EXHIBIT 10.3
------------
AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into as
---------
of August 31, 1998 by and among BP Acquisition Co., Inc., a Delaware corporation
("Newco"), Advanced Nutraceuticals, Inc., a Delaware corporation ("Buyer"),
----- -----
Bactolac Pharmaceuticals, Inc. a New York corporation (the "Company") and Xxxxxx
-------
Reddy ("Shareholder").
-----------
R E C I T A L S
- - - - - - - -
A. Buyer owns all of the outstanding shares of capital stock of Newco.
B. The respective boards of directors of Newco and the Company have
determined that it is fair to, and in the best interests of, their respective
corporations and sole stockholders for the Company to be merged with and into
Newco upon the terms and subject to the conditions set forth herein (the
"Merger"); the board of directors and sole stockholder of Newco have approved
------
and adopted this Agreement in accordance with the Delaware Law; and the board of
directors and sole shareholder of the Company have approved and adopted the
principal terms of this Agreement in accordance with the New York Business
Corporation Law (the "New York Law").
------------
AGREEMENT
---------
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties herein contained, the parties hereto agree as
follows:
ARTICLE 1
DEFINITIONS
-----------
Section 1.1 Definitions. For all purposes of this Agreement, certain
-----------
capitalized terms not otherwise defined herein shall have the meanings set forth
in Exhibit A attached hereto.
---------
ARTICLE 2
THE MERGER
----------
Section 2.1 Merger. Upon the terms and subject to the conditions of
------
this Agreement, the Company shall be merged with and into Newco in accordance
with the applicable provisions of the Delaware Law. The Company and Newco are
herein sometimes referred to as the "Constituent Corporations." Newco shall be
------------------------
the surviving corporation following the effectiveness of the Merger (sometimes
referred to herein as the "Surviving Corporation").
---------------------
Section 2.2 Effect of Merger. The parties agree to the following
----------------
provisions with respect to the Merger:
(a) Certificate of Incorporation and Bylaws. The certificate of
---------------------------------------
incorporation of Newco, as in effect immediately prior to the Effective Time,
shall be the certificate of incorporation of the Surviving Corporation, from and
after the Effective Time until amended in accordance with applicable law. The
bylaws of Newco, as in effect immediately prior to the Effective Time, shall be
the bylaws of the Surviving Corporation from and after the Effective Time until
amended in accordance with applicable law, the Surviving Corporation's
certificate of incorporation and such bylaws.
(b) Directors and Officers. The directors and officers of Newco in
----------------------
office immediately prior to the Effective Time shall be the directors and
officers, respectively, of the Surviving Corporation, and each shall hold his or
her respective office or offices from and after the
-1-
Effective Time until his or her successor shall have been elected and shall have
qualified or as otherwise provided in the bylaws of the Surviving Corporation.
(c) Name and Corporate Organization of Surviving Corporation. The
--------------------------------------------------------
name of the Surviving Corporation from and after the Effective Time shall be "BP
Acquisition Co., Inc.," which name shall be changed after the closing to
Bactolac Pharmaceuticals, Inc. in accordance with applicable law. At the
Effective Time, the identity and separate corporate existence of the Company
shall cease and Newco as the surviving corporation and successor shall succeed
to the Company in the manner of and as more fully set forth in Section 259 of
the Delaware Law.
(d) Filing of Certificate of Merger and Further Assurances. If this
------------------------------------------------------
Agreement is not terminated pursuant to Article 9 hereof, as soon as practicable
after all conditions to the Merger set forth in Article 6 hereof shall have
been satisfied or waived, the Constituent Corporations shall cause the
Certificate of Merger attached hereto as Annex B-1 ("Delaware Certificate of
-----------------------
Merger") to be executed and acknowledged and, as required by Delaware Law, filed
------
with the Secretary of State of the State of Delaware as provided in the Delaware
Law and, the Certificate of Merger attached hereto as Annex B-2 ("New York
--------
Certificate of Merger") to be executed and acknowledged and, as required by New
---------------------
York Law, filed with the Secretary of State of the State of New York as provided
in the New York Law and as required by New York Law, together with such other
instruments as are required to be filed under Section 907 thereof. The Merger
shall become effective on the date and at the time the Certificate of Merger is
filed with the Secretary of State of the State of Delaware in accordance with
Section 103 of the Delaware Law (the "Effective Time"). If, at any time after
--------------
the Effective Time, the Surviving Corporation shall consider or be advised that
any deeds, bills of sale, assignments or assurances or any other acts or things
are necessary, desirable or proper (i) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation, its right, title or interest in, to or
under any of the rights, properties or assets of the Constituent Corporations
acquired or to be acquired as a result of the Merger, or (ii) otherwise to carry
out the purposes of this Agreement, the Surviving Corporation and its officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of the Constituent Corporations, all such deeds, bills of
sale, assignments and assurances and do, in the name and on behalf of the
Constituent Corporations, all such other acts and things necessary, desirable or
proper to vest, perfect or confirm its right, title or interest in, to or under
any of the rights, properties or assets of the Constituent Corporations acquired
or to be acquired as a result of the Merger and otherwise to carry out the
purposes of this Agreement.
Section 2.3 Conversion of Securities.
------------------------
(a) By virtue of the Merger and without any action on the part of the
holder thereof, at the Effective Time each share of common stock of the Company
("Company Common Stock") outstanding immediately prior to the Effective Time
--------------------
shall be converted into the right to receive (i) that amount of the Stock Merger
Consideration (hereinafter defined) equal to the total aggregate Stock Merger
Consideration divided by the number of shares of Company Common Stock
outstanding, (ii) that amount of the Cash Merger Consideration (as hereinafter
defined) equal to the total aggregate Cash Merger Consideration divided by the
number of shares of Company Common Stock outstanding, and (iii) that amount of
the Note Merger Consideration (as hereinafter defined) equal to the total
aggregate Note Merger Consideration divided by the number of shares of Company
Common Stock outstanding; deliverable and payable to the holder thereof upon
surrender of the certificate formerly representing Company Common Stock (the
"Share Certificate") in the manner provided in Section 2.4 hereof.
------------------
(b) Subject to Section 8.9 hereof: "Stock Merger Consideration" shall
--------------------------
mean that number of shares of common stock, par value $.001 of Buyer ("Buyer
-----
Common Stock") equal to $4,500,000 divided by the initial public offering price
------------
per share of Buyer Common Stock (the "IPO Price"); "Cash Merger Consideration"
--------- -------------------------
shall mean an aggregate of $3,000,000 in cash, without interest; and "Note
----
Merger Consideration" shall mean the subordinated notes of the Buyer ("Buyer
-------------------- -----
Notes"), in substantially the form attached hereto as Annex A, having an
----- -------
aggregate principal amount of $500,000, an interest rate of 6.5% and payable in
whole on the first anniversary of the Closing Date. The Stock
-2-
Merger Consideration, Cash Merger Consideration and Note Merger Consideration
are herein sometimes collectively referred to as the "Merger Consideration."
--------------------
(c) By virtue of the Merger and without any action on the part of the
holder thereof, at the Effective Time each share of Company Common Stock held by
the Company as a treasury share immediately prior to the Effective Time shall be
canceled and no payment of any consideration shall be made with respect thereto.
Section 2.4 Payment of Cash for Company Common Stock; Exchange of Shares;
-------------------------------------------------------------
Delivery of Notes.
-----------------
(a) Each holder of a Share Certificate which immediately prior to the
Effective Time represented outstanding shares of Company Common Stock will be
entitled to receive, upon surrender to Buyer of such Share Certificate for
cancellation, (i) a cash payment, (ii) shares of Buyer Common Stock and (iii)
Buyer Notes, in each case in the amount calculated in accordance with Section
2.3 hereof. Until properly surrendered, each such Share Certificate shall be
deemed for all purposes to evidence only the right to receive the Merger
Consideration. No interest shall accrue or be paid on the cash payable upon the
surrender of the Share Certificates.
(b) No certificates or script representing fractional shares of Buyer
Common Stock shall be issued upon the surrender for exchange of Share
Certificates, and no holders thereof shall be entitled to any voting rights,
rights to receive any dividends or distributions or other rights as a
stockholder of Buyer with respect to any fractional shares of Buyer Common Stock
that would otherwise be issued to such holder. In lieu of any fractional shares
of Buyer Common Stock that would otherwise be issued, each holder that would
have been entitled to receive a fractional share of Buyer Common Stock shall,
upon proper surrender of such holder's Share Certificates, receive a cash
payment equal to such fraction multiplied by the initial public offering price
per share of Buyer Common Stock.
Section 2.5 Closing. The closing of the Merger and the other
-------
transactions contemplated hereby (the "Closing") shall take place at the offices
-------
of [Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, Twenty-Third Floor, 000 Xxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000], at 10:00 A.M. local time on the day of
closing of the initial public offering of the Buyer Common Stock, or at such
other time or on such other date as shall be agreed upon amount the parties upon
satisfaction or waiver of all conditions precedent to the Closing (such time and
date being referred to herein as the "Closing Date").
------------
Section 2.6 Actions at the Closing. At the Closing:
----------------------
(a) The Company and the Shareholder shall deliver or cause to be
delivered to Buyer and Newco all of the documents, certificates and instruments
required to be delivered to Buyer or Newco pursuant to Section 6.2.
(b) Buyer and Newco shall deliver or caused to be delivered to the
Company and the Shareholder all of the documents, certificates and instruments
required to be delivered to the Company or the Shareholder pursuant to Section
6.3.
(c) The Company and Newco shall file the Delaware Certificate of
Merger with the Secretary of State of the State of Delaware and the New York
Certificate of Merger with the Secretary of State of the State of New York.
