STOCK PURCHASE AND SALE AGREEMENT
(AVC)
AGREEMENT dated as of March 14, 1997, by and between the individuals
named in Section 1.1 below (referred to herein individually as "Seller" and
collectively as "Sellers") and HEALTHCARE HEARING CLINICS, INC., a Washington
corporation ("Purchaser").
RECITALS
A. Auditory-Vestibular Center, Inc., a California corporation (the
"Company"), operates an audiology and hearing aid clinic in Northridge,
California, which performs testing and evaluation of patients' hearing,
prescribes and fits hearing aids, and provides related services and products.
▇. ▇▇▇▇▇▇▇ own all shares of the issued and outstanding capital stock
of the Company (the "Shares").
C. Purchaser and Sellers desire that Purchaser acquire ownership of the
Company through a purchase of the Shares.
TERMS
In consideration of the premises and of the mutual covenants,
representations, warranties and agreements contained herein, the parties agree
as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 Ownership of Shares. The Shares are owned by Sellers as follows:
Sellers Shares Percentage
------- ------ ----------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 250 33-1/3
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 250 33-1/3
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇-▇/▇
=== ======
750 100
1.2 Purchase and Sale of Shares. At the Closing (as defined in Section
2.1), on the terms and subject to the conditions set forth in this Agreement,
Sellers shall sell and deliver to Purchaser, and Purchaser shall purchase the
Shares from Sellers.
1.3 Purchase Price. Subject to adjustment as set forth in Section 1.4
hereof, the purchase price for the Shares (the "Purchase Price") shall be a
total of $84,306 payable to Sellers as follows:
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Sellers
-------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ $28,102
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 28,102
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 28,102
------
$84,306
At the Closing, Purchaser shall pay the Purchase Price to Sellers by certified
or cashier's check.
1.4 Purchase Price Adjustments. The Purchase Price shall be subject to
post- closing adjustment as set forth below:
(a) Accounts Receivable. On the 200th day following the
Closing, Sellers shall reimburse Purchaser on a pro rata basis in an
amount equal to the total of the accounts receivable reflected on the
Statement of Net Working Capital (as defined in subsection 1.4(c)(i)
below) net of the allocable portion of the reserve for bad debts, which
remain uncollected as of such date provided that with respect to the
accounts receivable listed on Schedule 1.4(a) attached hereto, the
reimbursement date shall be the first anniversary of the Closing date.
Upon such reimbursement, the uncollected accounts shall be assigned to
Sellers. During such 200-day period (or the 365-day period with respect
to the accounts receivable listed on Schedule 1.4(a), Sellers may
participate in the collection process of such accounts receivable. In
the event the total amount collected with respect to accounts
receivable reflected on the Statement of Net Working Capital exceeds
the amount of such accounts receivable net of the applicable reserve
for bad debts, Purchaser shall pay the excess to Sellers pro rata on
the 200th day following Closing.
(b) Liabilities. Sellers acknowledge that the Purchase Price
was negotiated on the assumption that Company would have no long-term
liabilities, including debt. In the event that at Closing Company has
long-term liabilities, Sellers shall pay to Purchaser, on a pro rata
basis, an amount equal to the total of any such long-term liabilities.
(c) Net Working Capital Adjustment.
(i) For purposes of this Agreement, "Net Working
Capital" shall equal (i) cash, money market accounts, accounts
receivable (net of reasonable provisions for doubtful
accounts), cash surrender value of life insurance policies,
tax refunds receivable, and prepaid expenses including rental
payments if paid in advance, as of Closing less (ii) all
current liabilities of the Company as of Closing, including
but not limited to liabilities for inventory, office supplies,
ordinary compensation payables, employee benefits and taxes
(excluding accrued paid time off for vacation and sick leave),
bonuses (including all related payroll taxes and employee
benefits), personal and real property taxes, water, gas,
electric and other utility charges, business and
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other license fees and taxes (excluding fees for audiology and
hearing aid dispensing licenses), merchants' association dues,
rental payments under any leases, any customer refunds for
hearing aids delivered prior to Closing, and all other
operating liabilities (including legal, accounting, and other
professional fees and expenses incurred in the ordinary course
of business), vendor accounts payable and intercompany
accounts. In computing Net Working Capital, (i) all hearing
aids ordered but not fitted to the patient as of the Closing
date will not be included in accounts receivable and (ii) all
payments made by Company with respect to such hearing aid
orders shall be treated as prepaid items.
(ii) As promptly as practicable following the
Closing, but in no event later than 45 days thereafter,
Sellers and Purchaser shall cooperate in preparing a mutually
agreeable statement of the Net Working Capital which shall set
forth the computation and components thereof in reasonable
detail (the "Statement of Net Working Capital").
(iii) On the fifteenth day after the date on which
the Statement of Net Working Capital is completed (or such
earlier date as such statement is mutually agreed upon by
Sellers and Purchaser in writing), (i) in the event that the
Net Working Capital exceeds $20,000, then Purchaser shall pay
to Sellers pro rata an amount equal to the excess, or (ii) in
the event that Net Working Capital is less than $20,000, then
Sellers shall pay to Purchaser, pro rata, the amount of the
deficiency.
1.5 Purchase Price Offset. The Company has made loans to Sellers as
follows (the "Loan Amounts"): ▇▇▇▇▇▇, $4,902.96; ▇▇▇▇▇▇▇, $3,566.00; and
Tanihana, $6,656.00. At Closing, each Seller shall be paid his or her portion of
the Purchase Price less the Loan Amount due from each such Seller which shall be
paid by Purchaser to the Company to satisfy each such Seller's indebtedness to
the Company.
ARTICLE II
CLOSING
2.1 Closing. The closing of the transaction provided for herein (the
"Closing") shall occur on such date on or before February 28, 1997, and at such
time and place as the parties shall mutually agree.
2.2 Closing Transactions. The following actions shall be taken at
Closing, each of which shall be conditional on completion of all the others and
all of which shall be deemed to have taken place simultaneously:
(a) Deliveries by Sellers. Sellers shall deliver to Purchaser:
(i) Certificates representing the Shares;
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(ii) An opinion of counsel to Sellers, dated as of
the Closing date, substantially in the form of Schedule
2.2(a)(ii) attached hereto; and
(iii) The stock and minute books of the Company;
(iv) All consents required in connection with the
transactions contemplated hereunder.
