Exhibit 10.1
EXECUTION COPY
AGREEMENT
FOR
PURCHASE AND SALE OF ASSETS
BY AND BETWEEN
DELSITE, INC.
AND
CARRINGTON ACQUISITION, LLC
Dated July 28, 2008

 

 

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AGREEMENT
FOR
PURCHASE AND SALE OF ASSETS
THIS AGREEMENT is entered into this 28th day of July, 2008, by and between
Carrington Acquisition, LLC, an Illinois limited liability company (“Buyer”) and
DelSite, Inc., a Texas corporation (“Seller”).
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to sell to
Buyer the Purchased Assets (as defined below) on the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the premises and promises herein contained,
the parties agree as set forth below:
ARTICLE I
DEFINITIONS
“Affiliate” has the meaning set forth in Section 4.4.
“Ancillary Agreements” means the Trademark Assignment, Patent Assignment and the
Bill of Sale.
“Assumed Contracts” has the meaning set forth in Section 2.4.
“Assumed Liabilities” has the meaning set forth in Section 2.4.
“Bill of Sale” has the meaning set forth in Section 2.9(a).
“Books and Records” has the meaning set forth in Section 2.2(g).
“Business” means Seller’s business of designing, manufacturing, marketing and
selling human wound care products and providing contract manufacturing and other
services related thereto.
“Buyer” has the meaning set forth in the Preamble.
“Cash Payment” means Two Million One Hundred Fifty Thousand Dollars
($2,150,000).
“Closing” has the meaning set forth in Section 2.7.
“Closing Date” has the meaning set forth in Section 2.7.
“Code” means the Internal Revenue Code of 1986, as amended.
“Contract” means any instrument, commitment, agreement, arrangement or
understanding, whether written or oral, and any amendments thereto.

 

 

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“Disclosure Letter” means the disclosure letter delivered by the Seller on the
date hereof. The information shown in the Disclosure Letter shall specifically
refer to the section or subsection of Article IV to which such information is
responsive. Terms used in the Disclosure Letter and not otherwise defined
therein have the same meanings as set forth in the Agreement.
“Deductible” has the meaning set forth in Section 7.2(b).
“Establishment Registrations” has the meaning set forth in Section 4.13(a).
“Excluded Assets” has the meaning set forth in Section 2.3.
“Excluded Liabilities” has the meaning set forth in Section 2.5.
“Existing Distributor and License Agreement” means that certain Distributor and
License Agreement dated as of November 3, 2000, between Medline and Seller, as
twice amended by amendments dated April 9, 2004.
“Existing Supply Agreement” means that certain Supply Agreement dated as of
November 3, 2000, between Medline and Seller, as amended April 9, 2004 and
August 14, 2007.
“Existing Trademark Security Agreement” means that certain Trademark Security
Agreement dated as of November 3, 2000, between Medline and Seller.
“FDA” means the U.S. Food and Drug Administration.
“FDA Regulations” has the meaning set forth in Section 4.13(b).
“Financial Statements” means the audited financial statements of Seller for the
year ended December 31, 2007 and the unaudited balance sheet and statement of
income for the five (5) month period ended May 31, 2008 previously delivered to
Buyer.
“Fundamental Representation” has the meaning set forth in Section 7.1.
“Governmental Entity” means any government or any agency, bureau, board,
commission, court, tribunal, department, official, political subdivision or
other instrumentality of any government, whether federal, state or local,
domestic or foreign.
“GAAP” means the generally accepted accounting principles of the United States
consistently applied and applied on a basis consistent with the Financial
Statements.
“Indemnified Party” has the meaning set forth in Section 7.5(a).
“Indemnifying Party” has the meaning set forth in Section 7.5(a).
“Intellectual Property” has the meaning set forth in Section 4.8.
“Inventory” has the meaning set forth in Section 2.2(a).

 

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“Inventory Payment” means Six Hundred Twelve Thousand Thirty-Seven Dollars and
Seventy-Seven Cents ($612,037.77).
“Laws” mean any federal, state, local, foreign or other law, rule, regulation,
judgment, code, ruling, statute, order, act, decree, ordinance or other
requirement of any Governmental Entity.
“Liabilities” means any costs (including the cost of wages, salaries and other
remuneration or benefits), expenses, taxation, health contributions, levies,
Losses, claims, demands, actions, fines, penalties, awards, liabilities,
expenses, in each case howsoever arising and of whatever kind or nature (whether
known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due).
“Lien” means any mortgage, pledge, security interest, lien, easement, covenant,
restriction, levy, charge, claim, Liability or restriction or other encumbrance
of any kind, or any conditional sale Contract, title retention Contract or other
Contract to give any of the foregoing.
“Loss” has the meaning set forth in Section 7.2.
“Medline” means Medline Industries, Inc., an Illinois corporation.
“Other FDA-Like Requirements” has the meaning set forth in Section 4.13(b).
“Party” means each of Seller and Buyer.
“Patent Assignment” has the meaning set forth in Section 2.8(b).
“Permits” has the meaning set forth in Section 2.2(f).
“Person” means an association, a corporation, a limited liability company, an
individual, a partnership, a trust or any other entity or organization,
including a Governmental Entity.
“Product Licenses” has the meaning set forth in Section 4.13(a).
“Purchase Price” has the meaning set forth in Section 3.1.
“Purchased Assets” has the meaning set forth in Section 2.2.
“Schedule” means any schedule to this Agreement.
“Seller” has the meaning set forth in the Preamble.
“Seller’s Knowledge” when used to qualify any representation or warranty, shall
mean the actual knowledge of Carlton E. Turner and Robert W. Schnitzius after
reasonable investigation, of the matters subject to such representations or
warranties.
“Taxes” means all foreign, federal, state, county, local and other taxes of
every kind and however measured, including income, gross receipts, excise,
franchise, property, value added, import duties, employment, social security,
Medicare, payroll, sales and use taxes and any additions to tax and any interest
or penalties thereon.

 

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“Technical Information” has the meaning set forth in Section 4.9.
“Territory” has the meaning set forth in Section 6.4(a)(i).
“Third Party Claim” has the meaning set forth in Section 7.5(a).
“Trademark Assignment” has the meaning set forth in Section 2.8(a).
ARTICLE II
THE TRANSACTION
2.1 Purchase and Sale of Assets. At the Closing, Seller, as the sole and
beneficial owner, shall sell, transfer, grant, convey, assign and deliver to
Buyer (or its designated affiliate) and Buyer (or its designated affiliate)
shall purchase, accept and receive all right, title and interest in, to or
arising from the Purchased Assets, free and clear of all Liens of any kind.
2.2 Purchased Assets. The “Purchased Assets” are all of the assets, properties,
rights and claims acquired for, used in, held for use in, relating to or arising
from the conduct of the Business (other than Excluded Assets), as set forth
below:
(a) all inventories listed on Schedule 2.2(a) (“Inventory”);
(b) all Technical Information and all technical, processing, manufacturing or
marketing information, including new developments, inventions, know-how,
processes, ideas and trade secrets and documentation thereof (including related
papers, blueprints, drawings, chemical compositions, formulae, diaries,
notebooks, specifications, designs, methods of manufacture and data processing
software) and all claims and rights related thereto, including those listed on
Schedule 2.2(b);
(c) all Intellectual Property and all patents, trademarks, trade names, trade
styles, logos and service marks and all applications and registrations
therefore, and all rights thereunder, remedies against infringements thereof,
and rights to protection of interests therein under all applicable Laws, and all
of the goodwill of the Business appurtenant thereto and licenses thereof,
including those listed on Schedule 2.2(c);
(d) all copyrights and author’s rights, whether published or unpublished,
including rights to prepare, reproduce and distribute copies, compilations and
derivative works, including those listed on Schedule 2.2(d);
(e) all rights in, to and under the Assumed Contracts (in each case to the
extent legally transferable);

 