(d) Buyer shall deliver to the Shareholder certificates representing
the shares of Buyer Common Stock acquired by the Shareholder in the Merger.
(e) Buyer shall deliver to the Shareholder, by wire transfer of
immediately available funds, the cash portion of the Merger Consideration.
(f) Buyer shall deliver to the Shareholder Buyer Notes representing
the note portion of the Merger Consideration.
-3-
(g) Xxxxxx Xxxxx shall enter into an employment agreement with the
Company (the "Employment Agreement") in a form reasonably acceptable to Buyer
--------------------
and Xxxxxx Xxxxx having a term of two years from the Closing Date and providing
for payment of annual salary of $200,000 and, if terminated without cause,
severance equal to the remainder of the term of the Employment Agreement or a
maximum of one year.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
------------------------------
REGARDING THE COMPANY
---------------------
The Company and the Shareholder hereby jointly and severally represent
and warrant to, and covenant and agree with, Buyer and Newco that:
Section 3.1 Organization and Good Standing; Subsidiaries. The Company
--------------------------------------------
is a corporation duly organized, validly existing and in good standing under the
laws of the State of New York, with full power and authority to own and lease
its properties and to conduct its business as currently conducted. The Company
has been duly qualified as a foreign corporation for the transaction of business
and is in good standing under the laws of each jurisdiction in which the Company
owns or leases any property, or conducts any business, so as to require such
qualification, except where the failure to obtain such qualification would not
be reasonably likely to have a Material Adverse Effect. The Company has no
Subsidiaries and does not own or control or have any other equity investment or
other interest in, directly or indirectly, any corporation, joint venture,
limited liability company, partnership, association or other entity. The copies
or originals of the articles of incorporation, bylaws, minute books and stock
records of the Company previously delivered to, or made available for inspection
by, Buyer are true, complete and correct
Section 3.2 Authorization, Binding Agreement. The Company has all
--------------------------------
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the Company's board of directors
and the Company's stockholders in accordance with the New York Law and the
articles of incorporation and bylaws of the Company. No other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
and the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by the Company and constitutes the legal, valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium or other laws, now or
hereafter in effect, relating to or limiting creditors' rights generally, and
(b) general principles of equity (whether considered in an action in equity or
at law).
Section 3.3 No Conflicts. The execution, delivery and performance of
------------
this Agreement and the consummation of the transactions contemplated hereby will
not (a) conflict with or result in a breach or violation of any term or
provision of, or constitute a default under (with or without notice or passage
of time, or both), or otherwise give any Person a basis for accelerated or
increased rights or termination or nonperformance under, any obligation,
agreement or instrument to which the Company is a party or by which the Company
is bound or affected or to which any of the property or assets of the Company is
bound or affected, (b) result in the violation of the provisions of the articles
of incorporation or bylaws of the Company or any Legal Requirement applicable to
or binding upon it, (c) result in the creation or imposition of any Lien upon
any property or asset of the Company or (d) otherwise adversely affect the
contractual or other legal rights or privileges of the Company. Schedule 3.3
------------
sets forth a list of all agreements requiring the consent of any party thereto
to any of the transactions contemplated hereby.
Except as set forth on Schedule 3.3, all consents, authorizations and
------------
approvals of any Person to or as a result of the consummation of the
transactions contemplated hereby that are necessary or advisable in connection
with the operations and business of the Company as currently conducted and as
proposed to be conducted, or for which the failure to obtain the same might
have,
-4-
individually or in the aggregate, a Material Adverse Effect, have been lawfully
and validly obtained by the Company.
Section 3.4 Capitalization. The authorized capital stock of the
--------------
Company consists solely of 100 shares of Company Common Stock, of which 100
shares are issued and outstanding. All of the issued and outstanding shares of
Company Common Stock have been duly authorized and validly issued and are fully
paid and nonassessable and are held by the Shareholder in the amounts reflected
in Annex B hereto. There are no existing options, warrants, rights, calls or
-------
commitments of any character relating to the shares of Company Common Stock or
any other capital stock or securities of the Company, (ii) there are no
outstanding securities or other instruments convertible into or exchangeable for
shares of Company Common Stock or any other capital stock or securities of the
Company and no commitments to issue such securities or instruments, and no
Person has any right of first refusal, preemptive right, subscription right or
similar right with respect to any shares of Company Common Stock or any other
capital stock or securities of the Company.
Section 3.5 Financial Statements.
--------------------
(a) The Company has prepared and furnished to Buyer, and there are
included in Schedule 3.5 hereto, true and complete copies of (i) the unaudited
------------
balance sheet (the "Balance Sheet") of the Company at December 31, 1997 (the
-------------
"Balance Sheet Date"), and the related unaudited statements of income,
-------------------
shareholders' equity and cash flows for the twelve months then ended, (ii) the
unaudited balance sheets of the Company at June 30, 1998 and the related
unaudited statements of income, shareholders' equity and cash flow for the
fiscal year then ended, together with the report thereon of independent
certified public accountants (the financial statements described in clauses (i)
and (ii) above are collectively referred to as the "Financial Statements").
--------------------
(b) The Financial Statements present fairly the financial condition of
the Company as of the dates indicated therein and the results of operations and
cash flows of the Company for the periods specified therein, have been prepared
in conformity with GAAP applied on a consistent basis during the periods covered
thereby and prior periods, have been derived from the accounting records of the
Company.
Section 3.6 Property and Products.
---------------------
(a) The Company has, and immediately prior to the Closing will have,
good, valid and marketable title in fee simple to all real property and all
personal property reflected on the Balance Sheet as owned by the Company and all
real property and personal property acquired by the Company since the Balance
Sheet Date, in each case free and clear of all Liens except (i) as set forth on
Schedule 3.6(a-1), and (ii) for sales and other dispositions of inventory in the
-----------------
ordinary course of business since the Balance Sheet Date which, in the
aggregate, have not been materially different from prior periods. Schedule
--------
3.6(a-2) contains a list of all tangible personal property (including, without
--------
limitation, computer systems, hardware and software) having a cost or fair
market value in excess of $50,000 owned by the Company (other than personal
property held by the Company as lessee under an operating lease). Schedule
--------
3.6(a-3) contains a list of all real property leases, licenses and personal
--------
property leases under which the Company is the lessee or licensee. True and
complete copies of all real property leases, licenses and personal property
leases listed on Schedule 3.6(a-3) have been delivered to Buyer heretofore, as
well as copies of any title reports, surveys or environmental reports or audits
relating to any leased real property. For the purposes of this Section 3.6(a),
a "lease" shall include a sublease. All personal property owned by the Company
and all personal property held by the Company pursuant to operating leases is in
good operating condition and repair, subject only to ordinary wear and tear, and
is suitable and appropriate for the use thereof made and proposed to be made by
the Company in its business and operations. The real property and personal
property described in Schedules 3.6(a-1) and 3.6(a-2) and the real property and
personal property held by the Company pursuant to the leases and licenses
described in Schedule 3.6(a-3) comprise all of the real property and personal
property used in or necessary for the conduct of business of the Company. The
Company owns all of the real and personal property, tangible and intangible,
including, without limitation, computer systems hardware
-5-
and software, necessary or desirable to conduct its business as heretofore
conducted or as contemplated to be conducted except as specifically disclosed
herein.
(b) Except as set forth in Schedule 3.6(b), all of the facilities,
---------------
buildings, plants, structures and improvements (A) are in good operating
condition and repair, and (B) are adequate and suitable for the purposes for
which they are currently and proposed to be used. There are no (i) leases,
subleases, licenses, concessions or other agreements, written or oral, granting
to any other Person the right to acquire, use or occupy any portion of, any real
property, (ii) outstanding options or rights of first refusal to purchase all or
any portion of real property or interest therein, and (iii) Persons (other than
the Company) in possession of any real property. Except for inventory that is
excess, damaged or obsolete, for which in the aggregate an adequate reserve has
been established in the Balance Sheet in accordance with generally accepted
accounting principles, consistently applied, the inventory reflected in the
Balance Sheet and thereafter acquired and not disposed of since such date is of
good and merchantable quality, and of a quantity and quality saleable in the
ordinary course of business in accordance with past practices.
(c) Schedule 3.6(c) includes an accurate description of all products
manufactured, marketed, sold or licensed by the Company since January 1, 1993
(the "Company Products"). Except as disclosed on Schedule 3.6(c), there have
----------------
been no Company Products which have been recalled, withdrawn or suspended in
and/or outside of the United States (whether voluntarily or otherwise) since
January 1, 1993, nor have there been proceedings in and/or outside of the United
States pending against the Company at any time since January 1, 1993 (whether
such proceedings have since been completed or remain pending) seeking the
recall, withdrawal, suspension or seizure of any Company Product or seeking to
enjoin the Company from engaging in any activities pertaining to such Company
Products or to affirmatively perform activities pertaining to such Company
Products prior to shipping such products, or requiring the cessation or
curtailment of any business operation or practice. There are no facts which
exist which could reasonably be expected to furnish a basis for the recall or
withdrawal or any Company Product or the suspension of any product registration,
product license, manufacturing license, wholesale dealer's license, export
license or other governmental license, or the approval or consent of any
governmental regulatory agency with respect to any Company Product, nor do there
exist any facts which could reasonably be expected to furnish a basis for the
recall, withdrawal, suspension or seizure by any governmental agency or court of
any Company Product or which could reasonably be expected to form the basis for
the issuance of an injunction pertaining thereto or to cause the Company to
cease further distribution or marketing of any Company Product pending further
approval or authorization by any governmental agency or to change marketing
classification of any Company Product, or which could reasonably be expected to
require the cessation or curtailment of any business operation or practice. The
Company Products have been manufactured, marketed and distributed in accordance
with the specifications under which such Company Products have normally been
manufactured and in accordance with all applicable requirements of law. Since
January 1, 1993, the Company has not received or been subject to consent
decrees, orders, settlement agreements or similar matters relating in any
fashion to the Company Products or received any warning letters or other
correspondence from the Food and Drug Administration, Federal Trade Commission
or other governmental officials or agencies concerning the Company Products or
which have in any manner asserted that the operations of the Company may not be
in compliance with applicable laws, regulations, rules or guidelines. The
Company has complied in all respects with current reporting requirements
relating to the Company Products. No officer, director or employee of the
Company has been convicted of or formally charged with any offense or act of a
type that would be required to be disclosed in a registration statement of the
Company on Form S-1 under the Securities Act.
