ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered into
as of the 27th day of June, 1997 by and between CONTOUR FABRICATORS, INC., a
Michigan corporation (hereinafter "CFI"); CONTOUR FABRICATORS OF FLORIDA,
INC., a Florida corporation (hereinafter "CFFI" and, together with CFI,
sometimes hereinafter collectively referred to as "Sellers"); CONTOUR MEDICAL,
INC., a Nevada corporation (hereinafter "CMI"); and RAWCAR GROUP, L.L.C., a
Michigan limited liability company (hereinafter "Purchaser").
RECITALS
A. Purchaser desires to purchase certain assets of CFI, CFFI and CMI,
all as more fully described herein.
B. Sellers and CMI (sometimes hereinafter collectively referred to as
the "Contour Parties") desire to sell certain assets to Purchaser.
C. The parties have agreed to set forth their agreement in writing.
THE PARTIES AGREE AS FOLLOWS:
ARTICLE 1
AGREEMENT TO PURCHASE AND SELL
1.1 Sale. Sellers and CMI agree to sell, and Purchaser agrees to
purchase, the interest of Sellers and CMI in the following (the "Assets"):
A. All furniture, trade fixtures, equipment and tools owned by
CFI and all furniture, trade fixtures, equipment and tools of CFFI (other than
the furniture and equipment identified on Exhibit 1.1A attached hereto) used
in their manufacturing businesses and/or located at 3340 Scherer Drive, St.
Petersburg, Florida, including, but not limited to, those assets described on
Exhibit 1.1A attached hereto (it being understood that, for purposes of this
Agreement, the manufacturing business or operations of CFFI shall not include
its kit assembly business);
B. All of the current and usable inventory of CFI, wherever
located, and all of the current and usable manufacturing inventory of CFFI, as
the same shall exist as of the close of business on the Closing Date (as
hereinafter defined);
C. All of the accounts receivable of CFI and all of the
accounts receivable of CFFI relating to manufacturing only, as the same shall
exist as of the close of business on the Closing Date;
D. All of the rights, benefits and interest of CFI under all
contracts and agreements, written or oral, and all of the rights, benefits and
interest of CFFI under all contracts and agreements, written or oral, related
to the manufacturing business of CFFI;
E. All registered and unregistered trademarks, trade names,
copyrights, patents, 510ks, service marks and service names, and applications
therefor; all technology and technological processes, all research and
development, know-how, trade secrets, formulae and all other intellectual
property of CFI and all of the foregoing of CFFI used in connection with its
manufacturing operations;
F. All prepaid expenses of CFI and all prepaid expenses of CFFI
relating to its manufacturing business only;
G. All books, records, documents and other writings of CFI and
all of the foregoing used in connection with the manufacturing business of
CFFI;
H. All permits, licenses, certificates and governmental
authorizations, approvals, license applications or related certifications of
CFI and all of the foregoing obtained in connection with the manufacturing
operations of CFFI;
I. All data processing programs, software programs, computer
printouts, data bases and hardware and related items of CFI and all of the
foregoing used in the conduct of the manufacturing business of CFFI, including
accountings, invoices, auditing, pension and data processing bases and
programs;
J. Goodwill of Sellers as going concerns, all telephone numbers
of CFI, all yellow page advertisements (to the extent deliverable by Sellers)
and the right to the use of the names Contour Fabricators, Inc. and Contour
Fabricators of Florida, Inc.
K. The right to sublease from CMI the entirety of the building
located at 3340 Scherer Drive, St. Petersburg, Florida, for the period
commencing July 1, 1997 and terminating June 30, 2000 at a base rate of $4.23
per square foot plus sales tax and an annual increase measured by reference to
the Consumer Price Index and otherwise on terms substantially as set forth in
the prime lease.
L. Real estate of CFI commonly known as 4100 E. Baldwin Road,
Grand Blanc, Michigan, and located in Grand Blanc Township, Genessee County,
Michigan, legally described as:
A parcel of land in the West 1/2 of the NW 1/4 of Section
34, T6N-R7E, beginning at a point on the North line of Section 34, which is
East 861.22 feet from the NW corner of Section 34; thence, East along said
North line, 461-28 feet; thence, South 00 degrees 38 minutes East along the
West 1/8 line of Section 34, a distance of 2,165 feet to the NE'ly line of C &
O Railroad right-of-way line; thence, along said NE'ly line on a curve to the
left having a radius of 5,803.09 feet, chord bearing and distance of North 11
degrees 15 minutes West, 327.48 feet and North 12 degrees 52 minutes West
1,892.4 feet to the point of beginning;
M. All other assets, tangible or intangible, of CFI and all of
the foregoing used by CFFI in connection with the operation of its
manufacturing business;
N. The Environmental Tectonics Corporation Model 400-05 EtO
Sterilizer owned by CMI and constructed in CMI's facility at 3340 Scherer
Drive, St. Petersburg, Florida, which sterilizer shall be in operating order
at the time of sale, including all permits, licenses and governmental
approvals required therefor.
At Closing (as hereinafter defined), Sellers and CMI shall transfer,
assign, convey and deliver the Assets to Purchaser free and clear of all
security interests, liens, pledges, claims, charges, escrows, encumbrances,
encroachments, rights of first refusal, mortgages, indentures, easements,
licenses, restrictions or other covenants, agreements, understandings,
obligations, defects or irregularities affecting title to any of the Assets
(collectively, "Liens").
