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EXHIBIT 2.6
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of December 4, 1995, by and between
MEDICAL MOLDING CORPORATION OF AMERICA, a California corporation ("Seller") and
a wholly owned subsidiary of CIMCO, INC., a Delaware corporation, and ▇▇▇▇▇
▇▇▇▇▇ CA, INC., a California corporation (the "Purchaser") and a wholly owned
subsidiary of ▇▇▇▇▇ ▇▇▇▇▇, INC., a New Jersey corporation.
W I T N E S S E T H:
WHEREAS, the Seller desires to sell and transfer to the Purchaser, and
the Purchaser desires to purchase and assume from the Seller, certain of the
assets and liabilities, all as more specifically provided herein;
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and conditions
set forth herein, the Seller and the Purchaser agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1. Certain Definitions. As used in this Agreement, the
following terms have the respective meanings set forth below.
"Affiliate" means, with respect to any Person, any other Person who
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise, and the
terms "controlled" and "controlling" have meanings correlative thereto.
"Agreement" means this Asset Purchase Agreement.
"Assumed Liabilities" means those obligations of Seller which
Purchaser is assuming pursuant to Section 3.1 below.
"Auditor's Report" has the meaning ascribed to such term in Section
4.2.6.
"Authorizations" has the meaning ascribed to such term in Section 3.12.
"Business Day" means a day, other than a Saturday or Sunday, on which
commercial banks in New Jersey and California are open for the general
transaction of business.
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"Closing" has the meaning ascribed to such term in Section 4.7.
"Closing Date" has the meaning ascribed to such term in Section 4.7.
"Code" means the Internal Revenue Code of 1986, as amended.
"Debit Memo" means a memorandum issued by Seller to a vendor of Seller
asserting Seller's claim to a credit from such vendor with respect to
merchandise returned to vendor, promotional allowances earned, charge-backs or
otherwise.
"Division" means the operating division of Seller which designs,
develops, assembles and markets the Products (as hereinafter defined) from ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, provided, however, that the term
"Division", as used in this Agreement, shall specifically exclude the contract
manufacturing activities relating to items other than the Products undertaken
by Seller for third parties prior to the Closing date.
"Employee Benefit Plan" has the meaning ascribed to such term in
Section 5.19.
"Encumbrances" has the meaning ascribed to such term in Section 5.6.
"Environmental Laws" means any federal, state and local law, statute,
ordinance, rule, regulation, license, permit, authorization, approval, consent,
court order, judgment, decree, injunction, code, requirement or agreement with
any Governmental Authority, (x) relating to pollution (or the cleanup thereof
or the filing of information with respect thereto), human health or the
protection of air, surface water, ground water, drinking water supply, land
(including land surface or subsurface), plant and animal life or any other
natural resource, or (y) concerning exposure to, or the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production or disposal of Regulated Substances, in each case as
amended and as now or hereafter in effect. The term Environmental Law
includes, without limitation, (i) the Comprehensive Environmental Response
Compensation and Liability Act of 1980, the Water Pollution Control Act, the
Clean Air Act, the Clean Water Act, the Solid Waste Disposal Act (including the
Resource Conservation and Recovery Act of 1976 and the Hazardous and Solid
Waste Amendments of 1984), the Toxic Substances Control Act, the Insecticide,
Fungicide and Rodenticide Act, the Occupational Safety and Health Act of 1970,
each as amended and as now or hereafter in effect, and (ii) any common law or
equitable doctrine (including, without limitation, injunctive relief and tort
doctrines such as negligence, nuisance, trespass and strict liability) that may
impose liability or obligations for injuries or damages due to or threatened as
a result of the presence of, exposure to, or ingestion of, any Regulated
Substance.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Liabilities" means any and all liabilities or obligations of
the Seller or its Affiliates, of any kind or nature, whether or not relating to
the Division or the Purchased Assets, and whether known or unknown, absolute,
accrued, contingent or otherwise, or
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whether due or to become due, arising out of events or transactions or facts
occurring on, prior to, or after the Closing Date, other than the Assumed
Liabilities.
"FDA" shall mean the U.S. Food and Drug Administration and any
successor Governmental Agency having jurisdiction or regulatory oversight
authority over the design, manufacture, marketing and sale of the products
designed, marketed or sold by the Business or the other primary business
activities of Seller.
"Financial Statements" has the meaning ascribed to such term in
Section 5.10.
"GAAP" means generally accepted accounting principles as in effect in
the United States consistently applied.
"Governmental Authority" means any national, federal, state,
provincial, county, municipal or local government, foreign or domestic, or the
government of any political subdivision of any of the foregoing, or any entity,
authority, agency, ministry or other similar body exercising executive,
legislative, judicial, regulatory or administrative authority or functions of
or pertaining to government, including any authority or other
quasi-governmental entity established to perform any of such functions.
"Inventory" means any and all inventory, including raw materials, work
in process and finished goods, held by Seller in connection with the Division
and shown on SCHEDULE 5.9 hereof.
"Net Tangible Asset Value" means the aggregate amount of Purchased
Assets minus the aggregate amount of Trade Liabilities. "Initial Net Tangible
Asset Value" means the Net Tangible Asset Value as of October 31, 1995. "Final
Net Tangible Asset Value" means the Net Tangible Asset Value as of the Closing
Date, as set forth in the Auditor's Report.
"Operative Documents" means (i) in the case of the Seller the ▇▇▇▇ of
Sale, the Assignment and Assumption Agreement, and all instruments and any
other documents to be executed and delivered by Seller necessary for the
conveyance of the Purchased Assets to the Purchaser and (ii) in the case of the
Purchaser, any documents which this Agreement expressly provides are to be
executed and delivered by the Purchaser.
"Person" means an individual, partnership, corporation, joint stock
company, unincorporated organization or association, trust or joint venture, or
a governmental agency or political subdivision thereof.
"Products" mean a range of nebulizers, humidifiers, and other
respiratory care and related products (commonly referred to as the ▇▇▇▇▇ Ox
product line) offered for sale to customers of the Division in the ordinary
course of business prior to the Closing Date.
"Purchase Orders" means all outstanding purchase orders received from
customers of the Division in the ordinary course of business and all
outstanding purchase orders issued to suppliers of the Business in the ordinary
course of business; provided, however, that the term
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"Purchase Orders" shall not include any purchase order approved or issued by
Seller which is materially adverse, materially onerous or materially harmful to
any aspect of the Division, or any purchase order received from a customer of
the Division which does not include a ▇▇▇▇-up over estimated cost (based on
current actual cost experience) consistent with past ▇▇▇▇-ups on similar
business.
"Purchase Price" has the meaning ascribed to such term in Section 4.2.
"Purchased Assets" means all of the Seller's right, title and interest
in and to the following (but only to the extent that such assets are used in or
derived from the Division and do not constitute Retained Assets):
(i) to the extent reflected in the Auditor's Report, all of the
Seller's cash, money on deposit or in the process of collection with banks,
factors and others, certificates of deposit, commercial paper, letters of
credit, stock, bonds and other investment securities;
(ii) all machinery and equipment (including spare parts) and business
machines, automobiles, trucks, trailers, forklift trucks, and other vehicles,
furniture, fixtures, supplies, capital improvements in process, die, molds,
tools and all other tangible personal property employed in the conduct of the
business of the Division, but only to the extent reflected on SCHEDULE 5.6
hereof;
(iii) all raw material inventories, warehouse stock, parts,
inventories, material, supplies, work-in-progress and finished products,
packaging and shipping materials, but only to the extent reflected in SCHEDULE
5.9 hereof (the "Inventory");
(iv) all easements, rights of way, servitudes, leases, permits,
licenses or options used or held by the Division, if any, but only to the
extent reflected on any schedule hereto;
(v) all deposits, advances and manufacturer and supplier rebates to
the extent reflected in the Auditor's Report, but only to the extent shown on
SCHEDULE 1.1(B) hereto;
(vi) all prepaid rentals, deposits, advances, prepaid insurance and
other prepaid expenses to the extent reflected in the Auditor's Report, but
only to the extent shown on SCHEDULE 1.1(B) hereto;
(vii) all right, title and interest of the Seller in mortgages,
indentures, promissory notes, evidences of indebtedness, other debt, deeds of
trust, loan or credit agreements or similar agreements or instruments
evidencing indebtedness of customers (other than accounts receivable) to the
extent reflected in the Auditor's Report and as shown on SCHEDULE 1.1(B)
hereto;
(viii) all rights and claims of the Seller, whether mature,
contingent or otherwise, against third parties whether in tort, contract or
otherwise (but only to the extent accruing on and after the Closing Date), all
causes of action, unliquidated rights and claims under or pursuant to all
warranties, representations and guarantees made by manufacturers, suppliers
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or vendors (whenever accruing, but only to the extent relating to the Purchased
Assets listed in items (ii), (iii), or (xi) hereof), and all claims for
refunds, rights of off-set and credits of all kinds and all other general
intangibles (whenever accruing, but only to the extent relating to the
Purchased Assets listed in items (ii), (iii), or (xi) hereof);
(ix) all authorizations, consents, approvals, licenses, orders,
permits, exemptions of, filings or registrations with, any Governmental
Authority, including without limitation any and all 510K approvals issued by
the FDA and all correspondence relating thereto, but only to the extent shown
on SCHEDULE 5.12;
(x) all patents, patent registrations, patent applications,
trademarks, service marks, trademark and service ▇▇▇▇ registrations and
applications therefor shown on SCHEDULE 5.19 together with, copyrights,
copyright registrations, copyrights applications, trade and division or other
names used in the operation of the Division, technology, inventions, licenses
to use products and software, product drawings, trade secrets, know-how,
customer lists, processes, intellectual property and other proprietary
information or rights to the extent derived from or used in the conduct of
operations of the Division; and permits, licenses or other agreements to or
from third parties regarding the foregoing and listed on SCHEDULE 5.19 hereof
or that are related to the Products (the "Proprietary Rights");
(xi) all rights under any executory contract related to the Division
to which the Seller or any of its Affiliates is a party, any license
agreement, security agreement, indemnity agreement, subordination agreement,
mortgage, equipment lease or other lease or sublease, conditional sale or title
retention agreement and any purchase order from, or contract with, any customer
or supplier as listed on SCHEDULE 5.21;
(xii) restrictive covenants and obligations of present and former
employees, agents, representatives, and independent contractors of the Division
to the extent accruing on and after the Closing Date; all records, files and
correspondence relating to and necessary to the conduct of the business of the
Division (excluding tax returns, accounting records, and financial statements
and related schedules), drawings, engineering, manufacturing and assembly
information; all operating and training manuals, catalogs, quotations, bids,
sales and promotional materials, correspondence, trade association memberships
(to the extent transferable), research and development records, prototypes and
models, lists of present and former customers and suppliers, customer
information, business plans (whether prepared by the Seller or a third party)
relating to the Division; and the personnel, employment and other records
relating to the employees of the Division which are to be hired by the
Purchaser; and
(xiii) all accounts receivable of the Division as shown on the
Auditor's Report.
"Regulated Substances" means pollutants, contaminants, hazardous or
toxic substances, compounds or related materials or chemicals, hazardous
materials, hazardous waste, flammable explosives, radon, radioactive materials,
asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls,
petroleum and petroleum products (including, but not limited to, waste
petroleum and petroleum products) as regulated under applicable Environmental
Laws.
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"Retained Assets" means the assets listed on SCHEDULE 1.1(III).
