date of closing
on terms and conditions similar to those used in its current sales to Dayhill,
subject to general and customary price increases.
(x) Product Warranties. Except as set forth in Part X of the Schedule,
and for warranties under applicable law, (a) there are no warranties, express or
implied, written or oral, with respect to Products and (b) there are no pending
or threatened claims with respect to the Products and (b) there are no pending
or threatened claims with respect to any such warranty, and Dayhill has no
liability with respect to such warrant, whether known or unknown, absolute,
accrued, contingent or otherwise and whether due or to become due.
11
(y) Liability for Transfer Taxes. Dayhill shall be responsible for the
timely payment of, and shall indemnify and hold harmless Acquisition and Medical
Action against, all sales (including, without limitation, bulk sales) use, value
added, documentary, stamp gross receipts, convenience, excise, license and other
similar taxes and fees (the "Transfer Taxes") arising out of or in connection
with or attributable to the transactions affected pursuant to this Agreement.
Dayhill shall prepare and timely file all tax returns required to be filed in
respect of the Transfer Taxes.
(z) Territorial Restrictions. Dayhill is not restricted by any written
agreement or understanding with any other party from carrying on their business
anywhere in the world. Acquisition, solely as a result of its purchase of the
Assets from Dayhill pursuant hereto and the assumption of certain liabilities,
will not thereby become restricted in carrying on any business anywhere in the
world.
(aa) Customers. Part AA of the Schedule sets forth (a) the names and
addresses of all customers of Dayhill that ordered goods and services from
Dayhill with an aggregate value for each such customer of $2,500 or more during
the twelve month period ended August 31, 1997, and (b) the amount for which each
such customer was invoiced during such period. Dayhill has not received any
notice or has any reason to believe that any significant customer of Dayhill (i)
has ceased, or will cease, to use the Products, (ii) has substantially reduced
or will substantially reduce the use of the Products, or (iii) has sought, or is
seeking to, reduce the price it will pay for the Products, including in each
case after the consummation of the transactions contemplated hereby.
5. Each of Acquisition and Medical Action jointly and severally
represents and warrants to, and agrees with, Dayhill as follows:
(a) Organization of Acquisition and Medical Action.
Acquisition and Medical Action are corporations duly organized, validly existing
and in good standing under the laws of their respective jurisdictions of
incorporation.
(b) Authority of Acquisition and Medical Action. Acquisition
and Medical Action have the corporate power to enter into this Agreement and to
carry out the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by the Board of Directors and the sole stockholder of
Acquisition and by the Board of Directors of Medical Action; and (i) no other
corporate acts or proceedings on the part of Acquisition or Medical Action are
necessary to authorize this Agreement or the consummation of the transaction
contemplated hereby, and (ii) this Agreement constitutes the valid and legally
binding obligation of Acquisition and Medical Action enforceable against
Acquisition and Medical Action in accordance with its terms. This execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated hereby will not, violate or constitute a default under any
provision of the
12
Certificate of Incorporation or By-Laws of Acquisition or Medical Action or any
provision of (or result in the acceleration of any obligation under) any
mortgage, note, lien, lease, agreement, instrument, arbitration award, judgment
or decree to which either of Acquisition or Medical Action is a party or by
which they are bound or to which any of their property is subject, or any laws
of the United States or any state or jurisdiction in which Acquisition or
Medical Action conducts business.
(c) Consents, etc. No consent, authorization, order or
approval of, or filing or registration with, any governmental commission, board
or other regulatory body is required for or in connection with the execution and
delivery of this Agreement by Acquisition and Medical Action and the
consummation by Acquisition and Medical Action and the consummation by
Acquisition and Medical Action of the transactions contemplated hereby.
(d) Finder's Fee. No brokers or finders were employed by
Acquisition or Medical Action in connection with any of the transactions
contemplated by this Agreement.
(e) The closing shall take place at Dayhill Corporation, 0000
X. Xxxxxx Xxxxxx, Xxxxx Xxx, Xxxxxxxxxx 00000 on October 30, 1997 at 10:00 a.m.
At the time of the closing, upon delivery by Acquisition on the consideration as
described in paragraph 3(a) hereof, Dayhill shall execute and deliver to
Acquisition a Xxxx of Sale and such other instruments as may be necessary to
transfer to Acquisition all of the Assets. Dayhill shall also deliver possession
of the Premises. The Xxxx of Sale and other instruments will contain the usual
warranties and affidavits of title and will effectively transfer to Acquisition
full title to the Assets, free and clear of all liens, security interests and
encumbrances (except to the extent set forth in Exhibit "C"). The time and date
of such closing is herein called the "closing" or "closing date".
