ASSET PURCHASE AGREEMENT
WHITE KNIGHT HEALTHCARE, INC.
AND
THANTEX HOLDINGS, INC.
August ___, 1998
WHITE KNIGHT ASSET PURCHASE AGREEMENT (this "Agreement"), dated August
___, 1998, between WHITE KNIGHT HEALTHCARE, INC., a Pennsylvania corporation
("Seller"), and THANTEX HOLDINGS, INC. a Delaware corporation ("Purchaser").
Certain capitalized terms shall have the meaning set forth in Article I.
WHEREAS, in the past, Seller operated through three divisions, White
Knight medical, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ and White Knight industrial. Seller no longer
operates the ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ division. Certain of the ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
functions were merged into the White Knight industrial division. The Seller's
parent company, Isolyser Company, Inc. ("Isolyser") holds certain PVA related
patents and the OREX trademark and has used the Seller for the manufacture, sale
and distribution of certain OREX products. Certain functions, operations,
employees and assets are presently shared by the White Knight industrial
division and the White Knight medical division; and
WHEREAS, Seller wishes to sell to Purchaser, and Purchaser wishes to
purchase from Seller, the assets of the White Knight Industrial Division, as
hereinafter defined, upon the terms and subject to the conditions set forth
herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants hereinafter set forth, and other valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Purchaser and Seller hereby agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.01. Certain Defined Terms. (a) As used in this Agreement, the
following terms shall have the following meanings:
"Acquired Intellectual Property Rights" means the Intellectual Property
of the Business which is listed in Section 1.01 of the Disclosure Statement.
"Affiliate" of a specified Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by or is
under common control with, such specified Person.
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"Ancillary Agreements" means the agreements described in Section 5.06
and Exhibit A.
"Assumed Liabilities" means those specific liabilities which the
Purchaser specifically agreed to assume in writing, as listed on Exhibit B. The
Purchaser assumes no other liabilities of the Seller.
"Business" means the business customarily and historically conducted by
the Seller in its White Knight Industrial Division.
"Business Day" means any day that is not a Saturday, a Sunday or other
day on which banks are required or authorized by law to be closed in the City of
New York.
"Control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as a trustee or
executor (in each case, acting in a fiduciary capacity), of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, as trustee or executor (in each
case, acting in a fiduciary capacity), by contract or credit arrangement or
otherwise.
"Current Assets" means the Accounts Receivable and Inventory being part
of the Subject Business Assets.
"Disclosure Statement" means the Disclosure Statement dated as of the
date hereof delivered to Purchaser by Seller.
"Encumbrance" means a pledge, lien, security interest, mortgage,
charge, adverse claim of ownership or use, or other encumbrance of any kind.
"Equipment Related Property" means (1) all inventory of spare and
replacement parts relating to equipment, (2) all plans, manuals, records and
other documents relating to the equipment, and (3) the Intellectual Property
Rights, if any, directly pertaining to the equipment or the customized products
such equipment has been designed or programmed to produce.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Assets" means (1) those assets of the Seller which are used
solely and exclusively in the Seller's medical division, (2) the Seller's former
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ plant, located in New Jersey, (3) the Shared Functions which
the Seller and Purchaser agree are to be retained by Seller (some of which may
be the subject of a Shared Services Agreement) (4) distributorship or other
rights in OREX products and Safety products, (5) those other assets which the
Seller and the Purchaser agree are Excluded Assets and which are listed on
Exhibit
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C and (6) the Face Mask inventory described in Section 1.01 of the Disclosure
Statement and having a value of $461,609.
"GAAP" means United States generally accepted accounting principles in
effect from time to time applied consistently throughout the period involved.
"Governmental Authority" means any government, any governmental entity,
department, commission, board, agency or instrumentality, and any court,
tribunal, or judicial or arbitral body, whether federal, state, local or
foreign.
"Governmental Order" means any order, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.
"Intellectual Property Rights" means (a) patent and patent
applications, (b) trademarks, service marks, logos, trade dress, trade names and
corporate names and registrations and applications for registration thereof, (c)
copyrights, whether registered or unregistered, and registrations and
applications for registration thereof and (d) trade secrets, formulas,
inventions, invention disclosures, know-how, manufacturing and production
processes and techniques, business and marketing plans, customer and supplier
lists, computer software and other proprietary business and intellectual
property rights.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended.
"Knowledge of Seller" or "Seller's Knowledge" means the actual
knowledge of the executive officers of Seller after due inquiry of the executive
officers of Seller.
"Losses" of a Person means any and all claims, actions or causes of
action, assessments, losses, damages, deficiencies, liabilities, costs and
expenses (including reasonable legal fees, interest, penalties, and all
reasonable amounts paid in investigation, defense or settlement of any of the
foregoing) actually suffered or incurred by such Person.
"Material Adverse Effect" means, with respect to any Person, any
change in, or effect on, the business of such Person that is materially adverse
to the business, operations, results of operations or the financial condition
thereof or an amount in excess of $10,000.
"Permitted Encumbrances" means those Encumbrances listed in Section
1.01 of the Disclosure Statement, encumbrances to pay taxes or other
governmental assessments which are not yet due and payable, and other
encumbrances which do not in the aggregate materially detract from the value of
the Subject Business Assets or materially impair the use thereof.
"Person" means an individual, corporation, partnership, joint venture,
person (including, without limitation, a "person" as defined in Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended), trust, association or
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another entity.
"Related Transactions" means those transactions by and among the
Purchaser, the Seller and their Affiliates more fully described on Exhibit D.
"Shared Functions" means the assets, facilities, employees and
operations which have been used jointly by the Seller's industrial division, by
the Seller's medical division or by Affiliates of the Seller. The Seller
represents and warrants that all Shared Functions are identified in Section 1.01
of the Disclosure Statement.
"Subject Business Assets" means (i) the fixed assets of the Business
which are listed in Section 1.01 of the Disclosure Statement, including the
Equipment Related Property pertaining to such assets, (ii) the real property,
fixtures and improvements which together comprise the Childersburg, Alabama
plant (the "Plant") owned by Seller located on the real property more
particularly described in such Section 1.01, (iii) the inventory (the
"Inventory") of the Business (including raw materials, work in process and
finished goods except as may defined as a part of the Excluded Assets, if
applicable) identified in Section 1.01 of the Disclosure Statement, (iv) the
accounts receivable (the "Accounts Receivable") of the Business (both billed and
unbilled) identified in Section 1.01 of the Disclosure Statement, (v) all of
Seller's right to and interest in those contracts (collectively, the
"Contracts") and leases (collectively, the "Leases") identified in such Section
1.01, (vi) the Acquired Intellectual Property Rights (saving and excepting the
Licensed Intellectual Property Rights which are treated separately), (vii) the
Shared Functions which the Seller and the Purchaser agree shall transfer to the
Purchaser and identified in such Section 1.01, (viii) all tangible assets
located at the Plant and in the Seller's offices in Charlotte, North Carolina
and (ix) any other real or personal property owned, leased, or licensed by the
Seller and used primarily in the Business, wherever located; saving and
excepting the Excluded Assets.
"Tax" or "Taxes" means all income, gross receipts, sales, use,
employment, franchise, profits, property, transfer or other taxes, fees, stamp
taxes and duties, assessments or charges of any kind whatsoever (whether payable
directly or by withholding), together with any interest and any penalties,
additions to tax or additional amounts imposed by any taxing authority with
respect thereto.
"White Knight Industrial Division" means the operations of the Seller's
industrial division as it has customarily and historically been operated,
including any operations and functions which were transferred to the industrial
division when the ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ division was eliminated (i.e. the manufacture
and sale of blankets and headrests for the transportation industry); excluding,
however, the following (i) the right to manufacture, sell and distribute
patented OREX products, (ii) the Shared Functions which the parties agree are
not Subject Business Assets, and (iii) the Excluded Assets.
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"Working Capital" means, at any time, the Current Assets.