"Trade Liabilities" means any and all accounts payable on unsecured
indebtedness of or relating to the business for goods or services purchased by
the Division in the ordinary course of business which is payable on ordinary
commercial terms consistent with the ordinary practice of the industry in which
the Division operates as shown on the Auditors' Report; provided, however, that
"Trade Liabilities" excludes any and all amounts for which the goods or
services to which they relate have not been received by the Division.
Section 1.2. Interpretation. Unless otherwise indicated to the
contrary herein by the context or use thereof: (i) the words, "herein,"
"hereto," "hereof" and words of similar import refer to this Agreement as a
whole and not to any particular Section or paragraph hereof; (ii) words
importing the masculine gender shall also include the feminine and neutral
genders, and vice versa; and (iii) words importing the singular shall also
include the plural, and vice versa.
ARTICLE II
PURCHASE AND SALE OF ASSETS
Section 2.1. Assets Acquired. Subject to the terms and conditions
of this Agreement, Seller agrees to sell, assign, convey, transfer and deliver
to Purchaser on the Closing Date, and Purchaser agrees to purchase and acquire
from Seller on the Closing Date, all of the Purchased Assets, free and clear of
all liens, security interests and encumbrances whatsoever.
ARTICLE III
LIMITATION OF ASSUMPTION OF LIABILITIES
Section 3.1. Liabilities Assumed. Purchaser agrees to assume the
following obligations of Seller:
3.1.1 to fill customer Purchase Orders not filled as of the
Closing Date which are assigned to Purchaser at the Closing as part of the
Purchased Assets and which either (a) are listed on SCHEDULE 3.1. or (b) were
accepted by Seller in the ordinary course of business prior to the Closing
Date, subject to Seller's obligations under Section 7.13. hereof.
3.1.2 to pay suppliers for goods received by Purchaser
after the Closing pursuant to Purchase Orders issued by Seller prior to the
Closing and assigned to Purchaser at the Closing as part of the Purchased
Assets and as detailed in SCHEDULE 3.1.
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3.1.3 to perform obligations arising after the Closing with
respect to the period after the Closing under the Contracts assigned to Buyer
at the Closing as part of the Purchased Assets and as detailed in SCHEDULE 3.1.
3.1.4 to assume Seller's Trade Liabilities, but only up to
the amount set forth in the Auditor's Report.
3.1.5 to assume and perform Seller's warranty and rework
obligations as provided by the written warranty policy provided by Seller to
its customers and only as detailed in SCHEDULE 3.1 with respect to the
products sold by the Division, subject to Seller's obligations under Section
7.14 hereof.
Section 3.2. Limitations. EXCEPT FOR THE OBLIGATIONS SET FORTH IN
SECTION 3.1, PURCHASER SHALL NOT ASSUME OR DISCHARGE ANY DEBTS, OBLIGATIONS,
LIABILITIES OR COMMITMENTS OF SELLER OR THE DIVISION WHETHER ACCRUED NOW OR
HEREAFTER, WHETHER FIXED OR CONTINGENT, AND WHETHER KNOWN OR UNKNOWN, INCLUDING
BUT NOT LIMITED TO ANY SEVERANCE, VACATION PAY OR ANY OTHER OBLIGATIONS TO
EMPLOYEES OF SELLER UNLESS SUCH OBLIGATIONS ARISE EXCLUSIVELY AS A RESULT OF
EMPLOYMENT OF SUCH PERSONS BY PURCHASER. SELLER SHALL INDEMNIFY AND HOLD
HARMLESS PURCHASER FOR AND WITH RESPECT TO ALL EXCLUDED LIABILITIES, PURSUANT
TO SECTION 10.2 BELOW.
ARTICLE IV
PURCHASE PRICE; METHOD OF PAYMENT; ALLOCATION
Section 4.1. Purchase Price. The purchase price payable under
(the "Purchase Price") shall equal the sum of the following:
4.1.1 the Final Net Tangible Asset Value; plus
4.1.2 $900,000.
Section 4.2. Calculation of the Final Net Tangible Asset Value.
The Final Net Tangible Asset Value shall be calculated as follows:
4.2.1 At the Closing, the Seller and Purchaser shall each approve the
Balance Sheet of the Division as of November 30, 1995, which shall be
consistent with this Agreement and the Schedules hereto and as shall be
reasonably agreed upon by Seller and Purchaser. The November 30, 1995 Balance
Sheet shall reflect the "Estimated Value" of the Net Tangible Asset Value.
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4.2.2 Promptly after the Closing, but in any event within ten (10)
business days after the Closing Date, the parties will reasonably cooperate to
develop a Balance Sheet of the Division as of the Closing Date ("Closing
Balance Sheet"). The Closing Balance Sheet will be computed and prepared by
acceptance of the November 30, 1995 Balance Sheet and the application of GAAP
to account for changes therein occurring since November 30, 1995 to the Closing
Date, consistent with the principles and interim adjustments agreed upon at the
Closing. The Net Tangible Asset Value established as of the Closing Date shall
be the "Final Net Tangible Asset Value" for all purposes of this Agreement.
4.2.2.1 Such Closing Balance Sheet shall contain separate
line items for each type of asset and liability as detailed in SCHEDULE 5.10.
4.2.2.2 Inventory which is damaged, dirty, obsolete or
otherwise not currently saleable in the ordinary course of business shall not
be included in Inventory for purposes of this Agreement or the calculation of
Net Tangible Asset Value and shall be retained by Seller. The Inventory shall
be calculated on the basis of one or more appropriately timed physical counts
made by Seller and Purchaser.
4.2.2.3 No Debit Memo balances shall be deducted from Trade
Liabilities unless and until the applicable vendor has accepted the applicable
Debit Memo in writing.
4.2.2.4 Goodwill and all other intangible assets (other than
patents, which shall be valued at book value) shall be valued at zero for
purposes of such Closing Balance Sheet.
4.2.3 If Purchaser or Seller should object to such Closing Balance
Sheet on the grounds that it has not been prepared in accordance with this
Agreement, it may give written notice of such objection to the other party
within seven (7) days after its receipt of such Closing Balance Sheet. If no
such assertion is made within such seven (7) day period, or if Buyer and Seller
agree upon all matters in dispute, such balance sheet, as adjusted to reflect
any such agreements, shall be final and binding upon the parties hereto for the
purpose of determining the final Net Tangible Asset Value.
4.2.4 If Purchaser and Seller are unable to resolve all items in
dispute within ten (10) days after receipt of a party's written objection to
the above-mentioned Closing Balance Sheet, then such items shall be resolved by
the offices of Coopers & ▇▇▇▇▇▇▇ in Chicago. The determination of such third
party accounting form shall be final and binding upon all parties hereto for
purposes of calculating the final Net Tangible Asset Value. Both parties will
use their best efforts to resolve these matters as rapidly as possible.
4.2.5 Purchaser shall pay the costs and fees of the Purchaser and
Seller shall pay the costs and fees of the Seller, in connection with the
foregoing examination and preparation and review of the above-mentioned Closing
Balance Sheet. The fees of any third-party firm employed pursuant to the
provisions of Section 4.2.4 shall be borne one-half by Buyer and one-half by
Seller.
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4.2.6 After all adjustment required pursuant to Sections 4.2.3 and
4.2.4 have been made to such Closing Balance Sheet, the Seller and Purchaser or
the independent Accountant shall prepare a report (the "Auditor's Report")
reflecting the aggregate dollar amount of Assets set forth on such adjusted
balance sheet and the aggregate dollar amount of Trade Liabilities set forth on
such adjusted balance sheet. The Final Net Tangible Asset Value shall equal
(x) the aggregate amount of Assets set forth in such Auditor's Report less (y)
the aggregate amount of Trade Liabilities set forth in such Auditor's Report.
Section 4.3. Payment of the Purchase Price. The purchase price
described above shall be paid as follows:
4.3.1 At the Closing, Purchaser shall
4.3.1.1 wire funds to Seller's lender, ▇▇▇▇▇ Fargo
Bank, pursuant to wire transfer instructions to be provided by ▇▇▇▇▇ Fargo Bank
("Seller's Lender") in the amount of (i) $900,000 plus (ii) the Estimated
Value minus (iii) the "Withheld Sum" equal to ten percent (10%) of the
Estimated Value (in the aggregate, the "Cash Portion").
Section 4.4. Withheld Sum. Within seven (7) days following
determination of the Final Net Tangible Asset Value pursuant to Section 4.2
above, the Purchaser shall hold the Withheld Sum and pay or credit it in
accordance with this Section 4.4.
4.4.1 If the Estimated Value exceeds the Final Net Tangible
Asset Value, Purchaser may retain for itself the amount of such excess, without
interest thereon, from the Withheld Sum. In such event the balance of the
Withheld Sum, if any, shall be wired to the Seller's Lender.
4.4.2 If the Final Net Tangible Asset Value equals or is
greater than the Estimated Value, Purchaser shall wire the entire Withheld Sum,
without interest thereon, to the Seller's Lender.
4.4.3 If the Final Net Tangible Asset Value exceeds the
Estimated Value in addition to delivery of the Withheld Sum as provided in
Section 4.4.2, Purchaser shall wire funds to Seller's Lender equal to the
amount of such excess, without interest thereon.
4.4.4 If the amount by which the Estimated Value exceeds the
Final Net Tangible Asset Value is greater than the Withheld Sum, the Seller
shall deliver to the Purchaser a cashier's check equal to the amount of such
excess, without interest thereon.
Section 4.5. Bulk Sales Compliance. (a) The Purchaser waives any
compliance with the provisions and procedures of Article 6 of the Uniform
Commercial Code as currently enacted in California (the "Bulk Sales Law"), and
any other similar laws applicable to the transactions contemplated hereby, but
Seller nevertheless represents and warrants that the Purchased Assets will be
transferred to the Purchaser free and clear of any Encumbrances or transferee
liability that may be imposed by the Bulk Sales Law or such similar laws.
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Notwithstanding the foregoing, the Purchaser shall have the right to publish
notices pursuant to the Bulk Sales Law.
(b) In furtherance of the foregoing, but not in limitation thereof,
(i) at the Closing Date, the Seller shall provide to the Purchaser a list of
all creditors of the Division (the "Creditors List"), including any Person
holding secured, unsecured, matured, unmatured, liquidated, unliquidated,
contingent, non-contingent, legal or equitable claims against the Seller or the
Purchased Assets, including all taxing authorities and claimants pursuant to
any pending or threatened litigation (collectively, "Creditors"). The
Creditors List shall be signed and sworn to or affirmed by a duly authorized
officer of the Seller, and shall contain the names and business addresses of
all Creditors of the Seller, the amount owed to each such Creditor, if known,
the names of all Persons who are known to the Seller to assert claims against
the Seller which are disputed by the Seller and shall otherwise comply with the
requirements of the Bulk Sales Law.
Section 4.6. Allocation of the Purchase Price. The Purchase Price
shall be allocated as set forth in EXHIBIT 4.6 hereto. The Purchaser and the
Seller shall use such allocation in filing their respective Internal Revenue
Service Form 8594s.
Section 4.7. Closing. The closing of the transactions contemplated
hereby (the "Closing") shall take place at the offices of CIMCO, INC. ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, at 10:00 a.m. on December 4, 1995, or at
such other time and place as is mutually agreed by the Purchaser and the
Sellers. The time and date of the Closing is herein called the "Closing Date".
Each party shall accept faxed documents for purposes of the Closing, with
original documents to be sent by overnight delivery service.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Purchaser, except as set
forth in any of the Schedules delivered by Seller, as follows:
Section 5.1. Organization and Qualification of the Seller. The
Seller and Cimco, Inc. are corporations duly organized, validly existing and in
good standing under the laws of the State of California and the State of
Delaware, respectively, with full power and authority to own or lease its
property and assets and to carry on the business of the Division as presently
conducted, and is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction where the failure to be so qualified
would have a material adverse effect on the business, financial condition,
results of operations or prospects (financial and otherwise) of the Division (a
"Material Adverse Effect"). SCHEDULE 5.1 lists each jurisdiction in which the
Seller is so qualified. The business of the Division is conducted solely
through the Seller and the Seller does not, directly or indirectly, own any
subsidiaries.