(b) Deliveries by Purchaser. Purchaser shall deliver to
Sellers:
(i) The payments provided for in Section 1.3; and
(ii) An opinion of counsel to Purchaser, dated as of
the Closing date, substantially in the form of Schedule
2.2(b)(ii) attached hereto.
(c) Joint Delivery. Purchaser and Sellers shall execute and
deliver counterparts of the Noncompetition Agreements provided for in
Section 6.5(a) hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Except as otherwise set forth in the Disclosure Statement attached
hereto as Schedule III, Sellers represent and warrant to Purchaser as set forth
below in this Article III. Subject to the limitations set forth in Section
8.1(a), the Sellers shall be jointly and severally liable for breaches of such
representations and warranties except to the extent otherwise expressly set
forth in Section 3.1(b) hereof.
3.1 Corporate.
(a) Organization. The Company is a corporation duly organized
and existing under the laws of the state of California.
(b) Capitalization. The authorized capital stock of the
Company consists of 2,000 shares of a single class of common stock, of
which 750 shares are issued and outstanding. All issued and outstanding
Shares have been validly issued and are fully paid and nonassessable.
Each Seller separately warrants that such Seller is the owner of the
number of shares shown in Section 1.1 hereof (beneficially and of
record) free and clear of all liens, claims, and encumbrances
whatsoever. The Shares constitute all the outstanding shares of capital
stock of the Company. Except for a Buy-Out Agreement to which the
Sellers are parties, no person has any agreement, option or other
right, present or future, to purchase or otherwise acquire any of the
shares of Company. Such Buy-Out Agreement will be terminated effective
as of the Closing date.
(c) Corporate Power. The Company has all requisite corporate
power and authority to own, operate and lease its properties and to
carry on its business as and where such is now being conducted.
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(d) No Subsidiaries. The Company does not own an interest in
any corporation, partnership or other entity.
(e) Articles of Incorporation; Bylaws. The copies of Company's
articles of incorporation (certified by the Secretary of State of
California) and bylaws (certified by Company's secretary) which have
heretofore been delivered to Purchaser are complete and correct as
amended or restated to the date hereof.
3.2 No Violation. Neither the execution and delivery of this Agreement
or the other documents and instruments to be executed and delivered by the
Sellers pursuant hereto, nor the consummation by the Sellers of the transactions
contemplated hereby and thereby (a) will violate any statute or law or any rule,
regulation, order, writ, injunction or decree of any court or governmental
authority, (b) will require any authorization, consent, approval, exemption or
other action by or notice to any court, administrative or governmental agency,
instrumentality, commission, authority, board or body or (c) will violate or
conflict with, or constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, or will result in the
termination of, or accelerate the performance required by, or result in the
creation of any material Lien (as defined in Section 3.8(b)) upon any of the
assets of the Company under, any term or provision of the articles of
incorporation or bylaws of the Company or of any material contract, commitment,
understanding, arrangement, agreement or restriction of any kind or character to
which the Company is a party or by which the Company or any of the Company's
assets or properties or the shares of the Company may be bound or affected.
3.3 Financial Statements. The Sellers have heretofore delivered to
Purchaser the following financial statements of the Company including balance
sheets and statements of income (the "Financial Statements"):
(a) Financial Statements for the Company's 1993, 1994, and
1995 fiscal years; and
(b) Financial Statements for the interim period ended November
30, 1996.
The Financial Statements are correct and complete in all material respects and
fairly present the financial condition of the Company at the dates indicated and
results of its operations and changes in its financial position for the periods
then ended.
3.4 Absence of Certain Changes. Since the date of the most recent
balance sheet included in the Financial Statements, there has not been:
3.4(a) Adverse Change. Any material adverse change in the
financial condition, assets, liabilities, business, prospects or
operations of the Company;
3.4(b) Damage. Any material loss, damage or destruction,
whether covered by insurance or not, affecting the Company's business
or assets;
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3.4(c) Increase in Compensation. Any increase in the
compensation, salaries or wages payable or to become payable to any
employee or agent of the Company (including, without limitation, any
increase or change pursuant to any bonus, pension, profit sharing,
retirement or other plan or commitment), or any bonus or other employee
benefit granted, made or accrued;
3.4(d) Labor Disputes. Any labor dispute or disturbance, other
than routine individual grievances which are not material to the
business, financial condition or results of operations of the Company;
3.4(e) Commitments. Any commitment or transaction by the
Company (including, without limitation, any capital expenditure) other
than in the ordinary course of business consistent with past practice;
3.4(f) Dividends. Any declaration, setting aside, or payment
of any dividend or any other distribution in respect of the Company's
capital stock; any redemption, purchase or other acquisition by the
Company of any capital stock of the Company, or any security relating
thereto; or any other payment to any Shareholder as a shareholder;
3.4(g) Disposition of Property. Any sale, lease or other
transfer or disposition of any properties or assets of the Company
except for sales of inventory, consumption of supplies, and nonmaterial
dispositions of worn or broken parts and equipment in the ordinary
course of business;
3.4(h) Indebtedness. Any indebtedness for borrowed money
incurred, assumed or guaranteed by the Company other than changes in
the Company's line of credit in the ordinary course of business;
3.4(i) Amendment of Contracts. Any entering into, amendment or
termination by the Company of any contract, or any waiver of material
rights thereunder, other than in the ordinary course of business;
3.4(j) Loans, Advances, or Credit. Any loan or advance or any
grant of credit by the Company; or
3.4(k) Unusual Events. Any other event or condition
specifically related to the Company not in the ordinary course of
business which would have a material adverse effect on the assets or
the business of the Company.
3.5 Absence of Undisclosed Liabilities. Except as and to the extent
specifically disclosed in the most recent balance sheet included in the
Financial Statements or this Agreement, the Company does not have any
liabilities other than commercial liabilities and obligations incurred since the
date of such balance sheet in the ordinary course of business consistent with
past practices none of which has or will have a material adverse effect on the
business, financial condition or results of operations of the Company.
