Exhibit 10.12
This Exhibit contains Confidential Information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a
Confidential Treatment Request under Rule 24b-2 of the Securities Exchange Act
of 1934 as amended. The Confidential Information on pages 2, 5, and 11, and
ExhibitS 1.1(a)-(e) and 1.4 has been replaced with a *.
ASSET PURCHASE AGREEMENT
by and between
WM. WRIGLEY JR. COMPANY
and
GUM TECH INTERNATIONAL, INC.
Dated as of March 14, 2001
TABLE OF CONTENTS
ARTICLE I
PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES................... 1
1.1 Certain Definitions ............................................... 1
1.2 Purchase and Sale of Assets ....................................... 6
1.3 Allocation of Purchase Price ...................................... 7
1.4 Assumed Liabilities ............................................... 7
ARTICLE II
CLOSING ................................................................. 8
2.1 Closing ........................................................... 8
2.2 BUYER's Conditions to Closing ..................................... 9
2.3 SELLER's Conditions to Closing .................................... 11
2.4 Payment of Remaining Purchase Price Amount ........................ 12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER ................................ 13
3.1 SELLER's Authority; No Conflicts .................................. 13
3.2 Title to Tangible Assets .......................................... 14
3.3 Financial Statements .............................................. 14
3.4 No Undisclosed Liabilities ........................................ 15
3.5 Inventory ......................................................... 15
3.6 Real Property ..................................................... 15
3.7 Leases ............................................................ 16
3.8 Plant and Equipment ............................................... 16
3.9 Employee Benefit Plans; ERISA ..................................... 17
3.10 Environmental Matters ............................................. 18
3.11 Customers and Suppliers ........................................... 20
3.12 Insurance ......................................................... 20
3.13 Casualties ........................................................ 20
3.14 Intellectual Property ............................................. 20
3.15 Litigation; Proceedings ........................................... 21
3.16 Contracts ......................................................... 22
3.17 Taxes ............................................................. 22
3.18 Compliance with Applicable Laws ................................... 23
3.19 Brokers ........................................................... 24
3.20 Books and Records ................................................. 24
3.21 Absence of Certain Changes ........................................ 24
3.22 Full Disclosure ................................................... 25
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER ................................. 25
4.1 Authority; No Conflicts; Governmental Consents .................... 25
4.2 Actions and Proceedings ........................................... 26
4.3 Availability of Funds ............................................. 27
4.4 Brokers ........................................................... 27
ARTICLE V
COVENANTS OF SELLER ..................................................... 27
5.1 Access ............................................................ 27
5.2 Ordinary Conduct of the Business .................................. 27
5.3 Confidential Information .......................................... 28
5.4 Notification of Certain Matters ................................... 29
5.5 Shareholders' Meeting.............................................. 29
5.6 No Solicitation of Competing Transaction .......................... 30
5.7 Subsequent Actions ................................................ 32
5.8 Taxes ............................................................. 32
5.9 Procter & Xxxxxx Equipment ........................................ 32
ARTICLE VI
COVENANTS OF BUYER ...................................................... 33
6.1 Accounts Receivable ............................................... 33
6.2 Hiring by BUYER ................................................... 33
6.3 Tax Treatment of Listed Employees ................................. 34
6.4 Warehouse Support ................................................. 34
ARTICLE VII
MUTUAL COVENANTS OF THE PARTIES ......................................... 35
7.1 Cooperation ....................................................... 35
7.2 Publicity ......................................................... 35
7.3 Taxes ............................................................. 36
7.4 Access to Information ............................................. 36
7.5 Tax Cooperation ................................................... 36
7.6 Bulk Sales Waiver ................................................. 36
7.7 Expenses .......................................................... 37
7.8 Rent .............................................................. 37
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ARTICLE VIII
INDEMNIFICATION ......................................................... 37
8.1 Survival .......................................................... 37
8.2 Indemnification by SELLER ......................................... 37
8.3 Indemnification by BUYER .......................................... 38
8.4 Environmental Matters ............................................. 38
8.5 Procedures Relating to Indemnification ............................ 39
ARTICLE IX
TERMINATION ............................................................. 41
9.1 Bases for Termination ............................................. 41
9.2 Notice of Termination ............................................. 41
9.3 Effect of Termination ............................................. 41
ARTICLE X
GENERAL PROVISIONS ...................................................... 43
10.1 Assignment ........................................................ 43
10.2 No Third-Party Beneficiaries ...................................... 43
10.3 Amendments; Waiver ................................................ 43
10.4 Waiver of Compliance .............................................. 43
10.5 Notices ........................................................... 43
10.6 Interpretation .................................................... 44
10.7 Counterparts ...................................................... 44
10.8 Severability ...................................................... 45
10.9 Governing Law ..................................................... 45
10.10 Entire Agreement .................................................. 45
iii
ASSET PURCHASE AGREEMENT (the "AGREEMENT"), dated as of March 14, 2001, by
and between WM. WRIGLEY JR. COMPANY, a Delaware corporation ("BUYER") and GUM
TECH INTERNATIONAL, INC., a Utah corporation ("SELLER").
WITNESSETH:
WHEREAS, SELLER wishes to sell, and BUYER wishes to buy, all of the assets
of SELLER relating to chewing gum or other confectionery related products,
excluding the Excluded Assets (as defined in Section 1.1 of this Agreement),
upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties, intending to be legally bound, hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
1.1 Certain Definitions. For all purposes of this Agreement except as
expressly provided herein, capitalized terms used in this Agreement shall have
the meanings assigned to them in this Section 1.1:
"ACQUISITION PROPOSAL" shall mean any proposal or offer made by any Person
other than BUYER to acquire all or a substantial part of the Business or Assets,
whether by merger, tender offer, exchange offer, sale of assets or similar
transactions involving SELLER, but shall not include a proposal or offer to
acquire (i) all or substantially all of the stock of SELLER on terms which do
not interfere with the consummation of the transactions contemplated by this
Agreement or (ii) any of the Excluded Assets.
"AFFILIATE" shall have the meaning set forth in Rule 12b-2 of the Exchange
Act.
"ASSETS" shall mean all of the property, assets, goodwill and business as a
going concern of every kind, nature and description, real, personal or mixed,
tangible or intangible, that is owned or leased by SELLER for the purpose of
conducting the Business including, without limitation, the Intellectual Property
and specific assets set forth on Exhibit 1.1(a) hereto, but not including the
Excluded Assets.
"ASSUMED LIABILITIES" shall have the meaning assigned thereto in Section
1.4.
"BALANCE SHEET" shall mean the audited balance sheet of SELLER dated as of
December 31, 2000, which balance sheet shall be included in the Financial
Statements at Closing.
"BALANCE SHEET DATE" shall mean December 31, 2000.
"BASKET" shall have the meaning assigned thereto in Section 8.2.
"BUSINESS" shall mean all of the business of SELLER conducted heretofore
related to chewing gum or other confectionery related functional products,
except any of the rights and obligations related to SELLER's joint ventures with
Swedish Match AB and Iensano, Inc. (formerly BioDelivery Technologies, Inc.) or
any other operations related to [*].
"BUYER BASKET" shall have the meaning assigned thereto in Section 8.3.
"CLEANUP" shall mean all actions required to: (1) cleanup, remove, treat or
remediate Hazardous Materials in the indoor or outdoor environment; (2) prevent
the Release of Hazardous Materials so that they do not migrate, endanger or
threaten to endanger public health or welfare or the indoor or outdoor
environment; (3) perform pre-remedial studies and investigations and
post-remedial monitoring and care required by Environmental Laws or any
Governmental Entity; or (4) respond to any government requests for information
or documents in any way relating to cleanup, removal, treatment or remediation
or potential cleanup, removal, treatment or remediation of Hazardous Materials
in the indoor or outdoor environment to the extent required by Environmental
Laws or any Governmental Entity.
"CLOSING" shall have the meaning assigned thereto in Section 2.1.
"CLOSING DATE" shall have the meaning assigned thereto in Section 2.1.
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[*] Confidential Information on this page has been omitted and filed separately
with the Securities and Exchange Commission pursuant to a Confidential Treatment
Request.
2
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" shall have the meaning assigned thereto in
Section 5.3.
"CONTRACTS" shall mean all of the material contracts and agreements related
to the Business or the Assets, which contracts and agreements are set forth on
Schedule 3.16 hereto (each a "CONTRACT").
"DEFECT" shall mean a material defect or impurity of any kind, whether in
design, manufacture, processing, or otherwise.
"DISCLOSURE SCHEDULE" shall mean the disclosure schedule of even date
herewith prepared and signed by the SELLER and delivered to BUYER simultaneously
with the execution hereof.
"ENCUMBRANCES" shall mean any and all liens, charges, security interests,
options, claims, mortgages, pledges, proxies, voting trusts or agreements,
obligations, understandings or arrangements or other restrictions on title or
transfer of any nature whatsoever.
"ENVIRONMENTAL CLAIM" shall mean any claim, action, cause of action,
investigation or notice (written or oral) by any Person or entity alleging
potential liability (including, without limitation, potential liability for
investigatory costs, Cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties) arising
out of, based on or resulting from (a) the presence, Release or threatened
Release of any Hazardous Materials at any location, whether or not operated by
the Seller, or (b) circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law.
"ENVIRONMENTAL LAWS" shall mean all federal, state and local laws and
regulations applicable during SELLER's operation of the Business and for one
year thereafter relating to pollution or protection of human health or the
environment, including without limitation, laws relating to Releases or
threatened Releases of Hazardous Materials or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, Release,
transport or handling of Hazardous Materials and all laws and regulations with
regard to recordkeeping, notification, disclosure and reporting requirements
respecting Hazardous Materials,
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"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"EXCLUDED ASSETS" shall mean the assets identified on Exhibit 1.1(b)
hereto.
"EXPIRATION DATE" shall have the meaning assigned thereto in Section 8.1.
"FINANCIAL STATEMENTS" shall mean the consolidated balance sheet of the
SELLER as at December 31 in each of the years 1998 through 2000 together with
consolidated statements of income, shareholders' equity and cash flows for each
of the years then ended, all certified prior to Closing by Xxxxxx & Xxxxxxx,
independent public accountants, whose reports thereon are included therein.
"GAAP" shall mean generally accepted accounting principles in the United
States.
"GOVERNMENTAL ENTITY" shall mean a court, arbitral tribunal, administrative
agency or commission or other governmental or other regulatory authority or
agency.
"HAZARDOUS MATERIALS" shall mean all substances defined as Hazardous
Substances, Oils, Pollutants or Contaminants in the National Oil and Hazardous
Substances Pollution Contingency Plan, 40 C.F.R. ss. 300.5, or defined as such
by, or regulated as such under, any Environmental Law.
"INTELLECTUAL PROPERTY" means any and all United States and foreign: (a)
patents (including design patents, industrial designs and utility models) and
patent applications (including docketed patent disclosures awaiting filing,
reissues, divisions, continuous-in-part and extensions), patent disclosures
awaiting filing determination, inventions and improvements thereto relating
primarily to the Business; (b) the registered trademarks and trademark
applications relating primarily to the Business; (c) service marks, trade names,
trade dress, logos, business and product names, slogans, Internet domain names
and registrations and applications for registration thereof relating primarily
to the Business; (d) trade secrets, know-how, confidential and technical
information, manufacturing, engineering and technical drawings and confidential
business information relating primarily to the Business; (e) copyrights and
copyrightable works relating primarily to the Business and (f) copies and
tangible embodiments thereof (in whatever form or medium, including electronic
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media) and any registrations or applications for any of the foregoing.
Notwithstanding the foregoing, "Intellectual Property" will not include any of
the items listed on Exhibit 1.1(c).
"LEASE" shall mean each lease pursuant to which SELLER (for the use or
benefit of the Business) leases any real or personal property (excluding leases
relating solely to personal property calling for rental or similar periodic
payments not exceeding $10,000 per annum).
"LETTER OF INTENT" shall mean that certain Letter of Intent between SELLER
and BUYER dated as of January 17, 2001.
"LOSS" shall have the meaning assigned thereto in Section 8.2.
"PERMITTED LIENS" shall have the meaning assigned thereto in Section 3.2.
"PERSON" shall mean a natural person, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Entity or other entity or organization.
"PROCTER & XXXXXX PRODUCTS" shall mean [*] product or products that have
been developed by SELLER pursuant to that certain Joint Development Agreement
between SELLER and Procter & Xxxxxx, dated as of November 22, 1999, as amended,
which is more fully described on Exhibit 1.1(d) attached hereto.
"PURCHASE PRICE" shall have the meaning assigned thereto in Section 1.2.
"REAL PROPERTY" shall mean all real property that is owned, leased or used
by SELLER primarily for the Business.