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Section 5.2. Authorization. The Seller has full corporate power and
authority to execute and deliver this Agreement and each of the other Operative
Documents to be executed and delivered by it and to perform its obligations
hereunder and thereunder, all of which have been duly authorized by all
requisite corporate action on the part of Seller. This Agreement and each of
the other Operative Documents to be executed and delivered by it has been or,
at the time of delivery will be, duly authorized, executed and delivered by the
Seller and constitutes or, at the time of delivery will constitute, a valid and
binding agreement of the Seller, enforceable against the Seller in accordance
with its terms, subject to bankruptcy, in solvency and laws relating to
creditor's rights.
Section 5.3. Non-contravention. Neither the execution and delivery
of this Agreement and each of the other Operative Documents to be executed and
delivered by it, nor the performance by the Seller of its obligations hereunder
and thereunder, will (i) contravene any provision contained in the Seller's
Articles of Incorporation or by-laws, (ii) violate or result in a breach (with
or without the lapse of time, the giving of notice or both) of or constitute a
default under (A) any contract, agreement, commitment, indenture, mortgage,
lease, pledge, note, license, permit or other instrument or obligation or (B)
any judgment, order, decree, law, rule or regulation or other restriction of
any Governmental Authority, in each case to which the Seller is a party or by
which it is bound or to which any of its assets or properties are subject,
subject to any requirement that Seller obtain the approval and release of liens
from ▇▇▇▇▇ Fargo Bank, N.A. (appropriate documentation of which is to be
delivered by the Seller at the Closing), (iii) result in the creation or
imposition of any lien, claim, charge, encumbrance, equity, restriction or
right on any of the Seller's assets or properties, or (iv) result in the
acceleration of, or permit any Person to accelerate or declare due and payable
prior to its stated maturity, any Assumed Liability.
Section 5.4. No Consents. Except as set forth in SCHEDULE 5.4, no
notice to, filing with, or authorization, registration, consent or approval of
any Governmental Authority or other Person is necessary for the execution,
delivery or performance of this Agreement or any of the other Operative
Documents or the consummation of the transactions contemplated hereby or
thereby by the Seller, including without limitation any consent by or filing
with our Governmental Authority in respect of any applicable Environmental Law.
Section 5.5. The Purchased Assets. The Purchased Assets constitute
all of the rights, properties and assets (tangible or intangible) which are
necessary for the conduct of the business of the Division in accordance with
past operations of the Seller, other than the molding operations of the Seller
and Cimco, Inc., which are not being acquired by Purchaser hereunder, and other
than the real property in which the business of the Division is conducted. No
third party (including any Affiliate) owns or has any interest by lease,
license or otherwise in any of the Purchased Assets. The documents of transfer
to be executed and delivered by the Seller at the Closing will be sufficient to
convey good and marketable title to the Purchased Assets to the Purchaser, free
and clear of all Encumbrances, other than Assumed Liabilities.
Section 5.6. Personal Property. Except as disclosed in SCHEDULE
5.6, the Seller has good and marketable title to (or valid leasehold or
contractual interests in) all personal
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property comprising the Purchased Assets, free and clear of any lien, claim,
charge, mortgage, security interest, equity or other encumbrance (collectively,
"Encumbrances"). Except as disclosed on SCHEDULE 5.6, all machinery,
equipment, furniture, fixtures and other personal property used in the Business
is in good operating condition and fit for operation in the ordinary course of
business (subject to normal wear and tear) with no defects that could interfere
with the conduct of normal operations of such equipment, furniture, fixtures
and other personal property and are suitable for the purposes for which they
are currently being used.
Section 5.7. Real Property. All plants, structures and buildings
leased or otherwise occupied or used by the Business are in good operating
condition and fit for operation in the ordinary course of business (subject to
normal wear and tear) with no structural or other defects that could interfere
with the conduct of normal operations of such facilities and are suitable for
the purposes for which they are currently being used. No real property or
interest therein is included in the "Purchased Assets," but Purchaser shall be
entitled to transition off the premises of the Division for not over the 90
days immediately following the Closing as provided in Section 7.12 hereof.
Section 5.8. No Condemnation. Neither the whole nor any portion of
the real property or the improvements thereon is subject to any governmental
decree or order to be sold nor have any proceedings for the condemnation,
expropriation or other taking of all or any portion of such real property or
improvements been instituted or, to the Seller's best knowledge, threatened by
any Governmental Authority, with or without payment therefor.
Section 5.9. Inventory. SCHEDULE 5.9 sets forth a true and complete
listing of all Inventory used or held for sale in the Division as of November
30, 1995, including, without limitation, raw materials, work-in-process and
finished goods. Except as shown on SCHEDULE 5.9, all of the Seller's Inventory
consists of items which are good and merchantable, not obsolete, and of a
quantity and quality usable and salable in the regular and ordinary course of
the Division consistent with past practices at prices at least equal to their
value on the Seller's books. The Seller has good and marketable title to all
of such Inventory, free and clear of any Encumbrances other than Encumbrances
in favor of Purchaser. Subject to the provisions of Section 7.15, Seller is
not under any liability or obligation with respect to the return of Inventory
in the possession of its customers.
Section 5.10. Financial Statements and Reports. The Seller has
previously furnished to the Purchaser true and complete copies of the unaudited
balance sheets of Seller's respiratory medical products division and contract
manufacturing operations ("RMPD") as of April 30, 1994 and April 30, 1995, the
Division's unaudited balance sheet as of November 30, 1995 and the related
unaudited statements of operations for the six month period then ended, and
statements of income for the RMPD's fiscal years ended April 30, 1994 and April
30, 1995, all certified by RMPD's chief financial officer (collectively, the
"Financial Statements"). The Financial Statements have been prepared in
conformity with GAAP, applied on a consistent basis except for year-end
adjustments consisting only of normal recurring accruals (all of which are
described in SCHEDULE 5.10) and present fairly the
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financial condition and results of operations of the Division or RMPD as the
case may be, as of and for the periods included therein.
Section 5.11. Absence of Certain Developments. Except as set forth
in SCHEDULE 5.11, since November 30, 1995, there has not been any material
adverse change, or any development which could reasonably be expected to result
in a prospective material adverse change, in the business, financial condition,
results of operations or the prospects (financial and other) of the Division,
taken as a whole. Except as set forth in SCHEDULE 5.11, since November 30,
1995, the Seller has conducted the business of the Division in the ordinary and
usual course consistent with past practices and has not (i) sold, leased,
transferred or otherwise disposed of any of the assets of the Division (other
than dispositions in the ordinary course of business consistent with past
practices), (ii) terminated or amended in any material respect any contract or
lease to which the Seller is a party or to which it is bound or to which its
properties are subject, (iii) suffered any material loss, damage or destruction
whether or not covered by insurance, (iv) made any change in the accounting
methods or practices it follows, whether for general financial or tax purposes,
(v) incurred any liabilities (other than in the ordinary course of business,
none of which, individually or in the aggregate, are material), (vi) incurred,
created or suffered to exist any Encumbrances on the Purchased Assets other
than those listed on SCHEDULE 5.6 or created in the ordinary course of
business, none of which, individually or in the aggregate, are material, (vii)
increased the compensation payable or to become payable to any of the officers
or employees of the Division or increased any bonus, severance, accrued
vacation, insurance, pension or other Employee Benefit Plan, payment or
arrangement made by the Seller for or with any such officers or employees,
(viii) suffered any labor dispute, strike or other work stoppage, (ix) made or
obligated itself to make any capital expenditures in excess of $5,000
individually or in the aggregate, (x) entered into any contract or other
agreement requiring the Seller to make payments in excess of $5,000 per annum,
individually or in the aggregate, other than in the ordinary course of business
consistent with past practices, (xi) entered into any agreement to do any of
the foregoing or (xii) suffered any other event, fact or circumstance which
could reasonably be expected to result in a Material Adverse Effect.
Section 5.12. Governmental Authorizations; Licenses; Etc. Except as
set forth on SCHEDULE 5.12, the Division has been operated in compliance with
all applicable laws, rules, regulations, codes, ordinances, orders, policies
and guidelines of all Governmental Authorities, including but not limited to,
those related to: fire, safety, labeling of products, pricing, sales or
distribution of products, antitrust, trade regulation, trade practices,
sanitation, land use, employment or employment practices, energy and similar
laws and all laws, rules, regulations and guidelines administered or
promulgated by the FDA, except for violations which, individually or in the
aggregate, would not have a Material Adverse Effect. Except as set forth on
SCHEDULE 5.12, the Seller has and as of the Closing Date will have all permits,
licenses, approvals, certificates and other authorizations, and has made all
notifications, registrations, certifications and filings with all Governmental
Authorities, necessary or advisable for the operation of the Division as
currently conducted by the Seller, except for those which, individually or in
the aggregate would not have a Material Adverse Effect. The Seller has and as
of the Closing Date will have received 510K approvals from the FDA in respect
of each product marketed or sold by the Division prior to or as of the
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Closing Date. Except as set for on SCHEDULE 5.12, there is no action, case or
proceeding pending or, to the Seller's best knowledge, threatened by any
Governmental Authority with respect to (i) any alleged violation by the Seller
or its Affiliates of any law, rule, regulation, code, ordinance, order, policy
or guideline of any Governmental Authority, or (ii) any alleged failure by the
Seller or its Affiliates to have any permit, license, approval, certification
or other authorization required in connection with the operation of the
Division. Except as set forth on SCHEDULE 5.12, no notice of any violation of
such laws has been received by the Seller or any Affiliate of the Seller and
neither the Seller nor any such Affiliate has received any notice that the
products manufactured or sold by the Division are not in compliance with, or do
not meet the standards of, all applicable laws, including the Good
Manufacturing Practices required by the FDA. SCHEDULE 5.12 sets forth a true
and complete list of all permits, licenses, approvals, certificates,
registrations and other authorizations relating to the Division (the
"Authorizations") including without limitation all 510K approvals issued by the
FDA in respect of the products marketed or sold by the Division. Such
Authorizations are in full force and effect and the Seller has received no
notification of the suspension or cancellation of any thereof. The Seller has
no grounds to believe that any of the Authorizations listed on Schedule 5.12
will not be transferable to the Purchaser.
Section 5.13. Litigation. Except as set forth in SCHEDULE 5.13,
there are no lawsuits, actions, proceedings, claims, orders or investigations
by or before any Governmental Authority pending or, to the Seller's best
knowledge, threatened against the Seller or its Affiliates relating to the
Division, the Purchased Assets, the Assumed Liabilities or any product alleged
to have been manufactured or sold by the Division or seeking to enjoin the
transactions contemplated hereby and, except as set forth in SCHEDULE 5.13,
there are no facts or circumstances known to the Seller that could result in a
claim for damages or equitable relief which, if decided adversely, could,
individually or in the aggregate, have a Material Adverse Effect.
Section 5.14. Undisclosed Liabilities. Other than those reflected in
the Financial Statements, there are no material liabilities of the Seller of
any kind or nature whatsoever, whether known or unknown, absolute, accrued,
contingent or otherwise, or whether due or to become due relating to the
Division, other than liabilities incurred relating to the Division in the
ordinary course of business and consistent with past practices since the date
of the Financial Statements, none of which, individually or in the aggregate,
are material, and there exists no facts or circumstances (other than general
economic conditions) that could reasonably be expected to result in any such
liability.
