ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made as of this 9th day
of February, 2001, by and among Microtek Medical, Inc., a Delaware corporation
("Purchaser"), Deka Medical, Inc., a Florida corporation ("Seller" or "Deka"),
and all of the stockholders of Deka set forth on the signature page of this
Agreement (collectively, the "Stockholders").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Purchaser desires to purchase and Seller desires to sell
substantially all of the assets of Seller used or held for use by Seller in its
business of manufacturing, marketing and selling drapes and related supplies
packaged as cleanup kits for surgical procedures (collectively, the "Clean-Op
Business"), and substantially all of the assets of Seller used or held for use
by Seller in its business of manufacturing, marketing and selling drapes for
medical equipment and patients (collectively, the "Drape Business") (the
Clean-Op Business and the Drape Business are referred to herein collectively as
the "Seller's Business") but excluding the assets of Seller used in its gel
filled pad and cover business; and
WHEREAS, the parties hereto desire to set forth certain representations,
warranties and covenants made by each to the other as an inducement to the
consummation of the transactions contemplated herein and certain additional
agreements related thereto.
NOW, THEREFORE, in consideration of the mutual representations, warranties
and covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE OF PURCHASED ASSETS
1.1 Assets to Be Acquired. Except as set forth in Section 1.2 hereof,
subject to the terms and conditions of this Agreement, Purchaser agrees to
purchase from Seller, and Seller agrees to sell to Purchaser, at the Clean-Op
Closing and the Drape Business Closing (each as hereinafter defined), good and
marketable title in and to all of the tangible and intangible assets of Seller
used or held for use by Seller in the conduct of Seller's Business, whether
situated at the premises of Seller or the premises of third parties, free and
clear of all claims, liens, encumbrances, security interests and similar
interests of any kind or nature whatsoever (collectively, the "Purchased
Assets"), including, without limitation, the following:
(a) Fixed Assets. All of Seller's machinery, appliances, equipment,
including computer hardware and software (to the extent such software is
assignable), tools, supplies, leasehold improvements, construction in progress,
and furniture and fixtures, used or held for use by Seller in connection with
Seller's Business, including, without limitation, those items designated on
Schedule 3.13 as Clean-Op Fixed Assets and Drape Business Fixed Assets
(collectively, the "Fixed Assets").
(b) Contracts. All of Seller's right, title and interest under the
Contracts (as defined in Section 3.16 below) listed on Schedule 3.16 attached
hereto (which are designated on Schedule 3.16 as Clean-Op Contracts or Drape
Business Contracts).
(c) Accounts Receivable. All accounts receivable of Seller outstanding
as of the Closing for each of the Clean-Op Business and the Drape Business
(collectively, "Accounts Receivable").
(d) Intellectual Property. All Intellectual Property (as defined in
Section 3.17 below) of Seller relating to Seller's Business including, without
limitation, tradenames (including "Deka"), trademarks, service marks, website,
website domain name, patents (including, without limitation, all divisionals,
continuations, continuations-in-part, reexams, reissues, extensions and foreign
counterparts of such patents) and inventions, customer lists, business records,
goodwill and other intangible assets, including, without limitation, those
listed on Schedule 3.17 attached hereto as Clean-Op Intellectual Property or
Drape Business Intellectual Property.
(e) Licenses. All of Seller's licenses, consents, permits, variances,
certifications and approvals (including, without limitation, 510(k) clearances
and ISO certifications) of governmental agencies used or held for use in
connection with Seller's Business, to the extent assignable, which are listed on
Schedule 3.7 attached hereto as Clean-Op Licenses and Drape Business Licenses
(collectively, the "Licenses").
(f) Deposits. All prepaid expenses, security and other deposits
relating to Seller's Business, including, without limitation, those items listed
on Schedule 3.10 attached hereto as Clean-Op Deposits and Drape Business
Deposits (collectively, the "Deposits").
(g) Right to Claims. All benefits, rights or choses in action
including rights of recoveries under insurance policies, warranties or
guaranties relating to the Seller's Business.
(h) Inventory. All of Seller's inventory for the Clean-Op Business and
the Drape Business on hand at the Clean-Op Closing and the Drape Business
Closing, as applicable (collectively, the "Inventory").
(i) Books and Records. All of Seller's books, records (including,
without limitation computer records), files and other materials relating to the
Clean-Op Business and the Drape Business.
(j) Personal Property. All supplies and other personal property of
Seller related to the Purchased Assets and Seller's Business.
1.2 Excluded Assets. The Purchased Assets shall not include (a) any cash or
cash equivalents, (b) any assets held under any employee benefit plans
maintained by Seller, or (c) any of the assets described on Schedule 1.2
(collectively, the "Excluded Assets").
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1.3 Closing. Seller and Purchaser, and the Stockholders, as applicable,
shall close in accordance with Article VII the sale and purchase of the
Purchased Assets that are used in the Clean-Op Business on February 9, 2001
(such date referred to herein as the "Clean-Op Closing Date" and such closing
referred to herein as the "Clean-Op Closing"). Seller and Purchaser, and the
Stockholders, as applicable, shall close in accordance with Article VII all of
the other transaction contemplated in this Agreement, including, without
limitation, the sale and purchase of the Purchased Assets that are used in the
Drape Business, within five business days after the satisfaction or waiver by
Purchaser of the conditions set forth in Sections 7.1, 7.2, 7.3 and 7.6 through
7.11 of this Agreement at a date and time selected by Purchaser by notice to
Seller (such date referred to herein as the "Drape Business Closing Date" and
such second closing referred to herein as the "Drape Business Closing"). Each of
the Clean-Op Closing and the Drape Business Closing shall take place at the
offices of Purchaser's counsel or by the exchange of documents and instruments
by mail, courier, telecopy or wire transfer to the extent mutually acceptable to
the parties hereto. All computations, adjustments, and transfers for the
purposes hereof shall be effective as 11:59 p.m. on the Clean-Op Closing Date
and the Drape Business Closing Date. Seller, Stockholders and Purchaser
understand, acknowledge and agree that the Clean-Op Business is an integral and
vital component of Seller's Business, and that Purchaser has agreed to bifurcate
the closing of the transactions contemplated in this Agreement solely to enable
Seller and Stockholders to obtain required working capital for the continued
operation of the Seller's Business from the date of execution of this Agreement
until the Drape Business Closing. Seller and Stockholders understand,
acknowledge and agree that by consummating the Clean-Op Closing, they
irrevocably commit to consummate the Drape Business Closing in accordance with
the terms of this Agreement.
ARTICLE II
PURCHASE PRICE; ASSUMPTION OF LIABILITIES
2.1 Purchase Price. Subject to the adjustments set forth herein and the
other terms and conditions of this Agreement, the Purchase Price ("Purchase
Price") for the Purchased Assets shall be determined as follows:
(a) Clean-Op Closing. At the Clean-Op Closing, Purchaser shall pay to
or for the account of Seller $1.5 million in immediately available funds by wire
transfer to an account in the United States (which account shall be specified by
Seller at least two business days prior to the Clean-Op Closing) (the "Clean-Op
Purchase Price").
(b) Drape Business Closing. At the Drape Business Closing, Purchaser
shall do the following (collectively, the "Drape Business Purchase Price"):
(i) Cash Payment. At Purchaser's sole option in its sole
discretion: (A) Purchaser shall pay to or for the account of Seller $10.7
million in immediately available funds, or (B) Purchaser shall pay to or for the
account of Seller $7.3 million (less accrued and unpaid interest from the last
interest payment date to the Drape Business Closing Date) in immediately
available funds by wire transfer to an account in the United States (which
account shall be specified by Seller at least two business days prior to the
Drape Business Closing), and shall assume Seller's current $3.4 million term
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note with Chase Bank for which purposes Seller agrees to pay to Chase Bank any
fees charged by Chase Bank to approve such assumption not in excess of $25,000
(which assumption shall be contingent upon approval by Chase Bank) (the "Drape
Business Cash Payment"); and
(ii) Note. Purchaser shall issue to Seller a $1.0 million
contingent, subordinated, unsecured, non-interest bearing, non-negotiable note,
due and payable four (4) years from the Drape Business Closing Date (the "Note")
in the form attached hereto as Exhibit 2.1(b)(ii).
(iii) Key Employees Note. Purchaser shall issue contingent,
subordinated, unsecured, non-interest bearing, non-negotiable notes, in the
aggregate amount of $1.25 million, due and payable four (4) years from the Drape
Business Closing Date to the persons identified on Schedule 2.1(b)(iii) (the
"Key Employees Note") in the form attached hereto as Exhibit 2.1(b)(iii)
provided such persons shall have executed and delivered to Purchaser the
Noncompetition Agreements and Employment Agreements.
(c) Working Capital Adjustment. The Drape Business Purchase Price
shall be increased by the amount that Seller's Working Capital (as defined
below) transferred to Purchaser on the Clean-Op Closing Date and the Drape
Business Closing Date (the "Closing Working Capital") is more than $9.0 million
(the "December Working Capital") or decreased by the amount that the Closing
Working Capital is less than the December Working Capital, provided, that there
shall be no reduction in purchase price for the first $500,000 of reduction in
the Closing Working Capital as compared to the December Working Capital. As used
herein, the term "Working Capital" means the sum of the current assets of Seller
(to the extent such current assets are included in the Purchased Assets and are
acquired by Purchaser at either of the Closings) minus the sum of the Accounts
Payables of Seller (to the extent that such Accounts Payable are included in the
Assumed Liabilities (defined in Section 2.2 below)) as determined in accordance
with generally accepted accounting principles ("GAAP"). For purposes of
determining the Working Capital, (i) the Accounts Receivable shall be that which
arose in the ordinary course to creditworthy customers and shall not be more
than 90 days past due in accordance with their terms, (ii) the inventory shall
be that which is currently salable or usable in production and shall not exceed
12 months' usage or sales, (iii) in determining twelve months' usage or sales,
the parties will take into consideration calendar year 2000 actual usage and
sales as adjusted for any reasonably verifiable forecasted increase in sales for
the year 2001 or reasonably expected sales for any new inventory not sold in the
year 2000, and (iv) for purposes of determining the market value of finished
goods, there shall be a 15% assumed disposal cost applied to the applicable
selling price of inventory. At least one business day prior to the Drape
Business Closing Date, Purchaser shall provide to Seller a good faith estimate
and report of Purchaser's tentative calculation of the Closing Working Capital
and the Drape Business Cash Payment shall be increased or decreased based on
such tentative amount of the Closing Working Capital. Within 30 business days
following the Drape Business Closing Date, the Closing Working Capital shall be
reported in reasonable detail by Purchaser to Seller. In the event Seller
disagrees with Purchaser's determination of the Closing Working Capital, then
Seller shall notify Purchaser in writing within 10 business days after receipt
of Purchaser's calculation of the Closing Working Capital, setting forth in
reasonable detail the basis for such dispute. If Seller does not provide such
notice within such 10 business day period, then the determination of the Closing
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Working Capital shall be final, binding and conclusive upon the parties hereto.
If Seller does provide such notice, Purchaser and Seller shall attempt in good
faith to reconcile their differences and any resolution by them as to any
disputed amount shall be final, binding and conclusive upon each of the parties
hereto. If Purchaser and Seller fail to reach a resolution within 10 business
days after Seller's receipt of Purchaser's written notice of dispute, Purchaser
and Seller shall submit the items remaining for resolution to KPMG Peat Marwick,
LLP ("KPMG"), Jackson, Mississippi, or such other national accounting firm as
may be agreed upon by Purchaser and Seller (the "Independent Accounting Firm"),
which shall within 30 business days of submission resolve and report to Seller
and Purchaser upon such remaining disputed items, and such report shall be
final, binding and conclusive upon each of the parties hereto. Purchaser and
Seller agree that the party which claims the greatest variance in the Closing
Working Capital from that finally determined by the Independent Accounting Firm
shall be responsible for the fees and disbursements of the Independent
Accounting Firm in connection with the resolution of such dispute. Seller or
Purchaser, as the case may be, shall pay the applicable amount due under this
Section in immediately available funds within 5 business days following its
determination by the parties or the Independent Accounting Firm. Notwithstanding
anything to the contrary contained in this Section 2.1(c), the first $341,000 of
any purchase price reduction due to the Working Capital adjustment contemplated
by this subsection shall be effected by set off against the Note for which
purposes in the face amount of the Note shall be decreased by the undiscounted
value of such purchase price reduction using the "Discount Rate" specified in
the Note.