1.2 Assets Not Included. Notwithstanding Section 1.1, the following
(the "Excluded Assets") shall remain the property of Sellers and shall not be
included in the Assets:
A. All insurance policies relating to their respective
businesses and any rights or proceeds arising therefrom;
B. All minute books and stock record books of Sellers.
C. All cash, bank deposits, certificates of deposit, commercial
paper, treasury bills, marketable securities and other cash equivalents of
Sellers.
D. Any and all property, business and assets of every kind,
nature and description that are used in connection with CFFI's distribution
business or its kit assembly business.
E. All tax returns and financial statements of the Contour
Parties and any benefit, claim or receivable of the Contour Parties for
federal, state or local income taxes or refunds.
1.3 Covenant Not To Compete. At Closing, Sellers and CMI shall
execute a Covenant Not To Compete satisfactory to Purchaser.
ARTICLE 2
PURCHASE PRICE
2.1 Purchase Price. The purchase price for the Assets and the
covenant not to compete shall be Three Million Three Hundred Fifty Thousand
($3,350,000.00) Dollars.
2.2 Allocation of Purchase Price. The parties agree to allocate the
purchase price for the Assets in accordance with an allocation schedule to be
prepared by Purchaser in accordance with Section 1060 of the Internal Revenue
Code of 1986. The parties will report the federal, state and local tax
consequences of the purchase and sale contemplated hereby in a manner
consistent with such allocation schedule.
ARTICLE 3
TERMS OF PAYMENT
3.1 Payment. The purchase price shall be paid in cash or certified
funds at Closing.
3.2 Assumption of Liabilities. As of the Closing Date, Purchaser
shall assume and agree to pay, perform or otherwise discharge when due all of
the following liabilities relating to the Assets and existing at or arising on
or after the Closing Date (collectively, the "Assumed Liabilities") and shall
deliver to Sellers at Closing a duly executed instrument of assumption in form
sufficient to effect the assumption by Purchaser of the Assumed Liabilities:
(i) all of Sellers' obligations on the date hereof to fill orders from
inventory with respect to which payment is not made to Sellers; (ii) all of
Sellers' outstanding commitments for the purchase of raw materials and
supplies to the extent disclosed on the Contour Disclosure Schedule; (iii) all
of Sellers' liability for returned products and defective goods credited by
Purchaser's representatives in each case which were sold by Sellers prior to
Closing (but only to the extent so credited); and (iv) all obligations,
liabilities and commitments of either Seller arising out of any written
agreement, contract, instrument or other arrangement entered into in the
ordinary course of business and by which any of the Assets is bound or
affected or by which CFI or CFFI is bound in connection with the Assets (but
excluding any obligation or liability for any breach thereof occurring prior
to the Closing Date). Except as specifically set forth in the immediately
preceding sentence, Purchaser shall not assume, and shall have no liability
for, any debts, liabilities, obligations, expenses, taxes, contracts or
commitments of Sellers or CMI of any kind, character or description, whether
accrued, absolute, contingent or otherwise; provided, however, that Purchaser
shall be responsible for all liabilities and obligations pertaining to the
operation or ownership of the Assets arising subsequent to the Closing Date.
Sellers agree to satisfy in a timely manner all of their liabilities,
indebtedness and obligations not assumed by Purchaser pursuant to this
Agreement.
ARTICLE 4
TAXES, CLOSING COSTS AND ADJUSTMENTS TO PURCHASE PRICE
4.1 Liability for Taxes and Closing Costs. Purchaser, on the one
hand, and Sellers, on the other hand, shall be equally responsible for the
timely payment of (i) all title commitment fees and all closing costs related
to the closing of the real estate purchased hereunder, and (ii) all sales
(other than bulk sales), use, value added, documentary, stamp, registration,
transfer, conveyance, excise, recording, license and other similar taxes and
fees (collectively, "Transfer Taxes") arising out of or in connection with or
attributable to the transactions effected pursuant to this Agreement.
Purchaser shall prepare and timely file all tax returns required to be filed
in respect of the Transfer Taxes, provided that the Contour Parties shall be
permitted to prepare any such tax returns that are the primary responsibility
of the Contour Parties under applicable law. The preparation of any such tax
returns by the Contour Parties shall be subject to Purchaser's approval, which
approval shall not be withheld unreasonably.
4.2 Miscellaneous Business Taxes. All social security, sales, use,
unemployment, withholding and other business taxes for all years up to and
including the last completed tax year and all payroll periods for the current
tax year immediately preceding the Closing Date shall be paid in full by
Sellers.
4.3 Adjustments. Adjustments shall be made at the Closing for any
payroll and unpaid taxes and other liabilities, if any, attributable to
periods both on and prior and subsequent to the Closing Date. All real estate
taxes, personal property taxes, rents, utilities and all such other taxes,
charges and assessments, if any, relating to any real property to be sold to
or subleased by Purchaser hereunder shall be apportioned between Purchaser and
Sellers on the Closing Date on the basis of the tax year for which assessed.
If the Closing Date shall occur before the tax rate for any tax year is fixed,
the apportionment of taxes shall be upon the basis of the tax rate for the
next preceding year for which the tax rate is fixed applied to the latest
assessed valuation. The net amount of any of any such adjustments or
apportionment shall either be an increase or a decrease of the purchase price
and monies payable at Closing.
