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ASSET PURCHASE AGREEMENT
BY
AND
BETWEEN
XXXXX NATURALS/4HEALTH, INC.
AND
INHOLTRA INVESTMENT HOLDINGS AND TRADING, N.V.,
INHOLTRA, INC.,
AND
INHOLTRA NATURAL, LTD.,
FOR ITSELF AND AS ATTORNEY-IN-FACT ON BEHALF OF
XXXX X. XXXXXX
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Dated: March 10, 1999
TABLE OF CONTENTS
PAGE
1. Purchase and Sale Agreement................................ 1
1.1 Agreement of Purchase and Sale................ 1
1.2 Purchased Assets.............................. 2
1.3 Additional Purchased Assets................... 4
1.4 Assumed Liabilities........................... 4
1.5 Purchase Price, Note and Security Escrow...... 6
2. Closing.................................................... 7
2.1 Closing Date.................................. 7
2.2 Action by Buyer............................... 7
2.3 Action by Seller.............................. 7
3. Additional Covenants....................................... 8
3.1 Further Assurances/Cooperation................ 8
3.2 Non-Assignable Contracts...................... 8
3.3 Payment of Taxes and Charges Upon Transfer of
Purchased Assets.............................. 9
3.4 Retained Liabilities.......................... 9
3.5 Books and Records............................. 9
3.6 Preparation of Financial Information.......... 10
3.7 Transitional Services Agreement............... 10
3.8 Consulting Agreement.......................... 10
3.9 Employees..................................... 10
3.10 Waiver of Compliance with Bulk Transfer Laws.. 10
3.11 Non-Compete Agreement......................... 11
3.12 Reimbursement of Buyer........................ 11
3.13 Notice of Certain Matters..................... 11
3.14 Change of Name................................ 11
3.15 Other Agreements.............................. 11
4. Representations and Warranties as to Seller................ 12
4.1 Organization, Standing and Power.............. 12
4.2 Interests in Other Entities................... 12
4.3 Authority..................................... 12
4.4 Noncontravention.............................. 13
4.5 Properties.................................... 13
4.6 Inventory..................................... 13
4.7 Intellectual Property......................... 14
4.8 Absence of Changes............................ 16
4.9 Litigation.................................... 17
4.10 No Violation of Law........................... 18
4.11 Government and Third-Party Consents/ Approvals 18
4.12 Products Liability............................ 18
4.13 Material and Other Contracts.................. 19
4.14 Business Financial Statements; 1998 Revenues.. 20
4.15 Books and Records............................. 20
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4.16 Taxes......................................... 20
4.17 Information as to Seller...................... 21
5. Representations and Warranties as to Buyer................. 21
5.1 Organization, Standing and Power.............. 21
5.2 Authority..................................... 21
5.3 Noncontravention.............................. 21
5.4 Information as to Buyer....................... 22
6. Indemnification............................................ 22
6.1 Indemnification by Seller..................... 22
6.2 Indemnification by Buyer...................... 23
6.3 Third Party Claims............................ 23
6.4 Pending Litigations........................... 24
7. Nondisclosure/Announcements................................ 25
7.1 Nondisclosure................................. 25
7.2 No disparagement.............................. 25
7.3 Injunctive Relief, etc........................ 25
7.4 Scope of Restriction.......................... 25
7.5 Additional Undertakings....................... 25
8. Survival of Representations and Warranties................. 26
9. Miscellaneous Provisions................................... 26
9.1 Expenses...................................... 26
9.2 Notices....................................... 26
9.3 Applicable Law................................ 27
9.4 Waiver, etc................................... 27
9.5 Assignment.................................... 27
9.6 Binding Effect; Benefits...................... 28
9.7 Amendment..................................... 28
9.8 Severability.................................. 28
9.9 Entire Agreement.............................. 28
9.10 Schedules..................................... 28
9.11 Headings...................................... 28
9.12 Execution in Counterparts..................... 28
9.13 Arbitration................................... 29
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SCHEDULES
1.2(iii) Assumed Contracts
1.3 Other Excluded Assets
3.2 Non-Assignable Contracts
4.7 Intellectual Property
4.9 Litigation
4.12 Product Liability Claims
4.13(a) Material Contracts
4.13(b) Other Agreements
4.14 Financials
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EXHIBITS
1 Xxxx of Sale and Assignment
2 Transitional Services Agreement
3 Non-Compete Agreement
4 Indemnity Escrow Agreement
5 Seller's Opinion of Counsel
6 Promissory Note
7 Consulting Agreement
8 Security Escrow Agreement
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ASSET PURCHASE AGREEMENT
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AGREEMENT (this "Agreement"), dated as of the 10th day of March
1999, by and between Inholtra Natural, Ltd., a Maine corporation ("INL"), for
itself and as attorney-in-fact on behalf of Xxxx X. Xxxxxx, a resident of
Florida ("Vito's"), and Inholtra, Inc., a Florida corporation ("Inc.") and
Inholtra Investment Holdings and Trading, N.V., a Netherlands Antilles company
("Holdings"; INL, Vito's, Inc., and Holdings being sometimes referred to herein
individually and collectively as "Seller"), and Xxxxx Naturals/4Health, Inc.
("Buyer"), a Utah corporation.
W I T N E S S E T H:
WHEREAS, Seller is engaged in the business of manufacturing,
marketing, distributing and selling certain nutritional supplements and related
products throughout the United States and in certain other countries (the
"Business") and owns or has rights to use, among other assets, certain data
bases, licenses, inventory, tradenames and goodwill relating thereto, all as
more particularly set forth in this Agreement; and
WHEREAS, Seller wishes to sell to Buyer, and Buyer wishes to purchase
from Seller, as a going concern, the Business and all of the assets and rights
relating thereto, subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of and in reliance upon the
covenants, conditions, representations and warranties herein contained, the
parties hereto hereby agree as follows:
1. Purchase and Sale Agreement.
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1.1 Agreement of Purchase and Sale. Subject to the terms and
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conditions set forth in this Agreement and in reliance upon the representations,
warranties, covenants are conditions herein contained, on the Closing Date (as
defined in Section 2.1 hereof) Seller shall sell, convey, assign, transfer and
deliver to Buyer, and Buyer shall purchase from Seller, the Purchased Assets (as
defined in Section 1.2 hereof), free and clear of any and all liens, pledges,
security interests, claims, charges or encumbrances of any nature whatsoever.
