EXHIBIT 10.34
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made
and entered into as of the 27th day of January, 1997 by
and among Hydrothermic Floatation Systems, Inc., a
California corporation ("Seller"), Y. Xxxxxx Xxxx
("Shareholder") and KCI Therapeutic Services, Inc., a
Delaware corporation
("Buyer").
W I T N E S S E T H:
WHEREAS, Seller is presently engaged in the specialty
patient surface business, including, without limitation,
the rental of specialty patient beds, overlays, mattress
replacement systems or other therapeutic support surfaces
(the "Business"); and
WHEREAS, Seller and Shareholder desire to sell, assign
and convey to Buyer, and Buyer desires to purchase from
Seller, all of the assets of Seller except those
expressly excluded herein;
NOW, THEREFORE, in consideration of the premises
and mutual covenants and agreements of the parties
hereinafter contained, the parties hereby agree as follows:
ARTICLE I
SALE OF ASSETS
1.01 Sale of Assets. Subject to the provisions of
this Agreement, Buyer agrees to purchase and accept
delivery of, and Seller agrees to sell, assign, convey
and deliver to Buyer, at the Closing (as hereinafter
defined), all of the business, assets, properties,
goodwill and rights of Seller as a going concern, of
every nature, kind or description, tangible and
intangible, wheresoever located and whether or not carried
or reflected on the books and records of Seller
(hereinafter sometimes collectively called the "Assets"),
including, without limitation, (i) the right to use
Seller's corporate name and all variations thereof, (ii)
the assets referred to in the form of Xxxx of Sale and
Assumption Agreement attached hereto as Exhibit A (the "Xxxx
of Sale and Assumption Agreement") and (iii) the assets
reflected on the balance sheet of Seller dated December
31, 1996 referred to in Section 2.06 hereof, with only
such dispositions of such Assets as shall have occurred
in the ordinary course of business between the date
thereof and the Closing and which are permitted by the
terms hereof, and excluding only the minute books,
corporate seal, stock records and other assets of Seller set
forth on Exhibit B attached hereto. The Assets shall be
conveyed free and clear of all liabilities,
obligations, liens, security interests, encumbrances and
restrictions.
1.02 Purchase Price and Earnout Payment. In
consideration of the transfer, sale, assignment, conveyance
and delivery of the Assets to Buyer, and subject to
adjustments provided for herein and the conditions to
Closing (as hereinafter defined) set forth in
Article VII:
(a) Payments Due at Closing. Buyer agrees to
pay at the Closing an aggregate of Eight Million Forty-
Nine Thousand Eight Hundred Ninety-Two Dollars
($8,049,892) (the "Purchase Price"), to be paid to
Seller in cash by wire transfer in immediately available
funds to the bank account designated by Seller.
(b) Earnout Payment. In addition to
the consideration paid to Seller pursuant to Section
1.02(a) hereof, Buyer shall pay to Seller an amount, not
to exceed $2,500,000, determined in accordance with the
calculations and procedures set forth on Exhibit C hereto.
The amount of such payment, as thus determined, is
hereinafter referred to as the "Earnout Payment."
Within 5 days after the final determination, as provided
in Exhibit C hereto, of the amount of the Earnout
Payment, Buyer agrees to pay the Earnout Payment to
Seller in cash by wire transfer of immediately available
funds to the bank account designated by Seller. Interest
shall accrue upon the unpaid portion of the Earnout
Payment from the date such payment is due until paid at
the annual "Prime Rate" of interest as published in the
Wall Street Journal. In the event that the Earnout Payment
as determined by the Earnout Arbitrator (as defined in
Exhibit C hereto) in accordance with this Section 1.02(b)
is more than $100,000 in excess of the amount of the
Earnout Payment set forth in the Earnout Period Revenue
Statement (as defined in Exhibit C hereto) delivered by
Buyer, the fees and expenses of the Earnout Arbitrator
shall be paid by Buyer. Otherwise, all such fees and
expenses shall be paid by Seller.
(c) Accounts Receivable Closing
Adjustment. Notwithstanding anything contained herein to
the contrary:
(i) at the Closing, Seller and
Shareholder shall jointly deliver a certificate (the
"Accounts Receivable Certification") to Buyer, in form
reasonably satisfactory to Buyer, certifying the
aggregate amount of the accounts receivable being
sold to Buyer at Closing, net of allowance for
uncollectible accounts receivable, determined
in accordance with generally accepted accounting
principles, consistent with Seller's Financial Statements
(as hereinafter defined);
(ii) if and to the extent that the
aggregate amount of accounts receivable, net of allowance
for uncollected accounts receivable, reflected on the
Accounts Receivable Certification is less than One Million
Two Hundred Twenty-Four Thousand Five Hundred Forty Seven
Dollars ($1,224,547), then at the Closing, the amount of the
Purchase Price shall be adjusted downward on a dollar-for
dollar basis to the extent of such difference (the
"Closing Receivable Adjustment").
(d) Closing Asset Statement
Adjustment. Notwithstanding anything contained herein to
the contrary:
(i) as soon as practicable following the
date of this Agreement but in no event later than the
Closing Date, Buyer shall cause a statement setting forth
the book value of the Assets as of such date (the
"Adjusted Assets Statement") to be calculated,
prepared and adjusted in accordance with the principles
and procedures set forth on Exhibit D hereto (the
amount as thus determined shall hereinafter be referred
to as the "Adjusted Book Value") and to be delivered
to Seller. On the basis of the Adjusted Assets
Statement, Seller and Shareholder jointly and
severally, shall pay to Buyer the amount, if any, by
which the amount of the Adjusted Book Value (as defined
on Exhibit D hereto) of the Assets is less than
$3,377,883 ("Seller's Adjustment Amount").
(ii) Within 5 days after the
final determination, as provided for in Exhibit D
hereto, of Seller's Adjustment Amount, Seller and
Shareholder agree, jointly and severally, to pay to
Buyer in cash by wire transfer of immediately
available funds to the bank account designated by Buyer
an amount equal to Seller's Adjustment Amount. Interest
shall accrue on the unpaid portion of any such payment
from the date such payment is due until paid at the
annual "Prime Rate" of interest as published by the Wall
Street Journal. In the event that the Adjusted Book Value
as determined by the Adjusted Assets Arbitrator (as
defined in Exhibit D hereto) in accordance with this
Exhibit D hereto is more than $50,000 in excess of the
amount set forth on the Adjusted Assets Statement
delivered by Buyer at the Closing, the fees and expenses
of the Adjusted Assets Arbitrator shall be paid by
Buyer. Otherwise, all such fees and expenses shall be
paid by Seller.
1.03 Assumption of Liabilities. Buyer does not and
shall not assume or agree to assume, and shall not acquire
or take over, the liabilities and obligations of
Seller or Shareholder of any nature, direct, contingent
or otherwise, except the obligations listed on Schedule
1.03 hereto (the "Assumed Liabilities"). Buyer shall
not have, and assumes no, liabilities, obligations, or
responsibilities arising before or after the Effective
Time (as hereinafter defined) which arise out of the
activity or inactivity of Seller (including, without
limitation, breach or default) prior to the Effective
Time. Without limiting the generality of the foregoing,
it is expressly agreed that Buyer shall have no
liability to, for, or in respect of, any employees of
Seller including, without limitation, accrued payroll,
salary, expenses, severance, accrued vacation, accrued
sick leave or benefit claims of any nature, or any
withholding or other tax or payment in respect thereof.
1.04 Closing; Effective Time. The closing
(the "Closing") of the transactions provided for in this
Article I shall take place on February 3, 1997 at 9:00
a.m. at the offices of Jeffer, Mangels, Xxxxxx &
Xxxxxxx LLP or such other place, time and date as the
parties may mutually agree. The date, as thus determined,
on which the Closing is to take place is referred to
herein as the "Closing Date." The transactions hereunder
shall be effective as of 12:01 a.m., Los Angeles time,
on February 1, 1997 or such other time and date as the
parties may mutually agree. The time and date, as thus
determined, on which the transactions hereunder shall be
effective is referred to herein as the "Effective Time"
and the "Effective Date," respectively.
1.05 Conveyance and Transfer. Seller hereby agrees
that, at Closing, it shall deliver to Buyer the Xxxx of
Sale and Assumption Agreement and all other bills
of sale, endorsements, assignments, releases and other
goodand sufficient instruments of transfer, assignment and
conveyance, in form satisfactory to Buyer and its counsel,
as shall be effective to convey to Buyer good and
marketable title in and to all of the Assets and all
other documents required to be delivered to Buyer under
the provisions of this Agreement. Simultaneously with
such deliveries, Seller will take all steps necessary
to put Buyer in actual possession of the Assets
other than such Assets which are located on third-party
premises.
1.06 Further Assurances. Seller and Shareholder hereby
agree that, from time to time, at Buyer's request and
without further consideration, they will execute and
deliver to Buyer such other and further instruments of
conveyance, assignment and transfer and take such
other action as Buyer may reasonably require to more
effectively convey, transfer and assign to Buyer, and
to put Buyer in possession of, the Assets.
1.07 Allocation of Sales Price.
(a) The aggregate consideration received by
Seller pursuant to this Agreement shall be allocated as
set forth on Exhibit E hereto.
(b) The parties hereto covenant and agree
with each other that this allocation was arrived at
by arm's length negotiation and that none of them will
take a position on any income tax return, before any
governmental agency charged with the collection of any
income tax or in any judicial proceeding that is in
any manner inconsistent with the terms of this Section
1.07 without the written consent of the other parties to
this Agreement.
1.08 Taxes. Except for taxes owed by Buyer as a
result of its use and operation of the Assets, from and
after the Effective Time, Buyer shall have no
liability or responsibility for any income, franchise,
excise, sales, use or other taxes (other than income
taxes based upon or measured by Buyer's net income) or
charges or imposts of any kind relating to or
arising out of the transactions contemplated by this
Agreement. Seller shall be solely responsible for the
payment of sales, transfer and use taxes arising out of
the sale, transfer and assignment of the Assets.
1.09 Deliveries on Closing Date.
(a) Subject to the terms and provisions hereof,
on or before the Closing Date, Seller shall deliver to
Buyer the originals of all written contracts, books,
records and other data of Seller relating to the Assets,
the Business and the performance of services by Seller
in connection therewith (except Seller's minute books,
and all other corporate seal, stock records and other
corporate records (together, Seller's "Corporate Records")).