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(f) to the extent legally assignable, all permits, licenses, product
registrations, filings, authorizations, approvals and indicia of authority (and
pending applications for any thereof) (i) to conduct the operations of the
Business and to own, manufacture, construct, operate and maintain any product,
fixture, facility, equipment, vehicle, machinery or installation of the Business
or (ii) to store, transport, dispose of, market or sell any goods or any
substance (including, without limitation, materials classified as “hazardous
materials” or “hazardous substances” or “hazardous waste”) used, handled,
produced, disposed of, marketed or sold in the operation of the Business, as
issued by any Governmental Entity or instrumentality (the “Permits”);
(g) all data, files and records, whether in print, electronic, or other media,
required to enable Buyer to conduct the Business in the same manner conducted by
Seller prior to the Closing Date, including, without limitation, all books and
records relating to the Assumed Contracts, Inventory and maintenance and all
asset history records, ledgers and books of original entry and other files; all
mailing lists, card indices, and other lists of customers and sales
representatives; all existing business correspondence with customers and sales
representatives; information and data relating to the customers of the Business;
all sales and promotional materials, catalogues and advertising literature; and
all other administrative and instructional materials and data relating to the
Business (collectively, the “Books and Records”);
(h) rights under agreements with employees, former employees or any other third
party concerning confidentiality and the assignment of inventions, but excluding
any obligations of Seller pursuant thereto; and
(i) e-mail addresses, internet user names, addresses and sites listed on
Schedule 2.2(i);
provided, however, that the definition of Purchased Assets shall not include any
items defined as Excluded Assets in Section 2.3 below.
2.3 Excluded Assets. Nothing herein contained shall be deemed to sell, transfer,
assign or convey the Excluded Assets to Purchaser, and Seller shall retain all
right, title and interest to, in and under the Excluded Assets.
“Excluded Assets” shall mean all assets, properties, interests and rights of
Seller and the subsidiaries other than the Purchased Assets, including those
listed on Schedule 2.3.
2.4 Assumed Liabilities and Obligations. At the Closing, Buyer shall assume and
discharge liabilities and obligations of Seller (the “Assumed Liabilities”) for
performance or payment for performance (if such performance occurs after the
Closing Date) arising after the Closing under the Contracts listed on
Schedule 2.4 (collectively, the “Assumed Contracts”) but only to the extent such
liabilities or obligations did not arise out of a breach or default by Seller or
any of its Affiliates of such Assumed Contracts on or before the Closing Date.
Buyer further agrees to pay and discharge all of the Assumed Liabilities as they
come due.
2.5 Excluded Liabilities and Obligations. Buyer shall not be the successor to
Seller, and except as expressly set forth in Section 2.4 above, Buyer shall not
assume and shall not be liable or responsible for any debt, obligation or
Liability of the Business, Seller or any Affiliate of Seller, any shareholder or
any of their Affiliates, or related to the Purchased Assets, the Business, the
facilities from which the Business is or was conducted, or any claim against any
of the foregoing, of any kind, whether known or unknown, contingent, absolute,
or otherwise all of which are retained by Seller (the “Excluded Liabilities”).
Without limiting the foregoing, the term Excluded Liabilities shall include:

 

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(a) Liabilities related to or arising from transactions between Seller or with
any Affiliate of Seller, including any inter-company payables;
(b) Liabilities for Taxes of any kind;
(c) Liabilities for damage or injury (real or alleged) to person or property
arising from the ownership, possession or use of any product manufactured,
assembled, processed, treated, distributed, sold or serviced, directly or
indirectly, or any service rendered by Seller through the Closing Date,
including any product liability and product warranty claims;
(d) Liabilities to and claims asserted by current and former employees,
including those for accident, disability, health (including unfunded medical
liabilities) and worker’s compensation insurance or benefits, and all other
liabilities and obligations to employees;
(e) Liabilities arising from or relating to claims or Liabilities for benefits
or pay under any benefit plan, including Seller’s compensation policies,
individual employment Contracts or collective bargaining agreements, any
severance payment, including those related to any alleged termination of
employment solely as a result of the transactions contemplated hereby, or WARN
Act liabilities;
(f) Subject to Section 8.3, Liabilities for expenses, Taxes or fees incurred by
Seller, incidental to the preparation of this Agreement, preparation or delivery
of materials or information requested by Buyer, and the consummation of the
transactions contemplated hereby, including all broker, counsel and accounting
fees, sales, stamp, or transfer Taxes, payments or bonuses that become due or
are otherwise required to be made as a result of or in connection with the
Closing or as a result of any change of control or similar provisions and
amounts payable by Seller to obtain any third party consents;
(g) Liabilities relating to or arising from litigation or any other disputes
with third parties, if any, pending at the Closing or, to the knowledge of
Seller, threatened, on or prior to the Closing Date;
(h) Liabilities related to Excluded Assets;
(i) Liabilities due to products sold or services rendered by Seller or any of
its predecessors or Affiliates on or prior to the Closing Date with respect to
patent, trademark or copyright litigation or disputes, including actions for
infringement;
(j) Liabilities of Seller and/or the Business (including accounts payable and
those of the kind and character defined as Assumed Liabilities in Section 2.4),
arising from events or occurrences through the Closing Date but with respect to
which no disclosure is made herein;

 

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(k) Liabilities arising from or in connection with any administrative ruling or
other order, stipulation or decree of any federal, state or local agency, or the
violation of any federal, state or local Law with respect to events, actions or
occurrences occurring on or prior to the Closing Date;
(l) Liabilities relating to the operation prior to Closing of the facilities of
Seller or the Business or any other real property, buildings, improvements or
other premises utilized by Seller or its Affiliates, including Liabilities
arising from any environmental laws;
(m) Liabilities to any of Seller’s directors, officers, shareholders, agents or
representatives;
(n) Liabilities relating to the debt of Seller or any of its Affiliates or other
persons; and
(o) all other Liabilities of Seller or related to the operation of the Business
or the Purchased Assets on or prior to Closing.
Seller further agrees to pay and discharge all Excluded Liabilities and
obligations as they become due.
2.6 Nonassignable Contracts.
(a) To the extent that the assignment by Seller of any Assumed Contract is not
permitted without the consent of the other party to the Contract or the approval
of Buyer or Medline as a source of the products or services to be provided under
such Contract, then this Agreement shall not be deemed to constitute an
assignment or an attempted assignment of the same, if such assignment or
attempted assignment would constitute a breach thereof. However, unless
otherwise agreed as to any particular Assumed Contract, Seller shall use its
commercially reasonable efforts to obtain any and all such consents, approvals
and novations before and after Closing.
(b) If any necessary consent, approval or novation is not obtained, Seller shall
cooperate with Buyer in any reasonable arrangement designed to provide Buyer
with all of the benefits under such Assumed Contract as if such consent,
approval or novation had been obtained, including subleases from Seller and,
undertakings by Buyer of the work necessary to complete Assumed Contracts as the
agent of Seller with the understanding that Seller shall then invoice the
customer for services rendered and promptly remit the amount of the receivable
to Buyer. Nothing herein shall excuse Seller from responsibility for any of its
representations and warranties or covenants hereunder.

 

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2.7 Closing. The transfer of the Purchased Assets contemplated by this Agreement
(the “Closing”) shall take place at the offices of McDermott Will & Emery LLP,
227 West Monroe Street, Chicago, Illinois 60606-5096 on or before July 28, 2008
or such other date or at such other place mutually agreed upon by the parties,
such date being hereinafter referred to as the “Closing Date.” Upon
consummation, the Closing shall be deemed to take place as of the opening of
business on the Closing Date.
2.8 Closing Deliveries by Seller. At the Closing, Seller shall deliver to Buyer
the following:
(a) an executed copy of the Trademark Assignment in the form attached hereto as
Exhibit A (the “Trademark Assignment”);
(b) an executed copy of the Patent Assignment in the form attached hereto as
Exhibit B (the “Patent Assignment”);
(c) acknowledgement and release letters in the form attached hereto as Exhibit C
from the senior secured creditors of Seller together with UCC-3 amendment
statements with respect to financing statements filed against any of the
Purchased Assets amending the collateral for such financing statements to
specifically exclude the Purchased Assets in a form acceptable to Buyer;
(d) certificate of good standing for Seller, certified by the Secretary of State
(or an analogous official) of its jurisdiction of organization and any
jurisdiction where the Business is qualified to do business as of a date not
earlier than five (5) days prior to the Closing Date;
(e) an officer’s certificate of Seller certifying (i) the bylaws of Seller,
(ii) resolutions of the Seller’s Board of Directors approving this Agreement and
the transactions contemplated hereby and (iii) the incumbency of the officers of
Seller;
(f) any third-party consents required to consummate the transactions with
respect to the Purchased Assets contemplated hereby; and
(g) such other instruments, agreements or documents as may be reasonably
requested by Buyer to carry out the transactions with respect to the Purchased
Assets contemplated hereby.
At the Closing, Seller shall take all steps necessary to place Buyer in actual
possession and operating control of the Purchased Assets.
2.9 Closing Agreements. At the Closing, Buyer and Seller shall deliver to each
other executed copies of the following agreements:
(a) General Assignment, Bill of Sale and Assumption of Liabilities in the form
attached hereto as Exhibit D (the “Bill of Sale”);