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3.6 No Litigation. There is no action, suit, arbitration, proceeding,
investigation or inquiry pending or to the knowledge of the Sellers threatened
against the Company, its directors (in such capacity), its business or any of
its assets, nor do the Sellers know of any such proceeding, investigation or
inquiry threatened against the Company. The Disclosure Schedule identifies all
actions, suits, proceedings, investigations and inquiries to which the Company
has been a party since January 1, 1993. Neither the Company nor its business or
assets are subject to any judgment, order, writ or injunction of any court,
arbitrator or federal, state, foreign, municipal or other governmental
department, commission, board, bureau, agency or instrumentality.
3.7 Compliance With Laws.
3.7(a) Compliance. The Company (including each and all of its
operations, practices, properties and assets) is in material compliance
with all applicable federal, state, local and foreign laws, ordinances,
orders, rules and regulations (collectively, "Laws"), including,
without limitation, those applicable to discrimination in employment,
occupational safety and health, trade practices, environmental
protection, competition and pricing, product warranties, zoning,
building and sanitation, employment, retirement and labor relations,
and product advertising except to the extent any noncompliance would
not have a material adverse effect upon the assets or the business of
the Company taken as a whole. The Company has not received notice of
any violation or alleged violation of, and is not subject to liability
for past or continuing violation of, any Laws. All reports and returns
required to be filed by the Company with any governmental authority
have been filed, and were accurate and complete when filed except to
the extent any deficiency would not have a material adverse effect upon
the assets or the business of the Company taken as whole.
3.7(b) Licenses and Permits. The Company has obtained all
licenses, permits, approvals, authorizations and consents of all
governmental and regulatory authorities and all certification
organizations required for the conduct of its businesses (as presently
conducted) except to the extent failure to do so would not have a
material adverse effect upon the assets or the business of the Company
taken as a whole. All such licenses, permits, approvals, authorizations
and consents are described in the Disclosure Schedule and are in full
force and effect. The Company (including its operations, properties and
assets) is and has been in compliance with all such permits and
licenses, approvals, authorizations and consents, except to the extent
any noncompliance would not have a material adverse effect upon the
assets or the business of the Company taken as a whole.
3.8 Title to and Condition of Properties.
3.8(a) Real Property. Except as set forth on the Disclosure
Schedule, the Company does not own any interest in any real property
other than the leases referred to in Section 3.10(a) hereof.
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3.8(b) Personal Property. The Company has good and marketable
title to all its assets, free and clear of all mortgages, liens
(statutory or otherwise), security interests, claims, pledges,
equities, options, conditional sales contracts, assessments, levies,
easements, covenants, reservations, restrictions, exceptions,
limitations, charges or encumbrances of any nature whatsoever
(collectively, "Liens"). All the Company's tangible assets are located
at the business premises leased by the Company. No personal property
owned by Sellers is located at Company's business premises.
3.8(c) Condition. All the Company's tangible assets are, taken
as a whole, in good operating condition and repair, normal wear and
tear excepted.
3.8(d) Land Use Regulations. There are no condemnation,
environmental, zoning, land use, or other regulatory proceedings,
pending or, to the knowledge of the Sellers, planned to be instituted,
that could detrimentally affect the ownership, use, or occupancy of the
real property presently occupied by the Company or the continued
operation of the Company's business as it is presently being conducted.
3.9 Insurance. The Company maintain policies of fire, liability,
product liability, workers compensation, health and other forms of insurance
with such coverage limits and deductible amounts as are reasonable and prudent
in light of the nature of its assets and the risks of its business.
3.10 Contracts and Commitments.
3.10(a) Leases. Set forth in Schedule 3.10(a) of the
Disclosure Schedule is a list of all real and personal property leases
to which the Company is a party. Complete and correct copies of each
lease listed on the schedule, and all amendments thereto, have
heretofore been made available to Purchaser.
3.10(b) Purchase Commitments. Set forth in Schedule 3.10(b) of
the Disclosure Schedule is a list of all agreements (written or oral)
between the Company and third parties for the purchase of goods and
supplies by the Company which individually call for the payment by the
Company after the date hereof of more than $1,000 or which obligate the
Company for a period of more than 90 days from the date hereof.
Complete and correct copies of all such written agreements have
heretofore been made available to Purchaser.
3.10(c) Sales Commitments. Set forth in Schedule 3.10(c) of
the Disclosure Schedule is a list and description of all presently
effective agreements (written or oral) between the Company and third
parties for the distribution and sale of its products. Complete and
correct copies of all such written contracts have heretofore been made
available to Purchaser.
3.10(d) Contracts With Sellers and Certain Others. Except for
the employment relationships which exist between the Sellers and the
Company, the
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Company has no agreement, understanding, contract or commitment
(written or oral) with any Seller, or any relative of a Seller.
3.10(e) Collective Bargaining Agreements. The Company is not a
party to any collective bargaining agreement with any union.
3.10(f) Loan Agreements. Except as set forth on the Disclosure
Schedule, the Company is not obligated under any loan agreement,
promissory note, letter of credit, or other evidence of indebtedness as
signatories, guarantors or otherwise.
3.10(g) Guarantees. The Company has not under any instrument
which is presently effective guaranteed the payment or performance of
any person, firm or corporation, agreed to indemnify any person or act
as a surety, or otherwise agreed to be contingently or secondarily
liable for the obligations of any person.
3.10(h) Restrictive Agreements. The Company is not a party to
nor is it bound by any agreement requiring it to assign any interest in
any trade secret or proprietary information, or prohibiting or
restricting it from competing in any business or geographical area or
soliciting customers or otherwise restricting it from carrying on its
business anywhere in the world.
3.10(i) Other Material Contracts. The Company is not a party
to any lease, license, contract (including without limitation contracts
with health maintenance organizations) or commitment of any nature
involving consideration or other expenditure in excess of $1,000, or
involving performance over a period of more than 90 days from the date
hereof, or which is otherwise individually material to the operations
of the Company, except as set forth in Schedule 3.10(i) of the
Disclosure Schedule.
3.10(j) No Default. The Company is not in default under any
lease, agreement, contract or commitment, nor has any event or omission
occurred which through the passage of time or the giving of notice, or
both, would constitute a default thereunder or cause the acceleration
of any of the Company's obligations or result in the creation of any
Lien on any of the assets owned, used or occupied by the Company. To
the knowledge of the Sellers, no third party is in default under any
lease, agreement, contract or commitment to which the Company is a
party, nor has any event or omission occurred which, through the
passage of time or the giving of notice, or both, would constitute a
default thereunder or give rise to an automatic termination, or the
right of discretionary termination thereof.