Buyer shall retain, and shall make available for inspection
by Seller all written contracts, books, records and other
data of Seller delivered to Buyer at the Closing at an
office of Buyer in California, at any time, on reasonable
notice, during regular business hours for a period of
seven (7) years from and after the Closing Date.
(b) Seller shall retain Seller's Corporate
Records and shall make Seller's Corporate Records
available to Buyer for inspection and copying at any time,
on reasonable notice, during regular business hours for a
period of seven (7) years from and after the Effective
Time. Seller agrees that all Seller's Corporate Records
will be kept and maintained or made available to Buyer
at Seller's corporate office in Los Angeles, California
or such other location as the parties may mutually agree.
1.10 Accrued Vacation. At the Closing, Seller
shall provide a schedule to Buyer detailing the accrued
vacation and sick leave owed to each of Seller's
employees that Buyer intends to employ. Seller agrees to
pay to such employees at the Closing an amount equal to
the total of such accrued vacation and sick leave.
1.11 Employment Agreement. At the Closing,
Shareholder and Buyer shall execute and deliver the
Employment Agreement in the form of Exhibit F
attached hereto (the "Levy Employment Agreement").
1.12 Guarantee of Collectibility of Receivables
of Seller.
(a) Subject to the limitations set forth in
this Section 1.12, Seller and Shareholder, jointly and
severally, guarantee to Buyer that, except to the extent
of the reserve for doubtful accounts shown on the
Accounts Receivable Certification, all accounts and
notes receivable and other receivables reflected on
the Accounts Receivable Certification (the "Receivables")
will be valid and legally binding obligations of the
persons owing said amounts to Seller and that the full
amount of the Receivables will be paid to Buyer on or
before February 28, 1998.
(b) If any part of the Receivables has not
been paid on or before February 28, 1998, then to the
extent that such unpaid part of the Receivables exceeds
the reserve for doubtful accounts shown on the Accounts
Receivable Certification, Buyer may reassign on or before
March 31, 1998 to Seller all or any part of the unpaid part
of the Receivables, free and clear of any security
interest, lien or other encumbrance arising on or after
the Closing, in which event Seller shall pay to Buyer in
cash or by certified check that amount equal to such
reassigned part of the unpaid part of the Receivables
net of the reserve for doubtful accounts shown on the
Accounts Receivable Certification. Buyer shall deliver
to Seller reasonably detailed information supporting the
determination of the amount of such unpaid portion of the
Receivables.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
AND SHAREHOLDER
Seller and Shareholder jointly and severally
represent and warrant to Buyer as follows:
2.01 Organization, Standing and Power of Seller. Seller
is a corporation duly organized, validly existing and in
good standing under the laws of the State of California.
Seller has all requisite corporate power and authority to
own, lease and operate its properties and to carry on
its business as now being conducted. Seller has no
subsidiaries and does not conduct business in any
state other than California. Shareholder is the lawful
record and beneficial owner of all of the issued and
outstanding shares of capital stock of Seller, free
and clear of all security interests, liens, proxies,
voting trusts, voting agreements and other
encumbrances and restrictions of any kind, and all of
such shares are validly issued and outstanding and are
fully paid and nonassessable.
2.02 Authority for Agreements. Seller has the corporate
power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and
delivery of this Agreement and all other agreements,
instruments and documents which are contemplated by this
Agreement and the performance of the transactions
contemplated hereby and thereby have been duly and
validly authorized by all necessary corporate and other
action on the part of Seller and Shareholder and when
executed and delivered on behalf of Seller this Agreement
and all agreements contemplated by this Agreement will
constitute a valid and legally binding obligation of
Seller and Shareholder enforceable against them in
accordance with its terms.
2.03 Brokers and Finders. Neither Seller, Shareholder
nor any of their respective officers, directors,
agents, employees or affiliates has employed any broker,
agent or finder or incurred any liability for any brokerage
fees, agents' commissions or finders' fees in connection with
the transactions contemplated by this Agreement.
2.04 Good Title; No Encumbrances; Condition of the
Assets. Except as set forth on Schedule 2.04, Seller is
the owner of and has all right, title and interest in and
to the Assets and is conveying to Buyer good and
marketable title to the Assets. Seller has good right,
power and authority to sell, convey and assign the
Assets to Buyer. Except as set forth on Schedule 2.04,
none of the Assets is subject to any mortgage,
pledge, lien, charge, security interest,
encumbrance, restriction, lease, license, easement,
liability or adverse claim of any nature
whatsoever, direct or indirect, whether accrued, absolute,
contingent or otherwise (collectively, "Liens"). Except
as set forth on Schedule 2.04, all of the Assets owned,
leased or used by Seller are in good operating
condition and repair, subject to ordinary wear and tear,
are suitable for the purposes used, are adequate and
sufficient for all current operations of Seller and are
directly related to the Business.
2.05 Assets. Set forth on Schedule 2.05 hereto is an
accurate and complete list of:
(a) All real property owned by Seller or in
which Seller has a leasehold or other interest or which is
used by Seller in connection with the operation of its
business, together with a description of each lease, sublease,
license or any other instrument under which Seller claims
or holds such leasehold or other interest or right to
the use thereof or pursuant to which Seller has assigned,
sublet or granted any rights therein, identifying the
parties thereto, the rental or other payment
terms, expiration date and cancellation and renewal
terms thereof.
(b) All machinery, tools, equipment,
motor vehicles, rolling stock and other tangible personal
property (other than inventory and supplies), owned,
leased or used by Seller, setting forth with respect
to all such listed property a summary description of all
Liens relating thereto, identifying the parties thereto,
the rental or other payment terms, expiration date and
cancellation and renewal terms thereof.
(c) All patents, patent applications,
licenses, trademarks, trademark registrations, service
marks, service names, trade names, copyrights and
copyright registrations and applications for any of
the foregoing, wholly or partially owned or held by
Seller or used in the operation of Seller's business.
(d) All fire, theft, casualty, liability and
other insurance policies insuring Seller or its
properties or interests therein, specifying with
respect to each such policy the name of the insurer, the
risk insured against, the limits of coverage, the
deductible amount (if any), the premium rate and the
date through which coverage will continue by virtue of
premiums already paid.
(e) All sales agency or distributorship
agreements or franchises or agreements providing for the
services of an independent contractor to which Seller is a
party or by which it is bound.
(f) All contracts, agreements, commitments
or licenses relating to patents, trademarks, trade
names, copyrights, inventions, processes, know-how,
formulae or trade secrets to which Seller is a party or
by which it is bound.
(g) All loan agreements, indentures,
mortgages, pledges, conditional sale or title
retention agreements, security agreements, equipment
obligations, guaranties, leases or lease purchase
agreements to which Seller is a party or by which
it is bound.
(h) All contracts, agreements and
commitments, whether or not fully performed, in respect
of the issuance, sale or transfer of the capital
stock, bonds or other securities of Seller or pursuant
to which Seller has acquired any substantial portion of
its business or assets.
(i) All contracts, agreements, commitments
or other understandings or arrangements to which Seller
is a party or by which it or any of its property is
bound or affected but excluding purchase and sales orders
and commitments made in the ordinary course of business
involving payments or receipts by Seller of less than
$10,000 in any single case but not more than $30,000 in
the aggregate.
(j) All collective bargaining agreements, employment
and consulting agreements, executive compensation
plans, bonus plans, deferred compensation
agreements, employee pension plans or retirement plans,
employee stock options or stock purchase plans and
group life, health and accident insurance and other
employee benefit plans agreements, arrangements or
commitments, whether or not legally binding, including,
without limitation, holiday, vacation and other bonus
practices, to which Seller is a party or is bound or which
relate to the operation of Seller's business.
(k) The names and current annual salary rates
of all employees of Seller, (including independent
commission agents) showing separately for each such
person the amounts paid or payable as salary, bonus
payments and any indirect compensation for the year ended
December 31, 1996.
(l) The names of all of Seller's directors
and officers; and the names of all persons, if any,
holding tax or other powers of attorney from Seller and a
summary of the terms thereof.
All of the contracts, agreements, leases, licenses
and commitments required to be listed on Schedule 2.05
hereto (the "Agreements"), other than those which have
been fully performed, are valid and binding, enforceable
in accordance with their respective terms, in full
force and effect and, except as otherwise specified in
Schedule 2.05 hereto, validly assignable to Buyer without
the consent of any other party so that, after the assignment
thereof to Buyer pursuant hereto, Buyer will be entitled
to the full benefits thereof. Except as disclosed in
Schedule 2.05 hereto, (i) none of the Agreements has
been amended, modified or altered in any
manner, (ii) there is not under any of the Agreements
any existing default or other condition on the part of
Seller which would result in a right to accelerate or
a loss of rights, (iii) none of the Agreements is,
either when considered singly or in the aggregate with
others, unduly burdensome, onerous or materially adverse
to Seller's business, properties, assets, earnings or
prospects or likely, either before or after Closing, to
result in any material loss or liability, (iv) other than
in the ordinary course of business consistent with past
practice, no oral or written notice of termination or
indication of an intention to terminate has been given by any
party to any of the Agreements and (v) except as set forth
on Schedule 2.05, Seller is not providing any additional
products or services, without charge, to any customer covered by
any of the Agreements. True and complete copies of all of the
Agreements (together with any and all amendments thereto)
have been delivered to Buyer.
2.06 Financial Information. Seller has delivered to
Buyer copies of the balance sheets of Seller for each of
the past two (2) fiscal years, and the related statements of
income for each of the fiscal years ended December 31,
1995 and December 31, 1996 (collectively, "Seller's
Financial Statements"), all of which are complete and
correct in all material respects, have been prepared
from the books and records of Seller in accordance
with generally accepted accounting principles consistently
applied and maintained throughout the periods indicated,
and fairly present the financial condition of Seller as at
their respective dates and the results of its operations
for the periods covered thereby. Except as set forth on
Schedule 2.06, Seller's Financial Statements do not contain
any items of special or nonrecurring revenue or any other
revenue not earned in the ordinary course of business
except as expressly specified therein. For purposes of this
Agreement, Seller's Financial Statements shall include any
notes and schedules attached to such financial statements.
