1
Exhibit 10.24
MASTER FORMATION AGREEMENT
FOR
INCON PROCESSING, L.L.C.
AMONG
AC HUMKO CORP.,
INCON TECHNOLOGIES, INC.,
INCON INTERNATIONAL, INC.,
NUTRITION TECHNOLOGY CORPORATION,
AND
BIONUTRICS, INC.,
JUNE 25, 1999
The notation [*] herein indicates information omitted pursuant to a
request for confidential treatment filed with the Commission. The confidential
information has been filed separately with the Commission.
2
TABLE OF CONTENTS
PAGE
----
ARTICLE 1
Definitions ..................................................................................... 1
1.1 Definitions ............................................................................ 1
ARTICLE 2
The Company ..................................................................................... 7
2.1 New Business Structure ................................................................. 7
2.2 Contributions .......................................................................... 7
2.3 Contributions and Commitments to the Company ........................................... 7
2.4 Pre-Closing Actions to Create Company .................................................. 8
ARTICLE 3
Closing ......................................................................................... 9
3.1 Closing: Effective Date ............................................................... 9
3.2 Activation of the Company .............................................................. 9
3.3 Contributions and Commitments to the Company ........................................... 9
3.4 Transfer of Various Assets of InCon .................................................... 9
3.5 Execution of Transition Services Agreement. ............................................ 10
3.6 Execution of Amendment to Agreement for Purchase and Sale of Assets .................... 10
3.7 Execution of Related Agreements ........................................................ 10
3.8 Transfer of Construction Contract. ..................................................... 10
3.9 Notification of Assignment of Rights in Construction Contract. ......................... 10
3.10 Transfer of Representation Agreement. .................................................. 10
3.11 Notification of Assignment of Rights in Representation Agreement. ...................... 11
3.12 Transfer of Sales Representative Agreements. ........................................... 11
3.13 Notification of Assignment of Rights in Sales Representative Agreements. ............... 11
3.14 Escrow Agreement. ...................................................................... 11
3.15 Payment of Debts. ...................................................................... 11
3.16 Transfer of Golden Hope Instrument. .................................................... 11
3.17 Notification of Assignment of Rights in Golden Hope Instrument. ........................ 11
3.18 Guaranty. .............................................................................. 12
ARTICLE 4
Representations and Warranties by InCon ......................................................... 12
4.1 Organization and Authority ............................................................. 12
4.2 Validity: Enforceability. ............................................................. 12
4.3 No Violation. .......................................................................... 12
4.4 Litigation and Proceedings. ............................................................ 13
4.5 Third-Party Consents ................................................................... 13
ii
3
4.6 InCon Contracts. ....................................................................... 13
4.7 Environmental Matters .................................................................. 13
4.8 Intellectual Property Matters .......................................................... 14
4.9 Product Claims ......................................................................... 14
4.10 No Grant of Manufacturing Rights. ...................................................... 15
4.11 Title to Tangible Assets ............................................................... 15
4.12 Leased Real and Personal Property ...................................................... 15
4.13 Taxes .................................................................................. 15
4.14 Employee Matters ....................................................................... 16
4.15 Compliance with Laws ................................................................... 17
4.16 Ongoing Capital Expenditures ........................................................... 17
4.17 Ownership of Stock ..................................................................... 17
4.18 Identity of Subsidiaries ............................................................... 17
4.19 Employee Benefit Plans ................................................................. 17
4.20 Proprietary Information. ............................................................... 19
4.21 Brokers. ............................................................................... 20
4.22 Code. .................................................................................. 20
4.23 Insurance. ............................................................................. 20
4.24 Construction Contract. ................................................................. 20
4.25 Year 2000 Ready. ....................................................................... 20
4.26 Sales Representative Agreements. ....................................................... 20
4.27 State of Equipment ..................................................................... 20
4.28 Payments to Officials. ................................................................. 20
4.29 Accounts Payable. ...................................................................... 21
4.30 Accounts Receivable. ................................................................... 21
ARTICLE 4A
Representations and Warranties by Bionutrics .................................................... 21
4A.1 Organization and Authority. ............................................................ 21
4A.2 Validity: Enforceability. ............................................................. 21
4A.3 No Violation. .......................................................................... 21
4A.4 Litigation and Proceedings. ............................................................ 22
4A.5 Third-Party Consents. .................................................................. 22
4A.6 InCon Contracts. ....................................................................... 22
4A.7 Brokers. ............................................................................... 22
4A.8 Code. .................................................................................. 22
4A.9 Proprietary Information. ............................................................... 23
4A.10 Ownership of Stock. .................................................................... 23
4A.11 Matter Having Biological Activity. ..................................................... 23
ARTICLE 4B
Representations and Warranties by InCon International Inc. ...................................... 23
4B.1 Organization and Authority. ............................................................ 23
4B.2 Validity: Enforceability. ............................................................. 23
iii
4
4B.3 No Violation. .......................................................................... 24
4B.4 Representation Agreement ............................................................... 24
4B.5 Payments to Officials .................................................................. 24
4B.6 Sole Shareholder ....................................................................... 24
4B.7 Construction Contract. ................................................................. 24
ARTICLE 4C
Representations and Warranties by NTC ........................................................... 24
4C.1 Organization ............................................................................ 24
4C.2 Validity: Enforceability. .............................................................. 25
4C.3 No Violation. .......................................................................... 25
4C.4 Sole Shareholder. ...................................................................... 25
ARTICLE 5
Representations and Warranties by Humko ......................................................... 25
5.1 Organization and Authority ............................................................. 25
5.2 Validity: Enforceability. .............................................................. 26
5.3 No Violation. .......................................................................... 26
5.4 No Limitation. ......................................................................... 26
ARTICLE 6
Covenants Between Execution and Closing and Post-Closing ........................................ 26
6.1 Access to Records ...................................................................... 26
6.2 Conduct of Business Prior to Closing ................................................... 27
6.3 Filings with Governmental Authorities .................................................. 27
6.4 Statement of Finished Goods Inventory .................................................. 27
ARTICLE 7
Covenants of the Parties After the Closing ...................................................... 27
7.1 Indemnification Regarding Pre-existing Liabilities. .................................... 27
7.2 Confidentiality ........................................................................ 28
7.3 Budget ................................................................................. 30
7.4 Guaranteed Payment to Humko. ........................................................... 30
7.5 Restrictions Relating to Certain Products and Materials. ............................... 31
7.6 Adjustment Relating to Receivables and Payables Only. .................................. 31
ARTICLE 8
Conditions to Closing ........................................................................... 32
8.1 Conditions of Humko's Obligations to Close ............................................. 32
8.2 Conditions of InCon's and Bionutrics' Obligations to Close ............................. 33
8.3 Mutual Conditions ...................................................................... 33
iv
5
8.4 Waiver of Conditions to Closing ........................................................ 34
ARTICLE 9
Termination of Agreement ........................................................................ 34
9.1 Termination of this Agreement Prior to the Closing Date ................................ 34
ARTICLE 10
General Provisions .............................................................................. 35
10.1 Binding Nature and Restrictions on Assignment .......................................... 35
10.2 Notices ................................................................................ 35
10.3 Survival of Representations and Warranties ............................................. 36
10.4 Survival of Covenants .................................................................. 36
10.5 Governing Law: Severability ............................................................ 36
10.6 Public Announcement .................................................................... 36
10.7 Expenses ............................................................................... 37
10.8 Covenant of Good Faith ................................................................. 37
10.9 Further Assurances ..................................................................... 37
10.10 Calculation of Days .................................................................... 37
10.11 Headings ............................................................................... 37
10.12 Construction ........................................................................... 37
10.13 Counterparts ........................................................................... 37
10.14 Entire Agreement; Amendment ............................................................ 37
10.15 Submission to Jurisdiction ............................................................. 37
EXHIBITS
Exhibit 1.1 Members Agreement
Exhibit 3.4(a) General Assignment and Xxxx of Sale
Exhibit 3.4(b) Assignment of Lessee's Interest in Real Property Leases
Exhibit 3.4(c) Assignment of Lessee's Interest in Personal Property
Exhibit 3.4(d) Form of Opinions of InCon, International, NTC, and Bionutrics Counsel
Exhibit 3.4(e) FIRPTA Certificate
Exhibit 3.4(g) Technology Assignment Agreement from InCon to Company
Exhibit 3.5 Transition Services Agreement
Exhibit 3.6 First Amendment to Agreement for Purchase and Sale of Assets
Exhibit 3.8 Assignment and Assumption Agreement (International Construction Contract)
Exhibit 3.9 [*]
Exhibit 3.10 Assignment of Representation Agreement
Exhibit 3.11 [*]
Exhibit 3.12 Assignment of Sales Representative Agreements
Exhibit 3.13 Notification of Assignment of Rights in and to Sales Representative Agreements
v
6
Exhibit 3.14 Escrow Agreement
Exhibit 3.16 [*]
Exhibit 3.17 [*]
Exhibit 3.18 Guaranty of Bionutrics
SCHEDULES
3.4 Schedule of InCon Assets to be Conveyed to the Company
3.15 List of Certain Loans of InCon and Its Affiliates
4.4 InCon's Litigation and Proceedings
4.5 InCon's Third-Party Consents
4.6 InCon Contracts
4.7 InCon's Environmental Disclosures
4.8 InCon's Intellectual Property Disclosures
4.9 InCon's Product Claims Disclosures
4.10 Manufacturing Licenses Granted by InCon and Affiliates
4.11(a) List of InCon's Assets to be Conveyed to Company
4.11(b) List of InCon's Assets that will be retained by InCon
4.12 InCon's Leased Real and Personal Property
4.13 InCon's Tax Disclosures
4.16 Capital Expenditures
4.19 Employee Plans
4.23 Insurance
4.29 List of Accounts Payable
4.30 List of Accounts Receivable
5.4 [*]
vi
7
MASTER FORMATION AGREEMENT
This MASTER FORMATION AGREEMENT is entered into as of June 25,
1999, by and among AC HUMKO CORP., a Delaware corporation ("Humko"), having
offices at 0000 Xxxxxxxx Xxxxx Xxxxxxx, Xxxxxxx, Xxxxxxxxx 00000-0000, INCON
TECHNOLOGIES, INC., a Delaware corporation ("InCon"), having offices at 000
Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxxx 00000, INCON INTERNATIONAL INC., a British
Virgin Islands corporation ("International"), having offices at 000 Xxxxxxx
Xxxx, Xxxxxxx, Xxxxxxxx 00000, NUTRITION TECHNOLOGY CORPORATION, a Nevada
corporation ("NTC"), having offices at 0000 X. Xxxxxxxxx Xxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxx 00000, and BIONUTRICS, INC., a Nevada corporation
("Bionutrics"), having offices at 0000 X. Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxx 00000.
W I T N E S S E T H:
WHEREAS, InCon and Humko desire to enter into this Agreement in order
to form a Delaware limited liability company provisionally named InCon
Processing, L.L.C., (the "Company"); and
WHEREAS, NTC, as the sole shareholder of all of the outstanding capital
stock of InCon, and Bionutrics, as the sole shareholder of all the outstanding
capital stock of NTC, will benefit directly and indirectly from the transactions
referred to in this Agreement and, to evidence each of their approvals to this
Agreement and the transactions covered hereby, they joined in the execution of
this Agreement and additionally have made the respective warranties,
representations, indemnities and other agreements contained in this Agreement,
and Humko would not have executed this Agreement unless Bionutrics, NTC and
InCon all executed this Agreement; and
WHEREAS, the Company intends to engage in the business activities
included within the "Scope of Business", defined in Article I; and
WHEREAS, InCon and Humko desire to enter into the arrangements and
commitments described herein to create and effectuate the formation of the
Company, and Bionutrics joins in the execution of this Agreement for the
purposes set forth above.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements and covenants of the parties hereinafter set forth, the parties
hereby agree as follows:
ARTICLE 1
Definitions
1.1 Definitions. For purposes of this Agreement, the following
capitalized terms shall have the meanings ascribed thereto in this Section 1.1.