ARTICLE 5
BULK TRANSFER ACT COMPLIANCE
Sellers and Purchaser hereby waive compliance with the provisions of
Article 6 of the Uniform Commercial Code, entitled "Uniform Commercial Code -
Bulk Transfers", or comparable laws relating to bulk transfers as adopted in
the jurisdictions in which the Assets are located, to the extent applicable to
the transactions contemplated hereby. Sellers and CMI, jointly and severally,
shall indemnify and save harmless Purchaser from and against any and all
liability arising out of Sellers' and/or Purchaser's noncompliance with said
bulk transfer laws except to the extent arising out of Purchaser's failure to
pay, perform and discharge the Assumed Liabilities as and when due.
ARTICLE 6
REAL ESTATE
The following shall be applicable to the real estate sold to Purchaser
hereunder pursuant to Article 1.1(L) hereof:
6.1 Title Policy. At Closing, CFI shall deliver to Purchaser a policy
of title insurance without exceptions issued by Cislo Title Company, 1208 S.
Saginaw Street, Flint, Michigan, for an amount not less than the purchase
price for such real estate hereunder and insuring Purchaser herein as to the
nature of CFI's title in the above described property.
6.2 Possession. Possession of the real estate shall be given
immediately after Closing, subject to the rights of no tenants or others in
possession.
6.3 Limited Warranty Deed. CFI shall deliver to Purchaser at Closing
a limited or special warranty deed in the form required by the title company
to deliver the title policy contemplated under Section 6.1 above.
ARTICLE 7
REPRESENTATIONS, COVENANTS AND WARRANTIES OF CONTOUR PARTIES
Except as set forth on a Disclosure Schedule attached hereto that
specifically identifies the relevant subsection hereof to which it relates
(the "Contour Disclosure Schedule"), each Contour Party, severally and not
jointly with any other Contour Party, represents, covenants and warrants the
following to be true with respect to itself and not with respect to any other
Contour Party:
7.1 Organization and Authorization of Contour Parties. Such Contour
Party is a corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation and has all requisite power and
authority to carry on its business as it is now being conducted.
7.2 Authorization of Contour Parties. Such Contour Party has all
requisite power and authority to execute, deliver and perform this Agreement
and all writings relating hereto and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this
Agreement and all writings relating hereto by such Contour Party have been
duly and validly authorized by all necessary corporate action on the part of
such Contour Party. This Agreement and all writings relating hereto to be
signed by such Contour Party constitute valid and binding obligations of such
Contour Party enforceable in accordance with their respective terms. The
execution, delivery and performance by such Contour Party of this Agreement
and the consummation by such Contour Party of the transactions contemplated
hereby will not, with or without the giving of notice or the lapse of time, or
both, (i) be subject to obtaining any required consents, approvals,
authorizations, exemptions or waivers, (ii) violate any provision of law, rule
or regulation to which such Contour Party is subject, (iii) violate any order,
judgment or decree applicable to such Contour Party, (iv) violate any
provision of the charter or Bylaws of such Contour Party, except, in each
case, for violations which in the aggregate would not materially hinder or
impair the consummation of the transactions contemplated hereby or (v) result
in the creation of any Lien upon any of the Assets sold hereunder by such
Contour Party.
7.3 Financial Statements. Each Seller has delivered to Purchaser
copies of the following unaudited financial statements of such Seller, all of
which are true and complete and have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
period indicated:
A. Balance Sheets. Balance sheets of CFI as of June 30, 1996
and April 30, 1997, certified by CFI's Treasurer, each of which presents, in
all material respects, a true and complete statement, as of its date, of CFI's
financial condition, assets and liabilities;
Balance sheets of CFFI as of June 30, 1996 and April 30, 1997, certified
by CFFI's Treasurer, each of which presents, in all material respects, a true
and complete statement, as of its date, of CFFI's financial condition, assets
and liabilities.
B. Profit and Loss. Statements of CFI's profit and loss for
the eight months ending June 30, 1996, and for the nine months ended April 30,
1997, certified by CFI's Treasurer, each of which accurately presents, in all
material respects, the results of CFI's operations for the period indicated;
Statements of CFFI's profit and loss for the twelve months ending June
30, 1995 and 1996, and for the nine months ended April 30, 1997, certified by
CFFI's Treasurer, each of which accurately presents, in all material respects,
the results of CFFI's operations for the period indicated.
C. Schedules of Accounts Payable, Purchase Orders and Accounts
Receivable. The Contour Disclosure Schedule includes a schedule of accounts
payable (including taxes) as of April 30, 1997, outstanding purchase orders as
of June 26, 1997 and accounts receivable (with aging) with respect to CFFI
(other than as to its distribution and kit assembly businesses) and CFI, all
as of April 30, 1997, which schedule is true, complete and accurate in all
material respects.
7.4 Absence of Certain Changes in Sellers. Since April 30, 1997,
there has not been:
A. Any change in Sellers' financial condition, assets,
liabilities or business other than changes in the ordinary course of business,
none of which has been materially adverse;
B. Any damage or loss, whether or not covered by insurance,
materially and adversely affecting Sellers' properties or business;
C. Any declaration, or setting aside, or payment of any
dividend or other distribution in respect to Sellers, shares, or any direct or
indirect redemption, purchase or other acquisition of any such shares.
