EXHIBIT 2.1
Execution Version
ASSET PURCHASE AGREEMENT
BY AND AMONG
XXXXXX, INC.,
BOTANICALS INTERNATIONAL EXTRACTS, INC.,
AND
ZUELLIG BOTANICALS, INC.
DATED AS OF OCTOBER 15, 2003
ASSET PURCHASE AGREEMENT
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This ASSET PURCHASE AGREEMENT (together with the annex, exhibits and
schedules hereto, this "Agreement") is entered into as of October 15, 2003, by
and among XXXXXX, INC., a Delaware corporation ("Xxxxxx"), BOTANICALS
INTERNATIONAL EXTRACTS, INC., a Delaware corporation ("BIE" and together with
Xxxxxx, the "Sellers"), and ZUELLIG BOTANICALS, INC., a Delaware corporation
("Buyer"). Terms used herein and not otherwise defined shall have the meanings
set forth in Annex A attached hereto and made a part hereof.
RECITALS
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A. BIE manufactures, markets and distributes certain botanical extracts,
dietary and nutritional supplements, nutraceuticals and vitamins (the
"Business").
B. Subject to the terms and conditions set forth in this Agreement, Buyer
desires to acquire from the Sellers and the Sellers desire to sell to Buyer
certain assets, as set forth below, of the Business.
C. The Sellers are debtors and debtors-in-possession in that certain case
number 03-18788 BB (administratively consolidated with case numbers 03-18795 BB,
03-18798 BB and 03-18802 BB) filed April 1, 2003 (the "Petition Date") pending
under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code")
in the United States Bankruptcy Court in the Central District of California (the
"Chapter 11 Case").
X. Xxxxx Fargo Bank, National Association ("Xxxxx Fargo") asserts a first
priority security interest in the Acquired Assets (as hereinafter defined) and
the proceeds from the sale thereof.
E. The parties hereto have agreed that the Sellers will sell and Buyer will
acquire the Acquired Assets free and clear of all Indebtedness, Liens and
obligations other than the Assumed Liabilities, under Sections 363(b) and 363(f)
of the Bankruptcy Code.
NOW, THEREFORE, in consideration of the representations and warranties,
covenants and agreements, and subject to the conditions contained herein, each
of the Sellers and Buyer hereby agree as follows:
ARTICLE I
PURCHASE OF ASSETS
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1.1. Purchase and Sale of Acquired Assets. Subject to the terms and
conditions of this Agreement, the Sellers agree to sell, assign, convey and
transfer to Buyer, and Buyer agrees to purchase from the Sellers, at the
Closing, all right, title and interest in and to the assets listed below
(collectively, the "Acquired Assets") free and clear of any Indebtedness, Liens
and obligations other than the Assumed Liabilities, all as contemplated by
Section 363 of the Bankruptcy Code, including, without limitation:
(a) all inventory of the Business, wherever located, including samples,
finished goods, prepaid inventory and any finished goods in transit as of the
Closing Date, including any inventory owned by Xxxxxx related to the Business
which is listed on Schedule 1.5 (the "Inventory");
(b) all of the Sellers' rights, title and interest, if any, in and to the
trademarks RoseOx(R), Rossential(TM) and Rossential Plus(TM) and all trade
names, corporate names, logos, URLs and other network and email identifiers,
trade dress, trademarks and service marks, brand names and all registrations and
applications therefore associated with the names "BI Nutraceuticals,"
"Botanicals International," and "Botanicals International Extracts," together
with all goodwill symbolized thereby (the "Seller Intellectual Property");
(c) all billed and unbilled accounts receivable, notes receivable and other
rights to payment, except insurance proceeds, in connection with the Business
existing as of the Closing, including, without limitation, any payments received
with respect thereto after the Closing Date, unpaid interest accrued on any such
accounts receivable and any security or collateral relating thereto, and any
unbilled receivable for work in progress, except any and all accounts
receivable, intercompany debt or other liabilities owed to BIE by Xxxxxx or any
of Xxxxxx'x Subsidiaries, and any billed and unbilled accounts receivable
related to the sale of xxxxxxxx product by Xxxxxx (the "Accounts Receivable");
(d) all rights of the Sellers under the Assigned Purchase Orders listed on
Schedule 2.5(a) to this Agreement;
(e) all lists (including, without limitation, customer and supplier lists),
files, documents, books and records, manuals, cost and pricing information, and
plans and specifications related to the Business;
(f) all catalogues, brochures, sales literature, promotional material and
other selling material relating to the Business;
(g) all of the Sellers' rights, claims, defenses, or causes of action
against third parties in respect of the Acquired Assets (including, without
limitation, the Inventory, Accounts Receivable and the Seller Intellectual
Property) arising out of transactions prior to the Closing, except all claims
and causes of action of the Sellers against third parties under sections 544
through 550 of the Bankruptcy Code, inclusive, and against the account debtor
parties to any Returned Accounts Receivable related to collecting such Returned
Accounts Receivable;
(h) to the extent transferable, all Licenses and Permits relating to the
conduct of the Business;
(i) all goodwill (including, without limitation, all goodwill associated
with the Assigned Purchase Orders) and going concern value of the Business;
(j) to the extent transferable, all guarantees, warranties, indemnities and
similar rights from third parties in favor of any Seller with respect to any
Acquired Asset and all letters of credit and performance bonds issued to the
extent the Business is a beneficiary; and
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(k) all other assets set forth on Schedule 1.1(k) hereto.
Buyer shall also acquire, for the cash sum of $10,000, all of ZetaPharm's
right, title and interest in and to all trade names, corporate names, logos,
URLs and other network and email identifiers, trade dress, trademarks and
service marks, brand names and all registrations and applications therefore
associated with the name "ZetaPharm" pursuant to the ZetaPharm Name Purchase
Agreement attached as Exhibit D.
1.2. Excluded Assets. Notwithstanding anything herein to the contrary, it
is expressly agreed that the Sellers will retain, and Buyer will not acquire,
the following assets (collectively, the "Excluded Assets"):
(a) Non-Business Assets. Any assets owned or utilized by Xxxxxx except
those included in the Acquired Assets;
(b) Owned Real Property. All real property owned by Xxxxxx, including all
improvements and facilities thereon;
(c) Cash and Cash Equivalents. Cash and cash equivalents, including,
without limitation, checking accounts, bank deposits, investments in "money
market" funds, commercial paper funds, certificates of deposit, Treasury bills,
in each case including any accrued interest thereon;
(d) Causes of Action. All claims and causes of action of BIE and Xxxxxx
against third parties, including any claims and causes of action under sections
544 through 550 of the Bankruptcy Code, inclusive, except those causes of action
included in the Acquired Assets;
(e) Tax Losses, NOLS, Refunds and Credits. All losses, loss carry-forwards
and rights to receive refunds, credits and loss carry-forwards with respect to
any and all taxes of BIE and Xxxxxx;
(f) Insurance Contracts. Any contracts of insurance in respect of the
Business, any reimbursement for, or other benefit associated with prepaid
insurance, and any insurance proceeds thereof;
(g) Intercompany Receivables. Any amounts owed to BIE by Xxxxxx, HTS, or
any other subsidiary of Xxxxxx or any amounts owed to Xxxxxx by BIE, HTS, or any
other subsidiary of Xxxxxx;
(h) Transferred or Disposed Assets. Subject to Seller's compliance with
Section 4.3 hereof, any assets transferred or otherwise disposed of by the
Sellers in the ordinary course of the Business prior to the Closing;
(i) Xxxxxx Name. The names "Xxxxxx, Inc.," "Xxxxxx," "Xxxxxx Technical
Services, Inc.," "Xxxxxx Technical Services" or any related or similar trade
names, trademarks, service marks, email addresses or logos to the extent the
same incorporate the names "Xxxxxx, Inc.," "Xxxxxx," "Xxxxxx Technical Services,
Inc.," "Xxxxxx Technical Services" or any variations or derivations thereof; and
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(j) Excluded Accounts Receivable. The Excluded Pre-Closing Trade Accounts
Receivable listed on Schedule B and any Returned Accounts Receivable.
(k) Other Assets. All assets set forth on Schedule 1.2(k).
1.3. Assumed Liabilities.
(a) In connection with the establishment of the Unsecured Creditor Fund
described in Section 1.7, Buyer will assume and agree to partially pay, satisfy
and discharge the amounts owing to (i) unsecured creditors of the Sellers, HTS
and ZetaPharm (each, an "Eligible Unsecured Creditor") in respect of outstanding
pre-petition claims, to the extent such claims become Allowed Claims, of such
creditors set forth on Schedule 1.3(a)(i) (the "Unsecured Creditor Claims
Schedule"), and (ii) certain professionals of the Sellers and the Sellers'
estate (the "Seller Professionals") in respect of the outstanding pre-Closing
Date fees and costs incurred by such Seller Professionals set forth on Schedule
1.3(a)(ii) (the "Seller Professional Fees Schedule"), up to the aggregate dollar
amount set forth in such Schedules and only to the extent provided in this
Section 1.3 and Sections 1.7 and 1.8. The Unsecured Creditor Claims Schedule and
the Seller Professional Fees Schedule shall set forth in columns, the name of
each Eligible Unsecured Creditor and Seller Professional, respectively, and the
corresponding amount owing to such party in respect of its pre-petition claim
and pre-Closing Date fees and costs, respectively.
(b) At the Closing, the Buyer will assume and agree to fully pay, satisfy,
perform and discharge as the same shall become due all obligations and
liabilities relating to the Assigned Purchase Orders that arise post-Closing
((a) and (b), the "Assumed Liabilities").
(c) Except as expressly set forth in this Section 1.3 and the Unsecured
Creditor Claims Schedule and the Seller Professional Fees Schedule, Buyer will
not assume or otherwise be responsible at any time for any liability,
obligation, Indebtedness, Contract or commitment of the Business, whether
absolute or contingent, accrued or unaccrued, asserted or unasserted, or
otherwise, including, but not limited to: (a) any liabilities, obligations,
Indebtedness or commitments of the Business (i) incident to, arising out of or
incurred with respect to this Agreement and the transactions contemplated
hereby, (ii) which otherwise arise or are asserted or incurred by reason of
events, acts or transactions occurring, or the operation of the Business, prior
to the Closing, including, without limitation, any dispute, loss, cost, Claim,
injury, liability or expense, including reasonable attorneys' fees, regardless
of theory, relating to any accounts payable or Accounts Receivable outstanding
as of the Closing, including the Pre-Closing Trade Accounts Receivable, and any
events, acts or transactions underlying such accounts payable or Accounts
Receivable, (iii) relating to or arising under any employee benefit plan, (iv)
relating to any employees or former employees of the Sellers or any of their
Subsidiaries (it being understood that Buyer shall have no obligation to hire or
retain any employees of the Sellers or any of their Subsidiaries) or otherwise
relating to salaries, wages, bonuses, severance or retention pay or benefits
accruing, or relating to employment or termination from employment, on or prior
to the Closing, (v) relating to or arising under any Environmental Law on or
prior to the Closing; (b) any amounts, liabilities or obligations in respect of
the amounts set forth on the Unsecured Creditor Claims Schedule that remain
outstanding after giving effect to the provisions of Sections 1.7 and 1.8; or
(c) Taxes related to
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the Business or the Acquired Assets for all Tax periods (or portions thereof)
ending on or prior to the Closing (including any and all Taxes arising out of
the transactions contemplated hereby) (collectively, the "Excluded
Liabilities"). Sellers agree to retain each of the Excluded Liabilities as the
same shall become due. Buyer's assumption of the Assumed Liabilities shall in no
way expand the rights or remedies of third parties against Buyer as compared to
the rights and remedies which such parties would have had against any of the
Sellers had this Agreement not been consummated.
1.4. Method of Conveyance. The sale, transfer, conveyance and assignment by
Sellers of the Acquired Assets to Buyer in accordance with Section 1.1 hereof
shall be effected on the Closing Date by the execution and delivery by the
Sellers to Buyer of instruments of transfer including: (a) the xxxx of sale
executed by Sellers in substantially the form of Exhibit A attached hereto (the
"Xxxx of Sale"); (b) the Assignment and Assumption Agreement substantially in
the form of Exhibit B attached hereto (the "Assignment and Assumption
Agreement"); and (c) assignments of trademarks for the Seller Intellectual
Property to be assigned to Buyer in substantially the form of Exhibit C attached
hereto (the "Trademark Assignment Agreement"). At the Closing, all of the
Acquired Assets shall, pursuant to Bankruptcy Court order, be transferred by the
Sellers to Buyer free and clear of any and all Liens, Claims, Orders and
Indebtedness (other than the Assumed Liabilities).
1.5. Purchase Price. The purchase price ("Purchase Price") to be paid to
the Sellers by Buyer for the Acquired Assets shall be:
(a) a cash payment to the Sellers at Closing, by wire transfer of
immediately available funds, of an amount equal to the sum of:
(i) $4,580,207 for the Inventory at Closing, calculated in accordance
with the methodology set forth on Schedule 1.5, and as adjusted up or down
as of the Closing Date as provided in Section 1.6; plus
(ii) $280,918 for the value of all of the prepaid Inventory as of the
Closing Date, calculated in accordance with the methodology set forth on
Schedule 1.5 and as adjusted up or down as of the Closing Date as provided
in Section 1.6; plus
(iii) 80% of $3,382,397 for the value in respect of all of the
Pre-Closing Trade Accounts Receivable as of the Closing Date, calculated in
accordance with the methodology set forth on Schedule 1.5 and as adjusted
up or down on the Closing Date as provided in Section 1.6, (such total
amount, the "Cash Consideration");
(b) a monthly cash payment to the Sellers commencing the first calendar
month after the Closing Date and every month thereafter, payable on or prior to
the fifteen (15th) day of each such calendar month, equal to the aggregate
amount of proceeds from the remaining 20% of the Pre-Closing Trade Accounts
Receivable actually received by Buyer during the preceding month, and not
attributable to the amount already paid to the Sellers as part of the Cash
Consideration with respect to the Pre-Closing Trade Accounts Receivable (each
such net amount, the "Pre-Closing Monthly Trade Accounts Receivable
Consideration"). For avoidance of any doubt, all payments made by any Person
owing a Pre-Closing Trade Accounts Receivable
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shall be considered to be payable (and shall be paid) to Buyer until such time
as Buyer has collected from the Pre-Closing Trade Accounts Receivable an amount
equal to the amount paid by Buyer to the Sellers under Section 1.5(iii) above,
as may be adjusted pursuant to Section 1.6. After such time, all remaining
payments made by any Person with respect to a Pre-Closing Trade Accounts
Receivable shall be considered a payment with respect to the Pre-Closing Monthly
Trade Accounts Receivable Consideration.
(c) the assumption by Buyer of the Assumed Liabilities at Closing,
including the establishment of the Unsecured Creditor Fund as set forth in
Section 1.7 and into which Buyer shall deposit Royalty Payments and/or Seller
Distributions in accordance with Section 1.7 for the period between the Closing
Date and June 30, 2004 (provided that any amount of the Royalty Payment in
excess of $220,000 per month shall be paid by Buyer directly to the Sellers and
shall not be required to be deposited into the Unsecured Creditor Fund), in the
manner, at the times, and subject to the adjustments and exceptions set forth in
Sections 1.7 and 1.8; and
(d) the performance of collection services by Buyer with regard to the
Pre-Closing Trade Accounts Receivable, at no cost to the Sellers as of the
Closing, in accordance with Section 1.9.
The Purchase Price shall be allocated in accordance with Section 1.10.
1.6. Closing and Post-Closing Cash Consideration Adjustment. The parties
acknowledge and agree that the Cash Consideration shall be subject to adjustment
at Closing and following the Closing in accordance with this Section 1.6.
(a) Closing Adjustment. The Cash Consideration set forth in Section 1.5 has
been calculated based on the Inventory, prepaid Inventory and Pre-Closing Trade
Accounts Receivable determined as of the month-end immediately prior to the
signing of this Agreement. The parties acknowledge and agree that the Cash
Consideration payable at Closing shall be adjusted based on the Inventory,
prepaid Inventory and Pre-Closing Trade Accounts Receivable determined as of the
month-end immediately prior to the Closing, based on the same methodology used
in calculating the amounts shown in Section 1.5. The Sellers shall provide the
Buyer with the calculation of such amounts and any information reasonably
required to support such calculations at least 5 days prior to the Closing.
(b) Post-Closing Adjustment. The Cash Consideration shall also be subject
to adjustment after the Closing for any changes in the Inventory, prepaid
Inventory and Pre-Closing Trade Accounts Receivable between the month-end prior
to Closing and the Closing. Within 30 days of Closing, the Buyer shall provide
the Sellers with the calculation of the Inventory, prepaid Inventory and
Pre-Closing Trade Accounts Receivable as of the Closing, as well as any
resulting adjustment in the Cash Consideration, whether up or down, together
with any information reasonably required to support such calculations. Buyer and
the Sellers shall promptly work together to resolve any disputes with respect to
any post-Closing adjustment. To the extent necessary, the Sellers and their
agents shall have reasonable access to Buyer's books and records upon reasonable
notice for purposes of confirming and/or auditing Buyer's calculations. If any
such dispute has not been resolved within fifteen (15) days after Buyer has
notified the Sellers of any adjustment to the Cash Consideration, then the
issues in dispute shall be submitted to
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Honorable Bankruptcy Judge Xxxxxxx Xxxxxxx, subject to his agreement, for
mediation unless the Buyer and the Sellers otherwise agree. If Honorable
Bankruptcy Judge Xxxxxxx Xxxxxxx does not agree to mediate or is otherwise
unavailable, then the issues in dispute shall be submitted to a mutually
acceptable, independent, nationally recognized public accounting firm. The
accounting firm selected shall be jointly instructed by Buyer and the Sellers to
finally determine the issues submitted to such accounting firm within thirty
(30) days after receiving the joint instruction and the determination by such
accounting firm will be binding and conclusive on Buyer and the Sellers. The
party whose position in respect of the appropriate Cash Consideration, as
submitted to the accounting firm, is furthest from the result of the final
determination, shall bear all of the fees, costs and expenses of the accounting
firm incurred in connection with this Section 1.5.
1.7. Unsecured Creditor Fund.
(a) Establishment of Unsecured Creditor Fund. Subject to any rights of
Xxxxx Fargo under the stipulation described in Section 8.12 below, the Fund
Trustee shall establish an account (the "Unsecured Creditor Fund") reserved for
payment of the amounts set forth in the Unsecured Creditor Claims Schedule and
the Seller Professional Fees Schedule, up to the aggregate dollar amount set
forth in such Schedules and only to the extent and in the manner provided in
this Section 1.7 and Section 1.8.