1.2 Purchased Assets. As used in this Agreement the term
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"Purchased Assets" means all rights, interest and title to the properties and
assets owned by Seller and otherwise employed, used or available for use in the
Business, real and personal, tangible and intangible, of every kind and nature,
wherever located, as the same shall exist on the Closing Date, including,
without limitation:
(1) the Intellectual Property Rights (as defined in
Section 4.7 hereof), including, without limitation the
"INHOLTRA","QUICKSORB" and "ALGONOT" marks, and all goodwill
associated therewith and with the Business;
(2) the Inventory (so defined in Section 4.6 hereof);
(3) all contracts, licenses, arrangements, leases,
agreements and commitments, written or oral, that are listed
on Schedule 1.2(iii) (the "Assumed Contracts");
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(4) all brochures, sales literature, catalogues, price
lists, mailing lists, distribution lists, photographs,
advertising materials, media materials and plates, art work
and copy files (for all media), promotional and other
selling materials used in the Business, and masters thereof,
wherever situated, in hard copy and electronic format,
including, but not limited to, all web sites owned or
developed by Seller, together with all elements thereof,
including, without limitation, domain names, text, audio,
video and graphics, and all intellectual property rights
related thereto (all such items being hereinafter
collectively referred to as the "Promotional Materials");
(5) all papers, documents (including information stored
in electronic forms such as computer disks, CD Rom, computer
tape, computer hard drive and the like), instruments, books
and records, correspondence, files, books of account, data
and laboratory books, and other records by which any of the
Purchased Assets might be identified or rights with respect
thereto enforced, or otherwise pertaining to the Purchased
Assets or the Business that are located at the Seller's
offices or other locations used in connection with the
Business (including without limitation, customer invoices,
customer lists, vendor and supplier lists, drafts and other
documents and materials relating to customer transactions);
(6) all analytical and testing reports, files and
production data relating to the Business, in hard copy and
electronic format;
(7) all back order files and collections files relating
to the Business;
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(8) all credits, prepaid expenses, deferred charges,
advance payments, security charges, and other prepaid items,
deposits and advances (including royalty advances as set
forth in Schedule 4.7) relating to the Business;
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(9) all rights of Seller to the computer software
programs (including source and object codes to the extent
Seller owns the rights, data and related documentation) and
the licenses or other agreements conferring rights related
thereto used in connection with the Business;
(10) all office supplies and equipment used in connection
with the Business;
(11) all rights to receive payment, including promissory
notes and all balances, credits, deposits, accounts or
monies of Seller held by third parties (other than accounts
receivable generated by the Business prior to the Closing
Date); and
(12) all other assets and properties of Seller that are
used in connection with the Business other than Excluded
Assets.
1.3 Additional Purchased Assets. In the event that Buyer
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shall establish and notify Seller at any time or from time to time following the
Closing Date that any of the Schedules describing the Purchased Assets failed to
include assets or properties of Seller used by Seller in the Business (other
than Excluded Assets), then: (a) with respect to any such assets or properties
used in the Business, Seller shall, at its own expense, promptly convey,
transfer, assign and deliver to Buyer or other such person as may be designated
by Buyer, and Buyer or such designee shall acquire from Seller, without
additional consideration, all such assets and properties, which shall be deemed
for all purposes to be included in the definition of Purchased Assets hereunder
as provided in Section 1.2 hereof and (b) with respect to any such assets or
properties used primarily, but not exclusively, in the Business, Seller shall
grant to Buyer an irrevocable, royalty-free license or otherwise convey to Buyer
the unlimited right to use any such assets or property, without additional
consideration. Excluded Assets shall mean (a) accounts receivable and other
receivables related to merchandise shipped prior to the Closing Date,(b)
contracts, agreements or commitments which are not Assumed Contracts, and (c)
those assets listed on Schedule 1.3.
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1.4 Assumed Liabilities.
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(1) Subject to the terms and conditions set forth in this Agreement
and in reliance upon the representations, warranties, covenants and conditions
herein contained, on the Closing Date Buyer shall assume, and shall only assume
Seller's executory obligations under the Assumed Contracts (but not any
obligations thereunder arising from any breach or alleged breach by Seller
thereof), in each case only to the extent that the foregoing represent
obligations which are by their stated terms to be performed, in the ordinary
course, subsequent to the Closing Date ("Assumed Liabilities").
(2) Anything herein contained to the contrary notwithstanding, the
following liabilities of Seller are specifically excluded from the Assumed
Liabilities and shall constitute "Retained Liabilities":
(1) any and all income, franchise, sales, use, property,
payroll, employment, transfer and any other taxes, charges, fees,
levies, imports, duties, licenses or other assessments, together with
interest, penalties and any other additions to tax or additional
amounts imposed by any governmental or taxing authority, or liability
for such amounts as a result of Seller being a member of an
affiliated, consolidated, combined or unitary group or being a party
to any agreement or arrangement whereby Seller may be liable for taxes
or any other person for any period prior to (or up to and including)
the close of business on the day prior to the Closing Date;
(2) any and all liabilities to any employees of Seller for
services performed for Seller, or for any severance or other benefits,
and any and all employment or consulting arrangements, executive
compensation plans, collective bargaining agreements, bonus plans,
guaranteed bonus agreements, deferred compensation agreements,
employee pension plans or retirement plans, employee profit sharing
plans, employee stock purchase and stock option plans, group life
insurance, hospitalization insurance or other plans or arrangements
providing for benefits to employees of Seller;
(3) any liabilities and obligations of Seller, the
existence of which constitutes a breach of any of the representations,
warranties or covenants made by Seller in this Agreement or in any
document delivered by it pursuant hereto;
(4) any liabilities and obligations arising out of or in
connection with any defect in any
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product manufactured or sold by Seller prior to the Closing Date, or
any litigation, investigation or proceeding to which Seller is a
party, or which is based upon events occurring or circumstances
existing prior to the Closing Date;
(5) any accounts payable of the Business;
(6) any liabilities and obligations of Seller for any
breach or violation, prior to the Closing Date, of any of the Assumed
Contracts; and
(7) any other liability or obligation which is not an
Assumed Liability.
(3) For purposes of clarification, notwithstanding the assignment of
any contract or other rights included in the Purchased Assets, except as
otherwise provided herein Seller has not assigned and Buyer has not assumed and
Seller retains its rights and obligations, including all rights and remedies of
enforcement, with respect to receivables or other amounts owed or obligations to
or from Seller on sales made prior to the Closing Date.
1.5 Purchase Price, Note and Security Escrow. The purchase
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price for the Purchased Assets shall be $13,250,000.00 (the "Purchase Price"),
of which $250,000.00 has been paid to Seller in cash as a non-refundable down
payment, the sum of $3,000,000.00 shall be paid in cash to Seller at the Closing
(the "Cash Purchase Price"), and the balance of which shall be paid by a
promissory note of Buyer issued to Seller at the Closing, in the form annexed
hereto as Exhibit 6 (the "Note"). It is acknowledged and agreed that upon
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maturity of the Note, and as provided therein, $1,000,000.00 of the principal
amount due thereunder shall be paid to Xxxxxxxxx Xxxxxxxx Xxxxx & Xxxxx LLP, as
escrow agent (the "Indemnity Escrow Agent") pursuant to the terms and conditions
of the Indemnity Escrow Agreement (the "Indemnity Escrow Agreement") to be
executed and delivered at the Closing pursuant to Section 3.15 below. As
security for Buyer's obligations under the Note, the parties agree that the
Reassignments (as defined herein) shall be deposited in escrow (the "Security
Escrow") pending the payment in full of the Note, and the Clean Assignments
thereof (as defined in the Note) of the Intellectual Property Rights shall also
be deposited in the Security Escrow Agreement to be delivered to Buyer for
recording upon payment in full of the Note, all as provided in the Security
Escrow Agreement to be entered into by the parties at the Closing in
substantially the form attached hereto as Exhibit 8 (the "Security Escrow
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Agreement"). As a further inducement to Buyer to enter into this Agreement,
Seller has agreed to enter into the Non-Compete Agreement and the Transitional
Services Agreement, and
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has caused Xxxxxx X.X. Xxxxxx to enter into the Consulting Agreement (as such
terms are defined in Section 3). The Purchase Price shall be allocated as
determined by Buyer, in its discretion (Seller hereby agreeing to report the
transaction for tax purposes on a basis consistent therewith).