Section 3.7 Accounts Receivable. All accounts receivable of the
-------------------
Company reflected in the Balance Sheet and all accounts receivable of the
Company that have arisen since the Balance Sheet Date (except such accounts
receivable as have been collected since such dates) are valid and enforceable
claims. Such accounts receivable of the Company are not subject to any valid
defense, offset or counterclaim and are fully collectible on normal terms and in
the ordinary course of business, except to the extent of the allowance for
doubtful accounts reflected on the Balance Sheet. Schedule 3.7 contains a true
------------
and complete aging of the Company's accounts receivable as of the Balance Sheet
Date.
-6-
Section 3.8 Trademarks, Patents, Etc.
------------------------
(a) Schedule 3.8(a) contains a true and complete list of all letters
---------------
patent, patent applications, trade names, trademarks, service marks, trademark
and service xxxx registrations and applications, copyrights, copyright
registrations and applications, grants of a license or right to the Company with
respect to the foregoing, both domestic and foreign, claimed by the Company or
used or proposed to be used by the Company in the conduct of its business,
whether registered or not, (collectively herein, "Registered Rights").
-----------------
(b) Except as described in Schedule 3.8(b), the Company owns and has the
---------------
unrestricted right to use the Registered Rights and every trade secret, know-
how, process, discovery, development, design, technique, customer and supplier
list, promotional idea, marketing and purchasing strategy, invention, process,
confidential data, product formulation and or other information (collectively
herein, "Proprietary Information") required for, advantageous to or incident to
-----------------------
the design, development, purchase, distribution, sale and use of all products
and services sold or rendered or proposed to be sold or rendered by the Company,
free and clear of any right, equity or claim of others. The Company has taken
reasonable security measures to protect the secrecy, confidentiality and value
of all Proprietary Information.
(c) Schedule 3.8(c) contains a true and complete list and description,
---------------
including the term, payment for and scope thereof, of all licenses of or rights
to Proprietary Information granted to the Company by others or to others by the
Company. Except as described in Schedule 3.8(c), (i) the Company has not sold,
---------------
transferred, assigned, licensed or subjected to any Lien, any Registered Right
or Proprietary Information or any interest therein, and (ii) the Company is not
obligated or under any liability whatever to make any payments by way of
royalties, fees or otherwise to any owner or licensor of, or other claimant to,
any Registered Right or Proprietary Information. None of the Registered Rights
or Proprietary Information licensed or granted to the Company is owned by the
Shareholder or any affiliate of the Shareholder and no Registered Right or
Proprietary Information has been licensed or granted to the Shareholder or any
affiliate of the Shareholder.
(d) There is no claim or demand of any Person pertaining to, or any
Action that is pending or, to the Company's or Shareholder's knowledge,
threatened, which challenges the rights of the Company in respect of any
Registered Right or any Proprietary Information.
Section 3.9 Banking and Insurance.
---------------------
(a) Schedule 3.9(a) contains a true and complete list of the names and
---------------
locations of all financial institutions at which the Company maintains a
checking account, deposit account, securities account, safety deposit box or
other deposit or safekeeping arrangement, the numbers or other identification of
all such accounts and arrangements and the names of all persons authorized to
draw against any funds therein.
(b) Schedule 3.9(b) contains a true and complete list and brief summary
---------------
of all insurance policies and bonds and self insurance arrangements currently in
force that cover or purport to cover risks or losses to or associated with the
Company's business, operations, premises, properties, assets, employees, agents
and directors. The insurance policies, bonds and arrangements described on
Schedule 3.9(b) (the "Policies") provide such coverage against such risk of loss
--------------- --------
and in such amounts as are customary for corporations of established reputation
engaged in the same or similar business and similarly situated. True and
complete copies of all such Policies have been delivered to Buyer heretofore
-7-
Section 3.10 Litigation. Except as set forth on Schedule 3.10, there is
---------- -------------
no legal action, suit, arbitration or other legal, administrative or other
governmental investigation, inquiry or proceeding pending or, to the knowledge
of the Company, threatened against or affecting the Company or any of its
property, assets, business, products, franchises or governmental approvals,
before any court or governmental department, commission, board, bureau, agency,
instrumentality or arbitrator (including but not limited to any taxing entity or
authority) which, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect or to materially and adversely affect the
ability of the Company to carry out, or to prevent or make unduly burdensome,
the Merger contemplated by this Agreement. The Company is subject to no
outstanding judgments, orders, decrees, awards, stipulations or injunctions of
any governmental entity or arbitrator against or affecting the Company or its
properties, assets or business.
Neither the Company nor, to the Shareholder's knowledge, any of its
directors, officers, agents, employees or other Person associated with or acting
on behalf of the Company has (a) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity, (b) made any direct or indirect unlawful payments to
government officials or employees, or foreign government officials or employees,
from corporate funds, (c) established or maintained any unlawful or unrecorded
fund of corporate monies or other assets, or (d) made or received any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment.
Section 3.11 Income and Other Taxes. Except as set forth on Schedule
---------------------- --------
3.11:
----
(a) All Tax Returns required to be filed through and including the date
hereof in connection with the operations of the Company are true, complete and
correct in all respects and have been properly and timely filed. The Company
has not requested any extension of time within which to file any Tax Return,
which Tax Return has not since been filed. Buyer has heretofore been furnished
by the Company with true, correct and complete copies of each Tax Return of the
Company with respect to the past three taxable years, and of all reports of, and
communications from, any Governmental Entities relating to such period.
(b) All Taxes required to be paid or withheld and deposited through and
including the date hereof in connection with the operations of the Company have
been duly and timely paid or deposited by the Company. The Company has properly
withheld or collected all amounts required by law for income Taxes and
employment Taxes relating to its employees, creditors, independent contractors
and other third parties, and for sales and use Taxes on sales, and has properly
and timely remitted such withheld or collected amounts to the appropriate
Governmental Entity. The Company has no liabilities for any Taxes for any
taxable period ending prior to or coincident with the Closing Date.
Section 3.12 Employee Benefit Matters. Schedule 3.12 contains a
------------------------ -------------
complete list of all employee benefit plans (within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
-----
which are maintained or contributed to by the Company (the "Company Benefit
---------------
Plans"). The Company has heretofore provided to Buyer (i) true and complete
-----
copies of all Company Benefit Plans; (ii) the most recent annual actuarial
evaluation, if any, prepared for each Company Benefit Plan; (iii) the two most
recent annual reports (series 5500), if any, required under ERISA with respect
to each Company Benefit Plan, including audited financial statements; (iv) the
most recent determination letter received from the IRS, if any, for each Company
Benefit Plan, and (v) the most recent Summary Plan Description, if any, required
under ERISA with respect to each Company Benefit Plan. Except as disclosed on
Schedule 3.12, (i) with respect to each Company Benefit Plan that is intended to
-------------
be qualified under Section 401(a) of the Code and is maintained by the Company
for any of its employees, (x) the Company has obtained a favorable determination
letter from the IRS and nothing has happened since such letter that would
adversely affect the tax qualification of such plan and (y) such plan has been
operated in compliance with ERISA and in accordance with the provisions of, and
the rules and regulations covering, such plan except where the failure to so
comply does not individually or in the aggregate, have a Material Adverse
Effect, (ii) with respect to each Company Benefit Plan, the Company is not, and
to the Company's knowledge no other person is, engaged in a transaction
prohibited by Section 4975 of the Code or Section 406 of ERISA which could
result in a
-8-
liability to the Company which would individually or in the aggregate, have a
Material Adverse Effect, (iii) each Company Benefit Plan which is subject to
Part III of Subtitle B of Title I of ERISA or Section 412 of the Code has been
maintained in compliance with the minimum funding standards of ERISA and the
Code, and no reportable event, within the meaning of Section 4043 of ERISA has
occurred with respect to any Company Benefit Plan which is subject to Title IV
of ERISA, other than reportable events with respect to which notice has been
waived by the Pension Benefit Guaranty Corporation or which would not,
individually or in the aggregate, have a Material Adverse Effect, and (iv) no
benefit is provided pursuant to a welfare benefit plan (as defined in ERISA
Section 3(1)) to a former employee of the Company other than for continuation
health coverage benefits provided under Code Section 4980B.
Section 3.13 No Undisclosed Liabilities. Except (i) to the extent set
--------------------------
forth or provided for in the Balance Sheet or the notes thereto, (ii) as set
forth on Schedule 3.13 or (iii) for non-material current liabilities incurred
-------------
since the Balance Sheet Date in the ordinary course of business, as of the date
hereof the Company has no liabilities or obligations of any kind or nature
(whether or not of a type that would be required to be disclosed in financial
statements), whether accrued, absolute, contingent or otherwise, whether due or
to become due and whether the amounts thereof are readily ascertainable or not,
or any unrealized or anticipated losses from any commitments of a contractual
nature, including but not limited to liabilities or obligations for Taxes and
Environmental Matters with respect to or based upon the facts existing, or
transactions or events occurring at or prior to the Closing.