6. Dayhill covenants and agrees with Acquisition as follows:
(a) Fitness of Machinery and Equipment. All machinery and
equipment owned or leased and presently used by Dayhill is fit for the purposes
for which it is used and is in good operating condition, ordinary wear and tear
excepted. The use and operation of all such machinery and equipment conform to
all applicable ordinances and regulations and other laws.
(b) Certification of Stockholder Vote. Prior to the closing,
Dayhill shall deliver to Acquisition a certificate of its secretary setting
forth the unanimous approval by Dayhill stockholders of (i) the adoption of this
Agreement and (ii) the transactions contemplated hereby.
13
(c) Bulk Sale Notice. Dayhill shall prepare, deliver and file
in accordance with Section 6105 of the California Uniform Commercial Code a
"Notice of Bulk Sale" to all of Dayhill's creditors indicating its intention to
transfer substantially all of its assets to Acquisition, substantially in the
form of Exhibit "D" annexed hereto.
7. Conditions to Obligations of Each Party. The obligations of the
parties to consummate the transactions contemplated hereby shall be subject to
the fulfillment on or prior to the Closing Date of the following conditions:
(a) No Injunction, etc. Consummation of the transactions
contemplated hereby shall not have been restrained, enjoined or otherwise
prohibited by any applicable law, including any order, injunction, decree or
judgment of any court or other Governmental Authority and no proceeding with
respect to the application of any such applicable law to such effect shall be
pending.
(b) Asset Acquisition Statement. Medical Action and Dayhill
shall, within sixty (60) days of Closing, complete and execute Form 8594, Asset
Acquisition Statement, under Section 1060 of the Internal Revenue Code, and
deliver a copy of such form to the other party. In addition, each party will
file such form in its tax returns for all periods which include the Closing
Date.
8. Conditions to Obligations of Acquisition and Medical Action. The
obligations of acquisition and Medical Action to consummate the transactions
contemplated hereby shall be subject to the fulfillment (or waiver by
Acquisition and Medical Action) on or prior to the date of closing of the
following conditions, which Dayhill agrees to use reasonable good faith efforts
to cause to be fulfilled.
(a) Representation, Performance. The representations and
warranties of Dayhill contained in this Agreement (a) shall be true and correct
in all material respects on and as of the date hereof, and (b) shall be repeated
and shall be true and correct in all material respects on and as of the date of
closing with the same effect as though made on and as of the date of closing.
Dayhill shall have duly performed and complied in all material respects with all
agreements and conditions required to be performed or complied with by it prior
to or on the date of closing and signed by its duly authorized officers, to the
foregoing effect.
(b) Consents. Dayhill shall obtain such governmental permits,
orders or consents, if any, as may be required in connection with the
transactions contemplated by this Agreement, including but not limited to the
consent of the lessor of the Premises to the assignment of such lease to
Acquisition. Acquisition shall also have received an estoppel certificate
addressed to Acquisition from the lessor, dated as of the date of closing,
identifying the lease documents and any amendments thereto, stating that the
lease is in full force and effect and, to the best knowledge of the lessor, that
Dayhill is not in
14
default under the lease and no event has occurred that, with notice or lapse of
time or both, would constitute a default by Dayhill under the lease and
containing any other information reasonably requested by Acquisition.
(c) No Material Adverse Effect. No event, occurrence, fact,
condition, change, development or effect shall have occurred since August 31,
1997 that, individually or in the aggregate, has constituted or resulted in, or
could reasonably be expected to constitute or result in, a material adverse
effect to the business of Dayhill.
(d) Related Agreements. Concurrently with the Closing of this
Agreement, the respective parties have entered into each of the following
agreements:
(i) An Employment Agreement in the form attached
hereto as Exhibit "E", pursuant to which Medical Action will
employ Xxx Xxxxxx for a three (3) year period commencing on
the date of closing;
(ii) A Non-Competition Agreement in the form attached
hereto as Exhibit "F", pursuant to which Xxx Xxxxxx agrees not
to directly or indirectly engage in any business competitive
with the assets acquired hereunder for a period of five (5)
years;
(iii) A Consulting Agreement in the form attached
hereto as Exhibit "G", pursuant to which Xxxx Xxxxxx will
advise Medical Action on certain matters pertaining to the
business acquired hereunder for a five (5) year period.
(iv) An Escrow Agreement in the form attached hereto
as Exhibit "H", pursuant to which a warrant for the purchase
of 35,000 shares of Medical Action common stock shall be
released to Xxx Xxxxxx on achieving certain financial results.