2. Closing.
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2.1 Closing Date. The closing of the sale and purchase
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provided for herein (the "Closing") shall take place at 10:00 A.M., New York
time, at the offices of Xxxxxxxxx Xxxxxxxx Xxxxx & Xxxxx, 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 on March , 1999 or at such other place, time and date
as may hereafter be mutually agreed upon by the parties (such time and date of
Closing being hereinafter called the "Closing Date").
2.2 Action by Buyer. Subject to the terms and conditions
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herein contained, on the Closing Date, Buyer shall pay to Seller the Cash
Purchase Price and shall execute and deliver to Seller this Agreement, the Note,
the Indemnity Escrow Agreement, the Consulting Agreement, the Non-Compete
Agreement, the Security Escrow Agreement, the Transitional Services Agreement
and the other agreements contemplated hereby, and shall execute and deliver to
Xxxx X. Xxxx, Esq., as escrow agent (the "Security Escrow Agent"), the
Reassignments.
2.3 Action by Seller. Subject to the terms and conditions
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herein contained, on the Closing Date, Seller shall execute and deliver to Buyer
this Agreement, the Indemnity Escrow Agreement, the Non-Compete Agreement, the
Transitional Services Agreement, the Security Escrow Agreement, and the other
agreements contemplated hereby, shall cause Xxxxxx X.X. Xxxxxx to execute and
deliver the Consulting Agreement, and shall also execute and deliver to Buyer
the following:
(a) a duly executed Xxxx of Sale and Assignment in
substantially the form of Exhibit 1 attached hereto and made a part
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hereof;
(b) assignments with respect to the Intellectual Property
Rights (in forms suitable for recording in the United States Patent
and Trademark Office and in the comparable offices of all relevant
foreign jurisdictions) other instruments of transfer, including
without limitation any assignments with respect to all Assumed
Contracts including License Agreements;
(c) all third-party consents and governmental and
administrative approvals, as shall be, in the opinion of Buyer,
necessary or appropriate in order to convey, transfer and assign to
and vest in Buyer good and marketable right, title and interest in and
to
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the Purchased Assets, free and clear of all liens, pledges, security
interests, claims, charges and encumbrances of any nature whatsoever;
(d) an opinion of Xxxx X. Xxxx, Esq., counsel for Seller,
dated the Closing Date, in substantially the form of Exhibit 5
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attached hereto and made a part hereof; and
(e) duly executed powers of attorney, in form and substance
satisfactory to Buyer, authorizing the parties named therein to act on
behalf of Vito's, Inc. and Holdings, as the case may be, in all
capacities and in respect of all actions contemplated hereunder and
under any document contemplated hereby.
3. Additional Covenants.
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3.1 Further Assurances/Cooperation.
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(1) Seller hereby agrees that it shall from time to time after the
Closing Date, at its sole cost and expense, take any and all actions, and
execute, acknowledge, deliver, file and/or record any and all documents and
instruments, as Buyer may reasonably request in order to more fully perfect the
rights which are intended to be granted to Buyer hereunder.
(2) Each of the parties hereto hereby agrees to fully cooperate with
the other parties hereto in preparing and filing any notices, applications,
reports and other instruments and documents which are required by, or which are
desirable in the opinion of any of the parties hereto in respect of, any
statute, rule, regulation or order of any governmental or administrative body in
connection with the transactions contemplated hereby.
3.2 Non-Assignable Contracts. Anything in this Agreement
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contained to the contrary notwithstanding, nothing in this Agreement shall be
construed as an attempt to assign (a) any contract or agreement that is at law
non-assignable without the consent of the other party thereto and as to which
such consent shall not have been given, or (b) any contract or agreement as to
which all the remedies for the enforcement thereof and the rights thereunder
enjoyed by Seller would not, as a matter of law, pass to Buyer as an incident of
the assignments provided for by this Agreement. Attached hereto as Schedule 3.2
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is a list of all such non-assignable contracts. In order, however, that the full
value of every contract and agreement of the character described in clauses (a)
and (b) of the immediately preceding sentence and all claims and demands
relating to such contracts and agreements may be realized, Seller hereby agrees
with Buyer that it will, at its sole cost and expense, at the request and under
the direction of Buyer,
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in the name of Seller or otherwise, as Buyer shall specify and as shall be
permitted by law, take all such action and do or cause to be done all such
things as shall be, in the opinion of Buyer, necessary or desirable (1) in order
that the rights and benefits of Seller under such contracts and agreements shall
be preserved and (2) for, and to facilitate, the collection of the monies due
and payable, and to become due and payable, to Seller in and under every such
contract and agreement, and Seller will hold the same for the benefit of and
will pay the same, when received, to Buyer.
3.3 Payment of Taxes and Charges Upon Transfer of Purchased
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Assets. Seller shall be responsible for, and shall pay, any and all filing,
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recording, registration and similar fees, arising out of the transactions
contemplated by this Agreement. Buyer shall be responsible for, and shall pay,
any and all sales, use, purchase, transfer and similar taxes arising therefrom.
3.4 Retained Liabilities. Subsequent to the Closing Date,
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Seller shall pay, discharge and perform the Retained Liabilities as and when
due.
3.5 Books and Records. Seller shall, for a period of at least
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four (4) years following the Closing Date, maintain and make available to Buyer
and its representatives for inspection and reproduction, during regular business
hours, all books and records relating to the Purchased Assets, the Business or
the Assumed Liabilities which are not included among the Purchased Assets. Buyer
shall, for a period of at least four (4) years following the Closing Date,
maintain and make available to Seller and its representatives for inspection and
reproduction, during regular business hours, all books and records relating to
the Purchased Assets, the Business or the Assumed Liabilities which are included
among the Purchased Assets, but only insofar as said books and records relate to
periods ending on or prior to the Closing Date.
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3.6 Preparation of Financial Information.
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(1) In contemplation of and in order to comply with the rules and
regulations of the Securities and Exchange Commission, Buyer shall cause its
independent accountants to prepare, as promptly as possible after the Closing
Date, audited financial statements for the Business for the years ended December
31, 1997 and December 31, 1998 (collectively, the "Financial Statements") and to
Seller shall provide all necessary assistance with respect thereto, it being
understood and agreed by Seller that such assistance shall include, without
limitation, (i) providing Buyer and its representatives with all necessary
financial information and data relating to the Business for such periods, (ii)
making available to Buyer all employees or any of its affiliates deemed
necessary by Buyer to assist in the preparation of such financial statements,
and (iii) if requested by Buyer, delivering a management representation letter.
(2) The fees and expenses of such accountants in preparing Financial
Statements for the Business as provided in this Section shall be borne equally
by Buyer and Seller; provided that Seller's share thereof shall not exceed
$25,000.00 in the aggregate.
3.7 Transitional Services Agreement. At the Closing, Buyer
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shall enter into a transitional services agreement, in the form attached hereto
as Exhibit 2 (the "Transitional Services Agreement").
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3.8 Consulting Agreement. At the Closing, Buyer shall enter
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into a consulting agreement with Xxxxxx X.X. Xxxxxx in the form attached hereto
as Exhibit 7 (the "Consulting Agreement").
