<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) FEBRUARY 27, 1998
------------------------------
YOUNG INNOVATIONS, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
MISSOURI
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation)
000-23213 43-1718931
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(Commission File Number) (IRS Employer Identification No.)
13705 SHORELINE COURT EAST, EARTH CITY, MISSOURI 63045
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(Address of Principal Executive Offices) (Zip Code)
(314) 344-0010
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(Registrant's Telephone Number, Including Area Code)
N/A
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(Former Name or Former Address, if Changed Since Last Report
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YOUNG INNOVATIONS, INC.
FORM 8-K
ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS
On February 27, 1998, Registrant, through a wholly-owned subsidiary, acquired
the assets and assumed certain liabilities of Panoramic Corporation, an Indiana
corporation ("Panoramic"). The purchase included substantially all of the
assets of Panoramic, which is located in Fort Wayne, Indiana. Registrant's
subsidiary will continue, under the Panoramic name, to operate Panoramic's
business of designing, developing, manufacturing and marketing X-Ray equipment
sold or rented to dental professionals in the United States, Europe and Japan.
Registrant paid approximately $11.0 million in cash plus 62,500 shares of its
common stock and assumed approximately $3.7 million in liabilities, including
approximately $2.5 million of Panoramic's bank debt, which was repaid at
closing. The purchase price was determined by arms length negotiations between
the parties. The purchase price is subject to post-closing adjustments based
on the closing date balance sheet of Panoramic. Funds for the acquisition were
primarily provided by proceeds of the Registrant's initial public offering in
November, 1997.
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired.
At present, it is impractical for the Company to provide required financial
statements for the acquired business, but such financial statements will be
filed by an amendment to this report within 60 days after the required time for
filing for this report.
(b) Pro forma financial information.
At present, it is impractical for the Company to provide required pro forma
financial information relative to the acquired business, but such financial
information will be filed by an amendment to this report within 60 days after
the required time for filing for this report.
(c) Exhibits.
10.9 Asset Purchase and Sale Agreement between the Registrant and
Panoramic dated February 16, 1998.
99. Registrant's Press Release issued February 27, 1998.
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
YOUNG INNOVATIONS, INC.
Date: March 11, 1998
---------------
By: /s/ Michael W. Eggleston
--------------------------------------
Michael W. Eggleston, Vice-President
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EXHIBIT 10.9
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ASSET PURCHASE
AND SALE AGREEMENT
BETWEEN
YOUNG INNOVATIONS, INC.,
AS PURCHASER,
AND
PANORAMIC CORPORATION,
AS SELLER
FEBRUARY 16, 1998
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TABLE OF CONTENTS
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1. SALE AND PURCHASE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.1 Purchased Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(a) ACCOUNTS RECEIVABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(b) NOTES RECEIVABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(c) EMPLOYEE RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(d) INVENTORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(e) PROPERTY, PLANT AND EQUIPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(f) INTANGIBLE ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(a) ASSUMED LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(b) NO OTHER DEBTS, OBLIGATIONS OR LIABILITIES
ASSUMED. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.4 Transfer of the Purchased Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.5 The Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.6 Sales Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2. PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 Total Consideration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Allocation of Consideration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Adjustments to Cash Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(a) BASIS FOR ADJUSTMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(b) PHYSICAL INVENTORY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(c) CLOSING REPORT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(d) OBJECTIONS TO CLOSING REPORT AND PHYSICAL
INVENTORY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4 Payment of Cash Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(a) ESTIMATED CASH PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . . . . . . . 7
(b) PAYMENT TO SELLER AT CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(c) PAYMENT OF HOLD-BACK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.5 Determination and Payment of Stock Purchase Price. . . . . . . . . . . . . . . . . . . . . 8
(a) DETERMINATION OF NUMBER OF PURCHASE SHARES. . . . . . . . . . . . . . . . . . . . 8
(b) DETERMINATION OF MARKET VALUE OF PURCHASE
SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(c) CAP ON NUMBER OF PURCHASE SHARES; OPTIONAL CONVERSION TO
CASH. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(d) DELIVERY TO SELLER AT CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.6 No Registration of Purchaser Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . 8
3. REPRESENTATIONS AND WARRANTIES BY SELLER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.1 Organization, Standing and Qualification. . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Power; Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Execution, Delivery and Performance of Agreements. . . . . . . . . . . . . . . . . . . . . 9
3.4 Ownership of Outstanding Capital Stock; Subsidiaries. . . . . . . . . . . . . . . . . . . 9
3.5 Title to and Sufficiency of Purchased Assets. . . . . . . . . . . . . . . . . . . . . . . 9
3.6 No Third Party Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
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3.7 Assets and Liabilities, Generally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.8 Receivables and Payables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.9 Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.10 Property, Plant and Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.11 Accrued Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.12 Intellectual Property Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.13 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(a) YEAR-END FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . 11
(b) INTERIM FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.14 Books of Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.15 Taxes and Tax Returns and Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.16 [INTENTIONALLY OMITTED]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.17 Absence of Certain Changes or Events. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.18 Compliance with Law; Authorizations. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.19 Transactions with Certain Related Parties. . . . . . . . . . . . . . . . . . . . . . . . . 14
3.20 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.21 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.22 Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.23 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.24 Brokers, Finders, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.25 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.26 Employee Benefit Plans and Arrangements. . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.27 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.28 Business Names and Locations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.29 Copies of Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.30 Completeness of Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4. REPRESENTATIONS AND WARRANTIES BY PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.1 Organization and Standing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.2 Power; Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.3 Execution, Delivery and Performance of Agreements. . . . . . . . . . . . . . . . . . . . . 20
4.4 Brokers, Finders, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.5 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.6 SEC Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5. CONDUCT OF BUSINESS PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.1 Access to Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.2 Interim Operations of Seller. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.3 Schedules; Changes; Corrections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.4 Cooperation in Transaction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.5 Hiring of Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.6 Audited Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6. CONDITIONS PRECEDENT TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
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6.1 Conditions to Purchaser's Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.2 Conditions to Seller's Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.1 Indemnification by Seller. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.2 Indemnification by Purchaser. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.3 Indemnification Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.4 Continued Existence and Viability of Seller. . . . . . . . . . . . . . . . . . . . . . . . 30
(a) MAINTAIN EXISTENCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(b) PERIODIC REPORTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(c) DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(d) ESCROW ARRANGEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8. OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.1 Transfer Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.2 Survival of Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . 31
8.3 Maintenance of Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.4 Confidentiality; Public Announcements. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.5 Notice to Creditors and Customers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.6 Distribution of Purchaser Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.7 Name Change. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.2 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.3 Contents of Agreement, Parties in Interest, Etc. . . . . . . . . . . . . . . . . . . . . . 33
9.4 Assignment and Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.5 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.6 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.7 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.8 No Benefit to Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.9 Headings; Terminology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.10 Schedules and Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.11 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.12 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
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TABLE OF DEFINED TERMS
<TABLE>
<CAPTION>
Defined Term Cross Reference Page
- ------------ --------------- ----
<S> <C> <C>
18 Month Anniversary 7.4(a)(ii) 30
Accounts Payable 1.3(a)(i) 3
Accounts Receivable 1.1(a) 1
Agreement Preamble 1
Assumed Contracts 1.1(f)(iv) 2
Assumed Liabilities 1.3(a) 3
Authorizations 3.18 13
Cash Purchase Price 2.1 5
Closing 1.5 5
Closing Backlog 2.3(a)(ii) 6
Closing Date 1.5 5
Closing Report 2.3(c) 6
Code 2.2 5
Contracts 3.23 15
Deposits 1.1(f)(iv) 2
D&N 6.1(p) 25
Employee Benefit Plan 3.26(a) 17
Employee Receivables 1.1(c) 1
Employee-Related Liabilities 1.3(a)(iii) 3
Employees 3.25(a) 16
Environmental Regulations 3.27(a) 18
Equipment 1.1(e)(ii) 2
ERISA 3.26(a) 18
ERISA Affiliate 3.26(a) 18
Estimated Cash Purchase Price 2.4(a) 7
Excluded Assets 1.2 3
Federal Securities Laws 4.6 21
GAAP 2.3(c) 6
Hazardous Substances 3.27(a) 18
Hired Employees 5.5(a) 23
Indemnitee 7.3(a) 28
Indemnitor 7.3(a) 28
Intangible Assets 1.1(f) 2
Intellectual Property 1.1(f)(i) 2
Interim Balance Sheet Date 3.13(b) 11
Inventory 1.1(d) 1
Liquid Assets 7.4(c) 31
Liquid Net Worth 7.4(c) 31
Loss 7.3(a) 28
Loss Threshold 7.3(f) 29
Net Assets 2.3(a)(i) 5
Notes Receivable 1.1(b) 1
</TABLE>
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<TABLE>
<CAPTION>
Defined Term Cross Reference Page
- ------------ --------------- ----
<S> <C> <C>
Notice of Claim 7.3(b) 28
Paid Claims 7.4(a)(i) 30
Permits 1.1(f)(ii) 2
Permitted Encumbrances 1.4 5
Physical Inventory 2.3(b) 6
Prepaid Expenses 1.1(f)(iv) 2
Property, Plant and Equipment 1.1(e) 1
Purchase Shares 2.5(a) 8
Purchased Assets 1.1 1
Purchaser Preamble 1
Purchaser Common Stock 2.5(a) 8
Purchaser Loss 7.1 27
Real Property 1.1(e)(i) 2
Regulations 3.18 13
SEC 4.6 20
Seller Preamble 1
Seller Loss 7.2 27
Seller Plans 3.26(b) 18
Seller's Knowledge 3.8 10
Stock Purchase Price 2.1 5
Target Backlog 2.3(a)(ii) 6
Target Net Assets 2.3(a)(i) 6
Tax Returns 3.15 12
Taxes 3.15 12
Third Party Claim 7.3(c) 28
Title Commitments 6.1(n) 25
Unresolved Claims 7.4(a)(ii) 30
</TABLE>
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ASSET PURCHASE AND SALE AGREEMENT
This Asset Purchase and Sale Agreement ("Agreement") is entered into as
of the 16th day of February, 1998 between YOUNG INNOVATIONS, INC., a Missouri
corporation having its principal office at 13705 Shoreline Court East, Earth
City, Missouri 63045 ("Purchaser") and PANORAMIC CORPORATION, an Indiana
corporation having its principal place of business at 4321 Goshen Road, Fort
Wayne, Indiana 46818 ("Seller").
WHEREAS, Seller is engaged in the business of manufacturing, buying,
selling and leasing dental x-ray machinery and equipment to dentists, dental
schools and other associated institutions and organizations (the "Business");
and
WHEREAS, Seller desires to sell, transfer and assign to Purchaser, and
Purchaser desires to purchase and acquire from Seller, substantially all of the
assets and business of Seller, upon the terms and subject to the conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, and intending to be legally bound hereby, the parties
hereby agree as follows:
1. SALE AND PURCHASE OF ASSETS
1.1 PURCHASED ASSETS. Upon the terms and subject to the conditions
set forth in this Agreement, Seller will sell, transfer, convey and assign to
Purchaser, and Purchaser will purchase and acquire, at the Closing (which term
and the other capitalized terms used herein are defined in the respective
Sections of this Agreement referenced in the Table of Defined Terms), all of
Seller's right, title and interest in and to substantially all of the assets
used in the ordinary course of business of Seller as of the Closing Date, other
than the Excluded Assets (the "Purchased Assets"), including without limitation
Seller's right, title and interest in and to the following specifically
described Purchased Assets:
(a) ACCOUNTS RECEIVABLE. All customer accounts receivable
(the "Accounts Receivable");
(b) NOTES RECEIVABLE. All notes receivable (the "Notes
Receivable");
(c) EMPLOYEE RECEIVABLES. All advances to and receivables
from Hired Employees (the "Employee Receivables");
(d) INVENTORY. All inventories (the "Inventory"),
including raw materials, work in progress, supplies (including office
supplies), and finished goods, wherever located, goods previously
purchased for the account of and in transit to Seller on the Closing
Date;
(e) PROPERTY, PLANT AND EQUIPMENT. The following tangible
assets (the "Property, Plant and Equipment"):
(i) Real Property. All real property owned by
Seller and used in the ordinary course of business of Seller,
including all land, buildings, fixtures and other improvements
thereon located in Fort Wayne, Indiana, the legal description of
which
<PAGE> 8
is set forth on Schedule 1.1(e)(i), and all rights of Seller
appurtenant thereto (the "Real Property");
(ii) Equipment, etc. The machinery, equipment,
vehicles, furniture and furnishings of Seller, wherever located
(the "Equipment"), including both the machinery, equipment,
vehicles, furniture and furnishings used in the ordinary course
of business of Seller whether reflected on the books of Seller,
fully depreciated or otherwise not reflected on the books of
Seller at the Closing Date, each material item of which is
listed and described on Schedule 1.1(e)(ii) as of the date
hereof; and
(f) INTANGIBLE ASSETS. The following intangible assets of
Seller (the "Intangible Assets"):
(i) Intellectual Property. All transferable
patents, patent applications, trademarks, service marks, trade
or product names, copyrights, including registrations and
applications for registration thereof, if any, patent, software
and technology licenses, as well as the corporate names of
Seller, each material item of which owned by Seller as of the
date hereof is listed and described on Schedule 1.1(f)(i); and
all related common law rights, manufacturing formulations,
processes and recipes, software, know-how and trade secrets of
the business of Seller or associated with the Purchased Assets
(the "Intellectual Property");
(ii) Permits. To the extent their transfer is
permitted by law, all governmental licenses, permits, code and
other approvals (including UL, CSA and U.S. military approvals),
license applications, license amendment applications, and
product registrations used or utilized by or in the business of
Seller as of the date hereof (the "Permits"), all of which are
listed and described on Schedule 1.1(f)(ii) to the extent
material to the business of Seller;
(iii) Lists, Books and Records. All customer lists,
including terms of sale and related records, books, records,
manuals, documentation and other materials relating to the
business of Seller or the Purchased Assets;
(iv) Contract Rights. All rights of Seller, to the
extent transferable, relating to the Purchased Assets, including
rights with respect to prepaid expenses (the "Prepaid
Expenses"), deposits (the "Deposits") and other advances at the
Closing Date pursuant to the following contracts (the "Assumed
Contracts"): (A) all open purchase orders of Seller's customers
relating to the purchase of products; (B) all open supplier
purchase orders issued by Seller to its vendors, suppliers and
providers relating to the purchase of raw materials and supplies
by Seller; (C) all other contracts, leases of personal or real
property and other agreements with any customer, supplier,
distributor, licensor, licensee, union, purchaser, provider or
other persons; and (D) any non-compete and non-disclosure
agreements with Employees; and
(v) Goodwill. All goodwill of Seller.