3.11 Employee Benefit Plans. Set forth in Schedule 3.11 of the
Disclosure Schedule, is a description of all pension, profit sharing,
retirement, bonus, executive or deferred compensation, hospitalization and other
similar fringe or employee benefit plans, programs and arrangements, and any
employment or consulting contracts, "golden parachutes," severance agreements or
plans, vacation and sick leave plans including, without limitation, all
"employee benefit plans" (as defined in Section 3(3) of the Employee
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Retirement Income Security Act of 1974, as amended ("ERISA")), all employee
manuals, and all written or binding oral statements of policies, practices or
understandings relating to employment, which are provided to, for the benefit
of, or relate to, any persons employed by the Company. The items described in
the foregoing sentence are hereinafter sometimes referred to collectively as
"Employee Plans/Agreements." True and correct copies of all written Employee
Plans/Agreements, including all amendments thereto, have heretofore been
provided to Purchaser. The Company is in compliance with and have made all
payments due under all Employee Plans/Agreements and with respect thereto the
Company is in compliance with all applicable federal and state laws and
regulations. The Company is not a contributor to any multi-employer pension plan
which has an unfunded liability with respect to benefits due its participants.
3.12 Employment Compensation. Set forth in Schedule 3.12 of the
Disclosure Schedule is a true and correct list of:
(a) All employees to whom the Company is paying compensation;
and in the case of salaried employees such list identifies the current
annual rate of compensation for each employee and in the case of hourly
or commission employees identifies certain reasonable ranges of rates
and the number of employees falling within each such range;
(b) All amounts owed to employees of the Company (including
the Sellers) for accrued sick pay, vacation pay, and bonus pay.
3.13 Patents, Trademarks, etc. Set forth in Schedule 3.13 of the
Disclosure Schedule attached hereto is a list of all United States and foreign
trademarks, service marks, trade names, brand names, copyrights, including
registrations and applications, patent and patent applications, and employee
covenants and agreements respecting intellectual property ("Trade Rights") in
which the Company now has any interest, specifying the basis on which such Trade
Rights are owned, controlled, used or held (under license or otherwise) by the
Company, and also indicating which of such Trade Rights are registered. All
Trade Rights shown as registered in Schedule 3.13 of the Disclosure Schedule
have been properly registered, all pending registrations and applications have
been properly made and filed and all annuity, maintenance, renewal and other
fees relating to registrations or applications are current. In order to conduct
the business of the Company, as such is currently being conducted, the Company
does not require any Trade Rights that it does not already have. The Company is
not infringing and has not infringed on any Trade Rights of another in the
operation of its business, nor to the knowledge of the Sellers is any other
person infringing on the Trade Rights of the Company. The Company has not
granted any license or made any assignment of any Trade Right and no other
person has any right to use any Trade Right owned or held by the Company. The
Company does not pay any royalties or other consideration for the right to use
any Trade Rights of others. Except as set forth in Schedule 3.13 of the
Disclosure Schedule, to the knowledge of Sellers, there are no inquiries,
investigations or claims or litigation challenging or threatening to challenge
the Company's right, title and interest with respect to its continued use and
right to preclude others from using any Trade Rights of the Company. To the
knowledge of Sellers, all Trade
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Rights of the Company are valid, enforceable and in good standing, and there are
no equitable defenses to enforcement based on any act or omission of the
Company.
3.14 Product Warranty and Product Liability. Set forth in Schedule 3.14
of the Disclosure Schedule is a true, correct and complete copy of the Company's
standard warranty or warranties for sales of its products.
3.15 Tax Matters. The Company has properly completed and filed in
correct form all federal, state, and other tax returns (including Forms 1099 and
other informational returns) of every nature required to be filed by it and has
paid all taxes (whether or not requiring the filing of returns) including all
deficiencies, assessments, additions to tax, penalties and interest of which
notice has been received to the extent such amounts have become due. The Company
has obtained all required Forms W-9. Complete and correct copies of the
Company's federal and California income tax returns for 1993, 1994, and 1995
have been delivered by the Sellers to Purchaser. All tax liabilities have been
fully and properly reflected in the Financial Statements. The income tax returns
of the Company have not been examined by the Internal Revenue Service. There are
no outstanding agreements or waivers extending the statutory period of
limitation for any federal or state tax return of the Company for any period.
The Company has made all required deductions and payments and has properly
prepared and delivered all required documents in connection with the withholding
of taxes from the wages and other compensation of its employees. The Company has
filed all sales/use tax returns and have paid all such taxes for all states in
which they have responsibility to do so. The Company has obtained and maintains,
to the extent required by law, a current sales and use tax exemption certificate
for each customer to which it makes tax-exempt sales.
3.16 Key Employees; Bank; Etc. Set forth in Schedule 3.16 of the
Disclosure Schedule is a list showing:
(a) The names of all the Company's officers and directors;
(b) The name of each bank at which the Company has (i) an
account and the numbers of all accounts, (ii) a line of credit, or
(iii) a safe deposit box and the name of each person authorized to draw
thereon or have access thereto; and
(c) The name of each person holding a power of attorney from
the Company and a summary of the terms thereof.
3.17 Records. The books of account of the Company fairly reflect the
items of income and expense and the assets, liabilities, and accruals of its
business and operations.
3.18 Disclosure. No representation or warranty by the Sellers in this
Agreement, nor any statement, certificate, schedule or exhibit hereto furnished
or to be furnished by or on behalf of the Sellers pursuant to this Agreement,
nor any document or certificate delivered to Purchaser pursuant to this
Agreement or in connection with transactions contemplated
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hereby, contains or shall contain any untrue statement of material fact or omits
or shall omit a material fact necessary to make the statements contained therein
not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Sellers as follows:
4.1 Corporate.
(a) Organization. Purchaser is a corporation duly organized
and validly existing under the laws of the state of Washington.
(b) Corporate Power. Purchaser has all requisite corporate
power and authority to own, operate and lease its properties, to carry
on its business as and where such is now being conducted, to enter into
this Agreement and the other documents and instruments to be executed
and delivered by Purchaser pursuant hereto and to carry out the
transactions contemplated hereby and thereby.