(b) Funding of the Unsecured Creditor Fund. Subject to Section 1.8, as soon
as reasonably practicable after the last day of each month, but in no event
later than fifteen (15) days after the end of such month, for the period between
the Closing Date and June 30, 2004, Buyer shall deposit the Royalty Payments
(pro-rated as necessary for the first month that contains the Closing Date) into
the Unsecured Creditor Fund. Subject to Section 1.8 below, any amount of the
Royalty Payment in excess of $220,000 per month shall be paid by Buyer directly
to the Sellers and shall not be deposited into the Unsecured Creditor Fund. In
the event that Buyer or Zatpack is entitled to receive a distribution from the
Sellers in respect of Buyer's or Zatpack's unsecured claims against the Sellers
prior to June 30, 2004 (a "Seller Distribution"), subject to any rights of Xxxxx
Fargo under the stipulation described in Section 8.12 below, such Seller
Distribution shall be deposited into the Unsecured Creditor Fund by the Sellers
in lieu of Buyer making minimum Royalty Payments of equivalent amount to the
extent that any Royalty Payments remain unpaid. To the extent that Seller
Distributions are deposited into the Unsecured Creditor Fund in lieu of Royalty
Payments for any period and the actual Royalty Payment for that period is later
determined to be higher than the amount paid to the Unsecured Creditor Fund,
Buyer, subject to any rights of Xxxxx Fargo under the stipulation described in
Section 8.12 below, will pay to the Unsecured Creditor Fund any difference
between the actual Royalty Payment owed and the amount deposited as Seller
Distributions, subject to the maximum cap of $220,000 per month.
(c) Administration and Disbursements.
(i) The Unsecured Creditor Fund shall be administered by a third party
mutually acceptable to Buyer and the Creditors Committee (the "Fund
Trustee"). The Creditors Committee shall propose one or more qualified
candidates for the Fund Trustee, which Buyer may in its sole discretion
accept or reject. If the Creditors Committee and the Buyer cannot agree on
the Fund Trustee, the Bankruptcy Court or the
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Honorable Bankruptcy Judge Xxxxxxx Xxxxxxx shall determine the Fund
Trustee. The Fund Trustee shall not make any distributions from the
Unsecured Creditor Fund, except as provided in Section 1.7(c)(ii) below,
until the Xxxxxx Plan has been confirmed by the Bankruptcy Court, and all
such distributions shall be made in accordance with this Agreement and the
Xxxxxx Plan.
(ii) Following payment of the applicable Royalty Payments and/or
Seller Distributions to the Unsecured Creditor Fund, the Fund Trustee shall
disburse the first two Royalty Payments and/or Seller Distributions from
the Unsecured Creditor Fund to the Seller Professionals to the extent that
the Seller Professionals have unpaid claims with respect to services
provided to the Sellers or the Creditors Committee with respect to the
bankruptcy of the Sellers. Payments shall be first distributed on a pro
rata basis to those Seller Professionals who have not received any payments
as of the Closing Date until all Seller Professionals have received
payments (regardless of service and including (A) payments previously made
by or on behalf of the Sellers from retainers and (B) retainers still held
by such Seller Professionals) for an equal percentage of fees and costs
incurred in connection with the Chapter 11 Case, whether paid from the
Unsecured Creditor Fund or otherwise, and thereafter distributed on a pro
rata basis among the Seller Professionals; and
(iii) Following confirmation of the Xxxxxx Plan and upon receipt of
each Royalty Payment and/or Seller Distribution thereafter, the Fund
Trustee, subject to Section 1.8 and any rights of Xxxxx Fargo under the
stipulation described in Section 8.12 below, shall make disbursements from
the Unsecured Creditor Fund to each Eligible Unsecured Creditor on a pro
rata basis in respect of the amounts set forth in the Unsecured Creditor
Claims Schedule, to the extent such claims become Allowed Claims, in which
each Eligible Unsecured Creditor shall receive a disbursement equal to the
result obtained by multiplying the aggregate dollar amount in the Unsecured
Creditor Fund as of the applicable disbursement date by a fraction, the
numerator of which shall be the aggregate dollar amount of such Eligible
Unsecured Creditor's Allowed Claim and the denominator of which shall be
the aggregate dollar amount of the amounts set forth in the Unsecured
Creditor Claims Schedule. Each such disbursement shall be in full
satisfaction of the Sellers' obligation to such creditor to the extent of
the disbursement received. No Eligible Unsecured Creditor shall receive
payments from the Unsecured Creditor Fund in an amount greater than 100% of
its Allowed Claim.
(d) Acknowledgements; Treatment of Buyer and Zatpack. The Sellers
acknowledge and agree that (i) as set forth in the Unsecured Creditor Claims
Schedule, Xxxxxx is indebted to (A) Buyer in the amount of $2,073,729 and
indebtedness with respect to rights of indemnity, contribution or reimbursement
for actual losses incurred as a result of Buyer's performance of purchasing,
billing and collection services on the Sellers' behalf (but not including the
purchasing, billing and collection costs incurred by Buyer for such services),
including without limitation any amounts paid or attributable to amounts
collected by Buyer on the Sellers' behalf in connection with that certain
preference action styled Global Health Services Inc. x. Xxxxxxx Botanicals,
Inc., d/b/a BI Nutraceuticals, Case No. 01-10663 RA, Adv. No. 03-01219 RA
(Bankr. C.D. Cal.) and any actual out-of-pocket expenditures incurred by Buyer
to satisfy invoices of the Business as of the Closing Date (collectively "Buyer
Debt"), and
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to (B) Zatpack in the amount of $3,000,000 plus unpaid accrued interest through
the Petition Date pursuant that certain 6 1/2 Senior Subordinated Note Due 2003,
dated October 11, 2000, made by Xxxxxx in favor of Zatpack (the "Zatpack Note");
(ii) that Buyer and Zatpack shall participate in the Unsecured Creditor Fund as
Eligible Unsecured Creditors to the full extent of the amounts specified in (i);
and (iii) as of the date of this Agreement, Buyer and ZGNA hold of record
1,204,955 and 988,471 shares of common stock of Xxxxxx, respectively, provided,
that any payments that Zatpack is otherwise entitled to receive from the
Unsecured Creditor Fund shall not be paid to Zatpack but instead distributed
from the Unsecured Creditor Fund in favor of Eligible Unsecured Creditors who
are trade creditors of the Business, on a pro rata basis. As set forth in
Section 8.11, certain of these Eligible Unsecured Creditors shall provide to
Buyer a covenant not to xxx, substantially in the form of Exhibit E, in exchange
for, and as a condition to, the credit of such payments. Such covenants shall be
rendered null and void to the extent and for the reasons set forth in the form
the covenant not to xxx attached as Exhibit E. For avoidance of doubt, nothing
in such covenant shall affect the rights of an Eligible Unsecured Creditor to
participate in any distribution from the Sellers' bankruptcy estates on account
of any unpaid portion of the amount owing to such Eligible Unsecured Creditor
under the Unsecured Creditor Claims Schedule, to the extent such claims become
Allowed Claims. Nothing in this Agreement shall prohibit Buyer, Zatpack and
ZGNA, from ranking pari passu with other unsecured creditors or stockholders, as
the case may be, of the Sellers for all other purposes, including with respect
to any other proceeds or distributions from Sellers' bankruptcy estates. The
Buyer acknowledges that it shall not offset against the Royalty Payments or any
Seller Distributions any indemnification claims or other claims it or any of its
Affiliates may have against the Sellers or any of its Subsidiaries or any other
Person pursuant to this Agreement or otherwise.
(e) Accounting and Audit Rights. As soon as reasonably practicable after
each deposit of the Royalty Payment in the Unsecured Creditor Fund, Buyer shall
deliver to the Sellers and the Creditors Committee an accounting or statement,
prepared by Buyer's independent accountants, showing the calculation of the
Royalty Payment. The Sellers and the Fund Trustee shall have the right to cause
an independent accounting firm of national reputation, mutually acceptable to
each of them, to audit the calculation of the Royalty Payment, and all related
financial information, which right shall be exercisable by them and commenced
once during the period beginning on the Closing Date and ending 45 days after
the payment of the final Royalty Payment. The costs of the independent
accounting firm shall be borne by the Sellers and the Unsecured Creditor Fund;
provided that if it is determined that the aggregate amount of Royalty Payments
due to the Sellers and the Unsecured Creditor Fund was 5% or more than what was
actually paid by Buyer, then Buyer shall pay the costs of the independent
accounting firm. The Buyer shall reasonably cooperate with any such audit
provided that any information made available in connection with the audit shall
be subject to reasonable confidentiality provisions to be negotiated in good
faith among the parties.
1.8. Application of Certain Royalty Payments. In the event that after the
payment of the sixth Royalty Payment Xxxxx Fargo has not received at least $7.7
million in repayment of amounts owed to Xxxxx Fargo by Xxxxxx (not including
proceeds from the sale of the Sellers' real estate assets), Buyer shall pay
directly to Xxxxx Fargo all or a portion of the Royalty Payments (in lieu of
depositing into the Unsecured Creditor Fund) commencing with the seventh Royalty
Payment until June 30, 2004, plus any monthly Royalty Payments in excess of
$220,000 otherwise payable directly to the Sellers, as may be necessary to pay
down $7.7 million of the
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Sellers' obligations to Xxxxx Fargo pursuant to the Xxxxx Fargo Loan Documents.
At such time as Xxxxx Fargo has received $7.7 million (not including proceeds
from the sale of the Sellers' real estate assets), all remaining Royalty
Payments shall be paid to the Unsecured Creditor Fund or to the Sellers, as the
case may be, as provided under Section 1.7.
1.9. Collection Services.
(a) Buyer agrees to perform collection services on behalf of the Sellers
with respect to the Pre-Closing Trade Accounts Receivable, at no cost to the
Sellers from the Closing Date until that date which is 120 days after the
Closing, or such earlier time as all Pre-Closing Accounts Receivable have been
collected or written off as uncollectible by the Sellers (the "Collection
Period"). Upon the termination of the Collection Period, any Pre-Closing Trade
Accounts Receivable not collected by Buyer shall be returned (the "Returned
Accounts Receivable") to the Sellers provided that Buyer has collected
Pre-Closing Trade Accounts Receivable in an amount equal to the amount paid by
Buyer to the Sellers under Section 1.5(iii) above, as may be adjusted pursuant
to Section 1.6. Following such return of any Returned Accounts Receivable, Buyer
shall have no further obligation to the Sellers with respect to the Pre-Closing
Trade Accounts Receivable.
(b) Buyer will conduct its duties in connection with such services in a
manner consistent with its current practices. Buyer shall have the right to
control and determine the method and means of performing said services; the
Sellers shall have the general right of inspection and supervision in order to
secure the satisfactory completion of such services. Buyer's obligation to
provide such services is contingent upon the Sellers providing any information
or instruction, upon Buyer's request and within a reasonable time, that in
Buyer's reasonable business judgment is necessary to enable Buyer to perform
such services. Buyer will not be obligated to perform or cause to be performed
such services in a volume or quantity that substantially exceeds the volumes or
quantities of such services currently performed on behalf of the Sellers. Buyer
makes no warranties, express or implied, as to any service provided hereunder,
except as expressly provided herein. Without limiting any representation or
warranty as expressly provided herein, Buyer specifically disclaims any and all
implied warranties, including without limitation, any implied warranties or
merchantability, fitness for a particular purpose, or title or non-infringement.
(c) Buyer and the Sellers intend Buyer to be an independent contractor in
the performance of the services hereunder. Buyer is not an employee, agent,
partner, or joint venturer of or with any of the Sellers, including for state or
federal tax purposes. All personnel employed, engaged or otherwise furnished by
Buyer in connection with the rendering of such services will be Buyer's
employees, agents or subcontractors, as the case may be, and for no purpose will
be construed to be an employee of any of the Sellers.
(d) Concurrently with the payments to be made by Buyer pursuant to Section
1.5(b), Buyer shall deliver to the Sellers (with a copy to the Creditors
Committee) an accounting or statement, certified by an officer of Buyer, showing
an aging with respect to the Pre-Closing Trade Accounts Receivable and all
collections received by Buyer for the prior thirty days from any party owing a
Pre-Closing Trade Accounts Receivable.
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1.10. Allocation of Purchase Price. The Sellers and Buyer agree to allocate
the aggregate Purchase Price to be paid for the Acquired Assets in accordance
with Schedule 1060 of the Code and corresponding regulations, and as set forth
in Schedule 1.10. The Sellers and Buyer covenant and agree to file and to cause
their respective Affiliates to file, all Tax Returns consistent with such
allocation and that they further covenant and agree not to take any position
before any Authority or in any judicial proceeding that is in any way
inconsistent with such allocation.
1.11. Xxxxxx Plan. The Sellers agree to amend their currently filed Chapter
11 plan of reorganization and disclosure statement to provide for a plan of
reorganization, as soon as reasonably practicable, that contains terms which are
consistent with the plan summary set forth on Exhibit M (the "Xxxxxx Plan").
Buyer, the Creditors Committee, Xxxxx Fargo and the Sellers agree to support the
Xxxxxx Plan as set forth in the plan summary set forth on Exhibit M and to
negotiate in good faith to finalize a final form of the Xxxxxx Plan that will be
acceptable to the Buyer, Zatpack, the Sellers and the Creditors Committee.
1.12. Xxxxxxxx License.
(a) The Sellers hereby grant to Buyer a fully paid-up, royalty-free,
perpetual, worldwide exclusive license for Xxxxxxxx products or extracts within
the dietary supplement industry to develop, make, have made, use, offer for
sale, market, use, distribute, sell, lease, import, export or otherwise exploit,
any Xxxxxxxx Intellectual Property used in or useful for the conduct of the
dietary supplement line of the Xxxxxxxx portion of the Business (the "Xxxxxxxx
License").
(b) The Sellers (or any transferee-licensor of the Xxxxxxxx License) shall
prepare, file, prosecute, and otherwise maintain all of the Xxxxxxxx
Intellectual Property underlying the Xxxxxxxx License and shall notify Buyer in
writing if the Sellers (or any transferee-licensor of the Xxxxxxxx License) wish
to discontinue further filing, prosecution or maintenance of any Xxxxxxxx
Intellectual Property underlying the Xxxxxxxx License (the "Abandoned
Intellectual Property"). Such notice shall be provided at least 60 days prior to
the expiration of any deadline affecting the Sellers' continued rights in such
Abandoned Intellectual Property. Upon notice from the Sellers (or any
transferee-licensor of the Xxxxxxxx License) Buyer shall have the right to have
the Abandoned Intellectual Property assigned to Buyer.
(c) Each party agrees to provide written notice to the other party promptly
after becoming aware of any infringement or alleged infringement of the Xxxxxxxx
Intellectual Property underlying the Xxxxxxxx License.
(d) The Sellers shall have the right to sell, assign or otherwise transfer
any or all of their respective rights, title and interests in or to the Xxxxxxxx
License and/or the Xxxxxxxx Intellectual Property underlying the Xxxxxxxx
License without the prior written consent of Buyer, including any sale,
assignment or transfer by virtue of any liquidation plan, merger, consolidation,
sale of all or substantially all of the assets of any of the Sellers or any
merger, consolidation, or similar transaction in which more than 50% of any of
the Seller's voting securities are transferred, so long as Buyer's rights under
the Xxxxxxxx License continue in effect without any adverse change after such
sale, assignment or other transfer; provided,
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however, that Buyer shall have a right of first refusal with respect to any such
sale, assignment or transfer if the proposed purchaser, transferee or assignee
of the Xxxxxxxx License and/or the Xxxxxxxx Intellectual Property underlying the
Xxxxxxxx License is a competitor of Buyer or its Affiliates. For purposes of
this Section 1.12(d), Naturex and RFI shall not be deemed to be competitors of
Buyer.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
-----------------------------------------
Each Seller jointly and severally represents and warrants to Buyer as
follows:
2.1. Organization and Good Standing. Each of the Sellers is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and subject to compliance with applicable provisions of the
Bankruptcy Code, with corporate power and authority to carry on its business as
it is now being conducted and to own, operate and lease its properties and
assets. Except as set forth on Schedule 2.1, each of the Sellers is duly
qualified or licensed to do business and is in corporate good standing in every
jurisdiction in which the conduct of their business or the ownership or lease of
their properties, require it to be so qualified or licensed and where the
failure to be qualified or licensed will not have a Material Adverse Effect.
2.2. Power and Authority. Each of the Sellers, subject to the entry of the
Sales Procedures Order, the enforceability of which is not stayed, has full
power and authority to enter into this Agreement and the agreements contemplated
hereby to which it is a party and, subject to the entry of the Asset Sale Order,
the enforceability of which is not stayed, to consummate the transactions
contemplated hereby and thereby. All corporate proceedings and corporate actions
on the part of the Sellers required by law and by their charter documents and
bylaws to authorize the execution, delivery and performance of this Agreement
and all other agreements and transactions contemplated hereby have been duly
taken, and no other corporate proceedings on the part of the Sellers are
necessary to authorize this Agreement, the agreements contemplated hereby and
the transactions contemplated hereby and thereby. Subject to the entry of the
Asset Sale Order, the enforceability of which is not stayed, this Agreement and
all other agreements contemplated hereby to be entered into by the Sellers each
constitutes a legal, valid and binding obligation of the Sellers, enforceable
against each of them in accordance with its terms. Subject to the entry of the
Sales Procedure Order, the enforceability of which is not stayed, the Sellers
have full power and authority to pay to Buyer the Break-Up Fee pursuant to the
Sales Procedures Provisions and Section 11.3 hereof without further Order of the
Bankruptcy Court.
2.3. No Violation; Certain Restrictive Contracts.
(a) Except as set forth in Schedule 2.3(a) hereto, the execution, delivery
and performance by the Sellers of this Agreement, and all other agreements
contemplated hereby, and the fulfillment of and compliance with the respective
terms hereof and thereof by the Sellers, do not and will not, conflict with or
result in a breach of the terms, conditions or provisions of, constitute a
default or event of default under (whether with or without due notice, the
passage of time or both), result in the creation of any Lien, Claim or Order
upon the Acquired Assets or
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Assumed Liabilities pursuant to, give any third party the right to modify,
terminate or accelerate any obligation under, result in a violation of, or
require any authorization, consent, approval, exemption or other action by,
notice to, or filing with any third party or Authority pursuant to, (i) the
charters or bylaws of any of the Sellers, (ii) any Permit, (iii) any applicable
Regulation or Order, or (iv) any Contract, to which any of the Sellers, the
Acquired Assets, the Assumed Liabilities or the Business is subject; provided,
however, that with respect to each of clauses (ii) and (iv), except as would not
constitute a Material Adverse Effect. The Sellers have complied in all material
respects with all applicable Regulations and Orders in connection with the
execution, delivery and performance of this Agreement, the agreements
contemplated hereby, and the transactions contemplated hereby and thereby.
