Filed by Bowne Pure Compliance





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




 


 









 







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.


 


 









 





“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]