(b) Each of the following terms is defined in the section set
forth opposite such terms below:
Term Section
Agreement Recitals
Authorized Agent 11.10
Accounting Procedures 2.04(b)
CERCLA 3.07(g)
Closing 2.03(a)
Closing Date 2.03(a)
Closing Date Current Assets Statement 2.04
Confidentiality Agreement 5.05
Employees 6.01(a)
Environmental Laws 3.08(g)
Environmental Permits 3.08(g)
Financial Statements 3.04
Hazardous Materials 3.08(g)
Historic Industrial Division 3.04
Indemnified Party 9.04
Indemnifying Party 9.04
Independent Accounting Firm 2.04(d)(ii)
IRS 3.12(a)
Material Contracts 3.16
Maximum Purchase Price 2.02
Plant 1.01
Purchaser Recitals
Purchase Price 2.02
Purchaser's Accountants 2.04(b)
RCRA 3.08(g)
Qualified Accounts Receivable 2.02
Qualified Inventory 2.02
Seller Recitals
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ARTICLE II.
PURCHASE AND SALE
SECTION 2.01. Purchase and Sale. Upon the terms and subject to the
conditions set forth in this Agreement, Seller agrees to sell to Purchaser, and
Purchaser agrees to purchase from Seller, on the Closing Date, the Subject
Business Assets.
SECTION 2.02. Purchase Price. The aggregate purchase price (the
"Purchase Price") for the Subject Business Assets (exclusive of any additional
consideration set forth in the Ancillary Agreements) shall be the aggregate of
the following amounts:
(i) Inventory: The book value of "Qualified Inventory"
multiplied by 0.70. "Qualified Inventory" shall mean the
inventory of the Business which is of a quality and quantity
commercially usable or saleable in the ordinary and regular
course of the Business, after deduction of reserves
calculated in accordance with the Accounting Procedures
attached as Exhibit E and GAAP. The Qualified Inventory at
closing was calculated to be $3,645,751 and the amount paid
for such inventory was $2,550,626.
(ii) Accounts Receivable. The book value of "Qualified Accounts
Receivable" multiplied by 0.85. "Qualified Accounts
Receivable " shall mean the collectible accounts receivable
of the Business, resulting from services rendered by or
operations of the Business in the ordinary course of
Business and are not subject to setoff or counterclaim,
after deduction of reserves calculated in accordance with
the Accounting Procedures attached as Exhibit E and GAAP.
The Qualified Accounts Receivable at closing was calculated
to be $2,003,101 and the amount paid for such accounts was
$1,702,635.
(iii) Remainder of Subject Business Assets. $500,000 allocated to
the remainder of the Subject Business Assets, including the
Plant.
Subject to adjustment in accordance with Section 2.04, the Purchase Price shall
be payable as provided in Section 2.03(c).
SECTION 2.03. Closing.
(a) Closing Date. Subject to the terms and conditions of this
Agreement, the sale and purchase of the Subject Business Assets contemplated
hereby shall take place at a closing (the "Closing") to be held at 10:00 a.m.,
Tuesday, August 11, 1998, or on the third Business Day following the
satisfaction or waiver of the conditions to the obligations of the parties set
forth in Article VIII. The Closing will occur at the offices of Buist, Moore,
▇▇▇▇▇▇
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& ▇▇▇▇▇, P.A, 5 Exchange Street, Charleston, South Carolina, or at such other
time or on such other date or at such other place as Seller and Purchaser may
mutually agree upon in writing (the day on which the Closing takes place being
the "Closing Date").
(b) Effective Date. The Current Assets and those assets and liabilities
specified the Closing Memorandum of even date are transferred "as of" midnight
July 31, 1998 (the "Effective Date"). The special prorations, allocations and
procedures which apply with respect to the Effective Date are specified in the
Closing Memorandum.
(c) Closing Documents. At the Closing, Seller shall execute and deliver
to Purchaser such transfer and other documents as required to transfer the
Subject Business Assets, together with such other instruments of conveyance,
affidavits, declarations, assignments and other supporting documentation
typically delivered in connection with a transaction of this type and in
accordance with local law or custom (collectively the "Closing Documents")
including:
(i) ▇▇▇▇ of Sale in the form attached as Exhibit F
(ii) A warranty Deed in the form attached as Exhibit G, subject
only to any Permitted Encumbrances.
(iii)Trademark Assignment and Agreement in the form attached
hereto as Exhibit H.
(iv) Ancillary Agreements, other than the License Agreement
(v) Assignment and Assumption of the Assumed Liabilities in the
form attached as Exhibit I
(vi) Assignment of Title Certificates to vehicles, if any.
(vii) Consents, as defined in Section 3.21, unless waived by the
parties
(viii) Assignment of Permits, if any, as defined in Section 3.21,
unless waived by the parties.
(ix) Release of all liens and encumbrances on the Subject
Business Assets except Assumed Liabilities and Permitted
Encumbrances, or other arrangements satisfactory to
Purchaser and Seller
(x) Good Standing Certificates of Seller and Purchaser
(xi)Officer's Certificate of Seller and Purchaser including
authorizing resolution, articles of incorporation with all
amendments, by-laws and incumbency certificates.
(xii) FIRPTA affidavit and such other title affidavits as may be
required by Purchaser's title insurance company or customary
practice in the jurisdiction where the real property is
located.
(d) At the Closing, Purchaser shall deliver to Seller the Purchase
Price, by wire transfer in immediately available funds, to an account or
accounts designated at least three Business Days prior to the Closing Date by
Seller in a written notice to Purchaser.
SECTION 2.04. Purchase Price Adjustment. (a) The Purchase Price shall
be subject
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to adjustment after the Closing Date as specified in this Section 2.04.
(b) As soon as practicable after the expiration of 180 days following
the Closing Date (but in no event later than 210 calendar days following the
Closing Date), Purchaser shall prepare and deliver to Seller a statement (the
"Closing Date Current Assets Statement") setting forth the value of the Current
Assets for purposes of the Purchase Price after application of the discounts set
forth in Section 2.02 (the "Closing Date Current Assets"), which will be
determined in accordance with the procedures set forth in the Accounting
Procedures attached as Exhibit E and GAAP. The Closing Date Current Assets
Statement shall be prepared based on Seller's books and records as of the
Closing Date and shall be verified by review by, and shall be accompanied by the
statement thereon of, Ernst & Young L.L.P., accountants of Purchaser
("Purchaser's Accountants"), stating that the Closing Date Current Assets have
been determined in accordance with the Accounting Procedures. Seller and
Purchaser agree that the physical inventory of Seller's Inventory shall be
conducted on the Closing Date in accordance with the procedures set forth in the
Disclosure Statement. During the preparation of the Closing Date Current Asset
Statement by Purchaser and the period of any dispute provided for in Section
2.04(d), Purchaser shall provide Seller and Deloitte & Touche LLP ("Seller's
Accountants") access to the books, records, facilities and employees of
Purchaser (or the applicable subsidiary on site), and, if agreed by Purchaser's
Accountants, the work papers of Purchaser's Accountants, and Purchaser shall
cooperate fully with Seller's Accountants, in each case to the extent required
by Seller and Seller's Accountants in order to review the Closing Date Current
Assets Statement and to investigate the basis for any such dispute.
(c) Subject to the limitations set forth in Section 2.04(d), if
Purchaser has not received a notice of dispute from Seller in accordance with
Section 2.04(d) within 30 Business Days after the date of receipt by Seller of
the Closing Date Current Assets Statement:
(i) If the value of the Closing Date Current Assets shown on the
Closing Date Current Asset Statement is less than the amount
of the applicable Purchase Price component applicable to the
Current Assets, Seller shall pay to Purchaser, as an
adjustment to the Purchase Price, an amount equal to such
difference; and
(ii) If the value of the Closing Date Current Assets shown on the
Closing Date Current Assets Statement is greater than the
amount of the applicable Purchase Price component applicable
to the Current Assets, Purchaser shall pay to Seller, as an
adjustment to the Purchase Price, an amount equal to such
excess; provided that the adjustment does not result in a
purchase price which exceeds the maximum price set forth in
Section 2.02 for either Inventory or Accounts Receivable.
(iii)Notwithstanding any provision to the contrary, if the
Purchaser has not collected $1,500,000 from the Accounts
Receivable by 210 days after the Closing Date, the
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Seller shall pay the Purchaser the difference between the
Purchaser's collections and $1,500,000 within five (5) business
days of request. Purchaser agrees to use commercially reasonable
efforts to collect all Accounts Receivable by such date and to
apply collections first to the Accounts Receivable before
application to accounts receivable generated after Closing. All
payments to be made under this subsection (c) shall be made by
wire transfer of immediately available funds to an account
designated by the receiving party.