(b) Except as set forth in Schedule 2.3(b) hereto, none of the Sellers is a
party to any written or oral: (i) Contract relating to the mortgaging, pledging
or otherwise placing a Lien on any of the Acquired Assets (except for the Xxxxx
Fargo Loan Documents and the cash collateral stipulation and cash collateral
orders approved by the Bankruptcy Court); (ii) Contract pursuant to which Buyer
will, upon the consummation of the transactions contemplated by this Agreement
and by the agreements contemplated hereby, become the lessor of, or permits any
third party to hold or operate, any property, real or personal, owned or
controlled by the Sellers related to the Acquired Assets or Business; or (iii)
Contract or non-competition provision in any Contract which, upon the
consummation of the transactions contemplated by this Agreement and by the
agreements contemplated hereby, would prohibit Buyer from freely engaging in any
aspect of the Business or competing anywhere in the world.
2.4. Absence of Certain Changes. Except as set forth on Schedule 2.4, since
December 31, 2002, other than the commencement of the Chapter 11 Case, the
Business has not experienced any (a) developments or changes prior to the date
of this Agreement which would have a Material Adverse Effect; (b) entry into any
material Contract not in the ordinary course of business; (c) capital
expenditure or commitment therefore, except in the ordinary course of business
consistent with past practice and, in the aggregate, in excess of $100,000; (d)
change in accounting methods or principles, other than those arising from
changes in GAAP, any write-down, write up or revaluation of any of the Acquired
Assets or Assumed Liabilities except depreciation accounted for in the ordinary
course of business and write-downs of inventory which reflect the lower of cost
or market and which are in the ordinary course of business and in accordance
with GAAP; (e) sale, assignment, transfer, lease, license or otherwise placement
of a Lien (except for Permitted Liens) on any of the Acquired Assets, including
without limitation, the Seller Intellectual Property and the Xxxxxxxx License,
except in the ordinary course of business consistent with past practice, or
cancellation or waiver of any material Indebtedness or Claims; (f) disclosure of
any confidential information to any Person or abandoned or permitted to lapse
any of Seller Intellectual Property or any of the Xxxxxxxx Intellectual Property
underlying the Xxxxxxxx License; or (g) damage, destruction, loss (whether or
not covered by insurance) which has had or is reasonably likely to have a
Material Adverse Effect; or (h) agreement, whether orally or in writing, to do
any of the foregoing.
2.5. Purchase Orders.
(a) Schedule 2.5(a) hereto sets forth a list of all customer purchase
orders for the products or services of the Business with terms or obligations
reasonably expected to extend
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beyond the Closing that shall be assumed by Buyer as part of the Acquired Assets
(the "Assigned Purchase Orders"). To the Knowledge of the Sellers, each Assigned
Purchase Order is a legal, valid and binding agreement of the applicable Seller
party to such agreement, enforceable in accordance with its terms and is in full
force and effect. The Sellers have delivered to Buyer, copies of which are true
and complete in all material respects, of all the Assigned Purchase Orders in
their possession (and, in the case of oral agreements, if any, written summaries
thereof).
(b) Except as set forth on Schedule 2.5(b) hereto, to the Knowledge of the
Sellers, each Seller party to an Assigned Purchase Order has performed, in all
material respects, all obligations required to be performed by it and is not in
default in any material respect under or in material breach of nor in receipt of
any Claim of material default or material breach under any Assigned Purchase
Order; to the Knowledge of the Sellers, no event has occurred which with the
passage of time or the giving of notice or both would result in a material
default, breach or event of material non-compliance under any Assigned Purchase
Order; such Seller does not have any present expectation or intention of not
fully performing all such obligations; and such Seller is not aware of any
material breach or anticipated material breach by the other Persons with respect
to any such Assigned Purchase Order.
2.6. Title.
(a) Except as set forth in Schedule 2.6 hereto, the Sellers own all right,
title and interest in and to, and have good, valid and marketable title to, the
Acquired Assets, free and clear of any Indebtedness and Liens, except Permitted
Liens. At Closing and subject to receipt of Bankruptcy Court approval, the
Sellers shall convey to Buyer good and marketable title to the Acquired Assets,
free and clear of any Indebtedness and Liens.
(b) The Acquired Assets constitute all of the assets necessary for the
conduct of the Business and do not constitute any assets not related to the
Business.
(c) Except as set forth on Schedule 2.6, no Person, other than the Sellers,
has any right to the use or possession of any of the Acquired Assets.
2.7. Litigation.
(a) Schedule 2.7(a) sets forth a list, which is complete and accurate in
all material respects, of all Claims and Orders involving the Business for which
final and non-appealable resolutions of such matters have not been reached
and/or which matters have not been fully completed and satisfied. Except as set
forth in Schedule 2.7(a) , there is no Claim or Order pending or, to the
Knowledge of the Sellers, threatened against the Business or that is reasonably
likely to have a Material Adverse Effect, nor to the Knowledge of the Sellers,
is there any reasonable basis therefor. Except as set forth on Schedule 2.7(a),
the Sellers are fully insured with respect to each of the matters set forth on
Schedule 2.7(a) and the Sellers have not received any opinion or a memorandum or
advice from legal counsel to the effect that it is exposed, from a legal
standpoint, to any liability or obligations which are reasonably likely to have
a Material Adverse Effect.
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(b) To the Knowledge of the Sellers (after reasonable inquiry of the
Sellers' counsel, officers and directors), Schedule 2.7(b) sets forth a list,
which is complete and accurate, of all Persons who have contacted, orally or in
writing, any of the Sellers, the Sellers' counsel, or any officer or director of
any of the Sellers, regarding potential stockholder Claims against any of the
Sellers, any of their respective officers or directors or Affiliates, or Buyer
or any of its Affiliates, and a description of the nature of such potential
Claim.
2.8. Tax Matters. Except as set forth in Schedule 2.8, the Sellers have
timely filed or caused to be timely filed with the appropriate taxing
authorities all Tax Returns that are required to be filed by, or with respect
to, the Business or the Acquired Assets on or prior to the Closing Date. There
are no charges, liens, encumbrances or adverse claims for Taxes upon any of the
Acquired Assets.
2.9. Compliance with Law. Except as set forth on Schedule 2.9, the
Business, including its operations, practices, processes, products and services
and all other aspects of the Business, has been operated in compliance, in all
material respects, with all applicable Regulations and Orders. There are no
Claims pending, or to the Knowledge of the Sellers, threatened, nor has any of
the Sellers received any notice, written or oral, regarding any violations of
any Regulations or Orders enforced by any Authority which, if decided adversely
to the Sellers, would be reasonably likely to have a Material Adverse Effect.
2.10. Intellectual Property.
(a) Schedule 2.10(a) sets forth a complete and accurate list of all: (1)
Intellectual Property used, held for use or proposed to be used in the Business;
(2) oral and written licenses, sublicenses and other agreements to use, access
or otherwise related to Seller Intellectual Property and all other Intellectual
Property used, held for use or proposed to be used in the Business; and (3) all
worldwide applications and registrations for Seller Registered Intellectual
Property. There is no other Intellectual Property owned by any of the Sellers or
used by any of the Sellers in the Business other than as set forth on Schedule
2.10(a).
(b) Except as set forth on Schedule 2.10(b), each Seller owns and possesses
full, legally enforceable rights to use, sell, transfer, and assign all Seller
Intellectual Property, free and clear of conditions, adverse claims or other
restrictions or any requirement of any past, present or future royalty payments.
(c) Except as set forth on Schedule 2.10(c), there is not pending in any
forum (or, to the knowledge of any of the Sellers, threatened) any assertion or
claim: (i) challenging the validity, enforceability, ownership, scope or
effectiveness of, or contesting such Seller's rights with respect to, any Seller
Intellectual Property or any Xxxxxxxx Intellectual Property underlying the
Xxxxxxxx License, (ii) challenging such Seller's rights to use any Seller
Intellectual Property or any Xxxxxxxx Intellectual Property underlying the
Xxxxxxxx License or the enforceability of any agreements or arrangements
relating thereto, or (iii) asserting that such Seller's use or exploitation of
any Seller Intellectual Property or any Xxxxxxxx Intellectual Property
underlying the Xxxxxxxx License infringes upon, misappropriates, violates or
conflicts in any way with the rights (including, without limitation, rights in
Seller Intellectual Property, rights of privacy, rights of publicity and rights
in personal and other data) of any person; and, in each case, to the
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Knowledge of the Sellers, there are no grounds for any such assertion or claim.
The Sellers are not and have not been a party to any suit, action or proceeding
which involves a claim of infringement, breach or misappropriation of any Seller
Intellectual Property or any Xxxxxxxx Intellectual Property underlying the
Xxxxxxxx License of any person and have not brought any action, suit or
proceeding against any person for infringement or misappropriation of, or breach
of any license or agreement involving, any Seller Intellectual Property.
(d) To the Knowledge of the Sellers, there are no unauthorized uses,
disclosures, infringements, or misappropriations by any person of any Seller
Intellectual Property or any Xxxxxxxx Intellectual Property underlying the
Xxxxxxxx License and the Sellers have not entered into (i) any agreement to
indemnify any other person against any charge of infringement, breach or
misappropriation of any person's rights in Seller Intellectual Property or any
Xxxxxxxx Intellectual Property underlying the Xxxxxxxx License, or (ii) any
agreement granting any person the right to bring infringement or
misappropriation actions with respect to, or otherwise to enforce rights with
respect to, any Seller Intellectual Property or any Xxxxxxxx Intellectual
Property underlying the Xxxxxxxx License.
2.11. Warranties. Schedule 2.11 hereto sets forth a list, which is complete
and accurate, of all material existing, and, to the Knowledge of the Sellers,
potential Claims under or pursuant to any warranty or guarantee, whether
expressed or implied, on products or services related to the Business sold prior
to the Closing (other than warranty or product replacement claims in the
ordinary course of business not material in amount or significance). Schedule
2.11 identifies the nature of the warranty Claim, the status of the Claim and
the approximate dollar value of the Claim. To the Knowledge of the Sellers,
there is no reason to expect an increase in warranty Claims in the future based
upon the Business as presently conducted. All of the products sold and services
rendered by the Business (whether directly or indirectly through distributors,
marketers, independent contractors, or the like) have been performed in
conformity, in all material respects, with all expressed or implied warranties
and with all applicable contractual commitments, and, except as set forth on
Schedule 2.11, none of the Sellers has any liability for replacement or for
other damages relating to or arising from any such products or services.
2.12. Products Liability. Except as set forth in Schedule 2.12 hereto, (a)
there has been no material Claim against or involving any of the Sellers or
concerning any Acquired Asset manufactured, shipped, sold or delivered by or on
behalf of the Business relating to or resulting from an alleged defect in
design, manufacturing, materials, process, or workmanship or any alleged failure
to warn, or any alleged breach of implied warranties or representations (other
than warranty or product replacement claims in the ordinary course of business
not material in amount or significance), and, to the Knowledge of the Sellers,
none has been threatened nor is there any valid basis for any such Claim; (b)
there has not been any Occurrence; and (c) there has not been any Recall
conducted with respect to any product manufactured (or to be manufactured),
shipped, sold or delivered by or on behalf of the Business, or any notice,
whether oral or written, received by any of the Sellers from any Authority of
any investigation or consideration of or decision made by any Person or
Authority concerning whether to undertake or not undertake, any Recall (other
than warranty or product replacement claims in the ordinary course of business
not material in amount or significance). No Seller has received notice, whether
oral or written, from any Authority to the effect that any of the manufacturing
standards applied, testing procedures used, and product specifications and
labels disclosed to customers of the Business
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have not complied with all requirements established by any applicable Regulation
or Order of any Authority.
2.13. Insurance. Schedule 2.13 contains a list, which is complete and
accurate, of the insurance policies maintained by the Sellers in connection with
the Business. The Sellers currently maintain sufficient insurance coverage to
protect the Business and the full replacement value of the Acquired Assets. All
of such policies are in full force and effect and the Sellers are not in
material default of any provision thereof.
2.14. Accounts Receivable. Schedule 2.14(a) sets forth a listing showing
aging by customer of the Accounts Receivable that are outstanding as of the date
hereof. The Accounts Receivable reflected on the books and records of the
Business on the date hereof are, to the Knowledge of the Sellers, collectible
except to the extent reserved against thereon (which reserves have been
determined based upon actual prior experience and GAAP and are consistent with
prior practices). Except as set forth in Schedule 2.14(b), all such Accounts
Receivable (including any deferred billing that is not yet invoiced) are valid,
genuine and subsisting, arise out of bona fide transactions, and are not subject
to defenses, deductions, set-offs, counterclaims or any allowances or credits on
account of recalls, rejection or return of product (including for spoiled,
damaged and/or outmoded goods). The Sellers have not accelerated or delayed
collection of Accounts Receivable in advance of or beyond their regular due
dates or the dates when the same would otherwise have been collected other than
in the ordinary course of business. Accounts Receivable with extended payment
terms providing for payments over more than 90 days are carried at no greater
than present value.
2.15. Inventories. Except as set forth in Schedule 2.15, to the Knowledge
of the Sellers, the Inventory (i) is usable and saleable in the ordinary course
of business and does not include any items that are obsolete or discounted,
except as adequately provided for in the Sellers' reserve for distressed or
excess Inventory, (ii) is of consistent and merchantable quality, is fit for its
intended purposes and, with respect to the finished goods Inventory, has been
produced or manufactured in accordance with all applicable laws, orders and
regulations, and (iii) is not being held by any Person on a consignment basis or
is located off of the owned or leased properties of the Business. Except as set
forth in Schedule 2.15 hereto, none of the Sellers is aware of any material
adverse condition affecting the supply of materials available to the Business.
2.16. Brokerage. There are no Claims for brokerage commissions, investment
banking or finders' fees or expenses or similar compensation in connection with
the transactions contemplated by this Agreement based on any arrangement or
Contract binding upon any of the Sellers, the Acquired Assets or the Business.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to each of the Sellers as follows:
3.1. Organization and Good Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation with corporate
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power and authority to carry on its business as it is now being conducted and to
own, operate and lease its properties and assets. Buyer is duly qualified or
licensed to do business and is in corporate good standing in every jurisdiction
in which the conduct of its business or the ownership or lease of its
properties, require it to be so qualified or licensed and where the failure to
be qualified or licensed will not have a material adverse effect.
3.2. Power and Authority. Buyer has full power and authority to enter into
this Agreement and the agreements contemplated hereby to which it is a party and
to consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and all other agreements and
transactions contemplated hereby have been duly authorized by the Boards of
Directors of Buyer and no other corporate proceedings on its part are necessary
to authorize this Agreement and the agreements contemplated hereby and the
transactions contemplated hereby and thereby. This Agreement and all other
agreements contemplated hereby to be entered into by Buyer each constitutes the
legal, valid and binding obligation of Buyer enforceable against it in
accordance with its terms.
3.3. No Violation. The execution, delivery and performance by Buyer of this
Agreement, and all other agreements contemplated hereby, and the fulfillment of
and compliance with the respective terms hereof and thereof by Buyer, do not and
will not, conflict with or result in a breach of the terms, conditions or
provisions of, constitute a default or event of default under (whether with or
without due notice, the passage of time or both), result in a violation of, or
require any authorization, consent, approval, exemption or other action by,
notice to, or filing with any third party or Authority pursuant to, (i) the
charter or bylaws of Buyer, (ii) any Permit, (iii) any applicable Regulation or
Order, or (iv) any Contract, to which Buyer or its properties are subject;
provided, however, that with respect to each of clauses (ii) and (iv), except as
would not have a material adverse effect on the Buyer or its business. Buyer has
complied in all material respects with all applicable Regulations and Orders in
connection with its execution, delivery and performance of this Agreement, the
agreements contemplated hereby, and the transactions contemplated hereby and
thereby.
3.4. Brokerage. There are no Claims for brokerage commissions, investment
banking or finders' fees or expenses or similar compensation in connection with
the transactions contemplated by this Agreement based on any arrangement or
Contract binding upon Buyer.
3.5. Financial Capacity. Subject to receipt of financing on terms specified
in the commitment letter addressed to the Buyer from Xxxxx Fargo (the "Xxxxx
Fargo Commitment Letter"), a true and accurate copy of which is attached as
Exhibit J hereto, Buyer will have in hand sufficient cash necessary to
consummate the transactions contemplated by this Agreement.
ARTICLE IV
COVENANTS OF THE SELLERS
------------------------
4.1. Bankruptcy Court Approval. Within four business days of the execution
of this Agreement (the "Sale Motion Date"), the Sellers shall file a motion or
motions (the "Sale Motion") in form and substance acceptable to Buyer, with the
Bankruptcy Court pursuant to Sections 105(a), 363 and 365 of the Bankruptcy Code
and Bankruptcy Rule 9019 (i) seeking
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entry of an order approving, among other things, the Sales Procedures
Provisions, (ii) scheduling a hearing to approve this Agreement; and (iii)
seeking entry of the Asset Sale Order, as soon as possible but no later than
December 1, 2003 or forty-one (41) days after the Sale Motion Date.
(a) The Sellers shall use their reasonable best efforts to cause the
Bankruptcy Court to enter the Asset Sale Order.
(b) The Sellers agree to use their reasonable best efforts to obtain
Bankruptcy Court approval of the Asset Sale Order without any stay,
modification, reversal or amendment adverse or unacceptable to Buyer. If any
part of the Asset Sale Order or any other order of the Bankruptcy Court relating
to this Agreement shall be appealed by any Person (or a petition for certiorari
or motion for rehearing, reargument or stay shall be filed with respect
thereto), each of the Sellers agrees to, and to cause each of its Affiliates to,
take all steps, and use their reasonable best efforts, to defend against such
appeal, petition or motion and to obtain an expedited resolution of such appeal.
(c) The Sellers shall use their reasonable best efforts to cause the
Bankruptcy Court to enter an order finding that any derivative stockholder
Claims constitute the property of the bankruptcy estates of the Sellers.
(d) At Closing, the Sellers shall deliver an executed stipulation (the
"Dismissal Stipulation") in a form to be approved by the Bankruptcy Court and
approved by Buyer dismissing with prejudice the adversary proceeding pending in
the Bankruptcy Case and styled Botanicals International Extracts, Inc., et al.
x. Xxxxxxx Botanicals, Inc., Adv. No. 03-01655 (the "Substantive Consolidation
Claim"), and all underlying alleged claims and causes of action against Buyer
and its Affiliates. The Sellers agree to extend the stay in respect of the
Substantive Consolidation Claim, and all underlying alleged claims and causes of
action against Buyer and its Affiliates, from the date hereof until the earlier
of the termination of this Agreement by any party or the first business day
after the Bankruptcy Court dismisses the Substantive Consolidation Claim and
such order becomes a Final Order.
(e) Consultation; Notification; No Conflict. Each of the Sellers shall, and
shall cause each of its Subsidiaries to, (a) consult with Buyer, prior to its
submission to the Bankruptcy Court, on the form and substance of all court
submissions by any of the Sellers relating to this Agreement, and (b)
simultaneously deliver, by overnight mail or same day courier, to Buyer copies
of any and all pleadings, motions, notices, statements, schedules, applications,
reports, proposed orders and other documents filed by Sellers or related to this
Agreement, including, but not limited to, any objections to the approval of this
Agreement, or the transfer, assumption or assignment of any Acquired Assets.
