Exhibit 2.1
Asset Purchase Agreement
ASSET PURCHASE AND SALE AGREEMENT dated as of May 12, 1998 by and
among CHATTEM, INC., a Tennessee corporation ("Chattem"), SIGNAL
INVESTMENT & MANAGEMENT CO., a Delaware corporation ("Signal")
(Chattem and Signal being referred to herein together as the
"Sellers"), and DEL LABORATORIES, INC., a Delaware corporation
("Purchaser"). The Purchaser and the Sellers are sometimes referred to
collectively as the "Parties" and each as a "Party."
Chattem and Signal, a wholly-owned subsidiary of Chattem, own the
trademarks CORN SILK(R), CORN SILK & Design(R), WEIGHTLESS BY CORN SILK(R),
BRONZSILK(R) and MICRON(R) (the "Corn Silk Trademarks"). Chattem manufactuRes,
markets and sells certain cosmetic products (the "Corn Silk Business") under the
Corn Silk Trademarks. The Sellers desire to sell, and the Purchaser desires to
purchase, the Sellers' right, title and interest in and to substantially all of
the assets of the Corn Silk Business, including the Corn Silk Trademarks,
subject to and in accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained in this Agreement, the parties agree:
ARTICLE I
PURCHASE AND SALE
1.1 Agreement to Sell.
At the Closing, which shall occur on the Closing Date (both terms as
defined in Section 7.1 hereof), and in accordance with the terms and conditions
of this Agreement, the Sellers shall sell, convey, assign and deliver to the
Purchaser, without limitation, all right, title and interest of the Sellers in
and to the Corn Silk Business (the "Acquired Assets"), free and clear of all
mortgages, liens, pledges, security interests, charges, claims, restrictions and
encumbrances of any nature whatsoever.
1.2 Acquired Assets.
The Acquired Assets shall consist of the following assets, properties and
rights of the Sellers related to or used in the Corn Silk Business, except as
otherwise expressly set forth in this Article I:
(a) all inventories of Merchantable (as hereinafter defined) finished
products and display materials normally accompanying such finished products in
shipments to customers, in each case on hand at the Closing (collectively, the
"Inventory");
(b) all market research, promotional data and advertising and display
materials currently used in the Corn Silk Business;
(c) all technologies, analytical methods, technical information,
product specifications and formulations, manufacturing processes, data bases,
operating manuals, trade secrets, know-how and raw material specifications
currently owned by the Sellers and, subject to the further terms and conditions
of this Section 1.2, used exclusively in the Corn Silk Business;
(d) all machinery, equipment, molds, tools and other items of tangible
personal property as set forth on Schedule 1.2(d);
(e) subject to Section 1.9 hereof, all contracts, agreements, and
purchase and sale orders relating to the operation of the Corn Silk Business
subsequent to the Closing Date;
(f) all files, records, data, plans, contracts (including contracts
under which Seller is entitled to receive royalty payments from the other
parties thereto) and recorded information, including, without limitation,
customer and supplier lists currently used in the Corn Silk Business;
(g) all software, operating systems, dispatch systems and accounting
systems developed and transferable by the Sellers currently owned by the Sellers
and, subject to the further terms and conditions of this Section 1.2, used
exclusively in the Corn Silk Business;
(h) to the extent transferable, all governmental licenses, permits,
authorizations and approvals;
(i) all the right, title and interest of Sellers in and to the name
"Corn Silk" and any variations thereof containing the name "Corn Silk," all
logos of Sellers used or held for use in connection with the Corn Silk Business,
and the Corn Silk Trademarks and tradenames and related goodwill associated
therewith; and
(j) all cash received by Sellers or any agent of Sellers after the
Closing Date from customers of the Corn Silk Business for services provided or
products sold by the Corn Silk Business after the Closing Date.
In connection with the foregoing, (A) the term "Merchantable", as applied to the
Inventory, shall mean that such Inventory (i) is of a quality such that it can
be sold in the ordinary course of the Corn Silk Business, (ii) has or would pass
quality assurance testing consistent with past practice of the Corn Silk
Business, (iii) is in compliance with all applicable laws, rules and
regulations, including the fact that such Inventory has been manufactured in
accordance with good manufacturing practices ("GMP"), as defined by the United
States Federal Food, Drug and Cosmetic Act, as amended (the "FDA Act"), and (iv)
is not adulterated or misbranded within the meaning of the FDA Act, or the rules
and regulations promulgated thereunder; and (B) if, and to the extent, any of
the assets, properties and rights which are used both in the Corn Silk Business
and any other business being retained by Sellers (the "Retained Businesses") are
not included in the Acquired Assets, the Sellers and the Purchaser shall
cooperate with each other and make such reasonable arrangements as are necessary
to permit the Sellers, on the one hand, and the Purchaser, on the other hand, to
operate the Retained Businesses and the Corn Silk Business, respectively,
consistent with past practices, including making and providing duplicate copies
of certain material or redacting information therefrom (it being understood that
any such assets, properties or rights not included in the Acquired Assets
pursuant to Section 1.2(c) or (g) but
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currently used in the Corn Silk Business shall, to the extent severable, be
transferred and assigned to the Purchaser (thereby becoming Acquired Assets)
and, if not severable, be made available for the use of Purchaser).
1.3 Excluded Assets.
Notwithstanding the foregoing, those assets, properties and rights of the
Sellers not related to or used in the Corn Silk Business, including the
following, shall not be included in the Acquired Assets (the "Excluded Assets"):
(a) cash on hand or in bank accounts;
(b) accounts receivable;
(c) the rights to any of the Sellers' claims for any federal, state,
local or foreign tax refunds;
(d) all insurance policies of the Sellers pertaining to the Corn Silk
Business and all rights of the Sellers under or arising out of such insurance;
(e) the rights of the Sellers under this Agreement or any instruments
delivered to the Sellers by the Purchaser pursuant to this Agreement; and
(f) all cash received by the Purchaser or any agent of the Purchaser
from customers of the Corn Silk Business for services provided or products sold
by the Corn Silk Business on or prior to the Closing Date. Agreement to
Purchase.
1.4 Agreement to Purchase.
At the Closing, in accordance with the terms and conditions of this
Agreement, Purchaser shall purchase the Acquired Assets from Sellers for the
Purchase Price (as defined in Section 1.5 hereof).
1.5 Payment of the Purchase Price.
The aggregate purchase price (the "Purchase Price") for the Acquired Assets
payable at the Closing shall be $10,750,000, plus the additional amount of
$1,000,000 (such additional amount being the "Inventory Initial Payment"), which
Inventory Initial Payment shall be subject to adjustment on the basis of the
calculation of the value of the Inventory as of the Closing Date in accordance
with Section 1.6 hereof. All payments of the Purchase Price shall be paid to the
Sellers by the Purchaser by wire transfer of immediately available funds to such
bank account as the Sellers may designate.
1.6 Inventory Adjustment.
(a) On the Closing Date, or as soon thereafter as practicable and in
any event within five business days thereof, the Sellers and the Purchaser shall
jointly conduct a physical count of the Inventory as of the Closing Date. Within
20 days after such count is made, the
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Sellers shall make or cause to be made a calculation of the value of the
Inventory as of the Closing Date on a basis consistent with the definition of
Merchantable set forth in Section 1.2 hereof and the Sellers' standard costs as
set forth on Schedule 1.6 attached hereto (the "Calculation"). The Sellers
shall, within such 20-day period, provide Purchaser with copies of the
Calculation and all work papers associated therewith.
(b) If the Purchaser disagrees with all or any part of the
Calculation, Purchaser shall have the right, within 20 days of its receipt
thereof, to notify Sellers in writing of such disagreement and its reasons for
so disagreeing (a "Notice of Disagreement"), in which case the Sellers and the
Purchaser shall attempt to resolve the disagreement. If within 30 days after the
delivery of the Notice of Disagreement to the Sellers, the Sellers and the
Purchaser are unable to resolve the differences, if any, arising as a result of
the Calculation, they or either of them shall submit a statement of all
unresolved differences together with copies of the Calculation to a mutually
agreed upon independent "Big Five" accounting firm (the "Accountants") for a
binding and nonappealable determination to be rendered within 30 days after such
submission. All fees and expenses of the Accountants incurred in this capacity
shall be billed to and shared by the Sellers and the Purchaser equally.