D. Any increase in the compensation payable or to become
payable by Sellers to any of their officers, employees or agents, or any
deferred compensation arrangement entered into with, or any bonus payment or
arrangement made to or with, any of them; or
E. Any labor trouble or any event or condition of any character
materially or adversely affecting Sellers' business or prospects.
7.5 Title to Properties of Sellers.
A. Personal Property. Sellers have good and marketable title
to all their personal property sold hereunder. None of such personal property
is subject to any Lien, except as specifically disclosed. Except as otherwise
specified, all leasehold improvements, furnishings, machinery and equipment of
Sellers sold hereunder are in good condition in the aggregate, ordinary wear
and tear excepted and consistent with their age and use; and, to the best
knowledge of Sellers, substantially comply with all applicable laws,
ordinances and regulations.
B. Real Property. The following shall be applicable to the
real estate to be subleased to Purchaser hereunder pursuant to Article 1.1(K)
hereof and, where provided, real estate to be sold by CFI pursuant to Article
1.1(L) hereof:
(a) The lease of real property at 3340 Scherer Drive, St.
Petersburg, Florida, to which CMI is a party is fully effective and affords
CMI peaceful and undisturbed possession of the subject matter of the lease,
and a true and complete copy of such lease has been delivered to Purchaser.
Said lease has been duly authorized and executed by the parties and is in full
force and effect. To the knowledge of CMI, CMI is not in default under such
lease, nor, to the knowledge of CMI, has any event occurred which, with the
notice or passage of time, or both, would give rise to such a default. To the
knowledge of CMI, the other party to such lease is not in default under such
lease, and there is no event which, with the notice or passage of time, or
both, would give rise to such a default. To the knowledge of CFI and CMI with
regard to the real estate to be sold and leased pursuant to this Agreement,
neither is in violation of any zoning, building or safety ordinance,
regulation or requirement, or other law or regulation applicable to the
operation of its properties, nor, to the knowledge of CFI and CMI with regard
to such real estate, has any notice of such violation been received by them.
To the knowledge of CFI and CMI, there are no defaults by CFI or CMI or by any
other party which might curtail in any material respect the present use of its
respective properties. Except for the consent of the lessor of the real
property at 3340 Scherer Drive, St. Petersburg, Florida, which consent has
been obtained, no consent or approval is required with respect to the lease or
sale of the real property to be leased and/or sold hereunder from any other
parties or from any regulatory authority, and no filing with any regulatory
authority is required in connection therewith.
(b) To the knowledge of CMI and/or CFFI, (i) no Hazardous
Waste (as defined below) or Hazardous Material (as defined below) is present
on the property nor has CMI and/or CFFI ever generated, transported, used,
stored, treated, disposed of, or managed any Hazardous Waste or Hazardous
Material, (ii) CMI and/or CFFI do not have any material liability under, and
have not violated in any material respect, any Environmental Law (as defined
below), (iii) CMI and/or CFFI are in compliance in all material respects with
all applicable environmental laws, and (iv) CMI and/or CFFI have never entered
into or been subject to any material judgment, consent decree, compliance
order, or administrative order with respect to any material environmental or
health and safety matter or received any demand letter, formal complaint or
claim with respect to any environmental or health and safety matter or the
enforcement of any Environmental Law. For purposes of this Agreement, (i)
"Hazardous Material" shall mean and include any hazardous waste, hazardous
material, hazardous substance, petroleum product, oil, toxic substance,
pollutant, or contaminant, as defined or regulated under any Environmental
Law, or any other substance which may pose a threat to the environment or to
human health or safety; (ii) "Hazardous Waste" shall mean and include any
hazardous waste as defined or regulated under any Environmental Law; and (iii)
"Environmental Law" shall mean any environmental or health and safety-related
law, regulation, rule, ordinance or by-law at the foreign, federal, state or
local level, whether existing as of the date hereof, previously enforced or
subsequently enacted.
7.6 Intellectual Property Rights; Employee Restrictions.
A. To the knowledge of each Seller, it has exclusive ownership
of, with a right to use, sell, license, dispose of and bring actions for
infringement of, all Intellectual Property Rights (as hereinafter defined)
material to the conduct of its business as presently conducted (the "Sellers'
Rights");
B. To the knowledge of each Seller, the business of such Seller
as presently conducted and the production, marketing, licensing, use and
servicing of any products or services of such Seller, do not infringe any
patent, trademark, copyright, trade secret rights of any third parties or any
other Intellectual Property Rights of any third parties;
C. No claim is pending or, to the knowledge of either Seller,
threatened against such Seller, nor has any such Seller received any written
notice or other written claim from any person asserting that any of the
Sellers' present or contemplated activities infringe or may infringe any
Intellectual Property Rights of such person;
D. To the knowledge of each Seller, no employee of such Seller
has received notice that any such employee is in violation of any agreement or
in breach of any agreement or arrangement with former or present employers
relating to proprietary information or assignment of inventions.
As used herein, the term "Intellectual Property Rights" shall mean all
intellectual property rights, all patents, patent applications, patent rights,
trademarks, trademark applications, trade names, service marks, service mark
applications, copyrights, copyright applications, computer programs and other
computer software, inventions, designs, samples, specifications, schematics,
know-how, trade secrets, proprietary process and formulae, all source and
object code, algorithms, architecture, structure, display, screens, layouts,
development tools, promotional materials, data bases, customer lists, supplier
and dealer lists and marketing research, and all documentation and media
constituting, describing or relating to the foregoing, including, without
limitation, manuals, memoranda and records. The Contour Disclosure Schedule
contains a list and brief description of all patents, patent applications,
trademarks and registered copyrights owned by or registered in the name of
Sellers or of which Sellers are the licensor or licensee of material rights or
in which Sellers have any material right.