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1.2 EXCLUDED ASSETS. Notwithstanding anything contained in Section
1.1, Purchaser shall not purchase, and Seller shall not sell to Purchaser the
following described assets and any other assets specifically listed and
described in Schedule 1.2 (the "Excluded Assets"):
(a) any cash, cash equivalents, funds on deposit or
marketable securities;
(b) any records having to do with the corporate
organization of Seller;
(c) any insurance and/or workers' compensation premium
refunds and proceeds from claims arising out of occurrences prior to
Closing;
(d) any pension or other funded employee benefit plan
assets, or any amounts owed to Seller by, or claims by Seller against,
third parties with respect to Excluded Assets or with respect to
liabilities other than Assumed Liabilities (including any right or claim
to refund of any deposits, prepayments, taxes or tax abatements for
which Seller may have a claim);
(e) any of the rights of Seller under this Agreement or
under any agreement executed in connection herewith; and
(f) any income, franchise, sales, use or other tax refunds.
1.3 LIABILITIES.
(a) ASSUMED LIABILITIES. Effective as of the Closing Date,
Purchaser shall assume and hereby agrees to pay or otherwise discharge
only the following liabilities and obligations of Seller (the "Assumed
Liabilities"):
(i) Accounts Payable; Other Current and Accrued
Liabilities. Accounts payable and any other current and accrued
liabilities incurred by Seller ("Accounts Payable"), if and only
to the extent they are either (x) incurred prior to Closing in
the ordinary course of business or (y) reflected on the Closing
Report;
(ii) Long-Term Debt. The current and non-current
portions of the long-term debt set forth and described as of
December 31, 1997 on Schedule 1.3(a)(ii), which shall, at the
Closing, not exceed Two Million Six Hundred Seventy One Thousand
Three Hundred Seventy Seven Dollars ($2,671,377) in the
aggregate, and all liens related thereto;
(iii) Employee-Related Liabilities. All obligations
and liabilities of Seller at the Closing Date to Hired Employees
for accrued salaries, wages and vacation (the "Employee-Related
Liabilities") as reflected on the Closing Report;
(iv) Assumed Contracts. All obligations of Seller
requiring payment or performance after Closing under the Assumed
Contracts;
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(v) Real Estate and Personal Property Liabilities.
Any liability for real property taxes, utilities and similar
items with respect to the Real Property and for personal
property taxes to the extent reflected as accrued expenses on
the Closing Report;
(vi) Warranty Obligations. Warranty obligations
(i.e. to repair, replace or refund) arising prior to Closing in
the ordinary course of the conduct of the business of the
Seller;
(vii) Certain Other Liabilities to Hired Employees.
Liabilities expressly assumed by Purchaser under Section 5.5;
(viii) Other Specified Liabilities. Such other
liabilities, if any, as Purchaser may hereafter expressly agree
in writing to assume; and
(ix) Products Liability Claims. Products liability
claims relating to occurrences after the Closing Date with
respect to any products, inventory or equipment sold or leased
by Seller's Business whether before or after the Closing Date.
(b) NO OTHER DEBTS, OBLIGATIONS OR LIABILITIES ASSUMED.
Except as expressly set forth in Section 1.3(a) above, Purchaser does
not assume and shall not be liable for any of the debts, obligations or
liabilities of Seller whatsoever, including, without limitation: (i)
any liabilities of Seller which have arisen from Seller's defaults under
leases, contracts or other obligations not reflected on the Closing
Report; (ii) any income tax liabilities of Seller; (iii) any sales tax
or other tax liabilities of Seller (other than for real and personal
property taxes described in Section 1.3(a)(v) above) payable for periods
prior to Closing and not reflected as accrued expenses on the Closing
Report; (iv) any liability of Seller for the unpaid taxes of any person
other than Seller, as a transferee or successor, by contract or
otherwise; (v) any unemployment, payroll or withholding tax payable with
respect to employees for any period through the Closing Date; or (vi)
any liability for contributions or otherwise pursuant to any Employee
Benefit Plan not reflected on the Closing Report.
1.4 TRANSFER OF THE PURCHASED ASSETS. Subject to the terms and
conditions hereof, at the Closing the Purchased Assets shall be transferred or
otherwise conveyed to Purchaser by bills of sale, assignments, deeds or other
appropriate instruments of conveyance or assignment, free and clear of all
mortgages, liens, pledges, security interests, charges, claims, liabilities,
restrictions and encumbrances whatsoever, other than (i) the Assumed
Liabilities, (ii) statutory liens for current real or personal property taxes
not yet due and payable, (iii) statutory worker's, carrier's and materialman's
and other similar liens that are immaterial in character, amount, and extent,
and which do not detract from the value or interfere with the present or
proposed use of the properties they affect, (iv) in the case of the Real
Property, the exceptions shown on "Schedule B" to the Title Commitments
(hereafter defined), (v) the liens listed on Schedule 3.5, and (vi) consents of
third parties required to transfer any Assumed Contracts (the "Permitted
Encumbrances").
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1.5 THE CLOSING. The sale and purchase of assets herein described
shall take place at a closing (the "Closing") which shall be held at the
offices of Purchaser's counsel, Armstrong, Teasdale, Schlafly & Davis, One
Metropolitan Square, Suite 2600, St. Louis, Missouri 63102 at 9:00 a.m. on
February 27, 1998, or such date as may be agreed upon by Seller and Purchaser
by which all conditions to the Closing shall have been satisfied or waived (the
"Closing Date"). Unless otherwise expressly provided in this Agreement, all
balance sheet and other financial calculations herein shall be made as of the
close of business on the Closing Date. At the Closing, Seller shall deliver to
Purchaser such documents as Purchaser may reasonably request to evidence
compliance with Section 1.4, and shall take such other steps as may be
reasonably required to put Purchaser in actual possession and operating control
of the Purchased Assets.
1.6 SALES TAXES. The party upon which the law imposes the
obligation shall pay directly, or reimburse the other party promptly upon
demand and delivery of proof of payment, all sums required to be paid to any
state or local taxing jurisdiction as sales tax on account of the consummation
of the transactions contemplated hereby.
2. PURCHASE PRICE
2.1 TOTAL CONSIDERATION. The total consideration for the Purchased
Assets and the Non-Competition Agreements shall be Eleven Million Dollars
($11,000,000.00) (the "Cash Purchase Price") plus a number of shares of common
stock of Purchaser as determined in accordance with Section 2.5 (the "Stock
Purchase Price") plus the amount of the Assumed Liabilities. The Cash Purchase
Price shall be subject to adjustment as provided in Section 2.3.
2.2 ALLOCATION OF CONSIDERATION. The Cash Purchase Price and the
value of the Stock Purchase Price as of the Closing Date shall be allocated
among the Purchased Assets and to the Non-Competition Agreements in accordance
with the applicable sections of the Internal Revenue Code of 1986, as amended
(the "Code") and the parties will endeavor to reach agreement as to such
allocation within sicty (60) days after Closing. Seller and Purchaser agree to
make all appropriate tax filings on a basis consistent with the agreed
allocation, to provide a draft of any required information return to the other
party, if requested, at least ten days prior to filing any such return, and not
to take a position on any return or in any proceeding before any court or
governmental agency that is inconsistent with the terms of the agreed
allocation.
2.3 ADJUSTMENTS TO CASH PURCHASE PRICE.
(a) BASIS FOR ADJUSTMENT. The Cash Purchase Price shall
adjusted according to the following procedures:
(i) In the event that the amount of the Purchased
Assets, as shown on the Closing Report, less the amount of the
Assumed Liabilities, as shown on the Closing Report (such
difference being the "Net Assets"), is less than Two Million
Three Hundred Thirty Four Thousand Eighteen Dollars ($2,334,018)
(the "Target Net Assets"), the Cash Purchase Price shall be
decreased by the same amount.
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(ii) In the event that the Net Assets is greater
than the Target Net Assets and the dollar amount of the backlog
of Seller's customer orders as shown on the Closing Report (the
"Closing Backlog") is greater than or equal to eighty eight (88)
units and Seven Hundred Eighty Five Thousand Dollars ($785,000)
(the "Target Backlog"), the Cash Purchase Price shall be
increased by the same amount as the difference between the Net
Assets and the Target Net Assets.
(iii) In the event that the Net Assets is greater
than the Target Net Assets and the Closing Backlog is less than
the Target Backlog, the Cash Purchase Price shall be increased
by the positive difference, if any of (a) the excess of the Net
Assets over the Target Net Assets, minus (b) the excess of the
Target Backlog over the Closing Backlog.
(b) PHYSICAL INVENTORY. During the two days immediately
after the Closing Date, representatives of Purchaser shall perform an
actual physical inventory count and valuation of each item of Inventory
(the "Physical Inventory"), for the purpose of establishing the
valuation of Inventory to be used in the calculation of Net Assets,
which valuation shall be determined as provided in Section 2.3(c).
Representatives of Seller shall be allowed to attend the Physical
Inventory and participate in verifying and reviewing the count and
valuation of all items. Each party shall bear its own expenses incurred
in connection with the Physical Inventory.
(c) CLOSING REPORT. As promptly as practicable following
the completion of the Physical Inventory and not more than the later of
30 days following the Closing Date or 30 days following Seller's receipt
of its audited financial statements for the fiscal year ended December
31, 1997, Seller shall provide Purchaser with a written report (the
"Closing Report") reflecting, based upon the completed audit for
Seller's fiscal year ended December 31, 1997, together with adjustments
for the period ending on the Closing Date, the final list and valuation
of Purchased Assets and the final list of Assumed Liabilities, including
all prorations, and the resulting calculation of Net Assets, together
with supporting detail and other documentation including details of
receivables and payables, together with a final list and valuation of
customer backlog, determined in accordance with Seller's historic
methods of determining such customer backlog, as of the Closing date,
together with supporting detail and other documentation; and Seller
shall promptly provide Purchaser with such additional supporting
information available to Seller as Purchaser may from time to time
thereafter request. Net Assets shall be calculated in the same manner
as the calculation reflected in Exhibit A, but using appropriate line
items and valuations determined pursuant to Article I and this Section
2.3. To the extent not expressly provided for in this Agreement, the
composition of the line items, and all amounts, including, without
limitation, the valuation of inventory, on the Closing Report shall be
determined on a basis consistent with Exhibit A and in accordance with
generally accepted accounting principles consistently applied over all
relevant periods ("GAAP").
(d) OBJECTIONS TO CLOSING REPORT AND PHYSICAL INVENTORY.