 

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(b) the letter agreement terminating the Existing Distributor and License
Agreement, the Existing Supply Agreement and the Existing Trademark Security
Agreement in the form attached hereto as Exhibit E; and
(c) such other instruments, agreements or documents as may be necessary or
appropriate to carry out the transactions contemplated hereby.
ARTICLE III
PURCHASE PRICE
3.1 Consideration for Purchased Assets. The aggregate consideration to be paid
for the Purchased Assets shall be as follows (the “Purchase Price”):
(a) the Cash Payment;
(b) the Inventory Payment; and
(c) the assumption of the Assumed Liabilities.
3.2 Payment of the Purchase Price. At Closing, Buyer shall pay the Purchase
Price as directed in writing by Seller by wire transfer of immediately available
funds to an account designated by Seller in such letter of direction.
3.3 Allocation of Purchase Price. The Purchase Price shall be allocated by Buyer
and Seller as set forth in Schedule 3.3. Such allocation shall be used for all
Tax purposes, including preparation and filing of Internal Revenue Service
Form 8594 which Buyer and Seller agree to complete and file in accordance with
Schedule 3.3. Seller and Buyer agree that no party will take any position on any
report, return or other document filed with any Governmental Entity or in any
Action that is in any manner inconsistent with Schedule 3.3.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as of the date hereof and as of
the Closing Date:
4.1 Authority. Seller has full capacity, right, power and authority, without the
consent of any other person, to execute and deliver this Agreement, the
Ancillary Agreements, the documents to be delivered at Closing and to carry out
the transactions contemplated hereby and thereby. All acts or proceedings
required to be taken by Seller to authorize the execution, delivery and
performance of this Agreement, the Ancillary Agreements, the documents to be
delivered at Closing and all transactions contemplated hereby and thereby have
been duly and properly taken.

 

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4.2 Validity. This Agreement has been, and the Ancillary Agreements and the
documents to be delivered by Seller at Closing will be, duly executed and
delivered and constitute lawful, valid and legally binding obligations of Seller
enforceable in accordance with their terms. The execution and delivery of this
Agreement, the Ancillary Agreements, the documents to be delivered at Closing
and the consummation of the transactions contemplated hereby and thereby will
not result in the creation of any Lien of any kind or the termination or
acceleration of any indebtedness or other obligation of the Business, the
Purchased Assets or Seller and are not prohibited by, do not violate or conflict
with any provision of, do not constitute a default under or a breach of and do
not impair any rights under (a) the charter or bylaws or other constitutional
documents of Seller, (b) any Contract to which Seller is a party or by which
Seller or the Business or any of their assets are bound, (c) any order, writ,
injunction, decree or judgment of any Governmental Entity, or (d) any Law
applicable to Seller, the Business or the Purchased Assets. No approval,
authorization, registration, consent, order or other action of or filing with
any person, including any Governmental Entity, is required for the execution and
delivery by Seller of this Agreement, the Ancillary Agreements and the documents
to be delivered at Closing or the consummation by Seller of the transactions
contemplated hereby and thereby, except as set forth on Section 4.2 of the
Disclosure Letter.
4.3 Due Organization. Seller is a corporation duly organized, validly existing
and in good standing under the Laws of the jurisdiction of its organization, and
has full power and authority and all requisite rights, licenses, permits and
franchises to own, lease and operate its assets and to carry on the business in
which it is engaged. Seller is duly licensed, registered and qualified to do
business as a foreign corporation and is in good standing in all jurisdictions
in which the failure to qualify could reasonably be expected to have a material
adverse effect on Seller or the Business. Section 4.3 of the Disclosure Letter
sets forth each state or other jurisdiction in which Seller is licensed or
qualified to do business. Seller has delivered to Buyer an accurate, correct and
complete copy of its charter and bylaws or other constitutional documents.
4.4 Transactions with Affiliates. Except as set forth in Section 4.4 of the
Disclosure Letter, no Affiliate:
(a) owns, directly or indirectly, any debt, equity or other interest or
investment in any corporation, association or other entity which is a
competitor, lessor, lessee, customer, supplier or advertiser of the Business;
(b) has any cause of action or other claim whatsoever against or owes any amount
to, or is owed any amount by, the Business;
(c) has any interest in or owns any property or right used in the conduct of the
Business;
(d) is a party to any Contract or commitment directly related to the Business;
or
(e) received from or furnished to the Business any goods or services.
The term “Affiliate” shall mean (i) any officer, director or shareholder owning
more than 5% of the Seller and any member of the immediate family (including
spouse, brother, sister, descendant, ancestor or in-Law) of any officer,
director or such shareholder of Seller or (ii) any corporation, partnership,
trust or other entity in which Seller or any such family member has a five
percent (5%) or greater interest or is a director, officer, partner or trustee.
The term Affiliate shall also include any entity which controls, or is
controlled by, or is under common control with any of the individuals or
entities described in the preceding sentence.

 

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4.5 Interim Change. Except as set forth on Section 4.5 of the Disclosure Letter,
since December 31, 2007, Seller has operated the Business only in the ordinary
course, consistent with past practices, and there has not been any of the
following:
(a) any adverse change in the financial condition, assets, liabilities (fixed or
contingent), personnel, prospects or business affairs of the Business or in its
relationships with suppliers, vendors, customers, lessors, employees or others
(in each case, as a group or class) nor has there been the occurrence of any
event or condition which would reasonably be expected to have such an effect;
(b) any damage, destruction or loss, whether or not covered by insurance,
adversely affecting the Business or the Purchased Assets;
(c) any forgiveness, cancellation or waiver of any rights of Seller related to
the Business;
(d) any disposition of assets of the Business, other than sales of inventory in
the ordinary course of business on terms consistent with past practice;
(e) any event or condition of any character materially adversely affecting the
Business or the Purchased Assets;
(f) any change in credit practices as to customers of the Business; or
(g) any incurrence of any Lien on, or any material damage or loss to, the
Business.
Since December 31, 2007, Seller has not incurred or become subject to, or agreed
to incur or become subject to, in each case with respect to the Business, any
liability or obligation, contingent or otherwise, except current liabilities and
contractual obligations in the ordinary course of business and in amounts
consistent with past practices. Except as set forth in Section 4.5 of the
Disclosure Letter, since December 31, 2007, there has not been any agreement,
commitment or understanding by Seller to do any of the foregoing with respect to
the Business.
4.6 Inventory. All Inventories are (a) properly valued in accordance with the
definition of Inventory Payment; (b) of good and merchantable quality and
contain no material amounts that are not salable and usable for the purposes
intended in the ordinary course of the Business and meet the current standards
and specifications of the Business and are not obsolete; and (c) in conformity
with Seller’s warranties pursuant to the Existing Distributor and License
Agreement. Except as set forth on Section 4.6 of the Disclosure Letter, all
Inventories disposed of subsequent to December 31, 2007, have been disposed of
only in the ordinary course of business and at prices and under terms that are
normal and consistent with past practice.

 