"RELEASE" shall mean any release, spill, emission, discharge, leaking,
pumping, injection, deposit, disposal, dispersal, leaching or migration into the
indoor or outdoor environment (including, without limitation, ambient air,
surface water, groundwater and surface or subsurface strata) or into or out of
any property, including the movement of Hazardous Materials through or in the
air, soil, surface water, groundwater or property.
----------
[*] Confidential Information on this page has been omitted and filed separately
with the Securities and Exchange Commission pursuant to a Confidential Treatment
Request.
5
"SEC" shall mean the United States Securities and Exchange Commission.
"SELLER'S KNOWLEDGE" or "KNOWLEDGE OF SELLER" shall mean to the knowledge
of SELLER's Board of Directors and executive officers engaged primarily in the
management of the Business, after due inquiry.
"TAX" or "TAXES" shall mean all taxes, assessments, charges, duties, fees,
levies, imposts or other governmental charges, including, without limitation,
all federal, state, local foreign and other income, environmental, add-on,
minimum, franchise, profits, capital gains, capital stock, capital structure,
transfer, sales, gross receipt, use, ad valorem, service, service use, lease,
recording, customs, occupation, property, excise, gift, severance, windfall
profits, premium, stamp, license, payroll, social security, employment,
unemployment, disability, value-added, withholding, and other taxes,
assessments, charges, duties, fees, levies, imposts or other governmental
charges of any kind whatsoever (whether payable directly or by withholding and
whether or not requiring the filing of a return) and all estimated taxes,
deficiency assessments, additions to tax, additional amounts imposed by an
governmental authority (domestic or foreign), penalties, fines and interest, and
shall include any liability for such amounts as a result either of being a
member of a combined, consolidated, unitary or affiliated group or of a
contractual obligation to indemnify any person, regardless of whether disputed.
"TAX RETURN" shall mean any return, report, declaration, information
return, filing or other document (including, without limitation, any amendments
thereto or related or supporting information) filed or required to be filed with
respect to Taxes.
"THIRD-PARTY CLAIM" shall have the meaning assigned thereto in Section
8.5(a).
"URBCA" shall mean the Utah Revised Business Corporation Act.
"WAREHOUSE SUPPORT" shall mean the support items set forth on Exhibit
1.1(e) hereto.
1.2 Purchase and Sale of Assets. Upon the terms, and subject to the
conditions of this Agreement, on the Closing Date, SELLER will sell, convey,
transfer and assign, or cause to be sold, conveyed, transferred and assigned to
BUYER, and BUYER will purchase, the Assets, free and clear of all Encumbrances,
for an aggregate cash purchase price of Twenty Five Million United States
6
Dollars ($25,000,000) (the "PURCHASE PRICE"), payable as set forth in Article
II.
1.3 Allocation of Purchase Price. BUYER and SELLER shall allocate the
Purchase Price and the amount of the Assumed Liabilities among the Assets in the
manner required by Section 1060 of the Code. In making such allocation, the fair
market values will be agreed to in good faith by BUYER and SELLER within 60 days
after the Closing Date. If the parties are unable to resolve any material
differences with regard to the allocation of the Purchase Price among the
Assets, then any disputed matters will be finally and conclusively determined by
an independent certified accounting firm or independent certified appraisal firm
(the "ALLOCATION ARBITER"), which Allocation Arbiter shall be mutually agreed by
BUYER and SELLER, provided, however, that such agreement shall not be
unreasonably withheld. Promptly, but not later than 15 days after its acceptance
of appointment hereunder, the Allocation Arbiter will determine (based solely
upon representations of BUYER and SELLER and not by independent review) only
those matters in dispute, and will render a written report as to the disputed
matters and the resulting allocation of the Purchase Price, which report shall
be conclusive and binding upon the parties. Such Allocation Arbiter's fees and
expenses shall be born equally by the parties. If the Holdback is paid pursuant
to Section 2.4, the allocations described in this Section 1.3 shall be
recomputed in accordance with the requirements of Section 1060 of the Code and
the provisions of this Section 1.3, except that the 60- and 15-day periods set
forth herein shall be determined with reference to the date the Holdback is
paid. SELLER will provide to BUYER copies of Form 8594 (including any amended
Forms 8594) and any required exhibits thereto, consistent with the allocations
of this Section 1.3. The parties agree that, to the extent required, all Tax
Returns or other Tax information they may file or cause to be filed with any
governmental entity shall be prepared and filed consistently with such
allocation.
1.4 Assumed Liabilities. BUYER agrees to and will at the Closing assume and
agree to pay, discharge and perform when required all of the Assumed
Liabilities. For purposes of this Agreement, "ASSUMED LIABILITIES" shall mean
the liabilities of SELLER listed on Exhibit 1.4.
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ARTICLE II
CLOSING
2.1 Closing. The closing (the "CLOSING") of the purchase and sale of the
Assets and of the transactions contemplated by this Agreement shall be held at
the offices of Xxxxx & Xxxxxx L.L.P., Xxx Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx
00000, at 10:00 a.m. local time on the next business day following the
satisfaction and/or waiver of the conditions to Closing set forth in Sections
2.2 and 2.3 (other than conditions which can only be satisfied by the delivery
of certificates, opinions or other documents at the Closing), unless another
date or place is agreed in writing by each of the parties hereto. The date on
which the Closing shall occur is hereinafter referred to as the "CLOSING DATE."
(a) At the Closing, BUYER shall deliver to SELLER (i) by wire transfer
to SELLER's bank account per the wire transfer instructions on Exhibit 2.1(a)(i)
hereto immediately available funds in an amount equal to $24,000,000; (ii) an
assumption agreement substantially in the form of Exhibit 2.1(a)(ii) hereto (the
"ASSUMPTION AGREEMENT"), duly executed by BUYER, (iii) two royalty agreements
substantially in the form of Exhibit 2.1(a)(iii) (the "ROYALTY AGREEMENTS"),
duly executed by BUYER, (iv) a securities purchase agreement substantially in
the form of Exhibit 2.1(a)(iv) (the "SECURITIES PURCHASE AGREEMENT"), duly
executed by BUYER; (v) a manufacturing agreement substantially in the form of
Exhibit 2.1(a)(v) (the "MANUFACTURING AGREEMENT"), duly executed by BUYER; and
(vi) such other documents as are specifically required by this Agreement.
(b) At the Closing, SELLER shall deliver or cause to be delivered to
BUYER:
(i) duly executed bills of sale in substantially the form
attached hereto as Exhibit 2.1(b)(i), or other documents of conveyance
relating to the Assets and the Intellectual Property, as applicable;
(ii) all documents of title and instruments of conveyance
necessary to transfer record and/or beneficial ownership to BUYER of all
automobiles, trucks, trailers (and any other property owned by SELLER which
require execution, endorsement and/or delivery of a document in order to
vest record or beneficial ownership thereof in BUYER) which are included in
the Assets;
8
(iii) executed copies of consents referred to in Section 2.2(c)
hereof;
(iv) all of the books and records of SELLER relating primarily to
the Business;
(v) the officers' certificate referred to in Section 2.2(a)
hereof;
(vi) all such other endorsements, assignments and other
instruments as, in the reasonable opinion of BUYER's counsel, are necessary
to vest in BUYER, as the case may be, good and marketable title to the
Assets;
(vii) the Royalty Agreements, duly executed by SELLER;
(viii) the Securities Purchase Agreement, duly executed by
SELLER; and
(ix) the Manufacturing Agreement, duly executed by SELLER.
(c) SELLER and BUYER shall cooperate with each other regarding, and
shall use their respective commercially reasonable efforts to cause, the sale to
BUYER of all the Assets on the Closing Date on the terms and conditions set
forth in this Agreement.
2.2 BUYER's Conditions to Closing. The obligation of BUYER to consummate
the Closing shall be subject to the satisfaction (or waiver by BUYER) as of the
Closing of the following conditions:
(a) (i) The representations and warranties of SELLER made in this
Agreement shall be true and correct in all respects (in the case of any
representation or warranty containing any materiality qualification) or in all
material respects (in the case of any representation or warranty without any
materiality qualification), in each case as of the date of this Agreement
9
and on and as of the Closing Date, as though made on and as of the Closing Date
(unless and to the extent any such representation or warranty speaks
specifically as of an earlier date, in which case, as of such earlier date);
(ii) SELLER shall have performed or complied in all material respects with all
obligations and covenants required by this Agreement to be performed or complied
with by SELLER by the time of the Closing; and (iii) SELLER shall have delivered
to BUYER a certificate dated the Closing Date and signed by an authorized
officer of SELLER confirming the foregoing.
(b) No injunction, suit, action, proceeding or order of any court or
administrative agency of competent jurisdiction shall be threatened or pending
(i) seeking to prohibit or impose any material limitations on BUYER's ownership
or operation of all or a material portion of the Assets; (ii) seeking to
restrain or prohibit the consummation of the Closing; or (iii) seeking to impose
material limitations on the ability of BUYER effectively to exercise full rights
of ownership of the Assets.
(c) All material consents and approvals of any Person necessary to the
consummation of the Closing, including consents and approvals from parties to
loans, contracts, Leases or other agreements and consents and approvals from
governmental agencies, whether federal, state or local shall have been obtained,
and a copy of each such consent or approval shall have been provided to BUYER at
or prior to the Closing.
(d) Since the date hereof, there shall not have occurred any material
adverse change (or any development that, insofar as reasonably can be foreseen,
is reasonably likely to result in any material adverse change) regarding the
Business or the Assets.
(e) This Agreement and the transactions contemplated hereby shall have
been approved and adopted by a majority vote of SELLER's shareholders.
(f) SELLER shall have delivered to BUYER a duly executed and
acknowledged certificate, in form and substance reasonably acceptable to BUYER
and in compliance with the Code and Treasury Regulations, certifying such facts
as to establish that the transactions contemplated by this Agreement are exempt
from withholding under Section 1445 of the Code. Notwithstanding anything
expressed or implied to the contrary herein, if SELLER fails to provide BUYER
with such a certification, BUYER may, in its sole and absolute discretion, waive
the condition set forth in this Section 2.2(f), in which case BUYER shall
withhold from the Purchase Price (and pay over to the appropriate taxing
authorities) the requisite amounts in accordance with Section 1445 of the Code.
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(g) This Agreement shall not have been terminated in accordance with
Article IX hereof.
(h) Section 12 of that certain Consulting Agreement dated June 2, 2000
by and between Xxxx Xxxxx and SELLER shall be amended to remove any restrictions
on Xx. Xxxxx with respect to [*].
(i) Procter & Xxxxxx Company shall consent to BUYER performing the
manufacturing services of SELLER as set forth in that certain Joint Development
Agreement between SELLER and Procter & Xxxxxx Company dated as of November 22,
1999.
2.3 SELLER's Conditions to Closing. The obligation of SELLER to consummate
the Closing shall be subject to the satisfaction (or waiver by SELLER) as of the
Closing of the following conditions:
(a) (i) The representations and warranties of BUYER made in this
Agreement shall be true and correct in all respects (in the case of any
representation or warranty containing any materiality qualification) or in all
material respects (in the case of any representation or warranty without any
materiality qualification), in each case as of the date of this Agreement and on
and as of the Closing Date, as though made on and as of the Closing Date (unless
and to the extent any such representation or warranty speaks specifically as of
an earlier date, in which case, as of such earlier date); (ii) BUYER shall have
performed or complied in all material respects with the obligations and
covenants required by this Agreement to be performed or complied with by BUYER
by the time of the Closing; and (iii) BUYER shall have delivered to SELLER a
certificate dated the Closing Date and signed by a duly authorized officer of
BUYER confirming the foregoing.
(b) No injunction , suit, action, proceeding or order of any court or
administrative agency of competent jurisdiction shall be threatened or pending
as of the Closing that restrains or prohibits the purchase and sale of the
Assets.
(c) This Agreement and the transactions contemplated hereby shall have
been approved and adopted by a majority vote of the SELLER's shareholders.
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[*] Confidential Information on this page has been omitted and filed separately
with the Securities and Exchange Commission pursuant to a Confidential Treatment
Request.
11
(d) The landlords under the Leases relating to the Real Property shall
have agreed to release SELLER from all liability under such Leases arising after
the Closing Date.
(e) All material consents and approvals of any Person necessary to the
consummation of the Closing, including consents and approvals from parties to
loans, contracts, Leases or other agreements and consents and approvals from
governmental agencies, whether federal, state or local shall have been obtained.
(f) Procter & Xxxxxx Company shall consent to BUYER performing the
manufacturing services of SELLER as set forth in that certain Joint Development
Agreement between SELLER and Procter & Xxxxxx Company dated as of November 22,
1999.