Section 3.14 Permits, Licenses, Etc.; Regulatory Filings. The Company
-------------------------------------------
possesses, and is operating in compliance with, all franchises, licenses,
permits, certificates, authorizations, rights and other approvals of
Governmental Entities necessary to (i) occupy, maintain, operate and use the
real property as it is currently used and proposed to be used, (ii) conduct its
business as currently conducted and as proposed to be conducted, and (iii)
maintain and operate its Company Benefit Plans (collectively, the "Permits"),
-------
except to the extent that the failure to have or maintain any such permit would
not result in a Material Adverse Effect. Schedule 3.14 contains a true and
-------------
complete list of all Permits. Each Permit has been lawfully and validly issued,
and no proceeding is pending or, to the Shareholder's knowledge, threatened
looking toward the revocation, suspension or limitation of any Permit. The
consummation of the transactions contemplated by this Agreement will not result
in the revocation, suspension or limitation of any Permit.
The Company has made all required registrations and filings with and
submissions to all applicable Governmental Entities relating to the operations
of the Company as currently conducted and as proposed to be conducted,
including, without limitation, all such applicable Governmental Entities having
jurisdiction over any matters pertaining to conservation or protection of the
environment, the treatment, discharge, use, handling, storage or production, or
disposal of Hazardous Materials and the safety of foods, drugs and other
consumer products. All such registrations, filings and submissions were in
compliance with all Legal Requirements (including all Environmental Laws) and
other requirements when filed, no material deficiencies have been asserted by
any such applicable Governmental Entities with respect to such registrations,
filings or submissions and, to the Shareholder's knowledge, no facts or
circumstances exist which would indicate that a material deficiency may be
asserted by any such authority with respect to any such registration, filing or
submission.
Section 3.15 Material Contracts; No Defaults.
-------------------------------
(a) Schedule 3.15 contains a true and complete list and description of
-------------
all material contracts, agreements, understandings, arrangements and
commitments, written or oral ("Contracts"), of the Company by which it or its
properties, rights or assets are bound. True and complete copies of such
written Contracts and true and complete summaries of such oral Contracts have
been delivered to Buyer heretofore. For the purposes of this subsection (a),
"material" means any contract, agreement, understanding, arrangement or
commitment that (i) involves performance by any party more than 90 days from the
date hereof, (ii) involves payments or receipts by the Company in excess of
$100,000, (iii) involves capital expenditures in excess of $25,000 or (iv)
otherwise materially affects the Company.
-9-
(b) Except as described in Schedule 3.15, each Contract described herein
-------------
or elsewhere in this Agreement, including, without limitation, Section 3.6, is,
-----------
and after the Closing on identical terms will be, legal, valid, binding,
enforceable and in full force and effect and no event or condition has occurred
or become known to the Company or the Shareholder or is alleged to have occurred
that constitutes or, with notice or the passage of time, or both, would
constitute a default or a basis of force majeure or other claim of excusable
----- -------
delay, termination, nonperformance or accelerated or increased rights by the
Company or any other Person under any Contract described above in this Section
3.15, or described or otherwise disclosed pursuant to this Agreement; and
(c) Schedule 3.15(c-1) contains a true and complete list of the name and
------------------
address of each customer that represented in excess of 10% of the Company's
sales of goods or services during the twelve months ended on the Balance Sheet
Date, and since that date no such customer has terminated its relationship with
or adversely curtailed its purchases from the Company or indicated (for any
reason) its intention so to terminate its relationship or curtail its purchases.
Schedule 3.15(c-2) contains a true and complete list of each supplier from whom
------------------
the Company purchased in excess of 10% of the Company's purchases of goods or
services during the twelve months ended on the Balance Sheet Date, and since
that date no such supplier has terminated its relationship with or adversely
curtailed its accommodations, sales or services to the Company or indicated (for
any reason) its intention to terminate such relationship or curtail its
accommodations, sales or services. The Company has no purchases reasonably
available, on competitive terms available from only a single source.
(d) No person with whom the Company has such a contract, agreement,
arrangement, commitment or other understanding is in default thereunder or has
failed to perform fully thereunder by reason of force majeure or other claim of
----- -------
excusable delay, termination or nonperformance thereunder, the delay,
termination or nonperformance of which, or a default under which, has had or may
have a Material Adverse Effect.
Section 3.16 Absence of Certain Changes. Since the Balance Sheet Date,
--------------------------
except as disclosed in Schedule 3.16, the Company has not: (i) incurred any
-------------
debts, obligations or liabilities (absolute, accrued, contingent or otherwise),
other than current liabilities incurred in the ordinary course of business
which, individually or in the aggregate, are not material; (ii) subjected to or
permitted a Lien upon or otherwise encumbered any of its assets, tangible or
intangible; (iii) sold, transferred, licensed or leased any of its assets or
properties except in the ordinary course of business; (iv) canceled or
compromised any debt owed to or by or claim of or against it, or waived or
released any right, of material value other than in the ordinary course of
business; (v) suffered any physical damage, destruction or loss (whether or not
covered by insurance) causing or having a Material Adverse Effect; (vi) made or
suffered any change in, or condition affecting, its condition (financial or
otherwise), properties, profitability, prospects or operations other than
changes, events or conditions in the ordinary course of business, none of which
(individually or in the aggregate) has had or may have a Material Adverse
Effect; (vii) made any change in the accounting principles, methods, records or
practices followed by it or depreciation or amortization policies or rates
theretofore adopted; (viii) paid, or made any accrual or arrangement for payment
of, any severance or termination pay to, or entered into any employment or loan
or loan guarantee agreement with, any current or former officer, director or
employee or consultant; (ix) paid, or made any accrual or arrangement for
payment of, any increase in compensation, bonuses or special compensation of any
kind to any employee other than in the ordinary course of business, or paid, or
made any accrual or arrangement for payment of, any increase in compensation,
bonuses or special compensation of any kind to any officer or director of the
Company or any consultant to the Company; or (x) entered into any agreement or
otherwise obligated itself to do any of the foregoing.
Section 3.17 Employees and Labor Matters.
---------------------------
(a) Schedule 3.17(a) contains a true and complete list of all contracts,
----------------
agreements, plans, arrangements, commitments and understandings (formal and
informal) pertaining to terms of employment, compensation, bonuses, profit
sharing, stock purchases, stock repurchases, stock options, stock appreciation
rights, commissions, incentives, loans or loan guarantees, severance pay or
benefits, use of the Company's property and related matters of the Company with
any current or former
-10-
shareholder, officer, director, employee or consultant, and true and complete
copies of all such contracts, agreements, plans, arrangements and understandings
have been delivered to Buyer heretofore.
(b) Except as set forth on Schedule 3.17(a), neither Buyer nor the
----------------
Surviving Corporation will have any responsibility for continuing any person in
the employ (or retaining any person as a consultant) of the Company from and
after the Closing or have any liability for any severance payments to or similar
arrangements with any such Person who shall cease to be an employee of the
Company at or prior to the Closing.
(c) There is not any union or other collective bargaining unit, against
either the Company or its premises or products, nor is there occurring or, to
the Company's or Shareholder's knowledge, threatened or anticipated, any
strikes, slow downs, pickets, work stoppages, grievance proceedings, union
organization efforts or other concerted action by any current or former
employees or other persons.
Section 3.18 Affiliates. Except as disclosed on Schedule 3.18, none of
---------- -------------
the Shareholder, any officer, director or key employee of the Company or any
associate or Affiliate of the Company or any of such Persons has, directly or
indirectly, (i) an interest in any Person that (A) furnishes or sells, or
proposes to furnish or sell, services or products that are furnished or sold by
the Company or (B) purchases from or sells or furnishes to, or proposes to
purchase from or sell or furnish to, the Company any goods or services or (ii) a
beneficial interest in any contract or agreement to which the Company is a party
or by which the Company or any of the assets of the Company are bound or
affected.
Section 3.19 Compliance with Law. The Company (i) has not violated or
-------------------
conducted its business or operations in violation of, and has not used or
occupied its properties or assets in violation of, any Legal Requirement or
Licensing Requirement which would individually or in the aggregate have a
Material Adverse Effect, (ii) has not been alleged to be in violation of any
Legal Requirement or Licensing Requirement, and (iii) has not received any
notice of any alleged violation of, or any citation for noncompliance with, any
Legal Requirement or Licensing Requirement.
Section 3.20 Brokers' Fees. No investment banker, broker, finder or
-------------
similar agent has been employed by or on behalf of the Company in connection
with this Agreement or the transactions contemplated hereby, and the Company has
not entered into any agreement or understanding of any kind with any person or
entity for the payment of any brokerage commission, finder's fee or any similar
compensation in connection with this Agreement or the transactions contemplated
hereby.
Section 3.21 Disclosure. No representation or warranty of the Company
----------
or the Shareholder in this Agreement and no information contained in any
Schedule or other writing delivered pursuant to this Agreement or at the Closing
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact required to make the statements herein or
therein not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer hereby represents and warrants to, and covenants and agrees with,
the Company and the Shareholder that:
Section 4.1 Organization and Good Standing of Buyer. Buyer is a
---------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, with full power and authority to own and lease its
properties and to conduct its business as currently conducted. Buyer has been
duly qualified as a foreign corporation for the transaction of business and is
in good standing under the laws of each jurisdiction in which Buyer owns or
leases any property, or conducts any business, so as to require such
qualification, except where the failure to obtain such qualification would not
be reasonably likely to have a material adverse effect. The copies or originals
of the certificate of
-11-
incorporation, bylaws, minute books and stock records of Buyer previously
delivered to, or made available for inspection by, the Company and the
Shareholder are true, complete and correct.