(c) Authority. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been
duly authorized by the board of directors of HealthCare. This Agreement
constitutes the valid and binding agreement of Purchaser, enforceable
against Purchaser in accordance with its terms.
(d) Qualification. Purchaser is duly licensed or qualified to
do business as a foreign corporation, and is in good standing, in each
jurisdiction wherein the character of the properties owned or leased by
it, or the nature of its business, makes such licensing or
qualification necessary.
4.2 No Violation. Neither the execution and delivery of this Agreement
or the other documents and instruments to be executed and delivered by Purchaser
pursuant hereto, nor the consummation by Purchaser of the transactions
contemplated hereby and thereby (a) will violate any statute or law or any rule,
regulation, order, writ, injunction or decree of any court or governmental
authority, (b) will require any authorization, consent, approval, exemption or
other action by or notice to any court, administrative or governmental agency,
instrumentality, commission, authority, board or body, or (c) will violate or
conflict with, or constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, or will result in the
termination of, or accelerate the performance required by, or result in the
creation of any material Lien upon any of the assets of Purchaser under, any
term or provision of the Articles of Incorporation or By-laws of Purchaser or of
any material contract, commitment, understanding, arrangement, agreement or
restriction of any kind or character to which Purchaser is a party or by which
Purchaser or any of its assets or properties may be bound or affected.
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4.3 Disclosure. No representation or warranty by Purchaser in this
Agreement nor any statement, certificate, schedule or exhibit hereto furnished
or to be furnished by or on behalf of Purchaser pursuant to this Agreement, nor
any document or certificate delivered to Purchaser pursuant to this Agreement or
in connection with transactions contemplated hereby, contains or shall contain
any untrue statement of material fact or omits or shall omit a material fact
necessary to make the statements contained therein not misleading.
ARTICLE V
COVENANTS
5.1 Covenants of Sellers.
(a) Access to Information and Records. The Sellers agree that
during the period after the date hereof and prior to the Closing,
Purchaser, its counsel, accountants and other representatives shall be
provided (i) reasonable access during normal business hours to all of
the properties, books, records, contracts and documents of the Company
for the purpose of such inspection, investigation and testing as
Purchaser deems appropriate (and Sellers shall furnish or cause to be
furnished to Purchaser and its representatives all information with
respect to the business and affairs of the Company as Purchaser may
reasonably request); (ii) reasonable access to employees and agents of
the Company for such meetings and communications as Purchaser
reasonably desires; and (iii) with the prior consent of the Company in
each instance (which consent shall not be unreasonably withheld),
access to vendors, customers, and others having business dealings with
the Company.
(b) Conduct of Business Pending the Closing. The Sellers agree
that from the date hereof until the Closing, except as otherwise
approved in writing by Purchaser:
(i) No Changes. The Company will carry on its
business diligently and in the same manner as heretofore and
will not make or institute any changes in its methods of
purchase, sale, management, accounting or operation.
(ii) Maintain Organization. The Company will use its
best efforts to maintain, preserve, renew and keep in force
and effect the existence, rights and franchises of the Company
and to preserve the business organization of the Company
intact, to keep available to Purchaser the present officers
and employees of the Company, and to preserve for Purchaser
its present relationships with suppliers and customers and
others having business relationships with the Company.
(iii) No Breach. The Company will use its best
efforts to avoid any act, or any omission to act, which may
cause a breach of any material contract, commitment or
obligation, or any breach of any representation, warranty,
covenant or agreement made by the Sellers.
- 13 -
(iv) No Material Contracts. No contract or commitment
will be entered into, and no purchase of assets (tangible or
intangible) will be made, by or on behalf of the Company,
except contracts, commitments, purchases or sales which are in
the ordinary course of business and consistent with past
practice.
(v) No Corporate Changes. The Company shall not amend
its Articles of Incorporation or Bylaws or make any changes in
its authorized or issued capital stock; the Company shall not
grant any option or other right to acquire any share of its
authorized capital stock;
(vi) Maintenance of Insurance. The Company shall
maintain all of its insurance in effect as of the date hereof
or replace such insurance with comparable coverage and shall
procure such additional insurance as shall be reasonably
requested by Purchaser at Purchaser's expense.
(vii) Maintenance of Property. The Company shall use,
operate, maintain and repair all its assets and properties in
a normal business manner consistent with the Company's past
practices.
(viii) Interim Financials. The Company will provide
Purchaser with interim monthly financial statements and other
management reports as and when they are available.
(ix) No Dividends. The Company shall not declare or
pay any dividend (whether in cash, stock or property) or make
any other distribution to the Sellers, except for the
repayment of loans made by the Sellers to the Company.
(x) Compensation. The Company shall not increase the
compensation or benefits of any of its employees nor make any
other change in the terms of their employment.
(c) Repayment of Sellers' Loans. As of the date hereof, the
Company is indebted to the Sellers as set forth on Schedule 5.1(c). For
purposes of Section 1.4(b) hereof, such debts shall not be deemed to be
long-term liabilities. Notwithstanding any other provision of this
Agreement, on or prior to the Closing date, Sellers shall have the
right to cause the Company to repay such indebtedness to the extent the
Company has funds available for such purposes. To the extent any such
debts are not paid prior to Closing, (i) such debts shall be taken into
account in computing the Net Working Capital adjustment provided for in
Section 1.4(c), and (ii) Purchaser shall cause the Company to pay all
such debts at the time the Net Working Capital adjustment is made
pursuant to Section 1.4(c)(iii). To the extent necessary, Purchaser
shall advance funds to the Company for such debt repayment.
- 14 -
(d) Reimbursement of Sick and Vacation Pay. In preparing the
Statement of Net Working Capital it has been agreed that no accrual
shall be made for sick and vacation pay entitlements for employees of
Company. In consideration of this exclusion, Sellers agree to reimburse
Purchaser for any sick or vacation pay payments Purchaser is required
to make to former employees of Company who become employees of
Purchaser and whose employment terminates for any reason within the
first six months following the Closing date to the extent such payments
relate to accruals of sick or vacation pay prior to the Closing date.