Section 5.15. Taxes. All federal, state, county, local and foreign
tax returns and reports of the Seller or any Affiliate of the Seller required
to be filed which relate to or affect the Division or the Purchased Assets have
been duly filed. All federal, state, county, local, foreign and any other
taxes (including all income, withholding and employment taxes), assessments
(including interest and penalties), fees and other governmental charges with
respect to the employees, properties, assets, income or franchises of the
Seller or any Affiliate of the Seller relating to or affecting the Division or
the Purchased Assets have been paid or duly provided for, or are being
contested in good faith by appropriate proceedings as
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disclosed on SCHEDULE 5.15 and adequate reserves therefor have been established
pursuant to GAAP, or have arisen after the date hereof in the ordinary course
of business. There are no tax liens on any of the Purchased Assets.
Section 5.16. Insurance. SCHEDULE 5.16 sets forth a true and correct
list of all insurance policies or binders maintained by the Seller on the date
hereof relating to the Division or the Purchased Assets showing, as to each
policy or binder, the carrier, policy number, coverage limits, expiration
dates, annual premiums, deductibles or retention levels and a general
description of the type of coverage provided. Such policies and binders are,
and at all times prior to the Closing will be, in full force and effect. At
all times prior to the Closing Date, the Seller has maintained appropriate and
adequate insurance policies covering the Purchased Assets and all aspects of
the Division consistent with industry practice.
Section 5.17. Environmental Matters. Except as set forth on SCHEDULE
5.17, (i) the Division is being and has been conducted in compliance with all
Environmental Laws, (ii) the real property owned (and that leased to Purchaser
after the Closing pursuant to Section 7.12) or operated by Seller in connection
with the Division or leased, occupied or used by Seller in connection with the
Division (including, without limitation, soil, groundwater or surface water on,
under or adjacent to the properties and buildings thereon) (the "Affected
Property") do not contain any Regulated Substance other than as permitted under
applicable Environmental Laws, (iii) Seller has, and at all times has had, all
permits, licenses and other approvals and authorizations required under
applicable Environmental Laws for the operation of the Division, (iv) the
Seller has not received any notice from any Governmental Authority that the
Seller or any of its Affiliates may be a potentially responsible party in
connection with any waste disposal site or facility used, directly or
indirectly, by or otherwise related to the Division, (v) no reports have been
filed, or have been required to be filed, by the Seller concerning the release
of any Regulated Substance or the violation of any Environmental Law on or at
the properties used in the Division, (vi) no Regulated Substance has been
disposed of, transferred, released or transported from the Affected Property,
other than as permitted under applicable Environmental Law pursuant to
appropriate regulations, permits or authorizations, (vii) there have been no
environmental investigations, studies, audits, tests, reviews, or other
analyses conducted by or which are in the possession of the Seller or any
Affiliate of the Seller relating to the Division, true and correct copies of
which have not been delivered to the Purchaser prior to the date hereof, (viii)
there are no underground storage tanks on, in or under any of the properties
presently owned or operated by the Division and no underground storage tanks
have been closed or removed from such properties, (ix) the Seller has not
presently incurred, and the Affected Property is not presently subject to, any
liabilities (fixed or contingent) relating to any suit, settlement, judgment or
claim asserted or arising under any Environmental Law, [(x) all documents filed
by or on behalf of the Seller or any Affiliate of the Seller with any
Governmental Authority pursuant to any Environmental Law in connection with the
sale of the Division or the Purchased Assets were true, correct and complete
and did not omit to state any fact required to be stated therein or necessary
to make the statements therein not misleading,] (xi) all Environmental Laws in
existence at the time the Affected Property was acquired were complied with,
and (xii) there are no civil, criminal or administrative actions, suits,
demands, claims, hearings, investigations or other proceedings pending or
threatened against the Division or the Seller or
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any Affiliate of the Seller with respect to the Division or the Purchased
Assets relating to any violations, or alleged violations, of any Environmental
Law, and neither the Division nor the Seller or any Affiliate of the Seller
have received any notices, demand letters or requests for information, arising
out of, in connection with, or resulting from, a violation, or alleged
violation, of any Environmental Law, and neither the Division nor the Seller or
any Affiliate of the Seller have been notified by any Governmental Authority or
any other Person that the Division or the Purchased Assets have, or may have,
any liability pursuant to any Environmental Law. SCHEDULE 5.17 includes a true
and complete list of all Standard Industrial Classification (SIC) Codes
applicable to the Division or the Purchased Assets. No filing or registration
with or approval of or consent by any Governmental Authority is required of the
Seller in connection with the execution and delivery of this Agreement or the
consummation of the transactions by the Seller as contemplated hereby.
Section 5.18. Employee Matters. (a) SCHEDULE 5.18 contains a true
and correct list of the employees currently employed by the Seller in the
conduct of the business of the Division, including (i) any agreement concerning
such employees and a description of the rate and nature of all current
compensation payable by the Seller to each employee, (ii) the amount of annual
vacation time each such employee receives and has accrued, and the amount of
severance compensation, if any, to which each is entitled.
(b) (i) The Seller has not entered into any collective bargaining
agreements with respect to the above-mentioned employees, (ii) except as set
for in SCHEDULE 5.18, there are no written personnel policies applicable to
such employees generally, other than employee manuals, copies of which have
previously been provided to the Purchaser, (iii) there is no labor strike,
dispute, slowdown or work stoppage or lockout pending or, to the best of the
Seller's knowledge, threatened against or affecting the Division and during the
past three years there has been no such action, (iv) to the Seller's best
knowledge, no union organization campaign is in progress with respect to any of
such employees, and no question concerning representation exists respecting
such employees, (v) there is no unfair labor practice, charge or complaint
pending or, to the Seller's best knowledge, threatened against the Seller
arising out of the conduct of the division, and (vi) the Seller has not entered
into any agreement, arrangement or understanding restricting its ability to
terminate the employment of any or all of such employees at any time, for any
lawful or no reason, without penalty or liability.
Section 5.19. Proprietary Rights. (a) All of the Seller's
Proprietary Rights are listed in SCHEDULE 5.19. Except as disclosed therein,
the Seller owns and possesses all right, title and interest in, and upon
consummation of the transactions contemplated hereby, the Purchaser will own
all right, title and interest in, the Proprietary Rights. The Seller has taken
all necessary action to protect the Proprietary Rights and the transactions
contemplated by this Agreement will have no material adverse effect on the
Seller's right, title and interest in the Proprietary Rights.
(b) No claim by any third party contesting the validity,
enforceability, use or ownership of any Proprietary Right has been made, is
currently pending or is threatened. The Seller has not received any notice of,
nor is it aware of any fact which indicates a
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likelihood of any infringement or misappropriation by any third party with
respect to any of the Proprietary Rights. The Seller has not infringed or
misappropriated any rights of any third parties, nor is it aware of any
infringement or misappropriation which will occur as a result of the continued
operation of the Division as now conducted.
Section 5.20. Contracts. (a) SCHEDULE 5.20 describes all contracts,
agreements, leases, commitments, instruments, plans, permits or licenses,
whether written or oral, with respect to the Division to which the Seller is a
party or is otherwise bound, of the types described below (the "Contracts"):
(i) all agreements, commitments, purchase orders, sale
confirmations or other similar agreements for the sale by the Division
of products or services, or the purchase by the Division of raw
materials, products or services, other than those that are for amounts
not to exceed $5,000;
(ii) all agreements, commitments, purchase orders, sale
confirmations or other similar agreements for the purchase by the
Division of machinery, equipment or other personal property other than
those that are for amounts not to exceed $5,000;
(iii) all capitalized leases, pledges, conditional sale or
title retention agreements concerning assets used in the business of
the Division;
(iv) all employment agreements and commitments and all
consulting or severance agreements or arrangements;
(v) all agreements relating to the consignment or lease of
personal property (whether the Seller is lessee, sublessee, lessor or
sublessor), other than such agreements that provide for annual
payments of less than $5,000;
(vi) all license, royalty or other agreements relating to the
Proprietary Rights;
(vii) all agreements prohibiting the Seller from freely
engaging in the business of the Division in any geographic area;
(viii) all agreements to provide rebates to customers of the
Division, to the extent not reflected as a liability on the Financial
Statements;
(ix) all distribution, sales agency and other similar
agreements relating to the marketing, sale or distribution by the
Division of its products; and
(x) any agreements other than those covered by clauses (i)
through (viii) above relating to the Division and involving payment or
receipt of more than $2,500 in the aggregate and all agreements which
otherwise materially affect the Division.
(b) Except as disclosed in SCHEDULE 5.20, all of the Contracts which
are intended to be assigned to the Purchaser hereunder are fully assignable to
the Purchaser by the Seller
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without the consent of any third party. All consents of third parties required
for the assignment of such Contracts to the Purchaser have been obtained, or
will have been obtained prior to or on the Closing Date. To the best of the
Seller's knowledge after due inquiry, none of the other parties to any such
Contracts intends to terminate or materially alter the provisions of such
Contracts either as a result of transactions contemplated hereby or otherwise,
except as disclosed in SCHEDULE 5.20.
(c) Except as disclosed in SCHEDULE 5.20, the Seller is not in, nor
has the Seller given or received notice of, any default or claimed, purported
or alleged default, or facts that, with notice or lapse of time, or both, would
constitute a default (or give rise to a termination right) on the part of any
party in the performance of any obligation to be performed under any of the
Contracts.
(d) The Seller has not violated the Truth in Negotiations Act or the
False Claims Act or any other law regulating government contracts or failed to
comply with the applicable requirements of the Federal Cost Accounting
Standards with respect thereto would have a Material Adverse Effect.
(e) True and complete copies of all written Contracts, including any
amendments thereto, have been delivered to the Purchaser and such documents
constitute the legal, valid and binding obligation of the Seller and, to the
best of the Seller's knowledge after due inquiry, each other party purportedly
obligated thereunder.
Section 5.21. Customers and Suppliers. SCHEDULE 5.21 sets forth a
list of (a) the fifteen (15) largest customers of the Division in terms of
gross sales and (b) the fifteen (15) largest suppliers of the Division in terms
of purchases , in each case during the period from May 1, 1994 to the date of
this Agreement. Except as set forth on SCHEDULE 5.21, (a) no customer has
notified or otherwise indicated to the Seller that it will stop, or decrease
the rate of, its purchases of materials, products or services from the
Division, and no customer has, since April 30, 1994, ceased or materially
decreased its purchases of any such materials, products or services from the
Division; and (b) no supplier of the Division has notified or otherwise
indicated to the Seller that it will stop, or decrease the rate of, or, other
than publicly announced generally applicable price increases, materially
increase the cost of, its supply of materials, products or services used by the
Division, and no supplier has, since April 30, 1994, ceased, materially
decreased the rate of or materially raised the cost of, any such materials,
products or services. The Seller is not a party to any contract or commitment
relating to the Division to purchase products from any supplier, other than
contracts or commitments that are terminable at will by Seller in its sole
discretion, without cost or penalty. SCHEDULE 5.21 lists a summary of all
sales by the Division to each of its 15 largest customers from and after May 1,
1994 and also lists all open orders from each customer of the Division as of
the date of this Agreement.
Section 5.22. Ability to Conduct Business. To the knowledge of
Seller, the consummation of the transactions contemplated hereby will enable
the Purchaser to conduct the business of the Division substantially as it is
currently being conducted.
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Section 5.23. Brokers. The Seller has retained no person or firm as
a broker in connection with the transaction contemplated by this Agreement.