Each of the Sellers further covenants and agrees that, to the extent this
Agreement and the transactions contemplated hereby are approved by the
Bankruptcy Court, the terms of any plan of reorganization or liquidation
submitted by the Sellers or their Affiliates to the Bankruptcy Court for
confirmation shall not conflict with, supersede, abrogate, nullify, modify or
restrict the terms of this Agreement and the rights of Buyer or its Affiliates
hereunder, or in any way prevent or interfere with the consummation or
performance of the transactions contemplated hereby, including, without
limitation, any transaction that is contemplated by or approved pursuant to any
Order.
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4.2. Operation of Business. Except as contemplated by this Agreement and to
the extent not inconsistent with the Bankruptcy Code, and subject to any order
or direction of the Bankruptcy Court, during the period from the date of this
Agreement to the Closing Date or the termination of this Agreement, whichever is
earlier, each of the Sellers shall conduct (and shall cause their Affiliates to
conduct) the Business in the ordinary course of business consistent with past
practice, and in compliance with applicable Regulations, and to the extent
consistent therewith so as to preserve the value and integrity of the Business
and the Acquired Assets, maintain in full force and effect the existence of all
Seller Intellectual Property and take any and all actions necessary or
reasonably useful to protect the Seller Intellectual Property, maintain or cause
to be maintained in place insurance on the Business and the Acquired Assets (in
amounts and types consistent with past practice), and use its best efforts to
preserve the goodwill and organization of the Business and its relationships
with customers, suppliers and others having business dealings with it. Without
limiting the generality of the foregoing, prior to the Closing Date or the
termination of this Agreement, whichever is earlier, and subject to the
requirements of the Bankruptcy Code, and any Orders entered by the Bankruptcy
Court, each of the Sellers will not:
(a) Mortgage or pledge any of the Acquired Assets or subject any Acquired
Assets to any Lien other than Permitted Liens;
(b) make any demands for the acceleration of payment of any accounts
receivable of the Business, except in the ordinary course of business consistent
with past practice;
(c) take or omit to take any action that would require disclosure under
Article II, or that would otherwise result in a breach of any of the
representations, warranties or covenants made by Seller in this Agreement or in
any of the agreements contemplated hereby;
(d) take any action or omit to take any action which act or omission would
reasonably be anticipated to have a Material Adverse Effect;
(e) unless agreed to by Buyer, cancel, release, waive or compromise any
debt, Claim or right in its favor having a value in excess of $100,000 in the
aggregate, other than in connection with returns of inventory for credit or
replacement in the ordinary cause of business;
(f) enter into any commitment or agreement, oral or written, to take any of
the foregoing actions.
From the date of this Agreement to the Closing Date or the termination of
this Agreement, whichever is earlier, the Sellers shall promptly inform Buyer
about any material matters concerning the Acquired Assets or the Business,
including any matter that the Sellers reasonably believe would constitute a
Material Adverse Effect, cause a material breach of any of the Sellers'
representations, warranties or covenants under this Agreement, or cause the
Sellers to be unable to fulfill the conditions to closing set forth in Article
IX. Buyer shall have five (5) business days from the earlier of (i) receipt of
written notice from the Sellers completely and accurately describing such
matters or (ii) Buyer's Knowledge of such matters to determine whether to
terminate this Agreement or proceed to closing. If Buyer chooses to terminate,
Buyer
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shall have no further liability to the Sellers under this Agreement and Sellers
shall have no further obligations to Buyer under this Agreement. If Buyer
chooses to proceed to closing, Buyer shall be deemed to have waived its right
not to close or to indemnification with respect to such matters.
From the date of this Agreement to the Closing Date, or the termination of
this Agreement, whichever is earlier, the Sellers shall have three (3) business
days after written presentation of a prospective order or inventory purchase
request to determine whether to fulfill the order or request. If the Sellers do
not notify Buyer to fill any such order or request on behalf of the Sellers
within such period, the Sellers hereby grant a waiver of the Buyer's non-compete
covenant to permit Buyer to fill any such order or request on Buyer's behalf and
for Buyer's account, provided that Buyer shall divide equally with the Sellers
the net margin received by Buyer with respect to any such orders or requests
filled prior to the Closing Date. The Sellers' contact person with respect to
such matters shall be Xxxxxx Xxxxxx or, in the absence of Xxxxxx Xxxxxx, Xxxxxxx
Xxxxxxxxx. Net margin shall mean the sales price to the customer less any cost
of goods sold, financing and freight costs, and any cash discounts or rebates
taken.
4.3. Full Access and Disclosure. The Sellers shall afford to Buyer and its
counsel, accountants, agents and other authorized representatives reasonable
access on reasonable notice during business hours to the Sellers' facilities,
properties, books and records in order that Buyer may have full opportunity to
make such reasonable investigations as it shall desire to make of the affairs of
the Business. Each of the Sellers shall cause its respective officers,
employees, counsel and auditors to furnish such additional financial and
operating data and other information as Buyer shall from time to time reasonably
request including, without limitation, any internal control recommendations made
by its independent auditors in connection with any audit of any of the Sellers
or the Business.
4.4. Non-Competition.
(a) During the Restricted Period, each of the Sellers and each of their
respective Affiliates (other than any Affiliate who is a director, officer, or
employee of the Sellers or its Subsidiaries or is an individual or which is
Xxxxxxx Xxxxxxxxx Associates, Inc. or Xxxxxx Xxxxxx Associates), covenants and
agrees not to, directly or indirectly, alone or as a partner, agent, member or
stockholder of any Person, engage in any activity in the Restricted Area
relating to the development, manufacture, marketing, distribution, or sale of
botanical extracts, dietary and nutritional supplements, nutraceuticals and
vitamins, which is directly or indirectly in competition with or intended to
compete with the products or services of the Business, or which is directly or
indirectly detrimental to the Business. The restrictions set forth in the
previous sentence shall not apply to the current activities of the Sellers
conducted at Xxxxxx Park in Colorado as listed on Schedule 4.4, provided that
such activities shall not include marketing, distribution or sales of
competitive products. The "Restricted Period" shall mean five (5) years after
the Closing. The "Restricted Area" shall mean the (i) the counties of Los
Angeles and Orange, (ii) the state of California, (iii) the United States of
America, and (iv) throughout the world (collectively, the "Locations"). Each of
the Sellers acknowledges that the Business has been conducted by the Sellers
throughout and outside the United States and the prohibited activities may be
engaged in effectively from any location. The parties intend that the covenants
in this Section 4.4(a) will be construed as a series of separate covenants, each
consisting of the
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covenants in Section 4.4(a) for each of the Locations. Except for the Locations,
all such separate covenants will be deemed identical.
(b) Each of the Sellers recognizes and agrees that compliance with the
covenants contained in this Section 4.4 is in furtherance of the sale of the
Acquired Assets to Buyer, necessary to effectively protect the value of any
goodwill of the Business so sold, and is reasonable for such purposes, and that
a breach by any of the Sellers of any of the covenants set forth in this Section
4.4 could cause irreparable harm to Buyer, that Buyer's remedies at law in the
event of such breach would be inadequate, and that, accordingly, in the event of
such breach, a restraining order or injunction or both may be issued against
such Seller, as the case may be, without the requirement that Buyer post a bond,
in addition to any other rights and remedies which are available to Buyer.
(c) If any particular provision of this Section 4.4 is adjudicated to be
invalid or unenforceable, (i) each of the parties agrees that if such provisions
would be valid or enforceable if some part or parts of them were deleted or the
period or area of application reduced, the applicable restriction will apply
with the modifications necessary to make it valid and enforceable, and (ii) such
adjudication will apply only with respect to the operation of this Agreement in
the particular jurisdiction in which the adjudication is made and the
unenforceable covenant will be eliminated from this Agreement to the extent
necessary to permit the remaining separate covenants (or portions of them) to be
enforced.
(d) The covenants and restrictions set forth in this Section 4.4 shall bind
only the Sellers and shall not, and shall not be deemed to, bind any acquirer or
purchaser of any assets of Xxxxxx or BIE or of HTS or ZetaPharm. Buyer expressly
agrees that the Sellers, HTS and ZetaPharm can sell its assets free and clear of
the covenants, provisions and restrictions of this Section 4.4. The parties
acknowledge and agree that HTS shall not be deemed to be in violation of the
covenants and restrictions set forth in this Section 4.4 if HTS, in connection
with the sale of its assets, receives equity interests in connection with the
sale, provided that HTS does not hold, of record or beneficially, 20% or more of
the equity or voting interests of such entity and HTS does not otherwise
control, directly or indirectly, such entity.
(e) Each of HTS and Zetapharm shall execute and deliver to Buyer at Closing
the Non-Competition Agreement in the form of Exhibit F that is substantially
similar to the provisions of this Section 4.4.
4.5. Confidentiality. After the Closing Date, each of the Sellers agrees
that it will keep confidential and shall use its best efforts to cause its
Subsidiaries, and each of its and their officers, directors, employees and
agents to keep confidential all of the proprietary information that is conveyed
to Buyer as part of the Acquired Assets or is assigned as part of the Assumed
Liabilities, including without limitation, for purposes of this Section 4.5,
information about the Business' business plans and strategies, marketing ideas
and concepts, present and future product plans, pricing, volume estimates,
financial data, product enhancement information, business plans, marketing plans
and information, sales strategies, customer information, development plans,
specifications, customer requirements, or other technical and business
information, in each case, as such information relates to the Acquired Assets or
Assumed Liabilities.
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4.6. Fulfillment of Conditions Precedent. Each of the Sellers shall use its
reasonable best efforts to obtain at its expense all such waivers, Permits,
consents, approvals, Orders or other authorizations from third Persons and
Authorities, including without limitation from the Bankruptcy Court, and to do
all things as may be necessary or desirable in connection with transactions
contemplated by this Agreement.
4.7. Deliveries After Closing. From time to time after the Closing, at
Buyer's request and without further consideration from Buyer, the Sellers shall
and shall cause any of their respective Subsidiaries, as applicable, to execute
and deliver such other instruments of conveyance and transfer and take such
other action as Buyer reasonably may require to carry out the purposes and
intent of this Agreement, including to convey, transfer to and vest in Buyer and
to put Buyer in possession of any rights or property to be sold, conveyed,
transferred and delivered hereunder. The Sellers further agree to remit any
revenues or other dollar amounts, notices or documents received by any of the
Sellers or their Subsidiaries in connection with the Assigned Purchase Orders or
other Acquired Assets to Buyer within five (5) business days of the receipt
thereof.
4.8. Retention of Books and Records. Until the earlier of (i) all
applicable Tax statutes of limitation (including periods of waiver) have
expired, or (ii) the dissolution of the Sellers pursuant to the Xxxxxx Plan or
otherwise, each of the Sellers and each of their Subsidiaries shall, without
charge to Buyer, (a) retain and, as Buyer may reasonably request, permit Buyer
and its agents to inspect and copy, all original books, records and other
documents and all electronically archived data not deliverable to Buyer at
Closing related to the Acquired Assets and the Business and (b) make reasonably
available to Buyer, the officers, directors, employees and agents of the Sellers
and their respective Subsidiaries as long as they serve in such capacities at
the time of such request. After the expiration of such period, the Sellers shall
not destroy or dispose of or allow the destruction of or disposition of such
books and records without first having offered in writing to deliver such books
and records to Buyer. If Buyer fails to request such books and records within
thirty (30) days after receipt of the notice described in the preceding
sentence, each of the Sellers may dispose of the books and records.
4.9. Notice of Transactions. Notice of this Agreement and notice of the
Sale Motion and Asset Sale Order and the hearings therefore shall be duly and
properly given by the Sellers by publication notice and by actual notice to all
known creditors and known parties in interest in the Chapter 11 Case, including,
but not limited to, any known parties holding consensual or nonconsensual Liens
on the Acquired Assets, the non-Seller parties to the Assigned Purchase Orders
being assumed pursuant to this Agreement, other customers of the Business,
stockholders, employees, officers, directors, agents and applicable taxing and
governmental authorities.
4.10. Claims Against Buyer. Each of the Sellers covenants and agrees not
to, directly or indirectly, encourage, incite, or cause any stockholder,
officer, director, employee, or agent of any of the Sellers or their
Subsidiaries to make a Claim against Buyer or any of its Affiliates, except that
the Sellers on their behalf and on behalf of their respective bankruptcy estates
may pursue claims or cause of actions of the Sellers under this Agreement or any
agreements entered into in connection with this Agreement.
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ARTICLE V
TERMINATION AND RELEASES
------------------------
5.1. Non-Released Agreements. The releases set forth in this Article V
shall apply to any and all obligations or claims under all other agreements or
arrangements entered into between any of the Sellers or any of their Affiliates,
on the one hand, and Buyer and any of its Affiliates, on the other, before the
date of this Agreement (collectively, the "Released Agreements"); provided,
however, that the Released Agreements shall not include (a) this Agreement and
agreements entered into pursuant to this Agreement, (b) the Zatpack Note, (c)
that certain Agreement Re: Purchase of ZetaPharm Inventory between Zeta
Pharmaceuticals, Inc., and ZetaPharm, Inc., and (d) the Buyer Debt ((a), (b),
(c), and (d) collectively, the "Non-Released Agreements").
5.2. The Sellers' Releases. Except for those obligations created by or
arising out of the Non-Released Agreements, effective as of the Closing Date and
provided that Buyer is the purchaser of the Acquired Assets, for valuable
consideration, including the terms and conditions of this Agreement, the
sufficiency of which is hereby acknowledged, each of the Sellers, on behalf of
itself and its respective past, present, and future Affiliates, successors,
predecessors, assignees, transferees, executors, administrators, trustees,
members, directors, officers, shareholders, partners, principals, agents,
employees, servants, attorneys and accountants (hereinafter "Seller Releasors")
do hereby release and forever discharge Buyer and Buyer's past, present, and
future Affiliates, successors, predecessors, assignees, transferors, executors,
administrators, trustees, members, directors, officers, shareholders, partners,
principals, agents, employees, servants, attorneys and accountants (hereinafter
"Buyer Releasees"), of and from any and all past, present, and future claims,
obligations, Unknown Claims, demands, and causes of action, including, without
limitation, (i) claims alleging substantive consolidation, preference, breach of
contract, breach of fiduciary duty, or defenses to the payment of debt, or (ii)
claims arising from, related to, or in any way connected with their
relationships (whether contractual, fiduciary or otherwise) with any of the
Buyer Releasees, or any of the Released Agreements, which each owns or holds or
has at any time heretofore owned or held as against each of the Buyer Releasees
as of the Closing. Without limiting the foregoing, each of the Sellers
acknowledges that the following entities are included among the Buyer Releasees:
ZGNA, Zatpack, Interpacific Holdings Company, and any other company or entity
that was, is, or may become affiliated with these companies, and each of their
respective directors, officers and employees.
5.3. Buyer's Releases. Except for those obligations created by or arising
out of the Non-Released Agreements, effective as of the Closing Date and
provided that Buyer is the purchaser of the Acquired Assets, for valuable
consideration, including the terms and conditions of this Agreement, the
sufficiency of which is hereby acknowledged, the Buyer, on behalf of itself and
its respective past, present, and future Affiliates, successors, predecessors,
assignees, transferees, executors, administrators, trustees, members, directors,
officers, shareholders, partners, principals, agents, employees, servants,
attorneys and accountants (hereinafter "Buyer Releasors") do hereby release and
forever discharge the Sellers and the Sellers' past, present, and future
Affiliates, successors, predecessors, assignees, transferors, executors,
administrators, trustees, members, directors, officers, shareholders, partners,
principals, agents, employees,
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servants, attorneys and accountants (hereinafter "Seller Releasees"), of and
from any and all past, present, and future claims, obligations, Unknown Claims,
demands, and causes of action, including, without limitation, (i) claims
alleging breach of contract, breach of fiduciary duty, or defenses to the
payment of debt, (ii) claims asserting administrative expense priority, or (iii)
claims arising from, related to, or in any way connected with their
relationships (whether contractual, fiduciary or otherwise) with any of the
Seller Releasees, or any of the Released Agreements, which each owns or holds or
has at any time heretofore owned or held as against each of the Seller Releasees
as of the Closing. Without limiting the foregoing, Buyer acknowledges that the
following entities and persons are included among the Sellers Releasees: HTS and
ZetaPharm and their respective directors, officers and employees.
5.4. Additional Agreements.
(a) Each of the Seller Releasors and Buyer Releasors may later discover
facts in addition to or different from those which it now knows or believes to
be true with respect to their respective released claims, but each of the Seller
Releasors and Buyer Releasors acknowledges that, by virtue of the releases given
in Sections 5.2 and 5.3, as applicable, including the release of Unknown Claims,
it has finally and forever released and discharged any and all claims, demands,
and causes of action, known or unknown, suspected or unsuspected, contingent or
non-contingent, whether concealed or hidden, that now exist or heretofore have
existed upon any theory of law or equity now existing or coming into existence
in the future, including but not limited to, conduct that is negligent,
reckless, intentional, with or without malice, or a breach of any duty, law or
rule, without regard to the later discovery or existence of such different or
additional facts. Each of the Seller Releasors and Buyer Releasors acknowledges
that it later may discover facts in addition to or different from those which it
now believes to be true with respect to the subject matter of this release, but
it agrees that it has taken that possibility into account in reaching the
releases given in Sections 5.2 and 5.3, as applicable, and that such releases
given shall be and remain in effect as full and complete releases
notwithstanding the discovery or existence of any such additional or different
facts, as to which it expressly assumes the risk and that the releases
nevertheless will be binding and effective. Notwithstanding any other provision
of this Agreement, this release will not extend to any of the Seller Releasors'
or Buyer Releasor's respective rights and obligations under the Non-Released
Agreements.
(b) Each of the Seller Releasors and Buyer Releasors agrees, except as
required by law or court order, that it will not commence, maintain, initiate or
prosecute or cause, encourage, assist, advise or cooperate with any other person
or entity to commence, maintain, initiate or prosecute any action, suit,
proceeding, arbitration or claim before any court or other tribunal (whether
state, federal, arbitral or otherwise) against the Buyer Releasees or Seller
Releasees, as applicable, arising from, concerned with, or otherwise related to,
in whole or in part, any of the claims released hereunder.
(c) The Sellers and Buyer hereby represent and warrant that each is the
owner and/or has the full legal right and power completely to release each of
the claims released by the Sellers on its own behalf and Buyer on its own
behalf, as applicable, in this Agreement. The Sellers and Buyer each represents
and warrants that it has neither assigned nor transferred, nor purported to
assign or transfer, to any other person or entity any claim herein released by
the
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Sellers on its own behalf or Buyer on its own behalf, as applicable, or any
portion of such claim or any interest therein.