2.07 Inventory. All items of Seller's inventory and
related supplies (including finished goods and disassembled
inventory) are suitable and usable for rental in the ordinary
course of business, except as set forth on Schedule 2.07,
none of such items is obsolete or below standard quality
and each item of such inventory reflected on the balance
sheet of Seller as at December 31, 1996 (the "Base Balance
Sheet") and the books and records of Seller is so
reflected on the basis of a complete physical count and is
valued in accordance with generally accepted accounting
principles consistently applied. Except as set forth on
Schedule 2.07, the Assets include a sufficient but not an
excessive quantity of each type of such inventory and supplies in
order to meet the normal requirements of Seller's business.
2.08 Accounts Receivable. Schedule 2.08 hereto sets
forth a complete list of all accounts receivable of
Seller arising out of the Business showing the amounts
due and an aging analysis thereof. The accounts and
other receivables shown on Schedule 2.08 hereto have arisen
in the ordinary course of business, are valid and enforceable
and are not in dispute by the respective obligors therefore and
are collectible consistent with past experience. Schedule
2.08 hereto sets forth a list of any oral or written
communication to Seller of any dispute relating
to such accounts receivable.
2.09 Intellectual Property. Except as set forth on
Schedule 2.09 hereto, Seller owns or has the legal right
to utilize as presently used by Seller all inventions,
patents, patent applications, patent rights, trade
secrets, licenses, transferable permits and transferable
franchises, trademarks, trade names, service marks, copyrights
and copyright applications and applications for any of the
foregoing, know how (collectively, the "Intellectual Property
Rights"), including the exclusive right to use the name
"Hydrothermic Floatation Systems, Inc.," necessary to
manufacture and sell its products and to conduct its
business as it is presently operated, free and clear of
all liens or claims of others. Seller is not
infringing upon any Intellectual Property Rights owned
by any other person or persons, there is no claim or
action by any such person pending or to Seller's
Knowledge (as hereinafter defined), threatened against
Seller or any of its affiliates with respect thereto and
to Seller's Knowledge, there is no person or persons
infringing upon any Intellectual Property Rights used by
Seller. Subject to periodic filing reports due after the
Closing, all of the trademark registrations, copyright
registrations and patents that are included in the Assets
are valid and enforceable in their entirety in all
material respects.
2.10 Litigation. Except as set forth on Schedule 2.10
hereto, there is no (a) claim, suit, action, arbitration,
proceeding, governmental investigation or other legal or
administrative proceeding (collectively, "Claims")
in progress, pending or to Seller's Knowledge,
threatened against or relating to Seller, Shareholder or
any of their officers, directors or employees,
affiliates, properties, assets or the Business or the
transactions contemplated by this Agreement, nor to
Seller's Knowledge, is there any basis for any Claims or
(b) order, decree or ruling of any court or administrative
agency to which Seller, Shareholder or any of their
affiliates is a party or bound, which could adversely
affect Seller, the Business, the Assets or the performance
of the obligations of Seller or Shareholder hereunder and
Seller is not in default in respect of any such order,
decree or ruling. As used herein, the term "Seller's
Knowledge" shall mean the actual knowledge of Y. Xxxxxx
Xxxx, Xxxxx Xxxxxx and Xxxx Xxxxx and such knowledge as a
reasonably prudent person would have in the ordinary
exercise of his affairs in the capacity in which his
knowledge is at issue.
2.11 No Conflict with Other Instruments. The
execution, delivery and performance of this Agreement and
the consummation of the transactions herein contemplated will
not (a) constitute a default under, conflict with, result
in a right to accelerate, loss of rights under or a breach
of any of the terms, conditions or provisions of, Seller's
organizational documents or any agreement or instrument
to which Seller or Shareholder is now a party or by which
Seller or Shareholder is bound or to which any property
or asset of any of them is bound, (b) result in
the creation or imposition of any Lien upon Seller's
capital stock, the Assets or the Business or (c) result
in the violation of any applicable law, ordinance,
regulation, permit, authorization, decree or order of any
court or other government agency.
2.12 No Guaranties. Except as set forth on
Schedule 2.12, none of the obligations or liabilities of
Seller is guaranteed by, or subject to a similar contingent
liability of, any other person, firm or corporation, nor
has Seller guaranteed, or otherwise become contingently
liable for, the obligations or liabilities of any
other person, firm or corporation.
2.13 Compliance with Applicable Laws. Except as
set forth on Schedule 2.13, the Business has been, and
until the Effective Time will be, conducted in
compliance in all material respects with all
applicable laws, ordinances, regulations, permits,
authorizations, decrees and orders (collectively, "Laws
and Regulations"), including Laws and Regulations
concerning the environment, occupational health and
safety and the marketing of medical devices. Seller has
all licenses, permits, orders, approvals or other
authorizations of governmental, regulatory or
administrative agencies or authorities required to conduct
the Business and own and operate the Assets and neither
Seller nor Shareholder has received any written notice
or, to Seller's knowledge, any other notice, that any
governmental authority intends to cancel, terminate or
not renew any such license, permit, order, approval or
other authorization. Neither Seller nor Shareholder has
received any opinion or memorandum of legal advice from
any legal counsel to the effect that either of them is
exposed to any liability or disadvantage that is or may
be material to Seller.
2.14 Insurance. Schedule 2.14 hereto sets forth a
list of all insurance policies carried by Seller during
the period beginning January 1, 1994, including types
and limits of coverages and all claims, notice of which
were submitted to any insurer pursuant to any insurance
policy since January 1, 1994. True and complete copies
of such policies have been furnished to Buyer. Seller
has made available to Buyer all files and other information
known to Seller or Shareholder with respect to any claims
made or threatened against Seller arising out of the
Business during the period beginning January 1, 1994,
regardless of whether covered by insurance and regardless
of whether notice thereof was submitted to any insurer.
Except as indicated on Schedule 2.14 hereto, all of such
policies are "occurrence" policies and are not "claims made"
policies. In the event any such policies are on a
claims made basis, Seller shall, at Seller's
expense, purchase insurance with similar coverage which
shall insure Seller for claims made after the Closing
Date with respect to Seller's provision of services before
the Closing Date.
2.15 Consents. There are no (a) consents or
approvals of any public body or authority, (b) filings
with any public body or authority or (c) except as set
forth on Schedule 2.15, consents or waivers from other
parties to the Agreements or other instruments, that are
required for the lawful consummation of the transactions
contemplated hereby or necessary in order that the Business
can be conducted by Buyer in the same manner after Closing
as heretofore conducted by Seller.
2.16 Undisclosed Liabilities. Except as set forth
on Schedule 2.16 hereto or as reflected on the Base
Balance Sheet, Seller does not have any liability or
obligations whether known or unknown, asserted or
unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated, due or to become due, and
xxxxxx or inchoate that would be required under generally
accepted accounting principles to be reflected in a
balance sheet of Seller (including footnotes thereto)
("Liabilities") individually or in the aggregate in
excess of $10,000 (including, without limitation,
liabilities or obligations arising out of claims
based on products liability), and to Seller's Knowledge
there is no basis for any present or future action,
suit, proceeding, hearing, investigation, charge,
complaint, claim or demand against Seller giving rise
to any such liabilities or obligations, except as set
forth in Schedule 2.16 hereto or incurred after December
31, 1996 in the ordinary course of business
consistent with prior practices.
2.17 Absence of Changes or Events. Except as set
forth in Schedule 2.17 hereto or as contemplated by this
Agreement, since July 31, 1996, Seller has conducted the
Business only in the ordinary course of business, and
Seller has not:
(a) incurred any Liabilities which individually
or in the aggregate have had or might have a material
adverse effect on the Assets or the Business;
(b) pledged or subjected to any Lien any of
the Assets, other than liens arising by operation of
law to secure payment of ad valorem or personal property
taxes or arising in the ordinary course of business of
Seller;
(c) sold, transferred, leased to others
or otherwise disposed of any of the Assets, except
in the ordinary course of business of Seller;
(d) discharged, satisfied, canceled or
compromised any material debt or claim, or waived or
released any right of substantial value except for fair
value or in the ordinary course of business;
(e) received any notice of termination of
any contract, lease or other agreement, or suffered any
damage, destruction or loss that, individually or in the
aggregate, has had or might have a material adverse effect
on the Assets or the Business;
(f) instituted, settled or agreed to settle
any litigation, action, proceeding or arbitration;
(g) failed to replenish its inventory or
supplies in a normal and customary manner or made
any material purchase commitment other than in the
ordinary course of business of Seller;
(h) failed to pay any accounts or notes payable
or any other obligations on a timely basis consistent
with the practices of Seller;
(i) entered into any material
transaction, contract or commitment other than in the
ordinary course of the business of Seller;
(j) suffered any event or events,
whether individually or in the aggregate, that has had or
could be reasonably expected to have a material adverse
effect on the Assets or the Business;
(k) made any material change in the rate
of compensation, commission, bonus or other remuneration
payable, or paid or agreed to pay any material bonus,
extra compensation, pension, severance or vacation pay,
to Shareholder or any director, officer, salesman,
distributor, agent or employee of Seller other than
periodic salary increases consistent with past practices;
(l) issued any equity interests, declared or
paid any distribution on equity interests (not including
bonuses) or entered into any agreement or understanding
to do or engage in any of the foregoing actions;
(m) engaged in any activities or practices
other than the Business; or
(n) entered into any agreement or made
any commitment to take any of the actions described in
Subsections (a) through (m) inclusive of this Section
2.17.
2.18 Transactions with Affiliates. Except as set
forth on Schedule 2.18 hereto, during the past three
years Seller has not, directly or indirectly, purchased,
leased from others or otherwise acquired any property
or obtained any services from, or sold, leased or
otherwise disposed of any property or furnished any
services to, or otherwise dealt with (except with
respect to remuneration for services rendered as a
director, officer or employee of Seller), in the
ordinary course of business or otherwise, (i) any
shareholder of Seller or (ii) any person, firm or
corporation which, directly or indirectly, alone or
together with others, controls, is controlled by or is
under common control with, Seller or any shareholder
of Seller. Except as set forth on Schedule 2.18 hereto,
Seller does not owe any amount to, or have any contract
with or commitment to, any of its shareholders, directors,
officers, employees or consultants (other than compensation
for current services not yet due and payable and reimbursement
of expenses arising in the ordinary course of business),
and none of such persons owes any amount to Seller. Except
as set forth on Schedule 2.18 hereto, no part of the property
or assets of Shareholder or any affiliate of Shareholder has,
during the past three years, been used by Seller.