Section 4.2 Organization and Good Standing of Newco. Newco is a
---------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, with full power and authority to own and lease its
properties and to conduct its business as currently conducted. Newco has been
duly qualified as a foreign corporation for the transaction of business and is
in good standing under the laws of each jurisdiction in which Newco owns or
leases any property, or conducts any business, so as to require such
qualification, except where the failure to obtain such qualification would not
be reasonably likely to have a material adverse effect. The copies or originals
of the certificate of incorporation, bylaws, minute books and stock records of
Newco previously delivered to, or made available for inspection by, the Company
and the Shareholder are true, complete and correct.
Section 4.3 Authorization, Binding Agreement. Buyer and Newco each have
--------------------------------
all requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the respective
boards of directors of Buyer and Newco and the sole stockholder of Newco in
accordance with the Delaware Law and the respective certificates of
incorporation and bylaws of Buyer and Newco. No other corporate proceedings on
the part of Buyer or Newco are necessary to authorize this Agreement and the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Buyer and Newco and constitutes the legal, valid and
binding agreement of Buyer and Newco, enforceable against Buyer and Newco in
accordance with its terms, except as such enforceability may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium or other laws, now or
hereafter in effect, relating to or limiting creditors' rights generally, and
(b) general principles of equity (whether considered in an action in equity or
at law).
Section 4.4 No Conflicts. The execution, delivery and performance of
------------
this Agreement and the consummation of the transactions contemplated hereby will
not (a) conflict with or result in a breach or violation of any term or
provision of, or constitute a default under (with or without notice or passage
of time, or both), or otherwise give any Person a basis for accelerated or
increased rights or termination or nonperformance under, any indenture,
mortgage, deed of trust, loan or credit agreement, lease, license or other
agreement or instrument to which Buyer or Newco is a party or by which Buyer or
Newco is bound or affected or to which any of the property or assets of Buyer or
Newco are bound or affected, (b) result in the violation of the provisions of
the certificate of incorporation or bylaws of Buyer or Newco or any Legal
Requirement applicable to or binding upon them, (c) result in the creation or
imposition of any Lien upon any property or asset of Buyer or Newco or (d)
otherwise adversely affect the contractual or other legal rights or privileges
of Buyer or Newco. Schedule 4.4 sets forth a list of all agreements requiring
------------
the consent of any party thereto to any of the transactions contemplated hereby.
Except as set forth on Schedule 4.4, all consents, authorizations and approvals
------------
of any Person to or as a result of the consummation of the transactions
contemplated hereby, that are necessary or advisable in connection with the
operations and business of Buyer and Newco as currently conducted and as
proposed to be conducted, or for which the failure to obtain the same might
have, individually or in the aggregate, a material adverse effect, have been
lawfully and validly obtained by Buyer and Newco.
Section 4.5 Capitalization. The authorized capital stock of Buyer
--------------
consists solely of 30,000,000 shares of Buyer Common Stock, of which [______]
shares are issued and outstanding. All of the issued and outstanding shares of
Buyer Common Stock have been duly authorized and validly issued and are fully
paid and nonassessable, and 5,000,000 shares of Preferred Stock, none of which
are issued or outstanding. Except as set forth in Schedule 4.5, there are no
------------
existing options, warrants, right, calls or commitments of any character
relating to the shares of Buyer Common Stock or any other capital stock or
securities of Buyer, (ii) there are no outstanding securities or other
instruments convertible into or exchangeable for shares of Buyer Common Stock or
any other capital stock or securities of Buyer and no commitments to issue such
securities or instruments, and no Person has any right of first refusal,
preemptive right, subscription right or similar right with respect to any shares
of Buyer Common Stock or any other capital stock or securities of Buyer. The
authorized capital stock of Newco consists solely
-12-
of [10,000] shares of common stock, par value $.001 per share, of which [1,000]
shares are, and on the Closing Date will be, issued and outstanding. All of the
issued and outstanding shares of capital stock of Newco are, and on the Closing
Date will be, owned beneficially and of record by Buyer.
Section 4.6 Brokers' Fees. Except as set forth on Schedule 4.6, no
------------- ------------
investment banker, broker, finder or similar agent has been employed by or on
behalf of Buyer or Newco in connection with this Agreement or the transactions
contemplated hereby, and neither Buyer nor Newco have entered into any agreement
or understanding of any kind with any person or entity for the payment of any
brokerage commission, finder's fee or any similar compensation in connection
with this Agreement or the transactions contemplated hereby.
Section 4.7 Disclosure. No representation or warranty of Buyer or
----------
Newco in this Agreement and no information contained in any Schedule or other
writing delivered pursuant to this Agreement or at the Closing contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact required to make the statements herein or therein not misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
------------------------------
OF THE SHAREHOLDER
------------------
The Shareholder hereby represents and warrants to, and covenants and
agrees with, Buyer and Newco that:
Section 5.1 Ownership of Shares. The Shareholder owns of record and
-------------------
beneficially all of the issued and outstanding shares of Company Common Stock
and has, and at all times prior to and as of the Closing, will have, good and
marketable title to such shares free and clear of all Liens and adverse claims.
Section 5.2 Execution and Delivery. The Shareholder has the power and
----------------------
authority to execute and deliver this Agreement, to consummate the transactions
contemplated hereby and to perform its obligations under this Agreement. This
Agreement, upon its execution and delivery by the Shareholder (assuming the due
authorization, execution and delivery hereof by the other parties hereto), will
constitute the legal, valid and binding obligation of the Shareholder,
enforceable against the Shareholder in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency and similar
laws relating to creditors' rights generally and by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
Section 5.3 No Conflicts. The execution, delivery and performance of
------------
this Agreement by the Shareholder and the consummation by the Shareholder of the
transactions contemplated hereby will not conflict with or result in a breach or
violation of any term or provision of, or (with or without notice or passage of
time, or both) constitute a default under, any indenture, mortgage, deed of
trust, trust (constructive and other), loan agreement or other agreement or
instrument to which the Shareholder is a party or by which the Shareholder or
the Shareholder's shares are bound, or violate the provisions of any statute, or
any order, rule or regulation of any governmental body or agency or
instrumentality thereof, or any order, writ, injunction or decree of any court
or any arbitrator, having jurisdiction over the Shareholder or the property of
the Shareholder.
Section 5.4 Restrictions on Transfer of Buyer Common Stock and Buyer
--------------------------------------------------------
Notes Under Securities Laws.
---------------------------
(a) The Shareholder understands and agrees that the shares of Buyer
Common Stock and the Buyer Notes that the Shareholder will acquire in the Merger
have not been registered under the Securities Act and that, accordingly, such
shares and notes will not be fully transferable except as permitted under
various exemptions contained in the Securities Act or upon satisfaction of the
registration and prospectus delivery requirements of the Securities Act. The
Shareholder acknowledges that the Shareholder must bear the economic risk of its
investment in such shares of
-13-
Buyer Common Stock and Buyer Notes for an indefinite period of time since such
shares and notes have not been registered under the Securities Act and therefore
cannot be sold unless they are subsequently registered or an exemption from
registration is available. Shareholder hereby represents and warrants that
Shareholder is an Accredited Investor as defined under Rule 501(a) of the
Securities Act and is acquiring the shares of Buyer Common Stock and Buyer Notes
in the Merger for investment purposes only, for Shareholder's own account, and
not as nominee or agent for any other Person, and not with the view to, or for
resale in connection with, any distribution thereof within the meaning of the
Securities Act.
(c) The Shareholder hereby agrees with Buyer as follows:
(i) The certificates evidencing the shares of Buyer Common Stock and
the Buyer Notes it will acquire in the Merger, and each instrument or
certificate issued in transfer thereof, will bear substantially the following
legend:
"The securities evidenced by this certificate have not been registered
under the Securities Act of 1933 and have been taken for investment
purposes only and not with a view to the distribution thereof, and
such securities may not be sold or transferred unless there is an
effective registration statement under such Act covering such
securities or the issuer corporation receives an opinion of counsel
reasonably satisfactory to issuer corporation (which may be counsel
for the issuer corporation) stating that such sale or transfer is
exempt from the registration and prospectus delivery requirements of
such Act."
(ii) The certificates representing such shares of Buyer Common Stock
and the Buyer Notes, and each instrument or certificate issued in transfer
thereof, will also bear any legend required under any applicable state
securities law.
(iii) Absent an effective registration statement under the Securities
Act, covering the disposition of the shares of Buyer Common Stock and Buyer
Notes which the Shareholder acquires in the Merger, the Shareholder will not
sell, transfer, assign, pledge, hypothecate or otherwise dispose of any or all
of such shares of Buyer Common Stock or Buyer Notes without first providing
Buyer with an opinion of counsel reasonably acceptable to Buyer (which may be
counsel for Buyer) to the effect that such sale, transfer, assignment, pledge,
hypothecation or other disposition will be exempt from the registration and the
prospectus delivery requirements of the Securities Act and the registration or
qualification requirements of any applicable state securities laws. The
Shareholder consents to Buyer's making a notation on its records or giving
instructions to any transfer agent of the Buyer Common Stock in order to
implement the restrictions on transfer set forth in this subsection (c).
Section 5.5 Advice of Counsel. The Shareholder acknowledges that
-----------------
Shareholder has obtained advice from independent counsel with respect to this
Agreement to the extent Shareholder desired to do so. The Shareholder is not
relying on any representations, except those set forth herein, or advice from
Buyer or Newco or any of their respective officers, directors, attorneys or
other representatives regarding this Agreement, its content or effect.