(d) Each of the Sellers acknowledges and agrees that the Cash
Consideration, which represents a substantial premium over the liquidation value
of the Inventory, the Royalty Payments, and the collection services to be
provided by Buyer to the Sellers as set forth under Section 1.9 of this
Agreement, represent fair and adequate compensation to the Sellers in exchange
for the releases contemplated by this Article V.
(e) Although this is not intended to be a general release, in the event
that the releases given in Sections 5.2 and 5.3 are deemed to be a general
release, the Sellers and Buyer each hereby expressly waives and relinquishes, to
the fullest extent permitted by law, the provisions, rights and benefits of
Section 1542 of the California Civil Code, which provides as follows:
"A general release does not extend to claims which a creditor
does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially
affected his settlement with the debtor."
The Sellers and Buyer each expressly warrants that it has been advised by
its legal counsel and understands and acknowledges the significance and
consequence of these releases, of this specific waiver of Section 1542 of the
California Civil Code and recognizes and understands that the same applies to
and covers all claims described in this Article V whether or not known or
suspected to exist at the present time.
(f) Each of HTS and ZetaPharm on the one hand, and Buyer, ZGNA, and Zatpack
on the other hand, shall execute and deliver to the other at Closing the release
agreement in the form attached as Exhibit G (the "HTS/ZetaPharm Release").
(g) Each of Zatpack and ZGNA shall execute and deliver to the Sellers at
the Closing the release agreement in the form attached as Exhibit H (the
"Zatpack/ZGNA Release").
(h) Each of the officers and directors of the Sellers, on the one hand, and
Buyer on the other hand, shall execute and deliver to the other at Closing the
mutual releases in the form attached as Exhibit I (the "D&O Releases").
ARTICLE VI
OTHER AGREEMENTS
----------------
6.1. Cooperation. During the period from the date of this Agreement until
Closing, Buyer agrees to continue to perform management services on behalf of
the Sellers, and the Sellers agree to pay for such services, in each case in the
ordinary course of business, consistent with past practice.
6.2. Agreement to Defend. In the event any action, suit, proceeding or
investigation of the nature specified in Section 8.4 or Section 9.4 hereof is
commenced, whether before or after
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the Closing Date, the parties hereto agree to cooperate and use their best
efforts to defend against and respond thereto.
6.3. Further Assurances. Subject to the terms and conditions of this
Agreement, the parties hereto shall use their reasonable best efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable under applicable Regulations and Orders to
consummate and make effective as promptly as possible the transactions
contemplated by this Agreement and the agreements contemplated hereby, and to
cooperate with each other in connection with the foregoing.
6.4. Access to Books and Records; Audit Rights. Following the Closing Date,
the Buyer will permit the Sellers, and their authorized agents or
representatives, including any accountants or other professionals, to have
access to (and where reasonable, copies of) any books and records, or other
documents, relating to the Business and the Acquired Assets transferred to Buyer
until the earlier of three (3) years from the Closing Date, or (ii) the closing
of the Chapter 11 Case, during normal business hours and upon reasonable notice,
solely for purposes of (a) preparing Tax Returns, (b) defending against any
third party claims, and (c) objecting to proofs of claims filed in the Chapter
11 Case and for other such purposes in as are reasonable and necessary for the
administration of the Chapter 11 Case.
6.5. Administration of Accounts; Customer Inquiries.
(a) All payments and reimbursements made in the ordinary course of business
by any third party in the name of or to Buyer or any Affiliate thereof in
connection with or arising out of the Excluded Assets, the Excluded Liabilities
or any businesses that are not the Business after the Closing Date shall be held
by such person in trust for the benefit of the Sellers and, promptly upon
receipt by such person of any such payment or reimbursement, such person shall
pay over to Xxxxxx the amount of such payment or reimbursement without right of
set off.
(b) All payments and reimbursements made in the ordinary course of business
by any third party in the name of or to any of the Sellers or any Affiliate
thereof in connection with or arising out of the Business or Acquired Assets
after the Closing Date shall be held by such person in trust for the benefit of
the Buyer and, promptly upon receipt by such person of any such payment or
reimbursement, such person shall pay over to Buyer the amount of such payment or
reimbursement without right of set off.
(c) The Sellers shall promptly forward to Buyer any mail (physical,
electronic or otherwise), facsimile or telephone inquiries of actual or
potential clients, customers, suppliers and vendors of or relating to the
Business or the Acquired Assets, including, without limitation, customer orders.
(d) Buyer shall promptly forward to Xxxxxx any mail (physical, electronic
or otherwise), facsimile or telephone inquires of actual or potential clients,
customers, suppliers and vendors of or relating to the Excluded Assets and any
businesses that are not the Business, including, without limitation, customer
orders.
6.6. Public Announcements. Except for disclosures required to be made to
the Bankruptcy Court in connection with the Bankruptcy Court Orders, the form,
content and timing
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of all press releases, public announcements or publicity statements with respect
to this Agreement and transactions contemplated hereby shall be subject to the
prior written consent and approval of Buyer, which approval shall not be
unreasonably withheld. No such press releases, public announcements or publicity
statements shall be released by any of the Sellers without such prior consent.
The Sellers shall provide Buyer with prior notice of and a reasonable
opportunity to review and comment on any SEC filings with respect to this
Agreement and the transactions contemplated hereby, and shall consider in good
faith any comments made by Buyer prior to any filing.
6.7. No Personal Liability. Buyer agrees that the representations,
warranties and agreements made by the Sellers pursuant to this Agreement or in
any other certificate, instrument, schedule, exhibit or document delivered or be
delivered pursuant to this Agreement, except the D&O Releases, regardless of
whether they were made with or without the knowledge of Xxxxxxx Xxxxxxxxx,
Xxxxxx Xxxxxx or any other individual listed in the definition of Knowledge of
the Sellers, shall be limited in every respect to Xx. Xxxxxxxxx, Xx. Xxxxxx and
such other individuals solely in their capacities as officers, directors and
employees of the Sellers and shall not expose, under any circumstances, Xx.
Xxxxxxxxx, Xx. Xxxxxx or any such other individual, or any other director of any
of the Sellers, to any form of personal or individual liability for any reason
whatsoever, including for any breach or default of any such representation,
warranty or agreement.
ARTICLE VII
TAX MATTERS
-----------
7.1. Payment of Taxes.
(a) The Sellers shall be responsible and liable for the timely payment of
any and all Taxes imposed on or with respect to the Sellers, the Business or the
Acquired Assets for all Pre-Closing Periods, including the portion of the
taxable period ending on or prior to the Closing Date and ending after the
Closing Date (the "Overlap Period") up to and including the Closing Date. For
purposes of this Agreement, all Taxes and Tax liabilities with respect to the
income, property or operations of the Business or the Acquired Assets that
relate to the Overlap Period shall be apportioned between the Sellers and Buyer
as follows: (i) in the case of Taxes other than income, sales and use and
withholding Taxes, on a per diem basis, and (ii) in the case of income, sales
and use and withholding Taxes, as determined from the books and records of the
Sellers, as though the taxable year of the Sellers terminated at the close of
business on the Closing Date.
(b) Any stamp, transfer, documentary, sales and use, value added,
registration, and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement or any transaction
contemplated hereby (collectively, the "Transfer Taxes") shall be paid by the
party primarily responsible for such particular Tax, and each party shall, at
its own expense, properly file on a timely basis all necessary Tax Returns,
reports, forms, and other documentation with respect to any such Transfer Tax
and provide to the other party evidence of payment of such Transfer Taxes.
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ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF BUYER
--------------------------------------
Each and every obligation of Buyer under this Agreement shall be subject to
the satisfaction, on or before the Closing Date, of each of the following
conditions unless waived in writing by Buyer (except for the condition set forth
in Section 8.12, of which only Xxxxx Fargo may waive in its sole discretion):
8.1. Bankruptcy Court Approval. The Bankruptcy Court shall have entered
orders satisfactory to Buyer, approving the sale of the Acquired Assets by the
Sellers to Buyer, the assumption and assignment by the Sellers of the Assigned
Purchase Orders to Buyer, and the Sale Procedures Provisions, each as
contemplated by this Agreement, and such orders shall have become Final Orders.
The Sellers shall have delivered to Buyer (i) a certified copy of the Asset Sale
Order; and (ii) copies of all affidavits of service of Sellers' motion(s)
seeking Bankruptcy Court approval of this Agreement, the Sale Procedures
Provisions and/or other matters pertaining to this Agreement, or any notice(s)
of such motions(s) filed by or on behalf of the Sellers in the Chapter 11 Case.
8.2. Representations and Warranties; Performance. The representations and
warranties of each of the Sellers contained in Article II and elsewhere in this
Agreement and all information contained in any exhibit or schedule hereto
delivered by, or on behalf of, each of the Sellers, to Buyer, shall be true and
correct in all material respects when made and on the Closing Date as though
then made (except to the extent such representations and warranties by their
terms speak as of an earlier date, in which case they were true in all material
respects as of such date). Each of the Sellers shall have performed and complied
in all material respects with all agreements, covenants and conditions required
by this Agreement to be performed and complied with by it prior to the Closing
Date; provided, however, the parties agree that there will be no failure of this
condition based upon the falsity or incompleteness of any representation or
warranty or the failure to perform or comply with an agreement, covenant or
condition if, on the date of this Agreement, the Buyer Knowledge Group has
Knowledge of such falsity or incompleteness of such representation or warranty
or the failure of such agreement, covenant or condition or if the Buyer
Knowledge Group has Knowledge of such falsity, incompleteness or failure after
the date hereof but on or prior to the Closing Date and the Buyer has not
terminated this Agreement prior to Closing in accordance with the second
paragraph of Section 4.2.
8.3. No Material Adverse Change. There shall have been no developments or
changes since the date of this Agreement that would have a Material Adverse
Effect on the Acquired Assets or the Business.
8.4. No Proceeding or Litigation. No preliminary or permanent injunction or
other Order issued by a court of competent jurisdiction or by any Authority, or
any Regulation or Order promulgated or enacted by any Authority shall be in
effect which would prohibit, prevent or restrict the consummation of the
transactions contemplated hereby.
8.5. Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated hereby and all documents and
instruments incident to such
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transactions shall be reasonably satisfactory in form and substance to Buyer and
Buyer's counsel, and each of the Sellers shall have made available to Buyer for
examination the originals or true, complete and correct copies of all records
and documents relating to the business and affairs of the Sellers that Buyer may
reasonably request in connection with said transaction.
8.6. Physical Inventory. Buyer shall have completed a physical inventory of
the Inventory comprising the Acquired Assets 30 days prior to the Closing Date,
and Buyer shall be satisfied as to the accuracy of the books and records of the
Sellers with respect to such Inventory.
8.7. Secretary's Certificate; Good Standing. Each of the Sellers shall have
delivered to Buyer a certificate, dated the Closing Date, executed by the
secretary of each Seller certifying in such capacity and on behalf of the
applicable Seller (a) as to the charter and bylaws (and any amendments thereto)
of such Seller as being correct, complete and in full force and effect on the
Closing Date; (b) as to the incumbency and signatures of the officers of such
Seller who executed this Agreement and the related transaction documents on
behalf of such Seller; (c) as to the adoption of resolutions of the board of
directors of such Seller as being correct, complete and in full force and effect
on the Closing Date, authorizing (i) the execution and delivery of this
Agreement and the related transaction documents, and (ii) the performance of the
obligations of such Seller hereunder and thereunder.
8.8. Officer's Certificate. Each of the Sellers shall have delivered to
Buyer a certificate, dated the Closing Date, executed by the chief executive
officer, president, chief financial officer or treasurer of each of the Sellers,
certifying in such capacity and on behalf of the applicable Seller that (a) the
conditions to Buyer's obligations to consummate the transactions contemplated by
this Agreement set forth in Section 8.2 have been satisfied; and (b) there have
been no developments or changes which would have a Material Adverse Effect since
December 31, 2002 on the Acquired Assets or the Business since the date of this
Agreement.
8.9. Executed Agreements. Each of the Sellers shall have executed and
delivered to Buyer the Xxxx of Sale, the Assignment and Assumption Agreement,
and the Trademark Assignment Agreement. Each of HTS and ZetaPharm shall have
executed and delivered to Buyer the Non-Competition Agreements and the
HTS/ZetaPharm Release, and ZetaPharm shall have executed and delivered to Buyer
the ZetaPharm Name Purchase Agreement. The Sellers shall have delivered to Buyer
the executed D&O Releases.
8.10. Financing. Buyer shall have received financing from Xxxxx Fargo in
connection with the transactions contemplated by this Agreement in accordance
with the Xxxxx Fargo Commitment Letter.
8.11. Eligible Unsecured Creditor Releases. With respect of the payments to
be made to Eligible Unsecured Creditors who are trade creditors of the Business
instead of to Zatpack in accordance with Section 1.7(d), Buyer shall have
received covenants not to xxx substantially in the form of Exhibit D from the
following: (i) all creditors represented on the Creditors Committee; (ii) 100%
of the top 10 trade creditors of the Business as of the date hereof by dollar
volume; and (iii) 90% of the top 20 trade creditors of the Business as of the
date hereof by dollar volume, in exchange for, and as condition to the
disbursements by Fund Trustee under the Unsecured Creditor Fund. Buyer may waive
or modify this condition in its sole discretion.
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8.12. Release of Liens; Use of Proceeds; Creditor Committee Release. The
Sellers, certain affiliates of the Sellers, Xxxxx Fargo and the Creditors
Committee shall have delivered an executed stipulation, consistent with the
relevant provisions of this Agreement, in a form approved by the Bankruptcy
Court and Buyer with respect to the release of all Xxxxx Fargo's Liens with
respect to the Acquired Assets, the use of proceeds of the transactions
contemplated by this Agreement and the release by the Creditors Committee of any
claims that the Sellers, certain affiliates of the Sellers or the Sellers' or
such affiliates' bankruptcy estates have against Xxxxx Fargo. Only Xxxxx Fargo
may waive this condition in its sole discretion.
8.13. Dismissal of Substantive Consolidation Claim. The Sellers shall have
executed and delivered the Dismissal Stipulation.
ARTICLE IX
CONDITIONS TO THE OBLIGATIONS OF THE SELLERS
--------------------------------------------
Each and every obligation of each of the Sellers under this Agreement shall
be subject to the satisfaction, on or before the Closing Date, of each of the
following conditions unless waived in writing by the Sellers:
9.1. Bankruptcy Court Approval. The Bankruptcy Court shall have entered
orders approving the sale of the Acquired Assets, the assignment by Sellers of
the Assigned Purchase Orders to Buyer and the assumption by Buyer of the Assumed
Liabilities.
9.2. Representations and Warranties; Performance. The representations and
warranties of Buyer contained in Article III and elsewhere in this Agreement and
all information contained in any exhibit or schedule hereto delivered by, or on
behalf of, Buyer to Sellers, shall be true and correct in all material respects
when made and on the Closing Date as though then made (except to the extent such
representations and warranties by their terms speak as of an earlier date, in
which case they were true in all material respects as of such date). Buyer shall
have performed and complied in all material respects with all agreements,
covenants and conditions required by this Agreement to be performed and complied
with by it prior to the Closing Date.
9.3. Consents and Approvals. Buyer shall have obtained any and all material
consents, approvals, Orders, Permits or other authorizations, required by all
applicable Regulations or Orders involving Sellers, with respect to the
execution, delivery and performance of the Agreement, and the consummation of
the transactions contemplated hereby.
9.4. No Proceeding or Litigation. No preliminary or permanent injunction or
other Order issued by a court of competent jurisdiction or by any Authority, or
any Regulation or Order promulgated or enacted by any Authority shall be in
effect which would prohibit, prevent or restrict the consummation of the
transactions contemplated hereby.
9.5. Secretary's Certificate. Buyer shall have delivered to Seller a
certificate, dated the Closing Date, executed by the secretary of Buyer,
certifying in such capacity and on behalf of Buyer (a) as to the charter and
bylaws (and any amendments thereto) of Buyer as being correct, complete and in
full force and effect on the Closing Date; (b) as to the incumbency and
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signatures of the officers of Buyer who executed this Agreement and the related
transaction documents on behalf of Buyer; (c) as to the adoption of resolutions
of the board of directors of Buyer as being correct, complete and in full force
and effect on the Closing Date, authorizing (i) the execution and delivery of
this Agreement and the related transaction documents, and (ii) the performance
of the obligations of Buyer hereunder and thereunder.
9.6. Officer's Certificate. Buyer shall have delivered to Seller a
certificate, dated the Closing Date, executed by the president of Buyer,
certifying in such capacity and on behalf of Buyer that the conditions to the
Sellers' obligations to consummate the transactions contemplated by this
Agreement set forth in Section 9.2 have been satisfied.
9.7. Executed Agreements. Buyer shall have executed and delivered (i) to
the Sellers the Xxxx of Sale, the Assignment and Assumption Agreement, the
Trademark Assignment Agreement and the D&O Releases, (ii) to HTS and ZetaPharm
the Non-Competition Agreements and the HTS/ZetaPharm Release, and (iii) to
ZetaPharm the ZetaPharm Name Purchase Agreement. Each of Zatpack and ZGNA shall
have executed and delivered to the Sellers the Zatpack/ZGNA Release.
9.8. Dismissal of Appeal. Buyer shall have executed and delivered a
stipulation, in form satisfactory to the Sellers, dismissing Buyer's currently
pending appeal, Case No. CV 03-4554 (C.D. Cal.), to the United States District
Court for the District of California.
ARTICLE X
CLOSING
-------
10.1. Closing. Unless this Agreement shall have been terminated or
abandoned pursuant to the provisions of Article X hereof, a closing of the
transactions contemplated by this Agreement (the "Closing") shall be held at
10:00 a.m. in the offices of Buyer's counsel two (2) business days after the
later of the date on which (i) the Asset Sale Order becomes a Final Order and
(ii) all conditions precedent to the obligations of the parties hereto have been
satisfied or waived, but in no event later than December 19, 2003, or on such
other date designated in writing by Buyer and the Sellers (the "Closing Date").
At the Closing, (a) the Sellers shall deliver, or cause to be delivered, to
Buyer those agreements and certificates set forth in Article VIII, and (b) Buyer
shall deliver, or cause to be delivered, to the Sellers the Cash Consideration
and those agreements and certificates set forth in Article IX.