Purchaser and Seller shall each review the Closing Report and Physical
Inventory, and shall cooperate with each other in endeavoring to respond
to any questions and resolve any disputes about the contents
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and accuracy of the Closing Report and Physical Inventory. In the event
that there are items in dispute between Purchaser and Seller so that the
parties cannot agree as to the Closing Report or Physical Inventory
within 90 days after the Closing Date, the disputed matters shall be
submitted to the independent public accounting firm of Deloitte & Touche
LLP, Chicago, Illinois, as experts in accounting, or such other
accounting firm as the parties may agree upon, and the good faith
decision of such firm, which shall be made within 120 days after the
Closing Date, shall be final and binding on all parties and
non-appealable. Each party shall bear its own expenses incurred in
connection with preparation and examination of the Closing Report and
Physical Inventory. The cost of the engagement of such accounting firm
under this section shall be borne equally by the parties.
2.4 PAYMENT OF CASH PURCHASE PRICE.
(a) ESTIMATED CASH PURCHASE PRICE. Shown on Exhibit A is
Seller's best estimate of the amount which would be the Net Assets if
the Closing had occurred on January 31, 1998, based on the information
reasonably available to Seller at the time of such estimated
calculation, and Seller has provided Purchaser with a written report
reflecting such estimated calculation, together with supporting
documentation, and the resulting estimated Cash Purchase Price (the
"Estimated Cash Purchase Price").
(b) PAYMENT TO SELLER AT CLOSING. At the Closing,
Purchaser shall pay to Seller, by wire transfer to an account designated
by Seller at least twenty-four (24) hours before the Closing Date, an
amount equal the Estimated Cash Purchase Price, less an amount equal to
Fifty Thousand Dollars ($50,000) which Purchaser may temporarily hold
back from the Purchase Price until payable pursuant to Section 2.4(c).
(c) PAYMENT OF HOLD-BACK. Upon the later to occur of 90
days after the Closing Date or three business days following the date
the Closing Report becomes final pursuant to Section 2.3(d) resulting in
the final calculation of any adjustments to the Cash Purchase Price,
Purchaser shall pay to Seller, by wire transfer to an account designated
by Seller at least twenty-four (24) hours previously, the remaining
balance of the final, adjusted Cash Purchase Price (including the
$50,000 holdback). In the event that the calculation of the final,
adjusted Cash Purchase Price results in a credit due to Purchaser (after
giving effect to the $50,000 holdback), Seller shall repay such excess
to Purchaser within the same time period. In the event of a dispute
between the parties with respect to the amount of the adjusted Cash
Purchase Price, the amount not in dispute, if any, shall be paid to the
appropriate party pending resolution of the disputed amount. Any
payment made pursuant to this Section 2.4(c) shall be accompanied by
interest from the Closing Date until the date of payment at a rate per
annum equal to the lower of (i) the rate of interest publicly announced
by the Wall Street Journal as the "Prime Rate" as of the Closing Date,
or (ii) the maximum rate of interest allowable under applicable law.
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2.5 DETERMINATION AND PAYMENT OF STOCK PURCHASE PRICE.
(a) DETERMINATION OF NUMBER OF PURCHASE SHARES. The Stock
Purchase Price to be paid and issued to Seller will be determined to be
that number of shares of common stock, par value $.01 per share of
Purchaser ("Purchaser Common Stock"), having an aggregate Market Value,
determined as provided in Section 2.5(b) of One Million Dollars
($1,000,000.00), or such other number of shares of Purchaser Common
Stock as is provided in Section 2.5(c), if applicable (the "Purchase
Shares").
(b) DETERMINATION OF MARKET VALUE OF PURCHASE SHARES. The
Market Value of the Purchaser Common Stock shall be the average closing
price per share of the Purchaser Common Stock during the ten trading
days ending on the earlier of: (i) the third business day preceding the
Closing Date or (ii) the business day immediately preceding the day on
which a public announcement of the transaction contemplated herein is
made by either party.
(c) CAP ON NUMBER OF PURCHASE SHARES; OPTIONAL CONVERSION
TO CASH. If the number of shares determined under Section 2.5(a) shall
be more than Seventy One Thousand Four Hundred Twenty Eight (71,428),
the Stock Purchase Price shall be equal to Seventy One Thousand Four
Hundred Twenty Eight (71,428) shares. In the event that the Stock
Purchase Price shall be equal to Seventy One Thousand Four Hundred
Twenty Eight (71,428) shares pursuant to this section, Seller shall have
the option, exercisable by written notice to Purchaser given not less
than 48 hours prior to Closing, to increase the Cash Purchase Price by
$1,000,000 payable at Closing in lieu of receipt of the Stock Purchase
Price.
(d) DELIVERY TO SELLER AT CLOSING. At the Closing,
Purchaser shall deliver to Seller, the Purchase Shares, free and clear
of any liens, claims and encumbrances other than those imposed by
applicable law. The number of shares of Purchaser Common Stock
determined under this Section 2.5 shall be subject to equitable
adjustment in the event of any stock split, stock dividend, reverse
stock split or other similar change in the number of shares of Purchaser
Common Stock outstanding prior to Closing.
2.6 NO REGISTRATION OF PURCHASER COMMON STOCK. The Purchaser Common
Stock issued hereunder shall be unregistered, restricted securities, shall bear
appropriate legends summarizing the restrictions on transfer and may be resold
only in a registered transaction or under Rule 144 under the 1933 Act or
pursuant to another exemption from applicable registration requirements.
3. REPRESENTATIONS AND WARRANTIES BY SELLER.
Seller represents and warrants to Purchaser as follows:
3.1 ORGANIZATION, STANDING AND QUALIFICATION. Seller is a
corporation duly organized, validly existing and in good standing under the
laws of Indiana and is duly qualified and in good standing under the laws of
the states shown on Schedule 3.1, and in every other jurisdiction in which
qualification is required, except where failure to be so qualified would not
have a material adverse effect on the business, assets or financial condition
of the Seller.
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3.2 POWER; AUTHORIZATION. Seller has full corporate power and
authority to enter into this Agreement, to carry out the transactions
contemplated by this Agreement, to carry on the Business as now being
conducted, and to own, lease or operate its properties. The execution,
delivery and performance of this Agreement by Seller has been authorized by all
necessary corporate action on the part of Seller, including the consent or
approval by Seller's shareholders to this Agreement and the transactions
contemplated hereby.
3.3 EXECUTION, DELIVERY AND PERFORMANCE OF AGREEMENTS. This
Agreement has been duly executed and delivered by Seller and constitutes its
legal, valid and binding obligation, enforceable against it in accordance with
its terms. The execution, delivery and performance of this Agreement by Seller
will not, with or without the giving of notice or the passage of time, or both,
violate, conflict with or result in a breach of any term, condition or
provision of, or require the consent of any other person under, (i) the
certificate of incorporation or bylaws of Seller, (ii) any license, law, rule,
regulation, order, judgment or decree applicable to Seller, or (iii) any
mortgage, indenture, deed of trust, security agreement, lease or other contract
by which Seller or any of the Purchased Assets may be bound or affected, or
give any person with rights thereunder the right to terminate, modify,
accelerate or otherwise change the existing rights or obligations of Seller
thereunder, other than the agreements relating to the long-term debt described
on Schedule 1.3(a)(ii). No authorization, consent, order, permit, approval,
notice, filing, registration or qualification to, from or with any governmental
authority or entity, domestic or foreign, is or has been or will be required on
the part of Seller in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
3.4 OWNERSHIP OF OUTSTANDING CAPITAL STOCK; SUBSIDIARIES. The
shareholders identified on Schedule 3.4 collectively own or have the right to
purchase, beneficially and of record, all of the issued and outstanding capital
stock of Seller as shown on such Schedule. Except for Excluded Assets, Seller
does not own beneficially or of record, either directly or indirectly, any
interest or investment (whether debt or equity) in any corporation,
partnership, joint venture, business, trust or other entity.
3.5 TITLE TO AND SUFFICIENCY OF PURCHASED ASSETS. Seller has good
title to all of the Purchased Assets, which constitute all of the assets and
interests in assets (other than the Excluded Assets) that are necessary to
operate the Business of Seller. All Purchased Assets are free and clear of all
mortgages, liens, pledges, security interests, charges, claims, restrictions
and other encumbrances and defects of title of any nature whatsoever, except
for the Permitted Encumbrances and those to be released prior to Closing and
those disclosed on Schedule 3.5. No person other than Seller owns any
equipment or other tangible assets or properties situated on the Seller's
premises or necessary to the Business except for assets disclosed on Schedule
3.5 hereto.
3.6 NO THIRD PARTY OPTIONS. There are no existing agreements,
options, commitments or rights with, of or to any person to acquire any of the
Purchased Assets or any interest therein or any of the Business except for
Permitted Exceptions and the rights of customers under contracts entered into
in the ordinary course of business consistent with past practice for the sale
of finished goods inventory of Seller.
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3.7 ASSETS AND LIABILITIES, GENERALLY. Each amount in the Closing
Report will be fairly presented and calculated according to GAAP and in a
manner consistent with the amounts presented in Exhibit A. Except as otherwise
disclosed in the Schedules to this Agreement, Exhibit A does not reflect, and
the Closing Report will not reflect, any current transaction or outstanding
obligation between the Seller and any other officer, director, shareholder or
affiliate of Seller.
3.8 RECEIVABLES AND PAYABLES. Schedule 3.8 correctly sets forth, as
of December 31, 1997, all Accounts Receivable, Notes Receivable and Employee
Receivables by debtor, due date or aging, and dollar amount. The Accounts
Receivable, Notes Receivable and Employee Receivables are valid and genuine;
have arisen solely out of bona fide sales and deliveries of goods, advances or
loans, performance of services or other business transactions in the ordinary
course of the business of Seller consistent with Seller's past practice, and,
to the best actual knowledge of Eric Stetzel and/or Neil Miller ("Seller's
Knowledge"), are not subject to any defenses, set-offs or counterclaims except
as set forth on Schedule 3.8. The Allowance for Bad Debts set forth on the
Interim Balance Sheet is calculated in accordance with GAAP and in light of the
past practice and experience of Seller. There are no open purchase orders
other than those entered into in the ordinary course of the business of Seller.
3.9 INVENTORY. All Inventory was acquired and has been maintained
in the ordinary course of the Business of Seller, and is not adulterated,
misbranded, mispackaged or mislabeled within the meaning of, or in violation
of, any applicable local, state or Federal laws or regulations. Subject to the
Obsolescence Reserve reflected on the Interim Balance Sheet, all amounts of
Inventory reflected on the Interim Balance Sheet represent bona fide
inventories of the Seller on hand at December 31, 1997, Inventory consisting of
x-ray machines are valued thereon at the specific identified cost and all other
Inventory is valued thereon at the lower of average cost or market value, which
is consistent with Seller's past practices as historically applied. All
amounts of Inventory reflected on the Closing Report, subject to the
Obsolescence Reserve, will represent bona fide inventories of the Seller on
hand at the Closing Date and will be valued thereon as set forth in the
preceding sentence.
3.10 PROPERTY, PLANT AND EQUIPMENT. Schedule 1.1(e)(i) together with
Schedule 1.1(e)(ii) set forth the description and the location of each material
item of Property, Plant and Equipment, and Schedule 3.22 sets forth an
identification of each material lease of Property, Plant and Equipment under
which Seller is either a lessee or lessor, copies of which have been made
available to Purchaser, each as of the date hereof. With respect to the
foregoing, except as disclosed on Schedule 3.22:
(a) Each of the described leases is in full force and
effect and is a valid and binding obligation of Seller and each of the
other parties thereto;
(b) Neither Seller nor, to Seller's Knowledge, any other
party is in default with respect to any material term or condition of
any lease, and no event has occurred which through the passage of time
or the giving of notice, or both, would constitute a default thereunder
or would cause the acceleration of any obligation of any party thereto
or the creation of a lien or encumbrance upon any asset of Seller; and
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(c) Each item of Property, Plant and Equipment that is used
in the current conduct of the Business of the Seller is in good
operating condition and repair and is fit for its intended purpose,
ordinary wear and tear excepted.
Seller has delivered to Purchaser true and complete copies of the most recent
title insurance policies and surveys available to Seller relating to the
Seller's real property.
3.11 ACCRUED EXPENSES. Schedule 3.11 correctly and completely sets
forth all employee vacation accruals, real estate, personal property, sales,
use and other taxes (other than income taxes), utilities and similar items, by
item and dollar amount, with respect to which Seller is obligated or liable as
of December 31, 1997.