(d) (i) If not disputed by Seller in accordance with this Section
2.04(d), the Closing Date Current Assets Statement delivered by Purchaser to
Seller shall be final, binding and conclusive on the parties hereto. Seller may
dispute any amounts reflected on the Closing Date Current Assets Statement,
provided, however, that Seller shall notify Purchaser and Purchaser's
Accountants in writing of each disputed item, specifying, if known, the amount
thereof in dispute and setting forth, in detail, the basis for such dispute,
within 30 Business Days of Seller's receipt of the Closing Date Current Assets
Statement. In the event of such a dispute, each of Seller and Purchaser shall
negotiate in good faith to reconcile their differences.
(ii) If Purchaser and Seller are unable to reach a resolution,
leaving in dispute amounts the net effect of which in the
aggregate would change the Closing Date Current Assets,
Purchaser and Seller shall submit the items remaining in
dispute that Seller shall be entitled to dispute by the terms
of this Section 2.04(d) for resolution to the Charlotte,
North Carolina office of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP or such other
independent accounting firm as may be mutually acceptable to
Seller and Purchaser (the "Independent Accounting Firm"),
which shall, within 30 Business Days of such submission,
determine and report to Seller and Purchaser upon such
remaining disputed items, and such report shall have the
legal effect of an arbitral award and shall be final, binding
and conclusive on Seller and Purchaser. The fees and
disbursements of the Independent Accounting Firm shall be
allocated between Seller and Purchaser in the same proportion
that the aggregate amount of such remaining disputed items so
submitted to the Independent Accounting Firm that is
unsuccessfully disputed by each such party (as finally
determined by the Independent Accounting Firm) bears to the
total amount of such remaining disputed items so submitted.
(iii)Any amount that is payable under Section 2.04(c), including,
without limitation any portion thereof that is subject to a
dispute resolved under this Section 2.04(d) shall be paid by
Seller or Purchaser, as the case may be, by wire transfer in
immediately available funds, within five Business Days
following the resolution of such dispute and in an amount in
accordance with such resolution.
(e) In acting under this Agreement, Seller's Accountants, Purchaser's
Accountants and the Independent Accounting Firm shall be entitled to the
privileges and immunities of arbitrators.
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(f) Any payment required to be made by Seller or Purchaser pursuant to
Section 2.04(c) shall bear interest from the Closing Date through the date of
payment on the basis of the average of the daily rate of interest publicly
announced by The Chase Manhattan Bank from time to time as its base rate from
the Closing Date to the date of such payment.
SECTION 2.05. Allocation of Purchase Price. The Purchase Price shall be
allocated for tax purposes among each item or class of the Subject Business
Assets as set forth in Exhibit J of this Agreement. Seller and Purchaser agree
that they will prepare and file any notice or other filing required pursuant to
Section 1060 of the Internal Revenue Code, and that any notices or filings will
be prepared based upon such tax allocation of the Purchase Price. Purchaser
agrees to send to Seller a completed copy of its Form 8594 (Asset Acquisition
Statement under Section 1060) with respect to this transaction prior to filing
such form with the Internal Revenue Service.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser, as of the date of this
Agreement and through the Closing Date as follows:
SECTION 3.01. Incorporation and Authority of Seller. Seller is a
corporation duly incorporated and validly existing under the laws of
Pennsylvania. Seller is duly qualified as a corporation to do business in each
jurisdiction where the character of its properties owned, operated or leased or
the nature of its activities makes such qualification necessary, except for such
failures to be so qualified that would not have a Material Adverse Effect on
Seller. Seller has all necessary corporate power and authority to enter into
this Agreement, to carry out its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Seller, the performance by it of its obligations hereunder and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all requisite corporate action on the part of Seller. This
Agreement has been duly executed and delivered by Seller, and (assuming due
authorization, execution and delivery by Purchaser) this Agreement constitutes a
legal, valid and binding obligation of Seller enforceable against it in
accordance with its terms, subject to the effect of any applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting creditors'
rights generally and subject, as to enforceability, to the effect of general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
SECTION 3.02. No Conflict. Assuming all consents, approvals,
authorizations and other actions described in Section 3.03 have been obtained,
and except as may result from any facts or circumstances relating solely to
Purchaser or as described in Section 3.02 of the Disclosure Statement, the
execution, delivery and performance of this Agreement by Seller does
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not and will not (a) violate or conflict with the organizational documents of
the Seller, (b) conflict with or violate any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award applicable to the Seller,
except for such conflicts or violations as would not have a Material Adverse
Effect on the ability of Seller to conduct its business as currently conducted
or have a Material Adverse Effect on the ability of Seller to consummate the
transactions contemplated by this Agreement or (c) result in any breach of, or
constitute a default (or event which with the giving of notice or lapse of time,
or both, would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of any Encumbrance on any of the Subject Business Assets or properties
of the Seller pursuant to, any note, bond, mortgage, credit agreement,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument relating to such assets or properties to which the Seller is a party
or by which any of such assets or properties is bound or affected, except as
would not have a Material Adverse Effect on the ability of Seller to conduct its
business as currently conducted or have a Material Adverse Effect on the ability
of Seller to consummate the transactions contemplated by this Agreement.
SECTION 3.03. Consents and Approvals. The execution and delivery of
this Agreement by Seller does not, and the performance of this Agreement by
Seller will not, require any consent, approval, authorization or other action
by, or filing with or notification to, any Governmental Authority, except where
failure to obtain such consent, approval, authorization or action, or to make
such filing or notification, would not prevent Seller from, or delay Seller in,
performing any of its material obligations under this Agreement and would not
have a Material Adverse Effect on the ability of Seller to conduct its business
as currently conducted and as may be necessary as a result of any facts or
circumstances relating solely to Purchaser.
SECTION 3.04. Financial Statements; Absence of Undisclosed Liabilities.
Attached to Section 3.04 of the Disclosure Statement are true and correct copies
the summary financial reports of the White Knight industrial division, without
adjustments for the differences between White Knight industrial division as
previously operated by the Seller and the Business the "Historic Industrial
Division") for 1996, 1997 and the months January, 1998 through June, 1998 (the
"Financial Statements"). To the best of Seller's Knowledge, the Financial
Statements, which are unaudited, fairly present in all material respects the
results of the operations of the Historic Industrial Division for the period
then ended, and include all adjustments (consisting of normal recurring
adjustments) necessary for a fair presentation of the information included
therein, except for year-end adjustments.
SECTION 3.05. Absence of Certain Changes or Events. Except as set forth
in Section 3.05 of the Disclosure Statement, since December 31, 1997, Seller has
conducted the Business only in the ordinary course, and there has not been with
respect to the Subject Business Assets (i) any Material Adverse Effect, (ii) any
damage, destruction or loss, due to fire or other casualty, whether or not
covered by insurance, that has or reasonably could be expected to have a
Material Adverse Effect, (iii) any change in accounting methods, principles or
practices by
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Seller materially affecting its assets, liabilities or business, except insofar
as may have been required by a change in GAAP, (iv) any sale, lease, transfer,
or assignment of any material Subject Business Assets other than in the ordinary
course of business, (v) any material capital expenditures other than in the
ordinary course of business, or (vi) any material capital investment in, or loan
to, any other Person outside the ordinary course of business.
SECTION 3.06. Litigation. Except as set forth in Section 3.06 of the
Disclosure Statement, as of the date of this Agreement, there are no claims,
actions, proceedings or investigations pending, or to the Knowledge of Seller,
threatened against Seller or any of its assets or properties, including but not
limited to the Subject Business Assets, before any court, arbitrator or
administrative, governmental or regulatory authority or body that are reasonably
likely to have a Material Adverse Effect on Seller. Except as set forth in
Section 3.06 of the Disclosure Statement, neither Seller nor any of the Subject
Business Assets is subject to any order, writ, judgment, injunction, decree,
determination or award. Except as otherwise set forth in Section 3.06 of the
Disclosure Statement, each of the matters listed on Section 3.06 of the
Disclosure Statement is covered by insurance, and the insurer has acknowledged
coverage of each such matter without reservation.