ARTICLE XI
TERMINATION AND ABANDONMENT
---------------------------
11.1. Methods of Termination. This Agreement may be terminated and the
transactions herein contemplated may be abandoned at any time:
(a) by mutual consent of Buyer and the Sellers;
(b) by Buyer if the Bankruptcy Court does not enter an order approving (i)
the Sale Procedures Provisions, on or prior to October 30, 2003 or nine(9) days
after the Sale
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Motion Date; or (ii) the Asset Sale Order, on or prior to December 1, 2003, or
forty-one (41) days after the Sale Motion Date;
(c) by Buyer if as of the Closing Date any of the conditions specified in
Article VIII hereof have not been satisfied or if any of the Sellers is
otherwise in material default under this Agreement;
(d) by the Sellers if as of the Closing Date any of the conditions
specified in Article IX hereof have not been satisfied or if Buyer is otherwise
in material default under this Agreement as of the Closing Date; or
(e) by Buyer or the Sellers if the Sellers enters into an Alternative
Transaction;
(f) by Buyer prior to Closing if a motion to dismiss the Chapter 11 Case or
a motion to convert the Chapter 11 Case or appoint a trustee or examiner has
been granted in the Chapter 11 Case;
(g) by Buyer or the Sellers if the transactions contemplated pursuant to
this Agreement are not consummated on or before December 19, 2003 or sixty (60)
days after the Sale Motion Date; provided that if any party has materially
breached or defaulted with respect to its obligations under this Agreement on or
before such date, such party may terminate this Agreement pursuant to this
Section 11.1(h), and each other party to this Agreement may at its option
enforce its rights against such breaching or defaulting party and seek any
remedies against such party, in either case as provided hereunder and by
applicable Regulation;
(h) by Buyer if there shall be in effect a stay pending appeal or other
order restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated herein and such stay or order is not lifted or removed
on or before December 19, 2003; or
(i) by Buyer if Buyer has been notified by the Sellers of an actual or
prospective Material Adverse Effect, breach of representation, warranty or
covenant, or non-fulfillment of a condition in accordance with Section 4.3.
11.2. Procedure Upon Termination. If this Agreement is terminated under
Section 11.1, written notice thereof will forthwith be given by the terminating
party to the other parties and this Agreement will thereafter become void and
have no further force and effect and, except for those provisions that expressly
survive the termination of this Agreement, all further obligations of the
Sellers and Buyer to one another under this Agreement will terminate without
further obligation or liability of Sellers or Buyer to the other (other than
with respect to breaches, if any, of this Agreement prior to such termination).
If this Agreement is terminated as provided herein:
(a) each party shall either destroy or redeliver all documents and other
material of any other party relating to the transactions contemplated hereby,
whether obtained before or after the execution hereof, to the party furnishing
the same;
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(b) all information received by any party hereto with respect to the
business of any other party (other than information which is a matter of public
knowledge or which has heretofore been or is hereafter published in any
publication for public distribution or filed as public information with any
governmental authority) shall not at any time be used for the advantage of, or
disclosed to third parties by, such party to the detriment of the party
furnishing such information; and
(c) other than as provided in Sections 11.3, no party hereto shall have any
liability or further obligation to any other party to this Agreement.
11.3. Effect of Termination.
(a) If this Agreement is terminated by reason of the Sellers entering into
an Alternative Transaction, the Sellers shall pay to Buyer the Break-Up Fee upon
the closing of such Alternative Transaction.
(b) The Break-Up Fee shall be entitled to administrative claim status
pursuant to Sections 105, 503 and 507(b) of the Bankruptcy Code.
(c) In the event of a default by any of the Sellers under this Agreement
after entry of the Asset Sale Order by the Bankruptcy Court, Buyer shall be
entitled to all of its remedies at law and in equity.
(d) In the event of a default by Buyer under this Agreement after entry of
the Asset Sale Order by the Bankruptcy Court, the Sellers shall be entitled to
all of its remedies at law and in equity.
ARTICLE XII
SURVIVAL AND INDEMNIFICATION
----------------------------
12.1. Survival of Representations and Warranties and Covenants.
(a) Each of the representations and warranties and covenants (except to the
extent the covenant requires performance beyond such sixty (60) days) contained
herein or in any instrument or document delivered or to be delivered pursuant to
this Agreement, shall survive until sixty (60) days following the Closing Date
and all claims for indemnification with respect to any breach thereof must be
asserted within such survival period or they shall be forever barred. In the
event notice of any claim for indemnification under Sections 12.2 and 12.3
hereof has been given within the survival period, of which such notice shall
describe in sufficient detail the claim, the asserted indemnification amount and
the facts supporting such claim, the representations and warranties and
covenants that are subject of such indemnification Claim shall survive with
respect to such Claim until the final disposition thereof.
(b) From time to time prior to the Closing, the Sellers shall promptly
supplement or amend information previously delivered to Buyer with respect to
any matter hereafter arising which, if existing or occurring at the date of this
Agreement, would have been required to be set forth or disclosed in Article II.
In no event will any disclosure of any event or
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circumstance made after the date hereof and prior to the Closing serve to amend
any representation or warranty for any purpose of this Agreement, provided that
if the Sellers provide prompt prior and accurate written disclosure to Buyer of
any such event or circumstance and its effect on each applicable representation
or warranty and Buyer agrees to consummate the transactions contemplated by this
Agreement, then no remedy under this Article XII shall be available to the Buyer
as it relates to such disclosure.
(c) Any remedy under this Article XII for the breach of any representation
or warranty or covenant on the part of any of the Sellers shall be reduced or
eliminated dollar for dollar to the extent Buyer is able to adjust the Purchase
Price pursuant to Section 1.6 to offset any liability, damage, claim, cost or
expense resulting from such breach.
(d) No remedy under this Article XII for the breach of any representation
or warranty or covenant shall be available if, on the Closing Date, the Buyer
Knowledge Group has Knowledge of such breach of such representation or warranty
or covenant.
12.2. Indemnification by the Sellers. Upon the terms and subject to the
conditions of this Article XII, each of the Sellers shall indemnify, defend and
hold harmless the Business, Buyer and its directors, officers, employees,
agents, stockholders, representatives (collectively, the "Buyer Indemnitees")
from any damage, loss, deficiency, liability, obligation, commitment, claim (as
defined in Section 101 of the Bankruptcy Code), cost or expense (including the
reasonable fees and expenses of legal counsel) whatsoever, whether known or
unknown, fixed, liquidated, contingent or otherwise, resulting from, or in
respect of, any of the following:
(a) Except as set forth in Section 12.1, any breach of a representation or
warranty, or non-fulfillment of any obligation on the part of any of the Sellers
under this Agreement, any document relating hereto or thereto or contained in
any schedule or instrument delivered by any of the Sellers pursuant to this
Agreement.
(b) Any and all Excluded Liabilities.
(c) Any Claim against Buyer made by any shareholder, officer, director,
employee or agent of any of the Sellers or their Subsidiaries based upon Buyer's
relationship with the Sellers or it Subsidiaries.
(d) Liabilities arising out of the transactions contemplated by this
Agreement under any bulk transfer laws, to the extent that the Claim is shown
not to have been known or, as a result of Sellers' failure to comply with
Section 4.10 of this Agreement, the third party asserting the Claim is deemed
not to have received actual or constructive notice of this Agreement or of the
Sale Motion and Asset Sale Order and the hearings therefore, including without
limitation, in the event of a known creditor, the Sellers' actual notice to such
third party was untimely or was not delivered.
(e) Any Claim asserted by a third party arising out of or related to
Buyer's acquisition of the Business other than the Assumed Liabilities.
(f) Any successor or vicarious liability of any of the Sellers, to the
extent that the Claim is shown not to have been known or, as a result of
Sellers' failure to comply with
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Section 4.10 of this Agreement, the third party asserting the Claim is deemed
not to have received actual or constructive notice of this Agreement or of the
Sale Motion and Asset Sale Order and the hearings therefore, including without
limitation, in the event of a known creditor, that Sellers' actual notice to
such third party was untimely or was not delivered.
(g) All demands, assessments, judgments, costs and reasonable legal and
other expenses arising from, or in connection with, any action, suit, proceeding
or Claim incident to any of the foregoing.
12.3. Indemnification by Buyer. Upon the terms and subject to the
conditions of this Article XII, Buyer shall indemnify, defend and hold harmless
each of the Sellers and each of their respective directors, officers, employees,
agents, stockholders, representatives (collectively, the "Seller Indemnitees")
from any damage, loss, deficiency, liability, obligation, commitment, claim (as
defined in Section 101 of the Bankruptcy Code), cost or expense (including the
fees and expenses of legal counsel) whatsoever, whether known or unknown, fixed,
liquidated, contingent or otherwise, resulting from, or in respect of, any of
the following:
(a) Any breach of a representation or warranty, or non-fulfillment of any
obligation on the part of Buyer under this Agreement, any document relating
hereto or thereto or contained in any schedule or other Contract or instrument
delivered by Buyer pursuant to this Agreement.
(b) The Assumed Liabilities.
(c) All demands, assessments, judgments, costs and reasonable legal and
other expenses arising from, or in connection with, any action, suit, proceeding
or Claim incident to any of the foregoing.
12.4. Third-Party Claims.
(a) The following procedures shall be applicable with respect to
indemnification for third-party Claims. Promptly after receipt by the party
seeking indemnification hereunder (hereinafter referred to as the "Indemnitee")
of notice of the commencement of any (i) Tax audit or proceeding for the
assessment of Tax by any Taxing Authority or any other proceeding likely to
result in the imposition of a Tax liability or obligation or (ii) any action or
the assertion of any Claim, liability or obligation by a third party (whether by
legal process or otherwise), against which Claim, liability or obligation the
other party to this Agreement (hereinafter the "Indemnitor") is, or may be,
required under Article XII to indemnify such Indemnitee, the Indemnitee shall,
if a Claim thereon is to be, or may be, made against the Indemnitor, notify the
Indemnitor (with a copy to the Creditors Committee) in writing of the
commencement or assertion thereof and give the Indemnitor a copy of such Claim,
process and all legal pleadings. The Indemnitor shall have the right to (i)
participate in the defense of such action with counsel of reputable standing and
(ii) assume the defense of such action by agreeing to assume such defense within
ten (10) days of transmittal of the notice of the Claim by the Indemnitee, in
writing unless such Claim (A) may result in criminal proceedings, injunctions or
other equitable remedies in respect of the Indemnitee or its business; (B) may
result in liabilities which, taken with other then existing Claims under this
Article XII, would not be fully
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indemnified hereunder; (C) would have a Material Adverse Effect on the business
or financial condition of the Indemnitee after the Closing (including an effect
on the Tax liabilities, earnings or ongoing business relationships of the
Indemnitee); (D) is for an alleged amount of less than $5,000; (E) upon petition
by the Indemnitee, if an appropriate court rules that the Indemnitor failed or
is failing to vigorously prosecute or defend such Claim, in which events the
Indemnitee shall assume the defense; or (F) also involves the Indemnitor or its
Affiliate as a party and counsel to the Indemnitee determines in good faith that
joint representation would give rise to a conflict of interest.
(b) The Indemnitor and the Indemnitee shall cooperate in the defense of any
third-party Claims. In the event that the Indemnitor assumes or participates in
the defense of such third-party Claim as provided herein, the Indemnitee shall
make available to the Indemnitor all relevant records and take such other action
and sign such documents as are reasonable or necessary to defend such
third-party Claim in a timely manner. If the Indemnitee shall be required by
judgment or a settlement agreement to pay any amount in respect of any
obligation or liability against which the Indemnitor has agreed to indemnify the
Indemnitee under this Agreement, the Indemnitor shall promptly reimburse the
Indemnitee in an amount equal to the amount of such payment plus all expenses
(including legal fees and expenses) incurred by such Indemnitee in connection
with such obligation or liability subject to this Article XII. No Indemnitor, in
the defense of any such Claim, shall, except with the consent of the Indemnitee,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnitee of a release from all liability with respect to such Claim.
In addition, with respect to a Claim for Taxes, the Indemnitor shall not enter
into any settlement or arrangement with any taxing authority without the prior
written consent of the Indemnitee, such consent not to be unreasonably withheld
or delayed. In the event that the Indemnitor does not accept the defense of any
matter for which it is entitled to assume as provided above, the Indemnitee
shall have the full right to defend such Claim.
(c) Prior to paying or settling any Claim against which an Indemnitor is,
or may be, obligated under this Article XII to indemnify an Indemnitee, the
Indemnitee must first supply the Indemnitor with a copy of a final court
judgment or decree holding the Indemnitee liable on such Claim or failing such
judgment or decree, must first receive the written approval of the terms and
conditions of such settlement from the Indemnitor, which shall not be
unreasonably withheld; provided however, that no written approval is required
from the Indemnitor as to any third party Claim (i) that results solely in
injunctions or other equitable remedies in respect of the Indemnitee or its
business; (ii) that settles liabilities, or portions thereof, that are not
subject to indemnification hereunder; or (iii) is for an amount of less than
$5,000.
(d) An Indemnitee shall have the right to employ its own counsel in any
case and the fees and expenses of such counsel shall be at the expense of the
Indemnitee unless (i) the employment of such counsel shall have been authorized
in writing by the Indemnitor in connection with the defense of such Claim; (ii)
the Indemnitor shall not have employed counsel in the defense of such Claim
after ten (10) days notice; or (iii) such Indemnitee shall have reasonably
concluded that there may be defenses available to it which are contrary to, or
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inconsistent with, those available to the Indemnitor; in any of the foregoing
events such fees and expenses shall be borne by the Indemnitor.
12.5. Payment of Indemnification Claims.
(a) Each Indemnitor shall pay the indemnification amount claimed by the
Indemnitee in immediately available funds promptly within ten (10) days after
the Indemnitee provides the Indemnitor with written notice of a Claim hereunder
unless the Indemnitor in good faith disputes such Claim. If the Indemnitor
disputes such Claim in good faith, then promptly after the resolution of such
dispute, the amount finally determined to be due shall be paid by the Indemnitor
to the Indemnitee in immediately available funds within ten (10) days of such
dispute resolution. In the event the Indemnitor fails to pay the Indemnitee the
amount of such indemnification Claim within such ten (10) day period the
Indemnitor shall pay the Indemnitee interest on the amount of such
indemnification Claim at a rate of ten percent (10%) per annum, compounded
monthly from the date of the original written notice of such indemnification
Claim until the indemnification Claim is paid in full.
(b) If any Indemnitor fails to comply with its obligations to make cash
payments to an Indemnitee in an aggregate amount sufficient to reimburse the
Indemnitee for all losses resulting from an indemnified Claim, the Indemnitee
may pursue any and all rights and remedies against the Indemnitor available in
law or in equity, and shall be entitled to payment of its reasonable attorneys'
fees.
12.6. Threshold for Recovering Losses. The Buyer Indemnitees or the Seller
Indemnitees cannot claim an indemnity under Sections 12.2 or 12.3, as the case
may be, until the cumulative amount of losses for which the Buyer Indemnitees,
or the Seller Indemnitees, as the case may be, claim indemnity are at least
$100,000 (it being understood that once such amount exceeds $100,000, the
indemnifying party shall be liable for the full dollars of such claim beginning
with the first dollar thereof).
12.7. Cap on Losses Recoverable. Except in the case of fraud, or an
intentional breach of a covenant or obligation under this Agreement, the maximum
amount of liability of the (a) Sellers for losses, and the reimbursement of
legal fees and expenses related thereto, under Sections 12.2(a), 12.2(b),
12.2(d), 12.2(e) or 12.2(f) shall not exceed $500,000 in the aggregate, (b)
Seller for losses, and the reimbursement of legal fees and expenses related
thereto, under Section 12.2(c) shall not exceed $500,000 in the aggregate, or
(c) Buyer for losses, and the reimbursement of legal fees and expenses related
thereto, under Section 12.3, shall not exceed an amount equal to $1,000,000 in
the aggregate.
12.8. Time Period For Asserting Claims for Indemnification . Any claim for
indemnification under this Article 12, except for claims for breaches of
representations or warranties or covenants which are subject to a shorter period
as provided in Section 12.1 or for any breach of the covenant under Section 4.4,
shall be made within one year of the Closing Date and shall describe in
sufficient detail the claim, the asserted indemnification amount and the facts
supporting such claim. Any claims for indemnification (other than for breach of
Section 4.4) not made within such one year period shall be forever barred.
Claims for indemnification for breach of Section 4.4 shall be made prior to the
later of (i) one year from the Closing Date, or (ii) the
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date on which the creditors' trust established under the Xxxxxx Plan has
completed the liquidation of substantially all of the assets of the creditor's
trust.
12.9. Tax Benefits; Insurance Proceeds. Any indemnification payment under
this Agreement shall be:
(a) reduced by any net Tax benefits actually derived by any Person entitled
to indemnification under this Agreement with respect to the item giving rise to
the indemnification payment, net of any expenses incurred in obtaining that Tax
benefit, and increased by the amount of any Taxes attributable to the receipt of
the indemnity payments being treated as income; and
(b) reduced by any insurance proceeds actually received by any Person
entitled to indemnification under this Agreement with respect to the item giving
rise to the indemnification payment, net of any expenses incurred in obtaining
those insurance proceeds (including any future increases in premiums that will
result from the claim and any chargebacks).
Any adjustments under this Section 12.8 shall result in a reimbursement
after the event giving rise to the adjustment occurs, and will not constitute a
basis for withholding or delaying all or part of an indemnification payment
pending such event.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
------------------------
13.1. Amendment and Modification. This Agreement may be amended, modified
and supplemented only by written agreement of all the parties hereto with
respect to any of the terms contained herein. No course of dealing between or
among the parties shall be deemed effective to modify, amend, waive or discharge
any part of this Agreement or any rights or obligations of any party under or by
reason of this Agreement.
13.2. Waiver of Compliance; Consents. Any failure of any party hereto to
comply with any obligation, covenant, agreement or condition herein may be
waived in writing by the other parties hereto, 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. Whenever this Agreement requires or permits consent
by or on behalf of any party hereto, such consent shall be given in writing to
be effective.
13.3. Notices. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally against written receipt or by facsimile transmission against
facsimile confirmation or mailed by internationally recognized overnight courier
prepaid, to the parties at the following addresses or facsimile numbers:
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(a) If to the Sellers, to:
Xxxxxx, Inc.
000 Xxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
E-mail: xxxxxxxxxx@xxxxxx.xxx
Attn: Xxxxxxx X. Xxxxxxxxx
with a copy to (which shall not constitute notice to Sellers):
Xxxxxxx, Xxxxxxxx & Xxxxx, Professional Corporation
1901 Avenue of the Stars, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
E-mail: xxxxxxxx@xxxxxxx.xxx
Attn: Xxxxxxxx X. Xxxxxxx, Esq.
or to such other Person or address as the Sellers shall furnish by notice
to Buyer in writing.
(b) If to Buyer, to:
Zuellig Botanicals, Inc.
0000 Xx Xxxxxxxx
Xxxx Xxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
E-mail: xxxxxxxxxx@xxxxxxxxxx.xxx
Attn: Xxxxx Xxxxxxxxx
with a copy to (which shall not constitute notice to Buyer):
O'Melveny & Xxxxx LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
E-mail: xxxxxxx@xxx.xxx
Attn: Xxxx X. Xxxxxx, Esq.
or to such other Person or address as Buyer shall furnish by notice to
Sellers in writing.