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3.9 Employees. Buyer shall have no obligation to employ any
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employees of Seller.
3.10 Waiver of Compliance with Bulk Transfer Laws. Subject to
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the provisions of Section 6.1, with respect to the transactions contemplated by
this Agreement, Buyer hereby waives compliance with any applicable provisions of
the bulk transfer laws (Section 6 of the Uniform Commercial Code).
3.11 Non-Compete Agreement. At the Closing, the Seller shall
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enter into a non-compete agreement, in the form attached hereto as Exhibit 3
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(the "Non-Compete Agreement").
3.12 Reimbursement of Buyer. Seller shall, no later than June
----------------------
10, 1999, reimburse Buyer for any refunds, credits, returns, replacements,
repairs and warranty costs and expenses made by Buyer with respect to sales of
merchandise by Seller prior to the Closing.
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3.13 Notice of Certain Matters. Each of the parties hereto
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shall give written notice to the other party promptly upon becoming aware of (i)
the occurrence of a material adverse change in the condition of the Purchased
Assets or the Business, (ii) any occurrence, or failure to occur, of any event,
which occurrence or failure to occur has caused or could reasonably be expected
to cause any representation or warranty in this Agreement to be untrue or
inaccurate in any material respect at any time after the date hereof and prior
to the Closing Date or (iii) any material failure on the part of either party to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by such party hereunder; provided that the delivery of any notice
pursuant to this Section 3.18 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
3.14 Change of Name. Effective from and after the Closing
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Date, each of Seller, Inc., Vito's and Holdings shall (and shall cause each of
their respective subsidiaries and affiliates to) change its name to a name not
containing the words "Inholtra" or "Xxxx" or any combination, permutation or
derivative thereof (except for Vito's with respect to the name Xxxx X. Xxxxxx)
and shall within 15 days after the Closing Date furnish Buyer with certificates
or other written evidence satisfactory to Buyer from the appropriate regulatory
authorities confirming that such changes of name have been effected.
3.15 Other Agreements. At the Closing, the Buyer and Seller
----------------
shall enter into the Indemnity Escrow Agreement, in the form attached hereto as
Exhibit 4, and the Security Escrow Agreement, in the form attached hereto as
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Exhibit 8, pursuant to which Buyer shall deliver to the Security Escrow Agent
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reassignments to Seller, Vito's, Inc., or Holdings, as the case may be, of all
rights assigned to Buyer under Section 2.3(b) hereof, as security for repayment
of the Note (the "Reassignments").
4. Representations and Warranties as to Seller. Seller hereby,
-------------------------------------------
represents and warrants to Buyer as follows:
4.1 Organization, Standing and Power. Each of INL, Inc. and
--------------------------------
Holdings is a corporation duly organized, validly existing and in good standing
under the laws of the state of its incorporation shown in the introductory
paragraph of this Agreement, with full corporate power and authority to own,
lease and operate its properties and to carry on the Business as presently
conducted by it. There are no states or jurisdictions in which the character
and location of any of the properties owned or leased by Seller, or the conduct
of its business, makes it necessary for it to qualify to do business as a
foreign corporation.
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4.2 Interests in Other Entities. Seller does not (i) own,
---------------------------
directly or indirectly, of record or beneficially, any shares of voting stock or
other equity securities of any other corporation engaged in the same or similar
business to the Business; (ii) have any ownership interest, direct or indirect
of record or beneficially, in any unincorporated entity engaged in the same or
similar business to the Business; or (iii) have any obligation, direct or
indirect, present or contingent, (A) to purchase or subscribe for any interest
in, advance or loan monies to, or in any way make investments in, any other
person or entity engaged in the same or similar business to the Business, or (B)
to share any profits or capital investments or both from a entity engaged in the
same or similar business to the Business.
4.3 Authority. The execution and delivery by of this
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Agreement and of all of the agreements to be executed and delivered by them
pursuant hereto, the performance by them of their respective obligations
hereunder and thereunder, and the consummation of the transactions contemplated
hereby and thereby, have been duly and validly authorized by all necessary
corporate action on the part of each such party and each such party has all
necessary power with respect thereto. This Agreement is, and when executed and
delivered by the parties thereto, each of the other agreements to be delivered
pursuant hereto will be, the valid and binding obligation of them, Vito's, Inc.
and Holdings enforceable against each such party in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the rights of creditors generally and subject
to the rules of law governing (and all limitations on) specific performance,
injunctive relief, and other equitable remedies.
4.4 Noncontravention. Neither the execution and delivery of
----------------
this Agreement or of any agreement to be executed and delivered pursuant hereto,
nor the consummation of any transactions contemplated hereby or thereby, nor the
performance by INL, Vito's, Inc. and Holdings of its obligations hereunder or
thereunder, will (nor with the giving of notice or the lapse of time or both
would) (A) conflict with or result in a breach of any provision of the
Certificate of Incorporation or By-laws of any of such parties or (B) give rise
to a default or any right of termination, cancellation or acceleration, or
otherwise be in conflict with or result in a loss of contractual benefits to
Seller, under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, agreement or other instrument or obligation to
which it is a party or by which Seller or any of the Purchased Assets may be
bound, or require any consent, approval or notice under the terms of any such
document or instrument, or (C) violate any order, writ, injunction, decree, law,
statute, rule or regulation of any Court or governmental authority which is
applicable to Seller or any of the Purchased Assets, or (D) result in the
creation or imposition of any lien, claim, restriction,
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charge or encumbrance upon any of the Purchased Assets, or (E) interfere with or
otherwise adversely affect the ability of Buyer to carry on the Business after
the Closing Date on substantially the same basis as is now conducted by Seller.
4.5 Properties. Except for the Excluded Assets, the Purchased
----------
Assets comprise all of the properties and assets which are necessary in order
for Buyer to carry on the Business on and after the Closing Date on
substantially the same basis as is now conducted by Seller. INL, Vito's, Inc.
and Holdings have good and valid title to all of the Purchased Assets, free and
clear of all liens, pledges, security interests, claims, charges or encumbrances
of any nature whatsoever.
4.6 Inventory. The inventory of the Seller consists of all
---------
finished goods (including packaging), wherever located, related to the Business
(all such items being hereinafter collectively referred to as the Inventory"),
all of which is merchantable and fit for the purpose for which it was procured
or manufactured, and none of which is damaged, defective or obsolete. No single
SKU of product included in the Inventory exceeds in volume the amount of such
SKU that is necessary for the conduct of the Business, based upon historical
sales, by Seller of such SKU. Seller has, and on the Closing Date will have, on
hand sufficient quantities of each SKU of Inventory, based upon historical sales
by Seller of such SKU, or binding commitments from suppliers, third-party
manufacturers and packers and fulfillment houses to supply sufficient quantities
thereof, to enable Buyer to satisfy all commitments to customers for at least an
eight(8) week period after the Closing Date.