Should any person or firm claim that a fee or any other consideration is owed
by virtue of any agreement or act by Seller, Seller shall indemnify and hold
Purchaser harmless from any such fee or claim.
Section 5.24. Disclosure. No representation or warranty made by the
Seller in this Agreement, any Schedule, any Exhibit or any certificate
delivered, or to be delivered, by or on behalf of the Seller pursuant hereto
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
herein or therein not misleading. There is no fact which the Seller has not
disclosed to the Purchaser in writing which the Seller presently believes has
or may have a material adverse effect on the properties, assets, business,
operations, financial condition or prospects of the Seller or the Division or
on the ability of the Seller to perform its obligations under this Agreement or
the other Operative Documents to be executed and performed by it.
Section 5.25. Absence of Questionable Payments. Neither the Seller
nor any Affiliate, director, officer, employee, agent, representative or other
Person acting on behalf of the Seller in connection with the Division has: (i)
used any corporate or other funds for unlawful contributions, payments, gifts
or entertainment, or made any unlawful expenditures relating to political
activities to government officials or others, or (ii) accepted or received any
unlawful contributions, payments, gifts or expenditures.
Section 5.26. All Proprietary Rights for the Business and the
Products. There are no intellectual property or proprietary information or
rights related to or used in the conduct of the Business or required for the
production, sale or use of the Products in accordance with the past operations
of the Seller, other than the Proprietary Rights being acquired by the
Purchaser pursuant to this Agreement, except for Proprietary Rights relating to
the molding operations of Seller and Cimco, Inc. which are not being acquired
hereunder.
Section 5.27. All Equipment Required for Production of the Products.
The machinery, equipment and other tangible personal property being acquired by
the Purchaser pursuant to this Agreement are all the machinery, equipment, and
personal property required for the production of the Products in accordance
with the past operations of the Seller, except for the molding operations of
Seller and Cimco, Inc. which are not being acquired hereunder.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Seller as follows:
Section 6.1. Organization. The Purchaser and ▇▇▇▇▇ ▇▇▇▇▇, Inc. are
corporations duly organized, validly existing and in good standing under the
laws of the State of
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California and New Jersey respectively, and have full corporate power and
authority to own or lease its property and assets and to carry on its business
as presently conducted.
Section 6.2. Authorization. The Purchaser has full corporate power
and authority to execute and deliver this Agreement and each of the other
Operative Documents to which it is a party and to perform its obligations
hereunder and thereunder, all of which have been duly authorized by all
requisite corporate action on the part of the Purchaser. Each of this
Agreement and each of the other Operative Documents to which it is a party, has
been or, at the time of delivery will be, duly authorized, executed and
delivered by the Purchaser and constitutes or, at the time of delivery will
constitute, a valid and binding agreement of the Purchaser, enforceable against
the Purchaser in accordance with its terms.
Section 6.3. Non-contravention. The Purchaser is not subject to any
provision of its Certificate of Incorporation or by-laws or any agreement,
instrument, law, rule, regulation, order, decree or judgment of any
Governmental Authority or other restriction that would prevent the consummation
of the transactions contemplated by this Agreement and the other Operative
Documents.
Section 6.4. No Consents. Except for consents required in connection
with the Purchaser's assumption of the Assumed Liabilities, no notice to,
filing with, or authorization, registration, consent or approval of any
Governmental Authority or other Person is necessary for the execution, delivery
or performance of this Agreement and the other Operative Documents to which it
is a party or the consummation of the transactions contemplated hereby and
thereby by the Purchaser.
Section 6.5. Brokers. The Purchaser has retained ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ as
a finder in connection with the transaction contemplated by this Agreement as a
result of which he is entitled to a finder's fee which will be paid by the
Purchaser. No other person or firm is entitled to any consideration as a broker
or finder with respect to this transaction. Purchaser shall hold Seller
harmless and indemnify Seller from any fee claimed by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or any
other person or firm claiming that a broker's or finder's fee in connection
with this transaction is owed as a result of any act or agreement on the part
of Purchaser..
Section 6.6. Disclosure. No representation or warranty made by the
Purchaser in this Agreement any Schedule, any Exhibit or any certificate
delivered or to be delivered, by or on behalf of the Purchaser pursuant hereto
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
herein or therein not misleading. There is no fact which the Seller has not
disclosed to the Seller in writing which the Purchaser presently believes has
or may have a material adverse effect on the properties, assets, business,
operations, financial condition or prospects of the Purchaser or on the ability
of the Purchaser to perform its obligations under this Agreement or the other
Operative Documents to be executed and performed by Purchaser.
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ARTICLE VII
COVENANTS AND AGREEMENTS
Section 7.1. Access and Information. Prior to the Closing, the
Purchaser shall be entitled to make or cause to be made such investigation of
the Division, and the financial and legal condition hereof, as the Purchaser
deems necessary or advisable, and the Seller shall cooperate with any such
investigation. In furtherance of the foregoing, but not in limitation thereof,
the Seller shall permit the Purchaser and its agents and representatives or
cause them to be permitted to have full and complete access to the premises,
books and records of the Division upon reasonable notice during regular
business hours and shall furnish such financial and operating data,
projections, forecasts, business plans, strategic plans and other data relating
to the Division as the Purchaser shall request from time to time. Prior to the
Closing, the Purchaser shall not use any information obtained pursuant to this
Section 7.1 for any purpose unrelated to the consummation of the transactions
contemplated by this Agreement and, if such transactions are not consummated,
it will hold all information and documents obtained pursuant to this Section
7.1 in confidence unless and until such time as such information or documents
otherwise become publicly available or as it is advised by counsel that any
such information or document is required by law to be disclosed. In the event
that this Agreement is terminated, the Purchaser will deliver to the Seller all
documents so obtained by it and any copies thereof in the possession of the
Purchaser or its agents and representatives or, at the option of the Purchaser,
the Purchaser shall cause all of such documents and all of such copies to be
destroyed and shall certify the destruction thereof to the Seller.
No investigation by the Purchaser or any of its agents or
representatives, including without limitation its intellectual property
counsel, heretofore or hereafter made shall modify or otherwise affect any
representations and warranties of the Seller, which shall survive any such
investigation, or the conditions to the obligation of the Purchaser to
consummate the transactions contemplated hereby.
Section 7.2. Affirmative Covenants. Prior to the Closing, except as
otherwise expressly provided herein, the Seller shall:
(a) conduct the business of the Division only in the ordinary and
regular course of business consistent with past practices;
(b) keep in full force and effect its corporate existence and all
material rights, franchises, Proprietary Rights and goodwill relating or
obtaining to the Division;
(c) use its best efforts to retain those employees actively employed
in the business of the Division and preserve its present relationships with
customers, suppliers, contractors, distributors and such employees, and
continue to compensate such employees consistent with past practices;
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(d) maintain the Proprietary Rights so as not to affect adversely the
validity or enforcement thereof; maintain the other Purchased Assets in
customary repair, order and condition and maintain insurance reasonably
comparable to that in effect on the date of this Agreement; and in the event of
any casualty, loss or damage to any of the Purchased Assets, either repair or
replace such assets with assets of comparable quality or subject to the
provisions of Section 11.13, transfer consideration to the Purchaser at Closing
equal to the full repair cost or replacement value of such assets;
(e) maintain the books, accounts and records related to the Division
in accordance with GAAP, to the extent applicable, consistent with past
practices;
(f) use its best efforts to obtain all authorizations, consents,
waivers, approvals or other actions necessary or desirable to consummate the
transactions contemplated hereby and to cause the other conditions to the
Purchaser's obligation to close to be satisfied;
(g) promptly inform the Purchaser in writing of any material breach
of or change in the representations and warranties contained in Article V
hereof;
Section 7.3. Negative Covenants. Prior to the Closing, without the
prior written consent of the Purchaser, which shall not be unreasonably
withheld, or as otherwise expressly provided herein, the Seller will not:
(a) enter into any contract, agreement or commitment which, if
entered into prior to the date of this Agreement, would cause any
representation or warranty of the Seller to be untrue or be required to be
disclosed on one or more Schedules referred to in Article III; and
(b) take or omit to be taken any action, or permit its Affiliates to
take or to omit to take any action, which could reasonably be expected to have
a Material Adverse Effect.
Section 7.4. Closing Documents. The Seller shall, prior to or on the
Closing Date, execute and deliver, or cause to be executed and delivered to the
Purchaser, the documents or instruments described in Section 8.2. The Purchaser
shall, prior to or on the Closing Date, execute and deliver, or cause to be
executed and delivered, to the Sellers, the documents or instruments described
in Section 8.3.
Section 7.5. Post Closing Access and Assistance. (a) After the
Closing, upon request the Seller and its representatives shall be permitted
reasonable access, during normal business hours, to and to make inspection of
the books and records of the Seller transferred to the Purchaser hereunder so
long as such records are maintained by the Purchaser in accordance with its
customary records retention policy and to make copies thereof as is reasonably
necessary to allow the Seller to obtain information in the Purchaser's
possession (but excluding attorney work product or other privileged
communications). The Seller shall pay the Purchaser's out-of-pocket costs and
expenses in connection with satisfying such requests.
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(b) After the Closing, upon request the Purchaser and its
representatives shall be permitted reasonable access, during normal business
hours, to and to make inspection of the books and records (if any) of the
Seller which may be retained by the Seller relating to the Division and the
Purchased Assets and to make copies thereof as is reasonably necessary to allow
the Purchaser to obtain information in the Seller's possession (but excluding
attorney work product or other privileged communications). The Purchaser shall
pay the Seller's out-of-pocket costs and expenses in connection with satisfying
such requests.
(c) The following shall govern cooperation between the parties
regarding the transfer, maintenance and preservation of ownership rights in the
Proprietary Rights:
(i) The Seller shall cooperate with Purchaser in preparing and
providing at Seller's expense the instruments of conveyance and
related documents necessary or reasonably requested by Purchaser to
convey, sell, assign and transfer as provided herein all rights, title
and interest in and to the Proprietary Rights in all countries of the
world, which instruments shall be in registrable form in such
countries in which any rights included within the Proprietary Rights
are registered or under application as of the Closing Date. Purchaser
shall be responsible for filing and recordation of such instruments
and documents and for paying any fees or other charges in connection
therewith.
(ii) Except as provided by Section 10.2, Purchaser shall be
responsible following the Closing for paying all of the costs and
expenses in preparing, filing, registering, prosecuting, defending and
maintaining all such Proprietary Rights and the rights and interests
associated therewith. Seller shall use reasonable efforts to cooperate
with Purchaser in connection therewith, and shall be reimbursed for
all reasonable expenses incurred in connection therewith.
(iii) Upon the request of Purchaser, Seller shall use
reasonable efforts to make available or cause to be made available,
from time to time as reasonably required, current or former employees,
directors, officers, consultants, accountants and attorneys employed
or retained at any relevant time by Seller in connection with the
Division for purpose of giving testimony or such other reasonable
cooperation or assistance as Purchaser may reasonably require for the
preparation and defense or prosecution of any arbitration or judicial
or administrative action or proceeding in connection with (A) the
Purchaser's actual or threatened prosecution of Persons other than
Seller or any of its Affiliates that it believes to be infringing any
of its rights included within the Proprietary Rights and (B) the
defense by Purchaser of any claim of or action for infringement made,
brought or threatened by any Person other than Seller or any of its
Affiliates which might adversely affect the ownership, enjoyment or
value of the Proprietary Rights by Purchaser. Seller's costs and
expenses in connection therewith shall be reimbursed by Purchaser.