2.4 Payment of Remaining Purchase Price Amount. Within sixty (60) days
after the Closing Date, BUYER shall pay SELLER that portion of the Purchase
Price not paid pursuant to Section 2.1(a) (the "HOLDBACK") less any amounts (the
"FDA EXPENSES") paid by, or estimated to be paid by, BUYER as set forth below.
Neither BUYER nor SELLER shall invite an inspector from the Food and Drug
Administration (the "FDA") to inspect the Real Property, however, if such an
inspection occurs within sixty (60) days of the Closing and BUYER receives a
ss.483 letter that identifies deficiencies (based on SELLER's current products
and capacity), BUYER and SELLER will work together to determine the manner and
extent to which the deficiencies will be rectified and the amount to be expended
(i.e., the FDA Expenses). If the parties are unable to resolve any material
differences with regard to any FDA Expenses, then any disputed matters will be
finally and conclusively determined by an Allocation Arbiter, which Allocation
Arbiter shall be mutually agreed by BUYER and SELLER, provided, however, that
such agreement shall not be unreasonably withheld. Promptly, but not later than
15 days after its acceptance of appointment hereunder, the Allocation Arbiter
will determine (based solely upon presentations of BUYER, SELLER and, if
practicable, an FDA inspector) only those matters in dispute, and will render a
written report as to the disputed matters, which report shall be conclusive and
binding upon the parties. Such Allocation Arbiter's fees and expenses shall be
born equally by the parties. If no such inspection occurs prior to the date
sixty (60) days after the Closing Date, SELLER shall be entitled to the entire
Holdback.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as specifically set forth in the Disclosure Schedule, SELLER hereby
represents and warrants to BUYER as follows:
3.1 SELLER's Authority; No Conflicts.
(a) SELLER (i) is a corporation duly organized, validly existing and
in good standing under the laws of the State of Utah; (ii) has full corporate
power and authority to carry on the Business as it is now being conducted and to
own the Assets; and (iii) is duly qualified or licensed to do business as a
foreign corporation in good standing in every jurisdiction in which the conduct
of the Business requires such qualification, except where failure to be so duly
qualified or licensed and in good standing would not have a material adverse
effect on the Business or the Assets. SELLER has all requisite corporate power
and authority to enter into this Agreement, subject to shareholder approval, and
to consummate the transactions contemplated hereby. The only corporate act or
other proceeding required to be taken by SELLER, which has not been taken as of
the date of this Agreement, to authorize the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
is obtaining the consent of the shareholders of SELLER. The Board of Directors
of SELLER has authorized the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby and
SELLER intends to hold a shareholders' meeting to obtain their consent for this
Agreement. This Agreement has been duly executed and delivered by SELLER and,
assuming the due execution hereof by BUYER, this Agreement constitutes the valid
and binding obligation of SELLER, enforceable against SELLER in accordance with
its terms, except as enforcement hereof may be limited by applicable bankruptcy,
insolvency or other similar laws affecting creditors' rights generally and by
general equitable principles.
(b) The execution, delivery and performance by SELLER of this
Agreement will not (i) violate any provision of SELLER's Amended and Restated
Articles of Incorporation or Bylaws; (ii) require any filing with, or permit,
authorization, consent or approval of, any Governmental Entity; (iii) violate
any provision of, or be an event that is (or with the passage of time will
result in) a violation of, or result in the acceleration of or entitle any party
to accelerate (whether after the giving of notice or lapse of time or both) any
obligation under, or result in the imposition of any lien upon or the creation
13
of a security interest in any of the Assets pursuant to, any mortgage, lien,
Lease, agreement, instrument, order, arbitration award, judgment, injunction or
decree to which SELLER is a party or by which SELLER is bound; or (iv) violate
or conflict with any statute, rule or regulation applicable to SELLER or any of
its properties or assets or any other material restriction of any kind or
character to which SELLER is subject (other than in the case of clauses (ii),
(iii) and (iv), such filings, permits, authorizations, consents, approvals,
conflicts, violations or breaches which could not, individually or in the
aggregate, reasonably be expected to materially adversely affect the ability of
SELLER to consummate the transactions hereunder or have a material adverse
effect on the Assets or the Business).
3.2 Title to Tangible Assets. The bills of sale, endorsements, assignments
and other instruments to be executed and delivered by SELLER at the Closing will
be valid and binding obligations of SELLER, enforceable in accordance with their
respective terms, and will effectively vest in BUYER good, valid and marketable
title to all Assets, free and clear of all Encumbrances, except mechanics',
carriers', workmen's, repairmen's or other like liens arising or incurred in the
ordinary course of business or liens for Taxes and other governmental charges
that are not due and payable or that may thereafter be paid without penalty
(collectively the "PERMITTED LIENS"), which Permitted Liens are set forth on
Schedule 3.2.
3.3 Financial Statements. As of the date of this Agreement, true and
complete copies of the Financial Statements, together with the related auditors
reports (except for the auditors report as of December 31, 2000 and for the year
then ended (the "2000 AUDIT REPORT")), are included in the Disclosure Schedule.
As of Closing, the Disclosure Schedule shall contain the 2000 Audit Report
together with consolidated statements of income, shareholders' equity and cash
flows for the year then ended, which balance sheet and statements were included
in the Financial Statements as of the date of this Agreement. As of Closing, the
Financial Statements have been prepared from, are in accordance with and
accurately reflect in all material respects, the books and records of SELLER,
comply in all material respects with applicable accounting requirements, have
been prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be stated in the notes thereto) and fairly
present the financial position and the results of operations and cash flows (and
changes in financial position, if any) of SELLER as of the times and for the
periods referred to therein (subject, in the case of unaudited statements, to
normally recurring year-end audit adjustments which are not material either
individually or in the aggregate and to the fact that such unaudited statements
do not contain all the footnotes required by GAAP).
14
3.4 No Undisclosed Liabilities. Except (a) as disclosed in the Financial
Statements and (b) for liabilities and obligations incurred in the ordinary
course of business and consistent with past practice since the Balance Sheet
Date, SELLER has not incurred any liability or obligation of any nature, whether
or not accrued, contingent or otherwise, that has, or would be reasonably likely
to have, a material adverse effect on the Business.
3.5 Inventory. All of the raw materials and work in process inventories of
the SELLER relating primarily to the Business, whether reflected in the Balance
Sheet or otherwise, consist of a quality and quantity usable in the ordinary and
usual course of business as conducted by SELLER, except for items of obsolete
materials and materials of below-standard quality, all of which items have been
written off or written down on the Balance Sheet to fair market value or for
which adequate reserves have been provided therein. As of the Closing, Section
3.5 of the Disclosure Schedule shall contain true and complete Certificates of
Analysis for each item of raw materials included in the inventories. All work in
process included in the Assets is free of any Defect.
3.6 Real Property.
(a) The Disclosure Schedule sets forth a complete list and the
location of all Real Property leased by the SELLER. To the Knowledge of SELLER,
there are no proceedings, claims, disputes or conditions affecting any Real
Property leased by the SELLER that might curtail or interfere with the use of
such property. To the Knowledge of SELLER, neither the whole nor any portion of
the Real Property leased by the SELLER nor any other Asset is subject to any
governmental decree or order to be sold or is being condemned, expropriated or
otherwise taken by any public authority with or without compensation therefor,
nor, to the Knowledge of SELLER, has any such condemnation, expropriation or
taking been proposed. SELLER is not a party to any lease, assignment or similar
arrangement under which SELLER is a lessor, assignor or otherwise makes
available for use by any third party any portion of the Real Property.
(b) SELLER has not received any notice of, or other writing referring
to, any requirements or recommendation by any insurance company that has issued
a policy covering any part of the Real Property leased by the SELLER or by any
board or fire underwriters or other body exercising similar functions, requiring
or
15
recommending any repairs or work to be done on any part of the Real Property
leased by the SELLER, which repair or work has not been completed.
(c) SELLER (with respect to the Business) has all approvals, permits
and licenses (including any and all environmental permits and pharmacy licenses)
necessary to operate the Real Property leased by the SELLER as currently
operated, and no such approvals, permits or licenses will be required, as a
result of the transactions contemplated by this Agreement, to be issued after
the date hereof in order to permit BUYER, following the Closing, to continue to
operate the Real Property leased by the SELLER in the same manner as heretofore,
other than any such approvals, permits and licenses that are ministerial in
nature and are normally issued in due course upon application therefore without
further action by the applicant. True and complete copies of all such
certificates, permits and licenses have heretofore been furnished to BUYER.
(d) SELLER does not own and has never owned any Real Property. All
Real Property used by SELLER is leased by SELLER.
3.7 Leases. The Disclosure Schedule identifies the Leases. A true and
complete copy of each Lease has heretofore been delivered to BUYER. Each Lease
is valid, and as to SELLER is binding and enforceable in accordance with its
terms and is in full force and effect. The leasehold estate created by each
Lease is free and clear of all Encumbrances except for Permitted Liens, which
Permitted Liens are set forth on Schedule 3.7. There are no existing material
defaults by SELLER under any of the Leases. No event has occurred that (whether
with or without notice, lapse of time or the happening or occurrence of any
other event) would constitute a default by SELLER under any Lease. SELLER has no
reason to believe that any lessor under any Lease will not consent (where such
consent is necessary) to the consummation of the transactions contemplated by
this Agreement without requiring any modification of the rights or obligations
of the lessee thereunder.
3.8 Plant and Equipment. The plants and structures owned or used by the
SELLER with respect to the Business are structurally sound with no known
defects, are adequate for the uses to which they are being put, and are in
material compliance with all applicable FDA requirements. To SELLER's Knowledge,
the equipment owned or used by the SELLER with respect to the Business is
structurally sound with no defects, is adequate for the uses to which it is
being put and is in material compliance with all applicable FDA requirements. To
SELLER's Knowledge, the plants, structures and equipment are in good operating
condition and none of such plants, structures or equipment are in need
16
of maintenance or repairs except for ordinary, routine maintenance and repairs
which are not material in nature or cost. The SELLER (with respect to the
Business) has not received notification that it is in violation of any
applicable building, zoning, health or other law, ordinance or regulation in
respect of its stores, plants or structures or their operations or the Real
Property.
3.9 Employee Benefit Plans; ERISA.
(a) Schedule 3.9(a) contains a true and complete list of each material
pension, profit sharing, retirement, savings, employee stock ownership, stock
option, restricted stock, incentive, severance, termination, employment,
consulting, change in control, fringe benefit, welfare, collective bargaining,
bonus, insurance, medical or other employee benefit plan, program, agreement or
arrangement, including each "employee benefit plan" as defined in section 3(3)
of ERISA and including any multiemployer plan (as defined in section 4001(a)(3)
of ERISA) (each a "PLAN"), sponsored, maintained or contributed to or required
to be contributed to by the SELLER for the benefit of current or former
employees (the "BUSINESS EMPLOYEES") of the Business (each a "BUSINESS BENEFIT
PLAN").
(b) True and complete copies of the following documents relating to
each Business Benefit Plan, where applicable, have been made available to the
BUYER: (i) the Plan, including all amendments thereto; (ii) the most recent
summary plan description, summary of material modifications and all material
general employee communications relating to such Plan; (iii) a copy of the most
recent annual report, if required under ERISA, with respect to each such Plan;
(iv) a copy of the most recent actuarial report, if required under ERISA, with
respect to each such Plan; (v) if the Plan is funded through a trust or any
other funding vehicle, a copy of the trust or other funding agreement (including
all amendments thereto) and the latest financial statements thereof; and (vi)
the most recent determination letter received from the Internal Revenue Service
with respect to each Plan that is intended to be qualified under section 401 of
the Code.
(c) Except to the extent any of the following either individually or
in the aggregate would not result in any liability to BUYER following the
Closing, (i) neither SELLER nor any trade or business, whether or not
incorporated (an "ERISA AFFILIATE"), which together with SELLER would be deemed
a "single employer" within the meaning of section 4001(b) of ERISA, has incurred
any unsatisfied liability under title IV of ERISA and no condition exists that
could reasonably be expected to present a risk to SELLER or any ERISA Affiliate
of incurring any such liability (other than liability for premiums to the
17
Pension Benefit Guaranty Corporation arising in the ordinary course), and (ii)
no "employee benefit plan," maintained or contributed to by SELLER or any ERISA
Affiliate, has incurred an "accumulated funding deficiency" (within the meaning
of section 302 of ERISA or section 412 of the Code), whether or not waived.
(d) Except as expressly provided in this Agreement, or as set forth in
Schedule 3.9(d), the consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with another event, (i)
entitle any current or former employee of SELLER to severance pay or any other
payment, or (ii) accelerate the time of payment or vesting, or increase the
compensation or benefits provided to such employee, in either case for which
BUYER would have any liability.