SECTION 3.07. Compliance with Applicable Laws. Except as set forth in
Section 3.07 of the Disclosure Statement, within the preceding three years
Seller has not violated or failed to comply with any statute, law, regulation,
rule, judgment, decree or order of any Governmental Authority applicable to its
Business, except for violations and failures to comply that would not,
individually or in the aggregate, have a Material Adverse Effect on the ability
of Seller to conduct its Business as currently conducted, and there is no action
pending against Seller charging failure to so comply. The conduct of the
Business of Seller is in conformity with all federal, state and local
governmental and regulatory requirements applicable to its Business and
operations, except where such nonconformity would not, in the aggregate, have a
Material Adverse Effect on the ability of Seller to conduct its Business as
currently conducted. Seller has all permits, licenses, franchises and
certificates of occupancy from Governmental Authorities required to conduct its
Business as now being conducted, except for such permits, licenses, franchises
and certificates the absence of which would not, in the aggregate, have a
Material Adverse Effect on the ability of Seller to conduct its Business as
currently conducted.
SECTION 3.08. Environmental Matters. Except as set forth in Section
3.08 of the Disclosure Statement:
(a) Except as would not have a Material Adverse Effect on the ability
of Seller to conduct its Business as currently conducted, Seller (i) is in
compliance with all applicable Environmental Laws and (ii) holds all
Environmental Permits necessary for its operations and properties and is in
compliance with the terms and conditions of all such Environmental Permits.
(b) Seller has not received any written claim, demand, notice or
complaint
581510.1
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alleging violation of or liability (including without limitation any liability
for site investigation. Cleanup or corrective action) under any Environmental
Laws concerning the Subject Business Assets.
(c) Except as would not have a Material Adverse Effect on the ability
of Seller to conduct its Business as currently conducted, to Seller's Knowledge,
none of the following exists at the Plant: (i) asbestos-containing material in
any form or condition; (ii) materials containing polychlorinated biphenyls;
(iii) underground storage tanks or surface impoundments; or (iv) landfills,
surface impoundments or disposal areas.
(d) Except as would not have a Material Adverse Effect on the ability
of Seller to conduct its Business as currently conducted , Seller has not
treated, stored, disposed of, arranged for or permitted the disposal of,
transported, handled or released any Hazardous Material, or owned or operated
any facility or property, so as to give rise to liabilities for response costs,
natural resource damages or attorneys fees pursuant to CERCLA or other
Environmental Laws.
(e) No written notice of a release of a Hazardous Material has been
filed by or on behalf of Seller and no property or facility now or previously
owned or operated by Seller is on the CERCLA National Priorities List (or
proposed for such listing), the Comprehensive Environmental Response,
Compensation, and Liability Information System list or any similar state or
local list.
(f) Seller has not, either expressly or, to Seller's Knowledge, by
operation of law, assumed or undertaken any liability, including without
limitation any obligation for corrective or remedial action, of any other Person
relating to Environmental Laws.
(g) For purposes of this Agreement:
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"Environmental Laws" means any federal, state, local or foreign
statute, law, ordinance, regulation, rule or code, including any judicial or
administrative order, consent decree or judgment, relating to pollution or
protection of the environment or worker health and safety, including, without
limitation, those relating to the use, handling, transportation, treatment,
storage, disposal, release or discharge, investigation or cleanup of Hazardous
Materials, in effect as of the date hereof.
"Environmental Permits" means any permit, approval, identification
number, license or other authorization required of Seller under any applicable
Environmental Law.
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"Hazardous Materials" means (a) any petroleum, petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls, (b) any chemical, material or substance
defined or regulated as toxic or hazardous under any applicable Environmental
Law or (c) anything that is a "hazardous substance" pursuant to CERCLA, anything
that is a "solid waste" or "hazardous waste" pursuant to RCRA or any
"pesticide", "pollutant", "contaminant", "toxic chemical" or "noise".
"RCRA" means the Resource Conservation and Recovery Act, as amended.
SECTION 3.09. Title and Condition of Properties. (a) Seller has good
and marketable title to, or valid leasehold interests in, all the properties and
assets used by it or located on its premises that are material to the conduct of
the Business with respect to the Subject Business Assets, or which are shown on
the Financial Statements except for such as are licensed, as are no longer
useful in the conduct of its business or as have been disposed of in the
ordinary course of business and except for defects in title, easements,
restrictive covenants and similar impediments that, in the aggregate, would not
have a Material Adverse Effect on the ability of Seller to conduct its Business
as currently conducted and, as to the real property owned by Seller, would not
have a material effect on the value of such property. All such assets and
properties, other than assets and properties in which Seller has leasehold
interests, are free and clear of all Encumbrances (or at Closing will be) except
for (i) liens for taxes not yet due or being contested in good faith by
appropriate procedures, (ii) mechanics, carriers, workmen's, repairmen's or
other like liens arising or incurred in the ordinary course of business for
amounts that are not delinquent and which are not, individually or in the
aggregate, material to Seller's Business, (iii) liens arising under original
purchase price conditional sales contracts and equipment leases with third
parties entered into in the ordinary course of business, and (iv) the Permitted
Encumbrances.
(b) Except as set forth in Section 3.09 of the Disclosure Statement or
as would not result in a Material Adverse Effect, the Subject Business Assets
are all of the assets which have been used, and which are necessary, to operate
the Business as it has customarily been conducted.
(c) To the Seller's Knowledge and in reliance upon, and subject to,
the affidavit attached as Exhibit K, the Subject Business Assets are functional
and usable in the ordinary course of the Business and are in sufficiently good
operating condition to conduct the Business as it has been customarily
conducted.
(d) The real property owned or leased by Seller with respect to the
Business is listed in Section 1.01 of the Disclosure Statement and is suitable
for the uses for which these properties are currently used. The Plant has
customary access to the utilities serving such properties sufficient to allow
the conduct of Seller's Business as currently conducted, except for
interruptions in utility service beyond Seller's control.
581510.1
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SECTION 3.10. Trademarks. Etc. Section 1.01 of the Disclosure Statement
contains a complete and accurate list of (i) all trade names, registered and
Material unregistered trademarks owned by Seller or used in connection with the
Subject Business Assets, other than certain Excluded Assets which are used
jointly by the Business and the Seller's medical division; and (ii) all MIS,
MAPIX and related systems and computer software owned and/or used by Seller in
the Business other than commercially available software with an annual license
fee of less than $1,000. Seller has not granted any licenses to any Person with
respect to the Acquired Intellectual Property. Other than with respect to
computer software and the Licensed Intellectual Property Rights, no Person has
granted any such licenses to the Seller for the conduct of the Business. Except
as set forth in Section 3.10 of the Disclosure Statement, to Seller's Knowledge,
Seller owns (free and clear of all Encumbrances) or has sufficient unrestricted
right to use the Acquired Intellectual Property Rights in order to allow it to
conduct, and continue to conduct, its Business as currently conducted in all
material respects, and the consummation of the transactions contemplated hereby
will not alter or impair such ability in any material respect. To Seller's
Knowledge, except as set forth in Section 3.10 of the Disclosure Statement, (a)
Seller has not infringed, misappropriated or is otherwise not in conflict with
any intellectual property right of any Person in any material respect, and (b)
the conduct of the Business of Seller as currently conducted or as currently
contemplated to be conducted does not and will not conflict in any material
respect with any license, trademark, trademark right, patent, patent right,
invention, industrial model, service ▇▇▇▇ or copyright of any third Person. No
claims are pending or, to the Knowledge of Seller, threatened by any Person
contesting or challenging the ownership, validity, enforceability or use of the
Acquired Intellectual Property Rights. To the Knowledge of Seller, there are no
claims pending or currently threatened by any Person against Seller alleging
infringement of any intellectual property rights relating to the technology used
in Seller's manufacturing process with respect to the Business. Seller has not
made a claim of a violation or infringement by others of its rights to or in
connection with the Acquired Intellectual Property Rights. Seller has taken
commercially reasonable actions to maintain and protect the Acquired
Intellectual Property Rights. Notwithstanding any provision to the contrary, the
Seller makes no representations with respect to the Tyvek licenses. The Seller
represents and warrants that it is transferring to the Purchaser all of the
Intellectual Property Rights of the Business, including any licenses presently
used in connection with the Seller's face mask equipment (which rights may be
transferred on a non-exclusive basis).
SECTION 3.11. Insurance. Section 3.11 of the Disclosure Statement sets
forth a complete list of all material insurance policies (including policies
providing property, casualty, liability and workers' compensation coverage and
bond and surety arrangements) with respect to the Business or the Subject
Business Assets.