5.2 Release of Sellers' Personal Guarantees. Certain Sellers have
provided personal guarantees or have otherwise become individually liable with
respect to certain leases, line of credit agreements, purchase agreements with
manufacturers, or other agreements for the benefit for the Company, including,
without limitation, those described on Schedule 5.2. Following the Closing,
Purchaser will use its best efforts to obtain the release of the Sellers from
all such personal liabilities. To the extent that any such release cannot be
obtained, Purchaser will indemnify and hold the Sellers harmless with respect to
any loss, cost, or expense the Sellers may incur as a result of not being
released.
ARTICLE VI
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS
Each and every obligation of Purchaser to be performed at Closing shall
be subject to the satisfaction prior to or at the Closing (or the waiver by
Purchaser) of each of the following conditions:
6.1 Representations and Warranties True at Closing. Each of the
representations and warranties made by the Sellers in this Agreement, or in any
instrument, schedule, list, certificate or writing delivered by Sellers pursuant
to this Agreement, shall be true and correct when made and shall be true and
correct in all material respects at and as of the Closing as though such
representations and warranties were made as of the Closing.
6.2 Compliance With Agreement. The Sellers shall have in all material
respects performed and complied with all of their agreements and obligations
under this Agreement which are to be performed or complied with by them prior to
or on the Closing, including the delivery of the closing documents specified in
Section 2.2(a) hereof.
6.3 Absence of Suit. No action, suit, investigation or proceeding
before any court or any governmental authority shall have been commenced or
threatened, against Purchaser, the Company or any of the affiliates, officers or
directors of any of them, seeking to restrain, prevent or change the
transactions contemplated hereby, or questioning the validity or legality of any
such transactions, or seeking damages in connection with, or imposing any
condition on, any such transactions; provided that the obligations of Purchaser
shall not be affected unless there is a reasonable likelihood that as a result
of such action, suit, investigation, or proceeding Purchaser will be unable to
retain substantially all the practical benefits of the transaction to which it
is entitled under this Agreement.
- 15 -
6.4 Approvals; Consents. All consents, permits, approvals, licenses or
orders from any governmental or regulatory body or other third party required to
be obtained by Sellers for the consummation of the transactions contemplated by
this Agreement shall have been obtained except where failure to obtain such
consents, permits, approvals, licenses or orders would not have a material
adverse effect (whether or not such effect is referred to or described in any
Schedule) on the business, prospects, financial conditions, assets, reserves or
operations of the Company taken as a whole.
6.5 Noncompetition Agreements. Each Seller shall have executed and
delivered to Purchaser a Noncompetition Agreement substantially in the form
attached hereto as Schedule 6.5.
ARTICLE VII
CONDITIONS PRECEDENT TO THE SELLERS' OBLIGATIONS
Each and every obligation of the Sellers to be performed at Closing
shall be subject to the satisfaction prior to or at the Closing (or the waiver
by the Sellers) of the following conditions:
7.1 Representations and Warranties True at Closing. Each of the
representations and warranties made by Purchaser in this Agreement, or in any
instrument, list, certificate or writing delivered by Purchaser pursuant to this
Agreement, shall be true and correct when made and shall be true and correct at
and as of the Closing as though such representations and warranties were made as
of the Closing.
7.2 Compliance With Agreement. Purchaser shall have in all material
respects performed and complied with all of Purchaser's agreements and
obligations under this Agreement which are to be performed or complied with by
Purchaser prior to or on the Closing, including the delivery of the closing
documents specified in Section 2.2(b) hereof.
7.3 Absence of Suit. No action, suit, investigation, or proceeding
before any court or any governmental authority shall have been commenced or
threatened against Purchaser, the Company or any of the affiliates, officers or
directors of any of them, seeking to restrain, prevent or change the
transactions contemplated hereby, or questioning the validity or legality of any
such transactions, or seeking damages in connection with, or imposing any
condition on, any such transactions; provided that the obligations of the
Sellers shall not be affected unless there is a reasonable likelihood that as a
result of such action, suit, proceeding or investigation, the Sellers will be
unable to retain substantially all the consideration to which they are entitled
under this Agreement.
7.4 Noncompetition Agreements. Purchaser shall have executed and
delivered to each Seller a Noncompetition Agreement substantially in the form
attached hereto as Schedule 6.5.
- 16 -
ARTICLE VIII
INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS
8.1 Indemnification by the Sellers.
(a) The Sellers hereby agree to indemnify, defend, and hold
Purchaser (and its directors, officers, shareholders, employees,
affiliates, agents and assigns) harmless from and against all Claims
(as defined below) asserted against, resulting to, imposed upon, or
incurred by Purchaser directly or indirectly by reason of, arising out
of, or resulting from (a) the inaccuracy or breach of any
representation or warranty of the Sellers contained in or made pursuant
to this Agreement or (b) the non-performance or breach of any covenant,
term or provision to be performed by the Sellers contained in this
Agreement. The indemnification obligation of Sellers hereunder is with
respect to the full amount of the Claims (as defined below). As used in
this Article VIII, the term "Claim" shall include any and all losses,
liabilities, damages, deficiencies, assessments, judgments, awards,
settlements, costs, and expenses including without limitation
penalties, court costs, and attorney fees and expenses at trial and on
appeal. Notwithstanding the foregoing, Sellers' indemnity obligations
shall be subject to the following limitations:
(i) Sellers shall be responsible for indemnifying
Purchaser only to the extent Claims in the aggregate exceed
the sum of $1,500.
(ii) Each Seller shall be solely responsible for
indemnification with respect to such Seller's warranty of
title regarding Seller's Shares and such Seller's warranty
regarding the absence of liens and encumbrances applicable to
such Shares;
(iii) Each Seller's liability with respect to a Claim
shall be limited to a percentage of such Claim equal to such
Seller's percentage ownership of the Shares as set forth in
Section 1.1; and
(iv) Each Seller's maximum liability to Purchaser for
indemnification shall not exceed an amount equal the portion
of the Purchase Price being paid to such Seller as set forth
in Section 1.3 hereof.
(v) Any Claims shall be asserted by Purchaser jointly
against Sellers on a uniform basis and any waiver, compromise
or settlement of a Claim offered by Purchaser shall be offered
on the same terms to all Sellers.
(b) Purchaser's right to indemnification as provided in this
Section 8.1 shall not be eliminated, reduced or modified in any way as
a result of the fact that (i) Purchaser had notice of a breach or
inaccuracy of any representation, warranty or covenant contained herein
(except as set forth in the Disclosure Schedule), (ii) Purchaser had
been provided with access, as requested by Purchaser, to officers and
- 17 -
employees of the Company and such of Company's books, documents,
contracts and records as has been provided to Purchaser in response to
Purchaser's requests.