3.12 INTELLECTUAL PROPERTY MATTERS. Seller in the conduct of the
Business of the Seller does not utilize or otherwise have any material rights
in any patent (including patent applications), copyright, software, trade
secret or know-how except for the Intellectual Property, and Seller does not
infringe upon or unlawfully or wrongfully use any patent, trademark, trade
name, service mark, copyright or trade secret owned or, to Seller's Knowledge,
claimed by another. Seller is not in default under any agreement related to
Intellectual Property, and has not received any notice of any claim of
infringement or any other claim or proceeding relating to any Intellectual
Property. Schedule 3.12 lists all material confidentiality or non-disclosure
agreements which relate to the Seller and the Business as of the date hereof.
Seller has not granted any licenses or other rights to any of the Intellectual
Property. Except as set forth on Schedule 3.12, Seller has not made any claim
of any violation or infringement by others of its rights to the Intellectual
Property and is not aware of any basis for the making of any such claim.
3.13 FINANCIAL STATEMENTS.
(a) YEAR-END FINANCIAL STATEMENTS. Seller has delivered to
Purchaser true and complete copies of the audited balance sheets of the
Seller at December 31, 1996 and 1995 and the related audited statements
of income, stockholders equity and cash flows for the fiscal years then
ended, all of which have been prepared in accordance with GAAP. Such
balance sheets, including the related notes, fairly present in all
material respects the financial position of the Seller at the dates
indicated, and such statements of income, stockholder's equity and cash
flows fairly present in all material respects the results of operations,
changes in stockholder's equity and cash flows of the Seller for the
periods indicated, in conformity with GAAP.
(b) INTERIM FINANCIAL STATEMENTS. Attached hereto as
Schedule 3.13(b) is a true and complete copy of the unaudited balance
sheet of Seller at December 31, 1997 (the "Interim Balance Sheet Date")
and the unaudited income statement of Seller for the year then ended,
which have been prepared in accordance with GAAP, subject to adjustments
and accruals which will not have a material effect on such balance sheet
and income statement. Such balance sheet fairly presents in all
material respects the financial position of the Seller at December 31,
1997, and such statement of income fairly presents in all material
respects the results of operations for the period ended December 31,
1997, in conformity with GAAP,
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subject to adjustments and accruals which will not have a material
effect on such balance sheet and income statement.
3.14 BOOKS OF ACCOUNT. The books, records and accounts of Seller
accurately and fairly reflect, consistent with Seller's historical practice
consistently applied, all transactions and assets and liabilities of Seller.
Seller has not engaged in any transaction or used any of the funds of Seller in
the conduct of the Business except for transactions and funds which have been
and are reflected in the normally maintained books and records of Seller.
3.15 TAXES AND TAX RETURNS AND REPORTS. All returns, reports,
statements and other similar filings required to be filed by Seller with
respect to any periods prior to Closing ("Tax Returns") with respect to any
material Federal, state, local or foreign taxes, assessments, interest,
penalties, deficiencies, fees and other governmental charges or impositions
(including without limitation all income, unemployment compensation, social
security, payroll, withholding, sales and use, excise, privilege, property, ad
valorem, franchise, license, school and any other tax or similar governmental
charge or imposition under laws of the United States or any state or municipal
or political subdivision thereof or any foreign country or political
subdivision thereof) ("Taxes") have been filed or will be filed, when due, with
the appropriate governmental agencies in all jurisdictions in which such Tax
Returns are required to be filed, and all such Tax Returns properly reflect in
all material respects the liabilities of Seller for Taxes for the periods,
property or events covered thereby. Schedule 3.15 lists all states in which
Seller has leased property but has not paid or filed returns with respect to
sale and use taxes, income or franchise taxes and personal property taxes. All
Taxes, including without limitation those which are called for by the Tax
Returns or heretofore or hereafter claimed to be due by any taxing authority
from Seller, have been properly accrued or paid. Seller has not received any
notice of assessment or proposed assessment in connection with any Tax Returns
and there are no pending tax examinations of or tax claims asserted against
Seller or any of its assets or properties. Seller has not extended, or waived
the application of, any statute of limitations of any jurisdiction regarding
the assessment or collection of any Taxes. There are no Tax liens (other than
any lien for current Taxes not yet due and payable) or security interests for
taxes on any of the assets or properties of Seller. Except for the possible
reassessment of the Real Property and as noted on Schedule 3.15, Seller has no
knowledge of any basis for any additional assessment of Taxes. Seller has made
all deposits required by law to be made with respect to employees' withholding
and other employment taxes, including without limitation the portion of such
deposits relating to Taxes imposed upon Seller, and has paid all amounts when
due.
3.16 [INTENTIONALLY OMITTED].
3.17 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the Interim Balance
Sheet Date, except as disclosed on Schedule 3.17, Seller has not:
(a) Sold, encumbered, assigned or transferred any assets or
properties which would have been included in the Purchased Assets if the
Closing had been held on the Interim Balance Sheet Date or on any date
since then, except for the sale of inventory and other assets in the
ordinary course of business consistent with past practice;
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(b) Made or suffered any amendment or termination of any
material agreement, contract, commitment, lease or plan to which it is a
party or by which it is bound except for termination of rental
agreements in the ordinary course of Seller's business;
(c) Suffered any damage, destruction or loss, whether or
not covered by insurance, with regard to any item or items carried on
its books of account individually or in the aggregate at more than
$25,000; or suffered any repeated, recurring or prolonged shortage,
cessation or interruption of material supplies or utilities or other
material services required to conduct its business and operations;
(d) Received notice or had knowledge of any actual or
threatened labor trouble, strike or other occurrence, event or condition
of any similar character which has had or could reasonably be expected
to have an adverse effect on the business, operations, assets,
properties or prospects of Seller;
(e) Made any material change in its customary operating
methods (including its purchasing, marketing, selling and pricing
practices and policies);
(f) Made commitments or agreements for capital expenditures
or capital additions or betterments not listed on Exhibit B except such
as may be involved in ordinary repair, maintenance or replacement of its
assets not exceeding $25,000 in the aggregate;
(g) Increased the salaries or other compensation of, or
made any advance (excluding advances for ordinary and necessary business
expenses) or loan to, any of its employees or made any increase in, or
any addition to, other benefits to which any of its employees may be
entitled;
(h) Changed any of the accounting principles followed by it
or the methods of applying such principles, or revalued any of its
assets;
(i) Entered into any transaction relating to the Business
or the Purchased Assets other than in the ordinary course of business
consistent with past practice; or
(j) Agreed, whether in writing or otherwise, to take any of
the actions set forth in this Section 3.17.
3.18 COMPLIANCE WITH LAW; AUTHORIZATIONS. Except as set forth on
Schedule 3.18, Seller has complied in all material respects with each, and is
not in violation in any material respect of any, law, ordinance, or
governmental or regulatory rule or regulation, whether Federal, state, local or
foreign, to which the business, operations, assets or properties of Seller is
subject ("Regulations"). Seller owns, holds, possesses or lawfully uses in the
operation of the Business, all material franchises, licenses, permits,
easements, rights, applications, filings, registrations and other
authorizations ("Authorizations") which are necessary for it to conduct the
Business as now conducted or necessary for the ownership and use of the assets
owned or used by Seller in the conduct of the Business, free and clear of all
liens, charges, restrictions and encumbrances and in compliance in all material
respects with all Regulations. All such Authorizations held by Seller as
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of the date hereof are listed and described on Schedule 3.18. Seller is not in
default, nor has it received any notice of any claim of default, with respect
to any such Authorization or under any Regulation.
3.19 TRANSACTIONS WITH CERTAIN RELATED PARTIES. No director or
executive officer of Seller, no employee of Seller with current annual
compensation in excess of $50,000, and, except as described on Schedule 3.19,
no member of the immediate family of any such director, executive officer or
employee, has a controlling interest (direct or indirect) in any corporation or
other entity that is or was during the last three years a party to, or in any
property which is or was during the last three years the subject of, any
contract, agreement, understanding, business arrangement or relationship with
Seller involving payment from or to Seller in excess of $5,000 in the
aggregate.
3.20 LITIGATION. Except as set forth on Schedule 3.20, no
litigation, arbitration, investigation or other proceeding of or before any
court, arbitrator or governmental or regulatory official, body or authority is
pending or, to Seller's Knowledge, threatened by or against Seller or the
transactions contemplated by this Agreement, nor does Seller know of any
reasonably likely basis for any such litigation, arbitration, investigation or
proceeding, the result of which could have a material adverse affect on the
Business or the Purchased Assets or the transactions contemplated hereby.
Seller is not a party to or subject to the provisions of any judgment, order,
writ, injunction, decree or award of any court, arbitrator or governmental or
regulatory official, body or authority which may have a material adverse affect
on Seller, the Purchased Assets or the transactions contemplated hereby.
3.21 INSURANCE. Seller carries insurance with respect to the
Business and the Purchased Assets. Such policies are in full force and effect
on the date hereof, and Seller has not received notice of cancellation with
respect to any such policy. Seller has not received notice or other
communication of any outstanding requirements or recommendations by any
insurance company that issued any such policy, or by any Board of Fire
Underwriters or other similar body exercising similar functions or by any
governmental authority exercising similar functions which for continuance of
insurance mandates any changes in the conduct of Seller's business, or any
repairs or other work to be done on or with respect to any of the properties or
assets of Seller. Seller has not received any notice or other communication
from any insurance company within the three (3) years preceding the date hereof
cancelling or materially amending any insurance policies, and to Seller;s
Knowledge, no such cancellation, amendment or increase of premiums is
threatened with respect to the policies currently in effect. Schedule 3.21
contains a complete and correct list of Seller's insurance policies as in
effect on the date of this Agreement, together with its insurance loss
experience for the three (3) year period preceding the date hereof, other than
group insurance for employees of Seller.
3.22 LEASES. Schedule 3.22 contains a complete and correct list, as
of the date hereof, of all material leases and other agreements pursuant to
which Seller leases (or has purchased subject to a conditional sales or title
retention agreement) from others any property, and all material leases and
other agreements pursuant to which Seller leases (or has sold subject to any
conditional sales or other title retention agreement) to others any property
together with a description of the property to which each such lease,
conditional sales or other title retention agreement relates.
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3.23 CONTRACTS. Schedule 3.23, together with Schedule 3.12, Schedule
3.22 and Schedule 3.25(d) contains a complete and correct list of all material
agreements, contracts and commitments (collectively, the "Contracts") of the
following types, whether written or oral, to which any of the Purchased Assets
are subject, or to which Seller is a party or is bound as of the date hereof:
(a) Mortgages, indentures, deeds of trust, security
agreements and other agreements and instruments relating to the
borrowing of money by, or any extension of credit to, Seller;
(b) Sales agency, manufacturer's representative,
distributorship, employment or marketing agreements;
(c) Licenses to or from others of any Intellectual Property
or Licenses;
(d) Contracts or commitments to sell, lease or otherwise
dispose of any of the Purchased Assets other than at market rates or
other than in the ordinary course of business;
(e) Contracts or commitments limiting the freedom of Seller
to compete in any line of business or in any geographic area or with any
person;
(f) Employment, non-disclosure, confidentiality or
intellectual property ownership or transfer agreements with any
employees; and
(g) Contracts or commitments with Seller's customers or
suppliers outside of the ordinary course of business.
For purposes of this Agreement, without excluding other agreements, contracts
and commitments which may be material, any contract which may be not cancelled
by Seller without penalty upon the giving of not more than 30 days notice or
any contract which involves an annual aggregate dollar amount greater than Ten
Thousand Dollars ($10,000) is deemed to be material; provided, however, that
all contracts pursuant to which Seller leases, rents or otherwise loans dental
x-ray machinery or equipment to others shall be deemed material without regard
to dollar amount or termination rights of any party. Seller has delivered to
Purchaser complete and correct copies of all material written Contracts.
Schedules 3.22 and 3.23 sets forth an accurate description of all material oral
Contracts to which Seller is a party as of the date hereof. With respect to
each Contract and the Assumed Contracts, except as disclosed in Schedules 3.22
or 3.23, (i) each contract is in full force and effect, (ii) there is no
default or event that with notice or lapse of time, or both, would constitute a
default by Seller to any of such contracts, (iii) to Seller's Knowledge, there
is no default or event that with notice or lapse of time, or both, would
constitute a default by any other party to any of such contracts, and (iv)
Seller has not received written notice that any party to any of such contracts
intends to cancel or terminate any of such contracts or to exercise, or not
exercise, any options under any of such contracts except for cancellations by
Seller's customers or Seller of lease agreements for equipment received in the
ordinary course of business, consistent with past practice.
