ASSET PURCHASE AGREEMENT
BY AND AMONG
ANABOLIC LABORATORIES, INC.
"BUYER"
HEALTH FACTORS INTERNATIONAL INC.
"SELLER"
AND
TWIN LABORATORIES INC.
"PARENT"
MAY 22, 2002
TABLE OF CONTENTS
Page
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1. SALE AND TRANSFER OF ASSETS............................................ 2
1.1 ASSETS........................................................ 2
1.2 NO ASSUMPTION OF LIABILITIES.................................. 2
1.3 CLOSING....................................................... 3
1.4 PURCHASE PRICE................................................ 3
1.5 PURCHASE PRICE ALLOCATION..................................... 3
2. REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT.................... 3
2.1 ORGANIZATION AND GOOD STANDING................................ 3
2.2 AUTHORIZATION................................................. 4
2.3 ACQUIRED ASSETS............................................... 4
2.4 PROPRIETARY RIGHTS............................................ 4
2.5 NO CONFLICT OR VIOLATION...................................... 5
2.6 CONSENTS...................................................... 5
2.7 LABOR AND EMPLOYMENT MATTERS.................................. 5
2.8 LITIGATION.................................................... 6
2.9 CERTAIN CONTRACTS............................................. 6
2.10 COMPLIANCE WITH APPLICABLE LAW................................ 7
2.11 LICENSES...................................................... 7
2.12 INSIDER INTERESTS............................................. 8
2.13 CUSTOMERS AND SUPPLIERS....................................... 8
2.14 ENVIRONMENTAL MATTERS......................................... 8
2.15 BROKERS....................................................... 9
2.16 SOLVENCY...................................................... 9
2.17 ACCURACY OF INFORMATION....................................... 10
2.18 DETERMINATION OF BOARD OF DIRECTORS........................... 10
3. REPRESENTATIONS AND WARRANTIES OF BUYER................................ 10
3.1 ORGANIZATION AND CORPORATE AUTHORITY.......................... 10
3.2 AUTHORIZATION................................................. 10
3.3 NO CONFLICT OR VIOLATION...................................... 11
3.4 CONSENTS...................................................... 11
3.5 BROKERS....................................................... 11
4. CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES................... 11
4.1 CONFIDENTIALITY............................................... 11
4.2 TAX MATTERS................................................... 11
4.3 ACCESS TO RECORDS AND FILES................................... 12
4.4 EMPLOYMENT.................................................... 12
4.5 WARN ACT...................................................... 13
4.6 RIGHTS IN "HEALTH FACTORS INTERNATIONAL\...................... 13
4.7 NON-SOLICITATION.............................................. 14
4.8 SUPPLY AGREEMENT.............................................. 14
4.9 ADDITIONAL COVENANTS.......................................... 14
4.10 FURTHER ASSURANCES............................................ 14
5. SURVIVAL; INDEMNIFICATION.............................................. 15
5.1 SURVIVAL...................................................... 15
5.2 INDEMNIFICATION BY SELLER AND PARENT.......................... 15
5.3 INDEMNIFICATION BY BUYER...................................... 16
5.4 INDEMNIFICATION PROCEDURE..................................... 17
5.5 PAYMENT....................................................... 18
5.6 LIMITATIONS................................................... 18
6. DOCUMENTS TO BE DELIVERED AT CLOSING................................... 18
6.1 CLOSING DOCUMENTS OF SELLER AND PARENT........................ 18
6.2 CLOSING DOCUMENTS OF BUYER.................................... 19
7. MISCELLANEOUS.......................................................... 20
7.1 NOTICES....................................................... 20
7.2 ASSIGNABILITY AND PARTIES IN INTEREST......................... 21
7.3 GOVERNING LAW................................................. 21
7.4 VENUE......................................................... 21
7.5 COUNTERPARTS.................................................. 21
7.6 PUBLIC ANNOUNCEMENTS.......................................... 21
7.7 COMPLETE AGREEMENT............................................ 21
7.8 MODIFICATIONS, AMENDMENTS AND WAIVERS......................... 22
7.9 HEADINGS; REFERENCES.......................................... 22
7.10 RULES OF CONSTRUCTION......................................... 22
7.11 SEVERABILITY.................................................. 22
7.13 EXPENSES OF TRANSACTIONS...................................... 23
7.14 ATTORNEYS' FEES............................................... 23
7.15 ENFORCEMENT OF THE AGREEMENT.................................. 23
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EXHIBITS
A. Form of Real Estate Purchase and Sale Agreement
B. Form of Xxxx of Sale
C. Form of Supply Agreement
SCHEDULES
1.1(a) Acquired Assets
1.1(b) Excluded Assets
1.4 Amount due for Inventory
1.5 Purchase Price Allocation
2 Disclosure Schedule
2.1 Qualifications to do Business
2.3(a) Liens
2.3(b) Acquired Assets not at Facility
2.6 Consents
2.7 Employees
2.8 Litigation
2.9(a) Seller Contracts
2.9(b) Assigned Contracts
2.11 Licenses
2.13(a) Customers
2.13(b) Suppliers
2.14 Environmental
4.4 Employees to be Hired by Buyer
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is made and entered
into as of May 22, 2002, by and among Anabolic Laboratories, Inc., a California
corporation ("BUYER"), Health Factors International Inc., a Delaware corporation
("SELLER"), and Twin Laboratories Inc., a Utah corporation and parent
corporation of Seller ("PARENT").
A. Seller is engaged in the business of manufacturing vitamins and
other nutritional supplements (the "BUSINESS") at its facility located at 000 X.
Xxxxxx Xxxx, Xxxxx, Xxxxxxx 00000 (the "FACILITY").
B. Parent owns all of the issued and outstanding shares of capital
stock of Seller.
C. Seller desires to sell and assign to Buyer, and Buyer desires to
purchase from Seller certain assets and rights of Seller on the terms and
conditions set forth in this Agreement.
D. Concurrent herewith, Seller and LeBruns, LLC, a Delaware limited
liability company ("LEBRUNS"), are entering into a Real Estate Purchase and Sale
Agreement, in the form attached hereto as Exhibit A, providing for the purchase
of the Facility by LeBruns (the "REAL ESTATE PURCHASE AGREEMENT").
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual representations, warranties and agreements set forth herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. SALE AND TRANSFER OF ASSETS.
1.1 Assets.
(a) Acquired Assets. On the terms and subject to the
conditions set forth in this Agreement, on the date hereof (the "CLOSING DATE")
Seller, pursuant to the Xxxx of Sale substantially in the form of Exhibit B (the
"XXXX OF SALE"), shall convey, transfer, assign, sell and deliver to Buyer, and
Buyer shall acquire, accept and purchase, all of Seller's rights, title and
interest in the tangible assets and properties located at the Facility (other
than the Facility and the Excluded Assets) including, without limitation, those
assets listed on Schedule 1.1(a) (the "TANGIBLE ACQUIRED ASSETS") and certain
rights or interests of Seller listed on Schedule 1.1(a) (together, with the
Tangible Acquired Assets, the "ACQUIRED ASSETS").
(b) Excluded Assets. Seller is not selling, and Buyer is not
purchasing, any of the assets of Seller listed on Schedule 1.1(b) (the "EXCLUDED
ASSETS"), all of which shall be retained by Seller.
1.2 No Assumption of Liabilities. It is understood and agreed that
Buyer is not assuming, and will not be obligated or liable for, any direct or
indirect debts, obligations or
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liabilities of Seller or Parent of any nature related to the Business, the
Facility, the Acquired Assets or otherwise, whether absolute, accrued,
contingent, liquidated or otherwise, and whether due or to become due, asserted
or unasserted, known or unknown, except for liabilities arising after the
Closing Date under the Assigned Contracts (as defined in Section 2.9(a)).