(e) Opinion of Counsel. Acquisition shall have received an
opinion dated the Closing from Xxxxx X. Xxxxxxx, Esq., counsel for Dayhill,
that:
(i) Dayhill is a corporation duly and validly
organized, legally existing and in good standing under the
laws of the jurisdiction of its incorporation with corporate
power and authority to own its properties and to conduct its
business as then being conducted;
(ii) Dayhill is not required to be qualified to do
business as a foreign corporation in any jurisdiction where
they are not so qualified and where failure to so qualify will
have a material adverse effect on the financial condition or
operations thereof;
15
(iii) The authorized, issued and outstanding capital
stock of Dayhill is as stated in such opinion, the outstanding
shares have been duly and validly authorized and issued and
are fully paid and nonassessable; and there are no preemptive
or similar rights on the part of the holders of any class of
securities of Dayhill;
(iv) Dayhill has full corporate power to carry out
the transactions contemplated by this Agreement; this
Agreement has been duly executed and delivered by Dayhill; all
necessary corporate action has been taken by Dayhill and its
Board of Directors and stockholders to authorize Dayhill to
execute and deliver this Agreement and to consummate the
transactions contemplated hereby; and this Agreement is a
valid and legally binding obligation of Dayhill, enforceable
against Dayhill in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency, moratorium or
other similar laws affecting creditors' rights generally or by
general principles of equity;
(v) The execution, delivery and performance by
Dayhill of this Agreement and the consummation of the
transaction contemplated by this Agreement will not constitute
a violation of any provision of the Certificate of
Incorporation or By-Laws of Dayhill or, giving effect to any
consents which may have been obtained, of any material
agreement, instrument or other document known to such counsel
after reasonable investigation, to or by which Dayhill is a
party or is bound, or any judgment, decree or order known to
such counsel after reasonable investigation, of any court or
other governmental authority which is binding on Dayhill or
any of its property;
(vi) To the best knowledge and information of such
counsel, there is no material litigation or governmental
proceeding pending or threatened against Dayhill which has not
been disclosed in this Agreement;
(vii) No consent or approval by any governmental
authority which has not been obtained is required in
connection with the consummation by Dayhill of the
transactions contemplated by this Agreement.
(f) Corporate Proceedings. All corporate proceedings of
Dayhill in connection with this Agreement and the transactions contemplated
hereby, and all documents and instruments incidental thereto, shall be
reasonable satisfactory in substance and form to Acquisition and its counsel,
and Acquisition and its counsel shall have received all such documents and
instruments, or copies thereof (certified, if requested), as may be reasonable
requested.
16
9. Conditions to Obligations of Dayhill. The obligations of Dayhill to
consummate the transactions contemplated hereby shall be subject to the
fulfillment (or waiver by Dayhill), on or prior to the Closing Date, of the
following additional conditions, which Acquisition and Medical Action agree to
use reasonable good faith efforts to cause to be fulfilled.
(a) Representation, Performance. The representations and
warranties of Acquisition and Medical Action contained in this Agreement shall
be true and correct inall material respects on and as of the date hereof, and
(b) shall be repeated and shall be true and correct in all material respects on
and as of the date of closing with the same effect as though made on and as of
the date of closing. Acquisition and Medical Action shall have duly performed
and complied in all material respects with all agreements and conditions
required by its respective agreement to be performed or complied with by them
prior to or on the date of closing. Acquisition and Medical Action shall have
delivered to Dayhill a certificate, dated the date of closing and signed by its
duly authorized officers, to the foregoing effect.
(b) Permits, Orders and Consents Medical Action and
Acquisition shall, in connection herewith, comply with all applicable securities
laws and will obtain such governmental permits, orders or consents, if any, as
may be required in connection with the transactions contemplated by this
Agreement.
(c) No Material Adverse Effect. No event, occurrence, fact,
condition, change, development or effect shall have occurred since July 31, 1997
that, individually or in the aggregate, has constituted or resulted in, or could
reasonable be expected to constitute or result in, a material adverse effect.
(d) Related Agreements. Medical Action shall have entered into
the Related Agreements with Xxx Xxxxxx and PB Consulting, Inc.