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3.24 BROKERS, FINDERS, ETC. Except for the services of William Blair
& Company which shall be paid by Seller, all negotiations relating to this
Agreement and the transactions contemplated hereby have been carried on without
the intervention of any other person acting on behalf of Seller in such manner
as to give rise to any claim against Purchaser for any brokerage or finders'
commission, fee or similar compensation.
3.25 EMPLOYEES.
(a) Schedule 3.25(a) sets forth a true and complete list of
the name, title, current location and base salary or hourly rate of
every employee of Seller including employees on personal, military,
family, educational or medical leave, employees receiving sickness
disability benefits or occupational, illness and injury benefits, and
employees on long-term disability ("Employees") as of the date hereof,
together with a statement of the basis, amount and nature of any other
remuneration, whether in cash or kind, paid to each such Employee during
the current fiscal year or accrued for or payable to each such Employee
in the future, and the basis for accrual and amount of all vacation and
severance benefits to which each such Employee was entitled as of the
date hereof.
(b) Except as set forth on Schedule 3.25(b):
(i) Seller is not a party to or bound by any
employment agreement or any collective bargaining agreement with
respect to any of the Employees;
(ii) There is not pending or, to Seller's Knowledge,
threatened any strike, walkout or other work stoppage or any
union organizing effort relating to the Employees;
(iii) With respect to the Employees, Seller is in
compliance with all Federal and state laws with respect to
employment and employment practices, terms and conditions of
employment, and wages and hours, and is not engaged in any
unfair labor practice, and there is no unfair labor practice
complaint against Seller or any Employees pending before the
National Labor Relations Board;
(iv) No organized labor representation question
exists respecting the Employees, and no grievance or any
arbitration proceeding is pending and, to Seller's Knowledge, no
claim therefor exists with respect to the Employees;
(v) Seller has not experienced any labor stoppage,
concerted labor activity, or other material labor difficulty
during the last three years;
(vi) No current or former Employee has a formal or
informal claim against Seller, which is currently pending before
any court, board or tribunal, on account of or for:
a) overtime pay, other than overtime pay
for the current payroll period;
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b) wages or salary for any period other
than the current payroll period;
c) vacation, time off or pay in lieu of
vacation or time off, or other than that earned with
respect to the current fiscal year;
d) any violation of any law relating to
minimum wages or maximum hours of work; or
e) violation of any federal, state or
local anti-discrimination statute, breach of the terms
of employment or wrongful discharge, whether arising
under any contract or statute, or any tort.
(c) Schedule 3.12 includes a true and complete list of all
Employees with current annual compensation in excess of $50,000 who have
signed a non-compete or non-disclosure agreement with Seller, and copies
of all such non-compete or non-disclosure agreements have been provided
to Purchaser.
(d) Except as set forth on Schedule 3.25(d), Seller has no
outstanding commitment or agreement to effect any general wage or salary
increase for any Employees, has not increased the salary or wages of any
Employees since the Interim Balance Sheet Date, and has no plan or
outstanding commitment to implement or amend any Employee Benefit Plan.
(e) Except for persons hired on a short-term, temporary
basis, none of the persons employed by Seller is provided to the Seller
under contract with a third party (except workers made available under
contracts disclosed on Schedule 3.25(e)).
(f) Except as indicated on Schedule 3.25(f), Seller is not
in violation in any material respect of the Americans with Disabilities
Act of 1990 or any law, regulation or order relating to employment
discrimination or occupational safety, nor has Seller received any
unresolved complaint from any Federal or state agency or regulatory body
alleging violations of any such laws or regulations, nor is Seller
implementing any orders or consent decrees remedying any such prior
violation, except to the extent that all such violations and complaints
would not have a material adverse effect upon Seller's Business.
(g) Seller has not entered into any written contract with
any Hired Employees or made any oral or written representation, direct
or implied, which would require Purchaser to provide post-retirement
medical benefits or post-retirement life insurance benefits.
3.26 EMPLOYEE BENEFIT PLANS AND ARRANGEMENTS.
(a) "Employee Benefit Plan" means any bonus, incentive
compensation, deferred compensation, pension, profit sharing,
retirement, stock purchase, stock option, stock ownership, stock
appreciation rights, phantom stock, leave of absence, layoff, vacation,
day or dependent care, legal services, cafeteria, life, health,
accident, disability, workers' compensation, scholarship, company car,
sick pay, tuition reimbursement, relocation, fringe
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benefit or other insurance, severance, separation or other employee
benefit plan, practice, policy or arrangement of any kind, including,
but not limited to, any "employee benefit plan" within the meaning of
Section 3(3) of Title I of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA") which relates to the Employees or former
employees of Seller, established by Seller or an ERISA Affiliate or to
which Seller or an ERISA Affiliate contributes or has contributed or has
or may have liability and which relates to the Employees or former
employees of Seller (including any such Employee Benefit Plan not now
maintained by Seller or an ERISA Affiliate or to which Seller or an
ERISA Affiliate does not now contribute, but with respect to which
Seller or ERISA Affiliate has or may have any liability). "ERISA
Affiliate" means any corporation, entity or individual which has ever
been: (i) a member of the same controlled group (within the meaning of
Section 414(b) of the Code or Section 4001 of Title IV of ERISA) as
Seller, (ii) under common control (within the meaning of Section 414(c)
of the Code) with Seller, (iii) a member of an affiliated service group
(within the meaning of Section 414(m) of the Code) with Seller, or (iv)
required to be aggregated with Seller pursuant to Section 414(o) of the
Code or regulations promulgated thereunder.
(b) Except as set forth and described on Schedule 3.26(b)
(the "Seller Plans"), neither Seller nor any ERISA Affiliate are party
to any Employee Benefit Plans.
(c) To Seller's Knowledge, except as disclosed on Schedule
3.26(c), no Employee and no known dependent of any Employee has a
medical condition which would be excluded from coverage as a
pre-existing condition under any of Seller's medical plans if such
Employee were a new hire.
3.27 ENVIRONMENTAL MATTERS.
(a) Except as set forth on Schedule 3.27, Seller has
obtained all permits, licenses and other authorizations which are
required under Regulations relating to pollution or protection of the
environment, including Regulations relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals,
or industrial, toxic or hazardous substances or wastes ("Hazardous
Substances") into the environment (including without limitation ambient
air, surface water, groundwater, or land), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of Hazardous Substances ("Environmental
Regulations").
(b) Except as set forth on Schedule 3.27, Seller maintains
and is in full compliance with all terms and conditions of the required
permits, licenses and Authorizations, and is also in full compliance in
all respects with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and
timetables, contained in any Environmental Regulations or contained in
any regulation, code, plan, order, decree, judgment, injunction, notice
or demand letter issued, entered, promulgated or approved thereunder.
(c) Except as set forth on Schedule 3.27, Seller is not, to
Seller's Knowledge, aware of, nor has Seller received notice of, any
past, present or future events, conditions,
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circumstances, activities, practices, incidents, actions or plans which
may interfere with or prevent in any respect compliance or continued
compliance with any Environmental Regulations or any regulations, code,
plan, order, decree, judgment, injunction, notice or demand letter
issued, entered, promulgated or approved thereunder, or which could
reasonably be expected to give rise to any common law or legal
liability, or otherwise form the basis of any claim, action, demand,
suit, proceeding, hearing, study or investigation, based on or related
to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling, or the emission, discharge, release or
threatened release into the environment, of any Hazardous Substance.
(d) Except as set forth on Schedule 3.27, there is no
civil, criminal or administrative action, suit, demand, claim pending
before any court, board or tribunal, hearing, notice or demand letter,
notice of violation or to Seller's Knowledge any investigation, or
proceeding pending or threatened against Seller, relating in any way to
the Environmental Regulations or to any regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder.
(e) Seller shall reasonably cooperate with Purchaser in
connection with Purchaser's application for the transfer, renewal or
issuance of any permits, licenses, approvals or other authorizations or
to satisfy any regulatory requirements involving the Business.
(f) None of the Purchased Assets are being or have been
used by Seller or, to Seller's Knowledge, by any other party for the
generation, use, storage, manufacture, transportation, treatment or
disposal of Hazardous Substances, except as permitted by, and in
compliance with, all applicable Environmental Regulations. There is not
and there has not been any underground storage tank located on the Real
Property or used in connection with the Business.
(g) Seller has delivered to Purchaser true and complete
copies of the most recent environmental reports (Phase I or otherwise)
relating to the real property.
3.28 BUSINESS NAMES AND LOCATIONS. Schedule 3.28 sets forth a list
of all corporate, business, trade, assumed or other names, and all street and
post office addresses at which Seller has conducted any business under its name
or at which any Purchased Assets have been located in the past five years.
3.29 COPIES OF DOCUMENTS. Seller has provided to Purchaser access to
copies of all documents listed on any Schedule hereto or referred to herein or
therein. Such copies are true and complete and include all amendments,
supplements and modifications thereto or waivers currently in effect
thereunder.
3.30 COMPLETENESS OF DISCLOSURE. No representation or warranty by
Seller in this Agreement nor any Schedule, certificate, document or instrument
furnished or to be furnished to Purchaser pursuant hereto or in connection with
the execution or performance of this Agreement, contains or will contain any
untrue statement of a fact or omits or will omit to state a fact required to be
stated herein or therein or necessary to make any statement herein or therein
not misleading
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in light of the circumstances in which it is made or the context thereof. To
Seller's Knowledge, there is no fact that materially and adversely affects the
business, prospects, conditions, affairs or operations of Seller which has not
been fully described in this Agreement or the exhibits or schedules hereto
exclusive of matters relating to the economy or the industry generally.
4. REPRESENTATIONS AND WARRANTIES BY PURCHASER
Purchaser represents and warrants to Seller as follows:
4.1 ORGANIZATION AND STANDING. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of Missouri.
4.2 POWER; AUTHORIZATION. Purchaser has full corporate power and
authority to enter into this Agreement and to carry out the transactions
contemplated by this Agreement. The execution, delivery and performance of
this Agreement by Purchaser has been authorized by all necessary corporate
action on the part of Purchaser.
4.3 EXECUTION, DELIVERY AND PERFORMANCE OF AGREEMENTS. This
Agreement has been duly executed and delivered by Purchaser and constitutes its
legal, valid and binding obligation, enforceable against Purchaser in
accordance with its terms. The execution, delivery and performance of this
Agreement by Purchaser will not, with or without the giving of notice or the
passage of time, or both, violate, conflict with or result in a breach of any
term, condition or provision of, or require the consent of any other person
under, (i) the certificate of incorporation or bylaws of Purchaser, (ii) any
license, law, rule, regulation, order, judgment or decree applicable to
Purchaser, or (iii) any mortgage, indenture, deed of trust, security agreement,
lease or other contract by which Purchaser may be bound or affected, or give
any person with rights thereunder the right to terminate, modify, accelerate or
otherwise change the existing rights or obligations of Purchaser thereunder.
No consent, approval, order or authorization of, notice to, or registration,
declaration or filing with, any governmental authority or entity, domestic or
foreign, is or has been or will be required on the part of Seller in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
4.4 BROKERS, FINDERS, ETC. All negotiations relating to this
Agreement and the transactions contemplated hereby have been carried on without
the intervention of any person acting on behalf of Purchaser in such manner as
to give rise to any valid claim against Seller for any brokerage or finder's
commission, fee or similar compensation.
4.5 CAPITALIZATION. The authorized capital stock of Purchaser
consists of 25,000,000 shares of common stock, par value $.01 per share, of
which 6,710,296 shares were issued and outstanding as of December 31, 1997.
Since December 31, 1997, no shares of common stock of Purchaser have been
issued. All of the Purchase Shares, when issued, will be validly issued, fully
paid and nonassessable.
4.6 SEC DOCUMENTS. Purchaser has filed all documents with the
Securities and Exchange Commission (the "SEC") required by the Securities Act
of 1933, as amended, and the Securities
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Exchange Act of 1934, as amended (together, the "Federal Securities Laws"), and
such documents comply, as of their respective dates, in all material respects
with the Federal Securities Laws.
5. CONDUCT OF BUSINESS PRIOR TO CLOSING
5.1 ACCESS TO INFORMATION. From and after December 31, 1997 through
the Closing, Seller has and will afford to Purchaser and Purchaser's attorneys,
accountants and other designated representatives reasonable opportunities to
inspect the Purchased Assets and full access to Seller's personnel and all
properties, documents, contracts, books and records of Seller, the Purchased
Assets and the Assumed Contracts, and has and will furnish Purchaser with
copies of such documents and such additional information pertaining to the
Purchased Assets and Assumed Liabilities as Purchaser has and may request.