1.3 Closing. The closing of the sale and purchase of the Acquired
Assets (the "CLOSING") will take place at 10:00 a.m., Pacific Time, on the
Closing Date, at the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, 0 Xxxx Xxxxx,
Xxxxxx, Xxxxxxxxxx 00000. At the Closing, Seller shall convey, transfer, assign,
sell and deliver to Buyer the Acquired Assets, by delivery to Buyer of the Xxxx
of Sale, and Buyer shall pay to Seller the Purchase Price as provided in Section
1.4.
1.4 Purchase Price. The consideration to be paid by Buyer for the
Acquired Assets (the "PURCHASE PRICE") is Seven Hundred Fifty Thousand Dollars
($750,000) which shall be paid by check or wire transfer of immediately
available funds to the account designated in writing by Seller at least two
business days prior to the Closing.
1.5 Purchase Price Allocation. The Purchase Price will be allocated for
tax purposes (the "ALLOCATION") in the manner set forth on Schedule 1.5. The
Allocation will be used by the parties in preparing all applicable tax returns
and shall be binding upon the parties and upon each of their successors and
assigns, and the parties shall report the transaction herein for tax purposes in
accordance with the Allocation and shall not take any position or action
inconsistent with the Allocation.
2. REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT.
Each representation and warranty contained in this Article 2 is
qualified by the disclosures made in the disclosure schedule attached hereto as
Schedule 2, which is arranged in paragraphs corresponding to the numbered and
lettered paragraphs in this Article 2 (the "DISCLOSURE SCHEDULE"). This Article
2 and the Disclosure Schedule shall be read together as an integrated provision.
Seller and Parent, jointly and severally, represent and warrant to Buyer, as of
the date hereof and as of the Closing, that:
2.1 Organization and Good Standing. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with all requisite corporate power and authority to carry on the
Business as it is now being conducted, and to own, lease or operate the Acquired
Assets. Seller is duly qualified to do business and is in good standing in every
jurisdiction in which the character of the properties owned or leased by it or
the nature of the business conducted by it makes such qualification necessary,
except where failure to be so qualified has not and could not reasonably be
expected to have a material adverse effect on the business, operations, assets,
results of operations or condition (financial or otherwise) of the Business, the
Facility or the Acquired Assets or the ability of Seller to consummate the
transactions contemplated hereby (a "MATERIAL ADVERSE EFFECT"). Schedule 2.1
lists all of the jurisdictions in which Seller is qualified to do business. No
jurisdiction in which Seller is not qualified or licensed as a foreign
corporation has demanded or requested in writing that it qualify or become
licensed as a foreign corporation. Complete and accurate copies of the charter
documents and bylaws of Seller, with all amendments thereto to the date hereof,
have been furnished to Buyer or its representatives.
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2.2 Authorization. Seller has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement and all other agreements and instruments to
which Seller or Parent is a party executed in connection herewith (together with
all other documents to be delivered in connection herewith or therewith to which
Seller or Parent is a party, collectively, the "TRANSACTION DOCUMENTS") have
been duly and validly approved by the Board of Directors of Seller and by Parent
and no other corporate proceedings on the part of Seller or Parent are necessary
to approve this Agreement and to consummate the transactions contemplated hereby
and thereby. This Agreement and the other Transaction Documents to which Seller
or Parent is a party have been (or upon execution will have been) duly executed
and delivered by Seller and Parent, have been effectively authorized by all
necessary corporate action and constitute (or upon execution will constitute)
legal, valid and binding obligations of Seller and Parent, enforceable against
the Seller and Parent in accordance with their respective terms.
2.3 Acquired Assets.
(a) Ownership. Seller is the lawful owner of or has the right
and title to use and transfer to Buyer each of the Tangible Acquired Assets. The
Tangible Acquired Assets are free and clear of all liens, mortgages, pledges,
security interests, restrictions, prior assignments, encumbrances, legal or
equitable claims of others and other claims of any kind (each a "LIEN"), except
for the following: (i) liens for taxes not yet payable; or (ii) Liens listed on
Schedule 2.3(a). The delivery to Buyer of the Xxxx of Sale will vest good and
marketable title to the Tangible Acquired Assets in Buyer, free and clear of all
Liens. There are no outstanding contracts, agreements or arrangements of any
nature obligating Seller or Parent to directly or indirectly transfer any of the
Tangible Acquired Assets or rights or interests therein to any Person other than
Buyer.
(b) Condition of the Tangible Acquired Assets. All of the
Tangible Acquired Assets are in good operating condition and repair, ordinary
wear and tear accepted. None of the Tangible Acquired Assets is in need of
repair or replacement other than as part of routine maintenance in the ordinary
course of business. Except as set forth on Schedule 2.3(b), all of the Tangible
Acquired Assets are located at the Facility.
(c) Ownership of Seller. Parent is the record and
beneficial owner of all of the issued and outstanding capital stock of Seller.
There are no Contracts relating to the issuance, sale or transfer of any voting
or other equity securities of Seller. For purposes of this Agreement,
"CONTRACTS" means all contracts, agreements and other instruments and
understanding of any kind, including without limitation, loan agreements,
letters of credit, guarantees, notes, leases, employee plans, and all
amendments, supplements, modifications, extensions or renewals in respect of the
foregoing.
(d) Conformity to Applicable Law. To the knowledge of
Seller and Parent, the Tangible Acquired Assets conform in all respects with all
applicable laws, rules and regulations applicable to such Tangible Acquired
Assets.
2.4 Proprietary Rights. Except as set forth on Schedule 2.4, Seller
owns all right, title and interest in and to the service xxxx or trade name
"Health Factors International". Seller shall
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convey, transfer, assign, sell and deliver to Buyer all of its right, title and
interest in and to the formulations, processes and know-how used by Seller in
manufacturing products at the Facility, to the extent owned by Seller, Parent or
their affiliates (the "KNOW-HOW"). There are no outstanding Contracts to which
Seller or Parent is a party of any nature obligating Seller or Parent to
directly or indirectly transfer the service xxxx or trade name "Health Factors
International," the Know-How, or rights or interests therein to any Person other
than Buyer.
2.5 No Conflict or Violation. The execution, delivery and performance
by Seller and Parent of this Agreement and the other Transaction Documents to be
delivered by Seller or Parent and the consummation of the transactions
contemplated hereby and thereby do not: (i) violate or conflict with any
provision of the charter documents or bylaws of Seller or Parent or any
resolution adopted by the board of directors or stockholders of Seller or
Parent; (ii) violate in any material respect any provision or requirement of any
domestic or foreign, federal, state, or local law, statute, judgment, order,
writ, injunction, decree, award, rule, or regulation of any Governmental Entity
applicable to Seller, Parent, the Acquired Assets or the Facility; (iii) violate
in any material respect, result in a material breach of, constitute (with due
notice or lapse of time or both) a default or cause any material obligation,
penalty, premium or right of termination to arise or accrue under any Seller
Contract (as hereinafter defined); or (iv) result in the creation or imposition
of any Lien upon the Acquired Assets or the Facility.
2.6 Consents. Schedule 2.6 lists all consents and notices required to
be obtained or given by or on behalf of Seller or Parent in connection with the
execution of this Agreement and the other Transaction Documents and the
consummation of the transactions contemplated hereby and thereby (i) by law,
rule, regulation or order of any Governmental Entity or (ii) by the provisions
of any material contract to which Seller or Parent is a party or by which their
respective properties are bound. All such consents have been duly obtained and
are in full force and effect and all such notices have been given.
2.7 Labor and Employment Matters. Schedule 2.7 lists all current
employees of Seller, including the current title and current compensation of
such employees. Except as disclosed on Schedule 2.7, there is no employment
agreement, severance agreement, collective bargaining agreement or other labor
or employment Contract to which Seller is a party or by which it is bound.