(e) From and after the Closing, SELLER shall remain solely responsible
for any and all liabilities, claims, and obligations relating to or arising in
connection with the requirements of Section 4980B of the Code to provide
continuation of health care coverage under any Business Benefit Plan, in respect
of (A) employees of SELLER, other than the Transferred Employees (as defined in
Section 6.2(a)) and their covered dependents, and (B) to the extent related to a
qualifying event occurring on or before the Closing, Transferred Employees and
their covered dependents.
3.10 Environmental Matters.
(a) Except as set forth in the Disclosure Schedule, SELLER is in
compliance with all applicable Environmental Laws (which compliance includes,
but is not limited to, the possession by SELLER of all permits and other
governmental authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof), except where failure to be in
compliance would not have a material adverse effect on the Business. SELLER has
not received any communication (written or oral), whether from a governmental
authority, citizens group, employee or otherwise, alleging that SELLER is not in
such compliance, and there are no past or present (or to the best knowledge of
SELLER, future) actions, activities, circumstances conditions, events or
incidents that may prevent or interfere with such compliance in the future. All
permits and other governmental authorizations currently held by SELLER pursuant
to applicable Environmental Laws are identified in the Disclosure Schedule.
(b) Except as set forth in the Disclosure Schedule, no transfers of
permits or other governmental authorizations under Environmental Laws, and no
additional permits or other governmental authorizations under Environmental
18
Laws, will be required to permit BUYER to conduct the business of SELLER in full
compliance with all applicable Environmental Laws immediately following the
Closing Date, as conducted by SELLER immediately prior to the Closing Date. To
the extent that such transfers or additional permits and other governmental
authorizations are required, SELLER agrees to cooperate with BUYER to effect
such transfers and obtain such permits and other governmental authorizations
prior to the Closing Date.
(c) Except as set forth in the Disclosure Schedule, there is no
Environmental Claim pending or threatened against SELLER or, to the Knowledge of
SELLER, against any person or entity whose liability for any Environmental Claim
SELLER has or may have retained or assumed either contractually or by operation
of law which would have a material adverse effect on the Business.
(d) Except as set forth in the Disclosure Schedule, there are no past
or present (or to the Knowledge of SELLER, future) actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the Release, threatened Release or presence of any Hazardous Material which
could form the basis of any Environmental Claim against SELLER, or to the
Knowledge of SELLER, against any person or entity whose liability for any
Environmental Claim SELLER has or may have retained or assumed either
contractually or by operation of law which would have a material adverse effect
on the Business.
(e) Except as set forth in the Disclosure Schedule, SELLER has not,
and to the Knowledge of SELLER, no other person has placed stored, deposited,
discharged, buried, dumped or disposed of Hazardous Materials or any other
wastes produced by, or resulting from, any business, commercial or industrial
activities, operations or processes, on, beneath or adjacent to any property
currently or formerly operated or leased by SELLER, except for inventories of
such substances to be used, and wastes generated therefrom, in the ordinary
course of business of SELLER (which inventories and wastes, if any, were and are
stored or disposed of in accordance with applicable Environmental Laws and in a
manner such that there has been no Release or threatened Release of any such
substances).
(f) SELLER has delivered or otherwise made available for inspection to
BUYER true, complete and correct copies and results of any reports, studies,
analyses, tests or monitoring possessed or initiated by SELLER pertaining to
Hazardous Materials in, on, beneath or adjacent to any property currently or
formerly operated or leased by SELLER, or regarding the SELLER's compliance with
applicable Environmental Laws.
19
(g) Without in any way limiting the generality of the foregoing,
except as set forth in the Disclosure Schedule, any properties owned, operated
or leased by SELLER do not contain any: underground storage tanks; asbestos;
polychlorinated biphenyls ("PCBs"); underground injection xxxxx; radioactive
materials; or septic tanks or waste disposal pits in which process wastewater or
any Hazardous Materials have been discharged or disposed.
3.11 Customers and Suppliers. Schedule 3.11 sets forth a list of all
customers who have purchased product related to the Business from SELLER in an
amount greater than $ 50,000 in the calendar year 2000. To SELLER's Knowledge,
there has not been any material adverse change in the business relationship with
any such customer during the prior year, or with any supplier from whom SELLER
purchased more than 5% of the goods and services which it purchased during the
same period.
3.12 Insurance. The Disclosure Schedule sets forth (a) a true and complete
list and description of all material insurance policies, other insurance
arrangements and other contracts or arrangements for the transfer or sharing of
insurance risks by SELLER in force on the date hereof with respect to the
Business, together with a statement of the aggregate amount of claims paid out,
and claims pending, under each such insurance policy or other arrangement
through the date hereof and (b) a description of such risks which SELLER (with
respect to the Business), or the Board of Directors or officers thereof, have
designated as being self-insured. SELLER (with respect to the Business) has
policies of insurance of the type and in amounts customarily carried by Persons
conducting businesses or owning assets similar to those conducted and owned by
SELLER with respect to the Business. All such policies are in full force and
effect, all premiums due thereon have been paid and the SELLER is otherwise in
compliance in all material respects with the terms and provisions of such
policies.
3.13 Casualties. Since the Balance Sheet Date and through the Closing Date,
the Business has not been affected in any way as a result of flood, fire,
explosion or other casualty (whether or not material and whether or not covered
by insurance). SELLER is not aware of any circumstance, other than general
economic conditions, which is likely to cause the Business to suffer any
material adverse change in its business, operations or prospects.
20
3.14 Intellectual Property.
(a) Schedule 3.14 of the Disclosure Schedule sets forth a true and
complete list of all patent, trademark registrations, copyright registrations,
and applications thereto used or held for use in connection with the Business,
together with all licenses relating to the foregoing, other than computer
software shrinkwrap licenses, whether SELLER is the licensee or licensor
thereunder. SELLER is the sole and exclusive owner of the Intellectual Property
and has good and marketable title to the Intellectual Property. The Intellectual
Property is free and clear of all Encumbrances, whether by written agreement or
otherwise. No person other than SELLER owns any right in the Intellectual
Property. All patents, registrations and applications for Intellectual Property
are (i) to the Knowledge of Seller, valid and subsisting, in proper form and
enforceable, and have been duly maintained, including the submission of all
necessary filings and fees in accordance with the legal and administrative
requirements of the appropriate jurisdictions and (ii) have not lapsed, expired
or been abandoned, and no patent, registration or application therefor is the
subject of any opposition, interference, cancellation proceeding or other legal
or governmental proceeding before any Governmental Entity in any jurisdiction.
All trade secrets relating to the Products are protected against the use of such
trade secrets by other persons to an extent and in a manner customary in the
industry in which SELLER operates. To SELLER's Knowledge the use of the
Intellectual Property in the Business and the conduct of the Business as
presently conducted do not and have not infringed or violated the rights of any
other party. SELLER has not received any written claim or notice alleging any
such infringement (including any written claim that SELLER must license or
refrain from using the Intellectual Property rights of any third party).
(b) There is no claim, suit, action, litigation or proceeding
(judicial or administrative) pending, or to the Knowledge of SELLER, threatened
by or against SELLER challenging the registration, grant, validity or
enforceability of the Intellectual Property or the use of the Intellectual
Property; and no claim, suit, action, litigation or proceeding is otherwise
pending, or to the Knowledge of SELLER, threatened by or against SELLER alleging
infringement with respect to the use, or challenging the validity or
enforceability of any of the Intellectual Property or with regard to the
infringement of any rights of third parties. No person is infringing the
Intellectual Property. No person has been granted any license or other right or
interest by SELLER to any of the Intellectual Property.
3.15 Litigation; Proceedings. Except as set forth in Schedule 3.15, there
are no (a) outstanding judgments, orders, writs, injunctions or decrees of any
21
court, governmental agency or arbitration tribunal relating to the Business or
(b) actions, suits, claims or legal, administrative or arbitration proceedings
pending or, to SELLER's Knowledge, threatened, which relate to the Business or
which seek any injunctive relief that could reasonably be expected to have a
material adverse effect on the ability of SELLER to consummate the transactions
contemplated hereby; and to SELLER's Knowledge there is no valid basis for any
such action, suit, claim or proceeding. To SELLER's Knowledge, there are no
investigations pending which relate to the Business.
3.16 Contracts. SELLER has delivered current and complete copies of each
Contract listed on Schedule 3.16 of the Disclosure Schedule. The list of
Contracts on Schedule 3.16 of the Disclosure Schedule is a complete and accurate
list of all material contracts and agreements of SELLER related to the Business
or the Assets, including all (a) contracts, commitments or agreements involving
annual payments in excess of $25,000, (b) purchase contracts or commitments with
a term in excess of one year or are in excess of the normal, ordinary and usual
requirements of business or at an excessive price, (c) outstanding sales
contracts, commitments or proposals that continue for a period of more than one
year or that will result in any loss to the Business upon completion or
performance thereof, (d) outstanding contracts with officers, employees, agents,
consultants, advisors, salesmen, sales representatives, distributors or dealers
that are not cancelable by it on notice of not longer than 30 days and without
liability, penalty or premium, (e) employment agreements, or any other
agreement, that contains any severance or termination pay liabilities or
obligations and (f) commitments or obligations to continue to utilize the
services of, or otherwise to do business with, any licensor, vendor, supplier or
licensee of the Business. Each Contract is a valid and binding obligation of
SELLER (except as otherwise specified on Schedule
3.16) and, to SELLER's Knowledge, is in full force and effect. SELLER has
performed all material obligations required to be performed by it to date under
the Contracts and is not (with or without the lapse of time or the giving of
notice, or both) in breach or default in any material respect thereunder.
3.17 Taxes.
(a) (i) SELLER has duly and timely filed, or will so file when due,
with the appropriate governmental authorities (or there have been or will be
duly and timely filed on its behalf) all Tax Returns required to be filed by it
in connection with the Business, and all such Tax Returns are true, correct and
complete, and (ii) except as specified in Schedule 3.17, all Taxes, which have
become or are due with respect to the Business and any assessments with respect
22
to the Business received by SELLER regarding any period ended on or prior to the
Closing Date, have been or will be timely paid;
(b) there are no Tax liens (other than liens for Taxes not yet due and
payable) on any of the Assets;
(c) SELLER has duly and timely withheld, collected and paid to the
proper governmental authority all Taxes required to be withheld, collected or
paid with respect to the Business;
(d) no claim has ever been made by an authority in a jurisdiction
where SELLER has not filed Tax Returns that it is or may be subject to taxation
by that jurisdiction with respect to the Business;
(e) SELLER has not waived any statute of limitations in respect of
Taxes relating to the Business or agreed to any extension of time with respect
to a Tax assessment or deficiency relating to the Business;
(f) there is no contract, plan or arrangement (written or otherwise)
covering any current or former employee or independent contractor of SELLER in
connection with the Business that, individually or in the aggregate, could give
rise to the payment of any amount that will not be deductible under Section 280G
of Code;
(g) SELLER has never been a member of an affiliated group as defined
under Section 1504 of the Code and has no liability for Taxes of any Person
under Treas. Reg. Section 1.1502-6 (or any similar provision of state, local or
foreign law), as a transferee or successor, by contract or otherwise;
(h) no power of attorney that is currently in force has been granted
by SELLER with respect to any matters relating to Taxes with respect to the
Business;
(i) there are no Tax sharing agreements or other similar arrangements
with respect to or involving SELLER relating to the Business; and
(j) SELLER is not a "foreign person" within the meaning of Section
1445(b) of the Code.
23
3.18 Compliance with Applicable Laws. The Business is being conducted in
all material respects with all applicable statutes, laws, ordinances, rules,
orders and regulations of any Governmental Entity that affects the Business or
the Assets and no notice, charge, claim, action or assertion has been received
by SELLER or has been filed, commenced or, to the Knowledge of SELLER,
threatened against SELLER (with respect to the Business) alleging any violation
of any of the foregoing.
3.19 Brokers. Except as set forth on Schedule 3.19, SELLER has not agreed
or become obligated to pay, or has taken any action that might result in any
Person claiming to be entitled to receive, any brokerage commission, finder's
fee or similar commission or fee in connection with this Agreement or the
transactions contemplated hereby as a result of any agreement, understanding or
action by SELLER. SELLER shall be solely responsible for all fees and expenses
of any broker, finder or other Person engaged by or on behalf of it or otherwise
claiming through it in connection with the transactions contemplated by this
Agreement.
3.20 Books and Records. The books of account and other records of SELLER
relating to the Business are complete and correct in all material respects and
have been maintained in accordance with sound business practices, including the
maintenance of an adequate system of internal controls.