5.2 INTERIM OPERATIONS OF SELLER. From and after December 31, 1997
through the Closing, except as disclosed on Schedule 5.2 Seller:
(a) Has and will conduct its Business only according to its
usual, regular and ordinary course in substantially the same manner as
heretofore conducted;
(b) Has and will maintain, keep and preserve the Property,
Plant and Equipment in normal operating condition and repair, ordinary
wear and tear excepted, and maintain insurance with respect to its
assets and business as provided in Section 3.21;
(c) Has and will use reasonable efforts to preserve for
Purchaser the goodwill of Seller's suppliers, customers, landlords and
others having business relations with Seller;
(d) Has not and will not alter through merger, liquidation,
reorganization, restructuring or in any other fashion, the corporate
structure or ownership of Seller except for the exercise of options
disclosed in Schedule 3.4 or otherwise as disclosed in or anticipated by
this Agreement;
(e) Has not and will not revalue any of the Purchased
Assets, settle or compromise any pending or threatened suit, action or
claim relating to Seller or the transactions contemplated hereby, waive
or release any right or claim of Seller or pay, discharge or satisfy any
claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge
or satisfaction in the ordinary course of business of liabilities
reflected or reserved against in, or contemplated by the Interim Balance
Sheet or incurred in the ordinary course of business consistent with
past practice;
(f) Has not and will not sell, encumber, assign or transfer
any assets or properties which would have been included in the Purchased
Assets if the Closing had been held on the Interim Balance Sheet Date or
on any date subsequent thereto, except for the sale of rental x-ray
equipment, inventory in the ordinary course of business consistent with
past practice, other equipment not in excess of $50,000 and except for
Permitted Encumbrances;
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(g) Has not and will not amend or terminate any material
agreement, contract, commitment or lease to which it is a party or by
which it is bound other than termination of leases or commitments in the
ordinary course of business consistent with past practice;
(h) Has not and will not make any material change in its
customary operating methods (including its purchasing, marketing,
selling and pricing practices and policies);
(i) Has not and will not make commitments or agreements for
capital expenditures or capital additions not listed on Exhibit B except
such as were or are involved in ordinary repair, maintenance or
replacement of its assets not exceeding $25,000 in the aggregate;
(j) Has not and will not increase the salaries or other
compensation of, or make any advance (excluding advances for ordinary
and necessary business expenses) or loan to, any of its employees or
make any increase in, or any addition to, other benefits to which any of
its employees is entitled;
(k) Has not and will not change any of the accounting
principles followed by it or the methods of applying such principles, or
revalued any of its assets; and
(l) Has not and will not agree, whether in writing or
otherwise, to take any of the actions set forth in this Section 5.2.
5.3 SCHEDULES; CHANGES; CORRECTIONS. Seller shall give Purchaser
prompt written notice of any material changes in the business of Seller or the
Purchased Assets which occurs prior to Closing. At least five days before
Closing, and again at and as of the latest practicable time prior to Closing,
Seller will supplement or amend the Schedules to this Agreement in order to
disclose any matter hereafter arising which, if existing or occurring at or
prior to the date of this Agreement, would have been required to be set forth
or described in the Schedules, or which is necessary to correct any error in
the Schedules or in any representation or warranty of Seller. Any notice or
supplemental or amended Schedule delivered pursuant to this section shall be
deemed to amend the applicable representations, warranties and disclosure of
the delivering party for all purposes under this Agreement.
5.4 COOPERATION IN TRANSACTION. The parties shall cooperate in (i)
making as promptly as possible any filings required under applicable laws,
rules and regulations in order to consummate the transfer of the Purchased
Assets and the other transactions contemplated hereby in accordance with the
terms of this Agreement, (ii) obtaining all necessary Authorizations required
in order for the parties to consummate such transfer and transactions, and
(iii) causing the transfer, renewal or issuance to Purchaser of any of Seller's
permits, licenses or approvals used in the operation of the Business. In
addition, Seller shall use its reasonable, good faith efforts to cause such key
employees of the Seller as Purchaser shall designate to enter into employment
contracts and/or non-compete agreements in form satisfactory to Purchaser.
Nothing in this Agreement shall require Seller to pay money to any person in
order to obtain any consents or to effect any transfers for the benefit of
Purchaser.
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5.5 HIRING OF EMPLOYEES.
(a) Purchaser shall offer employment to all Employees
currently and actively employed by Seller effective as of the day
following the Closing Date. Seller shall exercise reasonable efforts to
assist Purchaser in its efforts to secure the employment of Employees.
Such employment offers for Employees shall provide for accrued vacation
benefits under Seller's vacation plan as of the Closing Date which are
reflected on the Closing Report, but other employment benefits shall be
determined by Purchaser except as provided in Section 5.5(b). For
purposes of this Agreement, "Hired Employees" means Employees who accept
employment with Purchaser. Hired Employees shall be deemed to have
resigned their employment with Seller as of the Closing Date.
(b) With respect to the Hired Employees, Purchaser shall
assume and discharge the Employee-Related Liabilities. Notwithstanding
the preceding sentence, however, if Seller pays severance or termination
payments or payments in lieu of accrued vacation to a Hired Employee,
Purchaser shall not be required to carry over the vacation accrual for
such Hired Employee. Hired Employees who are disabled on the Closing
Date shall continue to receive disability benefits from Seller or
pursuant to a Seller disability plan until such employee recovers from
disability or is re-employed by Purchaser.
(c) Except as otherwise provided in this Section 5.4,
Purchaser shall have no liability to employees of Seller or Hired
Employees for events or occurrences which take place or arise prior to
Closing or for:
(i) any obligations and claims under the Seller
Plans;
(ii) any failure to withhold or remit Taxes;
(iii) any claims for worker's compensation benefits
by employees or former employees;
(iv) any claims against Seller for discriminatory
employment practices; or
(v) any obligations Seller has to its employees or
their dependents under sections 601 through 609 of Title I of
ERISA, including such obligations relating to Hired Employees
and their dependents.
(d) Except as otherwise expressly agreed by Purchaser in
Section 1.3(a)(ii) or this Section 5.4, nothing in this Agreement shall
cause Purchaser to have any liability under or responsibility for or
with respect to any Employee Benefit Plan.
5.6 AUDITED FINANCIAL STATEMENTS. Seller shall cooperate with
Purchaser in preparing within 55 days after the Closing Date a balance sheet of
Seller at December 31, 1997 and the related statements of income, stockholders
equity and cash flows for the fiscal year then ended, all of which shall have
been prepared in accordance with GAAP, and Seller shall use its best efforts
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to cause Seller's auditors to issue an unqualified opinion thereon within such
period. The cost of the engagement of the auditors for such purpose shall be
borne by Seller.
6. CONDITIONS PRECEDENT TO CLOSING
6.1 CONDITIONS TO PURCHASER'S OBLIGATIONS. The obligation of
Purchaser to complete the Closing is subject, at the option of Purchaser, to
the fulfillment of each of the following conditions at or prior to the Closing,
and Seller shall exert good faith diligent reasonable commercial efforts to
cause each such condition to be so fulfilled:
(a) All representations and warranties of Seller contained
herein shall be true and correct in all material respects when made and
at the Closing as though made as of the time of Closing without regard
to any amended or supplemental disclosures or Schedules delivered after
the date hereof.
(b) All covenants, agreements and obligations required by
the terms of this Agreement to be performed by Seller at or before the
Closing shall have been duly and properly performed in all material
respects.
(c) Since the Interim Balance Sheet Date, there shall not
have occurred any material adverse change in the condition of the
Purchased Assets or the business, financial condition or results of
operations of Seller.
(d) Purchaser shall have received certificates executed by
the President and Chief Financial Officer of Seller, dated as of the
Closing Date, certifying that the conditions set forth in clauses (a),
(b) and (c) of this Section 6.1 have been fulfilled.
(e) Purchaser shall have received an opinion of Schwartz,
Cooper, Greenberger & Krauss Chartered, counsel to Seller, dated the
Closing Date, substantially in accordance with Exhibit C.
(f) Purchaser's due diligence procedures and any Schedule
supplements, amendments or corrections delivered by Seller after
execution of this Agreement shall not disclose any facts or conditions
that individually or collectively are materially and adversely at
variance with any one or more of the warranties or representations of
Seller set forth in this Agreement or the information in any earlier
version of a supplemented, amended or corrected Schedule.
(g) All necessary governmental approvals and any other
required approvals and consents required of any person other than
Purchaser in order to consummate the transactions contemplated hereby
(including consents to assignments of the Assumed Contracts as set forth
on Schedule 6.1(g)) shall have been duly obtained, and any waiting
periods shall have expired or been terminated.
(h) All mortgages, deeds of trust and other security
interests in the Purchased Assets shall have been released, and duly
executed deeds of release, terminations of any
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financing statements, and other necessary documents shall have been
filed or delivered to Purchaser for filing.
(i) No action or proceeding at law or in equity shall be
pending which (i) seeks to enjoin the transactions herein contemplated,
or (ii) materially interferes with the right of Purchaser to conduct its
operations and operate the Business using the Purchased Assets
subsequent to the Closing.
(j) Seller shall have delivered to Purchaser at the Closing
all bills of sale, deeds, documents, certificates and agreements
necessary to transfer to Purchaser good title to the Purchased Assets,
free and clear of any and all liens thereon (other than the Assumed
Liabilities and the Permitted Encumbrances), and to assign to Purchaser
the Assumed Contracts to the extent assignable (except for Assumed
Contracts listed on Schedule 6.1(g) whose assignment is a condition to
Closing), and Seller shall have taken such other steps as may be
required to put Purchaser in actual possession and operating control of
the Purchased Assets.
(k) Seller shall have delivered or caused to be delivered
to Purchaser at the Closing the Non-Competition Agreement executed by
Eric Stetzel in substantially the form of Exhibit E hereto.
(l) Seller shall have delivered or caused to be delivered
to Purchaser at the Closing the written undertaking and agreement, in
form and substance reasonably acceptable to Purchaser, of each of Eric
Stetzel, Pat Bruggeman and Tom Shoaff, as shareholders of Seller, to
comply with the undertakings set forth in Exhibit F hereto.
(m) Purchaser shall have received at its own cost an
appraisal of all Property, Plant and Equipment reasonably acceptable to
Purchaser.
(n) Purchaser shall have received at its own cost at least
10 days prior to Closing, commitments from a title insurance company
acceptable to Purchaser, to insure title to each parcel of Real
Property, such commitments to be for an ALTA Owner's Policy of Title
Insurance in such amount as Purchaser reasonably determines, insuring
fee simple title to such Real Property and the improvements thereon
subject only to the Permitted Encumbrances and such other exceptions as
are acceptable to Purchaser (the "Title Commitments").
(o) Seller shall have distributed to Eric Stetzel and Neil
Miller: (i) a copy of Purchaser's Prospectus dated November 4, 1997,
together with all other periodic reports of Purchaser filed with the SEC
pursuant to the Federal Securities Laws following such date; (ii) a copy
of Purchaser's Supplement; and (iii) Purchaser's investment letter with
respect to the Purchaser Common Stock; and Purchaser shall have received
a copy of such investment letter, duly executed by each of Eric Stetzel
and Neil Miller.
(p) Purchaser shall have received an estoppel certificate,
executed by an officer of D & N Micro Products, Inc. ("D&N"), which sets
forth: (i) that the agreement attached to such certificate sets forth
all of the terms and conditions of the agreement by and between
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D&N and Seller with respect to their relationship, (ii) the aggregate
dollar amount then payable by Seller to D&N, classified by aging in
thirty day increments, (iii) that D&N does not have any claims against
Seller for any amounts or performance of any acts other than as
otherwise described, and (iv) that neither Seller nor D&N is in breach
of any covenant or agreement by or between the parties, whether or not
any applicable cure period shall have expired.
(q) Seller shall have executed and delivered the Royalty
Agreement to Purchaser substantially in the form of Exhibit H hereto.
6.2 CONDITIONS TO SELLER'S OBLIGATIONS. The obligations of Seller
to complete the Closing are subject, at the option of Seller, to the
fulfillment of each of the following conditions at or prior to the Closing, and
Purchaser shall exert good faith diligent reasonable commercial efforts to
cause each such condition to be so fulfilled:
(a) All representations and warranties of Purchaser
contained herein shall be true and correct in all material respects when
made and at the Closing as though made as of the time of Closing.
(b) All covenants, agreements and obligations required by
the terms of this Agreement to be performed by Purchaser at or before
the Closing shall have been duly and properly performed in all material
respects.
(c) Seller shall have received a certificate executed by
the President of Purchaser, dated as of the Closing Date, certifying
that the conditions set forth in clauses (a) and (b) of this Section 6.2
have been fulfilled.