Seller has complied in all material respects with all applicable laws, rules and
regulations relating to employment and termination of employment of employees,
including without limitation those related to wages, hours, collective
bargaining and the payment and withholding of taxes and other sums as required
by appropriate Governmental Entities and has withheld and paid to the
appropriate Governmental Entities or is holding for payment not yet due to such
Governmental Entities, all amounts required to be withheld from employees of
Seller and is not liable for any arrears of wages, taxes, penalties or other
sums for failure to comply with any of the foregoing. There is no (i) unfair
labor practice complaint or charge against Seller pending, or to the knowledge
of Seller or Parent threatened, before the National Labor Relations Board or any
other Governmental Entity; (ii) pending, or to the knowledge of Seller or Parent
threatened, labor strike or other material labor trouble affecting Seller; (iii)
material labor grievance pending, or to the knowledge of Seller or Parent
threatened, against Seller; or (iv) pending, or to the knowledge of Seller or
Parent threatened, representation question respecting the employees of Seller;
or (v) employee or employment related claim or cause of action under any federal
or state law, including any pending before any state or district court, the
Equal
5
Employment Opportunity Commission or any state agency such as the Arizona
Human Rights Commission. For purposes of this Agreement, "EMPLOYEES" includes
employees, temporary employees, independent contractors and all other persons
performing duties or functions for the Seller that would traditionally be
considered to be those fulfilled by an employee.
2.8 Litigation. Except as set forth on Schedule 2.8, there are no
claims, actions, suits arbitrations, investigations or proceedings of any nature
pending or, to the knowledge of Seller or Parent, threatened by or against
Parent, Seller, the officers, directors, employees, agents of Seller, or any of
their respective Affiliates involving, affecting or relating to the Acquired
Assets or the transactions contemplated by this Agreement. No Acquired Asset is
subject to any order, writ, judgment, award, injunction or decree of any
Governmental Entity. For purposes of this Agreement, "AFFILIATE" shall have the
meaning ascribed to such term in Rule 405 under the Securities Act of 1933, as
amended.
2.9 Certain Contracts.
(a) Schedule 2.9(a) lists all material Contracts to which
Seller or Parent is a party relating to, binding on or affecting any of the
Acquired Assets or the ability for Seller and/or Parent to enter into this
Agreement, the Transaction Documents, or the transactions contemplated hereby or
thereby, including, without limitation, all: (i) supply, distribution or other
Contracts pursuant to which third parties are or will be entitled or obligated
to purchase or use any of the Acquired Assets; (ii) real property leases or any
subleases relating thereto; (iii) personal property leases or any subleases
relating thereto; (iv) Contracts limiting or restraining any of Seller's
employees from engaging or competing in any lines of business with any Person;
(v) any Contracts evidencing, securing or otherwise relating to any indebtedness
in excess of $25,000 for which the Parent or the Seller has any direct or
indirect debts, obligations or liabilities of any nature, and (vi) other
Contracts affecting the ownership of, title to, use of or any leasehold or other
interest in the Facility or the Acquired Assets (each a "SELLER CONTRACT," and
collectively, the "SELLER CONTRACTS.") Schedule 2.9(b) lists all Seller
Contracts to be assumed by Buyer upon the Closing (the "ASSIGNED CONTRACTS").
(b) Each Assigned Contract is valid, binding and
enforceable against the Seller in accordance with its terms, except as such
enforceability may be limited by general principles of equity and bankruptcy,
insolvency, reorganization and moratorium and other similar laws relating to
creditors' rights, and is in full force and effect. Seller or Parent, as the
case may be, has performed all material obligations required to be performed by
it under, and is not in material breach or in default of, any Seller Contract,
and no event has occurred which, with due notice or lapse of time or both, would
constitute such a material breach or default.
(c) To the knowledge of Seller or Parent, without any
independent investigation, no other party to any Assigned Contract is in
material breach or in default in respect thereof, and no event has occurred
which, with due notice or lapse of time or both, would constitute such a
material breach or default.
(d) There are no material disputes with any party to any
Assigned Contract, and to the knowledge of Seller or Parent, no party to any
Assigned Contract has credibly
6
threatened to cancel or terminate any Assigned Contract, whether as a result of
the transactions contemplated by this Agreement or otherwise.
(e) To the knowledge of Seller or Parent, without any
independent investigation, no party to any Assigned Contract has assigned any of
its rights or delegated any of its duties under such Assigned Contract.
(f) Neither the execution and delivery by Seller or
Parent of this Agreement, nor the consummation by Seller or Parent of the
transactions contemplated herein in accordance with the terms hereof, in any
material respect, violates, or conflicts with, or results in a breach of any
provision of, or constitutes a material default (or an event which, with notice
or lapse of time or both, would constitute a default) under, or results in the
termination or in a right of termination or cancellation of, or accelerates the
performance required by, or results in the triggering of any payment obligations
under, or results in the creation of any Lien upon any of the Acquired Assets
under, or results in being declared void, voidable, or without further binding
effect, any of the terms, conditions or provisions of any Seller Contract.
(g) Seller has delivered to Buyer or its representatives
true and complete originals or copies of all the Assigned Contracts and a copy
of every Material Notice received by Seller or Parent since January 1, 2001,
with respect to any of the Seller Contracts. For purposes hereof, "MATERIAL
NOTICE" means those notices alleging a breach of a Assigned Contract or
intention to terminate or materially modify a Seller Contract, but does not
include routine correspondence.
2.10 Compliance with Applicable Law. The operations of Seller are being
conducted in all material respects in accordance with all applicable laws,
regulations, orders and other requirements of all Governmental Entities having
jurisdiction over it and its assets, properties and operations, including,
without limitation, all such laws, regulations, orders and requirements relating
to the Tangible Acquired Assets. Without limiting the foregoing, Seller has
complied in all material respects with all requirements of the Occupational
Safety and Health Act and its state law equivalents that apply to the Tangible
Acquired Assets. Seller has not received any notice of any actual, alleged,
possible or potential material violation of any such law, regulation, order or
other legal requirement from any Governmental Authority, employee or third
party, and to Seller's or Parent's knowledge no event has occurred nor any
circumstance exists that (with or without notice or lapse of time) may
constitute or result in a violation by Seller of, or a failure on the part of
Seller to comply in all material respects with, any such law, regulation, order
or other legal requirement or may give rise to any obligation on the part of
Seller to undertake or bear all or any portion of the cost of any remedial
action of any nature.
2.11 Licenses.
(a) Schedule 2.11 lists each material license, permit,
certificate, franchise, authorization, or approval issued or granted by any
Governmental Entity that relates to the Acquired Assets (each a "LICENSE," and
collectively, "LICENSES") and such Licenses constitute all material Licenses
required by law, rule or regulation to be obtained by Seller in connection with
Seller's use of the Acquired Assets. as presently used and the execution,
delivery and performance of this Agreement and the other Transaction Documents
and the transactions
7
contemplated hereby and thereby. Seller has delivered to Buyer or its
representatives true and complete copies of all the Licenses together with all
amendments and modifications thereto. Schedule 2.11 identifies all Licenses that
are not transferable to Buyer hereunder.
(b) Each License has been issued to, and duly obtained
and fully paid for by Seller and is valid, in full force and effect and not
subject to any pending or to the knowledge of Seller or Parent threatened,
administrative or judicial proceeding to suspend, revoke, cancel or declare such
License invalid in any respect. Seller is not in violation in any material
respect of any of the Licenses.
2.12 Insider Interests. No officer, director or stockholder of Seller,
or any Affiliate of any such Person, or to the knowledge of Seller or Parent,
any family member of such individual persons, now has, or within the last year
had, either directly or indirectly any ownership rights in or to any of the
Acquired Assets.
2.13 Customers and Suppliers.
(a) Major Customers and Suppliers. Schedule 2.13(a)(i)
lists the ten largest customers of Seller, together with revenues to Seller from
each such customer during the most recent complete fiscal year and the current
fiscal year to March 31, 2002. Except for single purchase orders, Seller has no
current Contracts with such customers. Schedule 2.13(a)(ii) lists the ten
largest suppliers of Seller, together with payments to each supplier from Seller
during the most recent complete fiscal year and the current fiscal year to March
31, 2002, and the scheduled termination dates of their current Contracts with
Seller.
(b) No Notice of Termination. Except as set forth on
Schedule 2.13(b), none of such customers has given notice to Seller or Parent of
its intention not to purchase product from Buyer, as a result of the sale of the
Acquired Assets.