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4.7 Title to Assets. Seller is the sole and exclusive legal and equitable owner
of all right, title and interest in and has good and marketable title to all of
the Purchased Assets. Except as set forth on Section 4.7 of the Disclosure
Letter, none of the Purchased Assets which Seller purports to own is subject to
(a) any title defect or objection; (b) any Contract of lease, license or sale;
(c) any Lien of any kind or character, direct or indirect, whether accrued,
absolute, contingent or otherwise, except those disclosed in the Financial
Statements; (d) any royalty or commission arrangement; or (e) any claim,
covenant or restriction.
4.8 Intellectual Property. Section 4.8 of the Disclosure Letter sets forth an
accurate, correct and complete list and summary description of all patents,
trademarks, trademark rights, trade names, trade styles, trade dress, product
designations, service marks, copyrights and applications for any of the
foregoing utilized in the Business or in which Seller has an interest (the
“Intellectual Property”). During the preceding five (5) years, Seller has not
been known by or done business under any name other than DelSite, Inc. and
Carrington Laboratories, Inc. Section 4.8 of the Disclosure Letter sets forth an
accurate, correct and complete list and summary description of all licenses and
other agreements relating to any Intellectual Property. None of the Intellectual
Property is subject to any extensions, renewals, Taxes or fees due within ninety
(90) days after Closing. Except as set forth in Section 4.8 of the Disclosure
Letter, (a) Seller is the sole and exclusive owner and has the sole and
exclusive right to use the Intellectual Property; (b) no action, suit,
proceeding or investigation is pending or, to Seller’s Knowledge, threatened
with respect to the Intellectual Property; (c) to Seller’s Knowledge none of the
Intellectual Property interferes with, infringes upon, conflicts with or
otherwise violates the rights of others or, is being interfered with or
infringed upon by others, and none is subject to any outstanding order, decree,
judgment, stipulation or charge and Seller has not received any notice, written
or oral, from any Person asserting any infringement, conflict or violation;
(d) there are no royalty, commission or similar arrangements, and no licenses,
sublicenses or agreements, pertaining to any of the Intellectual Property;
(e) Seller has not agreed to indemnify any person for or against any
infringement of or by the Intellectual Property; (f) to Seller’s Knowledge no
patent, invention or application therefor or similar property would infringe
upon any of the Intellectual Property or render obsolete or adversely affect the
manufacture, processing, distribution or sale of products or services relating
to the Business; (g) all items of Intellectual Property are properly registered
under applicable Law; and (h) the Intellectual Property constitutes all such
assets, properties and rights which are used in or necessary for the conduct of
the Business as it is being conducted as of the date hereof. To Seller’s
Knowledge, the operation of the Business by Buyer after the Closing in the
manner and geographic areas in which the Business is currently conducted by
Seller will not interfere with or infringe upon any patent or trademark or any
asserted rights of others with respect to the current trade dress or packaging
of any products. Seller is not subject to any judgment, order, writ, injunction
or decree of any Governmental Entity, or any arbitrator, or has entered into or
is a party to any Contract which restricts or impairs the use of any
Intellectual Property.
4.9 Trade Secrets. Except as set forth on Section 4.9 of the Disclosure Letter,
information in the nature of know-how, trade secrets or proprietary information
which provides Seller with an advantage over competitors who do not know or use
it, including formulae, patterns, molds, tooling, inventions, industrial models,
processes, designs, devices, engineering data, cost data, compilations of
information, copyrightable material and technical information, if any, relating
to the Business (the “Technical Information”):

 

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(a) is owned legally, beneficially and solely and exclusively by Seller, and
Seller has, the sole and exclusive right to, use and transfer ownership of such
Technical Information;
(b) is documented and readily usable by Buyer; and
(c) has been subject to Seller’s reasonable precautions to protect the secrecy
of all Technical Information and prevent disclosure to unauthorized parties.
To Seller’s Knowledge, no violation of any trade secret rights with respect to
Seller’s operation of the Business currently exists.
4.10 Licenses and Permits. Section 4.10 of the Disclosure Letter contains an
accurate, correct and complete list and summary description of each Permit
currently issued to Seller related to the Business. The Permits are valid and in
full force and effect and there are not pending, or, to Seller’s Knowledge,
threatened, any proceedings which could result in the termination, revocation,
limitation or impairment of any Permit. Seller has all licenses, permits,
certificates, approvals, franchises, registrations, accreditations and other
authorizations as are necessary or appropriate in order to enable it to own and
conduct the Business as it is presently conducted and no Person has asserted
that others are required. All Permits will continue to be in full force and
effect according to their terms after the consummation of the transactions
contemplated hereby. No violations have been recorded in respect of any Permits,
and to Seller’s Knowledge there is no meritorious basis therefor.
4.11 Assumed Contracts. Seller has delivered accurate, correct and complete
copies of each Assumed Contract to Buyer. Each Assumed Contract is in full force
and effect and is valid, binding and enforceable against Seller and to Seller’s
Knowledge, the other parties to the Assumed Contract in accordance with its
terms. Seller has and to Seller’s Knowledge, the other parties to each Assumed
Contract have, complied with all commitments and obligations on its part to be
performed or observed under each Assumed Contract. No event has occurred which
is or, after the giving of notice or passage of time, or both, would constitute
a default under or a breach of any Assumed Contract by Seller, or, to Seller’s
Knowledge, by any other party. Seller has not received or given notice of an
intention to cancel or terminate a Assumed Contract or to exercise or not
exercise options or rights under a Assumed Contract. Seller has not received any
notice of a default, offset or counterclaim under any Assumed Contract, or any
other communication calling upon Seller to comply with any provision of any
Assumed Contract or ascertaining noncompliance. Except as set forth on
Section 4.11 of the Disclosure Letter, none of the rights of Seller under any
Assumed Contract will be impaired by the consummation of the transactions
contemplated by this Agreement, and all of such rights will be enforceable by
Buyer after the Closing Date without the consent or agreement of any other
party, including all rights to renew the applicable Assumed Contract. Except as
set forth on Section 4.11 of the Disclosure Letter, no Assumed Contract permits
or requires Seller (a) to obtain goods, services or benefits on terms
substantially more favorable than fair market terms or (b) to provide goods,
services or benefits on terms substantially less favorable than fair market
terms. With respect to each Assumed Contract which is to be assigned to Buyer
pursuant to the terms hereof, except as set forth on Section 4.11 of the
Disclosure Letter, Buyer will succeed to all the rights and benefits of Seller.
Seller has not granted any powers of attorney with respect to the Business. The
consummation of the transactions contemplated hereby, without notice to or
consent or approval of any party, will not constitute a default under or a
breach of any provision of a Assumed Contract, and except as set forth on
Section 4.11 of the Disclosure Letter Buyer will have and may enjoy and enforce
all rights and benefits under each Contract in the same manner as if the
transactions contemplated hereby were not consummated. There is no Lien on
Seller’s interest under any Assumed Contract. Section 4.11 of the Disclosure
Letter describes any proposed arrangement of a type that if entered into would
constitute a Assumed Contract, and the status of negotiations related thereto.

 

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4.12 Compliance with Law. The Business conforms to all applicable Laws. Seller
has complied with all licensing requirements, decrees, awards, orders or the
like applicable to the Business or operations; and there is not and will not be
any liability arising from or related to any violations thereof existing on or
prior to Closing. No notice from any Governmental Entity or other person of any
violation of any Law or requiring or calling attention to the necessity of any
repairs, installation or alteration in connection with the Business has been
served, and Seller does not know of any basis therefor. Neither Seller,
including any officer, agent or employee of Seller, nor, to Seller’s Knowledge,
any other person acting on behalf of Seller or the Business, has, with respect
to the Business, (a) made any unlawful domestic or foreign political
contributions, (b) made any payment or provided services which were not legal to
make or provide or which Seller or any such officer, employee or other person
should have known were not legal for the payee or the recipient of such services
to receive, (c) received any payments, services or gratuities which were not
legal to receive or which Seller or such person should have known were not legal
for the payor or the provider to make or provide, (d) had any transactions or
payments which are not recorded in its accounting books and records or disclosed
in its financial statements, (e) had any off-book bank or cash accounts or
“slush funds,” (f) made any payments to governmental officials in their
individual capacities for the purpose of affecting their action or the action of
the government they represent to obtain special concessions, or (g) made
payments or expenditures to obtain or retain business or obtain favorable
treatment from vendors, other than the customary business entertainment.
4.13 Regulatory and Product Matters
(a) Seller has all licenses, including clearances and approvals, conformity
determinations, and CE markings, in connection with the products of the Business
(“Product Licenses”) and establishment registrations in connection with the
medical device related operation of the Business (“Establishment Registrations”)
necessary to manufacture, promote, distribute, sell or otherwise market the
products of the Business in the United States and in each other jurisdiction in
which Seller manufactures and markets such products and to perform contract
manufacturing services under an Assumed Contract included in the Purchased
Assets. All such Product Licenses and Establishment Registrations are in full
force and effect and are listed on Section 4.13 of the Disclosure Letter. No
such Product License or Establishment Registration contains any untrue statement
of a material fact or omits to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except where such untruth or omission could not reasonably be
expected to have an adverse effect on the Business or the Purchased Assets.