2.19 Taxes. All taxes that relate to, arise out of
or impact upon the Business or the Assets, including,
without limitation, income, property, sales, use,
franchise, added value, employees' income withholding,
unemployment disability and social security taxes, imposed
by the United States or by any foreign country or by any
state, municipality, subdivision or instrumentality of
the United States or of any foreign country, or by any
other taxing authority (collectively, "Taxes"), which are
due or payable by Seller and/or Shareholder and all interest
and penalties thereon, whether disputed or not, have
been timely paid in full, all tax returns required to be
filed in connection therewith have been accurately
prepared and duly and timely filed, all deposits
required by law to be made by Seller with respect to
employees' income withholding and other taxes have been
duly made and in the case of Taxes for which payment is
not yet required, such Taxes have been fully accrued for
on Seller's Financial Statements.
2.20 Labor and Employment Contracts. Seller has not (a)
been a party to a collective bargaining agreement, (b)
had any organization certified as a bargaining agent on
behalf of all or any portion of Seller's employees, (c)
received a demand for recognition from any union or
other organization, (d) to Seller's Knowledge had any
attempt made to organize any of Seller's employees, (e)
encountered any labor union organizing activity or (f)
encountered any actual or threatened employee strikes,
work stoppages, jurisdictional disputes, slow-downs or
lock-outs. Seller has provided Buyer a written list of
all agreements and understandings, whether written or oral,
between Seller and any of its officers, employees or agents
that contain a noncompetition and confidentiality agreement
and/or covenant or any other terms of employment.
Except as set forth on Schedule 2.20 hereto, Seller does
not have any labor disputes currently subject to any
material grievance procedure, arbitration or litigation,
unfair labor practice charges, Equal Employment
Opportunity Commission charges, state or local fair
employment practice charges, Department of Labor
investigations, wage and hour claims or disputes or any
other labor law related charges or investigations
relating to or arising out of the Business or the Assets.
2.21 Environmental Matters.
(a) Except as set forth in Schedule 2.21 hereto,
(i) neither Seller nor any of its subsidiaries or
affiliates has ever generated, transported, used,
stored, treated, disposed of or managed any Hazardous
Waste (as hereinafter defined); (ii) no Hazardous
Material has ever been or is threatened to be spilled,
released or disposed of at any site presently or
formerly owned, operated, leased or used by Seller or
any of its subsidiaries or affiliates, or has ever come
to be located in the soil or groundwater at any such
site; (iii) no Hazardous Material has ever been
transported from any site presently or formerly owned,
operated, leased or used by Seller or any of its
subsidiaries or affiliates for treatment, storage or
disposal at any other place; (iv) neither Seller nor
any of its subsidiaries or affiliates presently owns,
operates, leases or uses, and has not previously owned,
operated, leased or used any site on which underground
storage tanks are or were located and (v) no lien has
ever been imposed by any governmental agency on any
property, facility, machinery or equipment owned,
operated, leased or used by Seller or any of its
subsidiaries or affiliates in connection with the
presence of any Hazardous Material.
(b) Except as set forth in Schedule 2.21 hereto,
(i) neither Seller nor any of its subsidiaries or
affiliates has any liability under, and has not
violated, any Environmental Law (as hereinafter defined);
(ii) each of Seller and its subsidiaries and affiliates, any
property, whether real, personal or mixed, owned,
operated, leased or used by Seller or any of its
subsidiaries or affiliates and any facilities and
operations thereon are presently in compliance with
all applicable Environmental Laws; (iii) neither Seller
nor any of its subsidiaries or affiliates has entered
into or been subject to any judgment, consent decree,
compliance order or administrative order with respect to
any environmental or health and safety matter or
received any request for information, notice, demand
letter, administrative inquiry or formal or informal complaint
or claim with respect to any environmental or health and
safety matter or the enforcement of any Environmental Law
and (iv) neither Seller nor Shareholder has any reason to
believe that any of the items enumerated in clause (iii)
of this paragraph will be forthcoming.
(c) Except as set forth in Schedule 2.21 hereto,
no site, improvements or other property of any kind
owned, operated, leased or used by Seller or any of its
subsidiaries or affiliates contains any lead-based
paint, asbestos or asbestos-containing material, any
polychlorinated biphenyls ("PCBs") or equipment containing
PCBs or any urea formaldehyde foam insulation.
(d) No condition exists affecting any property,
whether real, personal or mixed, occupied, owned,
used, operated, leased or possessed by Seller that might
(i) result in a generation of or a release into the
environment of Hazardous Materials or Hazardous Waste,
(ii) create a risk of harm to human health or animal
health or habitat or the Environment, (iii) require, under
any Environmental Law, that such condition be contained,
abated, remediated, removed, investigated or cleaned up
(regardless of whether or not any government or
regulatory body has ordered or required such action) or
(iv) limit Buyer's full and beneficial use of such
property in full compliance with all Environmental Laws.
(e) Seller has provided to Buyer copies of all
documents, records and information available to Seller
concerning any environmental or health and safety matter
relevant to Seller or any of its subsidiaries or affiliates,
whether generated by Seller or any of its subsidiaries or
affiliates, including, without limitation, environmental risk
assessments, site assessments, documentation regarding
off-site disposal of Hazardous Materials, spill
control plans, and reports, correspondence, permits, licenses,
approvals, consents and other authorizations related
to environmental or health and safety matters issued
by any governmental agency.
(f) For purposes of this Section 2.21, (i)
"Hazardous Material" shall mean and include any
hazardous waste, any reportable quantities of
hazardous material, hazardous substance, petroleum
product, oil, toxic substance, pollutant or contaminant,
as defined or regulated under any Environmental Law;
(ii) "Hazardous Waste" shall mean and include any
hazardous waste as defined or regulated under any
Environmental Law and (iii) "Environmental Law" shall
mean any applicable environmental or health and safety-
related law, regulation, rule, judgment, administrative
order, decree, ordinance or by-law at the federal, state
or local level, existing as of the date hereof or
previously enforced and (iv) the "Environment" means any
surface water, ground water,drinking water supply,
land surface, subsurface strata, ambient air (including
indoor air) and includes any property owned, used or occupied
by Seller.
2.22 Employee Benefit Programs.
(a) Schedule 2.22 hereto sets forth a list of
every Employee Program (as hereinafter defined) that has
been maintained (as such term is hereinafter defined) by
Seller or any of its subsidiaries or affiliates at any
time during the 5-year period ending on the date hereof.
(b) Except as set forth in Schedule 2.22 hereto,
each Employee Program which has been maintained by Seller
or any of its subsidiaries or affiliates and which has
at any time been intended to qualify under Section 401(a)
or 501(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), has received a favorable
determination or approval letter from the Internal
Revenue Service ("IRS") regarding its qualification
under such section and has, in fact, been qualified under
the applicable section of the Code from the effective
date of such Employee Program through and including the
Closing (or, if earlier, the date that all of such
Employee Program's assets were distributed). No event or
omission has occurred which would cause any such
Employee Program to lose its qualification under the
applicable Code section.
(c) Except as set forth in Schedule 2.22
hereto, there has not been any failure of Seller to
comply with any laws applicable with respect to the
Employee Programs that have been maintained by Seller or
any of its subsidiaries or affiliates. With respect to
any Employee Program now or heretofore maintained by
Seller or any of its subsidiaries or affiliates,there has
occurred no "prohibited transaction," as defined in
Section 406 of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or Section 4975 of
the Code, or breach of any duty under ERISA or other
applicable law (including, without limitation, any
health care continuation requirements or any other tax
law requirements, or conditions to favorable tax
treatment, applicable to such plan), which could
result, directly or indirectly (including without
limitation through any obligation of indemnification
or contribution), in any taxes, penalties or other
liability to Seller or any of its subsidiaries or
affiliates. Except as set forth in Schedule 2.22
hereto, no litigation, arbitration, governmental
administrative proceeding or investigation or other
proceeding (other than those relating to routine claims
for benefits) is pending or, to Seller's Knowledge,
threatened with respect to any Employee Program.
(d) Neither Seller nor any of its subsidiaries
or affiliates has incurred any liability under Title IV of
ERISA which will not be paid in full prior to Closing.
Except as set forth in Schedule 2.22 hereto, there has been
no "accumulated funding deficiency" (whether or not waived)
with respect to any Employee Program ever maintained by
Seller or any of its subsidiaries or affiliates and subject to
Code Section 412 or ERISA Section 302. With respect to any
Employee Program maintained by Seller or any of its
subsidiaries or affiliates and subject to Title IV of
ERISA, there has been no (nor will there be any as a
result of the transaction contemplated by this Agreement)
(i) "reportable event," within the meaning of ERISA
Section 4043, or the regulations thereunder (for which
the notice requirement is not waived under 29 C.F.R. Part
2615) or (ii) event or condition which presents a material
risk of plan termination or any other event that may cause
Seller or any of its subsidiaries or affiliates to incur
liability or have a lien imposed on its assets under
Title IV or ERISA. Except as set forth in Schedule 2.22
hereto, all payments and/or contributions required to have
been made (under the provisions of any agreements or other
governing documents or applicable law) with respect to all
Employee Programs ever maintained by Seller or any of its
subsidiaries or affiliates, for all periods prior to Closing,
either have been made or have been accrued (and all such unpaid
but accrued amounts are described on Schedule 2.22
hereto). Except as described in Schedule 2.22 hereto,
no Employee Program maintained by Seller or any of its
subsidiaries or affiliates and subject to Title IV of ERISA
(other than a Multiemployer Plan as hereinafter defined) has any
"unfunded benefit liabilities" within the meaning of
ERISA Section 4001(a)(18), as of the Closing Date.
Neither Seller nor any of its subsidiaries or
affiliates has ever maintained a Multiemployer Plan.
None of the Employee Programs ever maintained by Seller
or any of its subsidiaries or affiliates has ever
provided health care or any other non-pension
benefits to any employees after their employment
was terminated (other than as required by Part 6 of
Subtitle B of Title I of ERISA or any other health
benefits law) or has ever promised to provide such post-
termination benefits.