(d) After the closing and for a period of ninety (90) days, Seller
shall provide to Purchaser (upon Purchaser's request) and at Seller's sole
cost and expense the advisory services and
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assistance of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ for the purposes of enabling an orderly
transition of the Division and of the manufacturing process of the Products
from Seller to Purchaser.
The obligations hereunder exclude attorney work product or other
privileged communications unless waived or approved by Seller.
Section 7.6. Transfer and Property Taxes. (a) Each of Seller and
Purchaser shall pay one-half of any transfer, sales, purchase, use or similar
tax under the laws of any Governmental Authority arising out of or resulting
from the purchase of the Purchased Assets and the assumption of the Assumed
Liabilities. The Seller shall prepare and file the required tax returns and
other required documents with respect to the taxes and fees required to be paid
by it pursuant to the preceding sentence and shall promptly provide the
Purchaser with evidence of the payment of such taxes and fees. Without
limiting the foregoing, Seller shall promptly provide Purchaser with a copy of
its Internal Revenue Service Form 8594 filed in connection with this
transaction.
(b) The Seller shall (i) prepare and file all tax returns reporting
the income attributable to the Purchased Assets or the operation of the
Business for all periods ending prior to or on the Closing Date, (ii) prepare
and file all income tax returns reporting the income of the Seller arising on
the Closing Date from the sale to the Purchaser of the Purchased Assets and the
assumption by the Purchaser of the Assumed Liabilities, (iii) be responsible
for the conduct of all tax examinations relating to the tax returns referred to
in (i) and (ii) above, and (iv) pay all taxes attributable to the Purchased
Assets or the operation of the Business due with respect to the tax returns
referred to in (i) and (ii) above. The Purchaser shall prepare and file all
tax returns reporting the income attributable to the ownership of the Purchased
Assets and the operation of the Business for all periods beginning after the
Closing and shall be liable for and pay all taxes due in respect of such tax
returns.
(c) All personal property, motor vehicle (including road use) and ad
valorem taxes, and all other taxes, charges or assessments levied or imposed
upon the Purchased Assets by any Governmental Authority, for the taxable year
beginning before and ending on or after the Closing Date shall be apportioned
and pro rated on a per diem basis between the Purchaser and the Seller as of
11:59 p.m. on the day before the Closing Date (the "Adjustment Time"). The
Seller shall pay or cause to be paid, on or prior to the Closing Date, all ad
valorem taxes and any other taxes and assessments against the Purchased Assets
for all taxable periods ending prior to the Closing Date. The Purchaser shall
pay all ad valorem taxes and any other taxes and assessments against the
Purchased Assets for all periods beginning on or after the Closing Date. If
the Closing Date shall occur before the tax rate for the year of Closing is
fixed by the appropriate taxing authority, the apportionment of any such taxes
shall be upon the basis of the tax rate for the preceding year applied to the
latest assessed valuation and shall be readjusted promptly after such tax rates
are known. Such obligation to readjust shall survive the Closing.
Section 7.7. Use of Seller's Name and Logo. (a) Purchaser shall be
permitted to continue to use all purchased packaging materials regardless of
whether such materials bear
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Seller's name and/or logo not being acquired by the Purchaser, but only until
such materials have been used.
(b) As to any products manufactured by Seller before or after the
Closing for purchase and resale by Purchaser, Purchaser may indicate that such
products have been manufactured by Seller.
Section 7.8. Non-Competition and Confidentiality Agreement. For a
period of five (5) years after the Closing Date, neither Seller nor its
Affiliates will, directly or indirectly, anywhere in the continental United
States engage in the designing, developing, manufacturing or marketing of
respiratory care and related products; provided, however, that Seller and/or
any of its Affiliates may only manufacture (but not sell or market) components
of respiratory care and related products for unrelated companies. The Seller
shall not at any time after the Closing use for its own benefit or divulge or
convey to any third party, any Confidential Information (as hereinafter
defined) relating to the Division. For purposes of this Agreement,
Confidential Information consists of all information, knowledge or data
currently held by the Division and relating exclusively to the Division
including, without limitation, customer and supplier lists, formulae, trade
know-how processes, secrets, consultant contract, pricing information,
marketing plans and respiratory product development plans to the extent not in
the public domain or otherwise publicly available or used by Seller of its
Affiliates in their own businesses and which relate to products other than
those of the Division. Information which enters the public domain or is
publicly available loses its confidential status hereunder so long as neither
the Seller nor its Affiliates directly or indirectly wrongfully causes such
information to enter the public domain following the Closing Date.
The Seller acknowledges that the restrictions contained in this
Section 7.8 are reasonable and necessary to protect the legitimate interests of
the Purchaser and that any breach by the Seller of any provision hereof will
result in irreparable injury to the Purchaser. The Seller acknowledges that,
in addition to all remedies available at law, the Purchaser shall be entitled
to equitable relief, including injunctive relief, and an equitable accounting
of all earnings, profits or other benefits arising from such breach and shall
be entitled to receive such other damages, direct or consequential, as may be
appropriate. The Purchaser shall not be required to post any bond or other
security in connection with any proceeding to enforce this Section 7.8.
Without limiting the generality of Section 11.4, the provisions of
this Section 7.8 shall inure to the benefit of any subsequent transferee of the
Division or any substantial portion thereof, provided that this Agreement is
assigned to such transferee by written agreement, a copy of which shall have
been furnished to Seller, and such transferee continues to conduct the business
of the Division as acquired hereunder and as the same developed in the normal
course of business. In the event that the Seller or any Affiliate of the
Seller (i) dissolves, liquidates or winds up the affairs of the Seller, (ii)
sells the capital stock of the Seller other than sales of stock through a
broker to purchasers who are unknown to Seller or such Affiliate, (iii) merges,
consolidates or otherwise combines the Seller with
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any other entity, or (iv) otherwise leases, transfers, sells or disposes of all
or any substantial portion of the remaining assets of the Seller, whether in
one transaction or a series of related transactions, the Seller or the
Affiliate party to such transaction, as the case may be, shall request from the
shareholders of the Seller, any successor to the Seller or any purchaser or
other transferee of all or any substantial portion of its remaining assets, as
the case may be, a written agreement to comply with the provisions of this
Section 7.8, including this paragraph, as if such successor, purchaser or other
transferee were a party hereto.
Cimco, Inc. and its subsidiaries, including Seller, shall be bound by
the non-competition agreement described herein whether owned by its current
shareholders or a successor in interest. However, a shareholder of Cimco,
Inc. shall not be precluded from owning or acquiring a business that competes
with Purchaser as long as the business operation of Cimco, Inc. remains
separate, apart, and distinct from the competitive business owned by Cimco,
Inc.'s shareholder and Cimco, Inc. uses reasonable efforts to protect the
Proprietary Rights and Confidential Information of Purchaser.
Notwithstanding any term or provision herein or elsewhere, this
Section 7.8 shall not apply to or restrict any successor or transferee of the
business or assets of Cimco, Inc. in the conduct of any business conducted by
such successor or transferee prior to becoming a successor or transferee of
Cimco, Inc. or Seller or an Affiliate of Seller or acquired from any unrelated
party by such successor or transferee at any time after such entity became a
successor or transferee of Seller or an Affiliate of Seller. Should a transfer
to a competitor occur, or should such successor or transferee acquire such a
competing business, Purchaser has the option, exercisable, if at all, within
thirty (30) days following the later of (i) the effective date of such event,
or (ii) Purchaser receiving written notice of such event to terminate in its
entirety the Manufacturing Agreement.
Section 7.9. Best Efforts; Further Assurances. Subject to the terms
and conditions herein provided, each of the parties hereto shall use its best
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things reasonably necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement. Each of the Seller and the Purchaser will use
their respective best efforts to obtain consents of all Governmental
Authorities and third parties necessary to the consummation of the transactions
contemplated by this Agreement. In the event that at any time after Closing
any further action is necessary to carry out the purposes of this Agreement,
the Seller or the proper directors or officers of the Seller or the Purchaser,
as the case may be, shall take all such action without any further
consideration therefor.
Section 7.10. Third Party Proposals. Neither the Seller nor any of
its subsidiaries nor any Affiliate of the Seller shall solicit or encourage
inquiries or proposals with respect to, or, except as required by law or a
fiduciary obligation in the written opinion of counsel to the Seller, furnish
any information relating to or participate in any negotiations or discussions
concerning, any acquisition or purchase of all or a substantial portion of the
assets of, or of a
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substantial equity interest in, the Seller or any of its subsidiaries or any
business combination with the Seller or any of its subsidiaries other than as
contemplated by this Agreement. The Seller shall notify the Purchaser
immediately if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated with, the Seller or any of its subsidiaries. The Seller
shall instruct its officers, directors, agents, advisors and Affiliates to
comply with the provisions of this Section 7.10.
Section 7.11. Employment of Division's Employees. Purchaser may but
shall have no obligation to offer employment to and, following the Closing
Date, employ as many of Seller's employees as Purchaser determines in good
faith it can use in the conduct of the Business. Purchaser shall be under no
obligation to establish or continue, under the same of different terms or
conditions, any employee benefit arrangement for any of Seller's employees as
are hired by Purchaser. Purchaser shall notify Seller in writing as soon as
practicable, but no later than the Closing Date, the specific employees of
Seller to be offered employment by Purchaser.
Section 7.12. Disposition of Inventory Following Closing. Purchaser
will arrange, and Seller will provide all reasonable cooperation to Purchaser
at Purchaser's expense, to effect a prompt transfer following the Closing of
the Inventory and the Equipment to such location(s) as Purchaser may designate.
As set forth in SECTION 5.7 above, Purchaser shall be entitled to occupy the
premises of the Division at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ for up to
90 days following the closing on the terms as detailed in this Section 7.12.
Purchaser shall pay the Seller at a rate of $5800 per month for the exclusive
use and occupancy of the approximately 13,482 square feet currently occupied by
the Division at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, prorated for the
period that Purchaser actually occupies such premises. That portion of the
above premises to be occupied by Seller is detailed in EXHIBIT 7.12. The
above rate is a gross rent including, but not limited to, all rents, utilities,
property taxes, property insurance, common area charges, maintenance and
repairs, depreciation, and other charges or assessments relating to the
operation and management of the occupied premises. Seller shall be solely
responsible for hazardous materials or substances, if any, which may be found
at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ unless such hazardous materials or
substances are brought onto, utilized at, or disposed of at the premises by
Purchaser, its employees, or its contractors.
Section 7.13. Obligations Regarding Certain Customer Purchase Orders.
In the event that, prior to the Closing, Seller accepts Purchase Orders from
customers in the ordinary course of business of the Division which are not
listed on SCHEDULE 3.1, and which are not filled by Seller prior to the
Closing, Purchaser shall fill such orders. Seller shall pay to Purchaser,
within thirty (30) days following receipt of Purchaser's invoice therefor, an
amount equal to one hundred ten percent (110%) of Purchaser's actual cost of
filling such orders.
Section 7.14. Warranty Obligations. In the event that, from time to
time following the Closing, any customers of the Division return products of
the Division which were purchased prior to the Closing for reworking or other
warranty work under Seller's warranty
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policy detailed in SCHEDULE 3.1 (collectively, "Warranty Work"), Purchaser
shall perform such Warranty Work. Seller shall reimburse Purchaser for all
Warranty Work performed by Purchaser under Seller's warranty policy for
products purchased prior to the Closing that in the aggregate costs Purchaser
in excess of $28,000.00.
Section 7.15. Repurchase of Inventory. Notwithstanding any other
portion of this Agreement, in the event that any inventory items listed on
SCHEDULE 5.9 have not been sold to customers by the end of the eighteenth
(18th) month from the Closing Date, Seller agrees to repurchase the unsold
items at the same price paid by Purchaser at the Closing.