All such notices, requests and other communications will (a) if delivered
personally to the address as provided in this Section 13.3, be deemed given upon
delivery, (b) if delivered by facsimile transmission to the facsimile number as
provided for in this Section 13.3, be deemed
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given upon facsimile confirmation, and (c) if delivered by overnight courier to
the address as provided in this Section 13.3, be deemed given on the earlier of
the first business day following the date sent by such overnight courier or upon
receipt (in each case regardless of whether such notice, request or other
communication is received by any other Person to whom a copy of such notice is
to be delivered pursuant to this Section 13.3). Any party from time to time may
change its address or other information for the purpose of notices to that party
by giving notice specifying such change to the other party hereto.
13.4. Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties, except
that Buyer may assign in writing its rights, interests and obligations hereunder
to any Affiliate, and may grant Liens in respect of its rights and interests
hereunder to its lenders (and any agent for the lenders), and the parties hereto
consent to any exercise by such lenders (and such agent) of their rights and
remedies with respect to such collateral and that Sellers may assign any and all
rights to receive payments hereunder under a plan to any successor or
representative of the estate or to any trustee.
13.5. Governing Law. Except to the extent the mandatory provisions of the
Bankruptcy Code apply, this Agreement shall be governed by, and construed in
accordance with, the laws of the State of California applicable to contracts
made and to be performed entirely in such state without regard to principles of
conflicts of laws or any other law that would make the laws of any other
jurisdiction other than the State of California applicable hereto. The parties
agree that, except as provided herein, without limitation of any party's right
to appeal any order of the Bankruptcy Court, (a) the Bankruptcy Court shall
retain exclusive jurisdiction to enforce the terms of this Agreement and to
decide any claims or disputes which may arise or result from, or be connected
with, this Agreement, any breach or default hereunder, or the transactions
contemplated herein; and (b) any and all claims, actions, causes of action,
suits and proceedings relating to the foregoing shall be filed and maintained
only in the Bankruptcy Court, and the parties hereby consent and submit to the
jurisdiction of the Bankruptcy Court.
13.6. Arbitration. Other than matters under the jurisdiction of the
Bankruptcy Court as set forth in Section 13.5, any controversy, dispute or claim
between the parties arising out of, related to or in connection with this
Agreement or the performance or breach hereof shall be submitted to binding
arbitration conducted by the American Arbitration Association in Los Angeles,
California, in accordance with its commercial arbitration rules as then in
effect; provided that the arbitration shall be conducted by a panel of three
arbitrators. One arbitrator shall be selected by Buyer, one by the Sellers, and
a third selected by the agreement of the first two arbitrators. The
determination of the arbitrators shall be accompanied by a written opinion of
the arbitrators. Fees and expenses of the American Arbitration Association and
of the arbitrators shall be borne as shall be determined by the arbitrators.
13.7. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT OR ANY
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SCHEDULE OR EXHIBIT HERETO, OR ANY COURSE OF CONDUCT, COURSE OF DEALING OR
STATEMENTS (WHETHER VERBAL OR WRITTEN) RELATING TO THE FOREGOING. THIS PROVISION
IS A MATERIAL INDUCEMENT FOR THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT.
13.8. Injunctive Relief. The parties hereto agree that in the event of a
default under this Agreement, the aggrieved party or parties may be damaged
irreparably and without an adequate remedy at law. The parties therefore agree
that in the event of such a default, the aggrieved party or parties may elect to
institute and prosecute proceedings in any court of competent jurisdiction to
enforce specific performance or to enjoin the continuing breach of such
provision without the requirement of posting a bond, as well as to obtain
damages for breach of this Agreement. By seeking or obtaining any such relief,
the aggrieved party shall not be precluded from seeking or obtaining any other
relief to which it may be entitled. All remedies, either under this Agreement or
by law or otherwise afforded to any party, shall be cumulative and not
alternative.
13.9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.10. Headings. The article and section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
13.11. Entire Agreement. This Agreement, including the annex, schedules and
exhibits hereto and the contracts, documents, certificates and instruments
entered into in connection herewith, embodies the entire agreement and
understanding of the parties hereto in respect of the transactions contemplated
by this Agreement and supersedes all prior contracts, representations,
warranties, promises, covenants, arrangements, communications and
understandings, oral or written, express or implied, between the parties with
respect to such transactions.
13.12. Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable Regulations, but if any provision of this Agreement or the
application of any such provision to any Person or circumstance shall be held to
be prohibited by, illegal or unenforceable under applicable law in any respect
by a court of competent jurisdiction, such provision shall be ineffective only
to the extent of such prohibition or illegality or unenforceability, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
13.13. Expenses. Except as set forth in Section 11.3, each of Buyer and
each of the Sellers shall bear their own respective expenses, including without
limitation, legal fees and expenses, with respect to this Agreement and the
transactions contemplated hereby. If any legal action or other proceeding
relating to this Agreement, the agreements contemplated hereby, the transactions
contemplated hereby or thereby or the enforcement of any provision of this
Agreement or the agreements contemplated hereby is brought against any party,
the prevailing party in such action or proceeding shall be entitled to recover
all reasonable expenses relating thereto (including attorney's fees and
expenses) from the party against which such action or
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proceeding is brought in addition to any other relief to which such prevailing
party may be entitled.
13.14. No Third Party Beneficiaries. This Agreement is for the sole benefit
of the parties and their permitted successors and assigns and nothing herein
express or implied shall be construed to give any person, other than the parties
of such permitted successors and assigns, any legal or equitable rights
hereunder. The Creditors Committee shall be a third party beneficiary with
respect to Sections 1.7, 1.8, 1.9(d), 1.11 and 12.4(a) of this Agreement only to
the extent named. Xxxxx Fargo shall be a third party beneficiary with respect to
Sections 1.7, 1.8, and 8.12 of this Agreement only to the extent named.
13.15. Schedules. No exceptions to any representations or warranties
disclosed on one schedule shall constitute an exception to any other
representation or warranties made in this Agreement unless the substance of such
exception is disclosed as provided herein on each such applicable schedule or a
specific cross reference to a disclosure on another schedule is made. All
schedules and exhibits attached hereto or referred to herein are hereby
incorporated in and made a part of this Agreement as if set forth in full
herein.
13.16. No Strict Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties, and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
of the provisions of this Agreement.
[Signatures on Next Page]
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IN WITNESS WHEREOF, the parties hereto have made and entered into this
Asset Purchase Agreement the date first hereinabove set forth.
SELLERS: XXXXXX, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President and Chief Executive
Officer
BOTANICALS INTERNATIONAL EXTRACTS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President and Chief Executive
Officer
BUYER: ZUELLIG BOTANICALS, INC.
By: Xxxxx Xxxxxxxxx
------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
S-1
AGREED AND ACCEPTED
AS TO SECTION 1.11 AND EXHIBIT M:
CREDITORS COMMITTEE
By: /s/ Xxxx Xxxxxx
---------------------------------------
Name: Xxxx Xxxxxx
Title: Chairman of the Creditors Committee
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ANNEX A - DEFINITIONS
---------------------
"Abandoned Intellectual Property" shall have the meaning set forth in
Section 1.11 hereof.
"Accounts Receivable" shall have the meaning set forth in Section 1.1
hereof.
"Acquired Assets" shall have the meaning set forth in Section 1.1 hereof.
"Affiliate" means, with regard to any Person, (a) any Person, directly or
indirectly, controlled by, under common control of, or controlling such Person;
(b) any Subsidiary; (c) any Person, directly or indirectly, in which such Person
holds, of record or beneficially, fifty percent (50%) or more of the equity or
voting securities; (d) any Person that holds, of record or beneficially, fifty
percent (50%) or more of the equity or voting securities of such Person; (e) any
Person that, through Contract, relationship or otherwise, exerts a substantial
influence on the management of such Person's affairs; (f) any Person that,
through Contract, relationship or otherwise, is influenced substantially in the
management of its affairs by such Person; or (g) any director, officer, partner
or individual holding a similar position in respect of such Person. For purposes
of this definition, Buyer, Zatpack and ZGNA shall not be considered to be an
Affiliate of any of the Sellers and vice versa.
"Agreement" shall have the meaning set forth in the first paragraph hereof.
"Allowed Claim" shall have the meaning set forth in the Xxxxxx Plan.
"Alternative Transaction" shall mean an event where the Sellers sell,
transfer, lease or otherwise dispose, directly or indirectly, including through
an asset sale, stock sale, merger, reorganization or other similar transaction,
all or a substantial portion of the Acquired Assets in a transaction or series
of related transactions to a party or parties other than Buyer or its
Affiliates.
"Asset Sale Order" means the order approving the sale of the Acquired
Assets, which Asset Sale Order shall, among other things, (i) approve this
Agreement and the transactions contemplated hereby, and (ii) contain the other
provisions set forth in Exhibit L hereof (it being understood that certain of
such provisions must constitute findings of fact or conclusions of law to be
made by the Bankruptcy Court as part of the Asset Sale Order).
"Assignment and Assumption Agreement" shall have the meaning set forth in
Section 1.4 hereof.
"Assigned Purchase Orders" shall have the meaning set forth in Section
2.5(a) hereof.
"Assumed Liabilities" shall have the meaning set forth in Section 1.3
hereof.
"Authority" means any governmental, regulatory or administrative body,
agency, commission, board, arbitrator or authority, any court or judicial
authority, any public, private or industry regulatory authority, whether
international, national, federal, state or local, including,
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without limitation, the Food and Drug Administration, the Environmental
Protection Agency, the United States Drug Enforcement Agency, and the United
States Department of Interior and Agriculture.
"Bankruptcy Code" shall have the meaning set forth in the Recitals.
"Bankruptcy Court" means the United States Bankruptcy Court in the Central
District of California.
"Bankruptcy Court Orders" means the Sales Procedures Order and the Asset
Sale Order.
"Xxxx of Sale" shall have the meaning set forth in Section 1.4 hereof.
"Break-Up Fee" shall mean $250,000 in immediately available funds.
"Business" shall have the meaning set forth in the Recitals.
"Buyer Debt" shall have the meaning set forth in Section 1.7(d) hereof.
"Buyer Knowledge Group" means Xxxxx Xxxxxxxxx, Xxxxxxx Xxxxxx, Xxxx Xxxxxx,
Xxxxxxx Xxxxxxxx and Xxxx Xxxx.
"Buyer Releasees" shall have the meaning set forth in Section 5.2 hereof.
"Buyer Releasors" shall have the meaning set forth in Section 5.3 hereof.
"Cash Consideration" shall have the meaning set forth in Section 1.5
hereof.
"Chapter 11 Case" shall have the meaning set forth in the Recitals.
"Claim" means any action, claim, lawsuit, demand, suit, inquiry, hearing,
investigation, notice of a violation or noncompliance, litigation, proceeding,
arbitration, appeals or other dispute, whether civil, criminal, administrative
or otherwise.
"Closing" shall have the meaning set forth in Section 10.1 hereof.
"Closing Date" shall have the meaning set forth in Section 10.1 hereof.
"Code" means the Internal Revenue Code of 1986, as amended, and the
Regulations thereunder.
"Collection Period" shall have the meaning set forth in Section 1.9.
"Contract" means any agreement, contract, commitment, instrument, document,
certificate or other binding arrangement or understanding, whether written or
oral.
"Creditors Committee" shall mean the official committee of unsecured
creditors appointed in the Chapter 11 Case.
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"D&O Releases" shall have the meaning set forth in Section 5.4.
"Eligible Unsecured Creditor" shall have the meaning set forth in Section
1.3 hereof.
"Environmental Law" means any Regulation, Order, settlement agreement or
Authority requirement, which relates to or otherwise imposes liability or
standards of conduct concerning the environment, health, safety or Hazardous
Substances, including without limitation, discharges, emissions, releases or
threatened releases of noises, odors or any Hazardous Substances, whether as
matter or energy, into ambient air, water, or land, or otherwise relating to the
manufacture, processing, generation, distribution, use, treatment, storage,
disposal, cleanup, transport or handling of Hazardous Substances, including
without limitation the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended, the Superfund Amendments and Reauthorization
Act of 1986, the Hazardous Material Transportation Act, the Resource
Conservation and Recovery Act of 1976, the Toxic Substances Control Act, the
Federal Water Pollution Control Act, the Clean Water Act, the Clean Air Act, the
Occupational Safety and Health Act, any so-called "Superlien" law, all as now or
hereafter amended or supplemented, and the Regulations promulgated thereunder,
and any other similar Federal, state or local Regulations.
"Evaluation Period" shall have the meaning set forth in Section 1.6 hereof.
"Excluded Assets" shall have the meaning set forth in Section 1.2 hereof.
"Excluded Liabilities" shall have the meaning set forth in Section 1.3
hereof.
"Final Order" means an order or judgment of the Bankruptcy Court or any
other court or adjudicative body as to which (a) the time to appeal, petition
for certiorari, or move for reargument or rehearing has expired and as to which
no appeal, petition for certiorari, or other proceedings for reargument or
rehearing shall then be pending or, (b) in the event that an appeal, writ of
certiorari, reargument, or rehearing thereof has been sought, such order of the
Bankruptcy Court or any other court or adjudicative body shall have been
affirmed by the highest court to which such order was appealed, or certiorari
has been denied, or from which reargument or rehearing was sought, and the time
to take any further appeal, petition for certiorari or move for reargument or
rehearing shall have expired; provided, that no order shall fail to be a Final
Order solely because of the possibility that a motion pursuant to Rule 60 of the
Federal Rules of Civil Procedure or Rule 7024 of the Federal Rules of Bankruptcy
Procedure may be filed with respect to such order.
"Fund Trustee" shall have the meaning set forth in Section 1.7(c).
"GAAP" means generally accepted accounting principles as in effect in the
United States, consistently applied.
"Xxxxxx Plan" shall have the meaning set forth in Section 1.11.
"Hazardous Substances" shall be construed broadly to include any toxic or
hazardous substance, material, or waste, any petroleum or petroleum products,
radioactive
A-3
materials, asbestos in any form that has become friable, ura formaldehyde foam
insulation, dielectric fluid containing levels of polychlorinated biphenyls, and
radon gas, any chemicals, materials or substances defined or included in the
definition of "hazardous substances," "restricted hazardous wastes," "toxic
substances," "toxic pollutants," or words of similar import, under any
applicable Environmental Law, any other chemical, material or substance,
exposure to which is prohibited, limited, or regulated by any governmental
Authority and any other contaminant, pollutant or constituent thereof, whether
liquid, solid, semi-solid, sludge and/or gaseous, including without limitation,
chemicals, compounds, by-products, pesticides, asbestos containing materials,
petroleum or petroleum products or by-products, and polychlorinated biphenyls,
the presence of which requires investigation or remediation under any
Environmental Law or which are or could reasonably be expected to become
regulated, listed or controlled by, under or pursuant to any Environmental Law,
or which has been or shall be determined or interpreted at any time by any
Authority to be a hazardous or toxic substance regulated under any other
Regulation or Order.
"HTS" shall mean Xxxxxx Technical Services, Inc.
"HTS/ZetaPharm Release" shall have the meaning set forth in Section 5.4
hereof.
"Indebtedness" with respect to any Person means (a) indebtedness for
borrowed money, including indebtedness evidenced by a note, bond, debenture or
similar instrument and any guarantees or keep-well obligations or other
contingent obligations in respect thereof, (b) obligations to pay rent or other
amounts under any lease of real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet under GAAP, (c) obligations in respect of outstanding
letters of credit, acceptances and similar obligations created for the account
of such Person, (d) liabilities under interest rate cap agreements, interest
rate swap agreements, foreign currency exchange agreements and other hedging
agreements or arrangements; and (e) retroactive insurance premium obligations.
"Indemnitee" shall have the meaning set forth in Section 12.4(a) hereof.
"Indemnitor" shall have the meaning set forth in Section 12.4(a) hereof.
"Intellectual Property" means any or all of the following in any
jurisdiction: (i) all patents and applications therefore and all reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof, reexaminations, and extensions thereof, any
counterparts claiming priority therefrom, utility models, patents of
importation/confirmation, certificates of invention, certificates of
registration and like statutory rights; (ii) all inventions (whether patentable
or not), invention disclosures, improvements, trade secrets, proprietary
information, processes, formulae, technology, technical information, data and
customer lists, engineering procedures and all documentation relating to any of
the foregoing; (iii) all works of authorship, whether or not copyrightable,
copyrights, copyright registrations and pending copyright registration
applications and mask works, and all other rights corresponding thereto; (iv)
all industrial designs and any registrations and applications therefore; (v) all
trade names, corporate names, logos, URLs and other network and email
identifiers, trade
A-4
dress, trademarks and service marks, brand names and all registrations and
applications therefore; and (vi) goodwill associated with the foregoing.
"Inventory" shall have the meaning set forth in Section 1.1 hereof.
"Knowledge of Buyer" means the actual knowledge of the Buyer Knowledge
Group.
"Knowledge of the Sellers" means the actual knowledge of Xxxxxxx X.
Xxxxxxxxx, Xxxxxx X. Xxxxxx, Xxxxxx Xxxx, Xxxx Xxxxxx and Xxxxx Schekahn.
"Licenses" means any and all licenses and/or permits issued by an Authority
or other third party relating to the operation of any of the Assets or conduct
of the Business.
"Lien" means any (a) security interest, lien, mortgage, pledge,
hypothecation, encumbrance, Claim, easement, charge, restriction on transfer,
voting or otherwise, options, right of first refusal, right of first offer,
right of use or occupancy or other legal or equitable encumbrance and any other
matter affecting title, or interest of another Person of any kind or nature,
including any conditional sale or other title retention Contract or lease in the
nature thereof; (b) any filing or agreement to file a financing statement as
debtor under the Uniform Commercial Code or any similar statute; and (c) any
subordination arrangement in favor of another Person, whether created by
Contract, Order, operation of law, or otherwise.
"Material Adverse Effect" means any circumstances, state of facts or
matters, not directly caused by Buyer or its Affiliates, which have, or which
might reasonably be expected to have, a material adverse effect on the Acquired
Assets or the Business or its operations, properties, assets, liabilities,
affairs, condition (financial or otherwise), results, plans, strategies or
prospects. Without limiting the generality of the foregoing each of the
following shall be deemed to have a Material Adverse Effect, (i) any loss or
damage in excess of $100,000, (ii) any warranty returns that in aggregate exceed
$100,000, (iii) any purchase order cancellations or push outs that in aggregate
exceed $100,000, or (v) any Claim that the products sold by the Business
infringe or require a license under the Intellectual Property of a third party.