SECTION 3.12. Employee Benefit Matters. (a) Section 3.12 of the
Disclosure Statement, with respect to the Subject Business Assets, sets forth a
true and complete list of each "employee benefit plan" (as defined by Section
3(3) of ERISA), and any other bonus, profit sharing, pension, compensation,
deferred compensation, stock option, stock purchase, fringe
581510.1
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benefit, severance, post-retirement, scholarship, disability, sick leave,
vacation, individual employment, commission, bonus, payroll practice, retention,
or other plan, agreement, policy, trust fund or arrangement (each such plan,
agreement, policy, trust fund or arrangement is referred to herein as an
"Employee Benefit Plan", and collectively, the "Employee Benefit Plans") that is
for the benefit of (i) directors or employees of Seller working in the Business
or any other persons performing services for Seller in the Business, (ii) former
directors or employees of Seller working in the Business or any other persons
formerly performing services for Seller in the Business, and/or (iii)
beneficiaries of anyone described in (i) or (ii) (collectively, "Business
Employees") or with respect to which Seller or any "ERISA Affiliate" (hereby
defined to include any trade or business, whether or not incorporated, other
than Seller, which has employees who are or have been at any date of
determination occurring within the preceding six (6) years, treated pursuant to
Section 4001(a)(14) of ERISA and/or Section 414 of the Internal Revenue Code as
employees of a single employer which includes Seller) has any obligation on
behalf of any employee of the Business.
(b) Except as disclosed in Section 3.12 of the Disclosure Statement,
each Employee Benefit Plan is in material compliance with the provisions of
ERISA and the provisions of the Internal Revenue Code applicable to it. The
Seller has made available to the Purchaser a true and complete copy of each Plan
and a true and complete copy of the following documents, to the extent
applicable, prepared in connection with each such Plan: (i) the most recently
received IRS determination letter, (ii) the most recently prepared financial
statement (Form 5500's with attachments), (iii) all governmental rulings
determinations and opinions (and pending requests for governmental rulings,
determinations and opinions). Neither Seller nor any ERISA Affiliate has
maintained or contributed to any plan subject to the minimum funding standards
of Section 302 of ERISA or Section 412 of the Internal Revenue Code and/or any
"multiemployer plan" (as defined by Section 3(37) of ERISA). All Employee
Benefit Plans which are "pension plans" as defined in Section 3(2) of ERISA have
received favorable determination letters from the Internal Revenue Service
("IRS") as to their tax-qualified status and the tax-exempt status of any
related trust under Sections 401(a) and 501 of the Internal Revenue Code,
respectively, which determinations are currently in effect.
(c) Other than as may otherwise be provided hereunder (including, but
not by way of limitation, Article VI hereof), Purchaser shall not, as a result
of the transactions contemplated by this Agreement (or any employment by
Purchaser of Business employees): (i) become liable for any contribution, tax,
lien, penalty, cost, interest, claim, loss, action, suit, damage, cost
assessment or other similar type of liability or expense of Seller or any ERISA
Affiliate (including predecessors thereof) with regard to any Employee Benefit
Plan or any Employee Benefit Plan sponsored, maintained or contributed to by an
ERISA Affiliate (including predecessors thereof) (assuming a like definition of
"Employee Benefit Plan" were applicable to ERISA Affiliates as to those same
types of agreements, policies, trusts, funds and arrangements sponsored,
maintained or contributed to by them) (each such plan of an ERISA Affiliate, an
"ERISA Affiliate Employee Benefit Plan"), including, without limitation
withdrawal
581510.1
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liability arising under Title IV, Subtitle E, Part 1 of ERISA, liabilities to
the Pension Benefit Guaranty Corporation, or liabilities under Section 412 of
the Internal Revenue Code or Section 302(a)(2) of ERISA, or (ii) be or become a
party to any Employee Benefit Plan or any ERISA Affiliate Employee Benefit Plan.
(d) Seller, each ERISA Affiliate, each Employee Benefit Plan and each
Employee Benefit Plan "sponsor" or "administrator" (within the meaning of
Section 3(16) of ERISA) has complied in all material respects with the
applicable requirements of Part 6 of Subtitle B of Title I of ERISA and Section
4980B of the Internal Revenue Code.
(e) Neither Seller nor any ERISA Affiliate maintains (i) any employee
benefit plan of the type described in Sections 4063 and 4064 of ERISA or in
Section 413(c) of the Internal Revenue Code (and regulations promulgated
thereunder), or (ii) any plan which provides health, life insurance, accident or
other "welfare-type" benefits to current or future retirees or current or future
former employees, their spouses or dependents, other than in accordance with
Section 4980B of the Internal Revenue Code or applicable state continuation
coverage law.
(f) Other than with respect to the Assumed Liabilities, any bonuses,
severance , separation, termination or similar type of benefits, incentive fees,
or other amounts payable to employees of Seller solely as a result of the
consummation of the transactions contemplated by this Agreement will be paid by
Seller.
SECTION 3.13. Labor Matters. (a) There are no material controversies
pending or, to the Knowledge of Seller, threatened, between Seller and any of
its employees with respect to the Business; (b) Seller is not a party to any
collective bargaining agreement or other labor union contract applicable to
Persons employed by Seller with respect to the Business; (c) during the past
three years, there have been no unfair labor practice complaints filed or
pending against Seller before the National Labor Relations Board; and (d) during
the past three years, there have been no strikes, slowdowns, work stoppages,
lockouts, or, to Seller's Knowledge, threats thereof, by or with respect to any
employees of Seller with respect to the Business.
SECTION 3.14. Transactions with Affiliates. All of the material
contracts, leases, agreements or arrangements relating to the Business are
listed in Section 3.14 of the Disclosure Statement which are between the Seller
and Affiliates of Isolyser Company, Inc. and which impact the results of
operations reflected on the Financial Statements.
SECTION 3.15. INTENTIONALLY DELETED.
SECTION 3.16. Material Contracts. (a) Section 3.16(a) of the Disclosure
Statement lists the following contracts (collectively, the "Material Contracts")
to which Seller with respect to the Subject Business Assets or the Business, is
a party or by which its assets may be bound:
581510.1
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(i) any commitment, contract, agreement, note, loan, evidence of
indebtedness, purchase order or letter of credit and purchase
orders issued in the ordinary course to individual customers
or vendors that Seller reasonably anticipates will, in
accordance with its terms, involve aggregate payments by or
to Seller of more than $20,000 within the 12 month period
following the date hereof and that is not cancelable by
Seller without liability within 60 days;
(ii) any lease of real or personal property involving any annual
expense in excess of $20,000;
(iii)any contract or agreement containing covenants limiting in
any respect the freedom of Seller to engage in any line of
business or compete with any Person:
(iv) any agreement (or group of related agreements) under which
Seller has created, incurred, assumed or guaranteed any
indebtedness for borrowed money, or any capitalized lease
obligations, in excess of $50,000, or under which it has
imposed an Encumbrance on any of its assets (other than any
lien of the type described in the last sentence of Section
3.09(a));
(v) any contract or agreement not entered into in the ordinary
course of Seller's business; and
(vi) any written employment agreement.
(b) Seller is not (and, to the knowledge of Seller, no other party is)
in breach or violation of, or default under, any of the Material Contracts or
any Assumed Liability which would result in a Material Adverse Effect. Each
Material Contract is a valid agreement, arrangement or commitment of Seller,
enforceable against Seller in accordance with its terms except where
enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting creditors' rights generally and except where enforceability is subject
to the application of equitable principles or remedies.
SECTION 3.17. Accounts Receivable. The Accounts Receivable represent
bona fide claims against debtors for sales, services performed or other charges
arising on or before the date thereof, and all the sales or services performed
that gave rise to such accounts were delivered or performed in all material
respects in accordance with the applicable orders, contracts or customer
requirements.
SECTION 3.18 Inventories. The Inventory consists only of items of
quality and quantity commercially usable, consumable and salable in the ordinary
course of business.
SECTION 3.19. Brokers. Except for ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc.
581510.1
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("▇▇▇▇▇▇ ▇▇▇▇▇▇"), no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Seller. Seller is solely responsible for the fees and expenses
of ▇▇▇▇▇▇ ▇▇▇▇▇▇.
SECTION 3.20. Product Warranty. To the Knowledge of Seller, since
December 31, 1997, the products sold in the conduct of Seller's business have
been in compliance in all material respects with any warranties made with
respect thereto, and, except as set forth in Section 3.20 of the Disclosure
Statement, there is not currently pending any customer claim alleging any breach
of warranty with respect to such products other than such claims arising in the
ordinary course of business and which in the aggregate will not involve a loss
of greater than $10,000.