ARTICLE 6
CONDITIONS TO CONSUMMATION OF MERGER
------------------------------------
Section 6.1 Conditions to Each Party's Obligations. Notwithstanding
--------------------------------------
any other provision of this Agreement, the obligations of each party hereto to
consummate the Merger and the other transactions contemplated hereby shall be
subject to the satisfaction, at or prior to the Closing Date, of the following
conditions:
(a) There shall not be instituted and pending or threatened any Action
before any Governmental Entity (i) challenging the Merger or otherwise seeking
to restrain or prohibit the consummation of the transactions contemplated
hereby, or (ii) seeking to prohibit the direct or indirect ownership or
operation by Buyer or the Surviving Corporation of all or a material portion of
the
-14-
business or assets of the Company, or to compel Buyer, the Surviving Corporation
or the Company to dispose of or hold separate all or a material portion of the
business or assets of the Company, the Surviving Corporation or Buyer.
(b) Buyer shall have had declared effective its registration statement
under the Securities Act with respect to its firm commitment underwritten
initial public offering of the Buyer Common Stock, and no stop order with
respect thereto shall have been entered by the Securities and Exchange
Commission.
Section 6.2 Conditions to Obligations of Buyer and Newco.
--------------------------------------------
Notwithstanding any other provision of this Agreement, the obligations of Buyer
and Newco to consummate the Merger and the other transactions contemplated
hereby shall be subject to the satisfaction, at or prior to the Closing Date, of
the following conditions:
(a) The representations and warranties of the Company and the
Shareholder in this Agreement shall be true and correct in all material respects
on and as of the Closing Date with the same effect as if made on the Closing
Date and each of the Company and the Shareholder shall have complied with all
covenants and agreements and satisfied all conditions on the Company's or the
Shareholder's part, as applicable, to be performed or satisfied on or prior to
the Closing Date.
(b) Buyer shall have received from Xxxxxxx X. Xxxxxx, Esq., counsel
for the Company, a written opinion dated the Closing Date and addressed to Buyer
and Newco, in substantially the form attached as Annex C hereto.
-------
(c) Buyer shall have received a certificate of the president of the
Company in substantially the form attached as Annex D hereto.
-------
(d) Buyer shall have received the following under cover of a
certificate of the Secretary of the Company dated the Closing Date in
substantially the form attached as Annex E hereto:
-------
(i) Copies of resolutions of (A) the board of directors of the
Company authorizing and approving the execution, delivery and performance of
this Agreement and all other documents and instruments to be delivered by the
Company pursuant hereto, and of (B) the Company's shareholder evidencing
approval of this Agreement and the transactions contemplated hereby;
(ii) A certificate of incumbency certifying the names, titles and
signatures of the officers authorized to execute the documents referred to in
subparagraph (i) above and further certifying that the articles of incorporation
and bylaws of the Company delivered to Buyer at the time of, or prior to, the
execution of this Agreement have been validly adopted and have not been amended
or modified; and
(iii) Such additional supporting documentation and other
information with respect to the transactions contemplated hereby as Buyer or its
counsel may reasonably request.
(e) Xxxxxx Xxxxx shall have entered into a Non-Competition Agreement
with Buyer which shall provide that Xx. Xxxxx shall not compete in the
nutritional supplements business with the Company and Buyer for a period of
three years after closing (but in no event less than one year after termination
of employment with the Company), in substantially the form attached hereto as
Annex F.
-------
(f) The Shareholder and Buyer shall have entered into a Registration
Rights Agreement in substantially the form attached hereto as Annex G.
-------
(g) Buyer shall be satisfied, in its sole discretion, with the results
of its due diligence investigation of the Company.
(h) The Shareholder shall have entered into the Employment
Agreement.
-15-
(i) All authorizations, consents, waivers and approvals by or from
third parties required for the consummation of the transactions contemplated
hereby shall have been obtained and all Liens on the assets and properties of
the Company shall have been released or terminated.
(j) No act, event or condition shall have occurred after the date
hereof which Buyer determines has had or could reasonably be expected to have a
Material Adverse Effect.
(k) All corporate and other proceedings and actions taken in
connection with the transactions contemplated hereby and all certificates,
opinions, agreements, instruments, releases and documents referenced herein or
incident to the transactions contemplated hereby shall be in form and substance
reasonably satisfactory to Buyer and its counsel.
(l) The Shareholder shall have repaid the Company for any shareholder
loans pursuant to Section 8.1(e) and for any expenses pursuant to Section 8.4
-----------
hereof.
Section 6.3 Conditions to Obligations of the Company and the
------------------------------------------------
Shareholder. Notwithstanding any other provision of this Agreement, the
-----------
obligations of the Company and the Shareholder to consummate the Merger and the
other transactions contemplated hereby shall be subject to the satisfaction, at
or prior to the Closing Date, of the following conditions:
(a) The representations and warranties of Buyer and Newco in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date with the same effect as if made on the Closing Date, and Buyer and
Newco shall have complied with all covenants and agreements and satisfied all
conditions on their part to be performed or satisfied on or prior to the Closing
Date.
(b) The Company shall have received from Paul, Hastings, Xxxxxxxx &
Xxxxxx LLP, counsel for Buyer and Newco, a written opinion dated the Closing
Date and addressed to the Company and the Shareholder, in substantially the form
attached as Annex H hereto.
-------
(c) The Company shall have received the following under cover of a
certificate of the Secretary of Buyer dated the Closing Date in substantially
the form attached as Annex I hereto:
-------
(i) Copies of resolutions of the board of directors of Buyer
authorizing and approving the execution, delivery and performance of this
Agreement and all other documents and instruments to be delivered by Buyer
pursuant hereto and thereto;
(ii) A certificate of incumbency certifying the names, titles and
signatures of the officers authorized to execute the documents referred to in
subparagraph (i) above and further certifying that the certificate of
incorporation and bylaws of Buyer delivered to the Company at the time of, or
prior to, the execution of this Agreement have been validly adopted and have not
been amended or modified; and
(iii) Such additional supporting documentation and other
information with respect to the transactions contemplated hereby as the Company
or its counsel may reasonably request.
(d) The Company shall have received a certificate of the President of
Buyer in substantially the form attached as Annex J hereto.
-------
(e) The Company shall have received the following under cover of a
certificate of the Secretary of Newco dated the Closing Date in substantially
the form attached as Annex K hereto:
-------
(i) Copies of resolutions of (A) the board of directors of Newco
authorizing and approving the execution, delivery and performance of this
Agreement and all other documents and instruments to be delivered by Newco
pursuant hereto and thereto, and (B) the sole stockholder of Newco approving
this Agreement and the Merger;
-16-
(ii) A certificate of incumbency certifying the names, titles and
signatures of the officers authorized to execute the documents referred to in
subparagraph (i) above and further certifying that the certificate of
incorporation and bylaws of Newco delivered to the Company at the time of, or
prior to, the execution of this Agreement have been validly adopted and have not
been amended or modified; and
(iii) Such additional supporting documentation and other
information with respect to the transactions contemplated hereby as the Company
or its counsel may reasonably request.
(f) The Company shall have received a certificate of the President of
Newco in substantially the form attached as Annex L hereto.
-------
(g) Buyer or Newco shall have assumed all existing contracts with the
management, employees, consultants and advisors of the Company.
(h) No act, event or condition shall have occurred after the date
hereof which the Shareholder or the Company determines has had or could
reasonably be expected to have a material adverse effect on the business,
financial condition, properties, profitability, prospects or operations of
Buyer.
(i) All corporate and other proceedings and actions taken in
connection with the transactions contemplated hereby and all certificates,
opinions, agreements, instruments, releases and documents referenced herein or
incident to the transactions contemplated hereby shall be in form and substance
reasonably satisfactory to the Company and its counsel.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CLOSING
-----------------------------------
During the period commencing on the date hereof and continuing through
the Closing Date, the Company and the Shareholder covenant and agree (except as
expressly contemplated by this Agreement or to the extent that Buyer shall
otherwise expressly consent in writing) that:
Section 7.1 Qualification. The Company shall maintain all
-------------
qualifications to transact business and remain in good standing in the foreign
jurisdictions in which the Company owns or leases any property, or conducts any
business, so as to require such qualification, except where the failure to
maintain such qualification would not be reasonably likely to have a Material
Adverse Effect.
Section 7.2 Ordinary Course. The Company shall conduct its business
---------------
in, and only in, the ordinary course and shall preserve intact its current
business organizations, keep available the services of its current officers and
employees and preserve its relationships with customers, suppliers and others
having business dealings with it to the end that its goodwill and going business
value shall be unimpaired at the Closing Date. The Company shall maintain its
properties and assets in good condition and repair.
Section 7.3 Organic Changes. The Company shall not (a) amend its
---------------
articles of incorporation or bylaws, (b) acquire by merging or consolidating
with, or agreeing to merge or consolidate with, or purchase substantially all of
the stock or assets of, or otherwise acquire any business or any corporation,
partnership, association or other business organization or division thereof, (c)
enter into any partnership or joint venture, (d) declare, set aside, make or pay
any dividend or other distribution in respect of its capital stock or purchase
or redeem, directly or indirectly, any shares of its capital stock, (e) issue or
sell any shares of its capital stock of any class or any options, warrants,
conversion or other rights to purchase any such shares or any securities
convertible into or exchangeable for such shares, or (f) liquidate or dissolve
or obligate itself to do.
-17-
Section 7.4 Indebtedness. The Company shall not incur any
------------
Indebtedness, sell any debt securities or lend money to or guarantee the
Indebtedness of any Person. The Company shall not restructure or refinance its
existing Indebtedness.
Section 7.5 Accounting. The Company shall not make any change in the
----------
accounting principles, methods, records or practices followed by it or
depreciation or amortization policies or rates theretofore adopted by it. The
Company shall maintain its books, records and accounts in accordance with GAAP.