Section 7.16. Sales Representative Agreements. During the thirty
(30) day period commencing on the Closing Date, Purchaser agrees to fulfill
customer orders submitted by Seller's independent sales representatives
referenced in SCHEDULE 5.20 if all of the following conditions are met: (i)
Seller sends termination notices to the above-referenced sales representatives
as soon as reasonably possible; (ii) the sales representatives submit orders
consistent with the pricing, ordering, and commission policies and schedules
that existed between the sales representatives and Seller just prior to the
Closing; and (iii) the sales representatives acknowledge in writing that the
arrangement set forth in this Section 7.16 in no way shall extend beyond said
30-day period and that Purchaser owes no obligation to the sales representative
except for payment of the commission earned on the orders submitted during
said 30-day period at such time that the customer pays for the goods ordered.
ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.1. Mutual Conditions. The respective obligations of each
party to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to Closing of the conditions that (a) no
Governmental Authority of competent jurisdiction shall have (i) enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
judgment, decree, injunction or other order which is in effect; or (ii)
commenced or threatened any action or proceeding, which in either case would
prohibit consummation of the transactions contemplated by this Agreement, and
(b) no suit or other action or procedure shall have been initiated seeking to
prevent or delay the consummation of the transactions contemplated hereby and
by the other Operative Documents.
Section 8.2. Conditions to the Purchaser's Obligations. The
obligations of the Purchaser to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment prior to or at Closing of
each of the following conditions:
(a) All representations and warranties made by the Seller in this
Agreement and the Schedules delivered by the Seller to the Purchaser pursuant
hereto shall be true, correct and complete in all material respects on the date
hereof and as of the Closing Date as though such representations and warranties
were made as of the Closing Date, and the Seller shall have duly performed or
complied with all of the covenants, obligations and conditions to be
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performed or complied with by it under the terms of this Agreement on or prior
to or at Closing.
(b) There shall have been no material damage, destruction or loss
to, or any other material and adverse change in, the Purchased Assets or the
Business, regardless of insurance coverage.
(c) All authorizations, consents, waivers, approvals or other
actions legally required in connection with the execution, delivery and
performance of this Agreement and each of the other Operative Documents, by the
Seller and the consummation by the Seller of the transactions contemplated
hereby and thereby shall have been obtained and shall be in full force and
effect; the Seller shall have obtained any authorizations, consents, waivers,
approvals or other actions required to prevent a material breach or default by
the Seller under any contract to which Seller is party or for the continuation
of any agreement to which Seller is a party and which relates and is material
to the Purchased Assets or the Division; and all authorizations, consents,
waivers, approvals or other actions necessary to permit the Purchaser to
operate the business of the Division in compliance with all applicable laws
immediately after the Closing shall have been obtained and shall be in full
force and effect.
(d) The Purchaser shall have completed its investigation of the
Division and the Purchaser shall be satisfied in its sole discretion with the
condition of the Division and its future prospects.
(e) Prior to or at Closing, the Seller shall have delivered to the
Purchaser all instruments of assignment, transfer and conveyance identified
herein and such other closing documents as shall be requested by the Purchaser
in form and substance acceptable to the Purchaser's counsel, including the
following:
(i) such instruments of sale, transfer, assignment,
conveyance and delivery (including all vehicle titles), in form and
substance reasonably satisfactory to counsel for the Purchaser
(including without limitation the ▇▇▇▇ of Sale set forth as EXHIBIT B
and the Assignment and Assumption Agreement set forth as EXHIBIT C),
as are required in order to transfer to the Purchaser good and
marketable title to the Purchased Assets, free and clear of all
Encumbrances except as provided herein;
(ii) a certificate of the Seller over the signature of the
President or a Vice President of the Seller, dated the Closing Date,
to the effect that (1) the person signing such certificate is familiar
with this Agreement and (2) the conditions specified in Section
8.2(a), (b) and (c) have been satisfied;
(iii) a certificate of the Secretary or Assistant Secretary of
the Seller, dated the Closing Date, as to the incumbency of any
officer of the Seller executing this Agreement, each other Operative
Document and each other document related thereto and covering such
other matters as the Purchaser may reasonably request;
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(iv) a certified copy of (1) the Certificate of Incorporation
and by-laws of the Seller and all amendments thereto and (2) the
resolutions of the Seller's Board of Directors authorizing the
execution, delivery and consummation of this Agreement and each other
Operative Document and the transactions contemplated hereby and
thereby;
(v) an opinion of Stradling, Yocca, ▇▇▇▇▇▇▇ and ▇▇▇▇▇, P.C.,
counsel to the Seller, dated the Closing Date, in form and substance
acceptable to Purchaser and addressing the matters set forth in
EXHIBIT D;
(vi) such evidence as Purchaser shall request demonstrating
that the transactions contemplated by this Agreement have been
approved by the Board of Directors (and, if necessary, by the
Shareholders) of CIMCO, Inc., and
(vii) such other documents or instruments as the Purchaser
reasonably requests to effect the transactions contemplated hereby.
(f) Prior to or at Closing, the Seller shall have delivered to the
Purchaser evidence reasonably satisfactory to the Purchaser that the
transactions contemplated hereby are not subject to any applicable registration
or filing requirement under any Environmental Law, or in lieu thereof a
certificate, clearance letter or other comparable document from each relevant
Governmental Authority that each such applicable Environmental Law has been
complied with.
(g) Seller shall have received, and shall have delivered to
Purchaser copies of, 510K approvals from the FDA for all products sold or
marketed by the Business on or prior to the Closing Date, except as otherwise
set forth on SCHEDULE 5.12.
(h) Prior to, or at the Closing Seller shall have delivered to
Purchaser that certain Manufacturing Agreement dated as of the Closing Date
between Seller and Purchaser (hereinafter the "Manufacturing Agreement").
Section 8.3. Conditions to the Seller's Obligations. The obligations
of the Seller to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment at or prior to the Closing of each of the
following conditions:
(a) All representations and warranties made by the Purchaser in
this Agreement shall be true, correct and complete in all material respects on
the date hereof and as of the Closing Date as though such representations and
warranties were made as of the Closing Date, and the Purchaser shall have duly
performed or complied with all of the covenants, obligations and conditions to
be performed or complied with by it under the terms of this Agreement on or
prior to or at Closing.
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(b) All authorizations or approvals or other action required in
connection with the execution, delivery and performance of this Agreement, and
each of the other Operative Documents by the Purchaser of the transactions
contemplated hereby and thereby shall have been obtained and shall be in full
force and effect.
(c) Prior to or at Closing, the Purchaser shall have delivered to
the Seller such closing documents as shall be reasonably requested by the
Seller in form and substance reasonably acceptable to the Seller's counsel,
including the following:
(i) the Assignment and Assumption Agreement executed by
the Purchaser and dated the Closing Date;
(ii) a certificate of the Purchaser over the signature of
its President or a Vice President of the Purchaser, dated the Closing
Date, to the effect that (1) the person signing such certificate is
familiar with this Agreement and (2) the conditions specified in
Section 8.3(a) and (b) have been satisfied;
(iii) a certificate of the Secretary or Assistant Secretary
of the Purchaser, dated the Closing Date, as to the incumbency of any
officer of the Purchaser executing this Agreement, the instruments of
transfer or any document related thereto and covering such other
matters as the Seller may reasonably request;
(iv) a certified copy of (1) the Certificate of
Incorporation and by-laws of the Purchaser and all amendments thereto
and (2) the resolutions of the Purchaser's Board of Directors
authorizing the execution, delivery and consummation of this
Agreement, the instruments of transfer and the transactions
contemplated hereby and thereby;
(vi) an opinion of Brody & Satz, counsel to the Purchaser,
dated the Closing Date, in form and substance acceptable to Seller
addressing the matters set forth in EXHIBIT G;
(vii) the Purchase Price, as set forth in Section 2.2 in one
or more checks or by a wire transfer as specified by the Seller prior
to the Closing; and
(viii) such other documents or instruments as the Seller
reasonably requests to effect the transactions contemplated hereby.
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ARTICLE IX
TERMINATION
Section 9.1. Termination. This Agreement may be terminated at any
time prior to Closing as follows:
(a) by mutual consent of the Seller and the Purchaser;
(b) by either the Seller or the Purchaser if the other party hereto
shall breach in any material respect any of its representations, warranties or
obligations contained in this Agreement;
(c) by the Purchaser if any authorization, consent, waiver or
approval required for the consummation of the transactions contemplated hereby
shall impose any condition or requirement, which condition or requirement the
Purchaser determines, in its good faith judgment, to be materially burdensome
or to deny to the Purchaser in any material respect the benefits intended to be
obtained by the Purchaser pursuant to the transactions contemplated by this
Agreement;
(d) by the Purchaser, in the event that the conditions to its
obligations set forth in Article VI hereof have not been satisfied or waived;
(e) by the Seller, in the event that the conditions to its
obligations set forth in Article VI hereof have not been satisfied or waived on
or before the Closing Date; and
(f) by either party if the transactions contemplated by this
Agreement shall not have been consummated on or before January 1, 1996 (or such
later date as may be agreed upon in writing by the parties hereto).
Section 9.2. Effect of Termination. If this Agreement is terminated
pursuant to Section 9.1 hereof, all rights and obligations of the Seller and
the Purchaser hereunder shall terminate and no party shall have any liability
to the other party, except for obligations of the parties hereto in Sections
7.1, 10.2, 10.3, 11.2 and 11.9, which shall survive the termination of this
Agreement, and except nothing herein will relieve any party from liability for
any breach of any representation, warranty, agreement or covenant contained
herein prior to such termination.
ARTICLE X
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
Section 10.1. Survival of Representations and Warranties. The
representations and warranties provided for in this Agreement shall survive the
Closing and remain in full force and effect, subject to the terms of SECTION
10.2 below.
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Section 10.2. Indemnification. (a) The Seller shall indemnify and
hold harmless the Purchaser, its Affiliates, officers, directors, employees,
agents and representatives, and any Person claiming by or through any of them,
against and in respect of any and all claims, costs, expenses, damages,
liabilities, losses or deficiencies (including, without limitation, counsel's
fees and other costs and expenses incident to any suit, action or proceeding)
(the "Damages") arising out of, resulting from or incurred in connection with
(i) any inaccuracy in any representation or the breach of any warranty made by
the Seller in this Agreement, (ii) the breach by the Seller of any covenant or
agreement to be performed by it hereunder, and (iii) any Excluded Liability.
(b) The Purchaser shall indemnify and hold harmless the Seller, its
Affiliates, officers, directors, employees, agents and representatives, and any
Person claiming by or through any of them, against and in respect of any and
all claims, costs, expenses, damages, liabilities, losses or deficiencies
(including, without limitation, counsel's fees and other costs and expenses
incident to any suit, action or proceeding) (the "Damages") arising out of,
resulting from or incurred in connection with (i) any inaccuracy in any
representation or the breach of any warranty made by the Purchaser in this
Agreement, (ii) the breach by the Purchaser of any covenant or agreement to be
performed by it hereunder, and (iii) any Assumed Liability.
(c) Any Person providing indemnification pursuant to the provisions of
this Section 10.2 is hereinafter referred to as an "Indemnifying Party" and any
Person entitled to be indemnified pursuant to the provisions of this Section
8.2 is hereinafter referred to as an "Indemnified Party."
(d) Following the determination of the final Net Asset Value as of the
Closing Date, any claim made under this Agreement shall be made only pursuant
and subject to this Article X.