(e) With respect to each Employee
Program maintained by Seller of any of its subsidiaries or
affiliates within the five years preceding the date
hereof, complete and correct copies of the following
documents (if applicable to such Employee Program) have
previously been delivered to Buyer: (i) all documents
embodying or governing such Employee Program, and any
funding medium for the Employee Program, including, without
limitation, trust agreements) as they may have been amended
through the date hereof; (ii) the most recent IRS
determination or approval letter with respect to such
Employee Program under Code Section 401 or 501(a), and any
applications for determination or approval subsequently
filed with the IRS; (iii) the three most recently
filed IRS Forms 5500, with all applicable schedules and
accountants' opinions attached thereto; (iv) the current
summary plan description for such Employee Program (or
other descriptions of such Employee Program provided to
employees) and any material modifications to such summary
plan descriptions or other descriptions; (v) any insurance
policy (including any fiduciary liability insurance
policy) related to such Employee Program; (vi) any
documents evidencing any loan to an Employee Program
that is a leveraged employee stock ownership plan;
and (vii) with respect to any Multiemployer Plan, any
participation or adoption agreement relating to any such
participation in or contributions under such plan by Seller
or any of its subsidiaries or affiliates.
(f) Except as set forth in Schedule 2.22
hereto, each Employee Program maintained by Seller or
any of its subsidiaries or affiliates as of the date
hereof is subject to termination by the Board of
Directors of such Seller or any of its subsidiaries or
affiliates, as the case may be, without any further
liability or obligation on the part of Seller or
any of its subsidiaries or affiliates to make
further contributions to any trust maintained under any
such Employee Program following such termination.
(g) Buyer will not adopt or in any way
become a successor employer with respect to any such
Employee Program. Except as otherwise required by
law, any obligation, liabilities or responsibilities
under COBRA with respect to any such Employee Program
will be satisfied by Seller, and Buyer shall have no
obligations, liabilities or responsibilities under
COBRA with respect to any such Employee Program.
Seller shall indemnify Buyer for any and all liability
imposed by law under COBRA with respect to any such
Employee Program.
(h) For purposes of this Section 2.22:
(i) "Employee Program" means (A) all
employee benefit plans within the meaning of ERISA
Section 3(3), including, but not limited to, multiple
employer welfare arrangements (within the meaning of
ERISA Section 3(40)), plans to which more than one
unaffiliated employer contributes and employee benefit
plans (such as foreign or excess benefit plans) which
are not subject to ERISA; and (B) all stock option
plans, bonus or incentive award plans, severance
pay policies or agreements, deferred compensation
agreements, supplemental income arrangements, vacation
plans, and all other employee benefit plans, agreements
and arrangements not described in (A) above. In the case
of an Employee Program funded through an organization
described in Code Section 501(c)(9), each reference
to such Employee Program shall include a reference to such
organization;
(ii) an entity "maintains" an Employee
Program if such entity sponsors, contributes to, or
provides (or has promised to provide) benefits under such
Employee Program, or has any obligation (by agreement or
under applicable law) to contribute to or provide
benefits under such Employee Program, or if such
Employee Program provides benefits to or otherwise
covers employees of such entity (or their spouses,
dependents, or beneficiaries);
(iii) An entity is an "Affiliate"
of Seller or any of its subsidiaries or affiliates for
purposes of this Section 2.22 if it would have ever been
considered a single employer with Seller or any of its
subsidiaries or affiliates under ERISA Section 4001(b)
or part of the same "controlled group" as Seller for
purposes of ERISA Section 302(d)(8)(C), and in any
case includes each subsidiary or affiliate of Seller;
and
(iv) "Multiemployer Plan" means a
(pension or non-pension) employee benefit plan to which
more than one employer contributes and which is maintained
pursuant to one or more collective bargaining agreements.
2.23 Books and Records. All of the books and records
of Seller are complete and correct in all material
respects and have been maintained in accordance with
good business practice and there have been no
transactions involving the Business which are required
to have been set forth therein and which have not been
accurately so set forth.
2.24 Other Names and Businesses. During the past
five years, except for the names set forth on
Schedule 2.24, Seller has used no trade names,
fictitious names, assumed names, "doing business as"
names or other names to conduct business nor has
Shareholder had any interest in any other specialty
patient surface or woundcare business other than Apex,
Inc., a California corporation ("Apex"), Blue Line, Inc.
and 9th Wave, Inc.
2.25 Disclosures to Third Parties. Except as set
forth on Schedule 2.25 hereto, neither Seller,
Shareholder nor any of their respective brokers,
representatives, accountants, attorneys or agents has
disclosed any customer lists, contract terms, pricing
information, margin information, trade secrets or other
confidential information to any other person or other
entity.
2.26 Customer Relationships. The relationships
of Seller with its customers and suppliers
("Customers") are generally satisfactory business
relationships. Except as set forth on Schedule 2.26, no
Customer which accounted for more than 1% of the
revenues of Seller for the fiscal year ended December
31, 1996 has canceled or otherwise terminated its
relationship with Seller or has during said period
decreased materially its usage, purchase or provision, as
the case may be, of the services or products of Seller,
other than in the ordinary course of business consistent
with past practice. Except as set forth on Schedule 2.26
hereto, no Customer has, to Seller's Knowledge, any plan
or intention to terminate, cancel or otherwise adversely
modify its relationship with Seller or to decrease or
limit its usage, purchase or provision, as the case
may be, of the services or products of Seller other than
in the ordinary course of business consistent with past
practice.
2.27 Affiliated Entities. Apex has no material
assets and no longer conducts business.
2.28 Disclosure. No representation or warranty made
by Seller or Shareholder contained in this Agreement
nor any exhibit, schedule, statement or certificate
furnished or to be furnished by Seller or Shareholder to
Buyer or its representatives in connection herewith or
pursuant hereto, contains or will contain on the
Closing Date any untrue statement of a material fact,
or omits or will omit on the Closing Date to state any
material fact required to make the statements herein or
therein contained not misleading. The representations and
warranties contained in this Article II or elsewhere in
this Agreement or any document delivered pursuant hereto
shall not be affected or deemed waived by reason of the
fact that Buyer and/or its representatives knew or should
have known that any such representation or warranty is or
might be inaccurate in any respect.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller and Shareholder as follows:
3.01 Organization; Valid Authorization; Good
Standing. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the
State of Delaware. Buyer has all requisite corporate
power and authority to enter into this Agreement and
to perform its obligations hereunder. The execution and
delivery of this Agreement and all other agreements,
instruments and documents which are contemplated by
this Agreement and the performance of the transactions
contemplated hereby and thereby have been duly and
validly authorized by all necessary corporate and other
action on the part of Buyer, and when executed and
delivered on behalf of Buyer, this Agreement and all
agreements contemplated by this Agreement will constitute
a valid and legally binding obligation of Buyer
enforceable against it in accordance with its terms.
3.02 No Conflict with Other Instruments. The execution,
delivery and performance of this Agreement and the
consummation of the transactions herein contemplated will
not (a) constitute a default under, conflict with, result
in a right to accelerate, loss of rights under or a
breach of any of the terms, conditions or provisions of,
Buyer's organizational documents or any agreement or instrument
to which Buyer is now a party or by which Buyer is bound
or to which any property or asset of Buyer is bound or
(b) result in the violation of any applicable law, ordinance,
regulation, permit, authorization, decree or order of
any court or other government agency.
3.03 Consents. There are no (a) consents or
approvals of any public body or authority, (b) filings
with any public body or authority or (c) consents or
waivers from other parties to the Agreements or other
instruments, that are required for the lawful
consummation of the transactions contemplated hereby or
necessary in order that the Business can be conducted by
Buyer in the same manner after Closing as heretofore
conducted by Seller.
3.04 Brokers. Neither Buyer nor any of its respective
officers, directors, agents, employees or affiliates
has employed any broker, agent or finder or incurred any
liability for any brokerage fees, agents' commissions
or finders' fees in connection with the transactions
contemplated by this Agreement.
3.05 Disclosure. No representation or warranty made
by Buyer contained in this Agreement nor any exhibit,
schedule, statement or certificate furnished or to be
furnished by Buyer to Seller, Shareholder or their
representatives in connection herewith or pursuant hereto,
contains or will contain on the Closing Date any untrue
statement of a material fact, or omits or will omit on the
Closing Date to state any material fact required to make
the statements herein or therein contained not misleading.
The representations and warranties contained in this Article
III or elsewhere in this Agreement or any document
delivered pursuant hereto shall not be affected or
deemed waived by reason of the fact that Seller and/or its
representatives knew or should have known that any such
representation or warranty is or might be inaccurate in
any respect.
ARTICLE IV
COVENANTS OF SELLER AND
SHAREHOLDER
Seller and Shareholder jointly and severally covenant
and agree with Buyer as follows:
4.01 Conduct Prior to Effective Time. Unless
otherwise expressly consented to in writing by Buyer,
from and after the date of this Agreement through the
Effective Time, Seller agrees to (and Shareholder agrees
to cause Seller to):
(a) carry on the Business in the ordinary
and usual course as has been conducted since July 31, 1996;
(b) keep and preserve the Assets in good
condition and repair, ordinary wear and tear excepted;
(c) preserve the goodwill of Seller's
suppliers, customers, landlords and others having business
relations with Seller;
(d) maintain in full force and effect
insurance comparable in amount and in scope of the current
policies listed on Schedule 2.14 hereto;
(e) maintain in full force and effect, perform
all of its obligations under and not change any of the
material terms under, the customer accounts of Seller and
all other agreements, leases and other commitments
relating to or affecting the Assets or the Business;
(f) to cooperate with Buyer and use
reasonable efforts to assist Buyer in obtaining the
consent of any landlord or other party to any lease or
contract with Seller where the consent of such landlord
or other party may be required by reason of the transactions
contemplated hereby;
(g) comply in all material respects with
and perform in all material respects, all obligations and
duties imposed upon it by all federal and state laws and
all rules, regulations and orders imposed by federal or
state governmental authorities;
(h) not grant any increase or make any change
in the compensation of any employee employed in
connection with the Business other than in the ordinary
course of business consistent with past practices;
(i) not dispose of or encumber any of the
Assets other than in the ordinary course of business;
(j) not take any actions of the type described
in Section 2.17 other than in the ordinary course of
business;
(k) not take any actions that would be
inconsistent with the intent of this Agreement;
(l) not change its articles of incorporation
or bylaws or merge or consolidate or obligate itself to
do so with or into any other entity;
(m) cause Buyer, its counsel, accountants
and other representatives, to have full access, during
normal business hours, to the properties, books and
records of Seller and will furnish to Buyer and its
representatives during such period all such
information concerning the Business as Buyer or its
representatives may reasonably request; and
(n) give Buyer prompt written notice of
any material change of any of the information contained
in the representations and warranties made in Article
II or elsewhere in this Agreement or the schedules or
exhibits hereto which occurs prior to the Effective Time.