(c) If, upon completion of the Calculation and resolution of any
differences between the parties arising therefrom, the Calculation reflects (i)
a value of the Inventory that is in excess of the Inventory Initial Payment, the
Purchaser will pay within five days after the final determination of the value
of the Inventory the amount of such excess to the Sellers, or (ii) a value of
the Inventory that is less than the Inventory Initial Payment, Sellers will pay
within five days after the final determination of the value of the Inventory the
amount of such shortfall to the Purchaser, in each case in immediately available
funds (such adjusted amount, the "Adjusted Inventory Price"). Notwithstanding
the foregoing, any amount that is not the subject of a Notice of Disagreement
and which exceeds the Inventory Initial Payment shall be paid by the Purchaser
within five days after the Notice of Disagreement is submitted by the Purchaser.
The Sellers shall retain title to any Inventory that is determined, pursuant to
the Calculation, not to be Merchantable and that is not being purchased by
Purchaser. Assumed Liabilities.
1.7 Assumed Liabilities.
At the Closing, the Purchaser shall assume and agree to pay, discharge or
perform, as appropriate, all liabilities and obligations of the Sellers
identified on Schedule 1.7 arising after the Closing Date pursuant to contracts,
agreements, and purchase and sale orders effectively assigned to the Purchaser
hereunder (collectively, the "Assumed Liabilities"). Notwithstanding the
foregoing, the Purchaser does not assume or agree to pay, discharge or perform
any liabilities or obligations arising out of any breach of any of the Sellers
of any provision of any such agreement, contract, commitment or lease referred
to in Schedule 1.7.
1.8 Liabilities Not Assumed.
Except as expressly provided in Section 1.7 or Schedule 1.7, it is
understood and agreed that the Purchaser does not assume or agree hereunder to
pay, perform or discharge any debt, obligation, tax or other liability, known or
unknown, contingent or otherwise, of the Sellers of any kind or nature
whatsoever (collectively, the "Excluded Liabilities").
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1.9 Assignment of Contracts.
Anything contained in this Agreement to the contrary notwithstanding, this
Agreement shall not constitute an agreement to assign Sellers' right, title or
interest in, to or under any contract or other agreement or any claim or right
to any benefit arising thereunder or resulting therefrom if an attempted
assignment thereof, without the consent of a third party thereto, would
constitute a breach thereof or in any way materially adversely affect the rights
of Purchaser or Sellers thereunder. Sellers shall use all reasonable efforts to
obtain the consent of such third party (it being understood it shall not be
required to pay any amount to such third party) to the assignment or transfer
thereof to Purchaser in all cases in which such consent is required for
assignment or transfer. If such consent cannot be obtained, Sellers and
Purchaser shall cooperate in any reasonable arrangements designed to provide for
Purchaser the benefits thereunder, including enforcement for the benefit of
Purchaser of any and all rights of Sellers against such third party arising out
of the cancellation by such third party or otherwise.
1.10 Allocation of Purchase Price.
Sellers and Purchaser agree to allocate the Purchaser Price in accordance
with Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code"),
and in a manner consistent with the allocations set forth in Schedule 1.10
hereto (the "Statement of Allocation"). The Parties agree to report the
transaction for purposes of all Federal, state and local tax returns filed by
them subsequent to the Closing and for all other purposes, including the
determination by Sellers of taxable gain or loss on the sale of the Acquired
Assets hereunder and the determination by Purchaser of its tax basis with
respect to the Acquired Assets, in a manner consistent with such allocation and
in accordance with Section 1060 of the Code. The Parties shall promptly furnish
to each other any other amendments filed by them with respect to the Form 8594.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
The Sellers jointly and severally represent and warrant to the Purchaser as
follows:
2.1 Corporate Existence.
Each of the Sellers is a corporation duly organized, validly existing and
in good standing under the laws of the state of its incorporation and has all
requisite corporate power and authority to carry on its business as now
conducted and as contemplated by this Agreement. As used in this Agreement, (i)
the term "Charter" means the Certificate or Articles of Incorporation,
Organization or Association or other document which governs such entity's
internal affairs, in each case as amended, supplemented, or restated and (ii)
the term "Governmental Authority" means any federal, state, local or foreign
government, authority, instrumentality, department, commission, board, bureau,
agency, body, official or court.
2.2 Authority.
Each of the Sellers has full corporate power and authority to enter into
this Agreement and the other agreements and documents to be executed and
delivered as contemplated hereby or
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in connection herewith (collectively, the "Closing Documents") and to consummate
the transactions provided for herein. All actions on the part of the Sellers
necessary to approve the transactions contemplated by this Agreement have been
duly taken as required by applicable law.
2.3 Enforceable Obligation.
This Agreement has been, and the Closing Documents will have been by the
Closing Date, duly executed and delivered by the Sellers and constitute the
valid and binding agreement of the Sellers enforceable in accordance with their
respective terms, except that (i) enforcement may be subject to bankruptcy,
insolvency, moratorium or other similar laws relating to creditors rights
generally and (ii) the remedy of specific performance and injunctive relief and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding may be brought.
2.4 Absence of Violation or Conflicts.
Except as set forth on Schedule 2.4, the execution, delivery and
performance of the transactions contemplated by this Agreement by the Sellers
does not and will not (a) violate, conflict with or result in the breach of any
term, condition or provision of (i) any existing law, ordinance or governmental
rule or regulation to which either of the Sellers is subject, (ii) any judgment,
order, writ, injunction, decree or award of any Governmental Authority which is
applicable to either of the Sellers, (iii) the Charter or by-laws of either of
the Sellers or (iv) any mortgage, indenture, or other instrument, document or
understanding, oral or written, to which either of the Sellers is a party, or
(b) create, or cause the acceleration of the maturity of, any debt, obligation
or liability of the Sellers. Except as set forth on such Schedule 2.4, no
authorization, approval or consent of, and no registration or filing with, any
Governmental Authority is required in connection with the execution, delivery or
performance of this Agreement by the Sellers, except as have been made or
obtained, or where the failure to be so made or obtained would not have a
material adverse effect on the operation of the Corn Silk Business by the
Purchaser after the Closing Date.
2.5 Title to Acquired Assets.
(a) The Sellers have good, valid and marketable title to the Acquired
Assets, free and clear of all mortgages, liens, pledges, security interests,
charges, claims, restrictions and other encumbrances and defects of title of any
nature whatsoever, except for existing liens and encumbrances disclosed in
Schedule 2.5(a) attached hereto which will be satisfied and removed at or prior
to Closing ("Permitted Liens").
(b) Except as set forth on Schedule 2.5(b), this Agreement and, when
executed and delivered by Sellers at the Closing, the Closing Documents will be
sufficient to sell, transfer, convey and assign to Purchaser all right, title
and interest of Sellers in and to the Acquired Assets, free and clear of all
liens, claims and encumbrances and to vest in Purchaser good and valid legal
title thereto, free and clear of all liens, claims and encumbrances.
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2.6 Machinery and Equipment.
Schedule 1.2(d) sets forth all machinery, equipment, molds, tools and other
items of tangible personal property that Sellers use in the Corn Silk Business
and are purchased and sold pursuant to this Agreement.
2.7 Inventory.
The Inventory consists of items which are of a quality and quantity usable
or salable in the ordinary course of the business. The Inventory (including,
without limitation, all documentation furnished in connection therewith) is free
from any defects in workmanship and materials, and conforms in all material
respects with all customary and reasonable standards for products of such type.
The Inventory has been manufactured in accordance with GMP. None of the finished
goods Inventory is adulterated or misbranded within the meaning of the FDA Act,
or the rules and regulations promulgated thereunder. Neither the United States
Food and Drug Administration nor any other Governmental Authority regulating the
marketing, sale, testing or advertising of any of the products currently
manufactured, sold, distributed or used in connection with the Corn Silk
Business has requested that any such product be removed from the market, that
substantial new product testing be undertaken as a condition to the continued
manufacturing, selling, distribution or use of any such product, or that such
product be modified in any way, nor to the Sellers' Knowledge, is there any
basis for any such request, removal, testing or modification. No product
manufactured, distributed or sold in connection with the Corn Silk Business
within three years prior to or as of the Closing Date has been, is, or to the
Sellers' Knowledge, will be the subject of any product liability claim of any
kind. "Knowledge," as used in this Agreement, shall mean (i) actual knowledge
and (ii) that knowledge which a reasonable businessperson would have obtained in
the management of his or her business affairs after making due inquiry with
respect to the matters in question. Sellers' Knowledge shall be limited to the
knowledge of the persons listed on Schedule 2.7.