2.2 Assumed Liabilities. Purchaser agrees to assume from and after the
Closing only the following liabilities and obligations of Seller relating to the
Business (the "Assumed Liabilities"):
(a) the rights and obligations of Seller arising from and after the
Closing under the Contracts listed on Schedule 2.2(a) (the "Assumed Contracts")
which are designated on Schedule 2.2(a) as Clean-Op Assumed Contracts or Drape
Business Assumed Contracts and
(b) those accounts payable due from Seller listed on Schedule 2.2(b)
attached hereto (the "Accounts Payable"), which are designated on Schedule
2.2(b) as Clean-Op Accounts Payable or Drape Business Accounts Payable.
Except for the Assumed Liabilities, Purchaser shall not assume, nor shall
it be liable for, any liability, debt, obligation, claim against or contract of
Seller of any kind or nature whatsoever, at any time existing or asserted,
whether or not accrued, whether fixed, contingent or otherwise, whether known or
unknown, whether related to Seller's Business or the Purchased Assets, and
whether or not recorded on the books and records of Seller. In particular, but
without limiting the foregoing, Purchaser shall not be responsible for the
payment of (i) any expenses or liabilities for or to any employees of Seller
including, without limitation, any compensation, severance, vacation or
termination pay, (ii) any liability or obligation of Seller for any taxes,
assessments, charges, fees and impositions by any governmental authority
including, without limitation, any taxes, assessments, charges, fees or
impositions assessed as a result of the sale and purchase of the Purchased
Assets or any of the other transactions contemplated by this Agreement, (iii)
any liability or obligation under any laws relating to Hazardous Substances (as
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defined below) or laws regulating the environment, (iv) any other liabilities or
obligations with respect to any claim or cause of action, regardless of when
made or asserted, which arises out of or in connection with the business and
operations of Seller or the Purchased Assets prior to the applicable closing
date including, but without limitation, any product liability or claims for
injury to person or property relating to products manufactured, distributed or
sold by the Seller's Business on or prior to the applicable closing date or
which is imposed or asserted to be imposed by operation of law in connection
with any product manufactured by or on behalf of Seller or any of its affiliates
prior to the applicable closing date, and (v) any obligations related to
products manufactured, distributed or sold by the Seller's Business on or prior
to the applicable closing date which are either returned by a customer or for
which any warranty or service claim is made by a customer.
2.3 Allocation of Purchase Price Among Purchased Assets. Each payment of
the Purchase Price shall be allocated in the manner set forth on Schedule 2.3
attached hereto. The Purchase Price shall be allocated for tax purposes among
each item or class of Purchased Assets as mutually agreed by Purchaser and
Seller and set forth on Schedule 2.3 attached hereto. Seller and Purchaser agree
that they will prepare and file any notice or other filing required pursuant to
Section 1060 of the Code, and that any such notices or filings will be prepared
based upon such tax allocation of the Purchase Price.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
SELLER
In order to induce the Purchaser to enter into this Agreement and
consummate the transactions contemplated hereby, the Seller represents and
warrants to Purchaser as follows, each of which representations and warranties
is material to and relied upon by the Purchaser.
3.1 Organization and Authority of Seller. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida. Seller is duly qualified as a foreign corporation in all jurisdictions
in which the conduct of its business or the ownership of its properties requires
such qualification and Schedule 3.1 attached hereto lists all the states where
Seller is so qualified. Seller has all necessary corporate power and authority
to own, lease and operate its properties and conduct its business as it is
currently being conducted. Seller does not own, directly or indirectly, any
equity interest in any corporation, partnership, joint venture, or other entity.
3.2 Corporate Power and Authority; Due Authorization. Seller has full
corporate power and authority, and each Stockholder has full power and
authority, to execute and deliver this Agreement and each of the Seller's
Clean-Op Transaction Documents and Seller's Drape Business Transaction Documents
(as defined in Section 7.4 and Section 7.5 hereof) to which Seller or any of the
Stockholders is or will be a party and to consummate the transactions
contemplated hereby. Prior to the Clean-Op Closing or the Drape Business
Closing, as applicable, the directors and the Stockholders of Seller shall have
duly approved and authorized the execution and delivery of this Agreement and
each of the Seller's Clean-Op Transaction Documents and Seller's Drape Business
Transaction Documents to which Seller is or will be a party and the consummation
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of the transactions contemplated hereby and thereby, and no other corporate
proceedings shall then be necessary for such purposes. Assuming that this
Agreement and each of Seller's Clean-Op Transaction Documents and Seller's Drape
Business Transaction Documents which are also Purchaser's Transaction Documents
(as defined in Section 8.4 below) constitutes a valid and binding agreement of
the Purchaser, this Agreement and each of Seller's Clean-Op Transaction
Documents and Seller's Drape Business Transaction Documents constitutes, or will
constitute when executed and delivered, a valid and binding agreement of Seller
and/or the Stockholders, as the case may be, in each case enforceable in
accordance with its terms, subject to laws of general application affecting
creditors' rights and subject to general equitable principles. The duly elected
directors and officers of Seller are set forth on Schedule 3.2 attached hereto.
3.3 Title to Assets. Except as set forth on Schedule 3.3, Seller has good
and marketable title to the Purchased Assets, free and clear of any mortgages,
liens, pledges, security interests, encumbrances, claims or similar rights of
every kind and nature. At the Clean-Op Closing and the Drape Business Closing,
as applicable, Seller will deliver to Purchaser good and marketable title to the
applicable Purchased Assets, free and clear of any mortgages, liens, pledges,
security interests, encumbrances, claims or similar rights of every kind and
nature. Seller does not own any real property.
3.4 No Conflict; Required Consents. Assuming all consents, approvals,
authorizations and other actions on Schedule 3.4 attached hereto have been
obtained or taken prior to Closing, the execution and delivery by Seller and the
Stockholders of this Agreement and the Seller's Clean-Op Transaction Documents
and Seller's Drape Business Transaction Documents, and the consummation by
Seller and each of the Stockholders of the transactions contemplated hereby and
thereby do not and will not (a) require the consent, approval or action of, or
any filing with or notice to, any corporation, firm, person or other entity or
any public, governmental or judicial authority; (b) violate the terms of any
instrument, document or agreement to which Seller or any of the Stockholders is
a party, or by which Seller or any of the Stockholders or the property of Seller
or any of the Stockholders is bound, or be in conflict with, result in a breach
of or constitute (upon the giving of notice or lapse of time or both) a default
under any such instrument, document or agreement, or result in the creation of
any lien upon any of the property or assets of Seller or any of the
Stockholders; (c) violate Seller's Articles of Incorporation or Bylaws; or (d)
violate any order, writ, injunction, decree, judgment, ruling, law, rule or
regulation of any federal, state, county, municipal, or foreign court or
governmental authority applicable to Seller or any of the Stockholders, or the
Business or assets of Seller. Neither Seller nor any of the Stockholders is
subject to, or is a party to, any mortgage, lien, lease, agreement, contract,
instrument, order, judgment or decree or any other restriction of any kind or
character which would prevent or hinder the continued operation of Seller's
Business after the Clean-Op Closing or the Drape Business Closing on
substantially the same basis as theretofore operated.
3.5 Capitalization of Seller. Schedule 3.5 attached hereto is a true,
correct and complete list of the authorized capital stock, par value per share,
number of issued and outstanding shares of capital stock and number of treasury
shares for Seller. All outstanding shares of capital stock have been duly
authorized, and are validly issued, fully paid and nonassessable and are owned
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of record and beneficially solely by the persons and in the amounts set forth on
Schedule 3.5. No one other than the Stockholders has any beneficial or record
interest in the capital stock of Seller. Each Stockholder represents and
warrants that he is the lawful owner of, and has good and marketable title to,
the number of shares of outstanding capital stock as shown on Schedule 3.5 as
being owned by him, free and clear of any mortgage, pledge, claim, lien, charge,
encumbrance or other right in any third party (including any right to purchase,
vote or direct the voting of, any shares thereof). Seller has not issued any
convertible securities, options, warrants, or entered into any contracts,
commitments, agreements, understandings, arrangements or restrictions by which
it is bound to issue any additional shares of its capital stock or other
securities.
3.6 Compliance with Laws. Except as disclosed on Schedule 3.6 attached,
Seller is not in violation of, and has not violated, any applicable Federal,
state, local or foreign or other law, regulation or order or any other
requirement of any governmental, regulatory or administrative agency or
authority or court or other tribunal (collectively, "Governmental Authority")
relating to Seller or the Purchased Assets (including, but not limited to, any
law, regulation, order or requirement relating to medical devices, state or
local sales and use taxes, securities, properties, business, products,
manufacturing processes, quality system regulations, advertising, sales or
employment practices, state or Federal franchise or business opportunity laws,
terms and conditions of employment, wages and hours, safety, occupational
safety, health or welfare conditions relating to premises occupied,
environmental protection, product safety and liability or civil rights); and
Seller is not now charged with, and to the knowledge of Seller and the
Stockholders, Seller is not now under investigation with respect to any possible
violation of any applicable law, regulation, order or requirement relating to
any of the foregoing in connection with Seller or the Purchased Assets, and
Seller has filed all reports required to be filed with any Governmental
Authority.
3.7 Licenses and Permits. Seller holds and is in compliance with all
Licenses, all of which are listed on Schedule 3.7, and such list includes all of
the Licenses necessary or required for the use or ownership of the Purchased
Assets and the operation of Seller's Business. Neither Seller nor any of the
Stockholders has received written notice of, nor do they have any knowledge of,
any violations in respect of any such licenses, permits, approvals or
authorizations. No proceeding is pending or, to the knowledge of Seller or any
of the Stockholders, is threatened, which seeks revocation or limitation of any
such Licenses. Schedule 3.7 includes the expiration or renewal date, as
applicable, of such licenses.
3.8 Financial Information; Undisclosed Liabilities.
(a) Attached hereto as Schedule 3.8(a) are (i) the unaudited balance
sheets (the "Unaudited Balance Sheets") of the Clean-Op Business and the Drape
Business as of December 31, 2000 and the related statements of income and cash
flows of such separate businesses for the year then ended (collectively with the
Unaudited Balance Sheets, the "Unaudited Financial Statements"). The Unaudited
Financial Statements have been prepared in accordance with GAAP consistently
applied. The Unaudited Balance Sheets fairly present the respective condition of
the Clean-Op Business and the Drape Business as of December 31, 2000, and the
Unaudited Financial Statements fairly present the results of the operations of
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Clean-Op Business and the Drape Business for the year then ended. The Unaudited
Financial Statements do not contain any items of special or non-recurring income
except as specifically noted thereon.
(b) Seller is paying its debts in all material respects as they become
due unless such debts are subject to a bona fide dispute. The Clean-Op Purchase
Price and the Drape Business Purchase Price represented at least reasonably
equivalent value for the respective assets sold at the Clean-Op Closing and the
Drape Business Closing.
(c) Except as set forth on Schedule 3.8(c), Seller is not subject to
any liability including, without limitation, unasserted claims, whether known or
unknown, absolute, contingent, accrued or otherwise, which is not shown or which
is in excess of the amount shown in the Unaudited Balance Sheets other than (i)
liabilities of the same nature as those set forth in the Unaudited Balance Sheet
and reasonably incurred in the ordinary course of business after the date of the
Unaudited Balance Sheet and (ii) liabilities under or reflected in this
Agreement or the Schedules hereto.
3.9 Sufficiency of Assets. The Purchased Assets constitute all of the
assets and rights of any nature with which Seller has conducted Seller's
Business for the twelve month period prior to the Closing Date, subject only to
additions and deletions in the ordinary course of business except for the
Excluded Assets and Seller's personnel. The Purchased Assets transferred in
connection with the Clean-Op Closing and the Drape Business Closing constitute
all of the assets and rights of any nature with which Seller has conducted the
Clean-Op Business and the Drape Business, respectively, except for the Excluded
Assets and Seller's personnel. The Purchased Assets are held solely by, and all
agreements, obligations, expenses and transactions related to Seller's Business
have been entered into, incurred and conducted solely by, Seller. The Purchased
Assets are in good operating condition and repair, ordinary wear and tear
excepted and subject to repair and replacements in the ordinary course of
business at levels which are normal and customary to a business like Seller's
Business.
3.10 Deposits. Schedule 3.10 is a true, correct and complete list of all
Deposits of Seller with respect to each of the Clean-Op Business and the Drape
Business, setting forth the amount of each Deposit.
3.11 Accounts Receivable. Seller has delivered to Purchaser a true, correct
and complete list of all Accounts Receivable of Seller as of December 31, 2000
with respect to each of the Clean-Op Business and the Drape Business showing the
aging and time period for collection thereof, and all such Accounts Receivable
listed thereon are bona fide, arose in the ordinary course of business, and are
not subject to any disputes or offsets, except as noted in Schedule 3.14
attached hereto and reserved against in the Unaudited Balance Sheets. The
Accounts Receivable schedule will be updated through the Clean-Op Closing Date
and the Drape Business Closing Date and delivered to Purchaser on each such
closing date.