3.21 Absence of Certain Changes. Since December 31, 2000, the SELLER has
conducted the Business only in the ordinary and usual course consistent with
past practice, and the SELLER (with respect to the Business) has not:
(a) permitted or allowed any of its properties or assets (tangible or
intangible) to be subjected to any mortgage, pledge, lien, security interest,
encumbrance, restriction or charge of any kind, other than as existed on
December 31, 2000, and except for Permitted Liens, which Permitted Liens are set
forth on Schedule 3.21;
(b) sold, transferred, or otherwise disposed of any of its properties
or assets (tangible or intangible), except in the ordinary course of business
and consistent with past practice;
(c) disposed of or permitted to lapse any rights to the use of any
Intellectual Property, or disposed of or disclosed to any person other than
representatives of BUYER any trade secret, formula, process, know-how or other
Intellectual Property not theretofore a matter of public knowledge;
24
(d) suffered any material adverse change in its financial condition,
results of operation, assets, liabilities (absolute, accrued, contingent or
otherwise), reserves, business, operations or prospects;
(e) waived any claims or rights of substantial value;
(f) except for capital expenditures and commitments not to exceed
$1,627,438 in the aggregate for equipment to manufacture the Procter & Xxxxxx
Products as detailed on Schedule 5.9, made any single capital expenditure or
commitment for additions to property, plant, equipment or intangible capital
assets;
(g) made any change in any method of accounting or accounting
practice; or
(h) made any express or deemed election for Tax purposes or any offer
to settle or compromise or any settlement or compromise of any liability with
respect to Taxes;
(i) agreed, whether in writing or otherwise, to take any action
described in this section.
3.22 Full Disclosure. No representation or warranty by SELLER contained in
this Agreement contains any untrue statement of fact or omits to state any fact
necessary to make any of SELLER's representations, warranties or other
statements or information contained therein not misleading. All of the
information set forth in the Disclosure Schedule, and all other information
regarding SELLER, the Business, and the Assets that has been furnished to BUYER
by SELLER is accurate and complete in all material respects.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
BUYER hereby represents and warrants to SELLER as follows:
4.1 Authority; No Conflicts; Governmental Consents.
25
(a) BUYER is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. BUYER has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby and thereby. All corporate acts and other
proceedings required to be taken by BUYER to authorize the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and properly taken. This
Agreement has been duly executed and delivered by BUYER and, assuming the due
execution hereof by SELLER, this Agreement constitutes the valid and binding
obligation of BUYER, enforceable against BUYER in accordance with its terms,
except as enforcement hereof may be limited by applicable bankruptcy, insolvency
or other similar laws affecting creditors' rights generally and by general
equitable principles.
(b) The execution, delivery and performance of this Agreement will not
(i) violate any provision of the charter or bylaws or similar organizational
instrument of BUYER; (ii) require any filing with, or permit, authorization
consent or approval of, any Governmental Entity; (iii) violate any provision of,
or be an event that is (or with the passage of time will result in) a violation
of, or result in the acceleration of or entitle any party to accelerate (whether
after the giving of notice or lapse of time or both) any obligation under, or
result in the imposition of any lien upon or the creation of a security interest
in any of BUYER's assets or properties pursuant to, any mortgage, lien, lease,
agreement, instrument, order, arbitration award, judgment, injunction or decree
to which BUYER is a party or by which BUYER is bound; or (iv) violate or
conflict with any statute, rule or regulation applicable to BUYER or any of its
properties or assets or any other material restriction of any kind or character
to which BUYER is subject (other than, in the case of clauses (ii), (iii) and
(iv), such filings, permits, authorizations, consents, approvals, conflicts,
violations or breaches which could not, individually or in the aggregate,
reasonably be expected to adversely affect the ability of BUYER to consummate
the transactions hereunder).
4.2 Actions and Proceedings. There are no (a) outstanding judgments,
orders, writs, injunctions or decrees of any court, governmental agency or
arbitration tribunal against BUYER that would or could prevent, or otherwise
materially adversely affect the ability of BUYER to consummate, the transactions
contemplated hereby; or (b) actions, suits, claims or legal, administrative or
arbitration proceedings or investigations pending or, to the best knowledge of
BUYER, threatened against BUYER that would or could prevent, or otherwise
materially adversely affect the ability of BUYER to consummate, the transactions
contemplated hereby. To the knowledge of BUYER, there is no valid basis for any
such action, suit, claim or proceeding.
26
4.3 Availability of Funds. BUYER has cash available or existing borrowing
facilities or commitments which, together with available cash, are sufficient to
enable it to consummate the transactions contemplated by this Agreement.
4.4 Brokers. BUYER has not agreed to or become obligated to pay, nor has
taken any action that might result in any Person claiming to be entitled to
receive, any brokerage commission, finder's fee or similar commission or fee in
connection with the transactions contemplated by this Agreement.
ARTICLE V
COVENANTS OF SELLER
SELLER covenants and agrees as follows:
5.1 Access. Prior to the Closing, SELLER will grant to BUYER or cause to be
granted to BUYER and its representatives, employees, counsel and accountants (i)
reasonable access, during normal business hours and upon reasonable notice, to
the personnel, properties, books and records of SELLER relating to the Business,
(ii) during normal business hours permit BUYER to make such inspections and to
make copies of such books and records as it may reasonably require, and (iii)
furnish BUYER with such financial and operating data and other information
concerning the Business as BUYER may from time to time reasonably request;
provided that such access does not unreasonably interfere with the normal
operations of SELLER or the Business, and provided further that all requests for
access shall be directed to Xxxx Xxxxxx, or such other person as SELLER shall
designate from time to time.
5.2 Ordinary Conduct of the Business. Except as permitted by the terms of
this Agreement, from the date hereof to the Closing, SELLER will cause the
Business to be conducted in the ordinary course consistent with past practice.
Except as provided in this Agreement, SELLER shall not, without the prior
written consent of BUYER:
(a) sell or otherwise dispose of or abandon any of the Assets, other
than de minimis sales, dispositions and abandonments;
(b) mortgage, lease, license, pledge or grant any security interest in
any of the Assets in connection with the borrowing of money or for the deferred
27
purchase of any property; or otherwise permit the imposition of a lien on any of
the Assets other than Permitted Liens;
(c) modify, amend or terminate any of the Contracts or waive, release
or assign any material rights or claims with respect to the Business, except in
the ordinary course of business and consistent with past practice;
(d) take, or agree to or commit to take, any action that would or is
reasonably likely to result in any of the conditions to the Closing set forth in
Article II not being satisfied, or would make any representation or warranty of
SELLER contained herein inaccurate in any respect (subject to any applicable
materiality qualifier) at, or as of any time prior to, the Closing Date, or that
would materially impair the ability of SELLER or BUYER to consummate the Closing
in accordance with the terms hereof or materially delay such consummation;
(e) engage in any transaction with respect to the Business other than
in the ordinary course of business;
(f) enter into any contract or transaction relating to the purchase of
the Assets other than in the ordinary course of business consistent with past
practice;
(g) fail to file, on a timely basis, with appropriate taxing
authorities all Tax Returns required to be filed prior to the Closing Date with
respect to, or on behalf of, operations of the Business;
(h) permit any insurance policy identified in the Disclosure Schedule
to be cancelled;
(i) make any express or deemed election for Tax purposes or any offer
to settle or compromise or any settlement or compromise of any liability with
respect to Taxes; or
(j) enter into any agreement, contract, commitment or arrangement to
do any of the foregoing, or authorize, recommend, propose or announce an
intention to do, any of the foregoing.
5.3 Confidential Information. Except as otherwise provided herein, after
the Closing Date, SELLER shall keep secret and retain in strictest confidence,
and shall not use for the benefit of itself or others, all confidential
28
information primarily relating to the Business (the "CONFIDENTIAL INFORMATION"),
including, without limitation, "know-how," trade secrets, customer lists,
details of client or consultant contracts, pricing policies, marketing plans or
strategies, product development techniques or plans, business acquisition plans,
designs and design projects, inventions and research projects primarily relating
to the Business and the Assets and shall not disclose such Confidential
Information to anyone outside of BUYER except with BUYER's express written
consent.
5.4 Notification of Certain Matters.
(a) From time to time prior to the Closing, SELLER shall promptly
supplement or amend the Disclosure Schedule with respect to any matter arising
after the delivery thereof pursuant hereto that, if existing at, or occurring
on, the date of this Agreement, would have been required to be set forth or
described in the Disclosure Schedule. No supplement or amendment of the
Disclosure Schedule made after the execution hereof by BUYER pursuant to this
section or otherwise shall be deemed to cure any breach of any representation of
or warranty made pursuant to this Agreement.
(b) SELLER shall give notice to BUYER promptly after becoming aware of
(i) the occurrence or non-occurrence of any event whose occurrence or
non-occurrence would be likely to cause either (A) any representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
respect at any time from the date hereof to the Closing Date or (B) any
condition set forth in Article II to be unsatisfied in any material respect at
any time from the date hereof to the Closing Date and (ii) any failure of SELLER
or any officer, director, employee or agent thereof, to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that (x) the delivery of any notice pursuant to
this section shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice and (y) the failure to give such
notice shall not be required from and after the time the party to whom such
notice is to be given has actual knowledge of the information required to be
included in such notice.
5.5 Shareholders' Meeting.
(a) In order to consummate the transactions contemplated by this
Agreement, SELLER, acting through its Board of Directors, shall, in accordance
with applicable law:
29
(i) duly call, give notice of, convene and hold a special meeting
of its shareholders as promptly as practicable after the date of this
Agreement for the purpose of voting on the approval and adoption of this
Agreement and the transactions contemplated hereby;
(ii) prepare and file with the SEC a preliminary proxy statement
relating to this Agreement and the transactions contemplated hereby (the
"PROXY Statement") and use its best efforts to obtain and furnish the
information required to be included by the SEC in the Proxy Statement and
to respond promptly to any comments made by the SEC with respect to the
preliminary Proxy Statement and cause a definitive Proxy Statement to be
mailed to its shareholders at the earliest practicable time, provided,
however, prior to filing or mailing of the Proxy Statement, SELLER shall
allow BUYER to review and make reasonable comments on the Proxy Statement;
(iii) include in the Proxy Statement the recommendation of the
Board that shareholders of SELLER vote in favor of the approval of this
Agreement and the transactions contemplated hereby; and
(iv) use commercially reasonable efforts to solicit from holders
of shares of its common stock proxies in favor of the SELLER and shall take
all other action necessary or, in the reasonable opinion of SELLER,
advisable to obtain approval of the transactions contemplated by this
Agreement from shareholders holding at least a majority of the shares
entitled to vote.
5.6 No Solicitation of Competing Transaction.
(a) SELLER shall not (and SELLER shall cause the officers, directors,
employees, representatives and agents of SELLER and each Affiliate of SELLER
including investment bankers, attorneys and accountants, not to), directly or
indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any Person or group (other
than BUYER, any of its Affiliates or representatives) concerning any Acquisition
Proposal. SELLER shall not approve or recommend, or propose to approve or
recommend any Acquisition Proposal, or enter into any agreement with respect to
any Acquisition Proposal.
30
(b) Notwithstanding Section 5.6(a) above, SELLER's Board of Directors
shall not be prohibited from furnishing information to or entering into
discussions or negotiations with, any Person that makes an unsolicited bona fide
Acquisition Proposal which SELLER's Board of Directors determines in good faith
is more favorable from a financial point of view to SELLER's shareholders than
the transactions contemplated by this Agreement (a "SUPERIOR PROPOSAL") so long
as: (i) prior to furnishing such information to, or entering into discussions or
negotiations with, such a Person, SELLER provides three (3) business days'
advance written notice to BUYER to the effect that it is furnishing information
to, or entering into discussions or negotiations with, a Person from whom SELLER
shall have received an executed confidentiality agreement prior to furnishing
such information, (ii) such unsolicited bona fide Superior Proposal is made by a
third party that SELLER's Board of Directors determines in good faith has the
good-faith intent to proceed with negotiations to consider, and the financial
capability to consummate, such Superior Proposal, and (iii) SELLER's Board of
Directors, after duly considering the written advice of outside legal counsel to
SELLER, determines in good faith that such action is required for SELLER's Board
of Directors to comply with its fiduciary duties to shareholders imposed by
applicable law.
(c) Upon execution of this Agreement, SELLER shall immediately cease
any existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing and SELLER shall request (or if
SELLER has the contractual right to do so, demand) the return of all documents,
analyses, financial statements, projections, descriptions and other data
previous furnished to others in connection with SELLER's efforts to sell the
Assets. SELLER shall immediately notify BUYER of the existence of any proposal
or inquiry received by SELLER, including any Superior Proposal, and SELLER shall
immediately communicate to BUYER the terms of any proposal or inquiry which
SELLER may receive (and shall immediately provide to BUYER copies of any written
materials received by SELLER in connection with such proposal, discussion,
negotiation or inquiry) and the identity of the party making such proposal or
inquiry.