1
8
"Affiliate(s)" means an entity controlling, controlled by or under
common control with another entity, with majority ownership being deemed
necessary for control.
"Agreement" means this Agreement, together with all Appendices,
Schedules and Exhibits hereto and any modification or amendment hereto or
thereto that is made in accordance with Section 10.14.
"Agreement for Purchase and Sale of Assets" means that certain
Agreement for Purchase and Sale of Assets dated as August 14, 1998, by and
between Bionutrics and Humko.
"Assets" has the meaning set forth in Section 3.4.
"Bionutrics" has the meaning set forth in the opening paragraph of this
Agreement.
"InCon" has the meaning set forth in the opening paragraph of this
Agreement.
"Claims and Expenses" has the meaning set forth in Section 7.1.
"Closing" has the meaning set forth in Section 3.1(a).
"Closing Date" has the meaning set forth in Section 3.1(a).
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the first recital of this
Agreement.
"Competitive Activity" has the meaning set forth in the Members
Agreement.
"Confidential Information" has the meaning set forth in Section 7.2(a).
[*]
"Covered Systems" shall mean all computer software, computer hardware,
firmware, process, production, or other control systems of every kind and
description, telecommunications and other information systems, and all other
equipment containing microchips or computer code, that are used by InCon in
connection with its business, the Facility or any of the Assets that will be
acquired by the Company pursuant to this Agreement. A Covered System includes
any third-party-manufactured products that have been included by InCon in a
Covered System that has been installed by InCon or any of its subcontractors in
connection with its business, the Facility or any of the Assets that will be
acquired by the Company pursuant to this Agreement.
2
9
"EBITDA" means all Net Earnings before applicable state and federal
corporate income Taxes and interest expense.
"Effective Date" has the meaning set forth in Section 3.1(b).
"Employee Plans" has the meaning set forth in Section 4.19(a).
"Environmental Claims and Expenses" has the meaning set forth in
Section 7.1.
"Environmental Laws" means any and all laws, statutes, ordinances,
rules, regulations, orders, or determinations of any Governmental Authority at
the federal, state, and local level pertaining to pollution of the environment
and protection of health and the environment including without limitation, the
Clean Air Act, as amended, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the Federal
Water Pollution Control Act, as amended, the Occupational Safety and Health Act
of 1970, as amended, the Resource and Conservation and Recovery Act of 1976,
("RCRA") as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendments and Reauthorization
Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended,
all implementing rules and regulations, and any other environmental conservation
or protection laws at the federal, state, and local level regarding the Release,
Threatened Release, or Disposal of Petroleum Products, Hazardous Substances,
Solid Wastes or Materials of Environmental Concern.
"Environmental Permits" has the meaning set forth in Section 4.7(b).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Facility" means the facility of InCon located at 000 Xxxxxxx Xxxx,
Xxxxxxx, Xxxxxxxx 00000.
[*]
"Governmental Authority" means the United States, the state, county,
city, and political subdivisions in which the Facility is located or that
exercise jurisdiction over the Facility or InCon, and any agency, department,
commission, board, bureau, or instrumentality that exercises jurisdiction over
the Facility or InCon.
"Gross Revenues" means all revenues received from the business of the
Company during the period commencing one (1) calendar year after the date
hereof, and ending on the date that is two (2) calendar years after the date
hereof. All such items shall be determined in accordance with generally accepted
accounting principles applied consistently.
"Guaranty" means the Guaranty of Bionutrics guaranteeing all of the
warranties, representations, indemnities, and covenants of InCon, International
and NTC under this Agreement and the Related Agreements, in the form attached
hereto as Exhibit 3.18.
3
10
"Hazardous Substance" means any material, waste, or substance, that is:
(A) included within the definitions of "hazardous substances," "hazardous
materials," or "toxic substances," in or pursuant to any Environmental Law, or
subject to regulation under any Environmental Law; (B) listed in the United
States Department of Transportation Hazardous Materials Table, 49 C.F.R.
Section 172.101, as amended, or in the United States Environmental Protection
Agency List of Hazardous Substances and Reportable Quantities, 40 C.F.R. Part
302, as amended; or (C) explosive, radioactive, asbestos, a polychlorinated
biphenyl, or a Petroleum Product.
"Humko" has the meaning set forth in the opening paragraph of this
Agreement.
"Indemnitor" has the meaning set forth in Section 7.1.
"InCon Contracts" has the meaning set forth in Section 4.6(a).
"Intellectual Property Rights" means any and all intangible rights
existing from time to time under state, federal and/or foreign Laws, including
patent Law, copyright Law, trade secret Law, unfair competition Law, trademark
Law or other similar Laws or principles. As used herein, the term "Intellectual
Property Rights" shall not include any and all proprietary compounds and
compositions of matter having biological activity and/or utility and products
incorporating such compositions of matter, but such term shall include (i) all
proprietary information with respect to methods and/or techniques involved in
the processing of natural source materials except for coconut oil and (ii) all
proprietary information relating to compounds and compositions of matter that
are biologically inactive and/or utility and products incorporating such
compositions of matter.
"International" has the meaning set forth in the opening paragraph of
this Agreement.
[*]
"Law" means any applicable constitutional provision, statute, act, code
(including the Code), law, regulation, rule, ordinance, order, injunction,
arbitral award, decree, ruling, proclamation, resolution, judgment, decision, or
declaration, of a Governmental Authority.
"Leased Real and Personal Property" has the meaning set forth in
Section 4.12(a).
"Materials of Environmental Concern" includes chemicals, pollutants,
contaminants, wastes, toxic substances, Hazardous Substances, hazardous wastes,
hazardous materials, hazardous chemical, petroleum and Petroleum Products,
regulated materials, radioactive materials, and pesticides.
"Members Agreement" means the Members Agreement for the Company, a copy
of which is attached hereto as Exhibit 1.1.
4
11
"Net Earnings" means the difference between Gross Revenues minus all
costs (excluding depreciation and amortization) incurred by the Company in
connection with the operation of the business of the Company during the period
commencing one (1) calendar year after the date hereof, and ending on the date
that is two (2) calendar years after the date hereof.
"NTC" has the meaning set forth in the opening paragraph of this
Agreement.
"Petroleum Product" means any material, product, or substance that is
included within the definitions of "petroleum," "petroleum products," "petroleum
substances," or "crude oil" or any fraction thereof, in or pursuant to any
Environmental Law, or subject to regulation under any Environmental Law.
"Proprietary Information" means all commercial and technical
information, including, without limitation, licenses, know-how, trade secrets,
inventions, drawings (whether for engineering, production, or development
purposes), specifications (whether for products, processes, equipment, or
otherwise), and formulas, owned, licensed or developed by InCon or used in the
current business of InCon, including the exclusive, world-wide right to make use
of such information in the manufacture of products, the right to create
modifications and improvements thereof, and the right to defend its interests
therein with respect to third parties. As used herein, the term "Proprietary
Information" shall not include any and all commercial and technical information
relating to proprietary compounds and compositions of matter having biological
activity and/or utility and products incorporating such compositions of matter,
but such term shall include (i) all proprietary information with respect to
methods and/or techniques involved in the processing of natural source materials
except for coconut oil and (ii) all proprietary information relating to
compounds and compositions of matter that are biologically inactive and/or
utility and products incorporating such compositions of matter.
"Release", "Threatened Release" and "Disposal" shall have the meanings
provided within the definitions of "release," "threatened release," or
"disposal" in or pursuant to any Environmental Law, or subject to regulation
under any Environmental Law.
"Related Agreements" means all of the agreements set forth as Exhibits
hereto and any other agreements executed by any of the parties hereto in
connection with the matters covered by this Agreement.
[*]
"Sales Representative Agreements" means the following Sales
Representative Agreements:
[*]
5
12
"Scope of Business" means the toll processing of various products, the
sale of certain equipment and services in connection with the design,
engineering and/or construction of molecular separation (including molecular
distillation, dry fractionation, chromatographic separation and membrane
filtration) facilities and various activities related thereto, including
research and development, technical support and marketing, and the operation of
certain facilities involving molecular separation procedures and other processes
and procedures currently engaged in by InCon [*]; and
"Solid Waste" means any material, waste, or substance included within
the definition of "solid waste" in or pursuant to any Environmental Law, or
subject to regulation under any Environmental Law.
"Taxes" has the meaning set forth in Section 4.13.
"Tax Return" has the meaning set forth in Section 4.13.
"Territory" has the meaning set forth in the Members Agreement.
"Technology" means all proprietary technology owned, licensed or
developed by InCon, which relates to the business of InCon or which is within
the Scope of the Business.
"Transition Services Agreement" means the Transition Services Agreement
between the Company and InCon of even date herewith and the form of which is
attached as Exhibit 3.5.
"Year 2000 Ready" shall mean capable at all times, without additional
human intervention or additional programming, of correctly processing (and, if
applicable, calculating, comparing, and/or sequencing), storing, retrieving,
displaying, printing, inputting and outputting calendar, date, and time data
before, on, and after January 1, 2000 (and correctly handling each leap year);
the dates shall be in a 4-digit year format (YYYY) except for windowing and
similar techniques that permit logical interpretation of two-digit year fields
in situations where use of the temporary logical technique is specifically
disclosed and agreed to by all parties.
ARTICLE 2
The Company
2.1 New Business Structure.
(a) The parties shall cause the Company to be formed as a
Delaware limited liability company. After the Closing, the Company will be owned
fifty percent (50%) by Humko and fifty percent (50%) by InCon, subject to the
terms of the Members Agreement.
(b) Each party is and shall remain liable for all pre-existing
liabilities relating to the conduct of its respective businesses and the
businesses of its Affiliates prior to the Closing.
6
13
2.2 Contributions. InCon and Humko will make the contributions and
contractual commitments to the Company that are summarized in Sections 2.3 and
2.4. The parties have agreed that the aggregate value of the contributions to be
made by Humko is US $3,200,000 and the aggregate value of the contributions to
be made by InCon is US $3,200,000.
2.3 Contributions and Commitments to the Company.
(a) InCon shall convey to the Company all of the Assets, which InCon and Humko
have agreed have a value of US $6,000,000. InCon's contribution to the Company
shall be equal to $3,000,000 for the contribution of a one-half (1/2) undivided
interest in and to the Assets, and the Company shall immediately purchase the
other undivided one-half interest in and to the Assets for US $3,000,000. In
addition, InCon shall contribute US $200,000 in cash to the Company at Closing.
Accordingly, the aggregate contribution from InCon to the Company on the Closing
Date shall be equal to US $3,200,000.
(b) Humko shall make a cash contribution to the Company equal to US $3,200,000.