7.7 Customers, Distributors and Suppliers. The relationships of each
Seller with its customers, distributors and suppliers are, to the knowledge of
such Seller, good commercial working relationships. No customer, distributor
or supplier has canceled, materially modified or otherwise terminated its
relationship with such Seller or has during the last twelve (12) months
decreased materially its service, supplies or materials to such Seller or its
usage or purchase of the services or products of Seller, nor, to the knowledge
of such Seller, does any customer, distributor or supplier have any plan or
intention to do any of the foregoing.
7.8 Contracts of Sellers. Sellers have no contract or commitment
extending beyond December 31, 1997.
7.9 Status of Contracts of Sellers. To the knowledge of each Seller,
such Seller has complied, in all material respects, with all of the provisions
of contracts described in this Agreement and of all other contracts and
commitments to which such Seller is a party.
7.10 Compensation Paid by CFFI. The Contour Disclosure Schedule
includes a true and complete list, as of April 30, 1997, certified by CFFI's
Treasurer, showing the names of all persons who are employed by CFFI (other
than in its distribution or kit assembly businesses) as of such date,
including how and how much these persons are paid and the date of employment
of these persons with CFFI.
7.11 Employment Contracts of Sellers . There are no written or oral
contracts of employment between Sellers and any employee except as set forth
on the Disclosure Schedule. There exists no liability of Sellers to any
employee or former employee that will not be paid in full at Closing.
7.12 Employment Benefit Plan of Sellers. Sellers have no pension,
bonus, profit sharing or retirement plans for officers or employees.
7.13 Insurance of Sellers' Property. All assets owned or leased by
Sellers are adequately insured against fire and casualty, and valid policies
therefor are outstanding and duly in force and the premiums have been paid
when due. Sellers have not received any notice of any cancellation of
policies pertaining to the foregoing.
7.14 Multi-Employer Employee Benefit Plans. Sellers sponsor no
multi-employer employee pension or other qualified retirement plan and are not
required to contribute to such plan.
7.15 Taxes of Sellers. Each Seller has paid any and all taxes, license
fees or other charges levied, assessed or imposed on its business and any of
its property, except those that are not due and payable.
7.16 Tax Returns of Sellers.
A. Preparation. Each Seller has duly prepared and filed any
and all tax returns and reports required to be filed by it by federal, state
and local tax authorities.
B. Correctness. The returns of each Seller filed are correct,
true and complete in all material respects.
C. Payment. Any and all such taxes, including sales, corporate
franchise, property, excise and use taxes have been paid or are adequately
provided for on the latest financial statement of each Seller.
D. No Dispute. Neither Seller is involved in any dispute with
any tax authority about the amount of taxes due, nor has either Seller
received any notice of any deficiency, audit or other indication of deficiency
from any tax authority not disclosed to the parties to this Agreement.
7.17 Directors and Officers of Contour Parties. The Contour Disclosure
Schedule sets forth the names of all officers, directors and resident agents
of Sellers and CMI.
7.18 Litigation Regarding Sellers. There is no litigation or
proceeding either pending or, to the knowledge of either Seller, threatened
against or relating to such Seller, its properties or business in any
judicial, quasi judicial or administrative forum; further, such Seller does
not know or have reasonable grounds to know any basis for any such action,
including grievances with labor contracts.
7.19 Restrictions Regarding Sellers. There are no outstanding
judgments, orders or restrictions against either Seller that, individually or
in the aggregate with all other such items, could reasonably be expected to
have a material adverse effect on the business of such Seller.
7.20 Licenses of Sellers. To the knowledge of each Seller, the Contour
Disclosure Schedule sets forth a list of all licenses that each Seller
requires to operate its business.
7.21 Union Contract of Sellers. Neither Seller has any union contract
for any of its employees, and neither Seller has received any notice and has
no reason to believe any notice will be given regarding union activity.
7.22 Assumed Names of Sellers. Neither Seller conducts its business
under an assumed name.
7.23 Reliance. The foregoing representations and warranties are made
with the knowledge and expectation that Purchaser is placing complete reliance
on them.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Except as may be set forth on a Disclosure Schedule attached hereto that
specifically identifies the relevant subsection hereof to which it relates
(the "Purchaser Disclosure Schedule"), Purchaser represents, covenants and
warrants the following to be true:
8.1 Organization and Authorization of Purchaser.
A. Purchaser is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Michigan
and has all requisite power and authority to carry on its business as it is
now being conducted.
B. Purchaser has all requisite power and authority to execute,
deliver and perform this Agreement and all writings relating hereto and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and all writings relating hereto by Purchaser
have been duly and validly authorized by all necessary action on Purchaser's
part. This Agreement and all writings relating hereto to be signed by
Purchaser constitute valid and binding obligations of Purchaser enforceable in
accordance with their respective terms. The execution, delivery and
performance by Purchaser of this Agreement and the consummation by Purchaser
of the transactions contemplated hereby will not, with or without the giving
of notice or the lapse of time, or both, (i) be subject to obtaining any
required consents, approvals, authorizations, exemptions or waivers, (ii)
violate any provision of law, rule or regulation to which Purchaser is
subject, (iii) violate any order, judgment or decree applicable to Purchaser
or (iv) violate any provision of the Articles of Organization or Operating
Agreement of Purchaser, except, in each case, for violations which in the
aggregate would not materially hinder or impair the consummation of the
transactions contemplated hereby.