(e) Legal Opinion. Dayhill shall have received an opinion
dated the Closing Date from Xxxxxxx X. Satin, Esq., General Counsel of Medical
Action and Acquisition, that:
(i) Each of Medical Action and Acquisition is a
corporation validly organized, legally existing and in good
standing under the laws of its respective jurisdiction of
incorporation with full corporate power and authority to own
their properties and to conduct their businesses as they are
then being conducted;
(ii) The authorized, issued and outstanding capital
stock of Acquisition is as stated in such opinion; the
outstanding shares of capital stock of Acquisition are owned
of record and beneficially by Medical Action;
17
(iii) Each of Medical Action and Acquisition has full
corporate power to carry out the transactions contemplated by
this Agreement; this Agreement has been duly executed and
delivered by each of Medical Action and Acquisition and all
necessary corporate action has been taken by each of Medical
Action and Acquisition, their Board of Directors and
shareholders in order to consummate the transactions
contemplated by this Agreement, to execute and deliver this
Agreement and to make this Agreement the valid and legally
binding obligation of each of Medical Action and Acquisition
enforceable against Medical Action and Acquisition in
accordance with the terms, except as may be limited by
applicable bankruptcy, insolvency, moratorium, or other
similar laws affecting creditors' rights generally or by
general principles of equity;
(iv) The execution, delivery and performance of this
Agreement by Medical Action and Acquisition and the
consummation of the transactions contemplated by this
Agreement will not constitute a violation of any provision of
the certificate of Incorporation of Medical Action or
Acquisition or either of their By-Laws or, to the best of such
counsel's knowledge, under any agreement or other document to
or by which Medical Action or Acquisition is a party or is
bound or any judgment, decree, or order of any court or other
governmental authority which is binding on Medical Action and
Acquisition or any of their properties; and
(v) No consent or approval by any governmental
authority which has not been obtained is required in
connection with the consummation by Medical Action and
Acquisition of the transaction contemplated by this Agreement.
(f) Corporate Proceedings. All corporate proceedings of
Acquisition and Medical Action in connection with this Agreement and the Related
Agreements and the transactions contemplated hereby, and all documents and
instruments incidental thereto, shall be reasonable satisfactory in substance
and form to Dayhill and its counsel, and Dayhill and its counsel shall have
received all such documents and instruments, or copies thereof (certified, if
requested), as may be reasonably requested.
18
10. Reliance by Counsel. In rendering any opinion referred to herein,
counsel may rely, as to any factual matters involved in their opinion, on
certificates of public officials and of corporate officers, opinions of
corporate general counsel, and such other evidence as such counsel may
reasonable deem appropriate and, as to matters governed by DGCL or the laws of
jurisdictions other than the United States or the State of New York, an opinion
of local counsel in such jurisdictions, which counsel shall be satisfactory to
the other parties in the exercise of their reasonable judgment.
11. Notices. Any notice to a party hereto pursuant to this Agreement
shall be in writing, shall be deemed given when received, and shall be delivered
personally or sent by certified or registered mail or be telecopier addressed as
follows;
To Acquisition:
Medical Action Industries Inc.
000 Xxxxx Xxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Att: Xxxx X. Xxxxxxxxx, President
Telecopier No.: 000-000-0000
with a copy to:
Xxxxxxx X. Satin, Esq.
000 Xxxxx Xxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Telecopier No.: 000-000-0000
To Dayhill:
Dayhill Corporation
0000 X. Xxxxxx Xxxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Telecopier No.: 000-000-0000
19
with a copy to:
Xxxx Xxxxxxxx, Esq.
0000 Xxxxxxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
12. Entire Agreement; Law Governing This Agreement together with all
other agreements contemplated hereby (a) constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof, (b) may be executed in
several counterparts, each of which will be deemed an original and all of which
shall constitute one and the same instrument, and (c) except as otherwise stated
in any other agreement, shall be governed in all respects, including validity,
interpretation and effect, by the internal substantive laws if the State of
Delaware.
13. Publicity and Disclosures. No press releases or public disclosures
of the transactions contemplated by this Agreement, either oral or written,
shall be made without theprior written consent of all the parties hereto,
provided, however, that no such consent shall be required if (a) in the opinion
of counsel for the party proposing to make such press release or public
disclosure, such press release and/or public disclosure is required by
applicable law, rules or regulations or by stock exchange requirement, and (b)
time does not permit the obtaining of approval by the other parties.
14. Survival of Representations and Warranties. The representations,
warranties and covenants of Dayhill, Acquisition and Medical Action contained in
this Agreement, or in any instrument delivered by each of them hereunder, shall
survive the closing.
15. Headings. The headings and captions of the sections and subsections
of this Agreement are included for convenience of reference only and shall have
no effect on the construction or meaning of this Agreement.
20
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
DAYHILL CORPORATION
By: /s/ Xxx Xxxxxx
-------------------------------
Xxx Xxxxxx, President
/s/ Xxxx Xxxxxx
------------------------------------
Xxxx Xxxxxx
MEDICAL ACTION INDUSTRIES INC.
By: /s/ Xxxx X. Xxxxxxxxx
-------------------------------
Xxxx X. Xxxxxxxxx, President
DAYHILL ACQUISITION CORP.
By: /s/ Xxxx X. Xxxxxxxxx
-------------------------------
Xxxx X. Xxxxxxxxx, President