2.8 Financial Statements.
The product line profit and loss financial statements (including sales for
each of the ten largest customers of the Corn Silk Business) attached hereto as
Schedule 2.8 with respect to the Corn Silk Business for the fiscal years ended
November 30, 1995, 1996 and 1997 are in accordance with the books and records of
the Sellers prepared in accordance with accounting principles consistently
applied with prior periods. All such product line profit and loss financial
statements accurately and fairly present the Corn Silk Business as of the dates
or period indicated.
2.9 Litigation.
No litigation, including any arbitration, investigation or other proceeding
of or before any Governmental Authority, is pending or, to the Sellers'
Knowledge, threatened against the Sellers or the transactions contemplated by
this Agreement, nor do the Sellers know of any reasonably likely basis for any
such litigation, arbitration, investigation or proceeding, the result of which
could reasonably be expected to adversely affect the Sellers, the Corn Silk
Business or the transactions contemplated hereby.
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2.10 Absence of Changes.
Except as set forth in Schedule 2.10 or as otherwise contemplated by this
Agreement, since November 30, 1997, the Corn Silk Business has been operated in
the ordinary course and consistent with past practice and there have not been:
(a) any material adverse changes in the results of operations,
financial condition, assets, liabilities, business or prospects of the Corn Silk
Business;
(b) any damage, destruction or loss (whether or not covered by
insurance) affecting any tangible asset or property used or useful in the Corn
Silk Business (normal wear and tear excepted);
(c) any obligations or liabilities (whether absolute, accrued,
contingent or otherwise and whether due or to become due) created or incurred or
entered into, or any transactions, contracts or commitments entered into, by
Sellers relating exclusively to the Corn Silk Business, other than such items
created or incurred in the ordinary course of the Corn Silk Business and
consistent with past practice, except for this Agreement or as contemplated by
this Agreement;
(d) any material changes in the manner in which Sellers extend
discounts or credits to customers or otherwise deals with customers of the Corn
Silk Business;
(e) any forward purchase commitments of the Corn Silk Business in
excess of normal operating inventories or at prices higher than current market
prices;
(f) any forward sales commitments of the Corn Silk Business other than
in the ordinary course of business;
(g) any other material transactions relating to the Corn Silk Business
other than in the ordinary course of the Corn Silk Business and consistent with
past practice; or
(h) any agreements or understandings, whether in writing or otherwise,
for either of the Sellers to take any of the actions specified in items (a)
through (g) above.
2.11 Material Contracts and Commitments.
Schedule 2.11 hereto sets forth a full and complete list of all written or
oral contracts and commitments of Sellers relating to the Corn Silk Business
which constitute Material Contracts. As used herein, the term "Material
Contracts" shall mean and include any contracts, agreements or commitments which
(a) involve financial obligations of any party in excess of $25,000, (b) which
have a remaining term in excess of one year or (c) which, if not effectively
assigned to Purchaser, could reasonably be expected to have an adverse effect on
the Purchaser. Except as specifically indicated on Schedule 2.11 hereto, (i)
Sellers are not in breach or violation of, or in default under, any of the
Material Contracts, (ii) the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not constitute a
default or breach under any of the Material Contracts and (iii) the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby will not give rise to any consent
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requirement under any of the Material Contracts. No party to any of the Material
Contracts has given Sellers notice of its intention to cancel, terminate or fail
to renew such Material Contract. With respect to each Material Contract that
requires the consent of the other parties thereto to transfer the Acquired
Assets as contemplated hereby, Sellers shall have obtained prior to the Closing
Date, or will use its commercially reasonable efforts to obtain as promptly as
practicable following the Closing Date, all such consents, and have provided, or
will provide when obtained, the Purchaser with copies thereof. Sellers have
furnished the Purchaser true and complete copies of all of the Material
Contracts, all of which are in full force and effect and have not been modified
or amended.
2.12 Intellectual Property Rights.
(a) Except as set forth in Schedule 2.12(a):
(i) Sellers own, possess or have the right to use all
Intellectual Property Rights (as defined below) that are used in the Corn
Silk Business as presently conducted (collectively, the "Requisite
Rights");
(ii) no royalties, honorariums or fees are payable by Sellers to
other persons by reason of the ownership, sale, license or use of the
Requisite Rights;
(iii) no product or service manufactured, marketed or sold by
Sellers related to the Corn Silk Business violates any license or infringes
any Intellectual Property Rights of another; and there is no pending or, to
the Sellers' Knowledge, threatened claim or litigation against either of
the Sellers (nor, to the Sellers' Knowledge, does there exist any basis
therefor) contesting the validity of or right to use any of the foregoing,
nor have Sellers received any notice that any of the Requisite Rights or
the operation or proposed operation of the Corn Silk Business conflicts, or
will conflict, with the asserted rights of others, nor, to the Seller's
Knowledge, does there exist any basis for any such assertion; and
(iv) the execution, delivery and performance of this Agreement
and the other Closing Documents and consummation of the transactions
contemplated hereby and thereby will not breach, violate or conflict with
any instrument or agreement governing any Requisite Right and will not
cause the forfeiture or termination or give right to a right of forfeiture
or termination of any Requisite Right or in any way impair the right of the
Purchaser to use, sell, license of dispose of or to bring any action for
the infringement of any Requisite Right or portion thereof.
(b) Schedule 2.12(b) hereto sets forth (i) a complete list of all
patents, patent applications, trademarks, trademark applications, trademark
registrations, servicemarks, servicemark applications, servicemark
registrations, trade names, copyright registrations, copyright applications
which are held and/or owned by Sellers and used and/or held for use in
connection with the Corn Silk Business as currently conducted and (ii) a brief
description of all material new product development efforts, if any, currently
being made by Sellers with respect to the Corn Silk Business. The United States,
United Kingdom and Canadian trademark, servicemark, trade name, patent and
copyright registrations and applications and, to the Sellers'
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knowledge, the remaining trademark, servicemark, trade name, patent and
copyright registrations and applications therefor set forth on such Schedule
2.12(b) are valid and in good standing; no other firm, corporation, association,
or person has a right to use any of the trademarks, servicemarks, patents and
copyrights reflected on Schedule 2.12(b); and to the Seller's Knowledge, no
third party is claiming that any trademark, servicemark, patent or copyright
identified on Schedule 2.12(b) is invalid or infringes upon the rights of any
other persons.
(c) As used herein, the term "Intellectual Property Rights" means all
industrial and intellectual property rights, including, without limitation,
Proprietary Technology, patents, patent applications, patent rights, trademarks,
trademark applications, copyrights, copyright applications, know-how,
certificates of public convenience and necessity, franchises, licenses,
proprietary processes and formulae, layouts, processes and inventions used in
the Corn Silk Business. As used herein, the term "Proprietary Technology" means
all proprietary rights owned by Sellers pertaining to any product or service
manufactured, sold, distributed or marketed by Sellers in the conduct of the
Corn Silk Business or used, employed or exploited in the development,
manufacture, license, sale, distribution, marketing or maintenance thereof, and
all documentation and media constituting, describing or relating to the
foregoing.
2.13 Compliance with Law; Authorizations.
To the Sellers' Knowledge, they are in material compliance with and are not
in material violation of any law, ordinance, or governmental or regulatory rule
or regulation, whether federal, state, local or foreign, to which the Corn Silk
Business is subject. The Sellers own, hold, possess or lawfully use in the
operation of the Acquired Assets and the Corn Silk Business all franchises,
licenses, permits, rights, applications, filings, registrations and other
authorizations ("Authorizations") which if not held by Sellers could reasonably
be expected to have a material adverse effect on the Corn Silk Business. No
proceeding is pending or, to the Sellers' Knowledge, threatened to revoke or
limit any such Authorization.