(e) The obligations of any Indemnifying Party to indemnify any
Indemnified Party pursuant to this Article X shall be subject to the following
limitations:
(i) No claim shall be made except to the extent that any
violation of any representation or warranty of a party to this
Agreement shall result in direct injury or damage to the Indemnified
Party.
(ii) Except for claims relating to accounts receivables
acquired by Purchaser pursuant to this Agreement, no claim shall be
made except to the extent that the aggregate of all damages suffered
by the Indemnified Party exceeds (a) $50,000 ($10,000, if the claim
relates to Liabilities Assumed pursuant to Section 3.1 if this
agreement) plus (b) the aggregate amount of all assets discovered or
arising and benefitting the Indemnified Party from and after the
Closing which had not been included in the determination of Net Asset
Value, and the aggregate indemnification obligation of the Seller
under this Agreement shall in no event exceed the Purchase Price
(except for claims relating to products liability, Proprietary Rights
and
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intellectual property, and environmental matters, which shall be
counted toward, but shall not be subject to, such limit).
(iii) Notwithstanding any other provision of this Article X,
in the event of a final judgment which prohibits Purchaser or its
successors or assigns from using any of the Proprietary Rights
necessary to manufacture and sell the Products, Seller may, at its
sole option and at its expense obtain and maintain (also at Seller's
sole expense) a license for Purchaser and its successors or assigns to
use such Proprietary Rights.
(iv) No claim may be made for indemnification under this
Agreement after the expiration of three (3) years following the
Closing date, except that claims for indemnification due to a breach
of Sections 5.19 and 5.17 of this Agreement and/or relating to
products liability may be made at any time following the Closing date.
Section 10.3. Procedures for Claims. In the case of any claim for
indemnification arising from a claim of a third party, an Indemnified Party
shall give prompt written notice, in no event more than 10 days following such
Indemnified Party's receipt of such claim or demand, to the Indemnifying Party
of any claim or demand which such Indemnified Party has knowledge and as to
which it may request indemnification hereunder. The Indemnifying Party shall
have the right to defend and to direct the defense against any such claim or
demand, in its name or in the name of the Indemnified Party, as the case may
be, at the expense of the Indemnifying Party, and with counsel selected by the
Indemnifying Party unless (i) such claim or demand seeks an order, injunction
or other equitable relief against the Indemnified Party, or (ii) the
Indemnified Party shall have reasonably concluded that (x) there is a conflict
of interest between the Indemnified Party and the Indemnifying Party in the
conduct of the defense of such claim or demand or (y) the Indemnified Party has
one or more defenses not available to the Indemnifying Party. Notwithstanding
anything in this Agreement to the contrary, the Indemnified Party shall, at the
expense of the Indemnifying Party, cooperate with the Indemnifying Party, and
keep the Indemnifying Party fully informed, in the defense of such claim or
demand. The Indemnified Party shall have the right to participate in the
defense of any claim or demand with counsel employed at its own expense;
provided, however, that, in the case of any claim or demand described in clause
(i) or (ii) of the second preceding sentence or as to which the Indemnifying
Party shall not in fact have employed counsel to assume the defense of such
claim or demand, the reasonable fees and disbursements of such counsel shall be
at the expense of the Indemnifying Party. The Indemnifying Party shall have no
indemnification obligations with respect to any such claim or demand which
shall be settled by the Indemnified Party without the prior written consent of
the Indemnifying Party, which consent shall not be unreasonably withheld or
delayed.
Section 10.4. Guaranty of Accounts Receivable. Any provision to the
contrary herein contained notwithstanding, and without limiting any other right
of the Seller hereunder to recover for a breach of a representation or
warranty, for indemnification or otherwise, the Seller hereby guaranties to
Purchaser that all of the accounts receivable of the Business included in the
Purchased Assets and reflected on the Auditor's Report will be collected
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within 180 days after the Closing. In the event that after the expiration of
such 180 day period Purchaser has collected on account of such accounts
receivable an amount less than the book value of the accounts receivable of the
Business as shown on the Auditors' Report, the Seller agrees to repurchase all
uncollected accounts receivable of the Division from Purchaser for an amount
equal to (x) the book value of such accounts receivable as shown on the
Auditors' Report minus (y) the net amounts deduction of the collection expenses
realized by Purchaser on account of the accounts receivable included in the
Purchased Assets.
ARTICLE XII
MISCELLANEOUS
Section 11.1. Notices. All notices or other communications required
or permitted hereunder shall be in writing and shall be delivered personally,
by facsimile or sent by certified, registered or express air mail, postage
prepaid, and shall be deemed given when so delivered personally, or by
facsimile, or if mailed, five days after the date of mailing, as follows:
If to the Purchaser: ▇▇▇▇▇ ▇▇▇▇▇ Ca, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇▇▇▇▇, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Seller: Medical Molding Corporation of America
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Stradling, Yocca, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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Section 11.2. Expenses. Regardless of whether the transactions
provided for in this Agreement are consummated, except as otherwise provided
herein, each party hereto shall pay its own expenses incident to this Agreement
and the transactions contemplated herein.
SECTION 11.3. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF NEW JERSEY, WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES
THEREOF. EACH OF THE PARTIES HERETO IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATES OF NEW JERSEY AND CALIFORNIA AND THE
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY AND THE CENTRAL
DISTRICT OF CALIFORNIA FOR THE PURPOSE OF ANY SUIT, ACTION, PROCEEDING OR
JUDGMENT RELATING TO OR ARISING OUT OF THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY. SERVICE OF PROCESS IN CONNECTION WITH ANY SUCH SUIT,
ACTION OR PROCEEDING MAY BE SERVED ON EACH PARTY HERETO ANYWHERE IN THE WORLD
BY THE SAME METHODS AS ARE SPECIFIED FOR THE GIVING OF NOTICES UNDER THIS
AGREEMENT. EACH OF THE PARTIES HERETO IRREVOCABLY CONSENTS TO THE JURISDICTION
OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING AND TO THE LAYING OF
VENUE IN SUCH COURT. EACH PARTY HERETO IRREVOCABLY WAIVES ANY OBJECTION TO THE
LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH COURTS
AND IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM; PROVIDED
HOWEVER, UNLESS OTHERWISE AGREED BY THE PARTIES, ANY CASE INSTITUTED OR
COMMENCED BY THE SELLER SHALL BE BROUGHT IN CALIFORNIA AND ANY CASE INSTITUTED
OR COMMENCED BY PURCHASER OR ITS AFFILIATES SHALL BE BROUGHT IN NEW JERSEY.
Section 11.4. Assignment; Successors and Assigns; No Third Party
Rights. Except as otherwise provided herein, this Agreement may not be
assigned by operation of law or otherwise without consent of the other party,
which shall not be unreasonably withheld, and any attempted assignment shall,
without such consent, be null and void. The Purchaser may assign all of its
rights under this Agreement to any Affiliate; provided such Affiliate assumes
all of the obligations of the Purchaser hereunder, and provided further that no
such assignment shall relieve Purchaser or ▇▇▇▇▇ ▇▇▇▇▇, Inc. of their
respective obligations under this Agreement. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors, assigns and legal representatives, except as otherwise provided in
SECTION 7.8. This Agreement shall be for the sole benefit of the parties to
this Agreement and their respective successors, assigns and legal
representatives and is not intended, nor shall be construed, to
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give any Person, other than the parties hereto and their respective successors,
assigns and legal representatives, any legal or equitable right, remedy or
claim hereunder.
Section 11.5. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original agreement, but all
of which together shall constitute one and the same instrument.
Section 11.6. Titles and Headings. The headings and table of
contents in this Agreement are for reference purposes only, and shall not in
any way affect the meaning or interpretation of this Agreement.
Section 11.7. Entire Agreement. This Agreement, including the
Schedules and Exhibits attached thereto, constitutes the entire agreement among
the parties with respect to the matters covered hereby and supersedes all
previous written, oral or implied understandings among them with respect to
such matters.
Section 11.8. Amendment and Modification. This Agreement may only be
amended or modified in writing signed by the party against whom enforcement of
such amendment or modification is sought.
Section 11.9. Public Announcement. Except as may be required by law,
neither the Seller, on the one hand, or the Purchaser, on the other hand, shall
issue any press release or otherwise publicly disclose this Agreement or the
transactions contemplated hereby or any dealings between or among the parties
in connection with the subject matter hereof without the prior approval of the
other. In the event that any such press release or other public disclosure
shall be required, the party required to issue such release or other disclosure
shall consult in good faith with the other party hereto with respect to the
form and substance of such release or other disclosure prior to the public
dissemination thereof. Neither party shall disclose the Purchase Price,
whether prior to, on or after the Closing Date, except as may be required by
applicable laws or regulations or the rules of any securities exchange or
association binding on the Purchaser or the Seller, as the case may be, and
except as may be required to obtain consents and approvals from banks or
financial institutions or other parties to agreements to be assigned to
Purchaser, provided that such banks, financial institutions or other parties
agree to comply with the intent of this Section 11.9.
Section 11.10. Waiver. Any of the terms or conditions of this
Agreement may be waived at any time by the party or parties entitled to the
benefit thereof, but only by a writing signed by the party or parties waiving
such terms or conditions.
Section 11.11. Severability. The invalidity of any portion hereof
shall not affect the validity, force or effect of the remaining portions
hereof. If it is ever held that any restriction hereunder is too broad to
permit enforcement of such restriction to its fullest extent, such restriction
shall be enforced to the maximum extent permitted by law.
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Section 11.12. No Strict Construction. Each of the Purchaser and the
Seller acknowledge that this Agreement has been prepared jointly by the parties
hereto, and shall not be strictly construed against either party.
Section 11.13. Risk of Loss. Prior to the Closing, the risk of loss
with respect to the Purchased Assets shall remain with the Seller. In the
event of any material casualty, in addition to any other rights the Purchaser
may have hereunder, the Purchaser shall have the right to terminate this
Agreement upon giving written notice of its election to terminate to the
Seller.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
▇▇▇▇▇ ▇▇▇▇▇ CA, INC.,
A California Corporation
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------
Name:▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title:Vice-President
MEDICAL MOLDING CORPORATION OF
AMERICA, A California Corporation
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
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GUARANTEE AND INDEMNIFICATION
CIMCO, INC., a Delaware corporation, represents and warrants that it
holds all of the issued and outstanding shares of capital stock of MEDICAL
MOLDING CORPORATION OF AMERICA, a California corporation ("MMCA"), and that it
guarantees full and prompt performance by MMCA of all obligations and
liabilities of MMCA under the foregoing Agreement and agrees to indemnify and
hold ▇▇▇▇▇ ▇▇▇▇▇ CA, INC. and its corporate parent ▇▇▇▇▇ ▇▇▇▇▇ harmless from
any breach or violation of the obligations set forth in the foregoing
Agreement, hereby waiving notice, demand, and obligations to proceed against
any third party.
CIMCO, INC.
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman
GUARANTEE AND INDEMNIFICATION
▇▇▇▇▇ ▇▇▇▇▇, INC., a New Jersey corporation, represents and warrants
that it holds all of the issued and outstanding shares of capital stock of
▇▇▇▇▇ ▇▇▇▇▇ CA, INC., a California corporation ("VSCA"), and that it guarantees
full and prompt performance by VSCA of all obligations and liabilities of VSCA
under the foregoing Agreement and agrees to indemnify and hold MEDICAL MOLDING
CORPORATION OF AMERICA, and its corporate parent CIMCO, INC. harmless from any
breach or violation of the obligations set forth in the foregoing Agreement,
hereby waiving notice, demand, and obligations to proceed against any third
party.
▇▇▇▇▇ ▇▇▇▇▇, INC.
By: T.D. WALL
-------------------------
Name: T.D. Wall
Title: President
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