Exhibit 10.1
ASSET PURCHASE AND SALE AGREEMENT
THIS ASSET PURCHASE AND SALE AGREEMENT is made this 30th day of November,
2005 by and between Chattem, Inc., a Tennessee corporation ("Chattem") and
Signal Investment & Management Co., a Delaware corporation ("Signal")
(collectively the "Seller"), and The Mentholatum Co., Inc., a Delaware
corporation ("Mentholatum") and The Mentholatum Company of Canada Ltd.
("Mentholatum Canada") (collectively the "Purchaser"), under the following
circumstances:
RECITALS:
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WHEREAS, the Seller and/or its Affiliates are engaged either directly or
through third parties in the business of developing, manufacturing, marketing
and selling a line of products (the "Products") known as the Phisoderm(R)
product line through the use of the trademarks and trade names associated with
the Products (the "Product Line") that are either licensed by Seller and/or its
Affiliates from Valmont Inc., an Arkansas corporation (or its
successor-in-interest or assigns) (the "Licensor"), or owned by the Seller
and/or its Affiliates;
WHEREAS, the Purchaser has agreed to acquire from the Seller, and the
Seller has agreed to sell to the Purchaser, the Acquired Assets (as hereinafter
defined), subject to and in accordance with the terms and conditions of this
Agreement;
WHEREAS, the Purchaser has agreed to assume from the Seller, and the Seller
has agreed to assign to the Purchaser, the Assumed Liabilities (as hereinafter
defined), subject to and in accordance with the terms and conditions of this
Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained in this Agreement, the parties agree:
ARTICLE I
DEFINITIONS
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As used in this Agreement, unless otherwise defined herein, the following
words and phrases shall have the following meanings:
1.1. Acquired Assets. "Acquired Assets" shall mean assets and business
operations acquired by the Purchaser from the Seller pursuant to this Agreement,
as more fully described in Section 2.1 hereof.
1.2. Affiliate. "Affiliate" shall mean any Person that directly, or
indirectly through one or more intermediaries, controls or is controlled by or
is under common control with the Person specified. For purposes of this
definition, control of a Person means the power, direct or indirect, to direct
or cause the direction of the management and policies of such Person whether by
contract or otherwise, and, in any event and without limitation of the previous
sentence, any Person owning fifty percent (50%) or more of the voting securities
of a second Person shall be deemed to control that second Person
1.3. Assumed Contracts. "Assumed Contracts" shall have the meaning set
forth in Section 2.7(b) hereof.
1.4. Assumed Liabilities. "Assumed Liabilities" shall have the meaning
set forth in Section 2.7 hereof.
1.5. Claim. "Claim shall have the meaning set forth in Section 6.6(a)
hereof.
1.6. Closing. "Closing" shall have the meaning set forth in Section
8.1 hereof.
1.7. Closing Date. "Closing Date" shall have the meaning set forth in
Section 8.1 hereof.
1.8. Damages. "Damages" shall have the meaning set forth in Section
6.2 hereof.
1.9. Distribution Agreements. "Distribution Agreements" shall have the
meaning set forth in Section 2.6 hereof.
1.10. Escrow Agent. "Escrow Agent" shall have the meaning set forth in
Section 2.3(a) hereof.
1.11. Escrow Agreement. "Escrow Agreement" shall have the meaning set
forth in Section 2.3(a) hereof.
1.12. Escrow Fund. "Escrow Fund" shall have the meaning set forth in
Section 2.3(a) hereof.
1.13. Estimated Inventory Value. "Estimated Inventory Value" shall
mean Sellers' estimate of the Inventory Value, not to exceed One Million One
Hundred Thousand Dollars ($1,100,000.00).
1.14. Excluded Assets. "Excluded Assets" shall have the meaning set
forth in Section 2.2 hereof.
1.15. Indemnified Party. "Indemnified Party" shall have the meaning
set forth in Section 6.6(a) hereof.