Section 7.6 Compliance with Legal Requirements. The Company shall
----------------------------------
comply promptly with all requirements that applicable law may impose upon it and
its operations and with respect to the transactions contemplated by this
Agreement, and shall cooperate promptly with, and furnish information to, Buyer
in connection with any such requirements imposed upon Buyer, or upon any of its
affiliates, in connection therewith or herewith, including, without limitation,
all information reasonably required by Buyer to prepare its registration
statement with respect to its initial public offering.
Section 7.7 Disposition of Assets. The Company shall not sell,
---------------------
transfer, license, lease or otherwise dispose of, or suffer or cause the
encumbrance by any Lien upon any of, its properties or assets, tangible or
intangible, or any interest therein, except in the ordinary course of business.
Section 7.8 Compensation. The Company shall not (a) adopt or amend in
------------
any material respect any collective bargaining, bonus, profit-sharing,
compensation, stock option, pension, retirement, deferred compensation,
employment or other plan, agreement, trust, fund or arrangement for the benefit
of employees (whether or not legally binding) other than to comply with any
Legal Requirement or (b) pay, or make any accrual or arrangement for payment of,
any increase in compensation, bonuses or special compensation of any kind, or
any severance or termination pay to, or enter into any employment or loan or
loan guarantee agreement with, any current or former officer, director, employee
or consultant of the Company.
Section 7.9 Modification or Breach of Agreements; New Agreements. The
----------------------------------------------------
Company shall not terminate or modify, or commit or cause or suffer to be
committed any act that will result in breach or violation of any term of, or
(with or without notice or passage of time, or both) constitute a default under
or otherwise give any person a basis for nonperformance under, any indenture,
mortgage, deed of trust, loan or credit agreement, lease, license or other
agreement, instrument, arrangement or understanding, written or oral, disclosed
in this Agreement or the Schedules hereto. The Company shall refrain from
becoming a party to any contract or commitment other than in the ordinary course
of business. The Company shall meet all of its contractual obligations in
accordance with their respective terms.
Section 7.10 Capital Expenditures. Except for capital expenditures or
--------------------
commitments necessary to maintain its properties and assets in good condition
and repair (the amount of which shall not exceed $25,000 in the aggregate), the
Company shall not purchase or enter into any contract to purchase any capital
assets.
Section 7.11 Maintain Insurance. The Company shall maintain its
------------------
Policies in full force and effect and shall not do, permit or willingly allow to
be done any act by which any of the Policies may be suspended, impaired or
canceled.
Section 7.12 Discharge. The Company shall not cancel, compromise,
---------
release or discharge any claim of the Company upon or against any person or
waive any right of the Company of material value, and not discharge any Lien
upon any asset of the Company or compromise any debt or other obligation of the
Company to any person other than Liens, debts or obligations with respect to
current liabilities of the Company.
Section 7.13 Actions. The Company shall not institute, settle or agree
-------
to settle any Action before any governmental entity.
-18-
Section 7.14 Permits. The Company shall maintain in full force and
-------
effect, and comply with, all Permits.
Section 7.15 Tax Assessments and Audits. The Company shall furnish
--------------------------
promptly to Buyer a copy of all notices of proposed assessment or similar
notices or reports that are received from any taxing authority and which relate
to the Company's operations for periods ending on or prior to the Closing Date.
The Shareholder shall cause the Company to promptly inform Buyer, and permit the
participation in and control by Buyer, of any investigation, audit or other
proceeding by a Governmental Entity in connection with any Taxes, assessment,
governmental charge or duty and shall not consent to any settlement or final
determination in any proceeding without the prior written consent of Buyer.
ARTICLE 8
ADDITIONAL COVENANTS
--------------------
Section 8.1 Covenants of the Company and the Shareholder. During the
--------------------------------------------
period commencing on the date hereof and continuing through the Closing Date,
each of the Company and the Shareholder agrees to:
(a) comply promptly with all requirements that applicable Legal
Requirements may impose upon it with respect to the transactions contemplated by
this Agreement, and shall cooperate promptly with, and furnish information to,
Buyer in connection with any such requirements imposed upon Buyer or upon any of
its affiliates in connection therewith or herewith, including, without
limitation, all information reasonably required by Buyer to prepare its
registration statement with respect to its initial public offering;
(b) use its reasonable commercial efforts to obtain (and to cooperate
with Buyer in obtaining) any consent, authorization or approval of, or exemption
by, any Person required to be obtained or made by the Company or the
Shareholder, as applicable, in connection with the transactions contemplated by
this Agreement;
(c) use its reasonable commercial efforts to bring about the
satisfaction of the conditions precedent to Closing set forth in Sections 6.1
and 6.2 of this Agreement;
(d) promptly orally advise Buyer and, within three business days
thereafter, in writing of any change in the Company's business or condition that
has had or may have a Material Adverse Effect; and
(e) at or prior to the Closing, the Shareholder will repay to the
Company any shareholders loans payable.
Section 8.2 Covenants of Buyer. During the period commencing on the
------------------
date hereof and continuing through the Closing Date, Buyer agrees to:
(a) comply promptly with all requirements that applicable Legal
Requirements may impose upon it with respect to the transactions contemplated by
this Agreement, and shall cooperate promptly with, and furnish information to,
the Company and the Shareholder in connection with any such requirements imposed
upon the Shareholder or the Company or upon any of the Affiliates of the Company
in connection therewith or herewith;
(b) use its reasonable commercial efforts to obtain any consent,
authorization or approval of, or exemption by, any Person required to be
obtained or made by Buyer in connection with the transactions contemplated by
this Agreement;
(c) use its reasonable commercial efforts to have the Shareholder
released from any Guarantees set forth on Schedule 8.2 hereto. If Buyer cannot
------------
obtain any such release within 90
-19-
days after the Closing Date, it will indemnify the Shareholder from any
liability on the related guarantees; and
(d) use its reasonable commercial efforts to bring about the
satisfaction of the conditions precedent to Closing set forth in Sections 6.1
and 6.3 of this Agreement.
Section 8.3 Access and Information.
----------------------
(a) Between the date hereof and the Closing Date, (i) the Company will
permit, and will cause its officers, directors, key employees and advisors to
permit, Buyer and its representatives and agents reasonable access to the
Company's books and records, facilities, key personnel, customers, suppliers,
independent accountants and attorneys, as requested by Buyer; (ii) Buyer will
use its reasonable best efforts to provide the Shareholder and the Company and
their respective representatives and agents reasonable access to the books and
records, facilities, key personnel, customers, suppliers, independent
accountants and attorneys of other companies to be acquired by Buyer in
conjunction with the acquisition of the Company, as reasonably requested by the
Company (subject to the execution of appropriate confidentiality agreements and
with the understanding that there will be no access to product formulations or
other sensitive trade secret information); and (iv) the Company shall provide to
Buyer, promptly upon completion, an unaudited balance sheet and the related
statements of income or operations, cash flows and stockholder's equity for each
month-end and period from and after December 31, 1997.
(b) The Confidentiality Agreement dated June 29, 1998 (the
"Confidentiality Agreement") entered into among the Company, the Shareholder and
--------------------------
Buyer shall survive the execution and delivery of this Agreement.
Section 8.4 Expenses. Except as otherwise specifically provided
--------
herein, each party to this Agreement shall bear its own direct and indirect
expenses incurred in connection with the negotiation and preparation of this
Agreement and the consummation and performance of the transactions contemplated
hereby, including, without limitation, all legal fees and fees of any brokers,
finders or similar agents; provided, however, that the Company may advance such
-------- -------
expenses on behalf of the Shareholder which such advances the Shareholder shall
repay to the Company at, or prior to, the Closing; provided, further, that the
-------- -------
fees of independent auditors to audit the Company's financial statements shall
be paid by Buyer.
Section 8.5 Certain Notifications. At all times from the date hereof
---------------------
to the Closing Date, no party shall permit or undertake any action that would
result in, and each party shall promptly notify the others in writing of, the
occurrence of any event that will or may (i) render any statement,
representation or warranty of such party in this Agreement (including the
Schedules hereto) inaccurate or incomplete in any material respect or (ii)
constitute or result in the breach by such party of, or a failure to comply
with, any agreement or covenant in this Agreement applicable to such party or
(iii) result in the failure by such party to satisfy any of the conditions
specified in Article 6 hereof.
---------
Section 8.6 Publicity; Employee Communications. At all times prior to
----------------------------------
the Closing Date, each party shall obtain the consent of all other parties
hereto prior to issuing, or permitting any of its directors, officers, employees
or agents to issue, any press release or other information to the press,
employees of the Company or any third party with respect to this Agreement or
the transactions contemplated hereby; provided, however, that no party shall be
-------- -------
prohibited from supplying any information to any of is representatives, agents,
attorneys, advisors, financing sources and others to the extent necessary to
complete the transactions contemplated hereby. Nothing contained in this
Agreement shall prevent any party to this Agreement at any time from furnishing
any required information to any Governmental Entity or authority pursuant to a
Legal Requirement or from complying with its legal or contractual obligations.
Section 8.7 Further Assurances. Subject to the terms and conditions
------------------
of this Agreement, each of the parties hereto agrees to use all reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable Legal
-20-
Requirements, to consummate and make effective the transactions contemplated by
this Agreement. If at any time after the Closing any further action is necessary
or desirable to carry out the purposes of this Agreement, the Shareholder, the
Company, Buyer or Newco, as the case may be, shall take or cause to be taken all
such necessary or convenient action and execute, and deliver and file, or cause
to be executed, delivered and filed, all necessary or convenient documentation.