3.12 Inventory. Seller has delivered to Purchaser a true, correct and
complete list of all Inventory of Seller as of December 31, 2000 used or held
for use in the Clean-Op Business and the Drape Business, respectively. Except to
the extent reserved against on the Unaudited Balance Sheet of Seller, all
Inventory (a) is in good, merchantable and usable condition, (b) is reflected in
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the applicable Balance Sheet at the lower of cost or market (on a FIFO basis in
accordance with GAAP) and (c) is, in the case of finished goods, of a quality
and quantity saleable in the ordinary course of business and, in the case of all
other Inventory, is of a quality and quantity usable in the ordinary course of
business. The reserve for inventory reflected on the Unaudited Balance Sheets
fairly reflects the amount of obsolete and excess inventory. Except for
Inventory in transit to Seller or at contract sterilizers of Seller from its
suppliers, all Inventory is located at the premises of Seller. No purchase
commitments of Seller are in excess of the normal, ordinary and usual
requirements of its business, or made at any price in excess of the then current
market price, or contain terms and conditions more onerous than those usual and
customary in the conduct of the Seller's Business.
3.13 Accounts Payable. Seller has delivered to Purchaser a true, correct
and complete list of Seller's Accounts Payable as of December 31, 2000 with
respect to each of the Clean-Op Business and the Drape Business. The Accounts
Payable schedule will be updated through the Clean-Op Closing Date and the Drape
Business Closing Date and delivered to Purchaser at such closing date. Except as
disclosed in such Accounts Payable schedule, the Accounts Payable are normal,
customary and were incurred in the ordinary course of Seller's Business.
3.14 Tax Returns and Payments. Seller has correctly and timely filed all
Tax Returns (as defined in Section 5.10 below) required by law to be filed on or
before the date of this Agreement and shall correctly and timely file all Tax
Returns required by law to be filed on or prior to the Drape Business Closing
Date. All such Tax Returns are true, correct and complete in all respects to the
best of Seller's knowledge and belief, and all amounts shown as owing thereon
have been paid. No penalties, interest or other charges are or will be due with
respect to the late filing of any such Tax Returns. Seller has made all
estimated Tax (as defined in Section 5.10 below) payments required to be made
under the Code. Taxes for all Tax periods (or portions thereof) ending prior to
or on the Drape Business Closing Date have been, or prior to the Drape Business
Closing shall be, fully paid, except Taxes not then yet due and payable. Neither
Seller nor any of the Stockholders has received a claim of Taxes due or notice
of any such claims from any Tax Authority (as defined in Section 5.10 below)
with respect to Seller. There are no pending or, to Seller's or Stockholders'
knowledge, threatened audits, investigations or claims by any Tax Authority for
or relating to any liability in respect of Taxes. No state, federal or local tax
liens exist with respect to Seller or any of the Stockholders or any of Seller's
assets, other than liens, if any, for taxes not yet due and payable. Neither
Seller nor any of the Stockholders has entered into any agreements or waivers
extending the time for the assessment of any Tax that remain in effect. Prior to
the execution of this Agreement, Seller has provided to Purchaser true, correct
and complete copies of Seller's federal and state income tax returns for 1998,
1999, and 2000, which returns were properly signed by Seller and timely filed
with the Internal Revenue Service and appropriate state tax authorities, if any.
3.15 Fixed Assets. Except as specifically set forth on Schedule 3.15, each
of the Fixed Assets is in good operating condition and repair, normal wear and
tear excepted and subject to repairs and replacements in the ordinary course of
business at levels which are normal and customary to a business like Seller's
Business. A true, correct and complete list of the Fixed Assets and the location
thereof is set forth on Schedule 3.15.
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3.16 Contracts and Leases. Schedule 3.16 sets forth a true and complete
list of all written or oral contracts, real property leases, personal property
leases, customer contracts, vendor and other agreements to which Seller is a
party relating to Seller's Business (collectively, the "Contracts"), with
respect to each of the Clean-Op Business and the Drape Business except any
contract, agreement or understanding involving an aggregate annual expenditure
of less than $5,000 and which is terminable at will without penalty. Prior to
execution of this Agreement, Seller and the Stockholders have provided to
Purchaser true, correct and complete copies of the Contracts, including any and
all amendments and waivers thereto. Such Contracts are valid, legally binding
and enforceable against the parties thereto subject to laws of general
application in effect affecting creditors' rights and subject to the exercise of
judicial discretion in accordance with general equitable principles. Neither
Seller nor, to the knowledge of Seller and the Stockholders, any other party to
any of the Contracts, is in breach of, or in default under, any of the
Contracts, and no event has occurred which, with the giving of notice or lapse
of time, or both, would constitute a default by Seller or, to the knowledge of
Seller and the Stockholders, any other party to any of the Contracts. Except as
specifically set forth on Schedule 3.16 attached hereto, the assignment of any
of the Contracts to the Purchaser in accordance with this Agreement will not
constitute a breach or violation of such Contract. None of the Contracts
requires Seller to sell goods or provide services which Seller knows or has
reason to believe are at prices which would result in a negative incremental
gross margin on such sale or provision of said goods or services, or which
provide terms or conditions which Seller cannot reasonably expect to satisfy or
fulfill in their entirety in the ordinary course of business consistent with
past practices.
3.17 Intellectual Property. Schedule 3.17 attached hereto lists the
corporate name, all tradenames, trademarks, service marks, copyrights, website,
website domain name, patents, patent applications, patent rights (including,
without limitation, patent licenses), software licenses, customer lists and
intangible assets used by Seller in the operation of Seller's Business, or to
which Seller is otherwise a party (collectively, "Intellectual Property") and
Seller owns and/or has the sole and exclusive right to use all of the
Intellectual Property. Upon the consummation of the transactions contemplated
hereby and compliance with applicable laws as to the assignment of such
Intellectual Property, the Purchaser will have the sole and exclusive right to
own and use the Intellectual Property. No claims have been asserted and no
claims are pending nor, to Seller's or the Stockholders' knowledge, threatened
by any person or entity, as to the use of any such Intellectual Property or
challenging or questioning the validity or effectiveness of any state or federal
registration of the Intellectual Property. Seller's use of the Intellectual
Property, and the Purchaser's continued use of the Intellectual Property
following the Closing in the same manner as heretofore used by Seller, does not
and will not infringe on the rights of any person or entity.
3.18 Litigation; Judgments. Except as set forth on Schedule 3.18 attached
hereto, there is no action, proceeding or investigation pending or, to Seller's
or any Stockholder' knowledge, threatened against or involving Seller or any of
the Stockholders relating to the Purchased Assets or Seller's Business, nor is
there any action or proceeding pending or, to the knowledge of Seller or any of
the Stockholders, threatened before any court, tribunal or governmental body
seeking to restrain or prohibit or to obtain damages or other relief in
connection with the consummation of the transactions contemplated by this
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Agreement, or which might adversely affect Seller's Business or the Purchased
Assets, or Seller's or the Stockholders' ability to consummate the transactions
contemplated by this Agreement, the Seller's Clean-Op Transaction Documents or
the Seller's Drape Business Transaction Documents. Neither Seller nor any of the
Stockholders is subject to any judgment, order or decree, or entered in or
become subject to any lawsuit or proceeding relating to the Purchased Assets or
the operation of Seller's Business, except as set forth in Schedule 3.18.
3.19 Insurance. Seller currently maintains and has continuously maintained
since commencement of its operations, property, fire, casualty, worker's
compensation, general liability insurance and other forms of insurance relating
to its assets and the operation of Seller's Business against risks of the kind
customarily insured against (and, where appropriate, in amounts not less than
the replacement cost of the Purchased Assets) each of which policies is written
on an occurrence basis. Seller shall maintain such insurance policies in full
force and effect through the Drape Business Closing Date, except that Seller
agrees to maintain workers' compensation insurance relating to Seller's Business
through the completion of any transition services. Schedule 3.19 lists all of
the insurance policies so maintained by Seller, which schedule includes the name
of the insurance provider, the policy number, a description of the type of
insurance covered by such policy, the dollar limit of the policy, and the annual
premiums for such policy.
3.20 Benefit Plans and ERISA.
(a) Schedule 3.20 attached hereto sets forth a true and complete list
of each "employee benefit plan" (as defined by Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), and any other
bonus, profit sharing, pension, compensation, deferred compensation, stock
option, stock purchase, fringe benefit, severance, post-retirement, scholarship,
disability, sick leave, vacation, individual employment, commission, bonus,
payroll practice, retention, or other plan, agreement, policy, trust fund or
arrangement (each such plan, agreement, policy, trust fund or arrangement is
referred to herein as an "Employee Benefit Plan", and collectively, the
"Employee Benefit Plans") that is currently in effect, was maintained since
December 31, 1994 or which has been approved before the date hereof but is not
yet effective, for the benefit of (i) directors or employees of Seller working
in the Seller's Business or any other persons performing services for Seller in
the Business, (ii) former directors or employees of Seller working in Seller's
Business or any other persons formerly performing services for Seller in
Seller's Business, and/or (iii) beneficiaries of anyone described in (i) or (ii)
(collectively, "Business Employees") or with respect to which Seller or any
"ERISA Affiliate" (hereby defined to include any trade or business, whether or
not incorporated, other than Seller, which has employees who are or have been at
any date of determination occurring within the preceding six (6) years, treated
pursuant to Section 4001(a)(14) of ERISA and/or Section 414 of the Code as
employees of a single employer which includes Seller) has or has had any
obligation on behalf of any Business Employee. Except as disclosed on Schedule
3.20 attached hereto, there are no other benefits to which any Business Employee
is entitled.
(b) Except as set forth in Schedule 3.20, each Employee Benefit Plan
is in compliance with the provisions of ERISA and the provisions of the Internal
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Revenue Code of 1986, as amended (the "Code"), applicable to it. Except as set
forth in Schedule 3.20, Seller has not maintained or contributed to any plan
subject to the minimum funding standards of Section 302 of ERISA or Section 412
of the Code during its last six (6) fiscal years, and each plan maintained by an
ERISA Affiliate which is subject to Title IV of ERISA or Section 412 of the Code
is fully accrued and funded in compliance with ERISA and the Code as of the
Closing Date, and if any such plan or plans were terminated as of the Closing
Date, the termination would satisfy the minimum funding requirements of ERISA
and the Code. All Employee Benefit Plans which are "pension plans" as defined in
Section 3(2) of ERISA have received favorable determination letters from the
Internal Revenue Service as to their tax-qualified status and the tax-exempt
status of any related trust under Sections 401(a) and 501 of the Code,
respectively, which determinations are currently in effect.
(c) Except as set forth in Schedule 3.20, neither Seller nor any ERISA
Affiliate maintains or contributes to, is required to maintain or contribute to,
or, since December 31, 1975, has maintained or contributed to, a "multiemployer
plan" (as defined by Section 4001(a)(3) of ERISA).
(d) Purchaser shall not, as a result of the transactions contemplated
by this Agreement (or any employment by Purchaser of Business Employees): (i)
become liable for any contribution, tax, lien, penalty, cost, interest, claim,
loss, action, suit, damage, cost assessment or other similar type of liability
or expense of Seller or any ERISA Affiliate (including predecessors thereof)
with regard to any Employee Benefit Plan or any Employee Benefit Plan sponsored,
maintained or contributed to by an ERISA Affiliate (including predecessors
thereof) (assuming a like definition of "Employee Benefit Plan" were applicable
to ERISA Affiliates as to those same types of agreements, policies, trusts,
funds and arrangements sponsored, maintained or contributed to by them) (each
such plan for an ERISA Affiliate, an "ERISA Affiliate Employee Benefit Plan"),
including, without limitation withdrawal liability arising under Title IV,
Subtitle E, Part 1 of ERISA, liabilities to the PBGC, or liabilities under
Section 412 of the Code or Section 302(a)(2) of ERISA, or (ii) be or become a
party to any Employee Benefit Plan or any ERISA Affiliate Employee Benefit Plan.
(e) No ERISA Affiliate and none of the Purchased Assets is subject to
any lien arising under ERISA or the Code, including, but not limited to, a lien
arising pursuant to Title IV of ERISA or Section 412 of the Code or a lien
arising as a result of any tax imposed by Chapter 43 of Subtitle D of the Code.
Neither Seller nor any ERISA Affiliate has ceased operations at a facility so as
to become subject to the provisions of Section 4062(e) of ERISA.