2.4 Pre-Closing Actions to Create Company. On or before the Closing
Date,
(a) Humko and InCon agree to execute, file and record such
certificates and other documents as may be required in order to form the Company
as a limited liability company under Delaware Law. The parties agree not to make
any election to treat the Company as other than a partnership for federal income
tax purposes. The parties will further qualify the Company to do business in
Illinois and any jurisdiction that they determine to be appropriate and will
open a bank account in the name of the Company at a bank agreed to by the
parties.
(b) InCon shall obtain the written consent and estoppel, in
form and substance reasonably satisfactory to Humko, of each lessor of equipment
and the Facility leased by InCon to the transfer by InCon of its interest under
each of the respective leases to the Company.
(c) InCon shall obtain such other written consents and
estoppels from other contract parties, in form and substance reasonably
satisfactory to Humko, as may be required by Humko including, without
limitation, those related to various toll processing agreements in connection
with the business of InCon and each of the following:
(i) [*]
(ii) [*]
(iii) Manufacturing Agreement with InCon Industries, Inc.
dated October 31, 1997;
(iv) Facility lease identified on Schedule 4.12; and
7
14
(v) [*]
(d) Humko shall conduct its due diligence inspections of all
Facilities leased by InCon together with an inspection of all records and
documents of InCon.
ARTICLE 3
Closing
3.1 Closing: Effective Date.
(a) The closing (the "Closing") of the transactions
contemplated by this Agreement shall take place at 10:00 a.m. at the offices of
Xxxxxx & Xxxxxx L.L.P. at 1325 Avenue of the Americas, 17th Floor, New York
City, New York on or before (i) June 30, 1999, or (ii) at such other place, time
and date as InCon, Humko and Bionutrics may agree (the date of the Closing being
the "Closing Date"). All actions required to be taken at the Closing shall be
deemed to occur simultaneously and in the appropriate order in light of the
nature of the respective transactions. Final acceptance of this Agreement and
all Related Agreements shall be made by the parties in New York City, New York.
(b) All transactions consummated at the Closing will be given
financial effect as of 12.01 a.m. on the Closing Date (the "Effective Date").
3.2 Activation of the Company. At the Closing, InCon and Humko will
execute and deliver to each other the Members Agreement.
3.3 Contributions and Commitments to the Company. At the Closing, the
parties will make the contributions and commitments to the Company that are
described in Section 2.3.
3.4 Transfer of Various Assets of InCon. At the Closing, InCon shall
deliver the following instruments to the Company and transfer all of the assets
of InCon identified on Schedule 3.4 (the "Assets"):
(a) a General Assignment and Xxxx of Sale executed by InCon in
the form of Exhibit 3.4(a);
(b) Assignment of Lessee's Interest In Leases to each parcel
of real property leased by InCon, as required by applicable Law to transfer
leasehold title to all of such real property to the Company, in the form of
Exhibit 3.4(b);
(c) Assignment of Lessee's Interest In Leases to all equipment
leased by InCon in connection with the business of InCon, as required by
applicable Law to transfer leasehold title to all of such personal property to
the Company, in the form of Exhibit 3.4(c)
8
15
(d) opinions of counsel to InCon, International, NTC, and
Bionutrics including Nevada counsel in the form of Exhibit 3.4(d);
(e) a Code Section 1445 certificate in the form of Exhibit
3.4(e);
(f) all books and records of InCon relating to the Assets
assigned by InCon to the Company and to InCon's business except those relating
to employees or the corporate minute books and capital stock ledger of InCon;
(g) Technology Assignment Agreement from InCon to the Company
granting perpetual ownership of the Technology to the Company in the form of
Exhibit 3.4(g); and
(h) written approval of the sole shareholder of InCon and
Nutrition Technology Corporation, approving the transactions covered by this
Agreement;
(i) written approval of the sole shareholder of NTC,
Bionutrics, approving the transactions covered by this Agreement; and
(j) such other instruments or documents as may be reasonably
necessary or appropriate to transfer all of the Assets of InCon and
International to the Company.
3.5 Execution of Transition Services Agreement. At the Closing, InCon
and the Company shall execute and deliver to each other the Transition Services
Agreement in the form of Exhibit 3.5.
3.6 Execution of Amendment to Agreement for Purchase and Sale of Assets
. At the Closing, Bionutrics and Humko shall execute and deliver to each other
the First Amendment to Agreement for Purchase and Sale of Assets in the form of
Exhibit 3.6.
3.7 Execution of Related Agreements. At the Closing, each of InCon,
Humko, and Bionutrics and the other parties hereto shall execute and deliver
each of the respective Related Agreements not already described in this Article
3 to which it is a party.
3.8 Transfer of Construction Contract. At the Closing, International
shall execute and deliver to the Company the Assignment and Assumption of
Agreement (Construction Contract) in the form of Exhibit 3.8, assigning to the
Company all of International's rights, titles and interests in and to the
Construction Contract.
3.9 [*]
3.10 Transfer of Representation Agreement. At the Closing,
International shall execute and deliver to the Company the Assignment of
Representation Agreement in the form of
9
16
Exhibit 3.10, assigning to the Company all of International's rights, titles and
interests in and to the Representation Agreement.
3.11 [*]
3.12 Transfer of Sales Representative Agreements. At the Closing, InCon
shall execute and deliver to the Company the Assignments of Sales Representative
Agreements in the form of Exhibit 3.12, assigning to the Company all of InCon's
rights, titles and interests in and to each of the Sales Representative
Agreements.
3.13 Notification of Assignment of Rights in Sales Representative
Agreements. At the Closing, InCon shall execute and deliver to the Company the
Notification of Assignment of Rights in and to Sales Representative Agreements
in the form of Exhibit 3.13, notifying each of the Representatives defined in
each of the Sales Representative Agreements of the assignment to the Company of
all of InCon's rights, titles and interests in and to the respective Sales
Representative Agreements.
3.14 Escrow Agreement. At the Closing, InCon and Humko shall execute
and deliver to each other an Escrow Agreement in the form of Exhibit 3.14
appointing First American Title Insurance Company, National Division as escrow
agent to hold an amount of money equal to the amount required under the terms of
Section 7.7.
3.15 Payment of Debts. Schedule 3.15 contains a list of certain loans
of InCon or its Affiliates that must be paid by InCon from funds to be paid to
InCon by the Company as payment for an undivided fifty percent interest in the
Assets of InCon that will be contributed by InCon to the Company. The other
undivided fifty percent interest in such Assets shall constitute a capital
contribution by InCon to the Company.
3.16 [*]
3.17 [*]
3.18 Guaranty. At the Closing, Bionutrics shall execute and deliver the
Guaranty to Humko in the form of Exhibit 3.18.
ARTICLE 4
Representations and Warranties by InCon
InCon represents and warrants to Humko as follows:
4.1 Organization and Authority
10
17
InCon (i) is a corporation duly formed, validly existing and
in good standing under the Laws of the State of Delaware, (ii) has the full
power and authority to carry on its business as now being conducted and to own
and lease its properties, and (iii) has full power and authority to execute and
deliver this Agreement, the Related Agreements to which it is a party, and the
other agreements and instruments executed or to be executed and delivered by it
in connection herewith and to consummate the transactions contemplated hereby
and thereby.
4.2 Validity: Enforceability.
InCon's execution, delivery and performance of this Agreement
and any Related Agreements to which it is or will be a party, and InCon's
consummation of the transactions contemplated hereby and thereby, have been duly
authorized by all necessary action of InCon's board of directors and have been
approved by all shareholders of InCon. This Agreement has been, and at the
Closing the Related Agreements to which InCon is a party will be, duly executed
and delivered by InCon, and when duly executed and delivered by InCon will
constitute the legal, valid and binding obligations of InCon, enforceable in
accordance with their respective terms, except to the extent provided by
bankruptcy, insolvency or similar Laws respecting creditors' rights generally or
to the extent that enforceability may be limited by the availability of specific
performance or other equitable remedies being in the discretion of the court.
4.3 No Violation.
The execution, delivery and performance by InCon of this
Agreement, the Related Agreements to which it is or will be a party, and the
other agreements and instruments executed or to be executed and delivered by it
in connection herewith, and the consummation of the transactions contemplated
hereby and thereby, does not and will not (i) violate or conflict with the
provisions of any Law or of any order, judgment or decree of any court or other
Governmental Authority applicable to InCon or the property or business of InCon
or its Affiliates, (ii) violate or conflict with the articles of incorporation
or by-laws of InCon, or (iii) result in a breach of or constitute a default (or
an event that with the giving of notice or lapse of time or both would become a
default) under, pursuant to, any agreement to which InCon is a party or by which
it is bound.
4.4 Litigation and Proceedings. Except as described in Schedule 4.4,
there are no actions, suits, or proceedings (whether or not purportedly on
behalf of or against InCon) pending, or to the knowledge of InCon threatened,
against InCon or its Affiliates or relating to the consummation of the
transactions contemplated hereby, at Law or in equity, before or by any
Governmental Authority, or before any arbitrator. Neither InCon nor any of its
Affiliates or the business of any such parties is subject to any judgment,
order, writ, injunction, decree or award that adversely affects the business of
InCon or any of its Affiliates.
4.5 Third-Party Consents. Except as described in Schedule 4.5, no
permit, consent, authorization or approval of, or waiver or exemption by, or
filing with, any person is required in connection with the execution, delivery
or performance by InCon of this Agreement or any of the Related Agreements or
the consummation by InCon of the transactions contemplated thereby.
11
18
4.6 InCon Contracts.
(a) Schedule 4.6 lists, as of June 1, 1999, all
customer sales agreements, supply agreements, toll manufacturing agreements,
leases and other material agreements related to the business of InCon and
International (collectively, "InCon Contracts") in effect on the date hereof.
Except as described in Schedule 4.6, InCon is not aware of (i) the cancellation,
breach, expiration or lapse of any InCon Contract; or (ii) any default by any
party to any InCon Contract. Except as described in Schedule 4.6, neither InCon
nor any InCon Affiliate is a party to, or subject to, any agreement, contract or
commitment that substantially limits the freedom of InCon or any InCon Affiliate
to compete in any line of business within the Company Scope of Business, or that
would conflict with InCon's ability to become a member of the Company.
(b) Except as described in Schedule 4.6, the
execution, delivery and performance by InCon and International of this
Agreement, the Related Agreements, and the other agreements and instruments
executed or to be executed and delivered by it in connection herewith and the
consummation of the transactions contemplated hereby and thereby do not violate
or conflict with the provisions of any InCon Contract.
(c) Except as described in Schedule 4.6, each InCon
Contract is (or, in the case of InCon Contracts executed after the date hereof,
on the Closing Date will be) in full force and effect, and to the knowledge of
InCon, neither InCon nor any of its Affiliates is in default thereunder, and no
event has occurred which, with the passage of time or the giving of notice, or
both, would result in any default thereunder by InCon or any of its Affiliates.
4.7 Environmental Matters.
(a) Except as described in Schedule 4.7, neither InCon nor any
of its Affiliates is subject to any pending or threatened action, suit,
investigation, inquiry or proceeding by or before any court or Governmental
Authority (i) under any Environmental Laws or (ii) with respect to any claim by
any non-governmental third party in connection with any Release or Threatened
Release of any Hazardous Substances into the environment.
(b) InCon and its Affiliates have obtained with respect to the
Facility all permits, licenses, other authorizations, registrations and other
governmental consents ("Environmental Permits") required under Environmental
Laws.
(c) Except as described in Schedule 4.7, the Facility and the
business of InCon are each in compliance with all Environmental Laws and all
terms and conditions of such Environmental Permits.