 

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(b) As to each product of the Business that is developed, manufactured, tested,
distributed and/or marketed by Seller, and is subject to the FD&C Act, 21 U.S.C.
§§ 201 et seq., FDA regulations (“FDA Regulations”) promulgated thereunder, or
FDA’s policies and guidelines, each such product is being developed,
manufactured, tested, distributed and marketed in full compliance with all
applicable requirements under the FD&C Act, FDA Regulations, and FDA policies
and guidelines and to the extent such products of the Business are developed,
manufactured, tested, distributed and/or marketed in any U.S. state or local
jurisdiction or any jurisdiction outside the U.S., and said product of the
Business is subject to similar Laws, regulations, polices and guidelines of any
said state, local or foreign jurisdiction ( “Other FDA-Like Requirements”), each
such product is being developed, manufactured, tested, distributed and marketed
in full compliance with all applicable Other FDA-Like Requirements.
(c) Each product of the Business that has been introduced into interstate
commerce in the U.S., or is being developed with the intent that it be so
introduced, satisfies the statutory definition of “device” under the FD&C Act
(21 U.S.C. § 201(h)). To the extent that any product of the Business does not
meet the statutory definition of “device,” and such product is otherwise subject
to regulation by FDA or by another Governmental Entity, within or outside the
U.S., said product(s) is being developed, manufactured, tested, distributed and
marketed in full compliance with all applicable requirements under the FD&C Act,
FDA Regulations, and FDA policies and guidelines. Each product introduced into
interstate commerce not as a “device” is identified on Section 4.13 of the
Disclosure Letter and the FDA or other status of the product(s) is set forth
therein.
(d) Each product of the Business that has been introduced imported or otherwise
introduced into commerce in any jurisdiction other than the U.S., or is being
developed with the intent that it be so introduced, satisfies the statutory
definition of “device” under the applicable jurisdiction. To the extent that any
product of the Business does not meet the statutory definition of “device,” and
such product is otherwise subject to regulation under Other FDA-Like
Requirements, said product(s) is being developed, manufactured, tested,
distributed and marketed in full compliance with all applicable Other FDA-Like
Requirements. Each product introduced into a jurisdiction outside the U.S. not
as a “device” is identified on Section 4.13 of the Disclosure Letter and the
Other FDA-Like Regulation status of the product(s) is set forth therein.
(e) For each product of the Business that has been introduced into interstate
commerce, Seller timely and effectively obtained from FDA, to the extent
applicable, the appropriate marketing authorization for the product, 21 U.S.C. §
360(k) (premarket notification) or 21 U.S.C. § 360e (premarket approval), based
on (but not limited to) the classification of the device, 21 U.S.C. § 360c, and
any related provisions under the FD&C Act, including (but not limited to) any
applicable performance standards, 21 U.S.C. § 360d and also obtained, to the
extent applicable, similar appropriate marketing authorizations under Other
FDA-Like Requirements.
(f) No product of the Business manufactured and/or distributed by Seller is
adulterated within the meaning of the FD&C Act (21 U.S.C. § 351) or misbranded
within the meaning of the FD&C Act (21 U.S.C. § 352), nor would be considered so
under Other FDA-Like Requirements for products manufactured and /or distributed
outside the U.S.

 

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(g) No product of the Business manufactured and/or distributed by Seller is a
“banned device” within the meaning of the FD&C Act, 21 U.S.C. § 360f.
(h) Seller is duly registered as required by the FD&C Act, 21 U.S.C. § 360 and
has listed all devices manufactured, marketed or other otherwise distributed by
Seller.
(i) At no time has Seller failed to file with the FDA or under Other FDA-Like
Requirements, when required to do so, any filings, declarations, listings,
registrations, reports, notices or submissions of any kind, all such filings,
declarations, listings, registrations, reports, notices or submissions of any
kind were timely, truthful and otherwise in compliance with all applicable Laws,
policies and guidelines when filed and no deficiencies have been asserted by the
FDA or any another similar Governmental Entity, within or outside the U.S., with
respect to any such filings, declarations, listings, registrations, reports,
notices or other submissions.
(j) Except as specifically identified on Section 4.13 of the Disclosure Letter,
Seller has not received any material notice or other communication from the U.S.
Department of Justice or the FDA, such as a Warning Letter, Notice of Violation
Letter, Cyber Letter, Form FDA 483 or Establishment Inspection Report,
contesting the uses of or the labeling or promotion or manufacture of any
products of the Business or otherwise alleging any material violation by Seller
of any Law applicable to any of the products or products under investigation nor
similar such notice or communication under Other FDA-Like Requirements.
(k) Neither Seller nor, to Seller’s Knowledge, any officer, employee or agent of
Seller, has ever made an untrue statement of material fact or fraudulent
statement to the FDA or to another similar Governmental Entity, within or
outside the U.S., failed to disclose a material fact required to be disclosed to
the FDA or to another similar Governmental Entity, within or outside the U.S.,
or committed an act, made a statement, or failed to make a statement that, at
the time such disclosure was made, would reasonably be expected to provide a
basis for the FDA or to another similar Governmental Entity, within or outside
the U.S., to conclude that such disclosure was false or misleading in any
regard.
(l) No product of the Business is under consideration for or has been recalled,
withdrawn, subject to a field correction, suspended or discontinued (other than
for commercial or business reasons) by Seller (whether voluntarily or otherwise)
within the U.S. or within any other country wherein any product has been
distributed.
(m) To Seller’s Knowledge, there are no facts, circumstances or conditions that
would reasonably be expected to form the basis of any material investigation,
suit, claims, action (legal or regulatory) or proceeding (legal or regulatory)
against or affecting Seller relating to or arising under the FD&C Act, FDA
Regulations, or FDA policies and guidelines or Other FDA-Like Requirements.
4.14 Brokers. Except for Milkie Ferguson Investments, Inc., Seller has not
retained any broker, finder or agent or incurred any liability or obligation for
any brokerage fees, commissions or finders fees with respect to the transactions
contemplated hereby. Seller shall retain sole responsibility for the payment of
any fees of Milkie Ferguson Investments, Inc.

 

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4.15 Disclosure. Neither this Agreement nor any attachment, schedule, exhibit,
certificate or other written statement delivered pursuant to this Agreement or
in connection with the transactions contemplated hereby omits to state a
material fact necessary in order to make the statements and information
contained herein or therein, in light of the circumstances in which they were
made, not misleading. Buyer has been provided full and complete copies of all
documents referred to in the Disclosure Letter and on the Schedules to this
Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as of the date hereof and as of
the Closing Date:
5.1 Authority. Buyer has full capacity, right, power and authority, without the
consent of any other person, to execute and deliver this Agreement, the
Ancillary Agreements, the documents to be delivered at Closing and to carry out
the transactions contemplated hereby and thereby. All acts or proceedings
required to be taken by Buyer to authorize the execution, delivery and
performance of this Agreement, the Ancillary Agreements, the documents to be
delivered at Closing and all transactions contemplated hereby and thereby have
been duly and properly taken.
5.2 Validity. This Agreement has been, and the Ancillary Agreements and the
documents to be delivered by Buyer at Closing will be, duly executed and
delivered and constitute lawful, valid and legally binding obligations of Buyer
enforceable in accordance with their terms. No approval, authorization,
registration, consent, order or other action of or filing with any person,
including any Governmental Entity, is required for the execution and delivery by
Buyer of this Agreement, the Ancillary Agreements and the documents to be
delivered at Closing or the consummation by Buyer of the transactions
contemplated hereby and thereby.
5.3 Due Organization. Buyer is a limited liability company duly organized,
validly existing and in good standing under the Laws of the jurisdiction of its
organization, and has full power and authority and all requisite rights,
licenses, permits and franchises to own, lease and operate its assets and to
carry on the business in which it is engaged. Buyer is duly licensed, registered
and qualified to do business as a foreign corporation and is in good standing in
all jurisdictions in which the failure to so qualify could reasonably be
expected to have a material adverse effect.
5.4 Brokers. Buyer has not retained any broker, finder or agent or incurred any
liability or obligation for any brokerage fees, commissions or finders fees with
respect to the transactions contemplated hereby.
5.5 Disclosure. Neither this Agreement nor any attachment, schedule, exhibit,
certificate or other written statement delivered pursuant to this Agreement or
in connection with the transactions contemplated hereby omits to state a
material fact necessary in order to make the statements and information
contained herein or therein, in light of the circumstances in which they were
made, not misleading.