(d) Seller shall have received an opinion of Armstrong,
Teasdale, Schlafly & Davis, counsel to Purchaser, dated as of the
Closing date, substantially in accordance with Exhibit D.
(e) All necessary governmental approvals and any other
required approvals and consents required of any person other than Seller
shall have been duly obtained, and any waiting periods shall have
expired or been terminated.
(f) No action or proceeding at law or in equity shall be
pending which seeks to enjoin the transactions herein contemplated.
(g) Purchaser shall have delivered to Seller at the Closing
all agreements of assumption and other agreements necessary for
Purchaser to assume the Assumed Liabilities.
(h) Purchaser shall have granted to Eric Stetzel, Neil
Miller, Mark Smith and Robert Lehman employee stock options in the form
of Exhibit G hereto to purchase 16,000, 8,000, 8,000 and 8,000 shares,
respectively, of Purchaser Common Stock at an exercise price equal to
the closing price of the Purchaser Common Stock on the Closing Date.
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(i) Purchaser shall have executed and delivered the Royalty
Agreement to Seller substantially in the form of Exhibit H hereto.
(j) The shareholders and the Board of Directors of Seller
shall have approved and authorized this Agreement and the transactions
contemplated hereby.
(k) Since the date hereof, there shall not have occurred
any material adverse change in the business, financial condition or
results of operations of Seller.
7. INDEMNIFICATION
7.1 INDEMNIFICATION BY SELLER. Except as otherwise limited by this
Article VII, Purchaser and its officers, directors, employees, agents,
successors and assigns shall be indemnified and held harmless by Seller from
any and all liabilities, losses, damages, claims, costs and expenses, interest,
awards, judgments and penalties (including, without limitation, reasonable
attorneys' fees and expenses) suffered or incurred by any of them (a "Purchaser
Loss"), but excluding any Purchaser Loss suffered after the end of any
applicable survival period, arising out of or resulting from:
(a) The breach of any representation or warranty of Seller
contained herein or in any Exhibit, Schedule or certificate delivered
under this Agreement;
(b) Any liabilities with respect to any Taxes or Tax
Returns payable or applicable with respect to any periods prior to the
Closing Date notwithstanding the disclosure of such matters by Seller
pursuant to this Agreement;
(c) The breach of any covenant or agreement by Seller
contained herein or in any other document delivered at the Closing; or
(d) Any other liabilities of Seller, or any entity
controlling, controlled by or under common control with Seller other
than the Assumed Liabilities.
The amount of any Purchaser Losses recoverable hereunder shall be
reduced to the extent Purchaser receives any insurance proceeds or realizes any
tax savings (after giving effect to any indemnification payments actually
received in connection with such Purchaser Losses) with respect to an
indemnification claim sought hereunder. Purchaser's right to indemnification
hereunder shall be Purchaser's sole remedy for any Purchaser Losses.
7.2 INDEMNIFICATION BY PURCHASER. Except as otherwise limited by
this Article VII, Seller and its officers, directors, employees, agents,
successors and assigns shall be indemnified and held harmless by Purchaser from
any and all liabilities, losses, damages, claims, costs and expenses, interest,
awards, judgments and penalties (including, without limitation, attorneys' fees
and expenses) suffered or incurred by any of them (a "Seller Loss"), but
excluding any Seller Loss suffered after the end of any applicable survival
period, arising out of or resulting from:
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(a) The breach of any representation or warranty of
Purchaser contained herein or in any Exhibit, Schedule or certificate
delivered under this Agreement;
(b) The breach of any covenant or agreement by Purchaser
contained herein or in any other document delivered at the Closing; or
(c) The failure of Purchaser to pay or otherwise discharge
the Assumed Liabilities.
The amount of any Seller Losses recoverable hereunder shall be reduced
to the extent Seller receives any insurance proceeds or realizes any tax
savings (after giving effect to any indemnification payments actually received
in connection with such Seller Losses) with respect to an indemnification claim
sought hereunder. Seller' right to indemnification hereunder shall be Seller'
sole remedy for any Seller Losses.
7.3 INDEMNIFICATION PROCEDURES.
(a) For the purposes of this Section 7.3, "Indemnitee"
means the person indemnified, or entitled, or claiming to be entitled,
to be indemnified, pursuant to the provisions of Section 7.1 or 7.2, as
the case may be; "Indemnitor" means the person having the obligation to
indemnify pursuant to such provisions; and "Loss" means a Seller Loss or
a Purchaser Loss, as the case may be.
(b) An Indemnitee shall give written notice (a "Notice of
Claim") to the Indemnitor within a reasonable period after the
Indemnitee has knowledge of any claim (including a Third Party Claim, as
hereafter defined) which an Indemnitee has determined has given or could
give rise to a right of indemnification under this Agreement and within
any applicable survival period. No failure to give such Notice of Claim
shall affect the indemnification obligations of the Indemnitor
hereunder, except to the extent the Indemnitor can demonstrate that such
failure materially prejudiced such Indemnitor's ability to successfully
defend the matter giving rise to the claim. The Notice of Claim shall
state with specificity the nature of the claim, the amount of the Loss,
if known, and all known facts supporting the claim. The Indemnitor
shall have a period of 30 days to reply to such Notice of Claim.
(c) The obligations and liabilities of an Indemnitor under
this Article VII with respect to a Loss arising from a claim of any
third party that is subject to the indemnification provisions provided
for in this Article VII (a "Third Party Claim") shall be governed by the
following additional terms and conditions: the Indemnitee at the time
it gives a Notice of Claim to the Indemnitor of the Third Party Claim
shall advise the Indemnitor that the Indemnitor shall be permitted, at
the Indemnitor's option, to assume and control the defense of such Third
Party Claim at the Indemnitor's expense and through counsel of the
Indemnitor's choice provided such counsel is reasonably acceptable to
Indemnitee if the Indemnitor gives notice within the 30-day period
specified above of the Indemnitor's intention to do so to the Indemnitee
and confirms that the Third Party Claim is one with respect to which the
Indemnitor is obligated to indemnify. In the event the Indemnitor
exercises the Indemnitor's right to undertake the defense against any
such Third Party Claim as provided above, the Indemnitee shall cooperate
with the Indemnitor in such defense and to the extent
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reasonably possible make good faith diligent efforts to make available
to the Indemnitor all witnesses, pertinent records, materials and
information in the Indemnitee's possession or under the Indemnitee's
control relating thereto as is reasonably required by the Indemnitor and
the Indemnitee may participate by the Indemnitee's own counsel and at
the Indemnitee's own expense in defense of such Third Party Claim;
provided, however, that the Indemnitor shall thereafter consult with the
Indemnitee upon the Indemnitee's reasonable request for such
consultation from time to time with respect to such Third Party Claim.
Except for the settlement of a Third Party Claim which involves only the
payment of money damages solely by the party agreeing to such
settlement, no Third Party Claim for which the Indemnitor has elected to
defend may be settled by the Indemnitor without the written consent of
the Indemnitee, which consent may be reasonably withheld by such party
in consideration of its individual interests. If the Indemnitee does
not receive written notice within said period that the Indemnitor has
elected to assume the defense of such Third Party Claim or if Indemnitor
selects counsel not reasonably acceptable to Indemnitee, the Indemnitee
may elect to assume such defense, assisted by counsel of the
Indemnitee's own choosing; provided however, the Indemnitee shall
thereafter consult with the Indemnitor upon the Indemnitor's reasonable
request for such consultation from time to time with respect to such
Third Party Claim. Whether or not the Indemnitee elects to assume the
defense of such Third Party Claim, the Indemnitor shall not be relieved
of the Indemnitor's obligations hereunder.
(d) An Indemnitee shall be entitled to reimbursement for
reasonable expenses, including legal fees and expenses, incurred in
defending against any Third Party Claim, in advance of the final
disposition of the Third Party Claim, upon receipt by the Indemnitor of
a written undertaking to repay such amount if it shall ultimately be
determined that the Indemnitee was not entitled to indemnification under
this Article VII.
(e) Any claim by an Indemnitee with respect to Losses which
do not result from a Third Party Claim will be asserted in the same
manner as specified in Section 7.3(b) above. If the Indemnitor does not
respond to such claim within the 30-day period specified in Section
7.3(b), the Indemnitor will be deemed to have rejected such claim, in
which event the Indemnitee will be free to pursue such remedies as may
be available to the Indemnitee under this Agreement and applicable law.
(f) Notwithstanding any other provision of this Agreement
to the contrary, Seller shall not be liable to Purchaser for any
Purchaser Loss unless and until the aggregate amount of Purchaser Losses
exceeds Fifty Thousand Dollars ($50,000) ("Loss Threshold"); after which
point Seller will be obligated only to indemnify Purchaser from and
against any further such Purchaser Losses. In addition to the foregoing
limitation, neither Seller nor Purchaser shall be liable to the other
for any incidental or consequential damages or any Purchaser Losses or
Seller Losses, respectively, arising pursuant to Sections 7.1(a), 7.1(b)
or 7.2(a) in excess of the amount of Liquid Net Worth required to be
maintained by Seller from time to time as set forth below; provided,
however, that the foregoing limitation on Seller for Purchaser Losses
shall not apply to any breach by Seller of its obligation to maintain
Liquid Net Worth as set forth below.
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7.4 CONTINUED EXISTENCE AND VIABILITY OF SELLER. In order to
provide liquid assets with which Seller may fulfill its obligations as
Indemnitor pursuant to this Article, Seller agrees as follows:
(a) MAINTAIN EXISTENCE. Seller shall maintain its
existence as a corporation in good standing under the laws of the State
of Indiana until the later of: (i) the third anniversary of the Closing
Date, or (ii) the date on which all claims for Purchaser Losses which
have been timely asserted by any Indemnitee against Seller during any
applicable survival period have been finally resolved. Until such date,
Seller shall not permit Seller's Liquid Net Worth (as defined below) to
fall below the following amounts:
(i) From the Closing Date until the first
anniversary of the Closing Date, $740,000 less the aggregate
amount Seller shall have paid to Indemnitees in settlement of
claims for Purchaser Losses ("Paid Claims").
(ii) From the first anniversary of the Closing Date
until 18 full months after the Closing Date (the "18 Month
Anniversary"), a sum equal to $500,000, less the Paid Claims,
plus the amount (not to exceed $240,000) of the aggregate amount
of all unresolved claims for Purchaser Losses as to which
Indemnitees shall have given a bona fide Notice of Claim to
Seller ("Unresolved Claims").
(iii) From the 18 Month Anniversary until the third
anniversary of the Closing Date, a sum equal to $240,000, less
the Paid Claims, plus the aggregate amount (not to exceed
($500,000) of all Unresolved Claims.
(iv) After the third anniversary of the Closing
Date, a sum equal to the aggregate amount (not to exceed
$740,000) of all Unresolved Claims, less the Paid Claims.
(v) Seller shall fund its Liquid Net Worth required
to be maintained at Closing. If at any time the Liquid Net
Worth of Seller exceeds the Liquid Net Worth that Seller is
required to maintain pursuant to subparagraphs (i), (ii), (iii)
or (iv) above, whichever is then applicable, Seller may reduce
its Liquid Net Worth by the amount of such excess.
Nothing in this Agreement shall require any person to make any
additional contribution to Seller in order to maintain the Liquid Net
Worth required by this Section 7.4 unless, and only to the extent that,
as a result of any distribution, the Liquid Net Worth of Seller shall at
any time be less than the minimum Liquid Net Worth required to be
maintained at the time of such distribution.
(b) PERIODIC REPORTS. Seller shall, at any time upon the
request of Purchaser, provide to Purchaser a balance sheet of Seller as
of the most recent date practicable which balance sheet shall reflect
all of Seller's Liquid Assets (as defined below) and all of Seller's
liabilities, and a calculation of Seller's Liquid Net Worth.
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(c) DEFINITIONS. For purposes of this Section 7.4, the
term "Liquid Assets" means (i) cash, (ii) direct obligations of, or
obligations fully guaranteed by, the United States of America or any
agency thereof whose obligations are backed by the full faith and credit
of the United States of America, having maturities or unexpired terms of
maturity of twelve months or less, (iii) direct obligations of, or
obligations fully guaranteed by, any state or political subdivision of a
state of the United States of America whose obligations are rated AA or
better by Moody's Investor Service and Standard & Poor's Ratings
Services having maturities or unexpired terms of maturity of twelve
months or less, (iv) bonds, notes, debentures and other evidences of
indebtedness of companies that are denominated in US dollars and are
rated AA or better Moody's Investor Service and Standard & Poor's
Ratings Services having maturities or unexpired terms of maturity of
twelve months or less, (v) certificates of deposit having twelve month
or shorter maturities or money market funds of any commercial bank in
the United States of America insured by the Federal Deposit Insurance
Corporation, or (vi) other investments approved in writing by Purchaser,
and "Liquid Net Worth" means the aggregate value of Seller's Liquid
Assets, valued at fair market value, less Seller's total liabilities.