2.14 Environmental Matters.
Notwithstanding anything to the contrary contained in this
Agreement and except as disclosed on Schedule 2.14:
(a) Seller's ownership and operation of the Acquired
Assets and the Facility and Seller's operation of the East Fifth Street Property
(as defined in Schedule 2.9(b)) comply and have at all times complied in all
material respects with all applicable laws, regulations and other requirements
of Governmental Entities or duties under common law relating to toxic or
hazardous substances, wastes, pollution or to the protection of health, safety
or the environment (collectively, "ENVIRONMENTAL LAWS") and Seller has obtained
and maintained in effect all material licenses, permits and other authorizations
or registrations relating to its ownership and operation of the Acquired Assets,
the Facility and the East Fifth Street Property required under all Environmental
Laws (collectively "ENVIRONMENTAL PERMITS") and is in material compliance with
all such Environmental Permits.
(b) Seller has not performed, failed to perform or, to
the knowledge of Seller, suffered any act relating to its ownership or operation
of the Acquired Assets, the Facility or the East Fifth Street Property which
could reasonably be expected to give rise to, or has otherwise
8
incurred, material liability relating to its ownership or operation of the
Acquired Assets, the Facility or the East Fifth Street Property to any Person
(governmental or not) under the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601 et seq. ("CERCLA"), or
any other Environmental Laws, nor has it received notice of any such liability
or any claim therefore.
(c) Other than products in quantities that would not
reasonably be expected to present a material risk to health, safety or the
environment or other commonly used products that are used or stored in
compliance with Environmental Laws, no hazardous substance, hazardous waste,
contaminant, pollutant or toxic substance (as such terms are presently defined
in or otherwise presently subject to any applicable Environmental Law and
collectively referred to herein as "HAZARDOUS MATERIALS") has been released,
placed, disposed of or otherwise come to be located by Seller, Parent or any of
their affiliates, or, to the knowledge of Seller or Parent, by, any third party,
on, at, beneath or near any of the Acquired Assets, the Facility or the East
Fifth Street Property such that Seller could be subject to material liability
under any Environmental Laws.
(d) Seller's ownership and operation of the Acquired
Assets, the Facility and the East Fifth Street Property has not exposed any
employee or third party to any Hazardous Materials or conditions that could
subject it to any material liability under any Environmental Laws.
(e) Seller does not own or operate, and has never owned
or operated, any aboveground or underground storage tanks on or about the
Facility or the East Fifth Street Property.
(f) To the knowledge of Seller or Parent, with respect to
the Acquired Assets, the Facility or the East Fifth Street Property , there are
no asbestos-containing materials, urea formaldehyde insulation, polychlorinated
biphenyls or lead-based paints present at any such properties.
(g) There are no pending or, to the knowledge of Seller
or Parent threatened, administrative, judicial or regulatory proceedings, or,
pending, or, to the knowledge of Seller or Parent threatened, actions or claims,
or any consent decrees or other agreements in effect that relate to
environmental conditions in, on, under, about or related to the Acquired Assets,
the Facility or, to the knowledge of Seller or Parent, the East Fifth Street
Property.
(h) Seller has delivered to Buyer copies of all written
environmental assessments, audits, studies and other environmental reports in
the possession of Seller or Parent or reasonably available to them relating to
the Acquired Assets, the Facility or the East Fifth Street Property.
2.15 Brokers. No broker, finder, investment banker, or other Person is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement, based upon arrangements
made by or on behalf of Seller or Parent.
2.16 Solvency. Immediately after giving effect to the transactions
contemplated by this Agreement, Seller and Parent shall each be able to pay
their respective debts as they become
9
due and shall own property which has a fair saleable value greater than the
amounts required to pay their respective debts (including a reasonable estimate
of the amount of all contingent liabilities). Immediately after giving effect to
the transactions contemplated by this Agreement, Seller and Parent shall have
adequate capital to carry on their respective businesses. No transfer of
property is being made and no obligation is being incurred by Seller and Parent
in connection with the transactions contemplated by this Agreement with the
intent to hinder, delay or defraud either present or future creditors of Seller
and Parent.
2.17 Accuracy of Information. The descriptions set forth in the
Disclosure Schedule are accurate descriptions of the matters disclosed therein.
Copies of all documents heretofore or hereafter delivered or made available to
Buyer pursuant hereto were or will be complete and accurate records of such
documents.
2.18 Determination of Board of Directors. The Board of Directors of
Parent has determined in good faith that the Purchase Price is the fair market
value (as defined in the Indenture dated May 7, 1996 among Parent, certain
guarantors and Fleet National Bank (the "INDENTURE")) for the Acquired Assets,
that the Purchase Price (as defined in Section 2 of the Real Estate Purchase
Agreement), is the fair market value (as defined in the Indenture) for the
Facility and that the purchase price being paid for the inventory and work in
process, pursuant to the Xxxx of Sale described in Section 6.1(c), is the fair
market value (as defined in the Indenture).
3. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to Seller and Parent, as of the date
hereof and as of the Closing, that:
3.1 Organization and Corporate Authority. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California, with all requisite corporate power and authority to carry on its
business as it is now being conducted and to own, lease or operate the Acquired
Assets. Buyer is duly qualified to do business and is in good standing in every
jurisdiction in which the character of the properties owned or leased by it or
the nature of the business conducted by it makes such qualification necessary,
except where failure to be so qualified has not and could not reasonably be
expected to have a material adverse effect on the business, operations, assets,
results of operations or condition (financial or otherwise) of its business. No
jurisdiction in which Buyer is not qualified or licensed as a foreign
corporation has demanded or requested in writing that it qualify or become
licensed as a foreign corporation.
3.2 Authorization. Buyer has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement and the other Transaction Documents to which
Buyer is a party have been duly and validly approved by the Board of Directors
of Buyer and no other corporate proceedings on the part of Buyer are necessary
to approve this Agreement and to consummate the transactions contemplated hereby
and thereby. This Agreement and the other Transaction Documents to which the
Buyer is a party have been (or upon execution by Buyer will have been) duly
executed and delivered by Buyer, have been effectively authorized by all
necessary corporate action of Buyer and constitute (or upon execution will
constitute) legal, valid and binding obligations of Buyer, enforceable against
Buyer in accordance with their respective terms.
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3.3 No Conflict or Violation. The execution, delivery and performance
by Buyer of this Agreement and the other Transaction Documents to be executed
and delivered by Buyer and the consummation of the transactions contemplated
hereby and thereby do not and will not: (i) violate or conflict with any
provision of the charter documents or bylaws of Buyer or any resolution adopted
by the board of directors or stockholders of Buyer; or (ii) violate in any
material respect any provision or requirement of any domestic or foreign,
federal, state or local law, statute, judgment, order, writ, injunction, decree,
award, rule, or regulation of any Governmental Entity applicable to Buyer.
3.4 Consents. No consents or notices are required to be obtained or
given by or on behalf of Buyer in connection with the execution of this
Agreement and the other Transaction Documents and the consummation of the
transactions contemplated hereby and thereby.
3.5 Brokers. No broker, finder, investment banker, or other Person is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement, based upon arrangements
made by or on behalf of Buyer.
4. CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES.
4.1 Confidentiality. For purposes hereof, Seller and Parent will keep
the matters contemplated herein and all information provided by Buyer related to
Buyer confidential, and will not provide information about such matters to any
Person or use such information except to the extent (i) necessary to effect the
transactions contemplated hereby or (ii) required under applicable law, valid
subpoena or other court or governmental order, decree, regulation or rule. Buyer
will keep the matters contemplated herein and all information provided by Seller
and Parent related to Seller, Parent and the Business confidential, and will not
provide information about such matters to any Person or use such information
except to the extent (i) necessary to effect the transactions contemplated
hereby or (ii) required under applicable law, valid subpoena or other court or
governmental order, decree, regulation or rule. If information is disclosed
pursuant to clause (ii) of either of the preceding two sentences, the disclosing
party shall notify the other party as soon as reasonably practicable after such
party becomes aware of the required disclosure. Buyer, Seller and Parent shall
each cause their respective Affiliates, officers, directors, employees, agents,
and advisors to keep confidential all information received in connection with
the transactions contemplated hereby.