(d) Except as described in Schedule 4.7, there has not been a
Release, Threatened Release, or Disposal of any Hazardous Substances or
Materials of Environmental Concerns at any Leased Real and Personal, or other
property owned or operated by InCon or International.
12
19
(e) Neither InCon nor International has disposed of Hazardous
Substances or Materials of Environmental Concern at: (1) any facility that does
not have a permit to accept such substances or materials, or (2) any facility
that is on the National Priorities List.
4.8 Intellectual Property Matters. All of the Intellectual Property
Rights of InCon that are owned by InCon and/or used in InCon's business are
described on Schedule 4.8. Except as described in Schedule 4.8 and Schedule
4.10:
(a) There are no actions, suits, or proceedings pending
against InCon or any of its Affiliates that any of them is infringing upon (or
has infringed upon) the Intellectual Property Rights of any other party;
(b) To the knowledge of InCon, there are no such actions,
suits, or proceedings that have been threatened within the last three years; and
(c) To the knowledge of InCon, no party is infringing upon (or
has infringed upon) the Intellectual Property Rights related to the Technology.
4.9 Product Claims. Except as described in Schedule 4.9, there are no
actions, suits, or proceedings pending, or to the knowledge of InCon threatened,
against InCon or any of its Affiliates relating to any product liability claims
or product defect allegations relating to the business of InCon.
4.10 No Grant of Manufacturing Rights. Except as disclosed in Schedule
4.10, neither InCon nor any of its Affiliates has granted or transferred to any
person (including any Affiliate, Associate or third party) any rights or license
to use the Technology or to process or manufacture products using the
Technology. InCon knows of no basis on which any third party could claim to have
such rights. Neither InCon nor any of its Affiliates has disclosed any of its
technology relating to the Technology to any person, other than those parties
listed in Schedule 4.10, and then only pursuant to non-use and non-disclosure
restrictions described in such Schedule.
4.11 Title to Tangible Assets. (a) Schedule 4.11(a) lists all of the
material Assets of InCon that will be conveyed to the Company. Except as
specified in Schedule 4.11(a), InCon owns and has good and valid marketable
title to all such Assets and none of such Assets is subject to any security
agreement, pledge, mortgage, deed of trust, financing statement, lease financing
or any other financing arrangement whereby any other party has an interest in or
claim against any of such tangible Assets.
(b) Schedule 4.11(b) lists all of the material assets of InCon
that will not be conveyed or transferred to the Company.
4.12 Leased Real and Personal Property.
13
20
(a) Schedule 4.12 lists all of the real and personal property
that InCon currently uses in connection with its business, all of which is held
by InCon pursuant to leases (the "Leased Real and Personal Property").
(b) Except as set forth in Schedule 4.12, InCon has a valid
leasehold interest in all of the Leased Real and Personal Property, free and
clear of all liens and security interests. All leases in respect of the Leased
Real and Personal Property are valid, binding and enforceable in accordance with
their respective terms, and there does not exist under any such lease any
default, or any event which with notice or lapse of time or both would
constitute such a default. No such lease has been modified or amended in writing
except as evidenced by instruments described in Schedule 4.12. InCon has not
received from any party to any such lease any written notice of, or written
claim with respect to, any breach or default thereof, and InCon has not granted
any sublease, license or any agreement granting to any person or entity any
right to use or occupy any part of the Leased Real and Personal Property or
portion thereof and has no knowledge of any grant by any such other person.
4.13 Taxes. Except as described in Schedule 4.13,
(a) InCon and each of its Affiliates have paid or will pay
when due or finally settled all Federal, state, local and provincial and other
foreign net or gross income Taxes together with any interest thereon, any
penalties, additions to Tax or additional amounts with respect thereto and any
interest in respect of such penalties, additions or additional amounts relating
to their businesses which are imposed on them or which are attributable to the
period of time prior to the Effective Time.
(b) InCon and each of its Affiliates have filed, or will file
when due, all Tax Returns of all Federal, state, local and provincial and other
foreign, receipts, sales, use, ad valorem, value added, franchise, withholding,
payroll, employment, excise, property or other Taxes, assessments or other
governmental charges, together with any penalties, additions to Tax or
additional amounts with respect thereto and any interest required to be filed
relating to the business or the Assets of InCon and each of its Affiliates for
the periods up to the Effective Time.
(c) There are no liens for any Taxes upon any of the Assets of
InCon or any of its Affiliates other than liens for Taxes not yet delinquent.
(d) All of the Assets of InCon were obtained by InCon for its
own use, and the Company's purchase of the Assets of InCon and its applicable
Affiliates is exempt from sales and use Tax.
(e) InCon will file within fifteen days after the Effective
Time a final sales and use Tax return from all applicable jurisdictions and will
request from each applicable tax commissioner for presentation to the Company
and Humko a receipt showing that all Taxes, interest and penalties have been
paid or a certificate indicating that no Taxes are due.
14
21
(f) Neither InCon nor any of its Affiliates has requested or
received an extension of time within which to file any Tax Return that has not
yet been filed.
(g) Neither InCon nor any of its Affiliates is a party to any
allocation or sharing agreement with respect to Taxes.
As used in this Section 4.13,
"Taxes" means all taxes, fees, levies, imposts, assessments or other
charges including, but not limited to, foreign, federal, state, county or local
income, profits, gross receipts, payroll, excise, property, severance, sales,
use, employment, value added, unitary, capital, net worth, transfer, withholding
and franchise taxes and customs duties together with any penalties, interest and
additions to tax thereon or costs or expenses related thereto; and
"Tax Return" means all reports, estimates, declarations of estimated
tax, information statements and returns relating to, or required to be filed for
any period with any Governmental Authority in connection with, any Taxes.
4.14 Employee Matters. With respect to all of its employees, (i) InCon
has complied in all respects with all applicable Laws regarding labor,
employment and employment practices, terms and conditions of employment,
occupational safety and health and wages and hours, including, without
limitation, any bargaining or other obligations under the National Labor
Relations Act, (ii) InCon is not a party to or bound by, any collective
bargaining agreement or other written contract concerning employment, or any
affirmative action plan established pursuant to any local, state or federal Law
or order of any Governmental Body or court, (iii) there is no labor strike or
labor dispute, slowdown or stoppage actually pending or, to the best knowledge
and belief of InCon, threatened against or affecting InCon, and InCon has not
experienced any labor strikes or material labor disputes, slowdowns or stoppages
during last three years, and (iv) there is no dispute concerning representation
as to any collective bargaining representative concerning employees of InCon,
and no union claims to or is seeking to represent non-union employees of InCon.
4.15 Compliance with Laws. The business of InCon is being conducted,
and the Assets associated therewith are being maintained and operated, in
compliance with all applicable Laws and regulations. InCon knows of no pending
action by any Governmental Authority that, if taken, would prevent the present
conduct of such business or the present use of any of the Assets of InCon. InCon
has complied with all applicable statutes, codes, Laws, ordinances, rules and
regulations, in operating its business at the Facility and elsewhere. All
improvements and equipment situated on the Facility comply with all applicable
statutes, codes, Laws, ordinances, rules and regulations including specifically
(i) NFPA standards with regard to materials to be used in the area's class of
service including integral fire sprinklers or special protection devices for the
hazards in the area's class of service, (ii) the Occupational Safety and Hazards
Act health and safety standards with regard to materials to be used in the
area's class of service, and (iii) all pollution control regulations and
permitting requirements including but not limited to a spill prevention control
and countermeasure plan, storm water pollution control plan, and land use
documentation.
15
22
4.16 Ongoing Capital Expenditures. Schedule 4.16 contains a complete
and correct list, as of April 1, 1999, of all ongoing capital expenditure
programs of InCon.
4.17 Ownership of Stock. All of the outstanding capital stock of InCon
is owned and held by Nutrition Technology Corporation, and none of such capital
stock is subject to any liens, security agreements or pledge that will exist
after the date hereof.
4.18 Identity of Subsidiaries. InCon has no subsidiaries.
4.19 Employee Benefit Plans.
(a) Schedule 4.19 lists all the following that are sponsored,
maintained or contributed to by Bionutrics or by InCon for the benefit of the
employees of InCon (collectively, the "Employee Plans"):
(i) each "employee benefit plan," as such term is defined in
Section 3(3) of ERISA; and
(ii)each personnel policy, stock option or purchase plan,
collective bargaining agreement, bonus plan or arrangement, incentive award plan
or arrangement, vacation policy, sick pay policy, severance pay plan, policy or
agreement, deferred compensation agreement or arrangement, annuity contract,
executive compensation or supplemental income arrangement, consulting agreement,
employment agreement, and each other employee benefit plans, agreement,
arrangements, program, practice or understanding that is not described in
Section 4.19(a)(i).
(b) InCon has performed in all material respects all
obligations, whether arising with respect to the Employee Plans, by operation of
Law or by contract, required to be performed by it in connection with the
Employee Plans, and there have been no material defaults or violations by any
other party to the Employee Plans. All contributions required to be made to the
Employee Plans pursuant to their terms and provisions and applicable Law have
been timely made.
(c) All reports and disclosures relating to the Employee Plans
required to be filed with or furnished to governmental agencies, Employee Plan
participants, or Employee Plan beneficiaries have been filed or furnished in
accordance with applicable Law in a timely manner, and each Employee Plan has
been administered in substantial compliance with its governing documents and
applicable Law.
(d) With respect to the Employee Plans, (1) there are no
actions, suits or claims pending (other than routine claims for benefits) or, to
the knowledge of InCon, threatened against, or with respect to, any of the
Employee Plans or their assets, (2) there is no matter pending (other than
routine qualification determination filings) with respect to any of the Employee
Plans before the Internal Revenue Service, the Department of Labor, or the
Pension Benefit Guaranty Corporation, (3) InCon has not received notification of
the commencement of
16
23
an audit by any such agency of any of the Employee Plans, (4) there are no
expenses that are required to have been paid as of the date hereof by any of the
Employee Plans that have not been so paid, and (5) the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby will
not (i) require any larger contribution to, or the payment of greater benefits
under, any Employee Plan than otherwise would have been required or (ii) create
or give rise to any additional vested rights or service credits under any
Employee Plan.
(e) In connection with the consummation of the transactions
contemplated by this Agreement, no payments have or will be made under the
Employee Plans that, in the aggregate, would result in imposition of a penalty,
sanction, or Tax imposed under Section 280G and 4999 of the Code.
(f) None of the Employee Plans is a "multi employer plan" as
defined in Section 3(37) of ERISA.
(g) All the Employee Plans are in compliance in all material
respects with the requirements prescribed by applicable statutes, orders, or
governmental rules and regulations currently in effect with respect thereto.
(h) Each Employee Plan intended to be qualified under Section
401(a) of the Code has heretofore been determined by the Internal Revenue
Service to so qualify, and, such Employee Plan has not been amended or operated
in any manner that is reasonably likely to cause any such Employee Plan to fail
to qualify under Section 401(a) of the Code. As to any Employee Plan intended to
be qualified under Section 401 of the Code, there has been no termination of,
partial termination of, or, in the case of a plan to which Section 412 of the
Code does not apply, complete discontinuance of contributions under the Employee
Plan within the meaning of Section 411(d)(3) of the Code for which the rights of
all affected employees to benefits accrued to the date of such termination,
partial termination, or discontinuance, to the extent funded as of such date, or
the amounts credited to the employees' accounts, have not been vested 100% and
thereby rendered nonforfeitable.