(d) ESCROW ARRANGEMENT. Seller may, at any time, terminate
its obligations to maintain its existence and any Liquid Net Worth
pursuant to this Agreement by depositing with an escrow agent mutually
acceptable to Seller and Purchaser pursuant to an escrow agreement among
Seller, Purchaser and such escrow agent in form reasonably satisfactory
to Seller and Purchaser, funds in an amount equal to the Liquid Net
Worth Seller is required to maintain hereunder at the time such funds
are deposited with the escrow agent.
8. OTHER MATTERS
8.1 TRANSFER TAXES. Purchaser and Seller each agree to deliver to
the other party (or to such governmental or taxing authority as the other party
reasonable directs) any form of document that may be required or reasonably
requested in order to obtain an exemption with respect to any state, municipal
or other sales, use or other transfer taxes that may otherwise be required to
be paid on the transfer of the Purchased Assets or that may otherwise be due
with respect to such transfer, promptly upon the earlier of (i) reasonable
demand by the other party or (ii) learning that such form or document is
required.
8.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made by the parties in this Agreement or in any certificate,
Schedule, statement, document or instrument furnished hereunder or in
connection with negotiation, execution and performance of this Agreement shall
survive the Closing for a period of eighteen months after the Closing Date,
except that Seller's representations regarding sales, use, property and ad
valorem taxes shall survive until the third anniversary of the Closing Date.
Notwithstanding any investigation or audit conducted before or after the
Closing Date or the decision of any party to complete the Closing, each party
shall be entitled to rely upon the representations and warranties set forth
herein and therein; provided, however, that if at the Closing any party hereto
or its representatives shall have actual knowledge of the inaccuracy in a
material respect of any representation or warranty by another party and shall
nevertheless proceed to complete the Closing, the party making such
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representation or warranty shall have no liability after the Closing by reason
of such inaccuracy to the party who has, or whose representative has, such
knowledge.
8.3 MAINTENANCE OF BOOKS AND RECORDS.
(a) Following the Closing, Purchaser shall give Seller the
opportunity to remove all records pertaining solely to Excluded Assets.
(b) After the Closing, where there is a legitimate purpose,
Purchaser shall provide Seller with access, upon prior reasonable
written request specifying the need therefor, during regular business
hours, to the officers, employees, books of account and records of
Seller, but, in each case, only to the extent relating to the assets,
liabilities or business of Seller prior to the Closing, and Seller and
its representatives shall have the right to make copies of such books
and records; provided, however, that the foregoing right of access shall
not be exercisable in such a manner as to interfere unreasonably with
the normal operations and business of Purchaser.
8.4 CONFIDENTIALITY; PUBLIC ANNOUNCEMENTS. Purchaser and Seller
shall hold in confidence the terms and conditions of this Agreement and shall
make no public statements or releases relating to the transactions contemplated
by this Agreement, except those that may be required by law in the judgment of
counsel, without the advance review and approval of the other party as to
substance and timing, which review and approval shall not be unreasonably
withheld or delayed. Purchaser and Seller will cooperate with each other to
coordinate all such public statements and releases. It is agreed, however,
that Purchaser will publicly announce the execution of this Agreement. This
section shall survive any termination of this Agreement, but shall cease to
apply to information which hereafter is publicly disclosed or otherwise becomes
publicly available.
8.5 NOTICE TO CREDITORS AND CUSTOMERS. Purchaser and Seller each
hereby waives compliance by the other with the provisions of laws commonly
referred to as "bulk sales laws" requiring the furnishing of notice to
creditors of Seller. Seller shall indemnify Purchaser against, and hold
Purchaser harmless from, any and all loss, cost, damage and expense (including
but not limited to reasonable attorney's fees) which Purchaser may sustain by
reason of the failure by Seller and Purchaser to comply, in connection with the
transaction contemplated by this Agreement, with any applicable bulk sales or
bulk transfer act.
8.6 DISTRIBUTION OF PURCHASER COMMON STOCK. Seller hereby agrees
that it shall not distribute any of the Purchaser Common Stock to any person
other than Eric Stetzel and Neil Miller who are shareholders of Seller as of
the Closing Date, and that prior to distributing any Purchaser Common Stock to
such shareholders, Seller shall: (a) first deliver to such shareholder a copy
of Purchaser's Prospectus dated November 4, 1997, together with all other
periodic reports of Purchaser filed with the SEC pursuant to the Federal
Securities Laws following such date, and a copy of Purchaser's Supplement; (b)
deliver to such shareholders a copy of Purchaser's investment letter; and (c)
deliver to Purchaser a copy of Purchaser's investment letter, duly executed by
such shareholders.
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8.7 NAME CHANGE. Seller shall take all necessary corporate action
to change its corporate name following the Closing to a name which will not
include any reference to the name Panoramic and will deliver to Purchaser for
filing with the appropriate governmental entity a duly executed amendment to
its Articles of Incorporation, in form and substance satisfactory to Purchaser,
effectuating such change.
9. MISCELLANEOUS
9.1 TERMINATION. This Agreement and the transactions contemplated
herein may be terminated and abandoned at any time by mutual consent of Seller
and Purchaser, or by either Seller or Purchaser by notice to the other if the
Closing shall not have taken place on or prior to March 15, 1998 (or such other
date as may hereafter be agreed upon by the parties). If the Agreement is
terminated under this Section 9.1, the parties shall have no further liability
to each other by reason of such termination, except that if any party hereto
knowingly or wilfully breaches or defaults in any of its representations,
warranties or covenants, the other party adversely affected may at its option
seek and exercise all remedies permitted by law and equity, including specific
performance, and seek to recover attorneys' fees and other expenses related to
the exercise of this foregoing remedies.
9.2 EXPENSES. Except as otherwise provided in this Agreement, each
party hereto shall pay its own expenses incidental to the preparation of this
Agreement, the carrying out of the provisions of this Agreement and the
consummation of the transactions contemplated hereby.
9.3 CONTENTS OF AGREEMENT, PARTIES IN INTEREST, ETC. This Agreement
sets forth the entire understanding of the parties hereto with respect to the
transactions contemplated hereby. It shall not be amended or modified except
by written instrument duly executed by each of the parties hereto. Any and all
previous agreements and understandings between or among the parties regarding
the subject matter hereof, whether written or oral, are superseded by this
Agreement.
9.4 ASSIGNMENT AND BINDING EFFECT. This Agreement may not be
assigned prior to the Closing by either party without the prior written consent
of the other parties, provided that Purchaser may assign this Agreement in
whole or in part to a subsidiary or affiliate if such assignment does not
relieve Purchaser of its obligations hereunder. Subject to the foregoing, all
of the terms and provisions of this Agreement shall be binding upon and inure
to the benefit of and be enforceable by the successors and assigns of Seller
and Purchaser.
9.5 WAIVER. Any term or provision of this Agreement may be waived
at any time by the party entitled to the benefit thereof by a written
instrument duly executed by such party.
9.6 NOTICES. All notices required to be given under the terms of
this Agreement or which any of the parties desires to give hereunder shall be
in writing and delivered personally or sent by registered or certified mail,
return receipt requested, by overnight mail or courier service, or by facsimile
(and confirmed by registered or certified mail or overnight mail or courier as
aforesaid), addressed as follows:
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If to Seller: Panoramic Corporation
4321 Goshen Road
Fort Wayne, Indiana 46818
Attention: Eric Stetzel, President
Facsimile: 219-489-5683
Telephone: 219-489-2291
with a copy to: Robert A. Smoller, Esq.
Schwartz, Cooper, Greenberger & Krauss Chartered
180 North LaSalle Street
Chicago, Illinois 60601
Facsimile: 312-782-8416
Telephone: 312-346-1300
If to Purchaser: Young Innovations, Inc.
13705 Shoreline Court East
Earth City, Missouri 63045
Attention: George E. Richmond, President
Facsimile: 314-344-0021
Telephone: 314-344-0010
with a copy to: John L. Gillis, Jr., Esq.
Armstrong, Teasdale, Schlafly & Davis
One Metropolitan Square, Suite 2600
St. Louis, Missouri 63102
Facsimile: 314-621-5065
Telephone: 314-621-5070
or to such other address and to the attention of such other person as the party
to whom such notice is to be given may have theretofore designated in a notice
to the other party hereto. Any notice given in accordance with the foregoing
shall be deemed to have been given when delivered to the office of the
recipient as aforesaid, regardless of actual receipt by the individual named.
9.7 GOVERNING LAW. This Agreement shall be governed by and
interpreted and enforced in accordance with the internal laws of the State of
Missouri without regard to principles of conflicts of laws.
9.8 NO BENEFIT TO OTHERS. The representations, warranties,
covenants and agreements contained in this Agreement are for the sole benefit
of the parties hereto and in the case of indemnification pursuant to Article
VII, any other Indemnitees, and their heirs, executors, administrators, legal
representatives, successors and assigns, and they shall not be construed as
conferring any rights on any other persons.
9.9 HEADINGS; TERMINOLOGY. All headings contained in this Agreement
are for convenience of reference only, do not form a part of this Agreement and
shall not affect in any way
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the meaning or interpretation of this Agreement. Words used herein, regardless
of the number and gender specifically used, shall be deemed and construed to
include any other number, singular or plural, and any other gender, masculine,
feminine or neuter, as the context requires. Any reference to a "person"
herein shall include an individual, firm, corporation, partnership, trust,
governmental authority or body, association, unincorporated organization or any
other entity. The term "affiliate" when used with respect to a person shall
mean any other person directly or indirectly controlled by, under common
control with or in control of such person.
9.10 SCHEDULES AND EXHIBITS. All Schedules and Exhibits referred to
herein are intended to be and hereby are specifically made a part of this
Agreement.
9.11 SEVERABILITY. Any provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
9.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. This Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered by the parties. It shall
not be necessary in making proof of this Agreement or any counterpart hereof to
produce or account for any of the other counterparts.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
Purchaser: YOUNG INNOVATIONS, INC.
By /s/ George E. Richmond
--------------------------------------
Title President
-----------------------------------
Seller: PANORAMIC CORPORATION
By /s/ Eric Stetzel
--------------------------------------
Title President
-----------------------------------
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EXHIBIT 99
FOR IMMEDIATE RELEASE
Contact:
Alfred Brennan, COO
Young Innovations, Inc.
13705 Shoreline Court East
Earth City, Mo 63045
Phone: 314-344-0010
YOUNG INNOVATIONS, INC. CONSUMMATES ACQUISITION OF PANORAMIC CORPORATION
St. Louis, February 27, 1998 .... Young Innovations, Inc. (Nasdaq-YDNT) today
announced that it has consummated its previously announced acquisition of the
assets of Panoramic Corporation in Fort Wayne, Indiana. Young intends, through
a wholly-owned subsidiary, to continue to operate Panoramic's business of
designing, developing, manufacturing and marketing X-Ray equipment sold or
leased to dental professionals in the United States, Europe and Japan. Young
paid approximately $11 million in cash plus 62,500 shares of its common stock
and assumed approximately $3.7 million in liabilities, including approximately
$2.5 million of Panoramic's debt which was repaid at closing. The acquisition
is expected to add approximately $10 million to Young's annual sales and be
additive to earnings per share.
Young Innovations, Inc. is a leading designer, manufacturer and marketer of
single-use supplies, autoclavable instruments, other preventive and infection
control related products and diagnostic equipment used by dental professionals.
This press release contains forward-looking statements that involve risks and
uncertainties.
<PAGE> 2
Future events and Young's actual results could differ materially from those
contemplated by the forward-looking statements. These risks and uncertainties
include, but are not limited to, the effect of economic and market conditions,
opportunities for acquisitions and Young Innovations' ability to effectively
integrate acquired companies, the impact of managed care in dentistry, the
impact of the consolidation of dental dealers, pricing practices of other
professional dental products manufacturers, disruptions in Young's computer
systems or telephone systems, possible increases in shipping rates or
interruptions in shipping services, as well as other risks described in Young
Innovations' Prospectus dated November 4, 1997. Subsequent written or oral
statements attributable to Young Innovations or persons acting on its behalf
are expressly qualified in their entirety by the cautionary statements in this
press release and those in Young Innovations reports previously filed with the
SEC.
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