4.2 Tax Matters.
(a) Seller and Buyer will each provide the other party
with such assistance as may reasonably be requested in connection with
preparation of any Tax Return, audit or other examination by any taxing
authority or judicial or administrative proceeding relating to liability for
Taxes related to or attributable to the Acquired Assets or the Facility, will
each retain and provide to the other party all records and other information
that may be relevant to any such Tax Return, audit or examination, proceeding or
determination and will each provide the other party with any final determination
of any such audit or examination, proceeding or determination that affects any
amount required to be shown on any such Tax Return of the other party for any
period. Without limiting the generality of the foregoing, each of Buyer and
Seller will retain, until the expiration of the applicable statutes of
limitation (including any extensions thereof)
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copies of all such Tax Returns, supporting work schedules and other records
relating to Tax periods or portions thereof ending on or prior to the Closing
Date. For purposes of this Agreement, (i) "TAXES" means all taxes, including,
without limitation, all net income, gross receipts, sales, use, withholding,
payroll, employment, social security, unemployment, excise and property taxes,
plus applicable penalties and interest thereon; and "TAX RETURN" means all
reports and returns required to be filed with respect to Taxes.
(b) Notwithstanding any other provision of this Agreement, the
covenants set forth in this Section 4.2 shall survive until the expiration of
the respective statute of limitations applicable to the periods to which the
Taxes referred to herein relate.
4.3 Access to Records and Files.
(a) Seller shall have the right for a period of five
years following the Closing Date to have reasonable access to such books,
records and accounts, correspondence, employment records and other similar
information as are transferred to Buyer pursuant to the terms of this Agreement
for any lawful and proper purpose. Buyer shall have the right for a period of
five years following the Closing Date to have reasonable access to those books,
records and accounts, correspondence, and other records which are retained by
Seller pursuant to the terms of this Agreement to the extent that any of the
foregoing relate to the Acquired Assets or to the extent that such access is
required for any lawful and proper purpose.
(b) Buyer agrees that, in the event Seller receives
written notice of a claim relating to the Acquired Assets or any product
manufactured or distributed by Seller prior to the Closing Date, which claim is
not subject to Section 5.3, Buyer shall cooperate with Seller in all
commercially reasonable respects, at Seller's cost, in the investigation, trial,
defense and any appeal arising from the matter from which such claim arose,
including without limitation providing Seller access to all information
necessary for Seller's defense of such claim.
4.4 Employment.
(a) Except with respect to obligations or liabilities
arising after the Closing Date in connection with Buyer's hiring or employment
of any employees listed on Schedule 4.4 or hired by Buyer after the Closing
Date, Buyer shall not assume any liabilities or obligations of Seller to any
current or former employee of Seller. Except as set forth in Section 4.4(b),
Buyer shall not have any liability or obligation to or in respect of any
employee of Seller, including, without limitation, any liability or obligation
(i) to employ or engage any such employee, (ii) arising from such employee's
employment with Seller or dismissal by Seller, whether or not in connection with
the transactions contemplated hereby, or any notice or payment in lieu of notice
required by applicable law in connection with such dismissal, or (iii) in
respect of any compensation, tenure, seniority, benefit or welfare plan or
arrangement of any kind.
(b) Buyer agrees to offer employment or engagement to
each of the employees of Seller listed on Schedule 4.4. The salaries, wages or
compensation rates, medical insurance and other benefits, and seniority and
title of such employees shall be determined in the sole discretion of Buyer.
Buyer agrees that any such employees shall become eligible for participation
under any group health plan maintained by Buyer in accordance with the
provisions
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of such plan. Buyer agrees to waive any waiting periods imposed by Buyer for
such employees relating to eligibility for participation under any group health
plan so that such employees may participate in such plan as soon as the terms of
such plan allow. At any time after the Closing, Buyer may offer employment or
similar engagements to any other former employee of Seller, notwithstanding the
fact that they were not offered employment as of the Closing Date.
(c) Seller or Parent expressly agrees that it retains
liability for all claims arising under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended and any similar state law ("COBRA") for
any employee or former employee of Seller, including any "M&A qualified
beneficiary," as defined in Treasury Regulation section 54.4980B-9, Q&A-4(a).
Seller and Buyer agree and acknowledge that Buyer is not a "successor employer"
of Seller, as defined in Treasury Regulation section 54.4980B-9, Q&A-8(c) or
section 54.4980B-2, Q&A-2. In the event Seller or Parent ceases to maintain any
group health plan prior to the expiration of the COBRA continuation coverage
period, Seller or Parent shall cause the plan to offer an individual conversion
policy to each participant or beneficiary covered by such plan. Such individual
policy shall be effective as of the date the person ceases to be covered under
the group health plan and shall end no earlier than the date the COBRA
continuation coverage period would end for such person pursuant to the terms of
COBRA.
4.5 WARN Act. Seller shall have full responsibility for providing any
notice to its employees and appropriate government officials which may be
required pursuant to the Worker Adjustment and Retraining Notification Act of
1988, as amended (the "WARN ACT"), or any similar state law with respect to any
employees terminated by Seller; provided however, Buyer shall have full
responsibility under the WARN Act for any employees listed on Schedule 4.4(b)
who are terminated by Buyer after the Closing. Seller will bear any costs,
obligations or liabilities which may accrue to such employees or any unit of
local government under such Act or any similar state law as a result of improper
or untimely notice or other failure to comply with such laws. Seller
specifically agrees that it retains liability for all claims arising under the
WARN Act, and further agrees that it shall indemnify and hold harmless Buyer,
its Affiliates and their successors and assigns, and the officers, directors,
employees and agents of each of them, from and against any and all liabilities
or losses that the Buyer may incur under the WARN Act or any other statute,
rule, regulations, ordinance, policy, common law or contract, in connection with
Sellers' termination of any or all of Seller's employees.
4.6 Rights in "Health Factors International". Promptly after the
Closing Date, Seller will, and Parent will cause Seller to, change its name to
Tempe Manufacturing Corp., or such other name not confusingly similar with
"Health Factors International Inc." as may be acceptable to Buyer. From and
after the Closing Date, neither Parent, Seller nor any of their Affiliates will
employ the term "Health Factors" or "Health Factors International" or a
confusingly similar term in its business, except in connection with documents
referencing the fact that Health Factors International was previously a wholly
owned subsidiary of Parent. From and after the Closing Date, Seller shall
provide Buyer all documents of assignment reasonably requested by Buyer to
transfer to Buyer all of Seller's right, title and interest in and to the xxxx
and name "Health Factors International".
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4.7 Non-Solicitation.
(a) Until the third anniversary of the Closing Date,
Seller and Parent shall not, and shall cause their Affiliates not to, directly
or indirectly, on their behalf or on behalf of others, hire or attempt to hire,
or cause any other Person to hire or attempt to hire, any employee of Buyer or
its Affiliates (including without limitation persons employed or engaged by
Seller before the Closing Date who accept offers of employment with Buyer), or
directly or indirectly entice or solicit or seek to induce or influence any of
such employees to leave their employment or engagement with Buyer or its
Affiliates.
(b) Until the third anniversary of the Closing Date,
Buyer shall not, and shall cause its Affiliates not to, directly or indirectly,
on its behalf or on behalf of others, hire or attempt to hire, or cause any
other Person to hire or attempt to hire, any employee of Parent or its
Affiliates (excluding Seller), or directly or indirectly entice or solicit or
seek to induce or influence any of such employees to leave their employment or
engagement with Parent or its Affiliates (excluding Seller).