(f) Seller, each ERISA Affiliate, each Employee Benefit Plan and each
Employee Benefit Plan "sponsor" or "administrator" (within the meaning of
Section 3(16) of ERISA) has complied in all respects with the applicable
requirements of Part 6 of Subtitle B of Title I of ERISA and Section 4980B of
the Code (such statutory provisions and predecessors thereof are referred to
herein collectively as "COBRA"). Schedule 3.20 attached hereto lists the name of
each Business Employee who has experienced a "Qualifying Event" (as defined in
COBRA) with respect to an Employee Benefit Plan and who is thereby eligible for
"Continuation Coverage" (as defined in COBRA) and whose maximum period for
Continuation Coverage has not expired. Included in such list are the current
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address for each such individual, the date and type of each Qualifying Event,
whether the individual has already elected Continuation Coverage and, for any
individual who has not yet elected Continuation Coverage, the date on which such
individual was notified of his or her rights to elect Continuation Coverage.
Schedule 3.20 attached hereto also lists the name of each Business Employee who
is on a leave of absence (whether or not pursuant to the Family and Medical
Leave Act of 1993, as amended ("FMLA")) and is receiving or entitled to receive
health coverage under an Employee Benefit Plan, whether pursuant to FMLA, COBRA
or otherwise.
(g) The consummation of the transactions contemplated by this
Agreement will not give rise to any liability of Purchaser for any employee
benefits, including, without limitation, liability for severance pay,
unemployment compensation, termination pay or withdrawal liability, or
accelerate the time of payment or vesting or increase the amount of compensation
or benefits due from Purchaser to any Business Employee.
(h) From December 31, 1999 and through the date hereof, except as set
forth on Schedule 3.20, other than compensation increases in the ordinary course
of business, neither Seller nor any ERISA Affiliate has, nor from the date
hereof to the Drape Business Closing will it have, (i) instituted or agreed to
institute any new employee benefit plan or practice, (ii) made or agreed to make
any change in any Employee Benefit Plan, (iii) made or agreed to make any
increase in the compensation payable or to become payable by Seller or any ERISA
Affiliate to any Business Employee, or (iv) except pursuant to this Agreement
and except for contributions required to provide benefits pursuant to the
provisions of the Employee Benefit Plans, paid or accrued or agreed to pay or
accrue any bonus, percentage of compensation, or other like benefit to, or for
the credit of, any Business Employee.
3.21 Immigration Matters.
(a) With respect to all current employees (as defined in Section
274a.1(g) of Title 8, Code of Federal Regulations) of Seller, a true and
complete list, true and complete copies of all Forms I-9 (Employment Eligibility
Verification Forms) completed pursuant to the Immigration Reform and Control Act
of 1986, as amended, and all regulations promulgated thereunder ("IRCA"), and
any and all copies of documentation, records or other papers retained with Forms
I-9 have been delivered to Purchaser. Seller has complied with IRCA with respect
to the completion of Forms I-9 for all employees and the reverification of the
employment status of any and all employees whose employment authorization
documents indicated a limited period of employment authorization.
(b) With respect to all former employees who left Seller's employment
within three (3) years prior to Closing, Seller has complied with IRCA with
respect to the maintenance of Forms I-9 for at least three years or for one year
beyond the date of termination, whichever is later. True and complete copies of
all Forms I-9 maintained for former employees pursuant to IRCA, and any and all
copies of documentation, records or other papers retained with Forms I-9, have
been delivered to Purchaser.
(c) Schedule 3.21 attached hereto contains a true and complete list of
all employees of Seller working under INS authorization in E, F, H, J, L, M, O,
14
P, or TN Visa Status together with a listing of each such employee's visa status
and visa expiration date. Purchaser maintains current files containing all Labor
Condition Application (LCA) related public and non-public access documentation
which it must present upon request by the U.S. Department of Labor or the
general public, including but not limited to all documentation noted in 20 CFR
ss. 655.760.
(d) Seller has had no immigration violations and has only employed
individuals authorized to work in the United States. Seller has never been the
subject of any inspection or investigation relating to its compliance with or
violation of IRCA, nor has it been warned, fined or otherwise penalized by
reason of any failure to comply with IRCA, nor is such proceeding pending or
threatened.
(e) The consummation of the transactions contemplated by this
Agreement will not give rise to any liability for the failure to properly
complete, maintain and update Forms I-9, or give rise to any liability for the
employment of individuals not authorized to work in the United States, or cause
any current employee of Seller hired by Purchaser to become unauthorized to work
in the United States.
3.22 Broker's Fees. Neither Seller nor any of the Stockholders has retained
or utilized the services of any broker, finder or intermediary, or paid or
agreed to pay any fee or commission to any other person or entity for or on
account of the transactions contemplated hereby, or had any communications with
any person or entity with respect thereto, which would obligate the Purchaser to
pay any such fees or commissions.
3.23 Absence of Material Changes.
(a) Since December 31, 2000, except as set forth on Schedule 3.23,
there has not been any material adverse change in the condition (financial or
otherwise) of Seller's Business or the liabilities, assets, operations, results
of operations, prospects or conditions (financial or otherwise) of Seller.
(b) Except as will be disclosed on Schedule 3.23, since December 31,
2000, Seller has operated its business in the ordinary course consistent with
past practice, and, except in the ordinary course consistent with past practice
or as disclosed on Schedule 3.23 Seller has not:
(i) permitted or allowed any of its assets to be (1) mortgaged,
pledged or subjected to any encumbrance, (2) distributed to the Stockholders or
(3) transferred or sold to any parties, other than the sale of Inventory in the
ordinary course of business;
(ii) written down, or failed to write down, or written up the
value of any of its inventory or assets, other than in the ordinary course of
business consistent with past practice;
(iii) amended, terminated, cancelled or compromised any claims or
waived any other rights;
15
(iv) disposed of or permitted to lapse any patent, trademark,
assumed name, service mark, trade name or copyright application, registration or
license to its business, or under which Seller has any right or license;
(v) granted any increase in the compensation of the employees of
Seller, including, without limitation, any such increase pursuant to any
Employee Benefit Plan or established or increased or promised to increase any
benefits under any such Employee Benefit Plan;
(vi) made any material changes in the customary methods of
operation of its business, including practices and policies relating to
inventory carrying levels, purchasing, marketing or selling;
(vii) declared, made, set aside or paid any dividends or other
distributions (whether in cash, securities or other property) to the
Stockholders or redeemed any of its capital stock;
(viii) incurred or assumed any indebtedness for borrowed money or
guaranteed any such indebtedness;
(ix) issued or sold any of its stock, notes, bonds or other
securities (including treasury shares), or any option, warrant or other rights
to purchase the same;
(x) sustained any damage, destruction or other casualty loss
(whether or not covered by insurance) affecting the business or assets of
Seller;
(xi) entered into any transaction, commitment, contract or
agreement relating to its assets or business (including the acquisition or
disposition of any assets) or the relinquishment of any contract or other right,
material to Seller, other than transactions and commitments in the ordinary
course of business consistent with past practice and those contemplated by this
Agreement;
(xii) (1) granted any severance or termination pay to any
director, officer or employee of Seller, (2) entered into any employment,
deferred compensation or other similar agreement, (3) increased benefits payable
under any existing severance or termination pay policies or employment
agreements or (4) increased compensation, bonus or other benefits payable to
directors, officers or employees of Seller;
(xiii) granted any option to purchase, or other right to acquire,
capital stock or any security or other instrument convertible into capital stock
of any class of Seller to any Person (as defined below);
(xiv) changed any method of accounting or accounting practice
(including in each case tax accounting), except for any such change required by
16
reason of a concurrent change in accordance with generally accepted accounting
principles and notice of which has been given in writing to Purchaser;
(xv) entered into, extended, amended or terminated any Contract;
(xvi) agreed, whether in writing or otherwise, to take any of the
actions specified in this Section 3.23.
As used in this Agreement, "Person" means an individual, a corporation, a
partnership, an association, a trust or any other entity or organization,
including a government or political subdivision or any agency or instrumentality
thereof.
3.24 Environmental Matters.
(a) Except as set forth in Schedule 3.24 attached hereto:
(i) Neither Seller nor any persons or agents operating under the
control, direction and supervision of Seller, including without limitation, all
employees, agents and contractors of Seller, have placed, spilled, released or
deposited any Hazardous Substances (as defined below) in, on, under or around
any real property where Seller has ever conducted business in the preceding 5
years or any other facility to which Hazardous Substances from the Purchased
Assets may have been taken at any time in the past 5 years (collectively, all
such property and facilities, the "Property"); and
(ii) Seller's Business is, and at all times has been, in
compliance with all laws, rules, permits and regulations relating to
environmental protection; and except as disclosed in Schedule 3.24, neither
Seller nor the Property is in violation of, or subject to any liabilities as a
result of any past or current violations by Seller or its employees, agents or
contractors of, any existing federal, state or local law (including common law),
statute, ordinance, rule or regulation relating to occupational health and
safety or relating to pollution or protection of the environment, including
without limitation statutes, laws, ordinances, rules and regulations relating to
the emission, discharge, spillage, leakage, storage, off-site dumping, release
or threatened release of Hazardous Substances into ambient air, surface water,
ground water or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances, and no expenditures are required in connection with the
operation of Seller's Business as presently conducted (or as proposed to be
conducted pursuant to existing plans of Seller) in order to comply with any such
existing statute, law, ordinance, rule or regulation; and
(iii) None of Seller or the Stockholders has received any written
or oral governmental notice, inquiry, or proceeding concerning, or arising by
reason of, the actual or suspected presence, spillage, leakage, discharge or
other emission of any Hazardous Substance in, on, under, around, about or in the
vicinity of, or the transportation of any Hazardous Substance at, from or to the
Property, and to the knowledge of Seller, there is no basis for any such notice,
inquiry, or proceeding, nor do Seller or Stockholders have any reason to believe
that they or Seller's Business is considered potentially liable under, the
17
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, the Resource Conservation and Recovery Act of 1976, as amended, or any
similar federal, state or local law, statute, ordinance, rule or regulation; and
(iv) Seller has obtained all permits, licenses, approvals,
consents, orders and authorizations relating to environmental protection
("Environmental Permits") which are required under federal, state or local laws,
rules or regulations in connection with Seller's Business or the ownership, use
or lease of its assets, and Schedule 3.24 contains a true and complete list and
description of each such Environmental Permits; and
(v) There are no above-ground or underground storage tanks
located on the Property; and
(vi) Neither Seller or Stockholders nor any of their predecessors
in interest have assumed the liability of any other person or entity under
environmental, health and safety laws by or in connection with any contract or
agreement related to Seller's Business.
(b) Seller has provided to Purchaser true, complete and correct copies
of results of any reports, investigations, audits, and inspections, together
with supporting studies, analyses and tests, in the possession or control of
Seller pertaining to all matters covered by this Section 3.25. Seller has fully
disclosed to Purchaser its knowledge of any such reports, investigations, audits
and inspections which are not in the possession and control of the Seller. The
Seller has responded fully and accurately to Purchaser's (including its
consultants' and attorneys') written and oral requests for information relating
to environmental, health and safety matters.
(c) For purposes of this Agreement, the term "Hazardous Substance"
shall mean any substance, chemical, contaminant, pollutant, effluent, waste or
other material defined or listed in, or otherwise classified pursuant to, any
treaty, statute, law, ordinance, rule or regulation applicable to Seller or the
Leased Property (federal, state or local) as "hazardous substances," "hazardous
materials," "hazardous wastes," "infectious wastes" or "toxic substances".
Hazardous Substances shall include, but not be limited to, (i)(A) any "hazardous
substance" as defined in the Comprehensive Environmental Response, Compensation
and Liability Act, (B) any "hazardous waste" as defined in the Resource
Conservation and Recovery Act, (C) any "regulated substance" as defined in the
Solid Waste Disposal Act or (D) any substance subject to regulation pursuant to
the Toxic Substances Control Act, and any rule, regulation or administrative or
judicial order or decision under such laws, (ii) petroleum and refined petroleum
products, (iii) friable asbestos and friable asbestos-containing products, (iv)
flammable explosives, (v) radioactive materials, (vi) radon, (vii)
polychlorinated biphenyls, (viii) exposed lead-based paint, and (ix) any other
substance that is regulated or classified as hazardous or toxic under any
federal, state or local treaty, statute, law, ordinance, rule or regulation
applicable to Seller and/or the Property.