 

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ARTICLE VI
ADDITIONAL COVENANTS
6.1 Continued Assistance. Following Closing, Seller shall refer to Buyer as
promptly as practicable any telephone calls, letters, orders, notices, requests,
inquiries and other communications relating to the Business. Seller shall
cooperate in an orderly transfer of the Business and the continuation thereof by
Buyer. From time to time, at Buyer’s request and without further consideration,
Seller shall execute, acknowledge and deliver such documents, instruments or
assurances and take such other action as Buyer may reasonably request to more
effectively assign, convey and transfer any of the Purchased Assets and will
assist Buyer in the vesting, collection or reduction to possession of such
Purchased Assets. Buyer shall reimburse Seller for any reasonable out-of-pocket
expenses incurred in connection with the obligations under this Section 6.1.
6.2 Certain Payments. Promptly following Closing, Seller shall pay and fully
discharge all sales Taxes collected in the conduct of the Business, and all
liabilities and obligations to customers and suppliers of the Business which are
not assumed by Buyer as and when due, and shall otherwise pay, discharge or make
adequate provision for all other liabilities and obligations of the Business,
including all Excluded Liabilities. Seller shall promptly pay and fully
discharge any income, excise, employment, unemployment, sales or use Taxes
arising as a result of the sale, transfer, conveyance or assignment of the
Purchased Assets (except as otherwise set forth in this Agreement). Seller shall
retain responsibility after the Closing Date for all pending litigation and
disputes related to the Business and liability for claims therein asserted
against Buyer, the Purchased Assets or the Business. Seller shall keep Buyer
apprised of the status and all aspects of such litigation and disputes which
might affect Buyer, the Purchased Assets or the Business, either directly or
indirectly, and Seller shall comply with all court orders relating directly or
indirectly to such litigation or disputes. Buyer shall provide reasonable
cooperation to Seller in handling such litigation and disputes; provided, that
Seller shall reimburse Buyer for its out-of-pocket expenses incurred in
connection with such cooperation. Seller shall retain all rights to recover
moneys due or damages being sought by Seller under any such litigation or
disputes.
6.3 Records and Documents. For four (4) years following the Closing Date, Seller
shall grant to Buyer and its representatives, at Buyer’s request, access to and
the right to make copies of those records and documents related to the Business,
possession of which is retained by Seller as may be necessary or useful in
connection with Buyer’s conduct of the Business after the Closing. If during
such period Seller elects to dispose of such records, Seller shall first give
Buyer 60 days’ written notice, during which period Buyer shall have the right to
take such records without further consideration. Buyer shall reimburse Seller
for any reasonable out-of-pocket expenses incurred in connection with the
obligations under this Section.
6.4 Covenants Not To Compete Or Solicit
(a) For a period five (5) years from the Closing Date, Seller agrees not to,
directly or indirectly, by or for themselves or as the employee or agent of
another or through others as their agent:

 

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(i) produce, promote, sell, lease, license, distribute, install or service
anywhere in the world (the “Territory”) products or services in existence or
under development, which are similar to or in competition with those of the
Business;
(ii) own, manage, operate, fund, be compensated by, participate in, render
advice to, have any right to or interest in any other business directly or
indirectly engaged in the production, promotion, sale, lease, license,
distribution or servicing of products or services competitive with those of the
Business anywhere in the Territory;
(iii) divulge, communicate, use or disclose any nonpublic information concerning
the Business or Buyer or any of its affiliates, their personnel, business and
affairs;
(iv) interfere with the business relationships or disparage the good name or
reputation of the Business, Buyer, or any of their affiliates or take any action
which brings the Business, Buyer or any of its affiliates or its business into
public ridicule or disrepute;
(v) solicit or accept any business competitive with the Business from customers
or suppliers of the Business;
(vi) request, induce or advise customers or suppliers of the Business to
withdraw, curtail or cancel their business with the Business or Buyer;
(vii) solicit for employment or employ any present or future employee of the
Business, Buyer or any of their affiliates, or request, induce or advise any
employee to leave the employ of the Business, Buyer or any of its affiliates.
(viii) use or disclose the names and/or addresses of any customer, supplier or
employee of the Business or Buyer to any person for any purpose whatsoever.
The ownership of less than two (2) percent of a publicly-traded company shall
not in and of itself be deemed to be a violation of this Section 6.4.
(b) If Seller violates the provisions of this Section, Buyer shall not, as a
result of the time involved in obtaining relief, be deprived of the benefit of
the full period of the restrictive covenant with respect to Seller. Accordingly,
the restrictive covenant of this Section as it applies to Seller shall be deemed
to have the duration specified in Section 6.4(a) hereof, computed from the date
the relief is granted, but reduced by the time between the period when the
restriction began to run and the date of the first violation of the covenant by
Seller.
(c) Seller agrees that, if they shall violate any of the provisions of this
Section 6.4, Buyer shall be entitled to an accounting and repayment of all
profits, compensation, commission, remuneration or other benefits that Seller,
directly or indirectly, may realize arising from or related to any such
violation. These remedies shall be in addition to, and not in limitation of, any
injunctive relief or other rights to which Buyer may be entitled.

 

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(d) The parties agree and acknowledge that the duration, scope and geographic
areas applicable to the covenant not to compete described in this Section 6.4
are fair, reasonable and necessary, that adequate compensation has been received
by Seller for such obligations. If, however, for any reason any Governmental
Entity determines that the restrictions in this Section are not reasonable and
therefore the restrictions are unenforceable, such restrictions shall be
interpreted, modified or rewritten to include as much of the duration, scope and
geographic area identified in this Section as will render such restrictions
valid and enforceable.
(e) Seller acknowledges that Seller has carefully read and considered the terms
of this Section 6.4. Seller hereby waives any requirement of proof that a breach
of this Section 6.4 will cause serious or irreparable injury to Buyer, or that
there is an adequate remedy at Law. In any proceeding, either at Law or in
equity, between the parties hereto, Seller hereby agrees that Seller shall not
raise as a defense (i) that the duration, scope or geographical area in which
Seller is prohibited from competition is unfair, unnecessary or unreasonable or
(ii) that this Agreement is in restraint of trade. Further, the existence of any
claim or cause of action of Seller or any of their Affiliates, whether or not
predicated on the terms of this Agreement, shall not constitute a defense to the
enforcement of Seller’s obligations under this Section 6.4.
(f) Nothing contained in subparts (i), (ii), (v) or (viii) of Section 6.4(a)
shall prohibit or impair in any way the ability of Seller to conduct any
activities with respect to (i) veterinary products, SaliCept® products,
Manapol®, products containing Manapol® or Aloeceutical products now sold or
hereafter developed by Seller or (ii) Seller’s manufacturing, sale or licensing
of the Gel Site polymer as a delivery mechanism for FDA approved drugs to wound
sites; provided, however, nothing contained in subpart (ii) of this
Section 6.4(f) shall authorize Seller to directly manufacture such drugs, or
advertise and/or distribute such drugs to end users (patients, doctors or
hospitals) of such drugs without Buyer’s prior written consent.
6.5 Notices and Consents. Seller will give any notices to third parties, and
Seller will use commercially reasonable efforts to obtain any third-party
consents, that Buyer may reasonably request in connection with the matters
referred to in Section 4.2 above and Section 4.2 of the Disclosure Letter. Each
of the parties will give any notices to, make any filings with, and use its
commercially reasonable efforts to obtain any authorizations, consents, and
approvals of Governmental Entities in connection with the matters referred to in
Section 4.2 above and Section 4.2 of the Disclosure Letter.
6.6 Bulk Sales Act Compliance. Buyer and Seller hereby waive compliance with the
provisions of any applicable bulk transfer Laws.
6.7 Confidentiality; Publicity
(a) Except as may be required by Law, as expressly contemplated herein or as or
as mutually agreed to by Buyer and Seller, no party hereto or their respective
affiliates, employees, agents and representatives shall disclose to any third
party this Agreement, the subject matter or terms hereof or any confidential
information or other proprietary knowledge concerning the business or affairs of
any other party which it may have acquired from such party in the course of
pursuing the transactions contemplated by this Agreement or use or knowingly
permit the use of such confidential information or other proprietary knowledge
for any purpose other than in connection with the transactions contemplated
hereby without the prior written consent of the other parties hereto; provided,
that any information that is otherwise publicly available, without breach of
this provision, or has been obtained from a third party without a breach of such
third party’s duties, shall not be deemed confidential information. No press
release or other public announcement related to this Agreement or the
transactions contemplated hereby shall be issued by Seller without the prior
written approval of Buyer (which approval shall not be unreasonably withheld or
delayed).