(i) InCon has not incurred any liability to the Pension
Benefit Guaranty Corporation under Section 4001 et seq. of ERISA. All premiums
payable to the Pension Benefit Guaranty Corporation have been paid when due.
(j) InCon has delivered to Humko copies of all written
Employee Plans and, where applicable, amendments thereto, related trusts, the
most recent determination letter from the Internal Revenue Service, summary plan
descriptions and the most recent annual reports filed pursuant to ERISA or the
Internal Revenue Code with respect to the Employee Plans.
(k) No prohibited transaction, as defined in Section 4975 of
the Code or Section 406 of ERISA, has occurred with respect to any Employee
Plan. No breach of any fiduciary duty imposed with respect to an Employee Plan
pursuant to Title I of ERISA has occurred.
17
24
4.20 Proprietary Information. With respect to the Proprietary
Information of InCon, (i) InCon is the owner or has the right to authorize the
use of or convey such Proprietary Information to third parties including,
without limitation, the Company; (ii) no action, suit or proceeding is pending
or, to InCon's knowledge, threatened with respect to the Proprietary
Information; (iii) to the knowledge of InCon, none of the Proprietary
Information infringes upon the rights of others or is subject to any outstanding
order, decree or judgment; and (iv) there are no royalty, commission or similar
arrangements, and no licenses, sublicenses or agreements, pertaining to any of
the Proprietary Information other than as set forth on Schedule 4.10. All rights
of InCon in and to the Proprietary Information are transferable to Company as
contemplated herein without any consent or other approval. It should be noted
that InCon is currently conducting certain research for Bionutrics in connection
with compounds and compositions of matter having biological activity and/or
utility and products incorporating such compositions of matter. Accordingly, the
representation and warranty contained in the second sentence of this Section
4.20 shall not be deemed to apply to any of such compounds and compositions of
matter having biological activity and/or utility and products incorporating such
compositions of matter with respect to which InCon is presently conducting
research for Bionutrics. Except for Bionutrics' interest in such compounds and
compositions of matter, none of the Affiliates of InCon including, without
limitation, Bionutrics or any other party has any rights in any propriety
information used in connection with the current business of InCon, and the
Proprietary Information is all of the proprietary information necessary to
continue the business of InCon in the manner that the business of InCon has been
conducted during 1998 and 1999.
4.21 Brokers. InCon has not retained any broker, finder or
agent or incurred any liability or obligation for any brokerage fees,
commissions or finders fees with respect to this Agreement or the transactions
contemplated hereby.
4.22 Code. InCon is not a "foreign person" within the meaning
of Code Section 1445 (26 U.S.C. Section 1445). InCon shall furnish Humko and the
Company on or before the Closing Date with a certificate of non-foreign status
signed by the appropriate party and sufficient in form and substance to relieve
Purchaser of all withholding obligations under Code Section 1445.
4.23 Insurance. Schedule 4.23 herein sets forth a list of all
policies of insurance maintained for the benefit of the business of InCon and
owned by InCon (other than employee benefit plans), setting forth the applicable
underwriter, type of coverage, policy number and policy periods.
4.24 Construction Contract. International is the sole owner of
all of the interest of the Contractor in the Construction Contract and none of
the rights of the Contractor thereunder are subject to any liens, security
agreements or pledges including, without limitation, the right to any payments
due thereunder.
4.25 Year 2000 Ready. All Covered Systems that have been
installed in the Facility, and all computer code and other computerized data, if
any, furnished by InCon or its subcontractors in connection with InCon's
business and any of the Assets that will be acquired by
18
25
the Company under the terms of this Agreement or the Members Agreement are Year
2000 Ready.
4.26 Sales Representative Agreements. InCon is the sole owner
of all rights, titles and interests of the Principal, as defined in the Sales
Representative Agreements.
4.27 State of Equipment. All of the equipment constituting
part of the Assets is located in the Facility and all of such equipment is
sufficient for, and is the only equipment needed for, conducting the business of
InCon after the Closing in the manner conducted before the Closing. All such
equipment is and will be fully operational on the Closing Date and will be in
working condition.
4.28 Payments to Officials. Prior to the date hereof, neither
InCon nor any of its Affiliates has paid or given or has authorized or committed
to the payment or gift of money or anything of value to any official or employee
of any government entity or instrumentality or any political party or candidate
for political office for the purpose of influencing any governmental action or
decision in order to obtain or retain business or to direct business to any
other party.
4.29 Accounts Payable. Schedule 4.29 contains a true and
correct list (with aging detail) of all existing accounts payable of InCon as of
the Closing Date.
4.30 Accounts Receivable. Schedule 4.30 contains a true and
correct list (with aging detail) of all existing accounts receivable of InCon as
of the Closing Date. None of the listed accounts receivable is subject to any
offset or counterclaim by any party owing any of such accounts receivable.
ARTICLE 4A
Representations and Warranties by Bionutrics
Bionutrics represents and warrants to Humko as follows:
4A.1 Organization and Authority.
Bionutrics (i) is a corporation duly formed, validly
existing and in good standing under the Laws of the State of Nevada, (ii) has
the full power and authority to carry on its business as now being conducted and
to own and lease its properties, and (iii) has full power and authority to
execute and deliver this Agreement, the Related Agreements to which it is a
party, and the other agreements and instruments executed or to be executed and
delivered by it in connection herewith and to consummate the transactions
contemplated hereby and thereby.
4A.2 Validity: Enforceability.
Bionutrics' execution, delivery and performance of
this Agreement and any Related Agreements to which it is or will be a party, and
Bionutrics' consummation of the transactions contemplated hereby and thereby,
have been duly authorized by all necessary action of Bionutrics' board of
directors. This Agreement has been, and at the Closing the Related
19
26
Agreements to which Bionutrics is a party will be, duly executed and delivered
by Bionutrics, and when duly executed and delivered by Bionutrics will
constitute the legal, valid and binding obligations of Bionutrics, enforceable
in accordance with their respective terms, except to the extent provided by
bankruptcy, insolvency or similar Laws respecting creditors' rights generally or
to the extent that enforceability may be limited by the availability of specific
performance or other equitable remedies being in the discretion of the court.
4A.3 No Violation.
The execution, delivery and performance by Bionutrics
of this Agreement, the Related Agreements to which it is or will be a party, and
the other agreements and instruments executed or to be executed and delivered by
it in connection herewith, and the consummation of the transactions contemplated
hereby and thereby, does not and will not (i) violate or conflict with the
provisions of any Law or of any order, judgment or decree of any court or other
Governmental Authority applicable to Bionutrics or the property or business of
Bionutrics or its Affiliates, (ii) violate or conflict with the articles of
incorporation or by-laws of Bionutrics, or (iii) result in a breach of or
constitute a default (or an event that with the giving of notice or lapse of
time or both would become a default) under, pursuant to, any agreement to which
Bionutrics is a party or by which it is bound.
4A.4 Litigation and Proceedings. Except as described in
Schedule 4.4, there are no actions, suits, or proceedings (whether or not
purportedly on behalf of or against Bionutrics) pending, or to the knowledge of
Bionutrics threatened, against Bionutrics or its Affiliates or relating to the
consummation of the transactions contemplated hereby, at Law or in equity,
before or by any Governmental Authority, or before any arbitrator. Neither
Bionutrics nor any of its Affiliates or the business of any such parties is
subject to any judgment, order, writ, injunction, decree or award that adversely
affects the business of Bionutrics or any of its Affiliates.
4A.5 Third-Party Consents. Except as described in Schedule
4.5, no permit, consent, authorization or approval of, or waiver or exemption
by, or filing with, any person is required in connection with the execution,
delivery or performance by Bionutrics of this Agreement or any of the Related
Agreements or the consummation by Bionutrics of the transactions contemplated
thereby.
4A.6 InCon Contracts.
(a) Schedule 4.6 lists, as of June 1, 1999, all InCon
Contracts. Except as described in Schedule 4.6, Bionutrics is not aware of (i)
the cancellation, breach, expiration or lapse of any InCon Contract; or (ii) any
default by any party to any InCon Contract. Except as described in Schedule 4.6,
neither InCon nor any Affiliate of InCon is a party to, or subject to, any
agreement, contract or commitment that substantially limits the freedom of InCon
or any Affiliate by InCon to compete in any line of business within the Company
Scope of Business, or that would conflict with InCon's ability to become a
member of the Company.
20
27
(b) Except as described in Schedule 4.6, to
Bionutric's knowledge, the execution, delivery and performance by InCon of this
Agreement, the Related Agreements, and the other agreements and instruments
executed or to be executed and delivered by it in connection herewith and the
consummation of the transactions contemplated hereby and thereby do not violate
or conflict with the provisions of any InCon Contract.
4A.7 Brokers. Bionutrics has not retained any broker, finder
or agent or incurred any liability or obligation for any brokerage fees,
commissions or finders fees with respect to this Agreement or the transactions
contemplated hereby.
4A.8 Code. Bionutrics is not a "foreign person" within the
meaning of Code Section 1445 (26 U.S.C. Section 1445). Bionutrics shall furnish
Humko and the Company on or before the Closing Date with a certificate of
non-foreign status signed by the appropriate party and sufficient in form and
substance to relieve Purchaser of all withholding obligations under Code Section
1445.
4A.9 Proprietary Information. Subject to Section 4A.11, InCon
does not use any Proprietary Information owned or licensed by Bionutrics or any
other Affiliate in connection with the current business of InCon as reflected in
the definition of "Scope of Business."
4A.10 Ownership of Stock. All of the outstanding capital stock
of NTC is owned and held by Bionutrics and none of such stock is subject to any
liens, security interests, or pledges that will exist after the date hereof.
4A.11 Matter Having Biological Activity. None of the compounds
and compositions of matter having biological activity and/or utility and
products incorporating such compositions of matter owned by Bionutrics is part
of, or is required in connection with, the operation of the business of InCon
after Closing in the manner that the business of InCon was operated during 1998
and 1999 except for the research that InCon is currently performing for
Bionutrics relating to such compounds and compositions of matter.
ARTICLE 4B
Representations and Warranties by InCon International Inc.
International represents and warrants to Humko as follows:
4B.1 Organization and Authority.
International (i) is a corporation duly formed,
validly existing and in good standing under the Laws of the British Virgin
Islands, all of the stock of which is owned by Bionutrics, (ii) has the full
power and authority to carry on its business as now being conducted and to own
and lease its properties, and International has full power and authority to
execute and deliver this Agreement, the Related Agreements to which it is a
party, and the other agreements and instruments executed or to be executed and
delivered by it in connection herewith and to consummate the transactions
contemplated hereby and thereby.
21
28
4B.2 Validity: Enforceability.
International's execution, delivery and performance of this
Agreement and any Related Agreements to which it is or will be a party, and its
consummation of the transactions contemplated hereby and thereby, have been duly
authorized by all necessary action of its board of directors. This Agreement has
been, and at the Closing the Related Agreements to which International is a
party will be, duly executed and delivered by International, and when duly
executed and delivered by International will constitute the legal, valid and
binding obligations of International, enforceable in accordance with their
respective terms, except to the extent provided by bankruptcy, insolvency or
similar Laws respecting creditors' rights generally or to the extent that
enforceability may be limited by the availability of specific performance or
other equitable remedies being in the discretion of the court.
4B.3 No Violation.