3.25 Employees and Labor Relations. Seller has furnished to Purchaser a
true, correct and complete list of all United States employees of Seller (and
being identified as such) along with hire date, the amount of current annual
18
salaries or other rates of compensation for such persons and an indication
whether the employee is covered under the group health coverage sponsored by
Seller. No employee of Seller is represented by any labor union and Seller is
not a party to any collective bargaining agreement. Except as set forth on
Schedule 3.25, Seller has not within the preceding 5 years to the best of
Seller's and Stockholder's knowledge, information and belief been subject to any
claim, proceeding or investigation involving the Equal Employment Opportunity
Commission, the Wage and Hour Division or the Occupational Safety and Health
Administration or any similar state or federal agency, and Seller has never been
audited by the Office of Federal Contract Compliance. Seller maintains all
required books and records mandated by law including, without limitation, EEO-1
reports and OSHA log 200. Except as set forth on Schedule 3.25, none of Seller's
employees is party to any employment or compensation agreement with Seller or a
party to or subject to any contract, arrangement or commitment containing
covenants by such employee not to compete that would interfere with such
person's duties in respect of Seller's Business or restrict the clients or
customers with whom or the area in which the employee may solicit or conduct
business for purposes of Seller's Business, except as may operate in favor or
the Seller.
3.26 Principal Place of Business; Trade Names. The principal place of
business for Seller is, and has been for the last five years, as set forth on
Schedule 3.26. Seller has not done business under any names other than its
corporate name during such period. The locations at which Seller maintains
Inventory is set forth on Schedule 3.26.
3.27 Customers and Suppliers. Set forth on Schedule 3.27 is a list of the
names and addresses of the ten largest customers and the ten largest suppliers
(measured by dollar volume of purchases and sales in each case) of the Seller's
Business and the percentage of the Business which each such customer or supplier
represents or represented during each of the years ended December 31, 1998, 1999
and 2000. Except as set forth on Schedule 3.27, there exist no actual or to the
knowledge of Seller or any stockholder, threatened termination, cancellation or
limitation of, or any modification or change in the business relationship with
any customer or group of customers listed on Schedule 3.27 or whose purchases
individually or in the aggregate are material to the operations of the Business
or with any supplier or group of suppliers listed in Schedule 3.27, or whose
sales individually or in the aggregate are material to the operations of the
Business, and there exist no present or future condition or state of facts or
circumstances involving customers, suppliers or sales representatives which
Seller can now reasonably foresee would materially adversely effect the Business
or prevent the conduct of the Business after the consummation of the
transactions contemplated by this Agreement in essentially the same manner in
which it has heretofore been conducted.
3.28 Warranties and Product Liabilities. Each product manufactured, sold,
leased or delivered by Seller has been in conformity with all applicable
contractual commitments and all expressed and implied warranties, and Seller has
no liability (and there is no basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim or demand against
anything giving rise to any liability) for replacement or repair thereof or
other damages in connection therewith, subject only to the reserve for product
warranty claims set forth on the Unaudited Balance Sheets. No product
manufactured, sold, leased or delivered is subject to any guaranty, warranty or
other indemnity beyond the applicable terms and conditions of sale or lease.
Schedule 3.28 includes copies of the standard current conditions of sale of
19
Seller (including applicable guaranty, warranty and indemnity provisions) and a
summary of the warranty expense incurred by the Seller during the last two
fiscal years. Seller has no liability (and there is no basis for any present or
future action, suit, proceeding, hearing, investigation, charge, compliant,
claim or demand against Seller giving rise to any liability) arising out of any
injury to individuals or property as a result of the ownership, possession or
use of any product manufactured, sold, leased, or delivered by Seller.
3.29 Full Disclosure. The statements, representations and warranties made
by Seller and the Stockholders in this Agreement and in the Schedules and
Exhibits attached hereto do not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements contained
herein or therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER
In order to induce Seller and the Stockholders to enter into this Agreement
and consummate the transactions contemplated hereby, the Purchaser represents
and warrants to Seller and the Stockholders as follows, each of which
representation and warranty is material to and relied upon by Seller and the
Stockholders:
4.1 Organization of the Purchaser. Purchaser is a corporation duly
organized and validly existing under the laws of the State of Delaware and has
the corporate power and authority to own its property and to carry on its
business as now being conducted by it.
4.2 Corporate Power and Authority; Due Authorization. Purchaser has full
corporate power and authority to execute and deliver this Agreement and each of
the Purchaser's Transaction Documents (as defined in Section 8.4 below). Prior
to the Closing, the Board of Directors of the Purchaser shall have duly approved
and authorized the execution and delivery of this Agreement and each of the
Purchaser's Transaction Documents (as defined in Section 8.4 below) and the
consummation of the transactions contemplated hereby and thereby, and no other
corporate proceedings on the part of the Purchaser are necessary to approve and
authorize the execution and delivery of this Agreement and such Purchaser's
Transaction Documents and the consummation of the transactions contemplated
hereby and thereby. Assuming that this Agreement and each of the Purchaser's
Transaction Documents constitutes a valid and binding agreement of Seller and/or
the Stockholders, as the case may be, this Agreement and each of the Purchaser's
Transaction Documents constitutes, or will constitute when executed and
delivered, a valid and binding agreement of the Purchaser, enforceable against
the Purchaser in accordance with its terms, subject to laws of general
application in effect affecting creditors' rights and subject to general
equitable principles.
4.3 No Conflict; Consents. The execution and delivery by the Purchaser of
this Agreement, the Purchaser's Transaction Documents and the consummation by
the Purchaser of the transactions contemplated hereby and thereby do not and
will not (a) require the consent, approval or action of, or any filing or notice
to, any corporation, firm, person or other entity or any public, governmental or
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judicial authority; (b) violate the terms of any instrument, document or
agreement to which the Purchaser is a party, or by which the Purchaser or the
property of the Purchaser is bound, or be in conflict with, result in a breach
of or constitute (upon the giving of notice or lapse of time, or both) a default
under any such instrument, document or agreement; (c) violate the Purchaser's
Articles of Incorporation or Bylaws; or (d) violate any order, writ, injunction,
decree, judgment, ruling, law or regulation of any federal, state, county,
municipal, or foreign court or governmental authority applicable to the
Purchaser, or the business or assets of the Purchaser, and relating to the
transactions contemplated herein, except, with respect to (a) and (b) above,
Purchaser's obtaining the consent of its senior lender to the transactions
contemplated herein.
4.4 Brokers Fees and Expenses. The Purchaser has not retained or utilized
the services of any broker, finder, or intermediary, or paid or agreed to pay
any fee or commission to any other person or entity for or on account of the
transactions contemplated hereby, or had any communications with any person or
entity which would obligate Seller or the Stockholders to pay any such fees or
commissions.
4.5 Conversion Shares. Upon and in the event of the issuance of the
Conversion Shares (as such term is defined in the Note and Key Employee Note),
such Conversion Shares shall be duly authorized, fully paid and non-assessable.
4.6 Purchaser Disclosure. As of the date hereof, Isolyser Company, Inc., a
Georgia corporation ("Isolyser"), has made all necessary filings pursuant to the
applicable requirements of the Securities Act of 1933, as amended (the "1933
Act") and the Securities Exchange Act of 1934, as amended (the "1934 Act")
(collectively, the "Isolyser Public Reports"). The Isolyser Public Reports
complied at the respective times of the filing thereof in all material respects
with the applicable requirements of the 1933 Act and the 1934 Act, and, as of
the dates thereof, to Purchaser's knowledge, did not contain any untrue
statement of any material fact or fail to state a material fact required therein
to be stated in order to make the statements therein not misleading.
Notwithstanding the foregoing, in respect of the Private Securities Litigation
Reform Act of 1995, statements made by Isolyser in its Public Reports which are
not historical facts, including projections, statements or plans, objectives,
expectations, or future economic performance, are forward looking statements
that are subject to risks and uncertainties and are subject to the safe harbor
provided by the Private Securities Litigation Reform Act of 1995. Isolyser's
future performance could differ significantly from that set forth in the
Isolyser Public Reports, and from the expectation of management. Important
factors that could cause financial performance to differ materially from those
expressed in any forward looking statements include, without limitation, the
risk factors included Isolyser's Public Reports on Form 10-K for the year ended
December 31, 1999.
ARTICLE V
ADDITIONAL COVENANTS
5.1 Due Diligence Review. To facilitate Purchaser's due diligence, Seller
will provide Purchaser and its independent accountants, legal counsel and other
21
representatives full access to Seller's properties, facilities, books, records,
financial operating data, contracts and other materials of Seller.
5.2 Confidentiality.
Except as may be required by law or as otherwise provided or permitted
herein, unless and until the closing occurs, each of Seller, the Stockholders
and Purchaser shall, and shall cause their employees, agents, counsel,
accountants, advisors, financial consultants and other representatives to, (i)
hold in strict confidence any and all information obtained from the other
parties hereto or their representatives concerning the terms or conditions of
the transactions contemplated herein or the fact that such transactions are
being contemplated and (ii) not disclose or use any such information (unless
such information is or becomes ascertainable from public sources or public
disclosure of such information is in the good faith judgment of the Purchaser
required by law); provided, however, that nothing contained herein shall limit
the right of any such persons to disclose any such information (A) to their
employees, agents, representatives, counsel, accountants, lenders (and their
representatives), or financial advisors for the purpose of facilitating the
consummation of the transactions contemplated hereby, provided that such other
third persons are advised of the confidential nature of such information, (B) to
the extent required to enforce any legal rights arising in connection with this
Agreement, or (C) to customers or suppliers in connection with Purchaser's due
diligence review.
5.3 Employment Matters. Prior to the Clean-Up Closing and the Drape
Business Closing, as the case may be, Seller shall provide any notices and other
communications to employees of Seller to the extent required under the Worker
Adjustment and Retraining Act (the "WARN Act") and applicable state laws.
5.4 Consents.
Promptly after execution of this Agreement, Seller and the Stockholders
will apply for or otherwise seek, and use their best efforts to obtain, all
consents and approvals required with respect to Seller and/or the Stockholders
or the Purchased Assets for consummation of the transactions contemplated
hereby, including without limitation, those consents to be listed in Schedule
3.4 (including consents relating to the assignment of the Contracts to
Purchaser). Any charges imposed by lessors or other parties to the Contracts for
such consents shall be borne by Seller.
5.5 Noncompetition Agreements. Concurrently with the Clean-Op Closing, in
consideration of the acquisition of Purchased Assets as contemplated herein,
Seller and each of the Stockholders and the other persons named on Schedule 5.5
shall enter into a five-year noncompetition agreement with Purchaser in the form
of Exhibit 5.5A (for Seller) and Exhibit 5.5B (for Stockholders and such other
person) attached (collectively, the "Noncompetition Agreements").
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5.6 Employment Agreement.
(a) Concurrently with each of the Clean-Op Closing and the Drape
Business Closing, Purchaser shall enter into an Employment Agreement with those
persons set forth in Schedule 5.6(a) attached hereto in substantially the form
of Exhibit 5.6 attached hereto (collectively the "Employment Agreements").
(b) Seller shall cooperate with Purchaser to cause those employees of
Seller designated by Purchaser in advance of the respective closings to execute
and deliver to Purchaser such documents and agreements as reasonably may be
required by Purchaser in connection with Purchaser's hiring of such employees
designated by Purchaser including, without limitation, covenants and documents
acceptable to Purchaser.
(c) Purchaser affirms to Seller its current intention that Purchaser
intends to offer employment by Purchaser of those United States domestic
employees of Seller set forth on Schedule 5.6(c) attached hereto and, if such
persons become employees of Purchaser, to provide such United States domestic
employees of Purchaser with Purchaser's standard vacation benefits.