4.02 Advice of Change. Seller and Shareholder shall
advise Buyer in writing prior to the Effective Time of
any material adverse change, or the occurrence of any
event which involves any substantial possibility of any
material adverse change, in the condition, financial or
otherwise, to the Business or the Assets that has
occurred since the date of this Agreement.
4.03 Non-Competition Agreement. In consideration for
the purchase of the Assets hereunder and other good
and valuable consideration, at Closing, Seller and
Shareholder shall, and shall cause Apex to, execute and
deliver, the NonCompetition and Continuity of Business
Dealings Agreement in the form of Exhibit G
attached hereto (the "NonCompetition Agreement").
4.04 Cooperation. Subject to the terms and conditions
herein provided, Seller and Shareholder will each use
all commercially reasonable efforts to take, or cause
to be taken, such action, to execute and deliver, or
cause to be executed and delivered, such additional documents
and instruments and to do, or cause to be done, all
things necessary, proper or advisable under the provisions
of this Agreement and under applicable law, to
consummate and make effective all of the transactions
contemplated by this Agreement.
4.05 Right to Name. Seller and Shareholder agreeto
cause Seller, immediately after Closing, to change the
name of Seller to a name which does not include "H.F.,"
"H.F. Systems" or "Hydrothermic Floatation Systems, Inc.,"
a similar name or any other name reasonably objected to
by Buyer. Seller shall provide copies of all
documents evidencing the change of name to Buyer.
4.06 Access and Information. From the date hereof until
the first to occur of (i) the Closing Date and (ii)
the termination of this Agreement in accordance with
Section 9.01, Seller shall permit Buyer, its counsel,
accountants and other representatives full and complete
access during normal business hours to enable Buyer to
make such investigation of the business, operations and
properties of Seller relating to the Business as Buyer in
its sole discretion deems necessary or desirable in connection
with the transactions contemplated hereby. Such investigation
shall include, without limitation, access to the directors,
officers, employees, agents and representatives (including
legal counsel and independent accountants) of Seller
relating to the Business and the properties, books,
records and other documents of Seller relating to the Business.
Buyer, Seller and Shareholder agree to use reasonable efforts
wherever possible in conducting such investigation to keep
confidential the existence of this Agreement and the
proposed transactions contemplated hereby. Seller
shall furnish Buyer and its representatives with
such financial (including data with respect to
billing and accounts receivable), operating and other
data and information, and copies of documents with
respect to the Business or any of the
transactions contemplated hereby, as Buyer shall from
time to time request. Such access and investigation
shall be made upon reasonable notice and at reasonable
places and times. Such access and information shall not
in any way affect or diminish any of the representations
or warranties hereunder. Without limiting the foregoing,
during such period, Seller shall keep Buyer informed as
to the business and operations of the Business and shall
consult with Buyer with respect thereto as appropriate.
4.07 Termination of 401(k) Plan. Shareholder agrees
to, and shall cause Seller to, take all actions necessary
in accordance with all applicable laws to terminate
Seller's 401(k) Plan.
4.08. Termination of Settlement Agreement. Shareholder
agrees to, and shall cause Seller to, pay all amounts owed to
Xxxx Xxxx prior to the Closing.
ARTICLE V
COVENANTS OF BUYER
Buyer covenants and agrees with Seller and Shareholder as follows:
5.01 Cooperation. Subject to the terms and
conditions herein provided, Buyer will use its best
efforts to take, or cause to be taken, such action,
to execute and deliver, or cause to be executed and
delivered, such additional documents and instruments
and to do, or cause to be done, all things necessary,
proper or advisable under the provisions of this
Agreement and under applicable law to consummate
and make effective all of the transactions contemplated
by this Agreement.
5.02 Confidentiality. In the event that the
Closing does not occur,(i) the terms of the confidentiality
provisions set forth in Section 9 of the letter of intent
dated December 9, 1996 shall remain in full force and
effect, (ii) Seller and Shareholder shall maintain, and
shall require its accountants, attorneys, lenders,
employees, officers and other representatives to
maintain, the confidentiality of business methods,
practices, customer lists, trade secrets, books and
records of Buyer for a five-year period beginning on the
date of this Agreement and ending on December 31,
2001, (iii) for a period of twelve (12) months beginning
on the date of this Agreement, Buyer shall not
solicit any individual currently employed by Seller
("Seller Employees") other than pursuant to a general
solicitation or hire any of Seller's clinical
consultants, and (iv) for a period of six (6) months
beginning on the date of this Agreement, Buyer shall not
hire any Seller Employees.
5.03 Employees.
(a) On the date of this Agreement, Seller
shall, to the extent not previously provided to Buyer,
provide Buyer with a list of all of Seller's employees
employed in the Business ("Employees") by name, date of
hire, current salary and position and shall promptly
provide to Buyer the most recent performance
evaluation and other compensation information
(including anticipated bonuses, if any) for any
Employee who consents in writing to the provision of
such information to Buyer. Buyer shall interview each
Employee for employment effective as of the Closing Date
and use its reasonable efforts to hire as many of
the Employees as possible consistent with, and subject to,
Buyer's requirements and employment policies. Seller shall
permit Buyer to interview Employees at times and
locations acceptable to each of Seller and Buyer. No
later than seven (7) days from the date of this
Agreement, Buyer shall provide to Seller a list of
Employees it intends to employ following the Closing
Date. Seller shall permit Buyer to communicate with
Employees at reasonable times and upon reasonable notice
concerning Buyer's plans, operations, business,
customer relations and general personnel matters, provided
that such contacts shall be conducted in a manner as is
reasonably acceptable to Seller. Buyer shall pay to any
Employee (other than Shareholder and Xxxxx Xxxx) who is not
offered employment by Buyer for a reason other than a
failure to meet Buyer's standard pre-employment qualifications,
or is terminated by Buyer without good cause after the Closing
such amount, if any, as such Employee would have received
pursuant to Buyer's severance policy had such
Employee been an employee of Buyer since their date of
hire by Seller. Each Employee offered employment by
Buyer effective as of the Closing Date who accepts such
employment shall be referred to herein as a "Transferred
Employee."
(b) Other than as set forth in Sections
5.03(a) and (c) and subject to the provisions of Buyer's
policies and programs, each Transferred Employee shall
be eligible to participate or eligible for accrual of
benefits, vesting and contributions or accruals to be
made or credited following the Closing Date under
each of Buyer's employee benefit plans, programs or
arrangements available to all or substantially all of
Buyer's employees, subject to the terms upon which such
plans allow new participation by Buyer's employees. Each
Transferred Employee shall be deemed to have been hired
by Buyer as of the Closing Date. Except as expressly
provided in this Section 5.03, Buyer has no obligation
to (i) make any contributions or accruals with respect
to any period preceding the Closing Date, (ii) offer
Transferred Employees the same or comparable employee plans
or benefits as Seller, or (iii) assume any liability
of Seller with respect to Seller's employee benefit
plans or severance policy, accrued vacation or sick leave
for Seller's employees, or Seller's employment of
the Transferred Employees prior to the Closing Date.
(c) With respect to Transferred Employees
who regularly work less than 40 hours per week, Buyer
shall not be required to offer or provide benefits, other
than benefits offered or provided to Buyer's employees
who work a similar number of hours per week.
(d) This Agreement is not intended to create
and does not create any contractual or legal rights
in or enforceable by any employee of Seller employed
with the Business or upon any party other than Seller,
Shareholder and Buyer. Any written communications to the
employees of Seller employed with the Business concerning
the subject matter of this Section 5.03 shall be approved
by Seller and Buyer.
5.04 Earnout Revenues. Buyer agrees to use
commercially reasonable efforts to maximize the Earnout
Revenue during the Earnout Period, subject to all
applicable laws.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF SELLER
AND SHAREHOLDER
All obligations of Seller and Shareholder to
be discharged under this Agreement are subject to the
fulfillment, prior to or at the Closing, of each of
the following conditions, unless waived in writing by
Seller and Shareholder at any time prior to or at the
Closing:
6.01 Representations and Warranties of Buyer. All of
the representations and warranties of Buyer contained in
this Agreement shall be true and correct in all material
respects as of the date of this Agreement. All such
representations and warranties shall be deemed to have
been made again as of the Closing Date, and shall be
true and correct in all material respects as of the
time of the Closing. Buyer shall have executed and
delivered to Seller a Certificate, in form and substance
reasonably satisfactory to Seller, dated the Closing
Date, to such effect.
6.02 Covenants and Agreements of Buyer. Buyer shall
have caused all covenants, agreements and conditions
required by this Agreement to be performed or complied
with by them prior to or at the Closing to be so
performed or complied with in all material respects.
Buyer shall have executed and delivered to Seller a
Certificate, in form and substance reasonably
satisfactory to Seller, dated the Closing Date, to such
effect.
6.03 Opinion of Counsel. Xxx & Xxxxx Incorporated,
counsel for Buyer, shall have delivered to Seller
and Shareholder an opinion, dated the Closing Date, in
substantially the form of Exhibit H attached hereto.
6.04 Option. Kinetic Concepts, Inc., a Texas
corporation ("KCI"), shall have granted to Shareholder
an option (the "Option") pursuant to the 1987 Kinetic
Concepts, Inc. Key Contributor Stock Option Plan (the
"Plan") to purchase Fifteen Thousand (15,000) shares
of the common stock, par value $.001 per share, of KCI.