The execution, delivery and performance by
International of this Agreement, the Related Agreements to which it is or will
be a party, and the other agreements and instruments executed or to be executed
and delivered by it in connection herewith, and the consummation of the
transactions contemplated hereby and thereby, does not and will not (i) violate
or conflict with the provisions of any Law or of any order, judgment or decree
of any court or other Governmental Authority applicable to it or the property or
business of International or its Affiliates, (ii) violate or conflict with the
articles of incorporation or by-laws of International, or result in a breach of
or constitute a default (or an event that with the giving of notice or lapse of
time or both would become a default) under, pursuant to, any agreement to which
International is a party or by which it is bound.
4B.4 Representation Agreement. International is the true and
correct owner of all of the rights, titles and interest of the Company, as
defined in the Representation Agreement.
4B.5 Payments to Officials. Prior to the date hereof, neither
International nor any of its Affiliates has paid or given or has authorized or
committed to the payment or gift of money or anything of value to any official
or employee of any government entity or instrumentality or any political party
or candidate for political party or candidate for political office for the
purpose of influencing any governmental action or decision in order to obtain or
retain business or to direct business to any other party.
4B.6 Sole Shareholder. Bionutrics is the sole shareholder of
all of the capital stock of International and has approved, and does hereby
approve, this Agreement and the transactions covered hereby.
4B.7 Construction Contract. International is the sole owner of
all of the interest of the Contractor in the Construction Contract and none of
the rights of the Contractor thereunder are subject to any liens, security
agreements or pledges including, without limitation, the right to any payments
due thereunder.
22
29
ARTICLE 4C
Representations and Warranties by XXX
XXX represents and warrants to Humko as follows:
4C.1 Organization . NTC (i) is duly incorporated, validly
existing and in good standing under the Laws of Nevada, (ii) has the full power
and authority to carry on its business as now being conducted and to own and
lease its properties, and (iii) has full power and authority to execute and
deliver this Agreement, the Related Agreements to which it is a party, and the
other agreements and instruments executed or to be executed and delivered by it
in connection herewith and to consummate the transactions contemplated hereby
and thereby.
4C.2 Validity: Enforceability. NTC's execution, delivery and
performance of this Agreement and any Related Agreements to which it is or will
be a party, and NTC's consummation of the transactions contemplated hereby and
thereby, have been duly authorized by all required corporate action. This
Agreement has been, and at the Closing the Related Agreements to which NTC is a
party will be, duly executed and delivered by NTC, and when duly executed and
delivered by NTC will constitute the legal, valid and binding obligations of
NTC, enforceable in accordance with their respective terms, except to the extent
provided by bankruptcy, insolvency or similar Laws respecting creditors' rights
generally or to the extent that enforceability may be limited by the
availability of specific performance or other equitable remedies being in the
discretion of the court.
4C.3 No Violation. The execution, delivery and performance by
NTC of this Agreement, the Related Agreements to which it is to be a party, and
the other agreements and instruments executed or to be executed and delivered by
it in connection herewith, and the consummation of the transactions contemplated
hereby and thereby, does not and will not (i) violate or conflict with the
provisions of any Law or of any order, judgment or decree of any court or other
Governmental Authority applicable to NTC or the property or business of NTC,
(ii) violate the articles of incorporation or bylaws of NTC, or (iii) result in
a breach of or constitute a default (or an event that with the giving of notice
or lapse of time or both would become a default) under, pursuant to, any
agreement to which NTC is a party or by which it is bound.
4C.4 Sole Shareholder. NTC is the sole shareholder of all of
the capital stock of InCon and has approved, and does hereby approve, this
Agreement and the transactions covered hereby.
ARTICLE 5
Representations and Warranties by Humko
Humko represents and warrants to InCon and Bionutrics as
follows:
23
30
5.1 Organization and Authority. Humko (i) is duly
incorporated, validly existing and in good standing under the Laws of Delaware,
(ii) has the full power and authority to carry on its business as now being
conducted and to own and lease its properties, and (iii) has full power and
authority to execute and deliver this Agreement, the Related Agreements to which
it is a party, and the other agreements and instruments executed or to be
executed and delivered by it in connection herewith and to consummate the
transactions contemplated hereby and thereby.
5.2 Validity: Enforceability. Humko's execution, delivery and
performance of this Agreement and any Related Agreements to which it is or will
be a party, and Humko's consummation of the transactions contemplated hereby and
thereby, have been duly authorized by all required corporate action. This
Agreement has been, and at the Closing the Related Agreements to which Humko is
a party will be, duly executed and delivered by Humko, and when duly executed
and delivered by Humko will constitute the legal, valid and binding obligations
of Humko, enforceable in accordance with their respective terms, except to the
extent provided by bankruptcy, insolvency or similar Laws respecting creditors'
rights generally or to the extent that enforceability may be limited by the
availability of specific performance or other equitable remedies being in the
discretion of the court.
5.3 No Violation. The execution, delivery and performance by
Humko of this Agreement, the Related Agreements to which it is to be a party,
and the other agreements and instruments executed or to be executed and
delivered by it in connection herewith, and the consummation of the transactions
contemplated hereby and thereby, does not and will not (i) violate or conflict
with the provisions of any Law or of any order, judgment or decree of any court
or other Governmental Authority applicable to Humko or the property or business
of Humko, (ii) violate the articles of incorporation or bylaws of Humko, or
(iii) result in a breach of or constitute a default (or an event that with the
giving of notice or lapse of time or both would become a default) under,
pursuant to, any agreement to which Humko is a party or by which it is bound.
5.4 No Limitation. Except as described in Schedule 5.4,
neither Humko nor any Humko Affiliate is aware of any agreement, contract or
commitment that substantially limits the freedom of Humko or any Humko Affiliate
to compete in any line of business within the Company Scope of Business, or that
would conflict with Humko's ability to become a member of the Company.
24
31
ARTICLE 6
Covenants Between Execution and Closing and Post-Closing
6.1 Access to Records.
(a) From and after the date of this Agreement until the
Closing Date, upon reasonable advance notice, InCon will give Humko and its
counsel and representatives reasonable access during normal business hours to
the premises of InCon's business and the personnel of InCon related thereto;
furnish to Humko and its representatives such documents, financial information
and information with respect to InCon's business and the Technology as Humko may
from time to time reasonably request; subject, however, to any third party
limitations on confidentiality or disclosure that may restrict InCon from
providing such access.
(b) InCon and Humko recognize that each of them will need
access, from time to time, after the Closing, to certain accounting and Tax
records and information held by InCon to the extent such records and information
pertain to events occurring on or prior to the Closing; therefore, InCon agrees
(i) to properly retain and maintain such records for a period of seven (7) years
from the date the Tax Returns for the year in which the Closing occurs are filed
or until the expiration of the statute of limitations with respect to such year,
whichever is later, and (ii) allow Humko and its agents and representatives at
times and dates mutually acceptable to the InCon and Humko, to inspect, review
and make copies of such records as such other party may deem necessary or
appropriate from time to time, such activities to be conducted during normal
business hours and at the other party's expense.
6.2 Conduct of Business Prior to Closing. From the date
hereof to the Closing Date, InCon shall carry on its business in substantially
the same manner as heretofore conducted, and not introduce any materially
different method of management, operation or accounting with respect to its
business.
6.3 Filings with Governmental Authorities. Except as provided
in this Section 6.3, neither InCon nor Bionutrics is aware of any filings that
are required in any jurisdiction in connection with the transaction contemplated
by this Agreement. Without limiting the generality of the foregoing, InCon and
Bionutrics warrant and represent that none of the parties to this Agreement is
required to comply with any bulk sales act or other requirement relating to
notice to creditors in effecting the transactions contemplated by this
Agreement.
6.4 Statement of Finished Goods Inventory. The parties will
jointly prepare a statement of inventory showing the inventory to be contributed
to the Company by InCon. This joint statement will be used at the Closing, but
is subject to verification and correction within sixty (60) days after the
Closing through the parties' respective standard accounting practices, including
adjustments for inventory variances.
25
32
ARTICLE 7
Covenants of the Parties After the Closing
7.1 Indemnification Regarding Pre-existing Liabilities. InCon
and Bionutrics (individually, an "Indemnitor" and collectively, the
"Indemnitors") each jointly and severally agrees to indemnify, hold harmless and
defend each of Humko and the Company and each of their officers, partners,
directors, owners, and Affiliates and their respective successors and assigns,
from and against any and all demands, claims, suits and causes of action and any
and all liability, costs, expenses, settlements, and judgments incurred in
connection therewith (including, without limitation, court costs and attorney's
fees, charges, disbursements and advances), whether arising in equity, at common
law, or by statute, or under the Law of contracts, torts (including, without
limitation, negligence and strict liability without regard to fault), of every
kind or character, arising in favor of or brought by any of InCon's employees,
agents, subcontractors, or representatives, or by any Governmental Authority or
any other third party, based upon, in connection with, relating to or arising
out of (i) any Indemnitor's actions or inactions under this Agreement, (ii)
violation of any Laws by any Indemnitor including, without limitation, any
Environmental Laws and any violation thereof by InCon in connection with its
business or its operation of the Facility, (iii) caused by any
misrepresentation, breach of warranty or failure to fulfill any covenant or
agreement of any Indemnitor contained herein, (iv) arising out of or resulting
from the failure to comply with any applicable bulk sales act, (v) any act or
failure to act by any Indemnitor or any of its Affiliates that occurred before
the Effective Date relating to or arising out of the operation of any
Indemnitor's business, the Intellectual Property Rights, the Proprietary
Information or the Technology, or the ownership or use prior to the Effective
Date of any of the Assets comprising InCon's business or which are otherwise
being transferred to the Company pursuant to the provisions of this Agreement,
or (vi) any obligation or liability (whether absolute, accrued, contingent or
otherwise) relating to any Indemnitor's business, the Intellectual Property
Rights, the Proprietary Information or the Technology which arose prior to the
Effective Date and which is not expressly assumed by the Company (herein all
matters referred to in clauses (i) through (vi) being collectively called
"Claims and Expenses"). Without limiting the generality of the foregoing, each
Indemnitor's indemnity under this Section 7.1 shall extend to any and all Claims
and Expenses arising out of or based upon the requirements of Environmental Laws
or Governmental Authorities in connection with the ownership or operation by
InCon or any of its Affiliates of any facilities associated with InCon's
business or the Technology prior to the Closing Date (herein collectively called
the "Environmental Claims and Expenses"). Notwithstanding anything to the
contrary contained in this Agreement, Bionutrics' liability for Claims and
Expenses under this Section 7.1 shall be limited to the sum of US $3,000,000,
and Bionutrics shall not be liable for any Claims and Expenses brought by Humko
at any time (i) in the case of Environmental Claims and Expenses, five (5) years
after the Closing Date, and (ii) in the case of all other Claims and Expenses,
three (3) years after the Closing Date. The obligations of InCon under this
Section 7.1 are secured by the security interest granted to Humko under the
terms of Section 4.4 of the Members Agreement. In addition, if InCon fails to
pay to the Company or Humko any Claims and Expenses that the Company is required
to pay, Humko is entitled to exercise its right to the Conversion, as defined in
Section 4.5(d) of the Members Agreement, in addition to all other rights under
this Agreement, the Members Agreement or at law or in equity. All past due
26
33
amounts owed by InCon and Bionutrics with respect to any Environmental Claims
and Expenses that are required to be paid by Humko or the Company, shall bear
interest from the date due until paid at the annual rate equal to the lesser of
(i) the maximum lawful rate permitted by applicable law or (ii) the Agreed
Interest Rate, as defined in the Members Agreement, plus eight percent (8%).