5.7 Conduct of Business by Seller Pending Closing. Seller and each
Stockholder covenant and agree that, unless Purchaser shall otherwise consent in
writing, between the date hereof and the Drape Business Closing Date, the
Seller's Business shall be conducted only in, and Seller shall not take any
action except in, the ordinary course of business and in a manner consistent
with past practice; and Seller will use its reasonable best efforts to preserve
substantially intact the Seller's Business, to keep available the services of
the present officers, employees and consultants of Seller, and to preserve the
present relationships of Seller with customers, clients and other persons having
business relationships with Seller. By way of amplification and not limitation,
except as expressly provided for in this Agreement, Seller and each of the
Stockholders covenant that, between the date hereof and the Drape Business
Closing Date, Seller and the Stockholders shall not, directly or indirectly, do
any of the following without the prior written consent of Purchaser:
(a) (i) issue, sell, gift, pledge, transfer, dispose of, encumber, or
authorize any shares of capital stock, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of capital stock
of, or any other ownership interest in, Seller; (ii) amend the Articles of
Incorporation or Bylaws of Seller; (iii) split, combine or reclassify any
outstanding shares of Seller's capital stock, or declare, set aside or pay any
dividend or distribution payable in cash, stock, property or otherwise with
respect to Seller's capital stock (except for salary and bonuses in the ordinary
course of business, in a manner consistent with past practices and as disclosed
to Purchaser in writing in advance of payment); (iv) redeem, purchase or
otherwise acquire any shares of Seller's capital stock; or (v) enter into any
contract, agreement, commitment or arrangement with respect to any of the
matters set forth in this Section 5.7(a);
(b) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any interest in any corporation, partnership or other business
organization or division thereof; (ii) sell, pledge, dispose of, or encumber any
Purchased Assets of Seller; (iii) enter into any material contract or agreement,
except for customer contracts in the ordinary course of business; (iv) after the
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date hereof, authorize or make any capital expenditures without the consent of
Purchaser; or (v) enter into or amend any contract, agreement, commitment or
arrangement with respect to any of the matters set forth in this Section 5.7(b);
(c) except as set forth on Schedule 3.23, take any action other than
in the ordinary course of business and in a manner consistent with past practice
(none of which actions shall be unreasonable or unusual) with respect to (i)
increasing the compensation or other remuneration of any officer, director,
stockholder or employee of Seller, (ii) paying any bonuses to any of its
employees (except for bonuses earned in the ordinary course of business pursuant
to bonus plans described herein and disclosed to Purchaser), (iii) granting of
any severance or termination pay (otherwise than pursuant to policies of Seller
in effect on the date hereof and disclosed to Purchaser), or (iv) increasing
benefits payable under its severance or termination pay policies in effect on
the date hereof;
(d) take any action with respect to, or make any change in, its
methods of management, distribution, marketing, accounting or operating
(including practices relating to payment of trade accounts and carrying levels
of inventory) or relating to writing down or failing to write down (in
accordance with its past practices consistently applied) or writing up the value
of any inventory or other assets of Seller;
(e) take any action or enter into any agreement or make any change in
the billing or collection of its accounts receivable and unbilled claims (other
than in the ordinary course of business and consistent with past practices),
including without limitation, discounting or writing off any of Seller's
accounts receivable or work in progress for early payment, or granting any other
deduction or discount thereon or accelerating the collection thereof;
(f) change any existing bank accounts or lock box arrangements of
Seller, except for deposits, withdrawals, or changes of signatories in the
ordinary course of business; or
(g) waive any material rights of Seller or settle any material claim
involving Seller.
5.8 Public Announcements. Except for any public announcement relating to
the transactions contemplated herein as may be required by law (in which case
the announcing party shall notify the other party in writing and reasonably
cooperate with the other party regarding the content of such announcement) or as
provided in this Section, and except as otherwise permitted by this Agreement,
each of the Seller, the Stockholders and Purchaser agrees that until the
closings of the transactions contemplated herein, each of such parties will not,
and will direct its directors, officers, employees, representatives and agents
who have knowledge of the transactions not to, disclose to any person who is not
a necessary participant in discussions concerning the transactions (other than
persons whose consent is required to be obtained hereunder and persons to whom
due diligence inquiries may be made by Purchaser), any of the terms, conditions
or other facts with respect to the transactions contemplated herein. Purchaser
and Seller shall reasonably cooperate to agree on the timing, method and content
of any announcement to the public or their respective employees regarding the
consummation of the transactions contemplated hereby, including the closings.
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Seller and the Stockholders acknowledge that Purchaser intends to make a public
announcement relative to the existence of this Agreement and the transactions
contemplated hereby in connection with the Clean-Op Closing.
5.9 No Negotiations. From and after the date hereof until the Drape
Business Closing, neither the Stockholders, Seller, the officers or directors of
Seller, nor anyone acting on behalf of Seller or any Stockholder, shall,
directly or indirectly, solicit, engage in discussions or negotiations with, or
provide any information to, any person, firm or other entity or group (other
than Purchaser or its representatives) concerning any merger, sale of
substantial assets, purchase or sale of shares of capital stock or similar
transaction involving Seller.
5.10 Tax Matter Covenants.
(a) As used in this Agreement, the following terms have the specified
meanings:
(i) "Tax Authority" shall mean any United States federal,
foreign, national, state, county or municipal or other local government, any
subdivision, agency, commission or authority thereof, or any quasi-governmental
body exercising any taxing authority or any other authority exercising tax
regulatory authority.
(ii) "Tax Return" shall mean any return, amended return,
estimated return, information return and statement (including any related or
supporting information) filed or to be filed with any Tax Authority in
connection with the determination, assessment, collection or administration of
any Tax.
(iii) "Taxes" shall mean all taxes, charges, fees, interest,
fines, penalties, additions to tax or other assessments, including without
limitation, income, excise, environmental, property, sales, gross receipts,
gains, transfer, occupation, privilege, employment (including social security
and unemployment), use, value added, capital stock or surplus, franchise taxes,
advance corporate tax and customs duties imposed by any Tax Authority, payable
by Seller or relating to or chargeable against Seller's assets, revenues or
income.
(b) Seller and the Stockholders shall be solely responsible for and
shall pay, without any cost to the Purchaser (i) any and all Taxes for which
Seller or Stockholders are or may be liable, arising from Seller's activities,
Clean-Op Business or use of the Purchased Assets relating to the Clean-Op
Business prior to the Clean-Op Closing (regardless of whether the filing of any
Tax Return with respect thereto or payment of any amount in respect thereof is
filed, paid or due prior to, on or after the Clean-Op Closing Date), (ii) any
Taxes of Seller or Stockholders with respect to the acquisition by Purchaser
from Seller of any Purchased Assets relating to the Clean-Op Business, and all
other Taxes, if any, imposed by any Tax Authority assessed in connection with,
on account of or resulting from the consummation of the transfer of the
Purchased Assets to the Purchaser.
(c) Seller and the Stockholders shall be solely responsible for and
shall pay, without any cost to the Purchaser (i) any and all Taxes for which
25
Seller or Stockholders are or may be liable, arising from Seller's activities,
the Drape Business or use of the Purchased Assets relating to the Drape Business
prior to the Drape Business Closing (regardless of whether the filing of any Tax
Return with respect thereto or payment of any amount in respect thereof is
filed, paid or due prior to, on or after the Drape Business Closing Date), (ii)
any Taxes of Seller or Stockholders with respect to the acquisition by Purchaser
from Seller of any Purchased Assets relating to the Drape Business, and all
other Taxes, if any, imposed by any Tax Authority assessed in connection with,
on account of or resulting from the consummation of the transfer of the
Purchased Assets to the Purchaser.
(d) Except as otherwise provided in this Agreement, the parties hereby
agree that each of them shall cooperate with the other in executing or causing
to be executed any required document and by making available to the other all
work papers, records and notes of any kind at all reasonable times for the
purpose of allowing the appropriate party to complete Tax Returns, participate
in a proceeding, obtain refunds, make any determination required under this
Agreement or defend or prosecute Tax claims. Notwithstanding anything to the
contrary contained herein, Seller and the Stockholders shall have sole and
exclusive authority and responsibility to prepare and file all Tax Returns
concerning Seller and its related activities occurring prior to the Clean-Op
Closing or the Drape Business Closing, as applicable, including, without
limitation, its operation of Seller's Business and its use of the Purchased
Assets and all matters under agreements not being assumed by Purchaser
(regardless of when such return is filed). Purchaser shall not directly or
indirectly take any action to prepare or file such Tax Return but shall be given
copies of any such return filed by Seller.
5.11 Transaction Expenses. All of the expenses incurred by Purchaser in
connection with the authorization, negotiation, preparation, execution and
performance of this Agreement and other agreements referred to herein and the
consummation of the transactions contemplated hereby, including, without
limitation, all fees and expenses of agents, representatives, brokers, counsel
and accountants for Purchaser, shall be paid by Purchaser ("Purchaser
Transaction Expenses"). All expenses incurred by the Seller or the Stockholders
in connection with the authorization, negotiation, preparation, execution and
performance of this Agreement and the other agreements referred to herein and
the consummation of the transactions contemplated hereby, including without
limitation, all fees and expenses of agents, representatives, brokers, counsel
and accountants, shall be paid by the Seller or the Stockholders before the
Drape Business Closing or shall be deducted by Purchaser from the Drape Business
Cash Payment ("Seller Transaction Expenses").
5.12 Access to Books and Records Following the Closing. After the Clean-Op
Closing and the Drape Business Closing, as applicable, Seller and the
Stockholders shall preserve all of the records and books, customer records, and
any other records of Seller relating to Clean-Op Business and the Drape Business
or the Purchased Assets related thereto until the fifth anniversary of the
Clean-Op Closing Date or the Drape Business Closing Date, as applicable, and,
until such time, make them available, during normal business hours, to Purchaser
and its designees, counsel, accountants, and others authorized by them for
inspection and the making of copies thereof. Prior to the disposal of any such
materials, Seller shall offer to deliver such materials to Purchaser.
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5.13 Change of Corporate Names; License to Use Intellectual Property.
Within five business days following the Drape Business Closing, Seller shall
change its corporate name to remove any reference to "Deka". From and after the
Clean-Op Closing, Purchaser shall have the royalty free right and license to use
the name "Deka" and all other Intellectual Property (whether or not then
transferred by Seller to Purchaser) of Seller in connection with the labeling,
shipment, marketing and selling of products formerly manufactured by Seller and
for use of any labels acquired from Seller.
5.14 Financial Reports. Until the Drape Business Closing, on or before the
20th day of each calendar month following the date of this Agreement, Seller
shall deliver to Purchaser unaudited financial statements (including a balance
sheet and statements of operations and cash flow) of Seller as of the end of the
previous month and for the year to date.
5.15 Audited Financial Information.
(a) Prior to the Drape Business Closing, Seller shall cause KPMG to
complete and deliver to Seller and Purchaser (i) the audited balance sheets of
Seller at December 31, 1999 and 1998 (collectively, the "Audited Balance
Sheets"), and (ii) the related audited income statements and related financial
information and notes for the twelve month periods then ended (collectively, the
"Audited Income Statements") each containing an unqualified audit report of such
independent certified public accountant (the Audited Balance Sheets and the
Audited Income Statements are herein collectively referred to as the "1999
Audited Financial Statements"). The 1999 Audited Financial Statements will be
prepared in accordance with GAAP consistently applied and Regulation S-X.
(b) Prior to the Drape Business Closing, KPMG shall confirm to
Purchaser that KPMG is able to prepare an audit report with respect to the
assets and liabilities of Purchaser at December 31, 2000 and the operations of
Purchaser for the year then ended in accordance generally accepted auditing
standards, GAAP and Regulation S-X, as well as KPMG's consent to include such
audit report and related financial statements in Purchaser's current report on
Form 8-K relative to the transactions contemplated by this Agreement. To the
extent that the cost incurred by Purchaser to obtain such audit report exceed
$50,000, Seller agrees to reimburse Purchaser for same.
5.16 Transition Services. From and after the Clean-Op Closing and until the
earlier to occur of (a) the Drape Business Closing or (b) the later of (i) the
date of termination of this Agreement or sixty days following the Clean-Op
Closing Date, Seller shall provide to Purchaser out of Seller's Jacksonville,
Florida facility without cost to Purchaser the use of such personnel, equipment
and leasehold improvements currently located at such facility as may be
reasonably requested by Purchaser to transition the Clean-Op Business to a
location designated by Purchaser.
(b) From and after the Drape Business Closing, Seller shall provide to
Purchaser out of Seller's facilities located at Jacksonville, Florida and
Columbus, Mississippi, the use of such personnel, equipment and leasehold
improvements as may be reasonably requested by Purchaser, to transition the
operations formerly conducted at such facilities to such other locations as may
27
be designated by Purchaser. Such services shall be provided on a week to week
basis as may be reasonably requested by Purchaser at a cost per week payable in
advance of $7,000 for Columbus and $5,000 for Jacksonville, provided that Seller
and Purchaser agree to equitably reduce the applicable amounts payable for such
Transition Services by that amount equal to reductions in overhead expenses of
Seller at such locations from the date hereof to the applicable time of payment.
Purchaser agrees to continue such payments for a minimum of eight (8) weeks
following the Drape Business Closing.