4.7 Intellectual Property.
---------------------
(1) Schedule 4.7 is a complete and correct list of all (i) United
------------
States and foreign patents, trademark and trade name registrations, trademarks
and trade names, brandmarks and brand name registrations, servicemarks and
servicemark registrations, assumed names and copyrights and copyright
registrations, owned in whole or in part and used by INL, Vito's, Inc. or
Holdings with respect to the Business as presently conducted by Seller, and all
applications therefor, including without limitation, the "INHOLTRA" name, in
each case indicating the party owning such rights, (ii) inventions, discoveries,
improvement's, processes, formulae, proprietary rights and trade secrets
relating to the Business as presently conducted by Seller (including customer
and supplier lists, pricing and cost information, and business and marketing
plans and proposals), (iii) domain name, fictitious and d.b.a. name, proprietary
"800" and "888" prefix telephone numbers, Internet URL's, web site text, audio,
video and graphics, and other identifier and proprietary rights owned or used by
INL, Vito's, Inc. or Holdings in connection with the Business as presently
conducted by Seller (and
12
with respect to such "800" and "888" prefix telephone numbers, Seller will use
commercially reasonable efforts to obtain from its long distance carrier consent
to the assignment and transfer of all such telephone numbers and related
rights), and (iv) licenses, sublicenses and similar agreements (active or
pending) between INL, Vito's, Inc. or Holdings and the respective copyright
owners of all labels currently distributed by the Business as presently
conducted by Seller (the "License Agreements") (all such items listed in (i)
through (iv) above being hereinafter referred to as "Intellectual Property
Rights"). Schedule 4.7 also identifies, with respect to the License Agreements,
------------
the copyright owners and the royalty rate, the advance and the amount of the
advance, if any, which has not been recouped.
(2) Except as expressly set forth in said Schedule 4.7 or in Schedule
------------ --------
4.9, (i) INL, Vito's, Inc. and Holdings own or have the right to use all of the
---
Intellectual Property Rights; (ii) no proceedings have been instituted, are
pending or, to the best of the knowledge of INL, Vito's, Inc. and Holdings are
threatened, which challenge the rights of INL, Vito's, Inc. and Holdings in
respect thereto or the validity thereof and, to the best knowledge of INL,
Vito's, Inc. and Holdings there is no valid basis for any such proceedings;
(iii) none of the aforesaid violates any laws, statutes, ordinances or
regulations, or has at any time infringed upon or violated any rights of others,
or is being infringed by others; and (iv) none of the aforesaid is subject to
any outstanding order, decree, judgment, stipulation or charge.
(3) The Intellectual Property Rights include all patents, trademarks,
servicemarks, brandmarks, trade names, copyrights and similar rights that are
used in or are necessary for the operation of the Business as presently
conducted by Seller.
(4) All patents, trademarks, servicemarks and brandmarks that are
included in the Intellectual Property Rights have been duly registered in or
issued by the United States Patent and Trademark Office, the United Sates
Register of Copyrights and the appropriate offices of the other countries shown
on Schedule 4.7, have been renewed in accordance with all applicable provisions
------------
of law and administrative regulations in the United States and in each such
country, are valid, enforceable and subsisting, and all necessary actions have
been taken to maintain the same. All patent applications and applications for
registration of trademarks, servicemarks or brandmarks listed on Schedule 4.7
------------
have been duly filed with the United States Patent and Trademark Office, the
United States Register of Copyrights and the appropriate offices of the other
countries identified therein, and are pending, except as otherwise shown in
Schedule 4.7.
------------
13
(5) All licenses or other agreements included in the Intellectual
Property Rights are in full force and effect, there is no default by INL,
Vito's, Inc. or Holdings or any other party thereto, and all rights of each such
party thereunder are freely assignable to Buyer. The licensors under such
licenses and other agreements have and had all requisite power and authority to
grant the rights purported to be conferred thereby. True and complete copies of
all such licenses and other agreements have been provided to Buyer.
(6) All licenses or other agreements under which Seller has granted
rights to others in any of the Intellectual Property Rights are listed in
Schedule 4.7. All of such licenses and other agreements are in full force and
------------
effect, there is no default by Seller or any other party thereto, and all of
Seller's rights thereunder are freely assignable to Buyer. True and complete
copies of all such licenses and other agreements have been provided to Buyer.
4.8 Absence of Changes. Since November 30, 1998, (a) Seller
------------------
has conducted the Business (and during the transition period contemplated by the
Transitional Services Agreement will conduct the Business) only in the ordinary
course of business and in a manner consistent with existing policies and
practices, with a view toward maximizing sales and profits, and in compliance
with applicable law; and Seller has used (and, during such transition period,
shall use) its best efforts to preserve intact the Business, to maintain and
preserve the Purchased Assets, to keep available the services of key management
personnel and to preserve the present goodwill of Seller and its relationships
with customers, suppliers and other persons with whom it has business relations;
(b) there has not been (i) any material adverse change in the condition
(financial or otherwise), assets, liabilities, business, prospects, or results
of operations of the Business (including, without limitation, any such adverse
change resulting from damage, destruction or other casualty, loss, whether or
not covered by insurance), (ii) any waiver by Seller of any right, or
cancellation of any debt or claim, related to the Business, or (iii) any change
in the accounting principles or methods which are utilized by Seller; and (c)
Seller has not
(i) agreed or undertaken to sell, lease, license, mortgage or
otherwise encumber or subject to any lien or otherwise dispose of any of the
Purchased Assets, except the sale of the Inventory in the ordinary course of
business;
(ii) agreed or undertaken to sell, assign or transfer any patents,
trademarks, trade names, copyrights, licenses or other intangible assets related
to the Business or the Purchased Assets;
14
(iii) caused Seller to suffer any event or condition of any character
that has or could materially and adversely affect the Business or the Purchased
Assets;
(iv) altered the price lists relating to the Business,
other than in the ordinary course of business;
(v) waived or accelerated any rights of value or entered into any
transactions with respect to the Business not in the ordinary course of
business;
(vi) maintained the books of account and records relating to the
Purchased Assets in the usual, regular and ordinary manner, on a basis
consistent with past practice, and complied with all material laws applicable to
the conduct of the Business with respect to the Purchased Assets and performed
its material obligations relating to the Business with respect to the Purchased
Assets without default;
(vii) not authorized or permitted its officers, directors or employees
or any investment banker, financial advisor, attorney, accountant or other
representative to sell, agree to sell or enter into any arrangements or
negotiations or authorized any third party to enter into negotiations or solicit
offers of any type or to provide information, cooperate in any way or assist,
facilitate or encourage acquisitions relating to the transfer or other
disposition of any of the Purchased Assets or the Business (including any merger
or consolidation involving the Seller or any other similar transaction); or
(viii) authorized any of, or committed or agreed to take, any of the
foregoing actions.
4.9 Litigation. Except as set forth in Schedule 4.9, there
---------- ------------
are no claims, suits, actions, arbitrations, investigations, inquiries or other
proceedings before any governmental agency, court or tribunal, domestic or
foreign, or before any private arbitration tribunal, pending or, to the best of
the knowledge of Seller, threatened, against or relating to Seller, the Business
or any of the Purchased Assets; nor, is there any basis for any such claim,
suit, action, arbitration, investigation, inquiry or other proceeding. There are
no judgments, orders, stipulations, injunctions, decrees or awards in effect
which relate to Seller, the Business or any of the Purchased Assets, the effect
of which is (a) to limit, restrict, regulate, enjoin or prohibit any business
practice in any area, or the acquisition of any properties, assets or
businesses, or (b) otherwise materially adverse to the Business or any of the
Purchased Assets.