SECTION 3.21. Permits and Consents. Section 3.21 of the Disclosure
Statement lists all of the permits, licenses, consents, certificates,
governmental approvals required to conduct the Business (the "Permits") the
absence of which would have a Material Adverse Effect on the Business. The
Seller agrees to assign to Purchaser all Permits, to the extent assignable, as a
part of the Subject Business Assets and the Permits which cannot be transferred
are identified in Section 3.21 of the Disclosure Statement. To the Seller's
Knowledge, the Seller is in full compliance with all Permits and no suspension,
revocation, limitation or cancellation of any of the Permits is threatened or
pending and no cause exists for such, except as would not have a Material
Adverse Effect on the Business. Section 3.21 of the Disclosure Statement sets
forth any third party and governmental consents, approvals, waivers or
authorizations necessary for the valid and enforceable transfer of the Subject
Business Assets and the consummation of this transaction (the "Consents").
SECTION 3.22 Assumed Liabilities. Seller has made available to
Purchaser true and complete copies of all contracts, leases and records relating
to the Assumed Liability in a timely fashion from which the Purchaser has had an
opportunity to verify the terms of the Assumed Liabilities.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
SECTION 4.01. Incorporation and Authority of Purchaser. Purchaser is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all necessary corporate power and
authority to enter into this Agreement, to carry out its obligations hereunder
and to consummate the transactions contemplated hereby.
581510.1
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The execution and delivery of this Agreement by Purchaser, the performance by
Purchaser of its obligations hereunder and the consummation by Purchaser of the
transactions contemplated hereby have been duly authorized by all requisite
corporate action on the part of Purchaser. This Agreement has been duly executed
and delivered by Purchaser, and (assuming due authorization. execution and
delivery by Seller) constitutes a legal, valid and binding obligation of
Purchaser enforceable against Purchaser in accordance with its terms, subject to
the effect of any applicable bankruptcy, reorganization, insolvency, moratorium
or similar laws affecting creditors' rights generally and subject, as to
enforceability, to the effect of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
SECTION 4.02. No Conflict. Except as may result from any facts or
circumstances relating solely to Seller, the execution, delivery and performance
of this Agreement by Purchaser does not and will not (a) violate or conflict
with the Certificate of Incorporation or By-laws (or other similar applicable
documents) of Purchaser, (b) conflict with or violate any law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award applicable to
Purchaser or (c) result in any breach of, or constitute a default (or event
which with the giving of notice or lapse of time, or both, would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of any Encumbrance on
any of the assets or properties of Purchaser pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument relating to such assets or properties to which Purchaser or any
of its subsidiaries is a party or by which any of such assets or properties is
bound or affected, except as would not, individually or in the aggregate, have a
Material Adverse Effect on the ability of Purchaser to consummate the
transactions contemplated by this Agreement.
SECTION 4.03. Consents and Approvals. The execution and delivery of
this Agreement by Purchaser does not, and the performance of this Agreement by
Purchaser will not, require any consent, approval, authorization or other action
by, or filing with or notification to, any Governmental Authority, except (a)
where failure to obtain such consent, approval, authorization or action, or to
make such filing or notification, would not prevent Purchaser from, or delay
Purchaser in, performing any of its material obligations under this Agreement
and (b) as may be necessary as a result of any facts or circumstances relating
solely to Seller.
SECTION 4.04. Absence of Litigation. No claim, action, proceeding or
investigation is pending before any court, arbitrator or administrative,
governmental or regulatory authority or body that seeks to delay or prevent the
consummation of the transactions contemplated hereby or that would be reasonably
likely to materially and adversely affect or restrict Purchaser's ability to
consummate the transactions contemplated hereby.
SECTION 4.05. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Purchaser.
581510.1
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ARTICLE V.
ADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Business Prior to the Closing. (a) Unless
Purchaser otherwise agrees in writing (which agreement will not be unreasonably
withheld) and except as otherwise set forth in Section 5.01 of the Disclosure
Statement, between the date of this Agreement and the Closing Date, Seller will,
as to the Subject Business Assets (i) conduct its business only in the ordinary
course, (ii) use reasonable efforts to preserve intact Seller's Business
organization and assets and retain the services of key employees of the
Business, subject to the conduct of its Business in the ordinary course, and
(iii) use reasonable efforts to preserve the current relationships of the
Business with its respective customers, suppliers, licensors, distributors and
other Persons with which the Business has significant business relationships.
(b) Unless Purchaser otherwise agrees in writing (which agreement will
not be unreasonably withheld) and except as otherwise set forth in Section 5.01
of the Disclosure Statement and except for actions in the ordinary course of
business, between the date of this Agreement and the Closing Date, Seller will
not (i) amend or terminate any contract listed in the Disclosure Statement,,
(ii) sell, transfer, replace or lease any of the Subject Business Assets, (iii)
materially increase or write down the value of any Current Assets without a
written explanation of the cause furnished to Purchaser prior to Closing, (iv)
permit the Subject Business Assets to be subject to any new encumbrance, (v)
increase the compensation of the employees, except following normal review
procedures and prior written notice to Purchaser, or (vi) materially alter its
conduct in its relations with suppliers or customers.
SECTION 5.02. Access to Information. Insofar as relevant to the
Business, from the date hereof until the Closing, upon reasonable notice, Seller
shall (i) afford the officers, employees and authorized agents and
representatives of Purchaser access, during normal business hours, to its
offices, properties, books and records and (ii) furnish to the officers,
employees and authorized agents and representatives of Purchaser such additional
financial and operating data and other information regarding its assets,
properties, goodwill and business as Purchaser may from time to time reasonably
request and which is obtainable without unreasonable effort or expense;
provided, however, that such investigation shall not unreasonably interfere with
any of the businesses or operations of Seller.
SECTION 5.03. Books and Records. (a) Each of Seller and Purchaser
agrees that it shall preserve and keep all books and records relating to
business units then owning or operating the Subject Business Assets, as they
relate to the Subject Business Assets as of the Closing Date, for a period of at
least five years from the Closing Date. During such five-year period, Seller,
Purchaser and their respective representatives shall, upon reasonable notice,
581510.1
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have access thereto during normal business hours to examine, inspect and copy
such books and records.
(b) If, in order properly to prepare its financial statements or
documents required to be filed with Governmental Authorities, it is necessary
that any party hereto or any successors be furnished with additional information
relating to Subject Business Assets as of the Closing Date, and such information
is in the possession of another party hereto, such party agrees to use its
reasonable efforts to furnish such information to such other party, at the cost
and expense of the party being furnished such information.
SECTION 5.04. Governmental Approvals and Consents. (a) Each party
hereto will use its reasonable efforts to obtain all authorizations, consents,
orders and approvals of all Governmental Authorities that may be or become
necessary for the performance of its obligations pursuant to this Agreement and
will cooperate fully with the other party in promptly seeking to obtain all such
authorizations, consents, orders and approvals. The parties hereto will not take
any action that will have the effect of delaying, impairing or impeding the
receipt of any required approvals.
(b) Without limiting the generality of the parties' undertakings
pursuant to Section 5.04(a), each of the parties hereto shall use all reasonable
efforts to (i) respond to any inquiries by any Governmental Authority regarding
matters with respect to the transactions contemplated by this Agreement, (ii)
avoid the imposition of any order or the taking of any action that would
restrain, alter or enjoin the transactions contemplated by this Agreement and
(iii) in the event any Governmental Order adversely affecting the ability of the
parties to consummate the transactions contemplated by this Agreement has been
issued, to have such Governmental Order vacated or lifted.
SECTION 5.05. Confidentiality Agreement. The terms of the
confidentiality letter dated as of June 18, 1998 (the "Confidentiality
Agreement") between Seller and Purchaser are hereby incorporated herein by
reference and shall continue in full force and effect until the Closing and
shall survive the Closing.
SECTION 5.06 Ancillary Agreements. The Seller and the Purchaser will
execute at Closing Ancillary Agreements described and listed on the attached
Exhibit A.
SECTION 5.07 No General Assumption. Except for Permitted Encumbrances
and Assumed Liabilities listed on Exhibit I, Seller shall transfer the Subject
Business Assets to Purchaser free and clear of all encumbrances and without any
assumption of liabilities and obligations and Purchaser shall not assume or
become responsible, by virtue of its purchase of the Subject Business Assets,
for any liabilities or obligations of Seller, including without limitation those
matters disclosed in the Disclosure Statement which are not scheduled as Assumed
Liabilities.