(d) Except with respect to a Superior Proposal or otherwise in
connection with SELLER's Board of Directors compliance with its fiduciary duties
to shareholders imposed by applicable law (after SELLER's Board of Directors
duly considers the written advice of outside legal counsel and determines in
good faith that any such action described in clauses (i), (ii) or (iii) of this
paragraph (d) is required for SELLER's Board of Directors to comply with such
fiduciary duties), neither SELLER's Board of Directors nor any committee thereof
31
shall (i) withdraw or modify, or propose to withdraw or modify, in a manner
adverse to BUYER, the approval by such Board of Directors or any such committee
of this Agreement or the transactions contemplated hereby, except as provided in
Article IX, (ii) approve or recommend or propose to approve or recommend, any
Acquisition Proposal or (iii) authorize SELLER to enter into any agreement with
respect to any Acquisition Proposal.
5.7 Subsequent Actions. If at any time after the Closing, BUYER will
consider or be advised that any bills of sale, instruments of conveyance,
assignments, assurances or any other actions or things are reasonably necessary
to vest, perfect or confirm ownership (of record or otherwise) in BUYER, its
right, title or interest in, to or under any or all of the Assets or otherwise
to carry out this Agreement, SELLER shall execute and deliver all bills of sale,
instruments of conveyance, powers of attorney, assignments and assurances and
take and do all such other actions and things as may be reasonably requested by
BUYER in order to vest, perfect or confirm any and all right, title and interest
in, to and under such rights, properties or Assets in BUYER or otherwise to
carry out this Agreement.
5.8 Taxes. SELLER shall pay any sales, use, transfer or documentary or
similar taxes imposed in connection with the sale and delivery of the Assets and
rights acquired by BUYER under this Agreement, provided, however, that if SELLER
shall pay any sales, use, transfer, or documentary or similar Taxes in
connection with the consummation of the sale of SELLER's Assets and notifies
BUYER of all facts relating thereto, then to the extent that BUYER (or any
affiliate of BUYER) shall realize or obtain any tax deduction, credit or refund
allowance attributable to any such Tax payment made by SELLER (each, a "TAX
BENEFIT"), BUYER shall remit to SELLER the amount of any such Tax Benefit within
60 days after the close of the taxable year in which such Tax Benefit reduces
the amount of Taxes actually paid by the BUYER in such year. Notwithstanding the
previous sentence, (i) the determination of the existence and amount of a Tax
Benefit shall be made in the sole and absolute discretion of the BUYER, and (ii)
BUYER shall under no circumstances be obligated to disclose any information
relating to its Taxes to SELLER or any other Person.
5.9 Procter & Xxxxxx Equipment. Schedule 5.9 sets forth a list of equipment
SELLER has agreed, as of the date of this Agreement, to purchase or has
determined is necessary to produce the currently expected amount of Procter &
Xxxxxx Products. SELLER shall pay for all such equipment. Any such equipment
received from any vendor prior to Closing shall be paid by SELLER prior to
Closing. Any such equipment received by BUYER from any vendor after Closing
32
shall be paid by SELLER upon receipt of an invoice. BUYER shall promptly forward
any invoices to SELLER for such equipment upon receipt.
ARTICLE VI
COVENANTS OF BUYER
6.1 Accounts Receivable. BUYER shall promptly forward (but in any event
within 10 days of receipt thereof) or cause to be forwarded to SELLER any and
all proceeds from accounts receivable relating to the products sold on or prior
to the Closing Date that are received by BUYER after the Closing Date and that
were outstanding as of the Closing Date.
6.2 Hiring by BUYER.
(a) Effective as of the Closing, BUYER may offer employment to those
employees of SELLER set forth on Schedule 6.2 (the "EMPLOYEE SCHEDULE") who are
actively employed at the Closing (including those employees, if any, on sick
leave or short-term leave of absence as of the Closing), on terms and conditions
no less favorable in the aggregate than such employees enjoyed as employees of
SELLER, but shall not be obligated to hire any employees of SELLER. BUYER agrees
that it will provide SELLER with a list of those employees of SELLER to whom
BUYER may make offers no later than five (5) days prior to the Closing. Each
such employee who accepts BUYER's offer of employment will hereinafter be
referred to as a "LISTED EMPLOYEE."
(b) With respect to employee pension, welfare and fringe benefits
provided by BUYER to Listed Employees as of the Closing, BUYER will use
commercially reasonable efforts to cause its benefit providers to waive all
waiting periods and pre-existing condition requirements under any plans that
have any such requirements or restrictions. It being understood that each Listed
Employee will accrue vacation days and earn sick days for service following the
Closing in accordance with the applicable vacation and sick leave policies of
BUYER, as applicable.
(c) The obligation to pay all benefits, including, without limitation,
health, dental, life, accidental death and disability, and related benefits,
which are payable to current or former employees of SELLER under the Business
Benefit Plans and, in the case of Listed Employees, that arise, are incurred or
are based on events that occur on or prior to the Closing (whether or not claims
33
for such benefits are submitted on or prior to the Closing) will remain the
responsibility of SELLER. BUYER will be responsible for all benefits that are
payable to Listed Employees hired by BUYER under the terms of BUYER's benefit
plans and that arise, are incurred or are based on events that occur after the
Closing. For purposes of this Section 6.2(c), the term "events" means the item
that is the subject matter of the claim (i.e., medical services, layoff,
vacation, etc.) but not the condition or injury leading to the filing of the
claim. BUYER will not assume or be responsible for any liability in respect of
any benefits that are payable at any time to, or in respect of, current or
former employees of SELLER not employed by BUYER at any time on or after the
Closing.
(d) From and after the Closing, BUYER shall remain solely responsible
for any and all liabilities, claims, and obligations relating to or arising in
connection with the requirements of Section 4980B of the Code to provide
continuation of health care coverage in respect of the Listed Employees and
their covered dependents except to the extent related to a qualifying event on
or before the Closing.
(e) After the Closing, BUYER and SELLER will each provide the other on
a continuing basis at no cost to the other such information regarding Listed
Employees who are employed by BUYER as the other reasonably requests in order to
permit proper administration of benefit plans applicable to such employees;
provided, however, that (i) any consents or releases from such Listed Employees,
to the extent required by applicable law, must have been obtained, and (ii)
provision of such information is not prohibited by applicable law.
6.3 Tax Treatment of Listed Employees. BUYER and SELLER agree to (i) treat
BUYER as a "successor employer" and SELLER as a "predecessor" within the meaning
of Sections 3121(a)(1) and 3306(b)(1) of the Code, with respect to the Listed
Employees, solely for purposes of taxes imposed under the United States Federal
Unemployment Tax or the United States Federal Insurance Contributions Act, and
(ii) cooperate with each other to avoid, to the extent reasonably possible, the
filing of more than one IRS Form W-2 with respect to each Listed Employee for
the calendar year in which the Closing Date occurs.
6.4 Warehouse Support. For a period of up to six months after the Closing
at SELLER's request, BUYER shall provide SELLER Warehouse Support for SELLER's
Zicam product at no cost. In addition, BUYER shall provide SELLER office space
and office furniture for such period for up to nine (9) people who will remain
in the employ of SELLER after the Closing Date. Further, BUYER and SELLER shall
cooperate in the use of any information systems purchased by BUYER pursuant to
34
this Agreement, it being specifically acknowledged that SELLER's employees being
provided office space by BUYER shall be entitled to use such information systems
in a reasonable manner. SELLER shall pay BUYER an allocated portion of rent and
other facilities costs based on the percentage of square footage used by
SELLER's employees.
ARTICLE VII
MUTUAL COVENANTS OF THE PARTIES
Each of SELLER and BUYER covenants and agrees as follows:
7.1 Cooperation. Prior to the Closing, upon the terms and subject to the
conditions of this Agreement, BUYER and SELLER shall use their respective
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done and cooperate with each other in order to do, all things
necessary, proper or advisable (subject to any applicable laws) to consummate
the Closing as promptly as practicable including, but not limited to the
preparation and filing of all forms, registrations and notices required to be
filed to consummate the Closing and the taking of such actions as are necessary
to obtain any requisite approvals, authorizations, consents, orders, licenses,
permits, qualifications, exemptions or waivers by any third party or
Governmental Entity. In addition, no party hereto shall take any action after
the date hereof that could reasonably be expected to materially delay the
obtaining of, or result in not obtaining, any permission, approval or consent
from any Governmental Entity or other Person required to be obtained prior to
Closing.
7.2 Publicity. Other than as required by the rules and regulations of the
SEC as reasonably interpreted by SELLER's counsel in connection with the
preparation and distribution of the Proxy Statement, SELLER and BUYER agree
that, from the date hereof through the Closing Date, no public release or
announcement concerning the transactions contemplated hereby shall be issued by
a party without the prior consent of the other party (which consent shall not be
unreasonably withheld), except as such release or announcement may be required
by law or the rules or regulations of any United States or foreign securities
exchange and except such release on the execution of this Agreement as to be
agreed between the parties hereto which release may be made available to the
public generally or the trade. SELLER and BUYER agree for a period of three
years following the Closing Date to keep the terms of this Agreement
confidential, except to the extent reasonably required by applicable law as
reasonably interpreted by SELLER's counsel and except that the parties may
disclose such terms to their respective accountants and other representatives as
35
necessary in connection with the ordinary conduct of their respective businesses
(so long as such persons agree to keep the terms of this Agreement
confidential).
7.3 Taxes. All personal property Taxes and similar ad valorem obligations
levied with respect to the Assets for a taxable period that includes (but does
not end on) the Closing Date shall be apportioned between SELLER and BUYER as of
the Closing Date based on the number of days of such taxable period included in
the period ending with and including the Closing Date (with respect to any such
taxable period, the "PRE-CLOSING TAX PERIOD"), and the number of days of such
taxable period beginning after the Closing Date (with respect to any such
taxable period, the "POST-CLOSING TAX PERIOD"). SELLER shall be liable for the
propor tion-ate amount of such Taxes that is attributable to the Pre-Closing Tax
Period, and BUYER shall be liable for the propor tionate amount of such Taxes
that is attributable to the Post-Closing Period.
7.4 Access to Information. After the Closing, upon reasonable notice, BUYER
and SELLER agree to furnish or cause to be furnished to each other and their
representatives, employees, counsel and accountants access, during normal
business hours, to such information (including records pertinent to the
Business) and assistance relating to the Business as are reasonably necessary
for financial reporting and accounting matters relating to the Business, the
preparation and filing of any tax returns, reports or forms relating to the
Business or the defense of any tax claim or assessment relating to the Business,
provided, however, that such access and assistance do not unreasonably disrupt
the normal operations of BUYER or SELLER.
7.5 Tax Cooperation. Without duplication of Section 7.4, BUYER and SELLER
agree to furnish or cause to be furnished to each other, upon request, as
promptly as practicable, such information and assistance relating to the
Business and the Assets (including access to books and records) as is reasonably
necessary for the filing of all Tax Returns, the making of any election relating
to Taxes, the preparation for any audit by any taxing authority, and the
prosecution or defense of any claim, suit or proceeding relating to any Tax.
7.6 Bulk Sales Waiver. Each party hereto hereby waives compliance by SELLER
with the provisions of the "bulk sales," "bulk transfer" or similar laws of any
state or political subdivision. SELLER agrees to indemnify and hold BUYER
harmless against any and all claims, losses, damages, liabilities (including Tax
liabilities), costs and expenses incurred by BUYER or any of its affiliates as a
36
result of any failure to comply with any such "bulk sales," "bulk transfer" or
similar laws in connection with this Agreement or the transactions contemplated
thereby.
7.7 Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby will be paid by the party
incurring such costs and expenses, whether or not the transactions contemplated
hereby are consummated, except as otherwise expressly provided herein.
7.8 Rent. All rents and other payments required under the Leases and other
payments with respect to the leased Real Property (i.e., utilities) (the "RENT")
shall be apportioned between BUYER and SELLER as of the Closing Date based on
the number of days in the month included in the period ending with and including
the Closing Date (with respect to any such month, the "PRE-CLOSING RENT PERIOD")
and the number of days of such month beginning after the Closing Date (with
respect to any such month, the "POST-CLOSING RENT PERIOD"). SELLER shall be
liable for the proportionate amount of the Rent that is attributable to the
Pre-Closing Rent Period and BUYER shall be liable for the proportionate amount
of the Rent that is attributable to the Post-Closing Rent Period. Rent
proportions shall be based on a 30-day month.