8.2 Litigation. There are no actions, suits, claims, investigations
or legal or administrative or arbitration proceedings pending or, to the best
of Purchaser's knowledge, threatened (i) against Purchaser with respect to
which there is a reasonable likelihood of a determination that would have a
material adverse effect on the ability of Purchaser to perform its obligations
under this Agreement or (ii) that seeks to enjoin or obtain damages in respect
of the consummation of the transactions contemplated hereby. There are no
actions, suits, claims, investigations or legal or administrative or
arbitration proceedings pending or, to the best knowledge of Purchaser,
threatened that seek to enjoin or obtain damages in respect of the
consummation of the transactions contemplated hereby.
8.3 Consents. No consent, approval or authorization of, or exemption
by, or filing with, any governmental authority is required in connection with
execution, delivery and performance by Purchaser of this Agreement, or the
taking of any other action contemplated hereby, excluding, however, consents,
approvals, authorizations, exemptions and filings, if any, which Sellers are
required to obtain or make.
8.4 Disclaimer. EXCEPT AS OTHERWISE SET FORTH IN THIS AGREEMENT, NO
CONTOUR PARTY MAKES ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, IN
CONNECTION WITH THE ASSETS OR THE TRANSACTIONS CONTEMPLATED HEREBY. EXCEPT AS
OTHERWISE SET FORTH IN THIS AGREEMENT, THE ASSETS BEING TRANSFERRED TO
PURCHASER AT THE CLOSING ARE TO BE CONVEYED HEREUNDER "AS IS WHERE IS" ON THE
CLOSING DATE AND IN THEIR THEN PRESENT CONDITION, AND PURCHASER SHALL RELY ON
ITS OWN EXAMINATION THEREOF. EXCEPT AS OTHERWISE SET FORTH IN THIS AGREEMENT,
NO CONTOUR PARTY MAKES ANY WARRANTY OF MERCHANTABILITY, SUITABILITY OR FITNESS
FOR A PARTICULAR PURPOSE, OR QUALITY, OF ANY OF THE ASSETS BEING SO
TRANSFERRED, OR AS TO THE CONDITION OR WORKMANSHIP THEREOF OR THE ABSENCE OF
ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT.
8.5 Reliance. The foregoing representations and warranties are made
by Purchaser with the knowledge and expectation that Sellers and CMI are
placing complete reliance on them.
ARTICLE 9
CERTAIN COVENANTS
9.1 Books and Records; Personnel. For a period of seven (7) years
after the Closing Date:
A. Purchaser shall not dispose of or destroy any of the
business records and files of Sellers without first offering to turn over
possession thereof to Sellers by written notice to Sellers at least thirty
(30) days prior to the proposed date of such disposition or destruction.
B. Purchaser shall allow Sellers and their agents access to all
business records and files of Sellers as to which Sellers shall require access
in connection with any matter relating to Sellers' ownership of the Assets or
conduct of the business of Sellers prior to the Closing during normal working
hours at Purchaser's principal place of business or at any location where such
records are stored, and Sellers shall have the right, at their own expense, to
make copies of any such records and files; provided, however, that any such
access or copying shall be had or done in such a manner so as not to interfere
with the normal conduct of business of Purchaser.
C. Purchaser shall make available to Sellers upon Sellers'
written request and at Sellers' expense, but consistent with Purchaser's
business requirements, (i) copies of such records and files of Sellers as
Sellers may request, (ii) Purchaser's personnel to assist Sellers in locating
and obtaining records and files maintained by Sellers, and (iii) any of
Purchaser's personnel whose assistance or participation is reasonably required
by Sellers in anticipation of, or preparation for, existing or future
litigation or other matters in which Sellers are involved.
D. The foregoing provisions of this Section 9.1 shall be in
addition to the other obligations of Purchaser hereunder.
9.2 Purchaser Confidentiality. All documents and information
obtained by Purchaser relating to Sellers or CMI shall be held by Purchaser in
strictest confidence; provided, however, that Purchaser shall have no
confidentiality obligation to Sellers or CMI with respect to information
relating to the Assets. No such documents or information shall be disclosed
by Purchaser to any third party or be used by Purchaser for any purpose other
than facilitating the transactions contemplated by this Agreement unless
required to be disclosed pursuant to judicial order or law. It is agreed that
money damages would not be a sufficient remedy for any breach of this Section
9.2 and that Sellers and CMI shall be entitled to injunctive relief as a
remedy for any such breach. Such remedy shall not be deemed to be the
exclusive remedy for breach of this Section 9.2 but shall be in addition to
all other remedies available at law or in equity. Purchaser further agrees
and covenants that any confidential information that it has obtained in
connection with its ownership of the Assets or in the course of the
performance of its obligations or the exercise of its rights under this
Agreement may not be used by Purchaser in any judicial or administrative
proceeding brought by Purchaser against Sellers or CMI except in any
proceeding for breach of this Agreement.