2.14 Customers.
Schedule 2.14 identifies the ten largest customers of the Corn Silk
Business by gross sales for each such customer for each of the fiscal years
ending November 30, 1995, 1996 and 1997. Schedule 2.14 further provides the
following information for each such customer for each of the fiscal years ending
November 30, 1996 and 1997 and, with respect to clause (d) below, as of the date
hereof for products:
(a) volume of products purchased;
(b) SKU's carried;
(c) product returns; and
(d) dollar amount of trade promotional allowances, coupon redemptions,
coop advertising in the form of off-invoice allowances and xxxx-back charges,
price differences, discount agreements and other allowances and promotions
(collectively, "Promotional Allowances").
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Except as set forth on such Schedule 2.14, the Sellers have not been
informed by or become aware that any of the Customers on Schedule 2.14 intends
to purchase products of the Corn Silk Business on terms materially less
favorable than those currently in effect or intends to significantly modify its
purchase of Corn Silk products.
2.15 Distribution and Returns.
Product returns ("Product Returns") for the Corn Silk Business during the
six-month period prior to the date hereof have been consistent with Product
Returns during comparable periods (as to amount and reasons therefor), and
except as set forth on Schedule 2.15, the Sellers do not anticipate, nor do they
have any reasonable basis to anticipate, any increase or other material changes
in Product Returns for the Corn Silk Business. Except as set forth on Schedule
2.15, the Sellers do not reasonably anticipate, nor do they have any reasonable
basis to anticipate, any changes in distribution, discounting and Promotional
Allowances for the fiscal year ending November 30, 1998; provided, however, that
Sellers make no representation or warranty as to the impact that a new action
taken by Purchaser may have on distribution, discounting and Promotional
Allowances.
2.16 Complaints.
Sellers have provided a descriptive log of complaints during the past six
months regarding any products made in or by the Corn Silk Business from any
customer or consumer of the Corn Silk Business.
2.17 Full Disclosure.
No representation or warranty of Sellers and no Schedule or certificate
furnished to Purchaser under this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading.
ARTICLE III
PURCHASER'S REPRESENTATIONS AND WARRANTIES
The Purchaser hereby represents and warrants to the Sellers as follows:
3.1 Organization.
The Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite corporate
power and authority to own its properties and carry on its business as presently
being conducted and as contemplated by this Agreement.
3.2 Authority.
The Purchaser has full corporate power and authority to enter into this
Agreement and to consummate the transactions provided for herein. All actions on
the part of the Purchaser necessary to approve the transactions contemplated by
this Agreement have been duly taken as
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required by applicable law. This Agreement has been, and the other agreements,
documents and instruments, required to be delivered by the Purchaser in
accordance with the provisions hereof will have been by the Closing Date, duly
executed by the Purchaser and constitute the valid and binding agreements of the
Purchaser, enforceable in accordance with their respective terms, except that
(i) enforcement may be subject to bankruptcy, insolvency, moratorium or other
similar laws relating to creditors rights generally and (ii) the remedy of
specific performance and injunctive relief and other forms of equitable relief
may be subject to equitable defenses and to the discretion of the court before
which any proceeding may be brought.
3.3 Absence of Violation or Conflicts.
Except as set forth on Schedule 3.3, the execution, delivery and
performance of the transactions contemplated by this Agreement by the Purchaser
does not and will not (a) violate, conflict with or result in the breach of any
term, condition or provision of (i) any existing law, ordinance or governmental
rule or regulation to which the Purchaser is subject, (ii) any judgment, order,
writ, injunction, decree or award of any Governmental Authority which is
applicable to the Purchaser (ii) the Charter or by-laws of the Purchaser or (iv)
any mortgage, indenture, or other instrument, document or understanding, oral or
written, to which the Purchaser is a party, or (b) create, or cause the
acceleration of the maturity of, any debt, obligation or liability of the
Purchaser. Except as set forth on such Schedule 3.3, no authorization, approval
or consent of, and no registration or filing with, any Governmental Authority is
required in connection with the execution, delivery or performance of this
Agreement by the Purchaser, except as have been made or obtained, or where the
failure to be so made or obtained would not have a material adverse effect on
the operation of the Corn Silk Business by the Purchaser after the Closing Date.
3.4 Litigation.
No litigation, including any arbitration, investigation or other proceeding
of or before any Governmental Authority, is pending or, to the Purchaser's
Knowledge, threatened against Purchaser or the transactions contemplated by this
Agreement, nor does Purchaser know of any reasonably likely basis for any such
litigation, arbitration, investigation or proceeding, the result of which could
adversely affect the Purchaser or the transactions contemplated hereby.
3.5 Financial Ability to Perform.
The Purchaser has sufficient funds and credit arrangements available as of
the date hereof, and will be so available at the Closing, to pay the Purchase
Price and all other amounts payable by it hereunder at the Closing and
thereafter.
ARTICLE IV
OTHER AGREEMENTS
4.1 Commercially Reasonable Efforts.
Subject to the terms and conditions of this Agreement, each of the Parties
will use its commercially reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to
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consummate and make effective the transactions contemplated by this Agreement.
In case at any time after the Closing Date any further action is reasonably
necessary or desirable to carry out the purposes of this Agreement, including
(i) action to fully vest in the Purchaser its rights in the Corn Silk Business
and (ii) such additional assignments of trademarks conveying the rights to the
Corn Silk Trademarks, the goodwill associated therewith and the applications and
registrations therefor, in each country in which Sellers hold such rights, the
proper officers of the Sellers and the Purchaser shall on the written request of
either of them take all such reasonably necessary desirable action.
4.2 Responsibility for Promotional Allowances and Product Returns.
(a) The Sellers shall be responsible for and shall pay, indemnify and
hold Purchaser harmless from and against all liability arising from (i)
Promotional Allowances that are attributable to programs that run on or prior to
the Closing Date or products sold on or prior to the Closing Date, regardless of
when it is actually claimed by the account, (ii) all Product Returns during the
first six months after the Closing Date, except for returns of products that can
be identified as part of a full lot of the inventory manufactured and sold by
the Purchaser after the Closing Date, which shall be the responsibility of the
Purchaser and (iii) all other disputed items which could be deducted from
receivable amounts due to the Purchaser and which arise out of sales of products
prior to the Closing Date.
(b) The Purchaser shall be responsible for and shall pay, indemnify
and hold Sellers harmless from and against all liability arising from
Promotional Allowances that are attributable to programs that are run by
Purchaser after the Closing Date and all Product Returns which relate to
Products sold by Purchaser after the Closing Date except returns of products
that can be identified as part of a full lot of the inventory manufactured and
sold by the Sellers before the Closing Date.
(c) The Purchaser will use commercially reasonable efforts to assure
that, for a period of 60 days from the date of this Agreement, the Purchaser's
sales personnel will not initiate and actively encourage Canadian customers of
the Corn Silk Business to return Products in burgundy packaging for Products in
blue packaging.
4.3 Payment of Accounts Receivable.
In the event that either party shall receive any instrument or other
payment in respect of any account receivable belonging to the other party, such
party shall forthwith deliver the same to the Sellers if the accounts receivable
arose prior to the Closing Date, or to the Purchaser if it arose on or after the
Closing Date, endorsed where necessary, without recourse, in favor of the other
party. Each party agrees to exercise good faith and to cooperate in resolution
and documentation of any such accounts receivable. The Purchaser agrees to give
the Sellers such assistance as the Sellers may reasonably request in collecting
pre-Closing Date receivables, and the Sellers agree to give the Purchaser such
assistance as the Purchaser may reasonably request in collecting post-Closing
Date receivables.
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4.4 Manufacturing Agreement.
Simultaneously herewith, the Sellers and the Purchaser shall execute a
Manufacturing Agreement (the "Manufacturing Agreement"), in the form of Exhibit
E hereto, pursuant to which the Sellers shall continue to manufacture finished
goods for the Corn Silk Business for the benefit of the Purchaser for a period
of 90 days, subject to the terms and conditions thereof.
4.5 Inventory and Packaging.
(a) The Purchaser shall have the right to use and sell all of the
Inventory until all such Inventory shall have been disposed of by the Purchaser,
it being understood that Purchaser shall use its best efforts to change the
packaging for its products as promptly as practicable to eliminate all use of
the name "Chattem" and will not reorder any packaging using such name or
Sellers' UPC codes.