1.16. Indemnifying Party. "Indemnifying Party" shall have the meaning
set forth in Section 6.6(a) hereof.
1.17. Inventory Value. "Inventory Value" shall have the meaning set
forth in Section 2.4(a) hereof.
1.18. Licensed Trademarks. "Licensed Trademarks" shall have the
meaning set forth in Section 2.1(a) hereof.
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1.19. Licensor's Consent. "Licensor's Consent" shall have the meaning
set forth in Section 3.7(a) hereof.
1.20. Notice of Claim. "Notice of Claim" shall have the meaning set
forth in Section 6.6(a) hereof.
1.21. Owned Trademarks. "Owned Trademarks" shall have the meaning set
forth in Section 2.1(a) hereof.
1.22. Person. "Person" shall mean any natural person, corporation,
general partnership, limited partnership, limited liability company,
proprietorship, other business organization, trust, union, association or
governmental or regulatory authority.
1.23. Product Line. "Product Line" shall have the meaning set forth in
the Recitals to this Agreement.
1.24. Product Registrations. "Product Registrations" shall mean all
marketing and manufacturing permits, licenses, approvals and authorizations
granted by any governmental authority with respect to any Product.
1.25. Products. "Products" shall have the meaning set forth in the
Recitals to this Agreement.
1.26. Purchaser. "Purchaser" shall have the meaning set forth in the
preamble to this Agreement.
1.27. Purchase Price. "Purchase Price" shall have the meaning set
forth in Section 2.3 hereof.
1.28. Purchase Price Allocation. "Purchase Price Allocation" shall
mean the allocation of the Purchase Price for the intangible assets as between
The Mentholatum Co., Inc. and The Mentholatum Company of Canada Ltd.
1.29. Regulatory Approvals. "Regulatory Approvals" shall have the
meaning set forth in Section 2.9(a) hereof.
1.30. Seller. "Seller" shall have the meaning set forth in the
preamble to this Agreement.
1.31. Seller's Marks. "Seller's Marks" shall mean any of the Seller's
trademarks, trade names, trade dress, service marks, Internet domain names,
metatags, keywords, or similar electronic designation of addresses or corporate
names other than the Licensed Trademarks and the Owned Trademarks, whether or
not Seller or its Affiliates have applied for, registered or previously used
such trademark, service mark or corporate name.
1.32. Third Party Claim. "Third Party Claim" shall have the meaning
set forth in Section 6.6(b) hereof.
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1.33. Trademark License Agreement. "Trademark License Agreement" shall
have the meaning set forth in Section 2.7(a) hereof.
ARTICLE II
PURCHASE AND SALE
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2.1. Transfer of Assets. At the Closing, which shall occur on the
Closing Date, and in accordance with the terms and conditions of this Agreement,
the Seller shall sell, convey, assign and deliver to the Purchaser or its
Affiliates, all right, title and interest of the Seller and/or its Affiliates in
and to the following assets (the "Acquired Assets"):
(a) (i) Seller's license to the trademarks, trade names and all
applications and registrations of the foregoing as set forth on Schedule
2.1(a)(i) attached hereto (the "Licensed Trademarks"), pursuant to the terms of
the Trademark License Assignment and Assumption Agreement attached hereto as
Exhibit A, and (ii) The trademarks, trade names and all applications and
registrations of the foregoing that are owned by the Seller related to the
Product Line as set forth on Schedule 2.1(a)(ii), together with the goodwill
associated therewith (the "Owned Trademarks"), pursuant to the terms of the
Trademark Assignment attached hereto as Exhibit B;
(b) All inventory of the Product Line, including raw materials,
goods in process, finished goods, packaging, supplies and labels (the
"Inventory"), subject to Sections 2.3 and 2.4;
(c) Copies of all product information files and sales and
marketing information files (including distribution and sales promotion and
market research studies, if any) of Seller relating exclusively to the Product
Line; and
(d) Copies of all customer and supplier lists and all business
files in possession of the Seller for the last two (2) years relating
exclusively to the Acquired Assets.