Section 8.8 Competing Offers; Merger or Liquidation. The Company and
---------------------------------------
the Shareholder agree that they will not, and the Shareholder will cause the
Company not to, directly or indirectly, through any officer, director, agent or
otherwise, solicit, initiate, encourage or conduct discussions with, or accept
or consider the submissions of bids, offers or proposals by, any Person with
respect to an acquisition of the Company or its assets or capital stock or a
Merger or similar transaction, and the Company and the Shareholder will not, and
the Shareholder will not permit the Company to, engage any broker, financial
adviser or consultant with an incentive to initiate or encourage proposals or
offers from other parties. Furthermore, the Company and the Shareholder shall
not, and the Shareholder shall not permit the Company to, directly or
indirectly, through any officer, director, agent or otherwise, engage in
negotiations concerning any such transaction with, or provide information to,
any Person other than Buyer and its principal shareholder, and their respective
representatives, with a view to engaging, or preparing to engage, that Person
with respect to any matters referenced in this Section. The Shareholder shall
ensure that the Company shall not commence any proceeding to merge, consolidate
or liquidate or dissolve or obligate itself to do so.
Section 8.9. Adjustment to Merger Consideration. (a) Notwithstanding
----------------------------------
anything herein to the contrary, the Merger Consideration shall be reduced as
follows:
(i) if the projected pro forma earnings of the Company before
income taxes as reasonably determined by Buyer at Closing for the
period January 1, 1998 through December 31, 1998 ("1998 EBIT") is less
---------
than $1,500,000, then the total amount Merger Consideration shall be
reduced by an amount equal to the product of $8,000,000 and the
quotient obtained by dividing 1998 EBIT by $1,500,000; and
(ii) in addition to any reduction of the Merger Consideration
pursuant to the preceding clause (i), if the projected pro forma net
equity of the Company as of December 31, 1998 ("1998 Net Equity"), as
---------------
reasonably determined by Buyer at Closing, is less than $1,500,000,
the total amount of the Merger Consideration shall be reduced or
further reduced, as the case may be, by the dollar amount by which
1998 Equity is less than $1,500,000.
The aggregate amount by which the Merger Consideration is reduced (if at all)
pursuant to this Section is referred to as the "Consideration Reduction."
-----------------------
(b) If the Merger Consideration shall be reduced pursuant to this
Section, the Stock Merger Consideration, the Cash Merger Consideration and the
Note Merger Consideration shall each be reduced by the product of the percentage
of the Merger Consideration represented thereby multiplied by the Consideration
Reduction.
ARTICLE 9
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
Section 9.1 Termination. This Agreement may be terminated at any time
-----------
prior to the Closing:
(a) by mutual consent of all of the parties hereto;
(b) by the Company or the Shareholder, on the one hand, or by Buyer,
on the other hand, by written notice to the other party or parties hereto if the
Merger shall not have been consummated on or before November 15, 1998 (or such
later date as Buyer, the Company and the
-21-
controlling Shareholder may agree), provided that in the case of a termination
under this clause (b), the party or parties terminating this Agreement shall not
then be in material breach of any of its or their obligations under this
Agreement;
(c) by Buyer if (i) there has been a material misrepresentation,
breach of warranty or breach of covenant by the Company or the Shareholder under
this Agreement or (ii) any of the conditions precedent to Closing set forth in
Sections 6.1 and 6.3 have not been met on the Closing Date, and, in each case,
Buyer is not then in material default of its obligations hereunder; or
(d) by the Company or the Shareholder if (i) there has been a material
misrepresentation, breach of warranty or breach of covenant by Buyer under this
Agreement or (ii) any of the conditions precedent to Closing set forth in
Sections 6.1 and 6.2 have not been met on the Closing Date, and, in each case,
neither the Company nor the Shareholder are then in material default of their
obligations hereunder.
Section 9.2 Effect of Termination. In the case of any termination of
---------------------
this Agreement, the provisions of Sections 8.3(b) and 8.4 shall remain in full
force and effect. Upon termination of this Agreement as provided in Section
9.1(a) or (b), this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of any party hereto or their respective
directors, officers, employees, agents or other representatives. In the event
of termination of this Agreement as provided in Section 9.1(c) or (d) hereof,
such termination shall be without prejudice to any rights that the terminating
party or parties may have against the breaching party or parties or any other
Person under the terms of this Agreement or otherwise.
Section 9.3 Amendment and Waiver. This Agreement may be amended only
--------------------
by a written instrument executed by each of the parties hereto. Any term or
provision of this Agreement may be waived in writing at any time by the party or
parties entitled to the benefits thereof. No failure to exercise and no delay
in exercising any right, power or privilege shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege
preclude the exercise of any other right, power or privilege. No waiver of any
breach of any covenant or agreement hereunder shall be deemed a waiver of any
preceding or subsequent breach of the same or any other covenant or agreement.
The rights and remedies of each party under this Agreement are in addition to
all other rights and remedies, at law or in equity, that such party may have
against the other parties.
ARTICLE 10
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
------------------------------------------
Section 10 Survival of Representations and Warranties. The
------------------------------------------
representations and warranties of the parties hereto contained in this Agreement
or in any writing delivered pursuant hereto or at the Closing shall survive the
execution and delivery of this Agreement and the Closing and the consummation of
the transactions contemplated hereby (and any examination or investigation by or
on behalf of any party hereto) until the date 18 months after the Closing Date
(except for claims in respect thereof pending at such time, which shall survive
until finally resolved or settled); provided, however, that the representations
-------- -------
and warranties contained in Sections 3.1, 3.2, 3.3, 3.5, 3.11, 3.13 (in so far
as it applies to Environmental Matters), 5.1, 5.2, 5.3 and 5.4 shall survive
until the expiration of the applicable statute of limitations. No Action may be
commenced with respect to any representation, warranty, covenant or agreement in
this Agreement, or in any writing delivered pursuant hereto, unless written
notice, setting forth in reasonable detail the claimed breach thereof, shall be
delivered pursuant to Section 11 to the party or parties against whom liability
for the claimed breach is charged on or before the termination of the survival
period specified in Section 10 for such representation, warranty, covenant or
agreement.
-22-
ARTICLE 11
GENERAL PROVISIONS
------------------
Section 11.1 Notices. All notices and other communications under or
-------
in connection with this Agreement shall be in writing and shall be deemed given
(a) if delivered personally, upon delivery, (b) if delivered by registered or
certified mail (return receipt requested), upon the earlier of actual delivery
or three days after being mailed, or (c) if given by telecopy, upon confirmation
of transmission by telecopy, in each case to the parties at the following
addresses:
(a) If to Buyer or Newco, addressed to:
Advanced Nutraceuticals, Inc.
0000 Xxxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxx
With copies to:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
(b) If to the Company, addressed to:
Bactolac Pharmaceuticals, Inc.
00 Xxxxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx Xxxxx
With copies to:
___________________________
___________________________
___________________________
(c) If to the Shareholder,
addressed to:
Xxxxxx Xxxxx
00 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
____________________________
With copies to:
Xxxxxxx X. Xxxxxx, Esq.
000 Xxxxxxxx Xxxxxx
Xxxxxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Section 11.2 Severability. If any term or provision of this Agreement
------------
or the application thereof to any circumstance shall, in any jurisdiction and to
any extent, be invalid or unenforceable,
-23-
such term or provision shall be ineffective as to such jurisdiction to the
extent of such invalidity or unenforceability without invalidating or rendering
unenforceable such term or provision in any other jurisdiction, the remaining
terms and provisions of this Agreement or the application of such terms and
provisions to circumstances other than those as to which it is held invalid or
enforceable.
Section 11.3 Entire Agreement. This Agreement, including the
----------------
exhibits, annexes and schedules attached hereto and other documents referred to
herein, and the Confidentiality Agreement, contain the entire understanding of
the parties hereto in respect of their subject matter and supersede all prior
and contemporaneous agreements and understandings, oral and written, among the
parties with respect to such subject matter.
Section 11.4 Miscellaneous. This Agreement shall be binding upon and
-------------
inure to the benefit of each of the parties hereto and their respective
successors, heirs and assigns; provided, however, that no party may assign
-------- -------
either this Agreement or any of its rights, interests or obligations hereunder
in whole or in part without the prior written consent of the other parties
hereto (other than to the Surviving Corporation as a result of the Merger), and
any such transfer or assignment without said consent shall be void, ab initio.
---------
Subject to the immediately preceding sentence, this Agreement is not intended to
benefit, and shall not run to the benefit of or be enforceable by, any other
person or entity other than the parties hereto and their permitted successors
and assigns. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all such counterparts together shall
constitute one and the same Agreement. The exhibits, schedules and annexes to
this Agreement are incorporated herein and, by this reference, made a part
hereof as if fully set forth at length herein. The article, section and
subsection headings used herein are inserted for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement. As
used in this Agreement, the masculine, feminine or neuter gender, and the
singular or plural, shall be deemed to include the others whenever and wherever
the context so requires. For the purposes of this Agreement, unless the context
clearly requires, "or" is not exclusive. Each party hereto hereby knowingly,
voluntarily and intentionally waives any right it may have to a jury trial in
any legal proceeding which may be hereafter instituted by any party hereto to
assert a claim arising out of or relating to this Agreement or any other
agreement, instrument or document contemplated hereby or thereby. If any legal
action or other proceeding is brought by any party pursuant to this Agreement,
the prevailing party shall be entitled to recover its costs and expenses,
including reasonable attorneys' fees.
Section 11.5 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the internal laws (and not the law of conflicts) of
the State of Delaware.
-24-
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
ADVANCED NUTRACEUTICALS, INC.
By: /s/
---------------------------------------
An Authorized Officer
BP ACQUISITION CO., INC.
By: /s/
---------------------------------------
An Authorized Officer
BACTOLAC PHARMACEUTICALS, INC.
By: /s/
---------------------------------------
An Authorized Officer
/s/
---------------------------------------
Xxxxxx Xxxxx
-25-