(b) The Sellers shall, until receipt of shipping instructions from the
Purchaser, warehouse all Inventory at no additional charge to the Purchaser. The
Purchaser shall issue shipping instructions as reasonably necessary to service
the Corn Silk Business and the Sellers' obligation to provide such warehousing
for the Inventory shall terminate four weeks after the Closing Date. All risk of
loss with respect to such Inventory shall pass to Purchaser on the Closing Date.
Sellers shall have no obligation to insure such Inventory, any such insurance to
be the sole responsibility and at the sole cost and expense of Purchaser. All
shipping of Inventory shall be at the sole cost and risk of Purchaser on
carriers selected by Purchaser and Sellers shall have no liability or obligation
with respect thereto from the time of delivery to a reputable carrier.
(c) Sellers may sell (i) any Inventory not acquired by the Purchaser
hereunder and (ii) any Product Returns for which the Sellers bear
responsibility, only through those distributors listed on Schedule 4.5 attached
hereto.
4.6 Confidentiality.
Until the Closing, the Purchaser, and after the Closing, the Sellers, each
will treat and hold as such all Confidential Information (as defined below),
refrain from using any of the Confidential Information except in connection with
this Agreement or except as may be necessary for the completion of income tax
returns or in compliance with other applicable laws, regulations, and orders of
courts or regulatory authorities. The foregoing provisions shall not apply to
any Confidential Information which is generally available to the public
immediately prior to the time of disclosure. For purposes of the foregoing
paragraph, "Confidential Information" means financial and business information
relating exclusively to the Corn Silk Business which is non-public, confidential
or proprietary in nature.
4.7 Noncompetition.
(a) The Parties acknowledge and recognize that the Corn Silk Business
has been conducted by the Sellers, and substantial sales of the products of the
Corn Silk Business have been made, throughout the United States and Europe, and
further acknowledge and recognize the highly competitive nature of the industry
in which the Corn Silk Business is involved.
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Accordingly, in consideration of the premises contained herein, the
consideration to be received hereunder and in consideration of and as an
inducement to Purchaser to consummate the transactions contemplated hereby,
Sellers shall not, from and after the Closing until the fifth anniversary
thereof, (i) directly or indirectly engage, whether such engagement shall be as
a partner, stockholder, affiliate or other participant, in any Competitive
Business, whether such engagement or representation shall be for profit or not,
(ii) attempt to disrupt the relationship, contractual or otherwise, between the
Purchaser and any third party, including, without limitation, any customer,
supplier or employee of the Purchaser, or (iii) affirmatively assist or induce
others to engage in any Competitive Business in any manner described in the
foregoing clauses (i) and (ii). As used herein, the term "Competitive Business"
shall mean any business involving the manufacture and/or sale of any powder,
foundation or concealer products in any city or county in any state of the
United States or member country of the European Economic Community; provided,
however, that the following activities shall not be deemed to be a Competitive
Business: (A) engaging in transactions pursuant to the Trademark License
Agreement; (B) acquiring any entity or business engaged in any Competitive
Business (to the extent that less than five percent (5%) of such entity's or
business' revenues are derived from a Competitive Business) and thereafter
owning, managing, operating or controlling such entity or business or otherwise
engaging in any business engaged in by such entity or business; (C) engaging in
transactions pursuant to the Manufacturing Agreement; (D) owning up to five
percent (5%) of the voting equity securities or any non-voting equity or debt
securities of any entity or business primarily engaged in a Competitive Business
whose securities are publicly traded on a national securities exchange or in the
over-the-counter market; (E) owning any equity interest through any employee
benefit plan or pension plan; or (F) engaging in transactions pursuant to
Section 4.5(c) hereof.
(b) It is the desire and intent of the Parties that the provisions of
this Agreement be enforced to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if this Section 4.7 shall be adjudicated by a court of competent
jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of this Agreement or affecting the validity or enforceability of
such provision in any other jurisdiction. Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
4.8 Public Announcements.
The Sellers and the Purchaser will consult with each other before issuing
any press releases or otherwise making any public statements or statements to
the trade with respect to this Agreement and the transactions contemplated
hereby, except as may be required by law or by obligations pursuant to any
listing agreement with any national securities exchange.
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4.9 Inspection.
After the date hereof, the Sellers shall give to the Purchaser and to the
Purchaser's counsel, accountants, lenders and other representatives (with
Sellers' assistance) access with reasonable prior notification during normal
business hours in such a manner that will not disrupt normal business activities
to all the properties, books, financial records, tax returns, contracts,
commitments, records, officers, personnel, employees, vendors, customers and
accountants of each Seller to the extent the same relate to the Corn Silk
Business, and will furnish to Purchaser, at Purchaser's expense, all such
documents and copies of documents and all information with respect to the Corn
Silk Business as the Purchaser may reasonably request, including, without
limitation, all information necessary for the Purchaser to prepare audited
financial statements in accordance with Purchaser's reporting requirements under
the Securities Exchange Act of 1934. After the date hereof, for a period of 90
days, the Sellers agree to facilitate the Purchaser's discussions with Sellers'
employees, customers and vendors, which discussions are necessary in order for
the Purchaser to integrate the Corn Silk Business on and after the Closing.
Schedule 4.9 identifies all sales managers of the Sellers who work in the Corn
Silk Business. Sellers agree to provide full access for a period of 90 days to
these sales managers and all other employees involved in the Corn Silk Business
with reasonable prior notification during normal business hours in such a manner
that will not disrupt normal business activities.
4.10 Expenses.
Except as otherwise provided herein, each Party shall pay its own expenses
and costs incurred in connection with the negotiation and consummation of this
Agreement and the transactions contemplated hereby.
4.11 Brokers.
Each of the Parties represents and warrants that it has dealt with no
broker or finder in connection with any of the transactions contemplated by this
Agreement, and insofar as it knows, no broker or other person is entitled to any
commission or finder's fee in connection with any of these transactions. The
Sellers and Purchaser each agree to indemnify and hold harmless one another
against any loss, liability, damage, cost, claim, or expense, incurred by reason
of any brokerage, commission, or finder's fee alleged to be payable because of
any act, omission, or statement of the indemnifying party.
ARTICLE V
SURVIVAL OF REPRESENTATIONS AND INDEMNIFICATION
5.1 Survival.
The parties agree that the representations and warranties contained in this
Agreement shall survive the Closing and continue to be binding until the
eighteen-month anniversary of the Closing.
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5.2 Definitions.
For the purposes of this Article V, the following terms shall have the
following meanings:
(a) "Indemnified Person" means the Purchaser Indemnified Persons or
the Seller Indemnified Persons, as the case may be.
(b) "Losses" means any and all loses, claims, damages, liabilities,
expenses (including reasonable attorneys' and accountants' fees and court
costs), assessments, and taxes sustained, suffered or incurred by any
Indemnified Person arising from any matter which is the subject of
indemnification under Article V.
(c) "Purchaser Indemnified Persons" means and includes Purchaser and
its officers, directors, affiliates, successors and assigns.
(d) "Seller Indemnified Persons" means and includes Sellers and their
respective officers, directors, affiliates, successors and assigns.
5.3 Indemnification by Sellers.
(a) The Sellers shall indemnify, hold harmless and defend Purchaser
after the Closing Date against and in respect of:
(i) Any and all Losses resulting from any breach of the
warranties and representations of the Sellers contained herein;
(ii) Any and all Losses incurred or paid by the Purchaser as a
result of the nonpayment or assessment of taxes with respect to the
Acquired Assets or the Corn Silk Business attributable to the period before
the Closing Date;
(iii) Any and all Losses incurred or paid by the Purchaser as a
result of a claim of any kind arising from the operation, business or
ownership of the Acquired Assets or the Corn Silk Business by the Sellers
prior to the Closing Date; and
(iv) Any and all Losses incurred or paid by Purchaser as a result
of a claim of any kind relating to the Excluded Liabilities; and
(v) All Losses arising from or in connection with any action,
suit, proceeding or claim incident to any of the foregoing.
(b) Sellers shall have no liability pursuant to this Section 5.3 for a
breach of representation or warranty until the aggregate Losses of Purchaser for
all breaches of representations and warranties exceed $50,000, in which event
Sellers shall be liable pursuant to such section for all such Losses that are in
excess of $50,000, up to a maximum aggregate amount of the sum of $5,375,000
plus fifty percent of the Adjusted Inventory Price.