 

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(b) In the event that Seller or any of its subsidiaries or representatives are
required by interrogatories, requests for information or documents, subpoenas,
Civil Investigative Demand or similar process to disclose any confidential
information, Seller shall provide Buyer with prompt prior written notice of such
request or requirement so that Buyer may seek an appropriate protective order
(and if Buyer seeks such an order, Seller will, and will cause its subsidiaries
and representatives to, provide such cooperation as Buyer shall reasonably
request). Buyer will reimburse Seller for any out-of-pocket expense reasonably
incurred in providing such cooperation. If, in the absence of a protective
order, Seller or any of its subsidiaries or representatives are nonetheless
required to disclose confidential information, Seller or its subsidiary or
representative, as the case may be: (x) may, and will cause each of its
subsidiaries and representatives to, disclose only that portion of the
confidential information that Seller or its subsidiaries or Representative is
legally compelled to disclose; and (y) shall, and shall cause each of its
subsidiaries and representatives to, at the request of Buyer, use its
commercially reasonable efforts to obtain assurance that confidential treatment
will be accorded such confidential information.
(c) After Closing, except as may be required for Tax purposes or other
regulatory purposes, none of Seller or its Affiliates and respective successors
and assigns shall (i) except as provided in Section 6.3, retain any document,
databases or other media embodying any confidential or proprietary information
which relate to the Business or constitute a part of the Purchased Assets or
use, publish or disclose to any third person any such confidential or
proprietary information or (ii) use, publish or disclose any information
concerning Buyer, its affiliates or the Business, as the case may be, the
customers or suppliers of the Business or the terms of this Agreement or the
transactions contemplated hereby.
6.8 Licenses and Permits. To the extent permitted by the applicable Governmental
Entity and/or regulatory authorities, Seller shall cooperate with Buyer and
shall use its commercially reasonable efforts to transfer, assign and pass to
Buyer all of its rights under each of the Licenses and Permits listed on
Section 4.10 of the Disclosure Letter as soon as possible. Seller’s obligations
under this Section shall include, but not be limited to, the following:
(a) executing all assignments and other documents necessary to effect transfer
or assignment of the Licenses and Permits from Seller to Buyer;
(b) providing the Governmental Entities responsible for the Licenses and Permits
and Buyer with whatever information and documentation that may be reasonably
required in connection with the transfer of the Licenses and Permits;

 

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(c) complying with its obligations under the Licenses and Permits, and under
applicable Law relating thereto, prior to the applicable Closing;
(d) on, prior to, or subsequent to the applicable Closing, using reasonable
efforts to remedy any material non-compliance with any of the Licenses and
Permits, or with applicable Laws relating thereto, that has occurred before such
Closing; and
(e) taking such further actions relating to the Licenses and Permits as the
Governmental Entities, or Buyer, may reasonably require.
6.9 Cooperation. Seller agrees to cooperate and assist Buyer in connection with
the resolution of all claims and disputes pending at Closing or that arise after
Closing but relate to the period prior to such Closing.
ARTICLE VII
SURVIVAL AND INDEMNIFICATION
7.1 Survival. All covenants and agreements contained in this Agreement shall be
deemed to be material and to have been relied upon by the parties hereto and
shall survive the Closing until fully performed. All representations and
warranties contained in this Agreement or in any document delivered pursuant
hereto or thereto shall be deemed to be material and to have been relied upon by
the parties hereto, and shall survive the Closing and shall continue to be fully
effective and enforceable for a period of twelve (12) months from the Closing
Date; provided, however, that the representations and warranties set forth in
Sections 4.1 (Authority), 4.2 (Validity), 4.3 (Due Organization), and 4.7 (Title
to Assets) (collectively, the “Fundamental Representations”) shall survive
indefinitely. Notwithstanding the foregoing, any claim for indemnification that
is asserted by written notice as provided in Section 8.2 within the applicable
survival period shall survive until resolved by the parties or pursuant to a
final non-appealable judicial determination. The representations and warranties
contained in this Agreement shall not be affected by any investigation,
verification or examination by any party hereto or by anyone on behalf of any
such party.
7.2 Indemnification of Buyer Parties. (a) Seller shall defend, indemnify and
hold harmless Buyer from and against any and all loss, damage, cost (including
allocable costs of employees), expense (including court costs, amounts paid in
settlement, judgments, reasonable attorneys’ fees or other expenses for
investigating and defending), diminution in value, suit, action, claim,
deficiency, liability or obligation (collectively, “Loss”) related to, caused by
or arising from any (i) Excluded Liability or Excluded Asset,
(ii) misrepresentation or breach of warranty or (iii) failure to fulfill any
covenant or agreement contained herein by Seller, or in any agreement,
instrument or other document delivered pursuant hereto by Seller, and any and
all claims made based upon facts alleged that, if true, would have constituted
any such misrepresentation, breach or failure. All rights herein are cumulative
and are in addition to all other rights and remedies which are otherwise
available. All indemnification obligations shall be deemed made in favor of and
shall include Losses incurred by any of Buyer’s officers, directors, agents,
representatives, subsidiaries, parents, affiliates, successors and assigns.

 

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(b) Seller shall not be liable for any Loss pursuant to Section 7.2(a)(ii) until
the aggregate amount of Losses under this Agreement exceeds $5,000 (the
“Deductible”) and thereafter Seller shall be liable to the extent of any Loss in
excess of the Deductible.
7.3 Indemnification of Seller Parties. Buyer shall defend, indemnify and hold
harmless Seller from and against any and all Losses related to, caused by or
arising from any (i) Assumed Liability or (ii) any misrepresentation with
respect to Sections 5.1, 5.2 and 5.3. All rights herein are cumulative and are
in addition to all other rights and remedies which are otherwise available. All
indemnification obligations shall be deemed made in favor of and shall include
Losses incurred by, any of Seller’s officers, directors, agents,
representatives, subsidiaries, parents, affiliates, successors and assigns.
Absent fraud or intentional misrepresentation on the part of Buyer, the
aggregate liability of Buyer for any Losses shall not exceed the Purchase Price.
7.4 Indemnification Obligations with respect to Inventory.
(a) By Seller. Seller agrees to indemnify and hold harmless Buyer from and
against any and all Losses arising from any suit, claim or demand of any third
party relating to (i) any design or manufacturing defect in any Inventory item,
(ii) any statement on any labeling of or literature supplied or approved by
Seller for any Inventory item that is false or violates any Law, (iii) any
infringement by any Inventory item or any labeling, packaging or product
literature approved or authorized by Seller of any patent, trademark, copyright,
design or other intellectual property right of any third party.
(b) By Buyer. Buyer agrees to indemnify and hold harmless Buyer from and against
any and all Losses arising from any suit, claim or demand of any third party
relating to (i) any representations or claims made by Buyer or any of its
employees, sales representatives or distributors not contained in the labeling,
packaging or literature furnished or approved by Seller for any Inventory item
or (ii) any infringement by any labeling, packaging or literature for any
Inventory item not furnished or approved by Seller of any patent, trademark,
copyright, design or other intellectual property right of any third party
(c) General. The indemnification obligations contained in this Section 7.4 shall
(i) be deemed made in favor of and shall include Losses incurred by any of
Seller’s or Buyer’s, as the case may be, officers, stockholders, employees,
directors, agents, representatives, subsidiaries, parents, affiliates,
successors and assigns, (ii) not be subject to the Deductible and (iii) not
limit or reduce any other indemnification rights granted pursuant to this
Article VII.
7.5 Matters Involving Third Parties.
(a) If any third party shall notify any party (the “Indemnified Party”) with
respect to any matter (a “Third Party Claim”) which may give rise to a claim for
indemnification against the other party (the “Indemnifying Party”) under this
Article VII, then the Indemnified Party shall promptly notify the Indemnifying
Party thereof in writing; provided, however, that no delay on the part of the
Indemnified Party in notifying the Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party thereby is actually prejudiced by such delay.