(c) The covenants set forth in subsections (a) and (b)
above shall be read and interpreted with every reasonable inference given to
their enforceability. However, if any term, provision or condition of such
covenants is held by a court or arbitrator to be invalid, void or unenforceable,
the remainder of the provisions thereof shall remain in full force and effect
and shall in no way be affected, impaired or invalidated. If a court or
arbitrator should determine any of such covenants are unenforceable because of
over-breadth, then the court or arbitrator shall modify such covenant so as to
make it enforceable to the fullest extent the court or arbitrator deems
reasonable and enforceable under the prevailing circumstances.
4.8 Supply Agreement. At the Closing, the parties are entering into a
Supply Agreement setting forth the terms by which Buyer shall manufacture
certain products for Seller, in the form of Exhibit C (the "SUPPLY AGREEMENT").
4.9 Additional Covenants.
(a) Seller and Parent shall use their respective
commercially reasonable efforts to assist Buyer in retaining for Buyer's benefit
after the Closing the manufacturing business of customers of Seller (other than
the manufacture of Seller's Metabolife products) and Seller's employees to whom
Buyer desires to offer employment.
(b) On or before the Closing Date, Seller shall remove
all of the Excluded Assets from the Facility and the East Fifth Street Property.
(c) Within 360 days of the Closing Date, Parent and
Seller shall apply the Purchase Price, the Purchase Price defined in Section 2
of the Real Estate Purchase Agreement and the proceeds from the sale of the
inventory and work in process as set forth in Section 4.13(1) of the Indenture.
4.10 Further Assurances. Upon the reasonable request of a party or
parties hereto at any time after the Closing Date, the other party or parties
shall forthwith execute and deliver such further instruments of assignment,
transfer, conveyance, endorsement, direction or
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authorization and other documents as the requesting party or parties or its or
their counsel may reasonably request in order to perfect title of Buyer and its
successors and assigns to the Acquired Assets or otherwise to effectuate the
purposes of this Agreement.
5. SURVIVAL; INDEMNIFICATION.
5.1 Survival. The representations and warranties made in this Agreement
or any other Transaction Document shall survive any investigation made by any
party hereto and the Closing of the transactions contemplated hereby until the
first anniversary of the Closing Date, except those representations and
warranties contained in (i) Section 2.15 (Brokers), which will survive until the
expiration (including extensions) of the applicable statute of limitations; and
(ii) Section 2.3 (Acquired Assets) and Section 2.18 (Determination of Board of
Directors), which will survive indefinitely. As to any matter or claim or cause
of action which has been finally determined by a court of competent jurisdiction
after all appeals have been exhausted to constitute actual fraud, the
representations and warranties set forth in this Agreement shall expire only
upon expiration of the applicable statute of limitations. No party will be
liable to another under any warranty or representation contained herein after
the applicable expiration of such warranty or representation; provided however,
if a claim or notice is given under this Article 5 with respect to any
representation or warranty in reasonable detail prior to the applicable
expiration date, such claim may be pursued to resolution notwithstanding
expiration of the representation or warranty under which the claim was brought.
Completion of the transactions contemplated hereby shall not be deemed or
construed to be a waiver of any right or remedy of any of the parties.
5.2 Indemnification by Seller and Parent. Subject to the limits set
forth in this Article 5, Seller, Parent and their successors and assigns shall
jointly and severally indemnify, defend, reimburse and hold harmless Buyer and
its Affiliates and their successors and assigns, and the officers, directors,
employees and agents of each of them, from and against any and all claims,
losses, damages, liabilities, obligations, assessments, penalties and interest,
demands, actions and expenses, whether direct or indirect (including, without
limitation, settlement costs, legal and accounting fees and expenses and any
other expenses for investigating or defending any actions or threatened actions)
("LOSSES") reasonably incurred by any such indemnitee, arising out of or in
connection with any of the following:
(a) the ownership or operation of the Excluded Assets, at
any time, before or after the Closing, including without limitation with respect
to any product manufactured or shipped in whole or in part by Parent or Seller;
(b) the ownership or operation of the Acquired Assets, the
Facility or the East Fifth Street Property before the Closing, including without
limitation with respect to any product manufactured or shipped in whole or in
part by Parent or Seller;
(c) any untruth or inaccuracy of any representation, warranty
or certification made by Seller or Parent in this Agreement or any other
Transaction Document;
(d) any breach of any covenant, agreement or obligation of
Seller or Parent contained in this Agreement or any other Transaction Document;
15
(e) any failure to comply with applicable bulk sales laws or
fraudulent transfer laws in connection with the transactions contemplated
hereby;
(g) any liability under the WARN Act or similar state or
local law caused by any action of Seller, any liability or obligation to any
employee of Seller arising in connection with Seller's employees employment with
Seller prior to the Closing, including, but not limited to any liability in
connection with the termination of such employment, vacation or sick leave;
(h) any violation by Seller of any Environmental Law or
any liability in connection with the Acquired Assets, the Facility or the East
Fifth Street Property, on or prior to the Closing Date, arising under any
Environmental Law as a result of action or omissions on or prior to the Closing
Date; and
(i) any claims against, or liabilities or obligations of,
Seller not specifically assumed by Buyer pursuant to this Agreement.
5.3 Indemnification by Buyer. Subject to the limits set forth in this
Article 5, Buyer and its successors and assigns, shall indemnify, defend,
reimburse and hold harmless Seller, Parent and their successors and assigns and
their officers, directors, employees and agents from and against any and all
Losses reasonably incurred by any such indemnitee arising out of or in
connection with any of the following:
(a) the ownership and operation of the Acquired Assets,
the Facility or the East Fifth Street Property after the Closing, including
without limitation with respect to any product manufactured or shipped in whole
or in part by Buyer;
(b) any untruth or inaccuracy of any representation, warranty
or certification made by Buyer in this Agreement or any other Transaction
Document;
(c) any breach of any covenant, agreement or obligation of
Buyer contained in this Agreement or any other Transaction Document; and
(d) any claims made by employees of Seller hired by Buyer
and listed on Schedule 4.4 or hired by Buyer after the Closing Date, with
respect to employment subsequent to the Closing.
(e) any liability under the WARN Act or similar state or
local law caused by any action of Buyer after the Closing Date, and any
liability or obligation to any employee of Buyer, incurred after the Closing
Date, arising in connection with Buyer's employment or the termination of such
employment;
(f) any violation by Buyer of any Environmental Law or
any liability in connection with the Acquired Assets, the Facility or the East
Fifth Street Property, on or after the Closing Date, arising under any
Environmental Law as a result of action or omissions on or after the Closing
Date by Buyer; and
(g) any liabilities of Buyer arising after the Closing Date
under the Assigned Contracts.
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5.4 Indemnification Procedure.
(a) Notice. Whenever any claim shall arise for indemnification
hereunder (a "CLAIM"), the party entitled to indemnification (the "INDEMNITEE")
shall promptly give written notice to the party obligated to provide indemnity
(the "INDEMNITOR") with respect to the Claim after the receipt by the Indemnitee
of reliable information of the facts constituting the basis for the Claim; but
the failure to timely give such notice shall not relieve the Indemnitor from any
obligation under this Agreement, except to the extent, if any, that the
Indemnitor is materially prejudiced thereby.
(b) Third-Party Claims.
(i) Upon receipt of written notice from the
Indemnitee of a Claim, the Indemnitor may provide counsel
(such counsel subject to the consent of the Indemnitee, which
consent shall not be unreasonably withheld) to defend the
Indemnitee against the matter from which the Claim arose, at
the Indemnitor's sole cost, risk and expense. If the
Indemnitor assumes such defense, the Indemnitee shall
cooperate in all reasonable respects, at the Indemnitor's sole
cost, risk and expense, with the Indemnitor in the
investigation, trial, defense and any appeal arising from the
matter from which the Claim arose; provided, however, that the
Indemnitee may (but shall not be obligated to) participate in
any such investigation, trial, defense and any appeal arising
in connection with the Claim at the sole cost of the
Indemnitee. After notice from the Indemnitor to the Indemnitee
of the Indemnitor's election to assume the defense, compromise
or settlement of such Claim, the Indemnitor shall not, as long
as it diligently conducts such defense, be liable to the
Indemnitee for any fees of other counsel or any other expenses
with respect to the defense of such Claim, in each case
subsequently incurred by the Indemnitee in connection with the
defense, compromise, or settlement of the Claim. The
Indemnitor shall have the right to elect to settle any Claim
for monetary damages only without the Indemnitee's consent, if
the settlement includes a complete release of the Indemnitee.