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(c) The amount of any Loss subject to indemnification pursuant to this
Section 5.3 shall be calculated net of any amounts recovered by the Indemnified
Person (as defined below) under insurance policies or from other third-party
sources with respect thereto (such as contractual indemnities of any person
granted beyond the scope of this Agreement). In the event that an Indemnified
Person receives any recovery from an insurance policy or other third-party
source after an indemnification payment has been made pursuant hereto, then, to
the extent such recovery, had it been received prior to the indemnification
payment of Sellers, would have reduced such Loss, the Indemnified Person shall
forward such payment to the Indemnifying Person (as defined below) (net of the
Indemnified Person's costs of collection with respect thereto).
(d) The Purchaser acknowledges that the indemnification provided for
in this Section 5.3 is the sole remedy available to the Purchaser against the
Sellers for the matters covered under this Section 5.3; provided, however, that
nothing contained herein shall restrict the Purchaser's right to seek
alternative remedies in the case of alleged common law fraud on the part of
either of the Sellers.
5.4 Indemnification by Purchaser.
(a) The Purchaser shall indemnify, hold harmless and defend the
Sellers after the Closing Date against and in respect of:
(i) Any and all Losses resulting from any breach of the
warranties and representations of the Purchaser contained herein;
(ii) Any and all Losses incurred or paid by the Sellers as a
result of the nonpayment of taxes with respect to the Acquired Assets or
the Corn Silk Business attributable to the period after the Closing Date;
(iii) Any and all Losses incurred or paid by the Sellers as a
result of a claim of any kind arising from the operation, business or
ownership of the Acquired Assets or the Corn Silk Business by the Purchaser
after the Closing Date;
(iv) Any and all Losses incurred or paid by the Sellers as a
result of a claim of any kind relating to the Assumed Liabilities; and
(v) All Losses arising from or in connection with any action,
suit, proceeding or claim incident to any of the foregoing.
(b) Purchaser shall have no liability pursuant to this Section 5.4 for
a breach of representation or warranty until the aggregate Losses of Sellers for
all breaches of representations and warranties exceeds $50,000, in which event
Purchaser shall be liable pursuant to such section for all such Losses in excess
of $50,000, up to a maximum aggregate amount of the sum of $5,375,000 plus fifty
percent of the Adjusted Inventory Price.
(c) The amount of any Loss subject to indemnification pursuant to this
Section 5.4 shall be calculated net of any amounts recovered by the Indemnified
Person under insurance policies or from other third-party sources with respect
thereto (such as contractual indemnities of
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any person granted beyond the scope of this Agreement). In the event that an
Indemnified Person receives any recovery from an insurance policy or other
third-party source after an indemnification payment has been made pursuant
hereto, then, to the extent such recovery, had it been received prior to the
indemnification payment of Purchaser, would have reduced such Loss, the
Indemnified Person shall forward such payment to the Indemnifying Person (net of
the Indemnified Person's costs of collection with respect thereto).
(d) The Sellers acknowledge that the indemnification provided for in
this Section 5.4 is the sole remedy available to the Sellers against Purchaser
for the matters covered under this Section 5.4; provided, however, that nothing
contained herein shall restrict the Seller's right to seek alternative remedies
in the case of alleged common law fraud on the part of the Purchaser.
5.5 Resolution of Claims.
(a) The obligations and liabilities of the Sellers or Purchaser, as
the case may be (the "Indemnifying Person") with respect to Losses of the
indemnified person, as the case may be (the "Indemnified Person") resulting from
the assertion of liability by third parties (each, a "Third Party Claim") shall
be subject to the following terms and conditions:
(b) The Indemnified Persons shall give prompt written notice (each, a
"Notice of Claim") to the Indemnifying Person of any Third Party Claim that
might give rise to any Loss by the Indemnified Person, stating the nature and
basis of said Third Party Claim, and the amount thereof to the extent known.
Each Notice of Claim shall be accompanied by copies of all relevant
documentation with respect to such Third Party Claim, including, without
limitation, any summons, complaint or other pleading which may have been served
or written demand or other document or instrument.
(c) If the Indemnifying Person shall acknowledge in a writing
delivered to the Indemnified Person that the Indemnifying Person shall be
obligated under the terms of its indemnity hereunder in connection with such
Third Party Claim, then the Indemnifying Person shall have the right to assume
the defense of any Third Party Claim at its own expense and by its own counsel
(reasonably satisfactory to the Indemnified Persons) without such election's
being construed as an admission as to liability with respect to third parties;
provided, however, that the Indemnifying Person shall not have the right to
assume the defense of any Third Party Claim, notwithstanding the giving of such
written acknowledgment, if (i) such Third Party Claim seeks an injunction,
restraining order, declaratory relief or other nonmonetary relief and, if
decided adversely, such Third Party Claim could have material adverse effect on
the financial condition, properties, assets, liabilities, business, operations
or prospects of any Indemnified person, or (ii) the named parties to any such
action or proceeding (including any impleaded parties) include both the
Indemnified Person and the Indemnifying Person and the former shall have been
advised by counsel that there are one or more legal or equitable defenses
available to them which are different from or additional to those available to
the Indemnifying Person, and, in the reasonable opinion of the Indemnified
Persons, counsel for the Indemnifying Person could not adequately represent the
interests of the Indemnified Person because such interests could be in conflict
with those of the Indemnifying Person.
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(d) If, in accordance with the provisions of clause (c) above, the
Indemnifying Person shall assume the defense of a Third Party Claim, the
Indemnifying Person shall not be responsible for any legal or other defense
costs subsequently incurred by the Indemnified Person in connection with the
defense thereof. If the Indemnifying Person does not exercise its right to
assume the defense of such a Third Party Claim by giving the written
acknowledgment referred to in clause (a) above, the Indemnified Person shall
have the right to control the defense of such Third Party Claim. The party not
controlling such defense shall nevertheless be entitled to participate in such
defense with its own counsel and at its own expense. The Indemnifying Person and
the Indemnified Persons shall make available to each other and their counsel and
accountants all books and records relating to the Third Party Claim and shall
render to each other such assistance as may be reasonably required to ensure the
proper and adequate defense of any and all Third Party Claims.
(e) Anything contained herein to the contrary notwithstanding, neither
the Indemnifying Person nor the Indemnified Person shall admit any liability
with respect to, or settle, compromise or discharge, any Third Party Claim
without the written consent of the other, which consent shall not be
unreasonably withheld. In addition, each of the Indemnifying Person and the
Indemnified Person shall cooperate and act in a reasonable and good faith manner
to minimize Losses relating to any Third Party Claim.
ARTICLE VI
TERMINATION AND ABANDONMENT
6.1 Termination and Abandonment.
This Agreement may be terminated and the purchase and sale of the Acquired
Assets abandoned at any time prior to the Closing:
(a) by mutual written agreement of the Sellers and the Purchaser;
(b) by the Purchaser if the conditions set forth in Section 7.2 and
the deliveries required by Section 7.4 shall not have been complied with and
performed in any material respect and such noncompliance or nonperformance shall
not have been cured or eliminated (or by its nature cannot be cured or
eliminated) on or before the Closing Date;
(c) by the Sellers, if the conditions set forth in Section 7.3 and the
deliveries required by Section 7.5 shall not have been complied with and
performed in any material respect and such noncompliance or nonperformance shall
not have been cured or eliminated (or by its nature cannot be cured or
eliminated) on or before the Closing Date; or
(d) by either Purchaser or Sellers if the Closing shall not have
occurred on or before May 31, 1998 for any reason whatsoever, other than such
party's breach of or failure to perform or comply with any agreement herein or
provision hereof to be performed or complied with by such party on or prior to
the Closing Date.
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6.2 Rights and Obligations on Termination.
If this Agreement is terminated and abandoned as provided in this Article
(except for a termination or abandonment pursuant to the mutual agreement of the
parties), the continuing liability of the parties to this Agreement with respect
to any breach of any representation, warranty, covenant or agreement contained
in this Agreement shall not be affected by such termination or abandonment.