ARTICLE VIII
INDEMNIFICATION
8.1 Survival. The representations, warranties, covenants and agreements of
the parties hereto shall survive the execution and delivery hereof and the
delivery of all of the documents executed in connection herewith and shall
continue in full force and effect after the date hereof and after the Closing
Date until December 31, 2002 (the "EXPIRATION DATE"), except that (i) the
provisions of this Agreement relating to Taxes (including, without limitation,
Section 3.17) shall survive until 90 days after the expiration of all applicable
statutes of limitations, and (ii) any covenants or agreements contained herein
or made pursuant hereto that by their terms are to be performed after the
Closing Date shall survive until fully discharged. No action or proceeding may
be brought with respect to any of the representations and warranties unless
written notice thereof, setting forth in reasonable detail the claimed
misrepresentation or breach of warranty, shall have been delivered to the party
alleged to have breached such representation or warranty prior to the Expiration
Date.
8.2 Indemnification by SELLER. SELLER shall indemnify BUYER, its Affiliates
and each of their respective officers, directors, employees and agents and hold
37
them harmless from any loss, liability, claim, damage or expense (including
reasonable legal fees and expenses) ("LOSS") suffered, incurred or sustained by
any such indemnified party or to which any of them becomes subject, resulting
from, arising out of or relating to (i) any breach of any representation or
warranty of SELLER (other than a breach of Section 3.10, with any breach of such
section to be handled pursuant to Section 8.4) contained in this Agreement that
survives the Closing, (ii) any breach of any covenant of SELLER contained in
this Agreement and (iii) any failure on the part of SELLER to perform and
discharge its liabilities, other than the Assumed Liabilities (the "NON-ASSUMED
LIABILITIES"); provided, however, that except with respect to Taxes, SELLER
shall not have any liability under clauses (i) and (ii) above unless the
aggregate of all losses, liabilities, costs and expenses relating thereto for
which SELLER would, but for this proviso, be liable exceeds on a cumulative
basis an amount equal to $100,000 (the "BASKET") and then only to the extent
that the aggregate of all such losses, liabilities, costs and expenses relating
thereto exceeds the Basket; provided further, however, that except with respect
to Non-Assumed Liabilities, SELLER's aggregate liability under this Article VIII
shall in no event exceed the Purchase Price.
8.3 Indemnification by BUYER. BUYER shall indemnify SELLER and its
respective officers, directors, employees and agents against and hold them
harmless from any Loss suffered, incurred or sustained by any such indemnified
party or to which any of them becomes subject, resulting from, arising out of or
relating to (i) any breach of any representation or warranty of BUYER contained
in this Agreement that survives the Closing, (ii) any breach of any covenant of
BUYER contained in this Agreement and (iii) any failure on the part of BUYER to
perform and discharge the Assumed Liabilities and its other liabilities;
provided, however, that, except with respect to the breach (if any) by BUYER of
the covenant set forth in the last sentence of Section 1.4, BUYER shall not have
any liability under clauses (i) and (ii) above unless the aggregate of all
losses, liabilities, costs and expenses relating thereto for which BUYER would,
but for this proviso, be liable exceeds on a cumulative basis an amount equal to
$100,000 (the "BUYER Basket") and then only to the extent that the aggregate of
all such losses, liabilities, costs and expenses thereto exceeds the BUYER
Basket; and provided further, however, that except with respect to Assumed
Liabilities and its other liabilities, BUYER's aggregate liability under this
Article VIII shall in no event exceed the Purchase Price.
8.4 Environmental Matters. SELLER shall defend, indemnify and hold harmless
BUYER, its agents, representatives and employees for, from, and against all
demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, costs and expenses (including, without limitation, interest,
38
penalties, reasonable attorneys' fees, disbursements and expenses, and
reasonable consultants' fees, disbursements and expenses) asserted against,
resulting to, imposed on, or incurred by BUYER, directly or indirectly, in
connection with: (i) any misrepresentation or breach of any environmental
representation or warranty set forth in Section 3.10 of this Agreement; (ii)
each and every item listed in Section 3.10 of the Disclosure Schedule; (iii) the
Release or threatened Release of any Hazardous Materials (or allegation of same)
(A) prior to the Closing Date on or from any property currently or formerly
operated or leased by SELLER or (B) on or from any other property where, prior
to the Closing Date, Hazardous Materials are or were (or are or were alleged to
be) Released, threatened to be Released, discharged or disposed of in connection
with any property currently or formerly operated or leased by SELLER or the
business of SELLER, whether or not, in any case, such Release, threatened
Release, discharge or disposal was in compliance with Environmental Law; (iv)
the violation of any Environmental Law prior to the Closing Date (or allegation
of same), by SELLER or any other person in connection with the business of
SELLER, or any property currently or formerly operated or leased by SELLER; (v)
the installation of any pollution control equipment to the extent that such
equipment is required to bring any property operated or leased by SELLER or
business of SELLER into compliance with requirements of any Environmental Law as
of the Closing Date; and (vi) any Environmental Claim against any person whose
liability for such Environmental Claim SELLER has or may have retained or
assumed either contractually or by operation of law.
8.5 Procedures Relating to Indemnification.
(a) In order for an indemnified party to be entitled to any
indemnification provided for under this Article VIII in respect of, arising out
of or involving a claim or demand made by any Person, firm, governmental
authority or corporation against the indemnified party (a "THIRD-PARTY Claim"),
such indemnified party must notify the indemnifying party in writing, and in
reasonable detail, of the Third-Party Claim as promptly as reasonably possible
after receipt by such indemnified party of written notice of the Third-Party
Claim; provided, however, that failure to give such notification shall not
affect the indemnification provided hereunder except to the extent the
indemnifying party shall have been actually prejudiced as a result of such
failure. The indemnified party shall promptly deliver to the indemnifying party,
after the indemnified party's receipt thereof, copies of all notices and
documents (including court papers) received by the indemnified party relating to
the Third-Party Claim.
(b) If a Third-Party Claim is made against an indemnified party, the
indemnifying party will be entitled to participate in the defense thereof and,
39
if it so chooses and acknowledges its obligation to indemnify the indemnified
party therefor, to assume the defense thereof with counsel selected by the
indemnifying party and reasonably satisfactory to the indemnified party. Should
the indemnifying party so elect to assume the defense of a Third-Party Claim,
the indemnifying party will not be liable to the indemnified party for legal
expenses subsequently incurred by the indemnified party in connection with the
defense thereof. If the indemnifying party assumes such defense, the indemnified
party shall have the right to participate in the defense thereof and to employ
counsel, at its own expense, separate from the counsel employed by the
indemnifying party, it being understood that the indemnifying party shall
control such defense. The indemnifying party shall be liable for the reasonable
fees and expenses of counsel employed by the indemnified party for any period
during which the indemnifying party has not assumed the defense thereof,
provided that such counsel is reasonably acceptable to the indemnifying party.
If the indemnifying party chooses to defend any Third-Party Claim, all the
parties hereto shall cooperate in the defense or prosecution thereof. Such
cooperation shall include the retention and (upon the indemnifying party's
request) the provision to the indemnifying party of records and information that
are reasonably relevant to such Third-Party Claim, and making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. Whether or not the indemnifying
party shall have assumed the defense of a Third-Party Claim, the indemnified
party shall not admit any liability with respect to, or settle, compromise or
discharge, such Third-Party Claim without the indemnifying party's prior written
consent (which consent shall not be unreasonably withheld).
8.6 Exclusive Remedy. BUYER and SELLER each acknowledge and agree that,
from and after the Closing, their sole and exclusive remedy, with respect to any
and all claims relating to the subject matter of this Agreement shall be
pursuant to the indemnification provisions set forth in this Article VIII. In
furtherance of the foregoing, BUYER and SELLER hereby waive, from and after the
Closing, to the fullest extent permitted under applicable law, any and all
rights, claims and causes of action, they may have against each other relating
to the subject matter of this Agreement arising under or based upon any federal,
state or local statute, law (including common law), ordinance, rule or
regulation or otherwise, except for claims arising from fraud.
40
ARTICLE IX
TERMINATION
9.1 Bases for Termination. Anything contained herein to the contrary
notwithstanding, this Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing Date:
(a) by mutual written consent of SELLER and BUYER;
(b) by BUYER if any of the conditions set forth in Section 2.2 shall
have become incapable of fulfillment, and shall not have been waived by BUYER;
(c) by SELLER if any of the conditions set forth in Section 2.3 shall
have become incapable of fulfillment, and shall not have been waived by SELLER;
(d) by BUYER or SELLER if the Closing does not occur on or prior to
August 1, 2001; or
(e) by BUYER if the SELLER's Board of Directors shall have withdrawn,
modified or changed in a manner adverse to BUYER its approval or recommendation
of this Agreement or the transactions contemplated hereby or shall have approved
or recommended an Acquisition Proposal or shall have executed an agreement in
principle or a definitive agreement relating to an Acquisition Proposal or
similar business combination with a Person other than BUYER or its Affiliates.
provided, however, that the party seeking termination pursuant to clause (b),
(c) or (d) is not in breach of any of its representations, warranties,
covenants, or agreements contained in this Agreement.
9.2 Notice of Termination. In the event of termination by SELLER or BUYER
pursuant to this Article IX, written notice thereof shall forthwith be given to
the other party and the transactions contemplated by this Agreement shall be
terminated, without further action by any party.
9.3 Effect of Termination. (a) If this Agreement is terminated and the
transactions contemplated hereby are abandoned as described in this Article IX,
this Agreement shall become void and of no further force and effect, except for
the provisions of (a) Section 7.7 relating to expenses, (b) Section 7.2 relating
to publicity,
41
(c) Sections 3.19 and 4.4 relating to finders' fees and brokers' fees,
(d) Section 5.3 relating to Confidential Information and (e) this Section 9.3.
Nothing in this Article IX shall be deemed to release any party from any
liability for any breach by such party of the terms and provisions of this
Agreement or to impair the right of any party to compel specific performance by
another party of its obligations under this Agreement.
(b) If (i) BUYER exercises its right to terminate this Agreement under
Section 9.1(e) or (ii) SELLER unilaterally terminates this Agreement for any
reason other than those specifically set forth in Section 9.1(c) or 9.1(d),
SELLER shall pay BUYER $500,000. Such payment shall be payable in same-day
funds, as liquidated damages and not as a penalty to reimburse BUYER for its
time, expense and lost opportunity costs of pursuing the transactions
contemplated by this Agreement, and, in the case of clause (i) shall be made
upon consummation of the transaction relating to such Acquisition Proposal and
in the case of clause (ii) shall be made the next business day after any such
termination.
(c) If BUYER unilaterally terminates this Agreement for any reason
other than those specifically set forth in Section 9.1(b), 9.1(d) or 9.1(e),
BUYER shall pay to SELLER $500,000. Such payment shall be payable in same-day
funds, as liquidated damages and not as a penalty to reimburse SELLER for its
time, expense and lost opportunity costs of pursuing the transactions
contemplated by this Agreement, and shall be made the next business day after
any such termination.
(d) BUYER and SELLER each acknowledge that the agreements contained in
Sections 9.3(b) and 9.3(c) are an integral part of the transactions contemplated
by this Agreement, and that, without these agreements, the other party would not
have entered into this Agreement; accordingly, if BUYER fails to promptly pay
the amount due pursuant to Section 9.3(c) or SELLER fails to promptly pay the
amount due pursuant to Section 9.3(b), and in either case, in order to obtain
such payment, BUYER or SELLER, as the case may be, commences a suit which
results in a judgment against the other for the fee set forth in Section 9.3(b)
or 9.3(c), the party who must pay such fee shall also pay to the other its costs
and expenses (including attorneys' fees) in connection with such suit, together
with interest from the date of termination of this Agreement on the amount owed
at the prime rate of Bank of America, N.A., in effect from time to time during
such period.
42
ARTICLE X
GENERAL PROVISIONS
10.1 Assignment. This Agreement and the rights and obligations hereunder
shall not be assignable or transferable by BUYER or SELLER (including by
operation of law in connection with a merger, or sale of substantially all the
assets, of BUYER or SELLER) without the prior written consent of each of the
other parties hereto.
10.2 No Third-Party Beneficiaries. Except for Persons entitled to
indemnification under Article VIII hereof, this Agreement is for the sole
benefit of the parties hereto, and nothing herein express or implied shall give
or be construed to give to any person or entity, other than the parties hereto,
any legal or equitable rights hereunder.
10.3 Amendments; Waiver. No amendment to this Agreement shall be effective
unless it shall be in writing and signed by each party hereto.