If the settlement does not include such a release, it will be
subject to the consent of the Indemnitee, which consent shall
not be unreasonably withheld. The Indemnitor may not admit any
liability of the Indemnitee or waive any of the Indemnitee's
rights without the Indemnitee's prior written consent, which
consent shall not be unreasonably withheld. If the subject of
any Claim results in a judgment or settlement, the Indemnitor
shall promptly pay such judgment or settlement.
(ii) If the Indemnitor fails to promptly assume the
defense of the subject of any Claim in accordance with the
terms of Section 5.4(b)(i), if the Indemnitor fails diligently
to prosecute such defense, or if the Indemnitor has, in the
Indemnitee's good faith judgment, a conflict of interest, the
Indemnitee may defend against the subject of the Claim, and
the Indemnitor shall be responsible for the reasonable
expenses incurred by the Indemnitee in connection with such
defense, including employment of one law firm reasonably
satisfactory to the Indemnitee. If the Indemnitee defends the
subject of a Claim in accordance with this Section, the
Indemnitor shall cooperate with the Indemnitee and its
counsel,
17
at the Indemnitor's sole expense, in all reasonable respects,
and shall deliver to the Indemnitee or its counsel copies of
all pleadings and other information within the Indemnitor's
knowledge or possession reasonably requested by the Indemnitee
or its counsel that are relevant to the defense of the subject
of any such Claim and that will not prejudice the Indemnitor's
position, claims or defenses. The Indemnitee shall maintain
confidentiality with respect to all such information
consistent with the conduct of a defense hereunder.
(c) Other Claims. A Claim for indemnification for any
matter not involving a third-party claim may be asserted by written notice to
the party from whom indemnification is sought and shall be paid promptly after
receipt of such notice.
(d) Remedies Related to Fraud. Nothing contained in this
Agreement shall limit, in any manner, any remedy at law or in equity to which
Buyer shall be entitled against Seller, Parent or any of their affiliates or
representatives as a result of actual fraud by Seller, Parent or any of their
affiliates or representatives.
5.5 Payment. All payments owing under this Article 5 will be made
promptly as indemnifiable Losses are incurred. If the Indemnitee defends the
subject matter of any Claim in accordance with Section 5.4(b)(ii), the
reasonable expenses (including attorneys' fees) incurred by the Indemnitee shall
be paid by the Indemnitor in advance of the final disposition of such matter as
incurred by the Indemnitee.
5.6 Limitations. Notwithstanding any provision of this Agreement to the
contrary, no party shall have any obligation to indemnify any Person entitled to
indemnity under Section 5.2(c) or 5.3(b) unless the Persons so entitled to
indemnity thereunder have suffered Losses in an aggregate amount attributable to
all Claims and obligors in excess of $50,000 (the "THRESHOLD"), except claims
arising from any breach of the representations and warranties contained in
Sections 2.3 (Acquired Assets), 2.15 (Brokers), 2.18 (Determination of Board of
Directors) and 3.5 (Brokers) or the covenant contained in Section 4.9(c) shall
not be subject to the Threshold. Once the aggregate amount of Losses exceeds the
Threshold, Persons entitled to recovery shall be entitled to recover the full
amount of all Losses in excess of the Threshold.
6. DOCUMENTS TO BE DELIVERED AT CLOSING.
6.1 Closing Documents of Seller and Parent. Buyer will have received,
or will receive at the Closing, all of the following, each duly executed by the
parties thereto (other than Buyer) and dated the Closing Date, in form and
substance satisfactory to Buyer:
(a) copies, certified by the Secretary or an Assistant
Secretary of Seller or Parent, as applicable, of resolutions of its Board of
Directors and Seller's stockholder authorizing the execution, delivery and
performance of this Agreement and the other Transaction Documents to which
Seller or Parent is a party and the consummation of the transactions
contemplated hereby and thereby;
(b) the Xxxx of Sale described in Section 1.1;
18
(c) the xxxx of sale for Seller's inventory and work in
process, in the form attached hereto as Exhibit D.
(d) the Supply Agreement between Buyer and Seller;
(e) the Real Estate Purchase Agreement between Lebruns, LLC
and Seller;
(f) the prior written consent of the landlord to the
assignment and an assignment from Seller to Buyer of the lease dated March 13,
2000, by and between M&N Investments LLC and Seller, for the East Fifth Street
Property;
(g) the prior written consent of the lessor to the assignment
and an assignment from Seller to Buyer of the lease of those certain capsule
fillers and exchange parts thereto by and between Seller and Resource Capital
Corporation (assigned to Colonial Pacific Leasing) (Leases CPL#463893 and
CPL#464026);
(h) consent of CIT Group/Business Credit, Inc. to the release
of all liens, claims and encumbrances with respect to the Acquired Assets, the
Facility, inventory and work in process with such consent providing for the
right of Buyer to file a UCC financing statement amendment with respect to the
release of any and all such interests held by CIT Group/Business Credit, Inc.;
(i) a certificate from CIT Group/Business Credit, Inc. stating
that all of the conditions to its consent described in Section 6.1(h) have been
satisfied;
(j) consent of Xxxxx Xxxxxxxx and certain other members of the
Xxxxxxxx family to the release of all liens, claims and encumbrances with
respect to the Acquired Assets, the Facility, inventory and work in process with
such consent providing for the right of Buyer to file a UCC financing statement
amendment with respect to the release of any and all such interests held by
Xxxxx Xxxxxxxx and other members of the Xxxxxxxx family;
(k) Such further instruments of sale, transfer, conveyance,
assignment or delivery covering the Acquired Assets, or any part thereof, as
Buyer may reasonably require to assure the full and effective sale, transfer,
conveyance, assignment or delivery to it of the Acquired Assets to be
transferred pursuant to this Agreement; and
(l) Such other documents as Buyer may reasonably request.
6.2 Closing Documents of Buyer. Seller and Parent shall have received
or will receive at the Closing, all of the following, each duly executed by the
parties thereto (other than Seller and Parent) and dated the Closing Date, in
form and substance satisfactory to Seller and Parent:
(a) Copies, certified by the Secretary or an Assistant
Secretary of Buyer, of resolutions of its Board of Directors authorizing the
execution, delivery and performance of this Agreement and the other Transaction
Documents to which Buyer is a party and the consummation of the transactions
contemplated hereby and thereby;
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(b) The Supply Agreement between Buyer and Seller;
(c) The Real Estate Purchase Agreement between Lebruns, LLC
and Seller; and
(d) Such other closing documents as Seller or Parent may
reasonably request.
7. MISCELLANEOUS.
7.1 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed given (i) upon personal
delivery, (ii) three days after being mailed by certified or registered mail,
postage prepaid, return receipt requested, (iii) one business day after being
sent via a nationally recognized overnight courier service if overnight courier
service is requested from such service or (iv) upon receipt of electronic or
other confirmation of transmission if sent via facsimile and followed by
certified or registered mail, postage prepaid, return receipt requested, to the
parties, their successors in interest or their assignees at the following
addresses and telephone numbers, or at such other addresses or telephone numbers
as the parties may designate by written notice in accordance with this Section
7.1:
If to Buyer: Xxxxxx X. Xxxxx
President
Anabolic Laboratories, Inc.
00000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
With a copy to: Xxxxxxx X. Xxx
Xxxxxx, Xxxx & Xxxxxxxx LLP
0 Xxxx Xxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to Seller or Parent: Xxxx Xxxxxxxx
Chief Executive Officer and President
Twin Laboratories Inc.