The Option shall have all terms and conditions of other
options granted under the Plan except the Option shall
(i) vest as of the date of Closing and (ii) have an exercise
price equal to $11.375.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF BUYER
All obligations of Buyer to be discharged under
this Agreement at the Closing are subject to the
fulfillment, prior to or at the Closing, of each of
the following conditions, unless expressly waived in
writing by Buyer at any time prior to or at the Closing:
7.01 Representations and Warranties of Seller
and Shareholder. All of the representations and
warranties of Seller and Shareholder contained in this
Agreement shall be true and correct in all material
respects as of the date of this Agreement. All of such
representations and warranties shall be deemed to have
been made again as of the Closing Date, and shall be
true and correct in all material respects as of the time
of the Closing. Seller and Shareholder shall each have
executed and delivered to Buyer a Certificate, in form
and substance reasonably satisfactory to Buyer, dated the
Closing Date, to such effect.
7.02 Covenants and Agreements of Seller and Shareholder.
Seller and Shareholder shall have caused all
covenants, agreements and conditions required by this
Agreement to be performed or complied with by them prior
to or at the Closing to be so performed or complied with
in all material respects. Seller and Shareholder shall
each have executed and delivered to Buyer a
Certificate, in form and substance reasonably
satisfactory to Buyer, dated the Closing Date, to
such effect.
7.03 Consents. All of the consents necessary
or advisable to transfer the Assets to Buyer and for
Buyer to operate the Business from and after the Effective
Time shall have been secured in form reasonably
satisfactory to Buyer, except for any such consents the
failure of which to be made or obtained, individually or
in the aggregate, would not have a material adverse effect
on the Business or the Assets.
7.04 Opinion of Counsel. Jeffer, Mangels, Xxxxxx
& Marmaro LLP, counsel for Seller and Shareholder, shall
have delivered to Buyer an opinion, dated the Closing
Date, in substantially the form of Exhibit I attached
hereto.
7.05 No Material Adverse Changes. There shall not
have been any material adverse changes to the Assets
or the Business prior to the Closing; provided,
however, for purposes of this Section 7.05, a material
adverse change resulting solely from the announcement
of the transactions contemplated hereby shall only be
deemed to be a material adverse change under this
Section 7.05 if (i) eight (8) or more of Seller's
consulting clinicians elect to give notice to terminate
their employment with Seller or (ii) 80 or more
therapeutic support surface rentals are terminated,
other than in the ordinary course of business.
7.06 Releases. All of the liens, charges,
security interests and encumbrances outstanding on any of
the Assets shall have been terminated and released prior
to or at the Closing.
7.07 Agreements. Seller, Shareholder and Apex shall
have each executed and delivered the Non-Competition
Agreement. Seller shall have executed and delivered the
Xxxx of Sale and Assumption Agreement. Shareholder
shall have executed and delivered the Levy Employment
Agreement.
7.08 Employment Agreements. Xxxxx Xxxxxx and Xxxx
Xxxxx shall have executed and delivered to Buyer
Employment Agreements in form and substance reasonably
satisfactory to Buyer.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION
8.01 Survival of Representations and Warranties.
Subject to the limitations set forth in Section 8.04,
the representations, warranties, covenants, and
agreements made by Seller and Shareholder hereunder,
except as they may be fully performed prior to or at the
Closing, shall survive Closing and shall be fully
enforceable by Buyer and its successors and assigns, at
law or in equity, against Seller and Shareholder and their
respective successors or assigns. All of the
representations, warranties, covenants, and agreements
made by Buyer hereunder, except as they may be fully
performed prior to or at the Closing, shall survive
Closing and shall be fully enforceable by
Seller, Shareholder, its successors, and assigns, at
law or in equity, against Buyer and its successors and
assigns.
8.02 Indemnification by Seller and Shareholder. Subject
to the limitations set forth in Section 8.04, Seller
and Shareholder, jointly and severally, agree to
indemnify and hold Buyer harmless from all liabilities,
damages, losses, costs, reasonable attorneys' fees and
other expenses resulting from, arising out of or incurred
with respect to, the falsity of any representation or the
breach of any warranty or covenant made by Seller or Shareholder
herein or in accordance herewith or in enforcing any
agreement or indemnity hereunder. Except as expressly
provided in Section 1.03, Buyer has not assumed, or
agreed to assume, any liabilities or obligations of
any kind or nature whatsoever of Seller, whether
direct, contingent or otherwise. In connection therewith,
Seller and Shareholder agree, jointly and severally, to
indemnify and hold Buyer harmless from all liabilities,
damages, losses, costs, reasonable attorneys' fees and
other expenses resulting from or arising out of or incurred
in connection with any actual or alleged liability or
obligation of Seller or Shareholder not expressly assumed by Buyer.
8.03 Indemnification by Buyer. Buyer agrees to
indemnify and hold Seller and Shareholder harmless from
all liabilities, damages, losses, costs, reasonable
attorneys' fees and other expenses resulting from,
arising out of or incurred with respect to, the
falsity of any representation or the breach of any
warranty or covenant made by Buyer herein or in
accordance herewith or in enforcing any
agreement or indemnity hereunder. Buyer agrees to
indemnify and hold Seller and Shareholder harmless
from all liabilities, damages, losses, costs, reasonable
attorneys' fees and other expenses resulting from,
arising out of or incurred in connection with, (i) the
Assumed Liabilities and (ii) the operation of the
Business or the use of the Assets from and after the
Closing Date.
8.04 Limitations on Indemnification.
(a) If the Closing occurs, Seller and
Shareholder will have no liability with respect to any
representations or warranties in article II hereof,
other than with respect to Sections 2.19, 2.21 and 2.22,
unless on or before March 31, 1998, Buyer notifies
Seller or Shareholder of a claim for indemnification.
Any claim with respect to Sections 2.19, 2.21 and
2.22 may be made at any time. If the Closing occurs,
Buyer will have no liability with respect to any
representation or warranty made in Article III hereof,
unless on or before March 31, 1998, Seller notifies
Buyer of a claim for indemnification.
(b) If the Closing occurs, Seller and
Shareholder shall not be obligated to indemnify Buyer with
respect to the representations and warranties set forth in
Article II until and unless the cumulative amount of all
indemnification claims with respect to the representations
and warranties contained in Article II exceeds One Hundred
Thousand Dollars ($100,000) (the 'Basket"), at which
point Seller and Shareholder shall be obligated to indemnify
Buyer for all such claims in excess of the Basket.
(c) If the Closing occurs, Seller's and
Shareholder's liability for and obligation to indemnify
Buyer with respect to any breach of representations and
warranties contained in Article II shall be limited to
the aggregate amount of the consideration paid to
Seller pursuant to Sections 1.02(a) and (b) hereof.
The limitations set forth in this Section 8.04(c) shall
only apply with respect to those claims based solely on
the representations and warranties set forth in Article II hereof.
(d) If the Closing occurs, the aggregate liability of Buyer
for and obligation to indemnify Seller and Shareholder with
respect to any breaches of representations and warranties contained
in Article III shall be limited to the amount of One Million
Dollars ($1,000,000), except for Buyer's obligations under Sections
1.02(b), 1.02(c) and 1.03. The limitations set forth in this
Section 8.04(d) shall only apply with respect to claims based solely
on the representations and warranties set forth in Article
III hereof.
(e) In calculating the amount of any loss incurred by
any party hereto, such amount shall be reduced by the net amount of
recovery (after deducting all attorneys' fees, expenses and
other costs of recovery) from any insurer or other party liable for
such loss, and the indemnified party shall use reasonable efforts
to effect any such recovery.
8.05 Notice of Claim. The party seeking
indemnification (the "Indemnified Party") shall give
written notice to the party obligated to indemnify and
hold the other harmless (the "Indemnifying Party") of
an event giving rise to the obligation to indemnify,
allow the Indemnifying Party to assume and conduct the
defense of the claim or action and cooperate with the
Indemnifying Party in the defense thereof. If the
Indemnifying Party wrongfully refuses to assume the
defense of the Indemnified Party, the Indemnifying Party
shall be responsible for all legal and other
expenses incurred by the Indemnified Party in
connection with the investigation or defense of such
claim or action including, without limitation, expenses
incurred in enforcing such obligation to indemnify.
8.06 Offset. In the event Buyer shall be entitled
(a) to indemnification pursuant to this Article VIII or
(b) any other payments or claims from or against
Seller and/or Shareholder, Buyer shall have the right to
offset the amount of such claim, debt or obligation
against any amounts or consideration to be paid to
Seller and/or Shareholder after the Closing (the "Right
of Offset"). In the event it is later determined that
Buyer is not entitled to a recovery for the amount
offset, Buyer shall repay to Seller the amount
improperly offset plus accrued interest on such amount at
the rate of 10% per annum from the date that payment
would have been due had such amount not been improperly
offset. The Right of Offset shall in no way limit or impair
any other remedies available to Buyer.
8.07 Tax Treatment of Indemnification Payments.
Unless otherwise required by law, each of the parties
agree to treat any indemnification payments made pursuant
to this Agreement as an adjustment to the purchase price
for all tax purposes.
8.08 Exclusive Remedy. Except with respect to claims for
actual fraud only, the parties hereto agree that their
exclusive remedy after the Closing for any breach of
any representation or warranty set forth in Articles II
and III hereof contained in this Agreement shall be the
indemnity contained in this Article VIII; provided,
however, that nothing contained herein shall limit the
rights of any party to seek and obtain injunctive relief
to specifically enforce another party's obligations
hereunder.
ARTICLE IX
GENERAL
9.01 Termination.
(a) This Agreement may, by notice given prior
to or at the Closing, be terminated:
(i) by the mutual written agreement of
Buyer and Seller and Shareholder;
(ii) by either Buyer, on the one hand,
or Seller and Shareholder, on the other hand, if a
material breach of any provision of this Agreement has
been committed by the other party and such breach has
not been waived or cured without having a material
adverse effect on the Business or the Assets;
(iii) (I) by Buyer if any of the
conditions in Section VII has not been satisfied as of
the Closing, or if satisfaction of such a condition is or
becomes impossible (other than through the failure of
Buyer to comply with its obligations under this Agreement)
and Buyer has not waived such condition on or before the
Closing or (II) by Seller if any of the conditions in
Section VI has not been satisfied as of the Closing, or
if satisfaction of such a condition is or becomes
impossible (other than through the failure of Seller to
comply with its obligations under this Agreement) and
Seller has not waived such condition on or before the
Closing.