ARTICLE VI
INDEMNIFICATION
6.1 Survival of Representations, Warranties and Covenants. The
representations, warranties and covenants of the parties hereto shall survive
the Clean-Op Closing and Drape Business Closing, as applicable, for a period of
five years from and after the respective closing dates or the period(s) of the
statute of limitations relating to the indemnified claim if less than five
years, except that the representations and warranties made in Sections 3.12 and
5.10 (regarding Taxes), Section 3.20 (Employee Benefits) at Section 3.24
(Environmental Matters) shall survive through the period(s) of the statute of
limitations (collectively, the "Expiration Dates"). If written notice of a claim
has been given prior to, but not after, the applicable Expiration Date, then the
relevant representations, warranties and covenants shall survive as to such
claim, until the claim has been finally resolved.
6.2 Indemnification by Seller and Stockholders.
(a) Seller hereby agrees to indemnify and hold harmless Purchaser, and
Purchaser's stockholders, officers and directors, employees and agents and their
respective successors and assigns (collectively, the "Purchaser Indemnified
Parties") from and against any and all claims, damages, liabilities,
obligations, losses, costs, expenses (including, without limitation, reasonable
legal costs and expenses) and judgments (at equity or at law) arising out of or
resulting from (i) the breach of any representation, warranty or covenant of the
Seller or the Stockholders under this Agreement or the Seller's Clean-Op
Transaction Documents or the Seller's Drape Business Transaction Documents, (ii)
the operation of the Clean-Op Business or the ownership or use of the Purchased
Assets used in the Clean-Op Business prior to the Clean-Op Closing, other than
the Assumed Liabilities assumed by Purchaser at the Clean-Op Closing, (iii) the
operation of the Seller's Drape Business or the ownership or use of the
Purchased Assets prior to the Drape Business Closing, other than the Assumed
Liabilities, (iv) any liabilities of the Seller's Business not expressly assumed
by Purchaser, (v) any action, claim, suit or proceeding based on the failure of
Seller or Stockholders to comply with Section 5.10 above, (vi) the Excluded
Assets, and (vii) any creditors rights or debtor relief laws or actions with
respect to Seller (including, without limitation, any claims of avoidance of
transfers or rejections of contracts).
(b) Each of the Stockholders hereby agrees to indemnify and hold
harmless the Purchaser Indemnified Parties from and against any and all claims,
damages, liabilities, obligations, losses, costs, expenses (including, without
limitation, reasonable legal costs and expenses) and judgments (at equity or at
law) arising out of or resulting from (i) the breach of any representation,
28
warranty or covenant of such Stockholder under this Agreement or the Seller's
Clean-Op Transaction Documents or the Drape Business Transaction Documents and
(ii) any creditors rights or debtor relief laws (including without limitation
Title 11 of the United States Code) or actions with respect to Seller
(including, without limitation, any claims of avoidance of transfers or
rejections of contracts). The Stockholders' indemnification obligations under
Subsection 6.2(b)(ii) shall be limited to that amount set forth on Schedule
6.2(b) with respect to each of the Stockholders.
6.3 Indemnification by Purchaser. Purchaser shall indemnify, defend and
hold harmless Seller and the Stockholders and their respective officers,
directors, employees, agents, successors, assigns, heirs and beneficiaries
(collectively the "Seller Indemnified Parties") from and against any and all
claims, damages, liabilities, obligations, losses, costs, expenses (including,
without limitation, reasonable legal costs and expenses) and judgments (at
equity or at law) arising out of or resulting from (a) the breach of any
representation, warranty or covenant of Purchaser under this Agreement or any
the Purchaser's Transaction Documents, (b) any Assumed Liabilities, and (c) the
operation of the Business or the ownership or use of the Purchased Assets
following the Drape Business Closing.
6.4 General Indemnification Provisions.
(a) The indemnified party shall promptly notify the indemnifying party
of any third party claim, demand, action or proceeding ("Third Party Claim") for
which indemnification is sought under Section 6.2 or 6.3 of this Agreement (such
notice to state the nature and basis of the claim, demand, action or proceeding)
and, the indemnified party will have the right to conduct and control the
defense thereof using counsel reasonably acceptable to the indemnifying party.
The indemnifying party shall have the right to participate, at its own expense,
with respect to any such Third Party Claim. In connection with any such Third
Party Claim, the parties thereto shall cooperate with each other and provide
each other with access to relevant books and records in their possession. No
such Third Party Claim shall be settled without prior written consent of the
indemnified party and indemnifying party, which consent may not be unreasonably
withheld; provided, however, that such settlement shall not adversely effect
Purchaser's business and shall include a full and complete release of Purchaser.
(b) Any payment pursuant to this Article VI shall be made not later
than thirty (30) days after receipt by the indemnifying party of written notice
from the indemnified party stating that an indemnifiable amount has been paid to
a third party, and specifying the amount thereof and the amount of the indemnity
payment requested.
6.5 Set Off. Purchaser shall have the right to set off against the Note or
any other sums due from Purchaser to Seller any amount owed to Purchaser under
this Article VI.
6.6 Condition Precedent to Payment of Indemnification Claims. Prior to any
indemnifying party having any obligation to make a payment by way of
indemnification to any indemnified party, the indemnified party shall have
accrued at least $100,000 by way of unpaid indemnification claims, at which time
the indemnifying party shall be obligated for the first $1.00 of all accrued and
unpaid indemnification claims. Notwithstanding the foregoing, this Section shall
in no way restrict or limit the Purchaser Indemnified Parties right to
29
indemnification (a) with respect to the Clean-Op Business unless and until the
Drape Business Closing shall have occurred, (b) for the matters set forth in
Sections 6.2(a)(vii) or 6.2(b)(ii), or (c) for any breach of Seller's Clean-Op
or Drape Business Transaction Documents.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF
THE PURCHASER TO CLOSE
Each and every obligation of the Purchaser under this Agreement to be
performed on or prior to the Clean-Op Closing and the Drape Business Closing, as
applicable, shall be subject to the fulfillment, on or prior to the applicable
closing, of each of the following conditions unless and to the extent any such
condition is expressly waived in writing by the Purchaser:
7.1 Representations and Warranties True at Closing. The representations and
warranties made by Seller or the Stockholders in or pursuant to this Agreement
or given on their behalf hereunder shall be true and correct in all material
respects on and as of the Clean-Op Closing Date and the Drape Business Closing
Date, as applicable, (without regard to any knowledge qualification) with the
same effect as though such representations and warranties had been made or given
on and as of such closing date; provided, that, such representations and
warranties may be subject to modification to the extent such modification
directly results from changes in economic conditions generally or such changes
which are specific to the medical products industry as a whole or changes
resulting from the announcement of the transactions contemplated hereby or from
the actions of Purchaser after the date of this Agreement.
7.2 Obligations Performed. Seller and the Stockholders shall have performed
and complied in all material respects with all agreements, conditions and
obligations required by this Agreement to be performed or complied with by them
prior to or at the Clean-Op Closing and the Drape Business Closing, as
applicable.
7.3 Consents. Seller shall have obtained and delivered to Purchaser the
written consents set forth on Schedule 3.4 and all of such consents shall remain
in full force and effect at and as of the Clean-Op Closing and the Drape
Business Closing, as applicable.
7.4 Closing Deliveries of Seller and Stockholders at the Clean-Op Closing.
At the Clean-Op Closing, Seller and the Stockholders shall have delivered to
Purchaser each of the following, together with any additional items which
Purchaser may reasonably request to effect the transactions contemplated herein
(any documents, instruments, or certificates referenced below, collectively, are
the "Seller's Clean-Op Transaction Documents"):
(a) all of the Purchased Assets used or held for use by Seller in the
Clean-Op Business, including all of the Purchased Assets described in Section
1.1 of this Agreement relating to the Clean-Op Business;
(b) a certified copy of the resolutions of the stockholders and the
directors of Seller, authorizing the transactions contemplated herein for the
Clean-Op Closing and the Seller's execution, delivery and performance of this
30
Agreement and the Seller's Clean-Op Transaction Documents by Seller, together
with an incumbency certificate with respect to officers of Seller executing
documents or instruments on behalf of Seller;
(c) certificates of the President of Seller certifying as to the
matters set forth in Sections 7.1 and 7.2 hereof and as to the satisfaction of
all other conditions set forth in this Article 7;
(d) the Employment Agreements to be signed at the Clean-Op Closing;
(e) the Bill of Sale in the form of Exhibit 7.4(e) attached;
(f) the Assignment and Assumption Agreement in the form of Exhibit
7.4(f);
(g) the Noncompetition Agreements duly executed by Seller, the
Stockholders and the other parties required to execute the same at the Clean-Op
Closing;
(h) written consents from all parties to the Contracts whose consent
to the transactions contemplated for the Clean-Op Closing are required;
(i) true, correct and complete lists of the Accounts Payable, Accounts
Receivable, and Inventory with respect to the Clean-Op Business as of the
Clean-Op Closing Date;
(j) an opinion of counsel to Seller substantially in the form of
Exhibit 7.4(j) attached hereto;
(k) "paydown" letters from each of the secured creditors of Seller
addressed to Seller and Purchaser, indicating the balance owed to each of
Seller's secured creditors as of the Clean-Op Closing Date, together with duly
executed copies of UCC releases releasing the security interest of all secured
creditors of Seller in any of the Purchased Assets relating to the Clean-Op
Business;
(l) all documents and instruments necessary or appropriate for filing
with any state or federal agency to further effect the transfer of the Clean-Op
Intellectual Property identified on Schedule 3.17 from Seller to Purchaser; and
(m) any other documents or agreements contemplated hereby or
reasonably necessary or appropriate to consummate the transactions contemplated
hereby in the Agreement for the Clean-Op Closing.
7.5 Closing Deliveries of Seller and Stockholders at the Drape Business
Closing. At the Drape Business Closing, Seller and the Stockholders shall have
delivered to Purchaser each of the following, together with any additional items
which Purchaser may reasonably request to effect the transactions contemplated
31
herein (any documents, instruments, or certificates referenced below,
collectively, are the "Seller's Drape Business Transaction Documents"):
(a) possession of all of the Purchased Assets used or held for use in
the Drape Business, including all of the Purchased Assets described in Section
1.1 of this Agreement relating to the Drape Business;
(b) a certified copy of the resolutions of the stockholders and the
directors of Seller, authorizing the transactions contemplated herein for the
Drape Business Closing and the Seller's execution, delivery and performance of
this Agreement and the Seller's Drape Business Transaction Documents, together
with an incumbency certificate with respect to officers of Seller executing
documents or instruments on behalf of Seller;
(c) certificates of the President of Seller certifying as to the
matters set forth in Sections 7.1 and 7.2 hereof and as to the satisfaction of
all other conditions set forth in this Article 7;
(d) the Bill of Sale in the form of Exhibit 7.5(d) attached;
(e) the Assignment and Assumption Agreements in the form of Exhibit
7.5(e);
(f) a transfer and assignment of the leases which are included within
Assumed Contracts in form and substance acceptable to Purchaser;
(g) written consents from all parties to the Contracts whose consent
to the transactions contemplated for the Drape Business Closing are required;
(h) duly executed Employment Agreements and Noncompetition Agreements
to be signed at the Drape Business Closing;
(i) true, correct and complete lists of the Accounts Payable,
Additional Liabilities, Accounts Receivable, and Inventory as of the Drape
Business Closing Date;
(j) "paydown" letters from each of the secured creditors of Seller
addressed to Seller and Purchaser, indicating the balance owed to each of
Seller's secured creditors as of the Drape Business Closing Date, together with
duly executed copies of UCC releases releasing the security interest in any of
the Purchased Assets of all secured creditors of Seller;
(k) all documents and instruments necessary or appropriate for filing
with any state or federal agency to further effect the transfer of the Drape
Business Intellectual Property identified on Schedule 3.17 from Seller to
Purchaser; and
(l) an opinion of counsel to Seller substantially in the form of
Exhibit 7.4(j) attached hereto; and
32
(m) any other documents or agreements contemplated hereby or
reasonably necessary or appropriate to consummate the transactions contemplated
hereby.
7.6 No Challenge. As of the Clean-Op Closing Date and the Drape Business
Closing Date, as applicable, there shall not be pending or threatened any
action, proceeding or investigation challenging, or seeking material damages in
connection with, the acquisition by the Purchaser of the Purchased Assets or the
ability of Purchaser or any of its affiliates to own and operate Seller's
Business or otherwise materially adversely affecting Seller's Business or the
Purchased Assets.
7.7 No Investigations of Seller or Business. As of the Clean-Op Closing
Date and the Drape Business Closing Date, as applicable, there shall be no, and
neither Seller nor any of the Stockholders shall have any knowledge of or reason
to know of any, pending or threatened, investigation by any municipal, state or
federal government agency or regulatory body with respect to Seller, the
Purchased Assets or Seller's Business.