000 Xxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
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With a copy to: Xxxxxx X. Xxxxx
Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
7.2 Assignability and Parties in Interest. This Agreement and the
rights, interests or obligations hereunder may not be assigned by any of the
parties hereto without the written consent of the other party, such consent not
to be unreasonably withheld. This Agreement shall inure to the benefit of and be
binding upon Buyer, Seller and Parent and their respective permitted successors
and assigns. Nothing in this Agreement will confer upon any Person not a party
to this Agreement, or the legal representatives of such Person any rights or
remedies of any nature or kind whatsoever under or by reason of this Agreement.
7.3 Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of New York, without
giving effect to its conflicts of laws principles or rules which would require
the application of the law of any other jurisdiction.
7.4 Venue. Any civil action or legal proceeding arising out of or
relating to this Agreement shall be brought in the courts of record of the State
of New York in New York County or the United States District Court, Southern
District of New York. Each party consents to the jurisdiction of such court in
any such civil action or legal proceeding and waives any objection to the laying
of venue of any such civil action or legal proceeding in such court. Service of
any court paper may be effected on such party by mail, as provided in this
Agreement, or in such other manner as may be provided under applicable laws,
rules of procedure or local rules.
7.5 Counterparts. Facsimile transmission of any signed original
document or retransmission of any signed facsimile transmission will be deemed
the same as delivery of an original. At the request of any party, the parties
will confirm facsimile transmission by signing a duplicate original document.
This Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which shall constitute but one and the same instrument.
7.6 Public Announcements. Prior to the Closing Date, no party may, or
may permit its Affiliates to, issue or cause the publication of any press
release or other public announcement with respect to this Agreement or the
transactions contemplated hereby without the prior written consent of the other
party. Notwithstanding the foregoing, in the event any such press release or
announcement is required by law to be made by the party proposing to issue the
same, such party shall consult in good faith with the other party as far in
advance as practicable to the issuance of any such press release or
announcement. Seller and Buyer shall consult with each other concerning the
means by which Seller's employees, customers, suppliers and others having
dealings with Seller will be informed of the transactions contemplated hereby.
7.7 Complete Agreement. This Agreement, the exhibits and schedules
hereto (which are incorporated herein by this reference) and the other
Transaction Documents contain the entire
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agreement between the parties hereto with respect to the transactions
contemplated herein and therein and supersede all previous oral and written and
all contemporaneous oral negotiations, commitments, and understandings.
7.8 Modifications, Amendments and Waivers.
(a) At any time prior to the Closing Date or termination
of this Agreement, Seller and Parent, on the one hand, and Buyer on the other
may, (i) waive any inaccuracies in the representations and warranties of Seller
and Parent, on the one hand, and Buyer on the other contained in this Agreement
or in any other Transaction Document; and (ii) waive compliance by Seller and
Parent, on the one hand, and Buyer on the other with any of the covenants or
agreements contained in this Agreement.
(b) No waiver of any of the provisions of this Agreement
will be considered, or will constitute, a waiver of any of the rights or
remedies, at law or equity, of the party entitled to the benefit of such
provisions unless made in writing and executed by the party entitled to the
benefit of such provision. The waiver by any party of any right under this
Agreement or to a remedy for the breach of any of the provisions herein shall
not operate nor be construed by the breaching party as a waiver of the
non-breaching party's remedies with respect to any other or continuing or
subsequent breach.
7.9 Headings; References. The headings contained in this Agreement and
the other Transaction Documents are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. References
herein to Articles, Sections, Schedules and Exhibits refer to the referenced
Articles, Sections, Schedules or Exhibits hereof unless otherwise specified.
7.10 Rules of Construction.
(a) Unless the context otherwise requires: (a) "or" is
not exclusive; (b) words in the singular include the plural, and words in the
plural include the singular; (c) "herein", "hereof", "hereto" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision; and (d) any gender used in this Agreement
shall be deemed to include the neuter, masculine and feminine genders'.
(b) The disclosure of any matter in any Schedule to this
Agreement shall be deemed to be a disclosure for all purposes of this Agreement
to which such matter would reasonably be expected to be pertinent, but shall
expressly not be deemed to constitute an admission by any party hereto, or to
otherwise imply, that any such matter is material for the purposes of this
Agreement.
(c) This Agreement was negotiated by the parties with the
benefit of legal representation and any rule of construction or interpretation
otherwise requiring this Agreement to be construed or interpreted against any
party shall not apply to any construction or interpretation hereof.
7.11 Severability. If any provision of this Agreement is invalid,
illegal, or unenforceable in any jurisdiction, as to that jurisdiction, such
provision shall be deemed
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amended to the extent required to make it valid, legal and enforceable, and to
the extent that the rights or obligations of the parties under this Agreement
will not be materially and adversely effected thereby, such amended provision
and the remaining provisions of this Agreement will remain in full force and
effect in such jurisdiction and shall not render that or any other provision of
this Agreement invalid, illegal, or unenforceable in any other jurisdiction.
7.12 Expenses of Transactions. Except as otherwise expressly provided
in this Agreement, all fees, costs and expenses incurred by Buyer in connection
with the transactions contemplated by this Agreement shall be borne by Buyer,
and all fees, costs, and expenses incurred by Seller or Parent in connection
with the transactions contemplated by this Agreement shall be borne by Seller
and Parent jointly and severally.
7.13 Attorneys' Fees.
(a) If Buyer or any of its Affiliates, successors or
assigns brings any action, suit, counterclaim, cross-claim, appeal, arbitration,
or mediation for any relief against Seller, Parent or any of their Affiliates,
successors or assigns, or if Seller, Parent or any of their Affiliates,
successors or assigns brings any action, suit, counterclaim, cross-claim,
appeal, arbitration, or mediation for any relief against Buyer or any of its
Affiliates, successors or assigns, declaratory or otherwise, to enforce the
terms hereof or to declare rights hereunder (collectively, an "ACTION"), in
addition to any damages and costs which the prevailing party otherwise would be
entitled, the non-prevailing party shall pay to the prevailing party a
reasonable sum for attorneys' fees and costs (at the prevailing party's
attorneys' then-prevailing rates) incurred in bringing and prosecuting such
Action and/or enforcing any judgment, order, ruling, or award (collectively, a
"DECISION") granted therein, all of which shall be deemed to have accrued on the
commencement of such Action and shall be paid promptly after delivery of a
Decision. Any Decision entered in such Action shall contain a specific provision
providing for the recovery of attorneys' fees and costs incurred in enforcing
such Decision.
(b) For the purposes of this Section, attorneys' fees
shall include, without limitation, fees incurred in the following: (1)
postjudgment motions and collection actions; (2) contempt proceedings; (3)
garnishment, levy and debtor and third party examinations; (4) discovery; and
(5) bankruptcy litigation.
7.14 Enforcement of the Agreement. Seller, Parent and Buyer acknowledge
that irreparable damage would occur to Buyer if, after the Closing, the
obligations of Seller and Parent under this Agreement were not performed in
accordance with their specific terms or were otherwise breached. Buyer will be
entitled to an injunction or injunctions to prevent breaches of this Agreement
by Seller or Parent and to enforce specifically the terms and provisions hereto,
this being in addition to any other remedy to which Buyer is entitled at law or
in equity. Buyer acknowledges that irreparable damage would occur to Seller or
Parent if, after the Closing, the obligations of Buyer under this Agreement were
not performed in accordance with their specific terms or were otherwise
breached. Seller or Parent will be entitled to an injunction or injunctions to
prevent breaches of this Agreement by Buyer and to enforce specifically the
terms and provisions hereto, this being in addition to any other remedy to which
Seller or Parent is entitled at law or in equity.
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IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the date first above written.
ANABOLIC LABORATORIES, INC.
"BUYER"
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
HEALTH FACTORS INTERNATIONAL INC.
"SELLER"
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
TWIN LABORATORIES INC.
"PARENT"
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
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EXHIBIT A
FORM OF REAL ESTATE PURCHASE AND SALE AGREEMENT
25
EXHIBIT B
FORM OF XXXX OF SALE
26
EXHIBIT C
FORM OF SUPPLY AGREEMENT
27
EXHIBIT D
FORM OF XXXX OF SALE FOR INVENTORY AND WORK IN PROCESS
28