 

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(b) The Indemnifying Party will have the right to defend the Indemnified Party
against the Third Party Claim with counsel of its choice reasonably satisfactory
to the Indemnified Party so long as (i) the Indemnifying Party notifies the
Indemnified Party in writing within 15 business days after the Indemnified Party
has given notice of the Third Party Claim that the Indemnifying Party will
indemnify the Indemnified Party from and against any indemnifiable Losses the
Indemnified Party may suffer resulting from, arising out of, relating to, or
caused by the Third Party Claim, (ii) the Indemnifying Party provides the
Indemnified Party with evidence reasonably acceptable to the Indemnified Party
that the Indemnifying Party will have the financial resources to defend against
the Third Party Claim and fulfill the Indemnifying Party’s indemnification
obligations hereunder, (iii) the Third Party Claim involves only money damages
and does not seek an injunction or other equitable relief, and (iv) the
Indemnifying Party conducts the defense of the Third Party Claim actively and
diligently.
(c) So long as the Indemnifying Party is conducting the defense of the Third
Party Claim in accordance with Section 7.5(b) above, (i) the Indemnified Party
may retain separate co-counsel at its sole cost and expense and participate in
the defense of the Third Party Claim, (ii) the Indemnified Party will not
consent to the entry of any judgment or enter into any settlement with respect
to the Third Party Claim without the prior written consent of the Indemnifying
Party (not to be withheld unreasonably), and (iii) the Indemnifying Party will
not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnified Party (which shall not be unreasonably withheld); provided, however,
with respect to subsection (iii), if such settlement or judgment involves only
monetary damages and the Indemnified Party does not consent to such settlement,
the Indemnifying Party’s indemnification obligation to the Indemnified Party
with respect to such matters to be settled with such settlement shall not exceed
the amount proposed in such settlement.
(d) In the event any of the conditions in Section 7.5(b) above is or becomes
unsatisfied, however, (i) the Indemnified Party may defend against, and consent
to the entry of any judgment or enter into any settlement with respect to, the
Third Party Claim in any manner it reasonably may deem appropriate (and the
Indemnified Party need not consult with, or obtain any consent from, the
Indemnifying Party in connection therewith), (ii) the Indemnifying Party will
reimburse the Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including reasonable attorneys’ fees
and expenses), and (iii) the Indemnifying Party will remain responsible for any
Losses the Indemnified Party may suffer resulting from, arising out of, relating
to, or caused by the Third Party Claim to the fullest extent provided in this
Article VII.
7.6 Other Indemnification Provisions
(a) All indemnification payments under this Article VII shall be deemed
adjustments to the Purchase Price and the parties shall treat such payments as
such for Tax purposes.
(b) The foregoing indemnification provisions under this Article VII are in
addition to, and not in derogation of, any statutory, equitable or common law
remedy any party may have for a breach of any representation or warranty or any
covenant set forth herein.

 

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(c) Except as otherwise provided herein, no party shall be liable to any other
party for any loss of profits, consequential, incidental, indirect, special or
punitive damages of such other person.
7.7 Effect of Knowledge. The representations and warranties contained in this
Agreement shall not be affected by any investigation, verification or
examination by any party hereto or by anyone on behalf of any such party.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Amendments and Waiver
(a) No amendment, waiver or consent with respect to any provision of this
Agreement shall in any event be effective, unless the same shall be in writing
and signed by the Buyer and Seller, and then such amendment, waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
(b) The failure of any party at any time or times to require performance of any
provisions hereof shall in no manner affect that party’s right at a later time
to enforce the same. No waiver by any party of the breach of any term or
covenant contained in this Agreement in any one or more instances shall be
deemed to be, or construed as, a further or continuing waiver of any such
breach, or a waiver of the breach of any other term or covenant contained in
this Agreement.
8.2 Notices. All notices, requests, demands and other communications hereunder
shall be in writing and shall be personally delivered, sent by overnight carrier
(such as Express Mail, Federal Express, etc.) or sent by facsimile transmission
with confirming copy sent by overnight courier and a delivery receipt obtained
and addressed to the intended recipient as follows:

  (a)   If to Seller:

DelSite, Inc.
2001 Walnut Hill Lane
Irving, Texas 75038
Attn: Dr. Carlton E. Turner, President
Facsimile: (972) 714-5040
With a copy to:
Thompson & Knight LLP
1700 Pacific Avenue, Suite 330
Dallas, Texas 75201
Attention: Wesley P. Williams
Facsimile: (214) 969-1751

 

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  (b)   If to Buyer:

Medline Industries
1200 Town Line Road
Mundelein, Illinois 60060
Attn: Alex Liberman
Facsimile: (847) 949-2633
With a copy to:
McDermott Will & Emery LLP
227 West Monroe Street
Chicago, Illinois 60606
Attention: John P. Tamisiea
Facsimile: (312) 984-7700
Any party may change its address or add or change parties for receiving notice
by giving the other party notice in the manner set forth above.
8.3 Expenses. Except as otherwise expressly provided herein, each party to this
Agreement shall pay its own costs and expenses in connection with the
transactions contemplated hereby. Any sales, transfer or other Taxes or fees
applicable to the conveyance and transfer from Seller to Buyer of the Purchased
Assets shall be borne by Seller, except that Buyer shall pay any fees of any
Governmental Entity required to transfer to it the Intellectual Property
included as part of the Purchased Assets or the Permits. The provisions of this
Section shall survive any termination of this Agreement.
8.4 Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.5 Captions. The captions contained in this Agreement are for convenience of
reference only, shall not be given meaning and do not form a part of this
Agreement.
8.6 Successors and Assigns. This Agreement shall bind and inure to the benefit
of the parties named herein and their respective successors and permitted
assigns. Buyer shall be entitled to assign their respective rights and duties
under this Agreement to any of their respective affiliates or for collateral
security purposes to any lenders providing financing to Buyer without the
consent of Seller; provided, however, that Buyer shall in all events remain
liable hereunder. Except as provided in the foregoing sentence, this Agreement
shall not be assigned by either party hereto without the express prior written
consent of the other party and any attempted assignment, without such consents,
shall be null and void.
8.7 Entire Transaction. This Agreement, the Ancillary Agreements and the
documents referred to herein and therein contain the entire agreement and
understanding among the parties with respect to the transactions contemplated
hereby and thereby and supersede all other agreements, understandings and
undertakings among the parties on the subject matter hereof. All attachments,
exhibits and schedules hereto are hereby incorporated by reference and made a
part of this Agreement.

 

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8.8 Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal substantive laws of the State of Illinois without
regard to the choice of law principles thereof. EACH OF THE PARTIES HERETO WAIVE
THE RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING
SEEKING ENFORCEMENT OF SUCH PARTY’S RIGHTS UNDER THIS AGREEMENT OR ANY AGREEMENT
OR INSTRUMENT CONTEMPLATED HEREBY OR ENTERED INTO IN CONNECTION HEREWITH OR
THEREWITH OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
8.9 Other Rules of Construction. References in this Agreement to sections,
schedules and exhibits are to sections of, and schedules and exhibits to, this
Agreement unless otherwise indicated. Words in the singular include the plural
and in the plural include the singular. The word “or” is not exclusive. The word
“including” shall mean including, without limitation. The term “ordinary course
of business” means the ordinary course of the Business consistent with the past
practice of the Business. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Any information disclosed pursuant
to a Schedule or a section in the Disclosure Letter hereto shall be deemed
disclosed with respect to any other Schedule or section of the Disclosure Letter
to which it is reasonably apparent that the information is related to such other
Schedule or section of the Disclosure Letter and corresponding representation
and warranty.
8.10 Partial Invalidity. In the event that any provision of this Agreement shall
be held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provision hereof.
8.11 Schedules. The Disclosure Letter has been delivered to Buyer on the date of
this Agreement. The inclusion of any item in any Section of the Disclosure
Letter or any Schedule shall not constitute an admission that a violation, right
of termination, default, liability or other obligation of any kind exists with
respect to such item, but rather is intended only to qualify certain
representations and warranties in this Agreement and to set forth other
information required by this Agreement. Also, the inclusion of any matter in any
section of the Disclosure Letter or any Schedule shall not constitute an
admission to its materiality as it relates to any provision of this Agreement.
8.12 Authorship. The parties hereto agree that the terms and language of this
Agreement were the result of negotiations between the parties and, as a result,
there shall be no presumption that any ambiguities in this Agreement shall be
resolved against either party. Any controversy over construction of this
Agreement shall be decided without regard to events of authorship or
negotiation.
8.13 No Third-Party Beneficiaries. This Agreement, except as specifically set
forth in the provisions of Article VII (Survival and Indemnification) and this
Article VIII (General Provisions), is not intended to confer upon any person
other than the parties any rights or remedies.

 

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8.14 Injunctive Relief. The Parties agree that irreparable damage would occur in
the event that any of the provisions of Sections 6.4 or 6.7 were not performed
in accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, without bond or other security being
required, this being in addition to any other remedy to which they are entitled
at law or in equity.
* * *

 

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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed
on its behalf by a duly authorized officer all as of the date first written
above.
BUYER:
CARRINGTON ACQUISITION, LLC
By: /s/ Alex Liberman
Name: Alex Liberman
Its: Manager
SELLER:
DELSITE, INC.
By: /s/ Carlton E. Turner
Name: Carlton E. Turner
Its: President and CEO
[Signature Page to Agreement for Purchase and Sale of Assets]