8.2 Indemnification by Purchaser. Purchaser hereby agrees to indemnify,
defend, and hold harmless the Sellers from and against all Claims asserted
against, resulting to, imposed upon, or incurred by the Sellers directly or
indirectly by reason of, arising out of, or resulting from (a) the inaccuracy or
breach of any representation or warranty of Purchaser contained in or made
pursuant to this Agreement or in any of the documents delivered pursuant hereto,
or (b) the non-performance or breach of any covenant, term or provision to be
performed by Purchaser contained in this Agreement or in any of the documents
delivered pursuant hereto. The indemnification obligation of Purchaser hereunder
is with respect to the full amount of the Claims.
8.3 Notice; Defense of Claims. If a claim is to be made by a party
entitled to indemnification hereunder, the party entitled to such
indemnification shall give written notice to the indemnifying party immediately
after the party entitled to indemnification becomes aware of any fact, condition
or event which may give rise to a matter for which indemnification may be
sought; provided that the failure of any indemnified party to give timely notice
shall not affect the rights to indemnification hereunder except to the extent
that the indemnifying party demonstrates actual damage caused by such failure.
If any lawsuit or enforcement action is filed against any party entitled to the
benefit of indemnity hereunder, and if the indemnifying party shall acknowledge
in writing to the indemnified party that the indemnifying party shall be
obligated under the terms of its indemnity hereunder in connection with such
lawsuit, action or claim, then the indemnifying party shall be entitled, if it
so elects, to take control of the defense and investigation of such lawsuit or
action and to employ and engage attorneys of its own choice to handle and defend
the same, at the indemnifying party's cost, risk and expense provided that the
indemnifying party and its counsel shall proceed with diligence and in good
faith with respect thereto. The indemnified party shall cooperate in all
reasonable respects with the indemnifying party and such attorneys in the
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom; provided, however, that the indemnified party may, at its own
cost, participate in the investigation, trial and defense of such lawsuit or
action and any appeal arising therefrom.
8.4 Survival of Representations. All representations and warranties
made by the parties in this Agreement are made only as of the date of this
Agreement but will survive the consummation of the transactions contemplated by
this Agreement until October 31, 1998 (except for the representations and
warranties of the Sellers set forth in Section 3.10 hereof which shall expire 90
days after the applicable statutes of limitation shall have run with respect to
all tax returns filed by the Company for all periods ended on or before the
Closing), after which all such representations and warranties shall expire
except with respect to claims asserted in writing prior to such date.
- 18 -
ARTICLE IX
MISCELLANEOUS
9.1 Termination.
(a) Right of Termination Without Breach. This Agreement may be
terminated without further liability of any party at any time prior to
the Closing:
(i) By mutual written agreement of the parties, or
(ii) By either Purchaser or the Sellers if the
Closing shall not have occurred on or before the 90th day
after the date hereof, provided the terminating party has not,
through breach of a representation, warranty or covenant,
prevented the Closing from occurring on or before such date.
(b) Termination for Breach.
(i) Termination by Purchaser. If there has been a
material breach by the Sellers of any of their agreements,
representations or warranties contained in this Agreement
which has not been waived in writing by Purchaser, then
Purchaser may, by written notice to Sellers at any time prior
to the Closing that such breach is continuing, terminate this
Agreement with the effect set forth in Section 9.1(b)(iii)
hereof.
(ii) Termination by Sellers. If there has been a
material breach by Purchaser of any of its agreements,
representations or warranties contained in this Agreement
which has not been waived in writing by the Sellers, then the
Sellers may, by written notice to Purchaser at any time prior
to the Closing that such breach is continuing, terminate this
Agreement with the effect set forth in Section 9.1(b)(iii).
(iii) Effect of Termination. Termination of this
Agreement pursuant to this Section 9.1 shall not in any way
terminate, limit or restrict the rights and remedies of any
party hereto against any other party which has breached or
failed to perform any of the representations, warranties,
covenants, or agreements of this Agreement prior to
termination hereof.
9.2 Waiver. Sellers or Purchaser may (a) extend the time for the
performance of any of the obligations or other acts of the other, (b) waive any
inaccuracies in the representations and warranties of the other contained herein
or in any document delivered pursuant hereto and (c) waive compliance with any
of the agreements of the other or satisfaction of any of the conditions to its
obligations contained herein. Any extension or waiver made pursuant to this
Section 9.2 must be by an instrument in writing signed on behalf of the party
granting the extension or waiver. A waiver by any party of any provision hereof
or breach hereof shall not operate or be construed as the waiver of any other
provision or any subsequent breach.
- 19 -
9.3 Binding Effect; No Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
legal representatives. This Agreement is not assignable and any purported
assignment shall be null and void. Nothing contained in this Agreement shall be
deemed to confer any right or benefit upon any person other than the parties
hereto to the extent herein provided.
9.4 Dollars. "Dollars" and "$" mean lawful money of the United States
of America, which shall be legal tender on the date of payment for all public
and private debts.
9.5 Brokers and Finders. Sellers on the one hand and Purchaser on the
other, each agree to indemnify and hold the other harmless from and against any
claim made for a broker's or a finder's fee or other similar compensation (and
all related costs and expenses) asserted against an indemnified party which
arises out of or results from an action taken by an indemnifying party.
9.6 Headings; Severability. The headings in this Agreement are for
reference only, and shall not affect the interpretation of this Agreement. Each
and every provision of this Agreement shall be treated as separate and distinct
and, in the event of any provision hereof being declared invalid, such invalid
provision shall be deemed to be severable and all other provisions hereof shall
remain in full force and effect.
9.7 Schedules. The Schedules are a part of this Agreement as if fully
set forth herein.
9.8 Disclosures and Announcements. Both the timing and the content of
all disclosures to third parties and public announcements concerning the
transactions provided for in this Agreement by either Sellers or Purchaser shall
be subject to the approval of the other in all essential respects, except that
the Sellers' approval shall not be required as to any announcements or filings
Purchaser may be required to make under applicable laws or regulations.