(iv) the Closing shall not have
occurred (other than through the failure of any party
seeking to terminate this Agreement to comply fully with
its obligations under this Agreement) as of February 15,
1997, or such later date as the parties may agree upon in
writing.
(b) Nothing in this Section 9.01 shall relieve
any party of any liability for a breach of this Agreement prior
to the termination hereof.
9.02 Notices, Etc. All notices, requests, demands
and other communications hereunder shall be in writing and,
unless otherwise provided herein, shall be deemed to
have been duly given upon delivery in person, by
telecopy, by overnight courier or by certified or
registered mail, return receipt requested, as follows:
If to Seller Hydrothermic Floatation Systems, Inc
or Shareholder: 000 Xxxxx Xxxxxxx Xxxxx Xxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Mr. Xxxxxx Xxxx,
President
Facsimile No.: (000)000-0000
With a copy to: Jeffer, Mangels, Xxxxxx & Xxxxxxx, LLP
2121 Avenue of the Stars, Xxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xx. Xxxx X. Xxxxxxx
Facsimile No.: (000)000-0000
If to Buyer: KCI Therapeutic Services, Inc.
0000 Xxxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxxxx X. Xxxx,
General Counsel
Facsimile No.: (000)000-0000
With a copy to: Xxx & Xxxxx Incorporated
000 X. Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxx
Facsimile: (000)000-0000
or at such other address or telecopy number as shall
have been furnished to the other in writing in accordance
herewith, except that such notice of such change shall
be effective only upon receipt. Each such notice,
request, demand or other communication shall be
effective when received or, if given my mail, when
delivered at the address specified in this Section 9.02
or on the fifth business day following the date on
which such communication is posted, whichever occurs
first.
9.03 Amendments and Waiver. This Agreement may
be amended or modified by, and only by, a written
instrument executed by all the parties hereto. The
terms of this Agreement may be waived by, and only by, a
written instrument executed by the party against whom
such waiver is sought to be enforced.
9.04 Section and Other Headings. The section and
other headings contained in this Agreement are for
convenience of reference only and shall not in any way
affect the meaning or interpretation of this Agreement.
9.05 Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be
deemed an original and all of which shall constitute one
and the same
instrument.
9.06 Parties in Interest. This Agreement shall inure
to the benefit of and be binding upon parties hereto, and
their respective successors and assigns. This Agreement
shall not be assigned by any party hereto without the
written consent of the other parties, except as otherwise
expressly permitted herein.
9.07 No Implied Rights or Remedies. Except as
otherwise expressly provided herein, nothing herein
expressed or implied is intended or shall be construed
to confer upon or to give any person, firm, or
corporation, other than the parties hereto and their
respective successors and assigns, any rights or remedies
under or by reason of this Agreement.
9.08 Exhibits and Schedules. All exhibits and
schedules referred to herein and attached hereto are
incorporated herein for all purposes.
9.09 Entire Agreement. This Agreement, together
with all exhibits and schedules hereto and the letter
agreement of even date herewith between Buyer, Seller,
Shareholder, Apex and Blue Line, Inc., (the "Letter
Agreement"), embodies the entire agreement and
understanding between the parties hereto relating to the
subject matter hereof and supersedes any prior
agreements and understandings relating to the subject
matter hereof.
9.10 Legal Invalidity. If any part or provision of
this Agreement is or shall be deemed violative of any
applicable laws, rules or regulations, such legal invalidity
shall not void the Agreement or affect the remaining terms
and provisions of this Agreement, and the Agreement shall
be construed and interpreted to comport with all such
laws, rules or regulations to the maximum extent possible.
9.11 Applicable Law. This Agreement and the rights
and obligations of the parties hereto shall be construed
under and governed by the laws of the State of Delaware,
without giving effect to principles of conflict of laws.
9.12 Enforcement; Service of Process. In the
event either party shall seek enforcement of any covenant,
warranty or other term or provision of this agreement, the
party which prevails in such enforcement proceedings shall
be entitled to recover reasonable attorneys' fees actually
incurred by it in connection therewith. The parties
hereto agree that the service of process or any other
papers upon them or any of them by registered mail at
their respective addresses where notices are to be sent
pursuant to this Article IX shall be deemed good, proper
and effective service upon them.
9.13 Expenses; Taxes. Each party hereto shall pay
its own expenses incurred in connection with the
transactions contemplated hereby; provided, however, that
Seller shall pay the cost of all income, single
business, sales, transfer, use, value added, gross
receipts, registration and similar taxes
arising out of or in connection with the transactions
contemplated by this Agreement, other than any sales or
use tax that Buyer elects to pay, if such tax payment
is not mandatory; provided, Buyer shall pay use tax with
respect to any such election to the extent such
payment does not adversely affect Buyer.
9.14 Waiver of Punitive Damages. EXCEPT WITH RESPECT TO
FRAUD, THE PARTIES TO THIS AGREEMENT EXPRESSLY WAIVE
AND FORGO ANY RIGHT TO RECOVER PUNITIVE AND EXEMPLARY
DAMAGES IN ANY ARBITRATION, LAWSUIT, LITIGATION OR
PROCEEDING ARISING OUT OF OR RESULTING FROM ANY
CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY RELATED DOCUMENT, OR THE BREACH,
TERMINATION OR VALIDITY OF ANY PROVISION OF THIS
AGREEMENT, OR ANY RELATED DOCUMENT, OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR ANY RELATED DOCUMENT.
EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (a) NO REPRESENTATIVE,
AGENT OR ATTORNEY OR ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER,
(b) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THE
WAIVER, (c) IT MAKES THIS WAIVER VOLUNTARILY, AND (d) IT HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.14.
9.15 Exclusivity of Representations and Warranties;
Relationship Between the Parties. It is the explicit
intent and understanding of each of the parties hereto that
neither party hereto nor any of its affiliates,
representatives or agents is making any representation
or warranty whatsoever, oral or written, express or
implied, other than those set forth in this Agreement,
and neither party hereto is relying on any statement,
representation or warranty, oral or written, express or
implied, made by the other party hereto or such other party's
affiliates, representatives or agents, except for the
representations and warranties set forth in this Agreement
and the Exhibits, Schedules and other documents executed
and delivered by the parties hereto pursuant to this
Agreement. The parties hereto agree that this is an
arms' length transaction in which the parties' undertakings
and obligations are limited to the performance of their
obligations under this Agreement and the Exhibits, Schedules
and other documents executed and delivered by the parties
hereto pursuant to this Agreement.
9.16 Arbitration.
(a) The parties hereto agree that all
disputes, controversies or claims that may arise among
them (including their agents and employees) including,
without limitation, any dispute, controversy or claim
arising out of this Agreement, the Letter
Agreement, the Non-Competition Agreement or the Levy
Employment Agreement, or the breach, termination or
invalidity thereof, shall be submitted to, and determined
by, binding arbitration. The foregoing
notwithstanding, the parties may seek and obtain from a
court of competent jurisdiction a temporary restraining
order, temporary injunction or other temporary
emergency relief without first having to submit such
dispute to arbitration. Such arbitration shall be
conducted pursuant to the Commercial Arbitration Rules
(the "Rules") then in effect of the American Arbitration
Association, except to the extent such rules are inconsistent
with this Section 9.16; provided; however, that any dispute
relating to the calculation of the Earnout Revenue Statement
or the Adjusted Assets Statement shall be resolved in accordance
with Sections 1.02(b) and (d) hereof. If the amount in
controversy in the arbitration exceeds $200,000, exclusive of
interest, attorneys' fees and costs, the arbitration shall be
conducted by a panel of three (3) neutral arbitrators. Otherwise, the
arbitration shall be conducted by a single neutral arbitrator.
The arbitrator(s) shall be selected pursuant to the Rules.
Exclusive venue for such arbitration shall be in Phoenix, Arizona.
The arbitrator(s) shall apply the internal laws of the State
of Delaware (without regard to conflict of law
rules) in determining the substance of the dispute,
controversy or claim and shall decide the same in
accordance with the applicable usages and terms of trade.
Evidentiary questions shall be governed by the Federal
Rules of Evidence. The arbitrator(s)' award shall be in writing
and shall set forth the findings and conclusions upon which the
arbitrator(s) based the award. The prevailing party
in any such arbitration shall be entitled to recover
its reasonable attorneys' fees, costs and expenses
incurred in connection with the arbitration. Any award
pursuant to such arbitration shall be final and binding
upon the parties, and judgment on the award may be
entered in any federal or state court sitting or
located in Maricopa County, Arizona or in any other
court having jurisdiction. The provisions of this
Section 9.16 shall survive the termination of this
Agreement.
(b) The arbitration shall commence within
thirty (30) days after the selection of neutral
arbitrator(s) in accordance with the provisions of this
Section 9.16. In fulfilling his or her duties, the arbitrator(s)
may consider such matters as, in the opinion of the
arbitrator(s), are necessary or helpful to render an appropriate
decision. All discovery shall be expedited, consistent with the
nature and complexity of the claim or dispute and
consistent with fairness and justice. The arbitrator(s)
shall have the power to compel any party to comply with
discovery requests of the other parties and to issue
binding orders relating to any discovery dispute which
shall be enforceable in the same manner as awards.
The arbitrator(s) also shall have the power to impose
sanctions for abuse or frustration of the arbitration
process, including without limitation, the
refusal to comply with orders of the arbitrator(s)
relating to discovery and compliance with subpoenas.
(c) Without limiting the enforceability or
scope of this Section 9.16, the parties to this
Agreement agree that if a controversy or claim between
them arises out of or relates to this Agreement and results in
litigation, the courts of Maricopa County, Arizona or
the courts of the United States of America located in
Maricopa County, Arizona shall have jurisdiction to hear
and decide such matter, and such parties hereby submit to
jurisdiction of such courts.
IN WITNESS WHEREOF, the undersigned have duly
executed this Agreement as of the date and year first
above written.
KCI THERAPEUTIC SERVICES, INC.
/S/ XXXXXX X. XXXX
By:______________________________
Xxxxxx X. Xxxx, Vice President
HYDROTHERMIC FLOATATION SYSTEMS, INC.
/S/ Y. XXXXX XXXX
By:______________________________
Y. Xxxxxx Xxxx, President
/S/ Y. XXXXXX XXXX
_________________________________
Y. Xxxxxx Xxxx, Individually