10.4 Waiver of Compliance. Except as otherwise provided in this Agreement,
any failure of any of the parties to comply with any obligation, covenant,
agreement or condition herein may be waived by the party entitled to the
benefits thereof only by a written instrument signed by the party, granting such
waiver, but such waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
10.5 Notices. All notices or other communications required or permitted to
be given hereunder shall be in writing and shall be delivered by hand or sent by
telecopy, or sent, postage prepaid, by registered, certified or express mail, or
reputable overnight courier service and shall be deemed given when delivered by
hand or telecopied, three days after mailing (one business day in the case of
guaranteed overnight express mail or guaranteed overnight courier service), as
follows:
43
(i) If to SELLER:
Gum Tech International, Inc.
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: President
with a copy to:
Xxxxx & Xxxxxx L.L.P.
Xxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxx Xxxxxx
(ii) if to BUYER:
Wm. Wrigley Jr. Company
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx (Illinois)
000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
10.6 Interpretation. The headings contained in this Agreement, in any
Exhibit or Schedule hereto and in the table of contents to this Agreement, are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. This Agreement shall be construed without
regard to any presumption or rule requiring construction or interpretation
against the party drafting or causing any instrument to be drafted.
10.7 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other party.
44
10.8 Severability. If any provision of this Agreement or the application of
any such provision to any person or circumstance shall be held invalid, illegal
or unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof.
10.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to agreements made
and to be performed entirely within such State, without regard to the conflicts
of law principles of such State.
10.10 Entire Agreement. This Agreement contains the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and, except to the extent specifically set forth herein, supersedes all
prior agreements and understandings relating to such subject matter.
[SIGNATURE PAGE FOLLOWS]
45
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
GUM TECH INTERNATIONAL, INC.
By:
-------------------------------------
Name:
Title:
WM. WRIGLEY JR. COMPANY
By: /s/ Xxxxxxx Xxxxxxx Xx.
-------------------------------------
Name: Xxxxxxx Xxxxxxx Xx.
Title: President & Chief Executive Officer
Exhibit 1.1(a)
ASSETS.
1) All furniture, fixtures, and equipment except those items listed in
Schedule 1.1(b) for the following locations: 000 X. Xxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxx and 000 X. Xxxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxx.
2) All rights and interest relating to manufacturing Agreements with the
following parties:
[*]
3) *All rights and interest relating to manufacturing agreements with private
label customers on a non-contractual basis:
[*]
* For all of the private-label customers, Seller manufactures product
for them on a non-contractual basis. When the customer requires gum to
be produced, the customer calls Seller for a price quote. Seller faxes
or e-mails a quote concerning the specific production request. Each
quote may be different depending upon quantity, flavor, additional
criteria, etc., associated with a specific request There is no
standing agreement between Seller and any of these customers that
contains standard terms regarding pricing, assumptions, etc.
4) 1994 International Harvester Truck, [*].
5) Intellectual Property listed on Schedule 3.14 and excluding Intellectual
Property listed on Schedule 1.2.
6) Assignment of leases as listed in Schedule 3.7.
7) Raw materials and packaging inventory related to the Business.
8) Information system software and equipment except items listed in Schedule
1.1(b).
----------
[*] Confidential Information on this page has been omitted and filed separately
with the Securities and Exchange Commission pursuant to a Confidential Treatment
Request.
Exhibit 1.1(b)
EXCLUDED ASSETS.
1) Computer equipment for the following departments:
a) Sales: 1 desktop computer; 1 laptop;
b) Accounting: 5 desktop computers; 2 desktop printers; 1 dot-matrix
printer; 1 Hewlett Packard LaserJet;
c) Purchasing/Planning: 1 desktop computer; 1 desktop printer;
d) Investor Relations: 1 desktop computer.
2) Finished goods inventory.
3) All rights and interest relating to the joint venture with Swedish Match AB
("Swedish Match Joint Venture") as reflected in the following documents:
a) Shareholders Agreement between Swedish Match AB (or its designee) and
Seller;
b) International Manufacturing Agreement between Joint Venture Co. and
Seller;
c) Research and Development Agreement between Joint Venture Co. and
Seller;
d) Articles of Association of [*].
4) All rights and interest relating to the International Manufacturing
Agreement between Swedish Match North AB and Seller, dated May 28, 2000,
regarding [*].
5) All rights and interest relating to the Operating Agreement of Gel Tech,
LLC, effective as of January 27, 1999 and the First Amendment to the
Operating Agreement of Gel Tech, LLC dated as of October 6, 2000.
6) All rights and interest relating to the Intellectual Property Development
and License Agreement, dated as of May 1999, by and between Seller and
Zensano, Inc. (the successor in interest to Bio-Delivery Technologies,
Inc.) and all amendments thereto.
7) All Accounts Receivable for products shipped and/or invoiced as of the
Closing Date.
8) All rights and interest related to [*].
----------
[*] Confidential Information on this page has been omitted and filed separately
with the Securities and Exchange Commission pursuant to a Confidential Treatment
Request.
9) All packaging and certain raw materials specific to the manufacturing or
distribution of [*].
10) All cash, rights and benefits of Seller pursuant to the Purchase Agreement
and related transaction documents.
11) Intellectual Property listed in Schedule 1.2.
12) All rights and interest related to the Consulting Agreement with Xxxx Xxxxx
dated June 2, 2000.
13) Cash in all accounts including the following:
[*]
14) All rights related to an approximate $249,000.00 claim against Breath Asure
pending in chapter 11 Bankruptcy
----------
[*] Confidential Information on this page has been omitted and filed separately
with the Securities and Exchange Commission pursuant to a Confidential Treatment
Request.
Exhibit 1.1(c)
EXCLUDED INTELLECTUAL PROPERTY.
All Intellectual Property not related to the Business, including but not limited
to patents, trademarks, copyrights and trade secrets concerning the following:
1) All intellectual property associated with the Gel Tech Joint Venture.
2) All rights and interest relating to the Intellectual Property Development
and License Agreement, dated as of May 1999, by and between Seller and
Zensano, Inc. (the successor in interest to Bio-Delivery Technologies,
Inc.) and all amendments thereto.
3) All intellectual property associated with the Swedish Match Joint Venture
4) All intellectual property associated with the International Manufacturing
Agreement regarding [*] between Swedish Match North Europe AB and Seller,
dated May 28, 2000.
5) All intellectual property pertaining to ongoing discussions for products
other than chewing gum and confectionery products.
6) Trademarks:
a) 897-T-29 Globe Design
b) 897-T-30 Science for Health & Fitness
c) 897-T-31 Gumtech
7) Web-site domain name: xxx.xxx-xxxx.xxx
8) The name Gum Tech International, Inc. and all derivations thereof.
----------
[*] Confidential Information on this page has been omitted and filed separately
with the Securities and Exchange Commission pursuant to a Confidential Treatment
Request.
Exhibit 1.1(d)
[*]
----------
[*] Confidential Information on this page has been omitted and filed separately
with the Securities and Exchange Commission pursuant to a Confidential
Treatment Request.
Exhibit 1.1(e)
[*]
----------
[*] Confidential Information on this page has been omitted and filed separately
with the Securities and Exchange Commission pursuant to a Confidential Treatment
Request.
Exhibit 1.4
ASSUMED LIABILITIES.
1) Leases as described in Schedule 3.7.
2) Miscellaneous service contracts including copier maintenance, landscaping,
laundry service and T1 network cable with local telephone company.
3) Manufacturing Agreements listed on Exhibit 1.1(a).
4) Lease Agreements pertaining to the real property leases listed on Schedule
3.7.
5) Equipment Lease Agreements listed on Schedule 3.7.
6) Perpetual, non-exclusive Letter of Understanding with Xxxxxxxxx Oral
Technologies, Inc. dated September 9, 1997 for the use of Microdent.
7) Sales Agency Agreements with multiple agencies. These agreements are still
ongoing and have not been terminated even though the agencies are no longer
promoting Gum Tech branded gums. The agencies included [*].
----------
[*] Confidential Information on this page has been omitted and filed separately
with the Securities and Exchange Commission pursuant to a Confidential Treatment
Request.
Exhibit 2.1(a)(i)
[*]
----------
[*] Confidential Information on this page has been omitted and filed separately
with the Securities and Exchange Commission pursuant to a Confidential Treatment
Request.
Exhibit 2.1(a)(ii)
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT made, executed and delivered as of the __ day of
_______, 2001 by Wm. Wrigley Jr. Company, a Delaware corporation (herein
referred to as "Obligor"), to Gum Tech International, Inc., a Utah corporation
(herein referred to as "GTI"). Capitalized terms used but not defined herein
shall have the meanings as ascribed to them in the Purchase Agreement by and
between GTI and Obligor, dated March __, 2001 (the "Purchase Agreement").
RECITALS
WHEREAS, GTI and Obligor have agreed, pursuant to the Purchase Agreement,
to the sale by GTI to Obligor of the properties and assets of GTI related to the
Business, all as more fully described in the Purchase Agreement, for
consideration in the amount and on the terms and conditions provided for in the
Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, as of the date hereof, Obligor, pursuant to Section 1.4 of the
Purchase Agreement and subject to all of the terms thereof, hereby assumes and
agrees to pay, perform and discharge when due the Assumed Liabilities.
SECTION 1. Nothing in this instrument, express or implied, is intended or
shall be construed to confer upon, or give to, any person, firm or corporation,
other than GTI and its successors and assigns, any remedy or claim under or by
reason of this instrument or any terms, covenants or condition hereof, and all
the terms, covenants and conditions, promises and agreements in this instrument
shall be for the sole and exclusive benefit of GTI and its successors and
assigns.
SECTION 2. Notwithstanding anything to the contrary contained herein or in
the Purchase Agreement, the assumption by Obligor of the Assumed Liabilities as
set forth above shall not be construed to defeat, impair or limit in any way (i)
any rights or remedies of Obligor to contest or dispute the validity or amount
of any of such Assumed Liabilities with any third parties or (ii) any other
rights or remedies of the Obligor under the Purchase Agreement.
SECTION 3. This instrument shall be governed by and construed in accordance
with the laws of the State of Delaware without giving effect to the
conflicts-of-laws provisions thereof.
SECTION 4. This instrument is executed by, and shall be binding upon,
Obligor, its successors and assigns, for the uses and purposes above set forth
and referred to, effective immediately upon its delivery to GTI.
IN WITNESS WHEREOF, this Assumption Agreement has been duly executed and
delivered by Obligor as of the day and year date first written above.
WM. WRIGLEY JR. COMPANY
By:
--------------------------------------
Name:
Title:
Exhibit 2.1(a)(iii)-1/2
ROYALTY AGREEMENTS
Pursuant to these agreements, Wrigley will pay royalties to the Company
equal to 5% of:
* gross manufacturing sales, if any, of P&G Products for a period of
three years after the first date on which any P&G Product is first
launched for commercial sale, subject to a maximum of $1.2 million;
and
* net sales to third parties, if any, of Future Products for a period of
three years after the first date on which any Future Product is
launched for commercial sale, but in no event after the fifth
anniversary of the closing date of the Asset Sale.
The Company will identify three potential Future Products and Wrigley will
use its reasonable best efforts to evaluate the viability of those Future
Products for development, production and sale as Wrigley Products. If Wrigley
determines that any Future Product is suitable for development and production,
it will perform standard qualitative and quantitative testing with respect to
that Future Product and, if satisfied with the results of such testing, will act
reasonably and in good faith with a view to launching that Future Product for
commercial sale.
Exhibit 2.1(a)(iv)
SECURITIES PURCHASE AGREEMENT
In connection with the closing of the Asset Sale, Wrigley has agreed to
purchase for investment purposes 200,000 shares of the Company's common stock
for an aggregate purchase price equal to $1,501,876 in cash, which represents a
price per share equal to $7.50938, the 10-day average closing price for the
period from February 21, 2001 through March 6, 2001. Wrigley will agree not to
sell any of the acquired shares prior to the six month anniversary of the
closing date, subject to certain extraordinary corporate transactions by the
Company, and, following the six month anniversary, not to sell during any 30-day
period more than the greater of 1% of the Company's outstanding shares of common
stock or the average weekly trading volume for the Company's common stock for
the four week period prior to the proposed sale.
Exhibit 2.1(a)(v)
MANUFACTURING AGREEMENT
Wrigley has agreed to enter into a Manufacturing Agreement with the
Company, dated the date of closing of the Asset Sale, providing for the
manufacturing and packaging of non-tobacco nicotine products developed pursuant
to the Company's joint venture with Swedish Match. Pursuant to this agreement,
Wrigley has agreed to manufacture and package non-tobacco nicotine products
according to specifications provided by the joint venture company at Wrigley's
cost. Wrigley will be obligated under this agreement to manufacture and package
non-tobacco nicotine products for a period of three years following the closing
date of the Asset Sale.