7.8 Legality. As of the Clean-Op Closing Date and the Drape Business
Closing Date, as applicable, no federal or state statute, rule, regulation,
executive order, decree or injunction shall have been enacted, entered,
promulgated or enforced by any court or Governmental Authority which is in
effect and has the effect of making the transactions contemplated herein illegal
or otherwise prohibiting the consummation of the transactions contemplated
herein.
7.9 Regulatory Matters. As of the Clean-Op Closing Date and the Drape
Business Closing Date, as applicable, all filings shall have been made and all
approvals shall have been obtained as may be legally required pursuant to
federal and state laws prior to the consummation of the transactions
contemplated by this Agreement and all actions by or in respect of, or filings
with, any governmental body, agency or official or any other person required to
permit the consummation of the transactions contemplated herein so that the
Purchaser shall be able to continue to carry on Seller's Business substantially
in the manner now conducted by Seller shall have been taken or made.
7.10 Senior Lender Consent. As of the Clean-Op Closing Date and the Drape
Business Closing Date Purchaser shall have received and there shall remain in
full force effect any consents required under Purchaser's credit agreement with
its senior lender for the consummation of the transactions contemplated on each
respective closing date.
7.11 Due Diligence. At the Clean-Op Closing Date and the Drape Business
Closing Date, as applicable, Purchaser shall be satisfied, in its sole
discretion, with the results of its environmental and other due diligence
investigation of Seller, Seller's Business, the Purchased Assets and the Assumed
Liabilities.
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ARTICLE VIII
CONDITIONS TO SELLER'S
AND THE STOCKHOLDERS' OBLIGATIONS
Each and every obligation of Seller and the Stockholders under this
Agreement to be performed on or prior to the Clean-Op Closing and the Drape
Business Closing, as applicable, shall be subject to the fulfillment, on or
prior to the Closing, of each of the following conditions unless and to the
extent any such condition is specifically waived in writing by Seller and the
Stockholders:
8.1 Representations and Warranties True at Closing. The representations and
warranties made by the Purchaser in or pursuant to this Agreement or given on
its behalf hereunder shall be true and correct in all material respects, on and
as of the Clean-Op Closing Date and the Drape Business Closing Date, as
applicable, with the same effect as though such representations and warranties
had been made or given on and as of the Clean-Op Closing Date and the Drape
Business Closing Date, as applicable.
8.2 Obligations Performed. The Purchaser shall have performed and complied
in all material respects with all agreements, conditions and obligations
required by this Agreement to be performed or complied with by it prior to or at
the Clean-Op Closing Date and the Drape Business Closing Date, as applicable.
8.3 Closing Deliveries of Purchaser. The Purchaser shall have delivered to
the Seller each of the following, together with any additional items which the
Seller and Stockholders may reasonably request to effect the transactions
contemplated herein (collectively, "Purchaser's Transaction Documents"):
(a) certified copies of the resolutions of the Board of Directors of
Purchaser authorizing the transactions contemplated herein and the execution,
delivery and performance of this Agreement and the Purchaser's Transaction
Documents by the Purchaser, together with incumbency certificates with respect
to the respective officers of the Purchaser executing documents or instruments
on behalf of the Purchaser;
(b) a certificate of the President of the Purchaser certifying as to
the matters set forth in Sections 8.1 and 8.2 hereof and as to the satisfaction
of all other conditions set forth in this Article 8;
(c) at the Clean-Op Closing, the Clean-Op Purchase Price, and at the
Drape Business Closing, the Drape Business Purchase Price;
(d) the Assignment and Assumption Agreements; and
(e) any other documents or agreements contemplated hereby or
reasonably necessary or appropriate to consummate the transactions contemplated
hereby.
34
8.5 Legality. As of the Clean-Op Closing Date and the Drape Business
Closing Date, as applicable, no federal or state statute, rule, regulation,
executive order, decree or injunction shall have been enacted, entered,
promulgated or enforced by any court or governmental authority which is in
effect and has the effect of making the transactions contemplated herein illegal
or otherwise prohibiting the consummation of the transactions contemplated
herein.
ARTICLE IX
TERMINATION
9.1 Termination. This Agreement may be terminated at any time before the
Drape Business Closing Date:
(a) by mutual written consent of the Purchaser and Seller;
(b) by Purchaser, if any of the conditions set forth in Article VII
hereof shall not have been satisfied on or before March 31, 2001;
(c) by Seller if any of the conditions set forth in Article VIII
hereof shall not have been satisfied on or before March 31, 2001, provided
Seller and the Stockholders shall not have breached any representation, warranty
or covenant made on its or their behalf in this Agreement;
(d) by Purchaser in the event Seller or any of the Stockholders shall
have breached in any material respect any representation or warranty contained
in this Agreement or failed to perform and comply in any material respect with
all agreements, conditions and obligations required by this Agreement to be
performed or complied with by Seller or any of the Stockholders; or
(e) by Seller if Purchaser shall have failed to complete the Clean-Op
Closing or the Drape Business Closing on or before March 31, 2001, provided
Seller and the Stockholders shall not have breached any representation, warranty
or covenant made on its or their behalf in this Agreement.
9.2 Effects of Termination. In the event this Agreement is terminated
pursuant to Section 9.1(a), (b) or (c) above, no party shall have any further
obligations to the others hereunder except Sections 3.22, 4.4 and 5.11 shall
survive any termination of this Agreement and, if the Clean-Op Closing shall
have previously occurred, this Agreement (including, without limitation, Article
6 hereof) shall remain in full force and effect with respect to the terms and
conditions of this Agreement regarding the Clean-Op Business, the Clean-Op
Closing and the transactions contemplated thereby. In the event of a termination
of this Agreement pursuant to Sections 9.1(d) or (e) above, the terminating
party shall retain all of its rights and remedies available at law or in equity.
35
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Severability. If any provision of this Agreement is prohibited by the
laws of any jurisdiction as those laws apply to this Agreement, that provision
shall be ineffective to the extent of such prohibition and/or shall be modified
to conform with such laws, without invalidating the remaining provisions hereto.
10.2 Modification. This Agreement may not be changed or modified except in
writing specifically referring to this Agreement and signed by each of the
parties hereto.
10.3 Assignment, Survival and Binding Agreement. This Agreement may not be
assigned by Purchaser, except (a) Purchaser may assign this Agreement to an
"Affiliate" of Purchaser, and (b) Purchaser may assign its indemnification
rights under this Agreement to The Chase Manhattan Bank, as Agent, under
Purchaser's Amended and Restated Credit Agreement dated as of August 30, 1996,
as amended. This Agreement may not be assigned by Seller or any of the
Stockholders, without the prior written consent of Purchaser. "Affiliate" of
Purchaser means an entity that directly or indirectly controls, is controlled by
or is under common control with Purchaser. The terms and conditions hereof shall
survive the Closing as provided herein and shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, personal
representatives, successors and assigns.
10.4 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.5 Notices. All notices, requests, demands, claims or other
communications hereunder will be in writing and shall be personally delivered,
sent by a recognized overnight delivery service which guarantees next day
delivery ("Overnight Delivery") or mailed by registered or certified mail,
return receipt requested, postage prepaid and addressed to the intended
recipient as set forth below:
If to Seller or the Stockholders: Deka Medical, Inc.
(If by mail) P. O. Box 2426
Columbus, Mississippi 39704
Attention: President
If to Seller or the Stockholders: Deka Medical, Inc.
(If by courier) 168 Rosecrest Lane
Columbus, Mississippi 39701
with a copy to: Hallett & Perrin P.C.
717 N. Harwood, Suite 1400
Dallas, Texas 75201
Attention: Bruce Hallett, Esq.
36
If to Purchaser: Microtek Medical, Inc.
512 Lehmberg Road
Columbus, Mississippi 39702
Attention: President
with a copy to: Arnall Golden & Gregory, LLP
2800 One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Attention: Stephen D. Fox, Esq.
or at such other address as any party hereto notifies the other parties hereof
in writing. The parties hereto agree that notices or other communications that
are given in accordance herewith (i) by personal delivery, will be deemed
effective on delivery and receipt thereof by the receiving party, (ii) by
Overnight Delivery, will be deemed effective on the first business day
immediately following the date sent, and (iii) by U.S. mail, will be effective
three (3) business days immediately following the date sent. For purposes of
this Agreement, a "business day" is a day on which Purchaser is open for
business and shall not include a Saturday or Sunday or legal holiday.
Notwithstanding anything to the contrary in this Agreement, no action shall be
required of the parties hereto except on a business day and in the event an
action is required on a day which is not a business day, such action shall be
required to be performed on the next succeeding day which is a business day.
10.6 Entire Agreement; No Third Party Beneficiaries. This Agreement,
together with the Exhibits and Schedules attached hereto, constitutes the entire
agreement between the parties as to the subject matter hereof, and supersedes
any and all other prior agreements and undertakings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof
and, except as otherwise expressly provided herein, is not intended to confer
upon any person other than Seller, Purchaser and the Stockholders, any rights or
remedies hereunder.
10.7 Further Assurances. The parties to this Agreement agree to execute and
deliver, both before and after the Closing, any additional information,
documents or agreements contemplated hereby and/or necessary or appropriate to
effect and consummate the transactions contemplated hereby. Each of the
Stockholders and Seller agree to provide to the Purchaser, both before and after
the Closing, such information as the Purchaser may reasonably request in order
to consummate the transactions contemplated hereby and to effect an orderly
transition of the Business following Closing.
10.8 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND
ENFORCED UNDER AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF MISSISSIPPI,
WITHOUT REGARD TO THE PRINCIPLES THEREOF RELATING TO CONFLICT OF LAWS.
10.9 Pronouns. All personal pronouns in this Agreement, whether used in the
masculine, feminine or neuter gender shall include all other genders, and the
singular shall include the plural and the plural shall include the singular.
37
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
PURCHASER:
MICROTEK MEDICAL, INC.
By:
-------------------------------------
Title:
-------------------------------------
SELLER:
DEKA MEDICAL, INC.
By:
-------------------------------------
Title:
-------------------------------------
STOCKHOLDERS:
--------------------------------------------
Kimber L. Vought
--------------------------------------------
Dagoberto T. Capote
PNC Capital Corp.
By:
-------------------------------------
Title:
-------------------------------------
South Atlantic Private Equity Fund IV,
Limited Partnership
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
South Atlantic Private Equity Fund IV (QP),
Limited Partnership
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
38
Kitty Hawk Capital Limited Partnership, III
By: Kitty Hawk Partners Limited
Partnership, III, the General Partner
By:
----------------------------------
Walter H. Wilkinson, Jr.,
General Partner
Wood Street Partners II
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
39
LIST OF SCHEDULES AND EXHIBITS
Schedule 1.2 Excluded Assets
Schedule 2.1(b)(iii) Key Employees
Schedule 2.2(a) Assumed Contracts
Schedule 2.2(b) Accounts Payable
Schedule 2.3 Allocation of Purchase Price
Schedule 3.1 Foreign Qualification
Schedule 3.2 Officers and Directors
Schedule 3.3 Liens
Schedule 3.4 Consents
Schedule 3.5 Capitalization
Schedule 3.6 Compliance with Laws
Schedule 3.7 Licenses
Schedule 3.8(a) Unaudited Financial Statements
Schedule 3.8(c) Undisclosed Liabilities
Schedule 3.10 Deposits
Schedule 3.11 Accounts Receivable
Schedule 3.15 Fixed Assets
Schedule 3.16 Contracts
Schedule 3.17 Intellectual Property
Schedule 3.18 Litigation; Judgments
Schedule 3.19 Insurance
Schedule 3.20 Benefit Plans
Schedule 3.21 Immigration Matters
Schedule 3.23 Material Changes
Schedule 3.24 Environmental Matters
Schedule 3.26 Places of Business
Schedule 3.27 Customers and Suppliers
Schedule 3.28 Warranties and Product Liability
Schedule 5.5 Noncompetition Agreements
Schedule 5.6(a) Employment Agreements
Schedule 5.6(c) New Employees
Schedule 6.2(b) Stockholder Indemnification
Exhibit 2.1(b)(ii) Note
Exhibit 2.1(b)(iii) Key Employees Note
Exhibit 5.5A Seller Noncompetition Agreement
Exhibit 5.5B Stockholder Noncompetition Agreement
Exhibit 5.6 Form of Employment Agreement
Exhibit 7.4(b) Assignment and Assumption Agreement for Clean-Op
Exhibit 7.4(e) Bill of Sale for Clean-Op
Exhibit 7.4(j) Opinion of Seller's and Stockholders' Counsel
Exhibit 7.5(d) Bill of Sale for Drape Business
Exhibit 7.5(e) Assignment and Assumption for Drape Business
40
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