4.10 No Violation of Law. Seller is not engaging in any
-------------------
activity or omitting to take any action as a result of which (a) it is in
violation of any law, rule, regulation, zoning or
15
other ordinance, statute, order, injunction or decree, or any other requirement
of any court or governmental or administrative, body or agency, applicable to
Seller, the Business or any of the Purchased Assets, including, but not limited
to, those relating to truth-in-advertising, occupational safety and health,
consumer health and safety, environmental and ecological protection, business
practices and operations, labor practices, and employee benefits, and (b)
Seller, the Business and/or any of the Purchased Assets have been or may be
materially and adversely affected.
4.11 Government and Third-Party Consents/ Approvals. No
----------------------------------------------
approval, authorization, consent or order or action of, or filing with, any
third party or court, administrative agency or governmental authority (a) is
required for the execution and delivery by INL, for itself and on behalf of
Vito's, Inc. and Holdings, of this Agreement and of all of the agreements to be
executed and delivered by Seller pursuant hereto, or the consummation by Seller
of the transactions contemplated hereby or thereby or (b) is necessary in order
that the Business may be conducted immediately following the Closing Date
substantially in the same manner as heretofore conducted.
4.12 Products Liability. Schedule 4.12 lists all product
------------------ -------------
liability claims made or to the knowledge of Seller threatened in Seller's last
three (3) fiscal years with respect to the Business.
4.13 Material and Other Contracts.
----------------------------
(1) Schedule 4.13(a) lists all pending or executory contracts,
----------------
agreements or commitments relating to the Business, including, without
limitation, license agreements, product supplier agreements, distribution
agreements, marketing agreements, non-competition agreements, confidentiality
agreements and vendor agreements, and other agreements relating to the
Intellectual Property Rights (all such items being hereinafter collectively
referred to as the "Material Agreements"). True and complete copies of all such
documents and complete descriptions of all oral contracts (if any) referred to
in Schedule 4.13(a) have been provided or made available to Buyer and its
----------------
counsel. Each of the Assumed Contracts is (i) in full force and effect, no
person or entity which is a party thereto or otherwise bound thereby is in
default thereunder, and, to the best of the knowledge of Seller, no event,
occurrence, condition or act exists which does (or which with the giving of
notice or the lapse of time or both would) give rise to a default or right of
cancellation, acceleration or loss of contractual benefits thereunder; (ii)
there has been no threatened cancellations thereof, and there are no outstanding
disputes thereunder; and (iii) none of them is materially burdensome to Seller.
16
(2) Schedule 4.13(b) contains a complete and correct list of all
----------------
contract, commitments, obligations and understandings which are not set forth in
any other Schedule delivered hereunder and to which Seller is a party or
otherwise bound, and which relate to the Business, except for each of those
which (i) was made in the ordinary course of business, and (ii) either (A) is
terminable by Seller (and will be terminable by Buyer) without liability,
expense or other obligation on thirty (30) days' notice or less, or (B) may be
anticipated to involve aggregate payments to or by Seller of $5,000 (or the
equivalent) or less calculated over the full term thereof, and (iii) is not
otherwise material to the Business or any of the Purchased Assets. Complete and
correct copies of all contracts, commitments, obligations and undertakings set
forth on any of the Schedules delivered pursuant to this Agreement have been
furnished by Seller to Buyer, and except as expressly stated on the Schedule on
which they are set forth, (x) each of them is in full force and effect, no
person or entity which is a party thereto or otherwise bound thereby is in
default thereunder, and, to the best of the knowledge of Seller, no event,
occurrence, condition or act exists which does (or which with the giving of
notice or the lapse of time or both would) give rise to a default or right of
cancellation, acceleration or loss of contractual benefits thereunder; (y) there
has been no threatened cancellations thereof, and there are no outstanding
disputes thereunder; and (z) none of them is materially burdensome to Seller.
4.14 Business Financial Statements; 1998 Revenues. Schedule
-------------------------------------------- --------
4.14 is a true and correct copy of the balance sheet with respect to the
----
Business as at October 31 and November 30, 1998 and the related statements of
operations for the periods then ended (collectively, the "Business Financials").
The Business Financials have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as may otherwise be indicated therein) and each presents
fairly, in all material respects, the financial position of the Business as at
the date thereof and the results of its operations and cash flow position for
the period indicated. Seller represents and warrants that the revenues of Seller
(net of refunds, credits, returns, replacements, repairs, warranty costs and
expenses and bad debt expenses) for the year ended December 31, 1998 is no less
than $5,000,000.00.
4.15 Books and Records. The books and records of Seller are
-----------------
complete and correct, have been maintained in accordance with good business
practices, and accurately reflect the basis for the financial condition, results
of operations and cash flow of Seller as set forth in the Business Financials.
4.16 Taxes. Seller has filed all tax returns that it was
-----
required to file. All such tax returns were correct and complete in all material
respects. All taxes owed by Seller
17
(whether or not shown on any tax return) have been paid or adequate provision
for the payment thereof has been made by Seller. Seller currently is not the
beneficiary of, or subject to, any extension of time within which to file any
tax return. Seller has reported and duly paid state and local sales and use
taxes in all states in which it is required to report and pay such taxes,
including sales and/or use taxes on sales of merchandise and on promotional
materials. There is no material dispute or claim concerning any tax liability of
Seller either formally asserted or raised, or, to the knowledge of Seller,
threatened by any governmental or administrative entity.
4.17 Information as to Seller. None of the representations or
------------------------
warranties made by INL, Vito's, Inc. or Holdings, in this Agreement or in any
agreement executed and delivered by it pursuant hereto are false or misleading
with respect to any material fact, or omit to state any material fact necessary
in order to make the statements therein contained not misleading.
5. Representations and Warranties as to Buyer. Buyer hereby
------------------------------------------
represents and warrants to Seller as follows:
5.1 Organization, Standing and Power. Buyer is a corporation
--------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Utah, with full corporate power and authority to own, lease and operate
its properties and to carry on its business as presently conducted by it.
5.2 Authority. The execution and delivery by Buyer of this
---------
Agreement and of each agreement to be executed and delivered by it pursuant
hereto, the compliance by Buyer with the provisions hereof and thereof, the
consummation of the transactions contemplated hereby and thereby, have been duly
and validly authorized by all necessary corporate action on the part of Buyer,
and Buyer has all necessary corporate power with respect thereto. This
Agreement is, and when executed and delivered by Buyer each other agreement to
be executed and delivered by it pursuant hereto will be, the valid and binding
obligation of Buyer enforceable against Buyer in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the rights of creditors generally and subject
to the rules of law governing (and all limitations on) specific performance,
injunctive relief, and other equitable remedies.
5.3 Noncontravention. Neither the execution and delivery by
----------------
Buyer of this Agreement or of any of the aforementioned other agreements, nor
the consummation of the transactions contemplated hereby or thereby, nor the
compliance by Buyer with the provisions hereof and thereof, will (nor with the
giving of notice or the lapse of time or both, would) conflict with or result in
a violation of any provision of the Certificate of
18
Incorporation or By-laws of Buyer, or in the breach of any material agreement to
which Buyer is a party or otherwise bound.
5.4 Information as to Buyer. None of the representations or
-----------------------
warranties made by Buyer in this Agreement or in any agreement executed and
delivered by or on behalf of it pursuant hereto are false or misleading with
respect to any material fact, or omit to state any material fact necessary in
order to make the statements therein contained not misleading.