ARTICLE VII
THE CLOSING
7.1 Time, Date and Place of Closing.
Subject to the provisions hereof, the deliveries contemplated by this
Agreement to be made at the Closing shall be made at the offices of X'Xxxxxxxx
Graev & Karabell, LLP, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00
A.M., local time, on or before May 12, 1998, or at such later date and location
as may be mutually agreeable. The date on which the last of such deliveries
occurs is hereinafter referred to as the "Closing Date," and the events
comprising such deliveries are hereinafter referred to as the "Closing."
7.2 Conditions to Obligations of Purchaser.
All of the obligations of the Purchaser under this Agreement are subject to
the fulfillment prior to or at the Closing Date of each of the following
conditions, any one or more of which may be waived by the Purchaser:
(a) The Purchaser shall have received (i) a certificate, dated as of
the Closing Date, signed by the Secretary of each of the Sellers and certifying
as to the Charter, By-laws, incumbency of officers executing this Agreement and
the other documents contemplated hereby to which each of the Sellers is a party
and resolutions of the Board of Directors of the Sellers authorizing this
Agreement and the other documents contemplated hereby to which each of the
Sellers is a party and (ii) a certificate of an officer of each of the Sellers
certifying as to the fulfillment of the conditions set forth in this Section
7.2.
(b) Except as otherwise permitted or contemplated by this Agreement
and except for representations and warranties that by their terms speak only as
of a specified date, each of the representations and warranties of the Sellers
contained herein shall be true in all material respects as of the date when
made, shall be deemed to be made again at and as of the Closing Date and shall
be true at and as of the Closing Date;
(c) Prior to or at Closing, each Seller shall have performed and
complied in all material respects with all agreements and obligations and
satisfied in all material respects all conditions to be performed, complied with
and satisfied by such Seller under this Agreement and the other documents
contemplated hereby prior to or at Closing (including, but not limited to,
filing prior to Closing, or promptly thereafter, and at the Sellers' expense,
all necessary documents in all relevant jurisdictions and/or at the Patent and
Trademark Office, as applicable, to release and/or terminate all liens of any
kind on all Acquired Assets).
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(d) The Purchaser shall have obtained all third-party consents
required for consummation by it of the transactions contemplated by this
Agreement.
(e) No material adverse change in the financial condition, results of
operations, assets, liabilities, distribution, business or prospects (including
any change resulting from governmental regulations or the loss of any permits,
licenses or franchises) of the Corn Silk Business shall have occurred between
the date hereof and the Closing Date;
(f) No federal, state or local governmental unit, agency, body or
authority with competent jurisdiction over the subject matter shall have given
official written notice of its intention to institute proceedings to prohibit
the transactions contemplated by this Agreement, or which would interfere with
the use of the Acquired Assets or the operation of the Corn silk Business; and
(g) Each of the Sellers shall have executed and delivered the other
Closing Documents to which it is a party, including the Manufacturing Agreement.
7.3 Conditions to Obligations of Sellers.
All of the obligations of the Sellers under this Agreement are subject to
the fulfillment prior to or at the Closing Date of each of the following
conditions, any one or more of which may be waived by the Sellers:
(a) The Sellers shall have received (i) a certificate, dated as of the
Closing Date, signed by the Secretary of the Purchaser and certifying as to the
Charter, By-laws, incumbency of officers executing this Agreement and the other
documents contemplated hereby to which the Purchaser is a party and resolutions
of the Board of Directors of the Purchaser authorizing this Agreement and the
other documents contemplated hereby to which the Purchaser is a party and (ii) a
certificate of an officer of the Purchaser certifying as to the fulfillment of
the conditions set forth in this Section 7.3.
(b) Except as otherwise permitted or contemplated by this Agreement
and except for representations and warranties that by their terms speak only as
of a specified date, each of the representations and warranties of the Purchaser
contained herein shall be true as of the date when made, shall be deemed to be
made again at and as of the Closing Date and shall be true at and as of the
Closing Date;
(c) Prior to or at Closing, Purchaser shall have performed and
complied in all material respects with all agreements and obligations and
satisfied all conditions to be performed, complied with and satisfied by
Purchaser under this Agreement and the other documents contemplated hereby prior
to or at Closing.
(d) Sellers shall have obtained all third-party consents required for
consummation by it of the transactions contemplated by this Agreement.
(e) No federal, state or local governmental unit, agency, body or
authority with competent jurisdiction over the subject matter shall have given
official written notice of its
22
intention to institute proceedings to prohibit the transactions contemplated by
this Agreement; and (f) Purchaser shall have executed and delivered the other
Closing Documents to which it is a party, including the Manufacturing Agreement.
7.4 Deliveries by Sellers at the Closing.
Delivery by the Sellers of the following at the Closing shall be a
condition to the obligation of the Purchaser under this Agreement:
(a) evidence that all remaining liens or encumbrances, except for
Permitted Liens, of any kind on the Acquired Assets shall have been released
and/or a termination statement shall have been filed as of the Closing Date;
(b) the Trademark Assignment, in substantially the form attached
hereto as Exhibit A conveying the rights to the Corn Silk Trademarks, the good
will associated therewith and the applications and registrations therefor in the
United States, duly executed by the Sellers, and Trademark Assignments, in
substantially the form attached hereto as Exhibit A-1 conveying the rights to
the Corn Silk Trademarks, the good will associated therewith and the
applications and registrations therefor, in each country in which Sellers or
either of them hold such rights;
(c) the Sellers' Xxxx of Sale, in substantially the form of Exhibit B,
conveying all tangible property included in Assets, duly executed by the
Sellers;
(d) the Trademark License Agreement, in substantially the form of
Exhibit C, duly executed by the Sellers;
(e) the Assumption Agreement, in substantially the form of Exhibit D,
duly executed by the Sellers;
(f) the Manufacturing Agreement, in substantially the form of Exhibit
E, duly executed by Sellers;
(g) an opinion of Xxxxxx & Xxxxxx LLP, counsel to the Sellers, dated
as of the Closing Date in form and substance set forth on Exhibit F; and
(h) such other instruments of sale, transfer, conveyance and
assignment as the Purchaser reasonably may request to effectuate the transfer of
the Acquired Assets to the Purchaser.
7.5 Deliveries by Purchaser at the Closing.
Delivery by Purchaser of the following at the Closing shall be a condition
to the obligation of the Sellers under this Agreement:
(a) a wire transfer of immediately available federal funds, in the
amount of the Closing Payment to an account or accounts designated by Sellers;
23
(b) the Trademark License Agreement, in substantially the form of
Exhibit C, duly executed by the Purchaser;
(c) the Assumption Agreement, substantially in the form of Exhibit D,
duly executed by the Purchaser; and
(d) the Manufacturing Agreement, in substantially the form of Exhibit
E, duly executed by the Purchaser;
(e) an opinion of X'Xxxxxxxx Graev & Karabell, LLP, counsel to the
Purchaser, dated as of the Closing Date in form and substance set forth on
Exhibit G; and
(f) such other instruments of sale, transfer, conveyance and
assignment as the Sellers reasonably may request to effectuate the transfer of
the Acquired Assets to the Purchaser.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.1 Risk of Loss.
Sellers shall retain the risk of loss with respect to the Acquired Assets
prior to the Closing Date.
8.2 No Third Party Beneficiaries.
This Agreement shall not confer any rights or remedies upon any Person
other than the Parties and their respective successors and permitted assigns,
personal representatives, heirs or estate, as the case may be.
8.3 Notices.
All notices, communications and deliveries under this Agreement shall be
made in writing, signed by the party making the same, shall specify the Section
of this Agreement pursuant to which it is given, and shall be deemed given on
the date delivered if delivered in person or on the third (3rd) business day
after mailed if mailed certified mail (with postage prepaid), return receipt
requested, as follows:
To Sellers:
Signal Investment & Management Co.
Chattem, Inc.
0000 Xxxx 00xx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: A. Xxxxxxxxx Xxxxxx XX
24
With a copy to:
Xxxxxx & Xxxxxx LLP
1000 Volunteer Building
000 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Esq.
To Purchaser:
Del Laboratories, Inc.
000 XXX Xxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Xxx X. Xxxxxxx
With a copy to:
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxx, Esq.
or to such other representative or to such other address as the parties hereto
may furnish to the other parties in writing. If notice is given pursuant to this
section of a permitted successor or assign of a party of this Agreement, then
notice shall be given as set forth above to such successor or assign of such
party.