However, in no event shall Humko or the Company be entitled to any interest on
any such amounts in excess of the maximum amount of interest that may be
charged, collected or received by Humko or the Company under applicable law.
7.2 Confidentiality.
(a) If either party or its Affiliates discloses to the
other party or its Affiliates or, if permitted, to the Company any information
that the disclosing entity considers to be confidential (referred to herein as
the "Confidential Information") relating to or within the Scope of Business, the
receiving party shall, and shall cause its Affiliates to, hold such Confidential
Information in confidence and shall not use such Confidential Information except
for the benefit of the Company in accordance with this Section.
(b) The Confidential Information may be disclosed in
documentary form or by physical sample or the Confidential Information may be
disclosed orally or visually. If in documentary form, the Confidential
Information shall be marked as "Confidential Information." If the disclosure is
by physical sample, oral communication or visual observation, the Confidential
Information shall be held in confidence if it is identified to the recipient in
writing as being confidential.
(c) Each party agrees to hold and to cause its Affiliates
to hold Confidential Information received from the other party or its Affiliates
in confidence and not to disclose it to third parties without the prior written
permission of the party from which the Confidential Information was received.
Further, each party agrees that neither it nor its Affiliates will copy or use
Confidential Information of the other party or its Affiliates for any purpose
except as otherwise permitted under the provisions of this Agreement or a
Related Agreement.
(d) Each party shall take, and shall cause its Affiliates
to take, such precautions as are reasonably necessary to prevent disclosure of
Confidential Information to third parties. Confidential Information may be
disclosed under the same or more restrictive terms of this Agreement as to
confidentiality and non-use to: Affiliates; third parties to the extent
reasonably necessary in order to perform activities contemplated herein; and
Governmental Authorities to the extent required by applicable Law.
(e) The parties and their Affiliates shall take all
reasonable measures to ensure that their employees and management who shall be
given access to Confidential Information shall abide by the obligations set
forth in this Section.
(f) Notwithstanding the other provisions of this Section,
Confidential Information shall not include, and no restrictions on use or
disclosure shall apply to, any information:
27
34
(i) which was in the receiving party's possession
prior to its first receipt of the same, directly or indirectly, from the
disclosing party;
(ii) which is now, or hereafter becomes, through no
act or failure to act on the receiving party's part, generally known on a
non-confidential basis or as part of the public domain;
(iii) which corresponds in substance to information
heretofore or hereafter lawfully obtained by the receiving party from a third
party and the receiving party is without an existing restriction on the
disclosure thereof; or
(iv) which can be shown to be independently developed
by employees, agents or contractors of the receiving party who did not have
access to Confidential Information of the disclosing party;
provided, however, that the occurrence of (i), (ii), (iii) or
(iv) above shall not be construed to grant any rights, express or implied, under
any patents. Confidential Information shall not be deemed to be within one of
the foregoing exceptions if it is merely embraced by more general information
available on a non-confidential basis or in the receiving party's possession. In
addition, any combination of features shall not be deemed to be within the
foregoing exceptions unless the combination itself and its principle of
operation are embraced by corresponding information which is within one of the
exceptions.
(g) The secrecy and non-use obligations set forth in
this Section shall continue in force for a period of five (5) years from receipt
of such Confidential Information or such longer period as may be imposed under
third-party agreements with respect to information subject to such agreements,
irrespective of any termination or assignment of a party's or an Affiliate's
interest under this Agreement or any Related Agreement. If Confidential
Information is, under third-party agreements, subject to secrecy and non-use
obligations of duration greater than five (5) years from its receipt hereunder,
the disclosing party shall so inform the recipient party before making such
disclosure and, if the recipient party agrees to such longer term obligation of
secrecy and non-use, such disclosures shall be made. If the recipient party
refuses to assume such longer term obligation, the recipient party shall have no
right to obtain any Confidential Information that is subject to such longer term
obligation.
(h) The confidentiality provisions contained in any
Related Agreement shall supersede and replace the provisions of this Section 7.2
to the extent that the provisions in the Related Agreement are more specific or
impose obligations that are more stringent than the provisions in this Section
7.2.
28
35
7.3 Budget. Within thirty (30) days after the Closing, Humko and InCon
shall agree on the annual budget for the Company. Until such budget has been
approved, the Company shall be operated in accordance with the Members Agreement
and the only amounts that may be utilized by the Company to satisfy its
obligations shall be the amounts contributed by InCon and Humko to the Company
as working capital, subject to the restrictions imposed by the Members
Agreement.
7.4 Guaranteed Payment to Humko. Humko has entered into this Agreement
and is making the cash investment covered by this Agreement, based in part on
the belief that the Company will achieve a certain level of profitability.
Although such profitability can never be assured, InCon and Bionutrics, in order
to induce Humko to enter into this Agreement and make the cash investment
covered by this Agreement hereby agree as follows:
(a) If EBITDA for the period commencing one (1) calendar year after the date
hereof and ending on the date that is two (2) calendar years after the date
hereof, is less than US $1,500,000, then InCon and Bionutrics shall jointly and
severally be liable to pay to Humko an amount equal to two hundred percent
(200%) of the difference between US $1,500,000 and the actual amount of EBITDA
for such period; provided, however, that the maximum amount payable by InCon and
Bionutrics under this Section 7.4(a) shall not exceed US $600,000. InCon and
Bionutrics will pay Humko all amounts which are required to be paid under this
Section 7.4(a) on or before November 30, 2001.
(b) The covenant to pay to Humko the amounts set forth in Section 7.4(a) above
is absolute and unconditional and is secured by the security interest granted to
Humko under the terms of Section 4.4 of the Members Agreement. In addition, if
InCon and Bionutrics fail to pay all of such amounts to Humko in a timely
manner, Humko is entitled to exercise its right to the Conversion, as defined in
Section 4.5(d) of the Members Agreement, in addition to all other rights under
this Agreement, the Members Agreement or at law or in equity.
(c) All past due amounts owed by InCon and Bionutrics with respect to such US
$600,000, shall bear interest from the date due until paid at the annual rate
equal to the lesser of (i) the maximum lawful rate permitted by applicable law
or (ii) the Agreed Interest Rate, as defined in the Members Agreement, plus
eight percent (8%). However, in no event shall Humko be entitled to any interest
on any such amounts in excess of the maximum amount of interest that may be
charged, collected or received by Humko under applicable law.
7.5 Restrictions Relating to Certain Products and Materials. Until
April 8, 2001, neither Bionutrics, InCon nor any Affiliate, assignee or agent of
Bionutrics or InCon shall (i) participate in any Competitive Activity within the
Territory, (ii) engage directly or indirectly in any Competitive Activity within
the Territory; or (iii) engage directly or indirectly in the business of
[*]within the Territory.
7.6 Adjustment Relating to Receivables and Payables Only. If the
aggregate amount of
29
36
the accounts receivable listed on Schedule 4.30 do not exceed the aggregate
amount of the accounts payable listed on Schedule 4.29 by an amount equal to US
$275,000 on the Closing Date, then the following shall be applicable:
(a) InCon shall pay to the Company on the date hereof an
amount equal to the difference between US $275,000 and the difference between
such accounts receivable and such accounts payable. By example and not by way of
limitation, if such accounts payable equal US $400,000 and such accounts
receivable equal US $100,000, then the amount to be delivered to the Company
shall be equal to US $575,000.
(b) Such amount shall not constitute a capital contribution
but shall constitute payment to the Company for amounts to be paid on the
applicable accounts payable.
ARTICLE 8
Conditions to Closing
8.1 Conditions of Humko's Obligations to Close. The obligations of
Humko to consummate the transactions provided for by this Agreement are subject,
in the discretion of Humko, to the satisfaction at or prior to the Closing of
each of the following conditions, unless otherwise waived in writing by Humko:
(a) The representations and warranties of InCon and Bionutrics
contained in this Agreement shall be true in all material respects at and as of
the Closing Date as though such representations and warranties were made at and
as the Closing, except that such representations and warranties that were made
with specific reference to any date prior to the date hereof shall be updated as
of the Effective Date.
(b) InCon and Bionutrics shall have performed and complied in
all material respects with all agreements and covenants required by this
Agreement to be performed by InCon and Bionutrics prior to the Closing.
(c) Humko shall have received a certificate signed by a duly
authorized representative of InCon and Bionutrics certifying that the conditions
specified in Sections 8.1(a) and (b) have been satisfied.
(d) No action or proceeding shall be pending, or threatened to
be commenced, by or against InCon, Bionutrics or any of their Affiliates under
the United States Bankruptcy Code or under any other applicable insolvency,
reorganization, moratorium, or similar Law, and no receiver, liquidator or
trustee shall have been appointed in regard to InCon, Bionutrics or any of their
Affiliates, or as to all or any substantial portion of its property or the
business of InCon, Bionutrics or any of their Affiliates.
(e) There shall not have occurred any material adverse change
in the business, operations, properties, Assets, condition or prospects of the
business of InCon or Bionutrics.
30
37
(f) All proceedings in connection with the transactions
contemplated hereby and all documents and instruments (including, without
limitation, all Related Agreements) incident to such transactions shall be
satisfactory in legal substance and form to Humko's counsel, and Humko and its
counsel shall have received all such executed counterpart originals or certified
or other copies of such documents as Humko or its counsel may reasonably
request.
(g) The present lease of the Facility shall have been amended
by written instrument, in form and substance reasonably satisfactory to Humko.
(h) All Financing Statements covering equipment purchased by
Humko from NTC in 1998 shall have been released or executed UCC 3 instruments
executed by each applicable secured party shall have been delivered to Humko
prior to the Closing.
8.2 Conditions of InCon's and Bionutrics' Obligations to Close. The
obligations of InCon and Bionutrics to consummate the transactions provided for
by this Agreement are subject, in the discretion of InCon and Bionutrics, to the
satisfaction at or prior to the Closing of each of the following conditions,
unless otherwise waived in writing by InCon or Bionutrics:
(a) The representations and warranties of Humko obtained in
this Agreement shall be true in all material respects at and as of the Closing
Date as though such representations and warranties were made at and as the
Closing.
(b) Humko shall have performed and complied in all material
respects with all agreements and covenants required by this Agreement to be
performed by Humko prior to the Closing.
(c) InCon shall have received a certificate signed by a duly
authorized representative of Humko certifying that the conditions specified in
Sections 8.2 (a) and (b) have been satisfied.
(d) No action or proceeding shall be pending, or threatened to
be commenced, by or against Humko under the United States Bankruptcy Code or
under any other applicable insolvency, reorganization, moratorium, or similar
Law, and no receiver, liquidator or trustee shall have been appointed in regard
to Humko or as to all or any substantial portion of its property.
(e) All proceedings in connection with the transactions
contemplated hereby and all documents and instruments (including, without
limitation, all Related Agreements) incident to such transactions shall be
satisfactory in legal substance and form to InCon's and Bionutrics' counsel, and
InCon, Bionutrics and their counsel shall have received all such executed
counterpart originals or certified or other copies of such documents as InCon,
Bionutrics or its counsel may reasonably request.
