Opinion ID: 2981683
Heading Depth: 3
Heading Rank: 1

Heading: Relevant Terms of the APA

Text: The APA provided that Invacare would pay $380,000 of the purchase price into an escrow, “pursuant to the terms of the Escrow Agreement.” APA § 3.2(b). Under the Escrow Agreement, the escrow funds would remain deposited in a government-backed money market account until a year after the signing of the APA, where, absent a claim against the escrow funds, the money would automatically be released to Underwood. In particular, Section 3 of the Escrow Agreement permits Invacare to give notice of a claim to Naylor and the escrow agent, “specifying in reasonable detail the nature and dollar amount of any claim.” Filing a notice locks the escrow funds, preventing release without the written consent of both parties or a final non-appealable court order. The APA also contains three other sets of provisions relevant to this litigation. In Sections 5.2.4 and 5.2.6 (“Finder’s Fee Provisions”), Invacare represented the following: that no broker acted for Invacare in connection with the APA, that no Invacare finder was entitled to a finder’s fee, and that none of Invacare’s representations contained any “untrue statement of a material fact” or omitted “a material fact necessary to make the statements contained, in light of the circumstances in which they are made, not misleading.” In Section 7.6 (“Accounts Receivable Repurchase Provision”), the parties agreed that, at Invacare’s option any time before the anniversary of the sale, Naylor and Underwood would jointly and severally commit to repurchase accounts receivable that remain unpaid 180 days after the date of the invoice (minus a certain contractually defined “excess” amount and subject to a deductible). The same section guarantees to Naylor the “right to verify the existence of the unpaid balance of any -3- Nos. 11-5820/11-5844/11-6044/11-6050 Naylor Med. Sales & Rentals, Inc., et al. v. Invacare Continuing Care, Inc., et al. accounts receivable.” Both this provision and the Finder’s Fee Provisions were added at the request of Underwood’s attorney. Last, in Section 4.5.6 of the APA (“Customer Loss Provision”), Naylor and Underwood represented that “[n]o customer or supplier which had accounted for more than ten percent . . . of the total sales, rentals or purchases for the year 2007 and no other customer or supplier material to the Business” had “decreased or delayed materially, or threatened to decrease or delay materially” its purchase, rentals, or sales to Naylor. They also represented that they had no knowledge of facts or events that “could reasonably be expected” to cause such decreases or delays and that to their knowledge the sale would not adversely affect customer or supplier relationships.