8.4 Successors; Assignment.
This Agreement may not be transferred, assigned, pledged or hypothecated by
any party hereto, except with the prior written consent of the other parties
hereto, which consent will not be unreasonably withheld. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto, and their
respective successors and permitted assigns.
8.5 Captions; Definitions.
The titles or captions of articles, sections and subsections contained in
this Agreement are inserted only as a matter of convenience and for reference
and in no way define, limit, extend or describe the scope of this Agreement or
the intent of any provision hereof. The parties agree to all definitions in the
statement of parties to this Agreement and in the other introductory language to
this Agreement.
8.6 Controlling Law; Amendment; Waiver.
(a) This Agreement shall be construed and enforced in accordance with
the laws of the State of Delaware.
25
(b) This Agreement may not be altered or amended except in writing
signed by the Purchaser and the Sellers.
(c) The failure of any party hereto at any time to require performance
of any provisions hereof shall in no manner affect the right to enforce the
same. No waiver by any party hereto of any condition, or of the breach of any
term, provision, warranty, representation, agreement or covenant contained in
this Agreement, whether by conduct or otherwise, in any one or more instances
shall be deemed or construed as a further or continuing waiver of any such
condition or breach or a waiver of any other condition or of the breach of any
other terms, provision, warranty, representation, agreement or covenant herein
contained.
8.7 Incorporation of Exhibits and Schedules.
The Exhibits and Schedules identified in this Agreement are incorporated
herein by reference and made a part hereof.
8.8 Entire Agreement.
This Agreement constitutes the entire agreement among the parties hereto
with respect to the transactions contemplated and supersedes all prior
agreements, understandings, and negotiations, both written and oral, among the
parties with respect thereto.
8.9 No Presumption.
Neither this Agreement nor any other agreement between the parties nor any
uncertainty or ambiguity herein or therein shall be construed or resolved using
any presumption against any party hereto or thereto, whether under any rule of
construction or otherwise. On the contrary, this Agreement and the other
agreements between the parties have been reviewed by the parties and their
counsel and, in the case of any ambiguity or uncertainty, shall be construed
according to the ordinary meaning of the words used so as to fairly accomplish
the purposes and intentions of all parties hereto.
8.10 Counterparts.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, and it shall not be necessary in making proof of
this Agreement or the terms of this Agreement to produce or account for more
than one of such counterparts.
26
IN WITNESS WHEREOF, the parties have executed this Asset Purchase and Sale
Agreement as of the date and year first above written.
SELLERS:
CHATTEM, INC.
By: /s/
-----------------------------------------
A. Xxxxxxxxx Xxxxxx XX, President
SIGNAL INVESTMENT & MANAGEMENT CO.
By: /s/
-----------------------------------------
A. Xxxxxxxxx Xxxxxx XX, President
PURCHASER:
DEL LABORATORIES, INC.
By: /s/
-----------------------------------------
Xxx X. Xxxxxxx, Chairman,
President and Chief Executive Officer
TABLE OF CONTENTS
ARTICLE I PURCHASE AND SALE.......................................................................................1
1.1 AGREEMENT TO SELL.......................................................................................1
1.2 ACQUIRED ASSETS.........................................................................................1
1.3 EXCLUDED ASSETS.........................................................................................3
1.4 AGREEMENT TO PURCHASE...................................................................................3
1.5 PAYMENT OF THE PURCHASE PRICE...........................................................................3
1.6 INVENTORY ADJUSTMENT....................................................................................3
1.7 ASSUMED LIABILITIES.....................................................................................4
1.8 LIABILITIES NOT ASSUMED.................................................................................4
1.9 ASSIGNMENT OF CONTRACTS.................................................................................5
1.10 ALLOCATION OF PURCHASE PRICE............................................................................5
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS..............................................................5
2.1 CORPORATE EXISTENCE.....................................................................................5
2.2 AUTHORITY...............................................................................................5
2.3 ENFORCEABLE OBLIGATION..................................................................................6
2.4 ABSENCE OF VIOLATION OR CONFLICTS.......................................................................6
2.5 TITLE TO ACQUIRED ASSETS................................................................................6
2.6 MACHINERY AND EQUIPMENT.................................................................................7
2.7 INVENTORY...............................................................................................7
2.8 FINANCIAL STATEMENTS....................................................................................7
2.9 LITIGATION..............................................................................................7
2.10 ABSENCE OF CHANGES......................................................................................8
2.11 MATERIAL CONTRACTS AND COMMITMENTS......................................................................8
2.12 INTELLECTUAL PROPERTY RIGHTS............................................................................9
2.13 COMPLIANCE WITH LAW; AUTHORIZATIONS....................................................................10
2.14 CUSTOMERS..............................................................................................10
2.15 DISTRIBUTION AND RETURNS...............................................................................11
2.16 COMPLAINTS.............................................................................................11
2.17 FULL DISCLOSURE........................................................................................11
ARTICLE III PURCHASER'S REPRESENTATIONS AND WARRANTIES...........................................................11
3.1 ORGANIZATION...........................................................................................11
3.2 AUTHORITY..............................................................................................11
3.3 ABSENCE OF VIOLATION OR CONFLICTS......................................................................12
3.4 LITIGATION.............................................................................................12
3.5 FINANCIAL ABILITY TO PERFORM...........................................................................12
ARTICLE IV OTHER AGREEMENTS......................................................................................12
4.1 COMMERCIALLY REASONABLE EFFORTS........................................................................12
4.2 RESPONSIBILITY FOR PROMOTIONAL ALLOWANCES AND PRODUCT RETURNS..........................................13
4.3 PAYMENT OF ACCOUNTS RECEIVABLE.........................................................................13
4.4 MANUFACTURING AGREEMENT................................................................................14
4.5 INVENTORY AND PACKAGING................................................................................14
4.6 CONFIDENTIALITY........................................................................................14
4.7 NONCOMPETITION.........................................................................................14
4.8 PUBLIC ANNOUNCEMENTS...................................................................................15
4.9 INSPECTION.............................................................................................16
4.10 EXPENSES...............................................................................................16
4.11 BROKERS................................................................................................16
ARTICLE V SURVIVAL OF REPRESENTATIONS AND INDEMNIFICATION........................................................16
5.1 SURVIVAL...............................................................................................16
5.2 DEFINITIONS............................................................................................17
5.3 INDEMNIFICATION BY SELLERS.............................................................................17
5.4 INDEMNIFICATION BY PURCHASER...........................................................................18
5.5 RESOLUTION OF CLAIMS...................................................................................19
ARTICLE VI TERMINATION AND ABANDONMENT...........................................................................20
6.1 TERMINATION AND ABANDONMENT............................................................................20
6.2 RIGHTS AND OBLIGATIONS ON TERMINATION..................................................................21
ARTICLE VII THE CLOSING..........................................................................................21
7.1 TIME, DATE AND PLACE OF CLOSING........................................................................21
7.2 CONDITIONS TO OBLIGATIONS OF PURCHASER.................................................................21
7.3 CONDITIONS TO OBLIGATIONS OF SELLERS...................................................................22
7.4 DELIVERIES BY SELLERS AT THE CLOSING...................................................................23
7.5 DELIVERIES BY PURCHASER AT THE CLOSING.................................................................23
ARTICLE VIII MISCELLANEOUS PROVISIONS............................................................................24
8.1 RISK OF LOSS...........................................................................................24
8.2 NO THIRD PARTY BENEFICIARIES...........................................................................24
8.3 NOTICES................................................................................................24
8.4 SUCCESSORS; ASSIGNMENT.................................................................................25
8.5 CAPTIONS; DEFINITIONS..................................................................................25
8.6 CONTROLLING LAW; AMENDMENT; WAIVER.....................................................................25
8.7 INCORPORATION OF EXHIBITS AND SCHEDULES................................................................26
8.8 ENTIRE AGREEMENT.......................................................................................26
8.9 NO PRESUMPTION.........................................................................................26
8.10 COUNTERPARTS...........................................................................................26
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ASSET PURCHASE AGREEMENT
DATED AS OF MAY 12, 1998
AMONG
CHATTEM, INC.,
SIGNAL INVESTMENT & MANAGEMENT CO.
AND
DEL LABORATORIES, INC.