6. Indemnification.
---------------
6.1 Indemnification by Seller. Seller shall indemnify and
-------------------------
hold Buyer harmless from and against any and all losses, obligations,
deficiencies, liabilities, claims, damages, costs and expenses including,
without limitation, the amount of any settlement entered into pursuant hereto,
and all reasonable legal and other expenses incurred in connection with the
investigation, prosecution or defense of any matter indemnified pursuant hereto
(a "Loss") which Loss Buyer may sustain, suffer or incur and which arises out
of, is caused by, relates to, or results or occurs from or in connection with
(a) liabilities (other than the Assumed Liabilities) arising in connection with
the Business, this Agreement or the transactions contemplated hereby, (b) the
noncompliance with any applicable bulk transfer laws of any jurisdiction, (c)
the breach by Seller of any representation, warranty or covenant by it in this
Agreement or in any agreement or instrument executed and delivered pursuant
hereto, (d) the operation of the Business by Seller prior to the Closing Date
(regardless of whether any claim is brought prior to or subsequent to the
Closing), (e) any willful misconduct or negligence by Seller which interferes
with the transactions contemplated by this Agreement,(f) any refunds, credits or
replacements issued or made after the Closing Date relating to sales made by
Seller prior to the Closing Date, or (g) liabilities relating to any fees,
brokerage commissions, or other like payments owed to any agent, broker, person
or firm acting on behalf of Seller, or under its authority, in connection with
any of the transactions contemplated hereby. Furthermore, Seller will indemnify
and hold Buyer harmless against all liabilities, loss, expense, cost or
obligations of any nature, known or unknown, fixed or contingent, matured or
unmatured, to any party which Buyer might incur relating to the transactions
contemplated hereunder and the transfer of the Business to Buyer regardless of
whether said claim is instituted prior to or subsequent to the Closing and
regardless of whether the transactions contemplated hereby are consummated.
Seller will indemnify Buyer for any willful or negligent act by Seller
interfering with the intent and/or terms of this Agreement and the transactions
contemplated hereunder. This indemnification obligation shall also apply to
claims directly by Buyer against the Seller as well as to third party claims.
In addition to any other rights and remedies to which Buyer may be entitled
hereunder or
19
under applicable law, upon notice to Seller specifying in reasonable detail the
basis for a set-off, Buyer may set-off any amount to which it may be entitled
under this Article 6 against amounts otherwise payable by it under the Note.
Notwithstanding the foregoing, Seller's obligations to indemnify Buyer
hereunder, insofar as they relate to Losses arising out of any litigation
described on Schedule 4.9 hereto, shall not exceed One Million Dollars
------------
($1,000,000.00) in the aggregate.
6.2 Indemnification by Buyer. Buyer indemnifies and holds
------------------------
Seller harmless from and against any Loss, which Loss Seller may sustain, suffer
or incur and which arise out of, are caused by, relate to, or result or occur
from or in connection with (a) the Assumed Liabilities,(b) the breach by Buyer
of any representation, warranty or covenant made by it in this Agreement or in
any agreement or instrument executed and delivered pursuant hereto, (c)
liabilities relating to the merchandise sold by Buyer (other than claims caused
by a breach of a representation or warranty by Seller or negligent acts or
omissions of Seller), or the operation of the Business by Buyer after the
Closing Date, or (d) liabilities relating to any fees, brokerage commissions, or
other like payments owed to any agent, broker, person or firm acting on behalf
of Buyer, or under its authority, in connection with any of the transactions
contemplated hereby. This indemnification obligation shall also apply to claims
direct1y by Seller against Buyer as well as to third party claims.
6.3 Third Party Claims. If a claim by a third party is made
------------------
against any party or parties hereto and the party or parties against whom said
claim is made intends to seek indemnification with respect thereto under this
Section 6, the party or parties seeking such indemnification shall promptly
notify the indemnifying party or parties, in writing, of such claim; provided,
however, that the failure to give such notice shall not affect the rights of the
indemnified party or parties hereunder unless such failure materially and
adversely affects the indemnifying party or parties. The indemnifying party or
parties shall have ten (10) days after said notice is given to elect, by written
notice given to the indemnified party or parties, to undertake, conduct and
control, through counsel of their own choosing (subject to the consent of the
indemnified party or parties, such consent not to be unreasonably withheld) and
at their sole risk and expense, the good faith settlement or defense of such
claim, and the indemnified party or parties shall cooperate with the
indemnifying parties in connection therewith; provided: (i) in the case of
Seller as the indemnifying party, it shall not thereby permit to exist any lien,
encumbrance or other adverse change upon any of the Purchased Assets, Buyer or
the Business, and (ii) the indemnified party or parties shall be entitled to
participate in such settlement or defense through counsel chosen by the
indemnified party or parties, provided that the fees and expenses of such
counsel shall be borne by the indemnified party or parties.
20
So long as the indemnifying party or parties are contesting any such claim in
good faith, the indemnified party or parties shall not pay or settle any such
claim; provided, however, that notwithstanding the foregoing, the indemnified
party or parties shall have the right to pay or settle any such claim at any
time, provided that in such event they shall waive any right of indemnification
therefor by the indemnifying party or parties. If the indemnifying parties do
not make a timely election to undertake the good faith defense or settlement of
the claim as aforesaid, or if the indemnifying parties fail to proceed with the
good faith defense or settlement of the matter after making such election, then,
in either such event, the indemnified party or parties shall have the right to
contest, settle or compromise the claim at their exclusive discretion, at the
risk and expense of the indemnifying parties to the full extent set forth in
Sections 6.1 or 6.2 hereof, as the case may be.
6.4 Pending Litigations. The parties agree that Buyer shall
-------------------
have the rights of an indemnified party under Section 6.3 above with respect to
each of the pending litigations described on Schedule 4.9, provided that with
------------
respect to the Nutrimax/Rexall action described therein, any award received by
---------------
Buyer or Seller thereunder shall first be applied to the payment or
reimbursement of Seller's reasonable legal fees and expenses incurred in such
action prior to the Closing, then to the payment or reimbursement of Seller's
and Buyer's reasonable legal fees and expenses incurred in such action after the
Closing, and the balance shall be divided equally between Buyer and Seller.
7. Nondisclosure/Announcements.
---------------------------
7.1 Nondisclosure. Following the Closing, the parties shall
-------------
mutually agree on and issue a press release regarding the relationship
contemplated in this Agreement, provided that under no circumstances shall the
Purchase Price or any other financial terms of this Agreement be disclosed
except as otherwise required by law.
7.2 No disparagement. At no time during the period
----------------
commencing on the date hereof and continuing for five (5) years after the
Closing Date shall INL, or any subsidiary or affiliate thereof, including,
without limitation, Vito's, Inc. or Holdings, disparage the commercial, business
or financial reputation of Buyer or any of its officers, directors, employees,
agents or affiliates.
7.3 Injunctive Relief, etc. The parties hereto hereby
----------------------
acknowledge and agree that (i) Buyer would be irreparably injured in the event
of a breach by INL, Vito's, Inc. or Holdings of any of their respective
obligations under this Section 7, (ii) monetary damages would not be an adequate
remedy for any such
21
breach, and (iii) Buyer shall be entitled to injunctive relief, in addition to
any other remedy which it may have, in the event of any such breach. It is
hereby also agreed that the existence of any claims which Seller may have
against Buyer, whether under this Agreement or otherwise, shall not be a defense
to the enforcement by Buyer of any of its rights under this Section 7.