In no event shall any of the following, alone or in combination, be deemed to
constitute, nor shall any of the following be taken into account in determining
whether there has been or will be a Material Adverse Effect: (w) any change or
effect specifically permitted by this Agreement or resulting from compliance
with the terms and conditions of this Agreement; (x) the act of filing the
Chapter 11 Case in and of itself; (y) any change or effect that results or
arises from changes affecting any of the industries in which the Sellers operate
generally or the United States economy generally (which changes or effects in
each case do not disproportionately affect such entity in any material respect);
and (z) any change or effect that results or arises from changes affecting
general worldwide economic or capital market conditions (which changes or
effects in each case do not disproportionately affect such entity in any
material respect).
"Net Sales" means, with respect to any product in the current product line
of the Business, as set forth on Schedule A under the heading "Current Product
Line of the Business," the amount actually invoiced for the transfer, delivery,
or sale of such product, whether at wholesale or otherwise, by Buyer after the
Closing Date or the Sellers prior the Closing Date, as
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applicable, or their respective Affiliates or distributors, to a third party
after deducting the following, to the extent actually incurred or allowed with
respect to such sale: (a) normal and customary trade, cash and/or quantity
discounts or rebates, including any volume, formulary or other positioning
discounts or rebates paid or credited to any wholesaler, purchaser or third
party payor or other contractee as a result of a contractual arrangement
specific to a product; (b) import, export, sales, use, excise and other
consumption taxes and custom duties or tariffs, to the extent and up to the
amount mentioned in that respect on the invoice, and any other governmental
charges imposed upon the importation, use or sale of a product; (c) actual
freight, insurance and other transportation charges; (d) discounts (including
retroactive price reductions or statutorily required reimbursement) mandated by
or granted in response to local, state, provincial or federal law or regulation;
(e) allowances or credits on account of recalls, rejection or return of product
(including for spoiled, damaged and/or outmoded goods) in the ordinary course of
business; and (f) compulsory payments and rebates accrued, paid or credited to
any Authority or any third party payor, administrator or contractee. Net Sales
will not include any product supplied as commercial samples or used for testing
or clinical or marketing studies. Buyer shall not shift sales of products to its
Affiliates or other entities with the intent to reduce the amount of any Royalty
Payment.
"Non-Released Agreements" shall have the meaning set forth in Section 5.1
hereof.
"Occurrence" means any accident, happening or event which occurs or has
occurred at any time prior to the Closing Date that is caused or allegedly
caused by any hazard or defect in manufacture, design, materials, process or
workmanship including, without limitation, any failure or alleged failure to
warn or any breach or alleged breach of express or implied warranties or
representations with respect to a product manufactured, shipped, sold or
delivered by or on behalf of Seller which results or is alleged to have resulted
in injury or death to any person or damage to or destruction of property
(including damage to or destruction of the product itself) or other
consequential damages, at any time.
"Order" means any writ, decree, order, judgment, injunction, rule, ruling,
voting right, consent of or by an Authority.
"Overlap Period" shall have the meaning set forth in Section 6.2(a) hereof.
"Permits" means all permits, licenses, registrations, certificates, Orders,
qualifications or approvals required by any Authority or other Person.
"Permitted Liens" means (a) statutory Liens not yet delinquent and
immaterial in amount; (b) liens placed by Xxxxx Fargo pursuant to the Xxxxx
Fargo Loan Documents or pursuant to the cash collateral stipulation and cash
collateral orders entered during the pendency of the Chapter 11 Case; (c) the
rights of customers of the Sellers with respect to inventory or work in progress
under purchase orders or Contracts entered into by the Sellers in the ordinary
course of business; or (d) mechanics', carriers', workers', repairmen's,
warehousemen's, or other similar Liens arising in the ordinary course of
business in respect of obligations not overdue and immaterial in amount or which
are being contested in good faith and covered by a bond in an
A-6
amount at least equal to the amount of the Lien or which are asserted by the
Buyer against the Acquired Assets.
"Person" means any corporation, partnership, joint venture, limited
liability company, organization, entity, Authority or natural person.
"Pre-Closing Period" shall mean all taxable years or other taxable periods
that end on or before the Closing Date, and with respect to any taxable year or
other taxable period beginning on or before and ending after the Closing Date,
the portion of such taxable year or period ending on and including the Closing
Date.
"Pre-Closing Trade Accounts Receivable" shall mean all billed and unbilled
accounts receivable (other than those set forth on Schedule B under the heading
"Excluded Pre-Closing Trade Accounts Receivable"), and all notes receivable and
other rights to payment, except insurance proceeds, in connection with the
Business existing prior to the Closing, including, without limitation, any
unpaid interest accrued on any such accounts receivable and any unbilled
receivable for work in progress.
"Pre-Closing Monthly Trade Accounts Receivable Consideration" shall have
the meaning set forth in Section 1.5(b) hereof.
"Purchase Price" shall have the meaning set forth in Section 1.4 hereof.
"Recall" means product recall, rework or post-sale warning or similar
action.
"Registered Intellectual Property" means all United States, international
and foreign: (a) patents and patent applications (including provisional
applications); (b) registered trademarks and servicemarks, applications to
register trademarks and servicemarks, intent-to-use applications, other
registrations or applications to trademarks or servicemarks, or trademarks or
servicemarks in which common law rights are owned or otherwise controlled; (c)
registered copyrights and applications for copyright registration; (d) any mask
work registrations and applications to register mask works; and (e) any other
Intellectual Property that is the subject of an application, certificate,
filing, registration or other document issued by, filed with, or recorded by,
any state, government or other public legal authority.
"Regulation" means any rule, law, code, statute, regulation, ordinance,
requirement, announcement, policy, guideline, rule of common law or other
binding action of or by an Authority and any judicial interpretation thereof,
including, without limitation, the Food, Drug and Cosmetic Act, United States
Food and Drug Administration regulations adopted thereunder, Dietary
Supplementary Health and Education Act, Toxic Substances Control Act, Resource
Conservation and Recovery Act, and the Federal Water Pollution Act and any
Regulation relating to export control and trade embargoes.
"Released Agreements" shall have the meaning set forth in Section 4.11(a)
hereof.
"Restricted Area" shall have the meaning set forth in Section 4.4(a)
hereof.
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"Restricted Period" shall have the meaning set forth in Section 4.4(a)
hereof.
"Xxxxxxxx Intellectual Property" means any or all of the following in any
jurisdiction: (i) all patents and applications therefore and all reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof, reexaminations, and extensions thereof, any
counterparts claiming priority therefrom, utility models, patents of
importation/confirmation, certificates of invention, certificates of
registration and like statutory rights; and (ii) all inventions (whether
patentable or not), invention disclosures, improvements, trade secrets,
proprietary information, processes, formulae, technology, technical information,
data lists, engineering procedures, know how and all documentation relating to
any of the foregoing.
"Xxxxxxxx License" shall have the meaning set forth in Section 1.12 hereof.
"Royalty Payment" shall mean an amount equal to the higher of (a) 8% of the
Net Sales of the Business for an applicable one month period, or (b) $180,000
per month.
"Sale Motion" shall have the meaning set forth in Section 4.1 hereof.
"Sale Motion Date" shall have the meaning set forth in Section 4.1 hereof.
"Sale Procedures Order" shall mean an order (i) authorizing the sale of the
Acquired Assets under Section 363 of the Bankruptcy Code, and (ii) approving the
Sales Procedures Provisions.
"Sale Procedures Provisions" shall mean the provisions set forth in Exhibit
K to this Agreement, providing for the bidding procedures for the sale of the
Acquired Assets, and the no-shop and break-up fee provisions related thereto.
"SEC" means the Securities Exchange Commission.
"Seller Distributions" shall have the meaning set forth in Section 1.7(b).
"Seller Intellectual Property" shall have the meaning set forth in Section
1.1(b).
"Seller Professionals" shall have the meaning set forth in Section
1.3(a)(i) hereof.
"Seller Releasees" shall have the meaning set forth in Section 5.3 hereof.
"Seller Releasors" shall have the meaning set forth in Section 5.2 hereof.
"Seller Registered Intellectual Property" means all Registered Intellectual
Property related to or used in the Business owned by, filed in the name of,
assigned to or applied for by, or held by a third party for the benefit of, any
of the Sellers.
"Sellers" shall have the meaning set forth in the Preamble.
"Subsidiary" of a Person means (1) any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the
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board of directors or other Persons performing similar functions are at the time
directly or indirectly owned by the Person or (2) a partnership or limited
liability company in which the Person or a Subsidiary of the Person is, at the
date of determination, a general partner, limited partner or member, as the case
may be, but only if the Person or its Subsidiary is entitled at any time to
receive more than 50% of the amounts distributed or distributable by such
partnership or limited liability company to the partners or members thereof
whether upon dissolution or otherwise.
"Substantive Consolidation Claim" shall have the meaning set forth in
Section 4.1 hereof.
"Tax Returns" means federal, state, foreign and local Tax reports, returns,
information returns and other similar documents.
"Tax" or "Taxes" means all taxes, assessments, charges, duties, fees,
levies or other governmental charges, including, without limitation, all
federal, state, local, foreign and other income, franchise, profits, gross
receipts, capital gains, capital stock, transfer, property, sales, use,
value-added, occupation, property, excise, severance, windfall profits, stamp,
license, payroll, social security, withholding and other taxes, assessments,
charges, duties, fees, levies or other governmental charges of any kind
whatsoever (whether payable directly or by withholding and whether or not
requiring the filing of a Tax Return), all estimated taxes, deficiency
assessments, additions to tax, penalties 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 or other entity.
"Trademark Assignment Agreement" shall have the meaning set forth in
Section 1.3 hereof.
"Transfer Taxes" shall have the meaning set forth in Section 6.2(b) hereof.
"Unknown Claims" means any claim, demand, or cause of action that the
Seller Releasors or Buyer Releasors, as applicable, or any of them do not know
or suspect to exist in his, her, or its favor at the time of the release
provided for in this Agreement, including without limitation those that, if
known to him, her, or it might have affected its decision to enter into the
settlement and release provided by this Agreement.
"Unsecured Creditor Claims Schedule" shall have the meaning set forth in
Section 1.3(a)(i) hereof.
"Unsecured Creditor Fund" shall have the meaning set forth in Section 1.7
hereof.
"Xxxxx Fargo" shall mean Xxxxx Fargo Bank, N.A.
"Xxxxx Fargo Commitment Letter" shall have the meaning set forth in Section
3.5 hereof.
"Xxxxx Fargo Loan Documents" shall mean the Amended and Restated Credit
Agreement dated as December 7, 2001, by and among Hauser, BIE, Technical,
ZetaPharm,
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Xxxxxx Natural Products, Inc., and Xxxxx Fargo, as amended, and the notes and
other agreements entered into pursuant to such Agreement.
"Zatpack" shall mean Zatpack, Inc., a company incorporated under the laws
of the British Virgin Islands.
"Zatpack/ZGNA Release" shall have the meaning set forth in Section 5.4
hereof.
"Zatpack Note" shall have the meaning set forth in Section 1.7 hereof.
"ZetaPharm" shall mean ZetaPharm, Inc.
"ZGNA" shall mean Zuellig Group N.A., Inc.
Other terms may be defined elsewhere in this Agreement, and unless
otherwise indicated, shall have such meaning throughout this Agreement.
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TABLE OF CONTENTS
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Page
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ARTICLE I PURCHASE OF ASSETS................................................1
1.1. Purchase and Sale of Acquired Assets..............................1
1.2. Excluded Assets...................................................3
1.3. Assumed Liabilities...............................................4
1.4. Method of Conveyance..............................................5
1.5. Purchase Price....................................................5
1.6. Closing and Post-Closing Cash Consideration Adjustment............6
1.7. Unsecured Creditor Fund...........................................7
1.8. Application of Certain Royalty Payments...........................9
1.9. Collection Services..............................................10
1.10. Allocation of Purchase Price.....................................11
1.11. Xxxxxx Plan......................................................11
1.12. Xxxxxxxx License.................................................11
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS........................12
2.1. Organization and Good Standing...................................12
2.2. Power and Authority..............................................12
2.3. No Violation; Certain Restrictive Contracts......................12
2.4. Absence of Certain Changes.......................................13
2.5. Purchase Orders..................................................13
2.6. Title............................................................14
2.7. Litigation.......................................................14
2.8. Tax Matters......................................................15
2.9. Compliance with Law..............................................15
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2.10. Intellectual Property............................................15
2.11. Warranties.......................................................16
2.12. Products Liability...............................................16
2.13. Insurance........................................................17
2.14. Accounts Receivable..............................................17
2.15. Inventories......................................................17
2.16. Brokerage........................................................17
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER..........................17
3.1. Organization and Good Standing...................................17
3.2. Power and Authority..............................................18
3.3. No Violation.....................................................18
3.4. Brokerage........................................................18
3.5. Financial Capacity...............................................18
ARTICLE IV COVENANTS OF THE SELLERS.........................................18
4.1. Bankruptcy Court Approval........................................18
4.2. Operation of Business............................................20
4.3. Full Access and Disclosure.......................................21
4.4. Non-Competition..................................................21
4.5. Confidentiality..................................................22
4.6. Fulfillment of Conditions Precedent..............................23
4.7. Deliveries After Closing.........................................23
4.8. Retention of Books and Records...................................23
4.9. Notice of Transactions...........................................23
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4.10. Claims Against Buyer.............................................23
ARTICLE V TERMINATION AND RELEASES.........................................24
5.1. Non-Released Agreements..........................................24
5.2. The Sellers' Releases............................................24
5.3. Buyer's Releases.................................................24
5.4. Additional Agreements............................................25
ARTICLE VI OTHER AGREEMENTS.................................................26
6.1. Cooperation......................................................26
6.2. Agreement to Defend..............................................26
6.3. Further Assurances...............................................27
6.4. Access to Books and Records; Audit Rights........................27
6.5. Administration of Accounts; Customer Inquiries...................27
6.6. Public Announcements.............................................27
6.7. No Personal Liability............................................28
ARTICLE VII TAX MATTERS......................................................28
7.1. Payment of Taxes.................................................28
ARTICLE VIII CONDITIONS TO THE OBLIGATIONS OF BUYER...........................29
8.1. Bankruptcy Court Approval........................................29
8.2. Representations and Warranties; Performance......................29
8.3. No Material Adverse Change.......................................29
8.4. No Proceeding or Litigation......................................29
8.5. Proceedings and Documents........................................29
8.6. Physical Inventory...............................................30
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8.7. Secretary's Certificate; Good Standing...........................30
8.8. Officer's Certificate............................................30
8.9. Executed Agreements..............................................30
8.10. Financing........................................................30
8.11. Eligible Unsecured Creditor Releases.............................30
8.12. Release of Liens; Use of Proceeds; Creditor Committee Release....31
8.13. Dismissal of Substantive Consolidation Claim.....................31
ARTICLE IX CONDITIONS TO THE OBLIGATIONS OF THE SELLERS.....................31
9.1. Bankruptcy Court Approval........................................31
9.2. Representations and Warranties; Performance......................31
9.3. Consents and Approvals...........................................31
9.4. No Proceeding or Litigation......................................31
9.5. Secretary's Certificate..........................................31
9.6. Officer's Certificate............................................32
9.7. Executed Agreements..............................................32
9.8. Dismissal of Appeal..............................................32
ARTICLE X CLOSING..........................................................32
10.1. Closing..........................................................32
ARTICLE XI TERMINATION AND ABANDONMENT......................................32
11.1. Methods of Termination...........................................32
11.2. Procedure Upon Termination.......................................33
11.3. Effect of Termination............................................34
ARTICLE XII SURVIVAL AND INDEMNIFICATION.....................................34
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Table of Contents
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12.1. Survival of Representations and Warranties and Covenants.........34
12.2. Indemnification by the Sellers...................................35
12.3. Indemnification by Buyer.........................................36
12.4. Third-Party Claims...............................................36
12.5. Payment of Indemnification Claims................................38
12.6. Threshold for Recovering Losses..................................38
12.7. Cap on Losses Recoverable........................................38
12.8. Time Period For Asserting Claims for Indemnification.............38
12.9. Tax Benefits; Insurance Proceeds.................................39
ARTICLE XIII MISCELLANEOUS PROVISIONS.........................................39
13.1. Amendment and Modification.......................................39
13.2. Waiver of Compliance; Consents...................................39
13.3. Notices..........................................................39
13.4. Assignment.......................................................41
13.5. Governing Law....................................................41
13.6. Arbitration......................................................41
13.7. WAIVER OF JURY TRIAL.............................................41
13.8. Injunctive Relief................................................42
13.9. Counterparts.....................................................42
13.10. Headings.........................................................42
13.11. Entire Agreement.................................................42
13.12. Severability.....................................................42
13.13. Expenses.........................................................42
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13.14. No Third Party Beneficiaries.....................................43
13.15. Schedules........................................................43
13.16. No Strict Construction...........................................43
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SCHEDULES AND EXHIBITS
Schedules Responsibility
--------- --------------
("Seller" or "Buyer")
A Current Product Line of the Business...............................S
B Excluded Pre-Closing Trade Accounts Receivable.....................B
1.1(k) Other Assets (Acquired)............................................B
1.2(k) Other Assets (Excluded)............................................S
1.3(a)(i) Unsecured Creditor Claims Schedule...............................B/S
1.3(a)(ii) Seller Professional Fees Schedule (Closing Date delivery)..........S
1.5 Calculation Methodology .........................................B/S
1.10 Purchase Price Allocation........................................B/S
2.1 Organization and Good Standing ....................................S
2.3(a) No Violation.......................................................S
2.3(b) Certain Restrictive Contracts .....................................S
2.4 Absence of Certain Changes.........................................S
2.5(a) Assigned Purchase Orders...........................................S
2.5(b) Defaults under Assigned Purchase Orders............................S
2.6 Title Matters......................................................S
2.7(a) Litigation.........................................................S
2.7(b) Stockholder Claims.................................................S
2.8 Tax Matters........................................................S
2.9 Compliance with Law................................................S
2.10(a) Intellectual Property .............................................S
2.11 Warranties.........................................................S
2.12 Products Liability.................................................S
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2.13 Insurance..........................................................S
2.14(a) Accounts Receivable................................................S
2.14(b) Accounts Receivable Subject to Defenses............................S
2.15 Inventories........................................................S
4.4 Xxxxxx Park Activities.............................................S
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Exhibits
--------
A Form of Xxxx of Sale........................................................B
B Form of Assignment and Assumption Agreement.................................B
C Form of Trademark Assignment Agreement......................................B
D Form of ZetaPharm Name Purchase Agreement...................................B
E Form of Eligible Unsecured Creditor Covenant Not to Xxx.....................B
F Form of Non-Competition Agreement...........................................B
G Form of HTS/ZetaPharm Release...............................................B
H Form of Zatpack/ZGNA Release................................................B
I Form of Seller Director and Officer Releases................................X
X Xxxxx Fargo Commitment Letter ..............................................B
K Sale Procedures Provisions and Order .......................................B
L Asset Sale Order ...........................................................X
X Xxxxxx Plan Summary ........................................................B
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