9.9 Expenses. Sellers agree that all fees and expenses incurred by them
in connection with this Agreement shall be borne by Sellers including, without
limitation, all fees of counsel and accountants; and Purchaser agrees that all
fees and expenses incurred by it in connection with this Agreement shall be
borne by it, including, without limitation, all fees of counsel and accountants.
9.10 Notice. All notices, requests, demands and other communications
hereunder shall be given in writing and shall be: (a) personally delivered; (b)
sent by telecopier, facsimile transmission or other electronic means of
transmitting written documents; or (c) sent to the parties at their respective
addresses indicated herein by private overnight courier service. The respective
addresses and telephone numbers to be used for all such notices, demands or
requests are as follows:
- 20 -
If to Purchaser: HealthCare Hearing Clinics, Inc.
▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Personal & Confidential
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Miller, Nash, Wiener, Hager & ▇▇▇▇▇▇▇
▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: G. ▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Sellers: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: None
with a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇., ▇▇ ▇▇.
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, Carton & ▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If personally delivered, such communication shall be deemed delivered
upon actual receipt; if electronically transmitted, such communication shall be
deemed delivered the next business day after transmission (and the sender shall
bear the burden of proof of delivery); if sent by overnight courier pursuant to
this paragraph, such communication shall be deemed delivered upon receipt. Any
party to this Agreement may change its address for the purposes of this
Agreement by giving notice thereof in accordance with this section.
- 21 -
9.11 Resolution of Disputes.
(a) Arbitration. Any dispute, controversy or claim arising out
of or relating to this Agreement or the performance by the parties of
its terms shall be settled by binding arbitration held in Los Angeles,
California, in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect, except as specifically
otherwise provided in this Section 9.11. Notwithstanding the foregoing,
HealthCare, in its discretion, apply to a court of competent
jurisdiction for equitable relief from any violation or threatened
violation of the covenants of the Shareholders under Section 5.1(b) of
this Agreement.
(b) Arbitrators. If the matter in controversy (exclusive of
attorney fees and expenses) shall appear, as at the time of the demand
for arbitration, to exceed $50,000, then the panel to be appointed
shall consist of three neutral arbitrators; otherwise, one neutral
arbitrator.
(c) Procedures; No Appeal. The arbitrator(s) shall allow such
discovery as the arbitrator(s) determine appropriate under the
circumstances and shall resolve the dispute as expeditiously as
practicable, and if reasonably practicable, within 120 days after the
selection of the arbitrator(s). The arbitrator(s) shall give the
parties written notice of the decision, with the reasons therefor set
out, and shall have thirty (30) days thereafter to reconsider and
modify such decision if any party so requests within ten (10) days
after the decision. Thereafter, the decision of the arbitrator(s) shall
be final, binding, and nonappealable with respect to all persons,
including (without limitation) persons who have failed or refused to
participate in the arbitration process.
(d) Authority. The arbitrator(s) shall have authority to award
relief under legal or equitable principles, including interim or
preliminary relief, and to allocate responsibility for the costs of the
arbitration and to award recovery of attorney fees and expenses in such
manner as is determined to be appropriate by the arbitrator(s).
(e) Entry of Judgment. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having in personam and
subject matter jurisdiction. The Shareholders and HealthCare hereby
submit to the in personam jurisdiction of the federal and state courts
in California for the purpose of confirming any such award and entering
judgment thereon.
(f) Confidentiality. All proceedings under this Section 9.11,
and all evidence given or discovered pursuant hereto, shall be
maintained in confidence by all parties.
(g) Continued Performance. The fact that the dispute
resolution procedures specified in this Section 13 shall have been or
may be invoked shall not excuse any party from performing its
obligations under this Agreement, and during the pendency of any such
procedure all parties shall continue to perform their respective
obligations
- 22 -
in good faith, subject to any rights to terminate this Agreement that
may be available to any party.
9.12 Governing Law. This Agreement may not be modified or terminated
orally, and shall be construed and interpreted according to the internal law of
the state of California, excluding any choice of law rules that may direct the
application of the laws of another jurisdiction.
9.13 Counterparts. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all, of the parties hereto.
9.14 Entire Agreement. This instrument embodies the entire agreement
between the parties hereto with respect to the transactions contemplated herein,
and there have been and are no agreements, representations or warranties between
the parties other than those set forth or provided for herein.
9.15 Further Assurances. Both before and after the Closing, each party
will cooperate in good faith with the others and will take all appropriate
action and execute any documents, instruments, or conveyances of any kind that
may be reasonable necessary or desirable to carry out any of the transactions
contemplated hereunder.
9.16 Sellers Action. Whenever in this Agreement the Sellers are given
the discretion to take or not to take any action, the decision of the Sellers
shall be made pursuant to the vote of the Sellers holding a majority of the
Shares.
9.17 Termination of Restrictions. Upon the consummation of the
transactions provided for herein, any restrictions on the transfer of the Shares
shall be waived by Sellers and shall become void and of no further effect.
- 23 -
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement effective as of the date first above written.
SELLERS: PURCHASER:
HEALTHCARE HEARING CLINICS, INC., a
Washington corporation
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. Kawasaki
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇ ▇. Kawasaki
Vice President
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
The undersigned, being the spouses of the Sellers named in the foregoing Stock
Purchase and Sale Agreement, hereby relinquish all right, title, and interest,
including, without limitation, any community property rights under California
law to the Shares (as defined in such Agreement) and hereby consent and agree to
the transfer of such Shares pursuant to such Agreement.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
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SCHEDULES
Schedule 1.4(a) 365-Day Accounts Receivable
Schedule 2.2(a)(ii) Opinion of Sellers' Counsel
Schedule 2.2(b)(ii) Opinion of Purchaser's Counsel
Schedule III Disclosure Statement
Schedule 3.10(a) Leases
Schedule 3.10(b) Purchase Commitments
Schedule 3.10(c) Sales Commitments
Schedule 3.10(i) Other Material Contracts
Schedule 3.11 Employee Benefit Plans
Schedule 3.12 Employee Compensation
Schedule 3.13 Patents, Trademarks
Schedule 3.14 Product Warranty
Schedule 3.16 Key Employees; Banks
Schedule 5.1(c) Sellers' Loans
Schedule 5.2 Sellers' Personal Guarantees
Schedule 6.5 Noncompetition Agreement
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