581510.1
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SECTION 5.08 Prorations. The expenses and accruals of the Assumed
Liabilities and the Subject Business Assets, such as utilities, real and
personal property taxes and rents, shall be prorated as of the date of Closing,
based upon the best available information with corrections to be made by the
parties when the final statements or required information is available.
SECTION 5.09 Inventory Issues. The Inventory to be transferred to
Purchaser is located at the locations listed in Section 5.09 of the Disclosure
Statement. The Seller agrees to segregate, label, protect and preserve the
Inventory and to pay all warehouse fees in connection with such Inventory for
such period as time as is necessary for the Purchaser to make separate
arrangements for the storage of the Inventory. Purchaser agrees to pay its fair
pro rata cost of the warehouse storage fees and other Seller costs directly
related to the Purchaser's Inventory.
For so long as the Inventory is stored together with the Seller's other
inventory, the parties shall cooperate with each other and each agrees to afford
access to the other party, to the extent necessary that each has full and
complete access to its own inventory.
SECTION 5.10 Post-Closing Consents. In the event that the Purchaser
should consent to close without any Consent listed in Section 3.21 of the
Disclosure Statement, the Seller agrees to use reasonable efforts to diligently
obtain such Consent(s) within thirty (30) days after the closing until such
consents are obtained, provided that the Seller shall have no obligation to make
any payments to the party whose consent is required. The Seller and the
Purchaser will cooperate and assist each other in obtaining such Consents after
closing.
SECTION 5.11. Further Instruments. Each of the parties hereto shall
execute and deliver such documents and other papers and take such further
actions as may be reasonably required to carry out the provisions hereof and
give effect to the transactions contemplated hereby.
ARTICLE VI.
EMPLOYEE MATTERS
SECTION 6.01. Employees. (a) A roster of all current employees of the
Business is set forth in Section 6.01 of the Disclosure Statement, together with
the "Employee Information", as hereinafter defined with respect to each
employee. "Employee Information" shall mean the name, date of hire, and job
title. Purchaser shall be permitted (but shall not be under any obligation) to
make offers of employment to all such employees, and, in addition thereto, to
such other non-direct employees as may be agreed upon in writing and in advance
with Seller. Promptly and in any event within 30 days following the Closing,
Purchaser shall notify Seller of any such employees who do not become employees
of Purchaser or its Affiliates following the Closing. All such employees who
become employees of Purchaser or its Affiliates are herein called the
"Employees". The vacation and sick day accruals and entitlements of the
581510.1
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Employees which may be due upon the termination of employment by the Seller
shall not be Assumed Liabilities of the Purchaser.
(b) To the extent that service is relevant for purposes of eligibility,
vesting or benefit accrual under any employee benefit plan, program or
arrangement established or maintained by Purchaser for the benefit of the
Employees, such plan, program or arrangement shall credit such Employees for
service on or prior to the Closing with Seller or any of its Affiliates. All
such Employees shall be allowed to participate from and after Closing in the
medical and dental benefit plans of Purchaser or its Affiliates as employees of
Purchaser or its Affiliates. If the Closing falls within an annual period of
coverage under any group health plan of Purchaser or its Affiliates which
becomes the employer with respect to the Employees, such Employees shall be
given credit for covered expenses paid by that Employee under comparable
employee benefit plans of Seller during the applicable coverage period to the
Closing Date towards satisfaction of any annual deductible limitation and
out-of-pocket maximum that may apply under that group health plan.
SECTION 6.02. WARN Act. While it is currently Purchaser's intention to
continue to operate the Plant, Purchaser shall be liable and responsible for any
notification required to be provided under the Worker Adjustment and Retraining
Notification Act (or under any similar state or local law). In reliance upon
such covenant, Seller shall not give any notices under such laws and Purchaser
shall indemnify Seller and its Affiliates for any claims arising out of a breach
of this covenant or otherwise arising from any such discontinuance of operations
or decision not to employ, or to terminate the employment of any Employees.
SECTION 6.03. Survival. The covenants and agreements of the parties
hereto contained in this Article VI shall survive the Closing and shall remain
in full force and effect until the expiration of all statutes of limitations
with respect to the respective matters set forth herein.
ARTICLE VII.
TAX MATTERS
SECTION 7.01. Tax Indemnities. (a) From and after the Closing Date,
Seller agrees to indemnify Purchaser, against all Taxes (i) imposed on Seller or
any member of an affiliated group with which Seller files a consolidated or
combined income tax return with respect to any taxable period for which Seller
or any member of an affiliated group with Seller files (or is required by law to
file) an income tax return, and (ii) imposed on Seller with respect to any
taxable period or portion thereof that ends on or as of the Closing Date with
respect to the Subject Business Assets.
(b) From and after the Closing Date, Purchaser shall indemnify Seller
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and its Affiliates against all taxes imposed on or with respect to the Subject
Business Assets with respect to any taxable period or portion thereof beginning
after the Closing Date.
(c) Payment by the indemnitor of any amount due under this Section
7.01 shall be made within ten days following written notice by the indemnitee
that payment of such amounts to the appropriate tax authority is due, provided
that the indemnitor shall not be required to make any payment (i) earlier than
two days before it is due to the appropriate tax authority or (ii) of any Taxes
which the indemnitor has by all appropriate proceedings elected to contest and
is contesting diligently and in good faith. In the case of a Tax that is so
contested, payment of the Tax to the appropriate tax authority will not be
considered to be due earlier than the date a final determination to such effect
is made by the appropriate taxing authority or a court.
(d) For purposes of this Agreement, in the case of any Tax that is
imposed on a periodic basis and is payable for a period that begins before the
Closing Date and ends after the Closing Date, the portion of such Taxes payable
for the period ending on the Closing Date shall be (i) in the case of any Tax
other than a Tax based upon or measured by income, the amount of such Tax for
the entire period multiplied by a fraction, the numerator of which is the number
of days in the period ending on the Closing Date and the denominator of which is
the number of days in the entire period and (ii) in the case of any Tax based
upon or measured by income, the amount which would be payable if the taxable
year ended on the Closing Date. Any credit shall be prorated in the same manner
as the Tax to which such credit relates would be prorated, as described in the
preceding sentence. In the case of any Tax based upon or measured by capital
(including net worth or long-term debt) or intangibles, any amount thereof
required to be allocated under this Section 7.01(d) shall be computed by
reference to the level of such items on the Closing Date.
SECTION 7.02. Refunds and Tax Benefits. Purchaser shall promptly pay to
Seller any refund or credit (including any interest paid or credited with
respect thereto) received by Purchaser (i) imposed on the Subject Business
Assets relating to taxable periods or portions thereof ending on or before the
Closing Date or (ii) attributable to an amount paid by Seller under Section 7.01
hereof.
SECTION 7.03. Conveyance Taxes. All sales, transfer, stamp, real
property transfer and similar Taxes incurred as a result of the sale of the
Subject Business Assets contemplated hereby shall be split equally between the
Seller and the Purchaser.
SECTION 7.04 Survival. The covenants and agreements of the parties
hereto contained in this Article VII shall survive the Closing and shall remain
in full force and effect until the expiration of all statutes of limitations
with respect to the respective matters set forth in this Article.
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SECTION 7.04. Miscellaneous. The parties agree to treat all payments
made under Article IX or this Article VII as adjustments to the purchase price
for Tax purposes.
ARTICLE VIII.
CONDITIONS TO CLOSING
SECTION 8.01. Conditions to Obligations of All Parties. The obligations
of each party hereto 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) No Order. No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any Governmental Order which is in effect and
has the effect of making the transactions contemplated by this Agreement illegal
or otherwise restraining or prohibiting consummation of such transactions;
provided however, that each party hereto shall have complied with its
obligations under Section 5.04.