31
38
8.3 Mutual Conditions. The respective obligations of Humko, InCon and
Bionutrics to consummate the transactions provided for by this Agreement are
subject, in the discretion of Humko, InCon and Bionutrics, respectively, to each
the following conditions, unless waived in writing by all parties:
(a) All consents and approvals of third parties (including,
without limitation, all Governmental Authorities) required to be received by or
on the part of the Company, InCon, Bionutrics, Humko or any of their respective
Affiliates for the consummation of the transactions contemplated by this
Agreement (other than any such consent or approval which is designated herein or
in a Related Agreement as not being required to be received on or prior to the
Closing Date) shall have been obtained.
(b) No suit, action or proceeding, or governmental
investigation or inquiry against or concerning, directly or indirectly, the
Company, InCon, Bionutrics or Humko, or any of their respective Affiliates or
any of the properties of any of them, or the transactions contemplated hereby,
shall have been instituted or threatened, nor shall any basis therefore have
arisen, that might result in any order or judgment of any court or other
Governmental Authority which in the opinion of InCon, Bionutrics or Humko, as
the case may be, is of such significance or materiality and of such a nature as
to render it inadvisable for such party to consummate the transactions
contemplated by this Agreement.
(c) The parties shall have agreed on a preliminary business
plan for the Company in such detail as may be reasonably requested by either
party covering the period of time from the Closing Date until one (1) year
thereafter.
8.4 Waiver of Conditions to Closing. If any condition precedent to
Humko's obligations hereunder is not satisfied in Humko's sole discretion by the
Closing Date or if any condition precedent to InCon's obligations hereunder is
not satisfied in InCon's or Bionutrics' sole discretion by the Closing Date,
then Humko, InCon or Bionutrics, as the case may be, may, nevertheless, at its
option, proceed with the Closing, in which event it shall be deemed to have
waived such condition precedent.
ARTICLE 9
Termination of Agreement
9.1 Termination of this Agreement Prior to the Closing Date.
(a) In the event of a material default by one party in the
performance of its obligations hereunder prior to the Closing, the other party
shall have the right to give notice of default, and if such default is not cured
within thirty (30) days after such notice, the other party may terminate this
Agreement by notice to the defaulting party. Whether or not this Agreement is so
terminated, each party shall have the right to pursue any and all remedies
available to it under Law or in equity against the other party for default of
any obligation of the other party hereunder.
32
39
(b) In addition to the foregoing, this Agreement may, by
written notice, be terminated by mutual consent of InCon, Bionutrics and Humko.
(c) In the event this Agreement is terminated pursuant to
Section 9.1(a) or 9.1(b), the obligations of the parties hereunder shall
terminate on the date of such termination, except as may be expressly provided
herein, and each of the parties shall pay its own expenses and the fees and
expenses of its counsel and other experts.
ARTICLE 10
General Provisions
10.1 Binding Nature and Restrictions on Assignment. This Agreement
shall be binding on the parties hereto and their respective successors and
permitted assigns. Neither InCon, Bionutrics, International nor NTC shall have
the power to assign this Agreement or any of their rights and obligations
hereunder without the prior written consent of Humko.
10.2 Notices. Any and all notices to any of the parties hereto
provided for or permitted under this Agreement or by Law shall be given in
writing by personal delivery, telecopier, overnight delivery service, or by
certified or registered mail, return receipt requested, postage prepaid,
addressed to such party at the address set forth below, and shall be effective
upon actual receipt or, if given by certified or registered mail, as of three
(3) days after the date of mailing:
(a) If to InCon: c/o InCon Technologies, Inc.
000 Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxx
Telecopy No.: 000-000-0000
With copies to: Xxxxx X. Xxxxxx, Esq.
000 Xxxxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
Telecopy No.: 000-000-0000
(b) If to Bionutrics, Bionutrics, Inc., International or NTC:
0000 X. Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxx
Telecopy No.: 000-000-0000
With copies to: Xxxxxxxx Siegelbaum LLP
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: J. Xxxxxx Xxxxxx
Telecopy No.: 000-000-0000
33
40
(b) If to Humko: AC HUMKO CORP.
0000 Xxxxxxxx Xxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Telecopy No. 000-000-0000
Attention: President
-and-
AC HUMKO CORP.
0000 Xxxxxxxx Xxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Telecopy No. 000-000-0000
Attention: General Counsel
With copies to: Xxxxxx & Xxxxxx L.L.P.
2500 First City Tower
0000 Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Telecopy No.: 000-000-0000
Attention: J. Xxxxx Xxxxxxx
Any party may change its address or add or change parties for receiving notice
by written notice given to the other names above in the manner required above.
10.3 Survival of Representations and Warranties. Any investigation
made by any party or such party's representatives shall not constitute a waiver
of any representation or warranty made by the parties under Articles 4 or 5,
respectively, and no such representation or warranty shall be merged into the
Closing and all representations and warranties contained in Articles 4 and 5 and
in any certificate delivered pursuant to this Agreement shall survive the
Closing.
10.4 Survival of Covenants and Indemnities. All covenants required to
be performed prior to or after the Closing and all indemnities shall survive the
Closing.
10.5 Governing Law: Severability. THIS AGREEMENT IS GOVERNED BY AND
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
(EXCLUDING ITS CONFLICT-OF-LAWS RULES), EXCEPT THAT WITH RESPECT TO THE
FORMATION OF THE COMPANY, THE LAWS OF THE STATE OF DELAWARE SHALL APPLY TO THE
EXTENT SUCH LAWS ARE MANDATORY UNDER DELAWARE LAW.
10.6 Public Announcement. The parties hereto will consult and agree
with each other prior to issuing any public announcement or statement with
respect to the transactions contemplated hereby.
34
41
10.7 Expenses. Except as otherwise expressly provided by this
Agreement, each party shall pay all fees and expenses incurred by it in
connection with the negotiation and execution of, and performance under, this
Agreement.
10.8 Covenant of Good Faith. Each party agrees that, in its respective
dealings with the other party under or in connection with this Agreement, it
shall act in good faith.
10.9 Further Assurances. Each of the parties hereto agrees that, from
time to time, at the request of the other party and without further
consideration, it will execute and deliver such other documents and take such
other actions as such other party may reasonably request to consummate more
effectively the transactions contemplated under this Agreement.
10.10 Calculation of Days. Unless otherwise noted, "days" refers to
calendar days.
10.11 Headings. The Article and Section headings and the table of
contents used herein are for reference and convenience only and shall not enter
into the interpretation hereof.
10.12 Construction. In the event of any conflict between this
Agreement and any Exhibits or Attachments hereto, the provisions of this
Agreement shall control.
10.13 Counterparts. This Agreement may be executed in several
counterparts, all of which taken together shall constitute one single agreement
between the parties hereto.
10.14 Entire Agreement; Amendment. This Agreement, including any
Appendices, Schedules and Exhibits referred to herein and attached hereto, each
of which is incorporated herein for all purposes constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements, whether written or oral, with respect to the
subject matter contained in this Agreement. This Agreement may be amended only
by a written instrument signed by an authorized representative of each party. No
consent, agreement or approval of a party that is contemplated under this
Agreement shall be valid unless in writing and signed by such party.
10.15 Submission to Jurisdiction. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING
AGAINST ANY PARTY WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT AND ENFORCED IN
A FEDERAL OR STATE COURT LOCATED IN THE SOUTHERN DISTRICT OR COUNTY OF NEW YORK,
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY,
IRREVOCABLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE
PARTIES HERETO AGREE THAT A JUDGMENT, AFTER EXHAUSTION OF ALL AVAILABLE APPEALS,
IN ANY SUCH ACTION OR
35
42
PROCEEDINGS SHALL BE CONCLUSIVE AND BINDING UPON THE APPLICABLE PARTIES, AND MAY
BE ENFORCED IN ANY OTHER JURISDICTION BY A SUIT UPON SUCH JUDGMENT, A CERTIFIED
COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE JUDGMENT. HUMKO HEREBY
IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CORPORATION SERVICES COMPANY, WITH
OFFICES ON THE DATE HEREOF AT 0000 XXXXXX XXXX, XXXXXXXXXX, XXXXXXXX 00000 , AND
EACH OF THE OTHER PARTIES HERETO HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND
EMPOWERS CORPORATION SERVICES COMPANY, WITH OFFICES ON THE DATE HEREOF AT 0000
XXXXXX XXXX, XXXXXXXXXX, XXXXXXXX 00000, SO LONG AS THIS AGREEMENT IS
OUTSTANDING, AS ITS RESPECTIVE DESIGNEE, APPOINTEE AND AGENT WITH RESPECT TO ANY
ACTION OR PROCEEDING TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS
RESPECTIVE BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL
PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH ACTION
OR PROCEEDING AND AGREE THAT THE FAILURE OF ANY SUCH AGENT TO GIVE ANY ADVICE OF
ANY SERVICE OF PROCESS TO THE RESPECTIVE PARTY SHALL NOT IMPAIR OR AFFECT THE
VALIDITY OF SUCH SERVICE OR OF ANY JUDGMENT BASED THEREON. IF FOR ANY REASON ANY
SUCH DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH,
THE RESPECTIVE PARTIES AGREE TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN
THE STATE OF NEW YORK ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION
SATISFACTORY TO THE OTHER PARTIES. EACH OF THE PARTIES HERETO FURTHER
IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE RESPECTIVE PARTIES, AT
THEIR RESPECTIVE ADDRESSES SET FORTH IN SECTION 10.2 HEREOF, SUCH SERVICE TO
BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF ANY PARTY TO SERVE PROCESS OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST ANY OTHER PARTY IN ANY OTHER MANNER PERMITTED BY LAW.
EACH PARTY HERETO HEREBY WAIVES IRREVOCABLY, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY OBJECTION TO THE LAYING OF VENUE IN THE AFOREMENTIONED NEW YORK COURTS
OR ANY CLAIM OF INCONVENIENT FORUM IN RESPECT OF ANY SUCH ACTION THEREIN TO
WHICH IT MIGHT OTHERWISE NOW OR HEREAFTER BE ENTITLED IN ANY ACTIONS ARISING OUT
OF OR BASED ON THIS AGREEMENT.
IN WITNESS WHEREOF, THE PARTIES BELOW HAVE EXECUTED THIS
AGREEMENT AS OF THE DATE FIRST SET FORTH ABOVE.
[SIGNATURES FOLLOW ON SUCCEEDING PAGES]
36
43
MEMBERS:
AC HUMKO CORP., A DELAWARE CORPORATION
BY
XXXXXX X. XXXXXXXXX
PRESIDENT & CEO
"HUMKO"
37
44
INCON TECHNOLOGIES, INC., A DELAWARE
CORPORATION
BY
XXXX X. XXXXXX
PRESIDENT
"INCON"
[SIGNATURE PAGE 2 TO MASTER FORMATION AGREEMENT]
2
45
BIONUTRICS, INC., A NEVADA CORPORATION
BY
XXXXXX X. XXXX
PRESIDENT AND CHIEF EXECUTIVE OFFICER
"BIONUTRICS"
[SIGNATURE PAGE 3 TO MASTER FORMATION AGREEMENT]
46
NUTRITION TECHNOLOGY
CORPORATION, A NEVADA CORPORATION
BY
NAME:
TITLE:
"NTC"
[SIGNATURE PAGE 4 TO MASTER FORMATION AGREEMENT]
47
INCON INTERNATIONAL INC., A BRITISH
VIRGIN ISLANDS COMPANY
BY
NAME:
TITLE:
"INTERNATIONAL"
[SIGNATURE PAGE 5 TO MASTER FORMATION AGREEMENT]