9.3 Employees. CFI intends to terminate all of its employees (the
"CFI Employees") and CFFI intends to terminate those employees referred to in
Section 7.10 hereof (the "CFFI Employees") as of 12:00 midnight on the Closing
Date. Purchaser intends to offer employment to substantially all of the CFI
Employees and to a majority of the CFFI Employees effective as of the day next
following the Closing Date at the wage and salary levels equal to or greater
than in effect immediately prior to the Closing Date; provided, however,
nothing herein shall affect Purchaser's right to discharge any such employee
at any time for any reason whatsoever.
ARTICLE 10
BROKER
Each party represents and warrants that all negotiations related to this
Agreement have been carried on by the parties without the intervention of any
broker.
ARTICLE 11
NOTICES
All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered or mailed, first class postage prepaid, to Sellers at Sellers'
addresses given in this Agreement, or to Purchaser at Purchaser's address
given in this Agreement, or to any other address that Purchaser or Sellers
shall designate in writing.
ARTICLE 12
EXECUTION OF DOCUMENTS
Purchaser and the Contour Parties mutually agree that each shall take
all steps reasonably necessary to facilitate the purchase and sale
contemplated in this Agreement and to execute any other documents reasonably
necessary to carry out and put into effect the terms of this Agreement,
including, but not limited to, a bill of sale for the purchased Assets, an
instrument of assumption as contemplated by Section 3.2 hereof, an amendment
to the charter of each Seller changing such Seller's corporate name to a name
wholly dissimilar from such name, and a sublease of a portion of CMI's
leasehold interest.
ARTICLE 13
CONDITIONAL TAX CLEARANCE
Immediately after the Closing Date, Sellers shall apply for issuance of
a conditional tax clearance or like document pertaining to sales, use, single
business, income, payroll withholding and unemployment taxes to the extent
applicable and, in that regard, shall prepare all appropriate returns and
reports for submitting the application for issuance of a conditional tax
clearance.
ARTICLE 14
INDEMNIFICATION
14.1 Indemnification of Purchaser. Subject to the limitations
hereinafter set forth, the Contour Parties shall, jointly and severally,
indemnify and save Purchaser and each of its members harmless from, against,
for and in respect of any and all damages, losses, settlement payments,
obligations, liabilities, claims, actions or causes of action, encumbrances
and reasonable costs and expenses suffered, sustained, incurred or required to
be paid by them including, without limitation, reasonable fees and
disbursements of counsel (collectively, the "Damages") suffered, sustained,
incurred or required to be paid by any of them by reason of: (i) the claims of
any broker or finder engaged by Sellers or CMI; (ii) the untruth, inaccuracy
or breach of any representation, warranty, agreement or covenant of any
Contour Party contained in or made in connection with this Agreement that was
not known to Purchaser prior to the date hereof; (iii) the assertion against
Purchaser of any liability or obligation of Sellers' or relating to Sellers'
operations on or prior to the Closing Date, whether absolute or contingent,
matured or unmatured, known or unknown, other than Assumed Liabilities; and
(iv) noncompliance with any applicable bulk sales or similar laws. Purchaser
shall not be entitled to recover any amount for any claims from Sellers or CMI
under this Section 14.1 unless and until the aggregate amount which Purchaser
is entitled to recover in respect of such claims exceeds $25,000.00, and
indemnification shall be made by the indemnifying party hereunder only to the
extent the aggregate amount of such claims exceeds $25,000.00; provided that
the maximum amount recoverable by Purchaser for indemnification claims from
the Contour Parties under this Section 14.1 shall be $1,500,000.00 in the
aggregate.
14.2 Indemnification of Contour Parties. Subject to the limitations
hereinafter set forth, Purchaser shall indemnify and save the Contour Parties
and each of their respective shareholders, subsidiaries, affiliates, officers
and directors harmless from, against, for and in respect of any and all
Damages suffered, sustained, incurred or required to be paid by them by reason
of (i) the claims of any broker or finder engaged by Purchaser; (ii) the
untruth, inaccuracy or breach of any representation, warranty, agreement or
covenant of Purchaser contained in or made pursuant to this Agreement that was
not known to such Contour Party prior to the date hereof; (iii) any event or
occurrence related to the ownership or operation of any of the Assets after
the Closing Date; (iv) liabilities arising in connection with the Assumed
Liabilities. The Contour Parties shall not be entitled to recover any amount
for any claims from Purchaser under this Section 14.2 unless and until the
aggregate amount which the Contour Parties are entitled to recover in respect
of such claims exceeds $25,000.00 and indemnification shall be made by the
indemnifying party hereunder only to the extent the aggregate amount of such
claims exceeds $25,000.00; provided that the maximum amount recoverable by the
Contour Parties for indemnification claims from Purchaser under this Section
14.2 shall be $1,500,000.00 in the aggregate.