SECTION 8.02. Conditions to Obligations of Seller. The obligations of
Seller to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment or waiver, at or prior to the Closing, of each of the
following conditions:
(a) Representations and Warranties; Covenants. (i) The representations
and warranties of Purchaser contained in this Agreement shall be true and
correct in all material respects as of the date hereof and as of the Closing,
with the same force and effect as if made as of the Closing, other than such
representations and warranties as are made as of another date, which shall be
true and correct in all material respects as of such date, (ii) the covenants
contained in this Agreement to be complied with by Purchaser on or before the
Closing shall have been complied with in all material respects and (iii) Seller
shall have received a certificate of Purchaser to such effect signed by a duly
authorized officer thereof;
(b) Resolutions. Seller shall have received a true and complete copy,
certified by the Secretary or an Assistant Secretary of Purchaser (or equivalent
officer), of the resolutions, duly and validly adopted by the Board of Directors
of Purchaser evidencing its authorization of the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby;
(c) Incumbency Certificate. Seller shall have received a certificate of
the Secretary or an Assistant Secretary (or equivalent officer) of Purchaser
certifying the names and signatures of the officers of Purchaser authorized to
sign this Agreement and the other documents to be delivered hereunder;
581510.1
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(d) Closing Documents. The Closing Documents to be delivered or
executed by the Purchaser are in form and substance reasonably satisfactory to
the Seller and its counsel.
(e) Related Transactions. The Related Transactions have taken place as
more fully described on the attached Exhibit D; and
(f) Further Action. All actions to be taken by Purchaser in connection
with the consummation of the transactions contemplated hereby, and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to the Seller.
SECTION 8.03. Conditions to Obligations of Purchaser. The obligations
of Purchaser to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment or waiver, at or prior to the Closing, of each of
the following conditions:
(a) Representations and Warranties; Covenants. (i) The representations
and warranties of Seller contained in this Agreement shall be true and correct
in all material respects as of the date hereof and as of the Closing, with the
same force and effect as if made as of the Closing, other than such
representations and warranties as are made as of another date, which shall be
true and correct in all material respects as of such date, (ii) the covenants
contained in this Agreement to be complied with by Seller on or before the
Closing shall have been complied with in all material respects and (iii)
Purchaser shall have received a certificate of Seller to such effect signed by a
duly authorized officer thereof;
(b) Resolutions. Purchaser shall have received a true and complete
copy, certified by the Secretary or an Assistant Secretary (or equivalent
officer) of Seller, of the resolutions duly and validly adopted by the Board of
Directors of Seller evidencing its authorization of the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby;
(c) Incumbency Certificate. Purchaser shall have received a certificate
of the Secretary or an Assistant Secretary (or equivalent officer) of Seller
certifying the names and signatures of the officers authorized to sign this
Agreement and the other documents to be delivered hereunder;
(d) Required Third Party Actions. The Persons identified in Section
8.03 of the Disclosure Statement have consented to this transaction and the
Related Transactions, if applicable, and Purchaser has received assurances
satisfactory to the Purchaser that such Person will release its liens on the
Subject Business Assets or will deliver any required Consent or Permit.
(e) FIRPTA. Seller shall have provided Purchaser with a certificate
581510.1
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pursuant to Treasury Regulations Sections 1.1445-2(c)(3) and 1.897-2(h) that the
Subject Business Assets are not a United States real property interest within
the meaning of Section 897 of the Internal Revenue Code;
(f) Closing Documents The Closing Documents to be delivered or executed
by the Seller are in form and substance reasonably satisfactory to the Purchaser
and its counsel.
(g) Related Transactions. The Related Transactions more fully described
on Exhibit D have taken place;
(h) Key Employees. Purchaser (or any designee of Purchaser) and the
"Key Employees", as hereinafter defined have entered into mutually satisfactory
employment agreements. "Key Employees" shall mean ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇, E.
▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, III; and
(i) Further Action. All actions to be taken by Seller (and any of
its applicable subsidiaries) in connection with the
consummation of the transactions contemplated hereby, all
certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will
be reasonably satisfactory in form and substance to the
Purchaser.
ARTICLE IX.
INDEMNIFICATION
SECTION 9.01. Survival. Subject to the limitations and other provisions
of this Agreement, the representations, warranties (except the representations
and warranties contained in Sections 3.17 and 3.18 of the Agreement, which shall
not survive the Closing), covenants and agreements of the parties contained
herein shall survive the Closing and shall remain in full force and effect,
regardless of any investigation made by or on behalf of Seller or Purchaser,
until 18 months following the Closing Date; provided however, that the
representations and warranties set forth in Section 3.01 and 4.01 (Incorporation
and Authority) shall survive indefinitely and all representations and warranties
contained in this Agreement relating to Assumed Liabilities shall survive the
term of such Assumed Liabilities.
SECTION 9.02 Indemnification Agreement. The indemnification agreement
by and among Isolyser Company, Inc., SafeWaste Corporation and White Knight
Healthcare, Inc. , as sellers and Thantex Specialties, Inc., White Knight
Industrial, Inc., SafeWaste, Inc. and Thantex Holdings, Inc., as purchasers of
even date shall control all matters relating to indemnification by either the
Seller or the Purchaser with respect to this Agreement.
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ARTICLE X.
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01. Termination. This Agreement may be terminated at any
time prior to the Closing:
(a) by the mutual written consent of Seller and Purchaser; or
(b) by either Seller or Purchaser, if the Closing shall not have
occurred prior to August 30, 1998; provided, however, that the right to
terminate this Agreement under this Section 10.01(b) shall not be available to a
party whose failure to fulfill any obligation under this Agreement shall have
been the cause of, or shall have resulted in, the failure of the Closing to
occur prior to such date.
Time shall be of the essence in this Agreement.
SECTION 10.02. Effect of Termination. In the event of termination of
this Agreement as provided in Section 10.01, this Agreement shall forthwith
become void and there shall be no liability on the part of any party hereto (a)
except as set forth in Section 5.05 and Section 11.01 hereof and (b) nothing
herein shall relieve any party hereto from liability for any willful breach
hereof.
SECTION 10.03. Waiver. At any time prior to the Closing, each of the
parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto or (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid only if
set forth in an instrument in writing signed by the party to be bound thereby.
ARTICLE XI.
GENERAL PROVISIONS
SECTION 11.01. Expenses. Except as otherwise expressly provided herein,
all costs and expenses, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses, whether or not the Closing shall have
occurred.
SECTION 11.02. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
581510.1
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(and shall be deemed to have been duly given or made upon receipt) by delivery
in Person, by courier service, by cable, by telecopy, by telegram, by telex or
by registered or certified mail (postage prepaid, return receipt requested) to
the respective parties at the following addresses (or at such other address for
a party as shall be specified in a notice given in accordance with this Section
11.02):
(a) if to Seller:
Isolyser Company, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Chief Financial Officer
Telecopier: (▇▇▇)▇▇▇-▇▇▇▇
with a copy to:
Arnall Golden & ▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇, Esq.
Telecopier: (▇▇▇)▇▇▇-▇▇▇▇
(b) if to Purchaser:
White Knight Industrial, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Buist, Moore, ▇▇▇▇▇▇ & ▇▇▇▇▇, PA
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 11.03. Press Release and Public Announcements. Unless otherwise
required by applicable law or stock exchange requirements, no party to this
581510.1
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Agreement shall issue any press releases or make any public announcements in
respect of this Agreement or the transactions contemplated hereby or otherwise
communicate with any news media without prior written notification to and
consent of the other party, and the parties will cooperate as to the timing and
contents of any announcement. With respect to announcements and releases
required by applicable law or stock exchange requirements, the Seller shall
afford the Purchaser prior notice and the opportunity to comment prior to
release.
SECTION 11.04. Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 11.05. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible.
SECTION 11.06. Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral, between
Seller and Purchaser with respect to the subject matter hereof and except as
otherwise expressly provided herein. The exhibits referred to in and attached to
this Agreement form a part of this Agreement and by reference are incorporated
herein.
SECTION 11.07. Assignment. Without the prior written consent of the
other party hereto, neither party hereto may assign its rights or delegate its
obligations hereunder; provided however the Purchaser may assign all or a part
of its rights to an Affiliate if the Purchaser remains responsible for the
performance of all of its obligations hereunder. The Seller agrees that in the
event that it transfers all or substantially all of its remaining assets to a
third party, the Seller shall require such third party to assume the Seller's
obligations under the Ancillary Agreements listed as items 1,2, 3 and 5 on
Exhibit A
SECTION 11.09. Amendment. This Agreement may not be amended or modified
except by an instrument in writing signed by Seller and Purchaser.
SECTION 11.10. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed in and to be performed in that State.
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SECTION 11.11. Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, Seller and Purchaser have caused this White Knight
Asset Agreement to be executed as of the date first written above by their
respective officers hereunto duly authorized.
WHITE KNIGHT HEALTHCARE, INC.
By:______________________________________
Its:_____________________________________
THANTEX HOLDINGS, INC.
By:______________________________________
Its:_____________________________________
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