2.2. Excluded Assets. Notwithstanding the foregoing, the Acquired
Assets shall not include, and Seller does not sell, transfer or convey, and
Purchaser does not purchase or acquire any assets, rights, or interest in or to
any assets not expressly listed or described in Section 2.1 hereof (the
"Excluded Assets"). By way of example, and not to limit the generality of the
foregoing, Excluded Assets shall include:
(a) all accounts receivable relating to the Acquired Assets
accrued on or prior to the Closing Date;
(b) all cash on hand in bank accounts;
(c) the rights to any of the Seller's claims for any federal,
state, local or foreign tax refunds;
(d) all insurance policies of the Seller pertaining to the
Acquired Assets and all rights of the Seller under or arising out of such
insurance policies;
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(e) the rights of the Seller under (i) this Agreement; or (ii)
the other instruments delivered to the Seller or the Purchaser pursuant to this
Agreement;
(f) the name "Chattem" and related logos, and any related
materials (including, without limitation, packaging designs and colors);
(g) any interest in any of the Seller's trademarks, trade names
and service marks that are not specifically listed on Schedule 2.1(a)(i) or
Schedule 2.1(a)(ii) to this Agreement, including, but not limited to, the
Seller's Marks; or
(h) any and all other assets, properties or rights of the Seller
and/or its Affiliates other than those specifically listed in Section 2.1
hereof.
2.3. Purchase Price. The total Purchase Price for the Acquired Assets
shall be the sum of Eight Million Five Hundred Thousand Dollars ($8,500,000.00)
plus the Estimated Inventory Value (the "Purchase Price"). The Seller will pay
the Purchase Price at the Closing in the following manner:
(a) Three Million Dollars ($3,000,000.00) of the Purchase Price
(the "Escrow Fund") shall be paid by wire transfer of immediately available
funds to a mutually agreed upon financial institution (the "Escrow Agent" ) to
be held pursuant to the terms and conditions of an escrow agreement (the "Escrow
Agreement") in the form attached hereto as Exhibit F;
(b) the remaining balance of the Purchase Price shall be paid at
Closing in immediately available funds.
2.4. Inventory Value.
(a) Within five (5) business days after the Closing Date, the
Seller and the Purchaser shall jointly conduct a physical count of the Inventory
as of the Closing Date and the Purchaser shall make or cause to be made a
calculation of the value of the Inventory as of the Closing Date (the "Inventory
Value") in accordance with the Seller's accounting policies applied on a
consistent basis for determining standard costs (the "Calculation"), except that
unmerchantable or obsolete Inventory ("Obsolete Inventory") shall be excluded
from the Calculation. Any finished goods Inventory with a shelf life expiration
date of less than twelve (12) months from the Closing Date shall be considered
unmerchantable and obsolete for purposes of determining Obsolete Inventory. Any
finished goods Inventory not in full unopened case cartons shall also be
considered unmerchantable. The Seller will retain the Obsolete Inventory which
the Seller shall destroy within ninety (90) days after the Closing Date. Any
non-finished goods Inventory that exceeds a 12 month supply (as measured on the
basis of the Seller's shipment production forecast for the 12 month period
following the Closing Date), to the extent of such excess, shall be excluded
from the Calculation and shall be retained by the Seller. Any Inventory that has
been ordered by the Seller but not received prior to the Closing Date shall not
be included in the Calculation but will be accepted by the Purchaser and shall
be considered to have been purchased by the Seller to support firm purchase
orders in accordance with Section 4.1 of the Supply Agreement. The Purchaser
shall also provide the Seller with copies of the Calculation and all work papers
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associated therewith within thirty (30) days after the Closing Date. The
Purchaser may not assert a claim for indemnification with respect to any
Inventory that is not included in the Calculation.