14.3 Rules Regarding Indemnification.
A. The obligations and liabilities of each indemnifying party
hereunder with respect to Damages resulting from the assertion of liability by
the indemnified party or third parties shall be subject to the following terms
and conditions:
(i) the indemnified party shall give prompt written
notice to the indemnifying party of any claim that might give rise to a claim
by the indemnified party against the indemnifying party based on the indemnity
agreements contained in Sections 14.1 and 14.2 hereof, stating the nature and
basis of said claims and the amounts thereof, to the extent known; and
(ii) if any action, suit or proceeding is brought
against the indemnified party, with respect to which the indemnifying party
may have liability under the indemnity agreements contained in Sections 14.1
and 14.2 hereof, the action, suit or proceeding shall be defended (including
all
proceedings on appeal or for review that counsel for the indemnified party
shall deem appropriate) by the indemnifying party. The indemnified party
shall have the right to employ its own counsel in any such case, but the fees
and expenses of such counsel shall be at the indemnified party's own expense
unless (A) the employment of such counsel and the payment of such fees and
expenses both shall have been specifically authorized by the indemnifying
party in connection with the defense of such action, suit or proceeding or (B)
such indemnified party shall have reasonably concluded and specifically
notified the indemnifying party that there may be specific defenses available
to it that are different from or additional to those available to the
indemnifying party or that such action, suit or proceeding involves or could
have an effect upon matters beyond the scope of the indemnity agreements
contained in Sections 14.1 and 14.2 hereof, in any of which events the
indemnifying party, to the extent made necessary by such defenses, shall not
have the right to direct the defense of such action, suit or proceeding on
behalf of the indemnified party. In such case only that portion of such fees
and expenses reasonably related to matters covered by the indemnity agreements
contained in Sections 14.1 and 14.2 hereof shall be borne by the indemnifying
party. The indemnified party shall be kept fully informed of such action,
suit or proceeding at all stages thereof whether or not it is so represented.
The indemnifying party shall make available to the indemnified party and its
attorneys and accountants all books and records of the indemnifying party
relating to such proceedings or litigation, and the parties hereto agree to
render to each other such asistance as they may reasonably require of each
other in order to ensure the proper and adequate defense of any such action,
suit or proceeding.
B. An indemnified party's right to indemnification pursuant to
this Article 14 shall be calculated net of any net (giving effect to the
payment of any additional taxes that may be incurred by such party from
treatment of such indemnification payments as taxable income or gain to such
party) tax benefit to such party (utilized by such party against income of
such party in the year that such party deducts such liability, loss, claim,
cost or expense in its income tax returns, regardless of whether such party
receives any tax benefits in any other year by reason of any net operating
loss or other available income tax carryforwards or carrybacks), resulting
from such liability, loss, claim, cost or expense.
C. The indemnified party shall not make any settlement of any
claims without the written consent of the indemnifying party, which consent
shall not be unreasonably withheld or delayed.
D. Except as herein expressly provided, the rights and remedies
provided in this Article 14 are the exclusive rights and remedies of a party
hereunder with respect to the transactions contemplated hereby and shall
preclude the assertion by any party of any other rights or the seeking of any
other rights or remedies against any other party hereto.
E. No party shall have any liability under this Article 14
unless on or before December 31, 1998, the indemnifying party is given written
notice asserting a claim for indemnity hereunder with respect thereto, in
which event the survival period for such claim shall be tolled.
ARTICLE 15
CLOSING
The closing of the transactions contemplated hereby (the "Closing") is
taking place simultaneously with the execution hereof at the offices of Hicks,
Schmidlin & Bancroft, 2300 Austin Parkway, Flint, Michigan commencing at 10:00
a.m., eastern daylight time, on June 27, 1997 or at such other time and/or
place and/or on such other date as the parties may mutually agree (the
"Closing Date").
ARTICLE 16
MISCELLANEOUS
16.1 Amendment. This Agreement shall not be amended, altered or
terminated except by a writing executed by each Party.
16.2 Governing Law. This Agreement shall be governed in all respects
by the laws of the State of Michigan.
16.3 Headings. The paragraph headings used in this Agreement are
included solely for convenience.
16.4 Entire Agreement. This Agreement sets forth the entire
Understanding of the parties; further, this Agreement shall supersede and/or
replace any oral or written Agreement(s) relating to this subject matter
entered into by the parties before the date of this Agreement.
16.5 Waiver. The waiver by any party of any breach or breaches of any
provision of this Agreement shall not operate as or he construed to be a
waiver of any subsequent breach of any provision of this Agreement.
16.6 Binding Effect. This Agreement, inclusive of its terms and
provisions, shall survive the closing and shall be binding on and inure to the
benefit of, and be enforceable by, the respective heirs, legal
representatives, successors and assigns of the parties.
16.7 Dispute Resolution. Except with respect to matters as to which
injunctive relief is being sought, any dispute arising out of or relating to
this Agreement that has not been settled within thirty (30) days by good faith
negotiation between the parties to this Agreement shall be submitted to the
American Arbitration Association for final and binding arbitration pursuant to
AAA's arbitration rules. Any such arbitration shall be conducted in Genessee
County, Michigan.
16.8 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules (including the Contour Disclosure Schedule and Purchaser Disclosure
Schedule) identified in this Agreement are incorporated hereby by reference
and made a part hereof.
IN WITNESS WHEREOF, Purchaser, CMI and Sellers have caused this
Agreement to be executed as of the date first above written by their
respective officers or representatives thereunder duly authorized.
SELLERS:
CONTOUR FABRICATORS, INC.
By: /s/ Donald F. Fox
Its: President
Address: 6025 Shiloh Road
Alpharetta, Georgia 30005
CONTOUR FABRICATORS OF FLORIDA, INC.
By: /s/ Donald F. Fox
Its: President
Address: 6025 Shiloh Road
Alpharetta, Georgia 30005
CONTOUR MEDICAL, INC.
By: /s/ Donald F. Fox
Its: President
Address: 6025 Shiloh Road
Alpharetta, Georgia 30005
PURCHASER:
RAWCAR GROUP, L.L.C.
By: /s/ Richard A. Weaver
Its: President
Address:----------------------------