7.4 Scope of Restriction. It is the intent of the parties
--------------------
hereto that the covenants contained in this Section 7 shall be enforced to the
fullest extent permissible under the laws of and public policies of each
jurisdiction in which enforcement is sought (Seller hereby acknowledging that
said restrictions are reasonably necessary for the protection of Buyer).
Accordingly, it is hereby agreed that if any one or more of the provisions of
this Section 7 shall be adjudicated to be invalid or unenforceable for any
reason whatsoever, said provision shall be (only with respect to the operation
thereof in the particular jurisdiction in which such adjudication is made)
construed by limiting and reducing it so as to be enforceable to the extent
permissible.
7.5 Additional Undertakings. The provisions of this Section
-----------------------
7 shall be in addition to, and not in lieu of, any other obligations with
respect to the subject matter hereof, whether arising as a matter of contract,
by law or otherwise, including, but not limited to, any obligations which may be
contained in any employment or consulting agreements to which Buyer is a party.
8. Survival of Representations and Warranties.
------------------------------------------
Each of the parties hereto hereby agrees that all representations and
warranties made by or on behalf of it in this Agreement or in any document or
instrument delivered pursuant hereto shall survive the Closing Date and the
consummation of the transactions contemplated hereby.
9. Miscellaneous Provisions.
------------------------
9.1 Expenses. Except as otherwise provided in this
--------
Agreement, each of the parties hereto shall pay his or its own costs and
expenses in connection with this Agreement and the transactions contemplated
hereby.
9.2 Notices. All notices, requests, demands and other
-------
communications hereunder shall be in writing and shall be deemed to have been
duly given or made as of the date delivered, if delivered personally, or one (1)
business day after having been deposited with courier, if sent by overnight
courier or having been sent by telecopy, if sent by telecopy (receipt
confirmed), or three (3) business days after having been mailed, if mailed by
registered or certified mail, postage prepaid, return receipt requested, as
follows:
22
If to Buyer, to: Xxxxx Naturals/4Health, Inc.
00000 X. Xxxxxxxxx Xxxxxxxxx
Xxxxxx Xxxx, XX 00000
Attn: Xxxx Xxxxx
Copy to: Xxxxxxxxx Xxxxxxxx Xxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxxx
If to INL,
Vito's, Inc. or
Holdings, to: Inholtra Natural, Ltd.
00 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxx X.X. Xxxxxx
President and CEO
Copy to: Faro & Associates
X.X. Xxx 0000
Xxxxx, Xx 00000-0000
Attn: Xxxx X. Xxxx
or to such other address as any party shall have designated by like notice to
the other parties hereto (except that a notice of change of address shall only
be effective upon receipt).
9.3 Applicable Law. This Agreement shall be governed by, and
--------------
construed in accordance with, the law of the State of Utah without regard to its
choice of law principles.
9.4 Waiver, etc. The failure of any of the parties hereto to
-----------
at any time enforce any of the provisions of this Agreement shall not be deemed
or construed to be a waiver of any such provision, nor to in any way affect the
validity of this Agreement or any provision hereof or the right of any of the
parties hereto to thereafter enforce each and every provision of this Agreement.
No waiver of any breach of any of the provisions Agreement shall be effective
unless set forth in a instrument executed by the party or parties against whom
enforcement of such waiver is sought; and no waiver of breach shall be construed
or deemed to be a waiver of or subsequent breach.
9.5 Assignment. Prior to the Closing Date, neither this
----------
Agreement nor any rights, interests or obligations hereunder may be assigned (by
operation of law or otherwise) by any party hereto without the prior written
consent of all of the parties hereto, except that Buyer may (a) assign any and
all of its rights and remedies and delegate any and all of its obligations under
this Agreement to any affiliate, subsidiary or any entity owned or controlled
by, it, provided such affiliate, subsidiary or
23
entity agrees in writing to be bound by the terms hereof, and (b) grant a
security interest in its rights under this Agreement to Buyer's lender, as
administrative agent (the "Agent"), in connection with the financing of the
transactions contemplated by this Agreement.
9.6 Binding Effect; Benefits. This Agreement shall inure to
------------------------
the benefit of, and shall be binding upon, the parties hereto and their
respective successors and permitted assigns. Nothing herein contained, express
or implied, is intended to confer upon any person other than the parties hereto
and their respective successors and permitted assigns, any rights or remedies
under or by reason of this Agreement.
9.7 Amendment. This Agreement may only be amended by a
---------
written instrument executed by each of the parties hereto.
9.8 Severability. Any provision of this Agreement which is
------------
held by a court of competent jurisdiction to be prohibited or unenforceable in
any jurisdiction(s) shall be, as to such jurisdiction(s), ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
9.9 Entire Agreement. This Agreement (together with the other
----------------
agreements and documents being delivered pursuant to or in connection with this
Agreement) and the Confidentiality Agreement constitute the entire agreement of
the parties hereto with respect to the subject matter hereof, and supersede all
prior agreements and understandings of the parties, oral and written, with
respect to the subject matter hereof.
9.10 Schedules. The Schedules delivered pursuant to this
---------
Agreement are an integral part hereof. Each such Schedule shall be in writing,
shall indicate the Section pursuant to which it is being delivered, and shall be
initialed by the delivering party.
9.11 Headings. The headings contained herein are for the sole
--------
purpose of convenience of reference, and shall not in any way limit or affect
the meaning or interpretation of any of the terms or provisions of this
Agreement.
9.12 Execution in Counterparts. This Agreement may be executed
-------------------------
in one or more counterparts, and by the different parties hereto in separate
counterparts, each of which shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement, and shall become
effective when one or more counterparts has been signed by each of the parties
hereto and delivered to each of the other parties hereto.
24
9.13 Arbitration. All disputes under this Agreement shall be
-----------
resolved by binding arbitration in the City of New York, NY, before a single
arbitrator in accordance with the rules of the American Arbitration Association.
25
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto as of the date first above written.
Attest: XXXXX NATURALS/4HEALTH, INC.
By:/s/ Xxxx Xxxxx
----------------------- --------------------------------
Secretary Name: Xxxx Xxxxx
Title: Chief Executive Officer
Attest: INHOLTRA NATURAL, LTD.
By:/s/ Xxxxxx X. X. Xxxxxx
------------------------ --------------------------------
Secretary Name: Xxxxxx X. X. Xxxxxx
Title: President
Attest: XXXX X. XXXXXX
by Inholtra Natural, Ltd., as
attorney-in-fact
By: /s/ Xxxxxx X. X. Xxxxxx
------------------------ --------------------------------
Secretary Name: Xxxxxx X. X. Xxxxxx
Title: President
Attest: INHOLTRA INVESTMENT HOLDINGS AND
TRADING, N.V.,
by Herm Jan van Asselt, as
attorney-in-fact
By: /s/ Herm Jan van Asselt
------------------------ --------------------------------
Secretary Name: Herm Jan van Asselt
Title: President
Attest: INHOLTRA, INC.
By: /s/ Xxxxxx xxx Xxxxxx
------------------------ --------------------------------
Secretary Name: Xxxxxx xxx Xxxxxx
Title: President
26