(b) Thereafter, the Seller shall have a period of thirty (30)
days in which to review the Calculation and the work papers associated therewith
provided by the Purchaser. If the Seller disagrees with all or any part of the
Calculation, the Seller shall have the right to notify the Purchaser in writing
of such disagreement and their reasons for so disagreeing, in which case the
Seller and the Purchaser shall attempt to resolve the disagreement. If within
fifteen (15) days after receipt of such notice by Seller, the Seller and the
Purchaser are unable to resolve the differences, if any, arising as a result of
the Calculation, they or either of them shall submit a statement of all
unresolved differences together with copies of the Calculation to KPMG LLP or
such other independent accounting firm as shall be mutually agreed (the
"Accountants") for a binding and non-appealable determination to be rendered
within thirty (30) days after such submission. All fees and expenses of the
Accountants incurred in this capacity shall be billed to and shared by the
Seller and the Purchaser equally.
(c) If the Calculation reflects an Inventory Value that is
either less than or in excess of the Estimated Inventory Value, the Purchase
Price will be reduced or increased dollar-for-dollar, as the case may be, by the
amount of such difference, and the Purchaser will pay the amount of any such
increase to the Seller or the Seller will pay the amount of any such decrease to
the Purchaser, in immediately available funds, within five (5) business days
after the final determination of the Inventory Value provided, however, in no
event shall the purchase value of the Inventory exceed One Million One Hundred
Thousand Dollars ($1,100,000.00).
2.5. Allocation of Purchase Price. The Purchase Price shall be
allocated among the various Acquired Assets as provided by Section 1060 of the
Internal Revenue Code at or prior to Closing in accordance with Schedule 2.5
attached hereto with an allocation of a portion of the Purchase Price for the
intangible assets pursuant to the Purchase Price Allocation. The parties agree
that any tax returns or other tax information they may file or cause to be filed
with any governmental agency shall be prepared and filed consistently with the
Purchase Price Allocation. In this regard, the parties agree that, to the extent
required, they will each properly prepare and timely file Form 8594 in
accordance with Section 1060 of the Code and such other documents as may be
required by Canadian or other authorities.
2.6. Assumption of Distribution Agreements. At the Closing, Seller
shall assign (and, as applicable, require its Affiliates to assign), and the
Purchaser shall assume all rights, benefits, obligations, and liabilities of the
Seller and/or its Affiliates arising under the agreements with Farmasa -
Laboratorio Americano de Farmacoterapia S.A. related to the Acquired Assets
listed on Schedule 2.6 (the "Distribution Agreements"), if and to the extent
assignable. Seller shall use commercially reasonable efforts to obtain the
written consent of Farmasa - Laboratorio Americano de Farmacoterapia S.A. to the
assignment and assumption of the Distribution Agreements as soon as reasonably
practicable after the Closing; provided, however that until Seller is able to
obtain the consent required to make the assignment of the Distribution
Agreements effective, Seller shall provide Purchaser with the economic benefits
of such Distribution Agreements until such consent is obtained or until the
Distribution Agreements terminate or expire.
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2.7. Assumed Liabilities. On the Closing Date, Purchaser shall assume
the liabilities of Seller and Seller's Affiliates identified below in this
Section 2.7 (the "Assumed Liabilities"), including:
(a) All obligations and liabilities of the Seller under the
Trademark License Agreement with Valmont Inc. dated June 17, 1994, a copy of
which has been provided to the Purchaser (the "Trademark License Agreement"), in
accordance with the terms of the Trademark License Assignment and Assumption
Agreement;
(b) All obligations and liabilities of the Seller under the
contracts set forth in Schedule 2.7(b) (the "Assumed Contracts");
(c) All obligations and liabilities of the Seller under the
Distribution Agreements;
(d) Taxes that are the responsibility of Purchaser pursuant to
Section 5.11 of this Agreement and all taxes relating to the Product Line
attributable to any period or partial period beginning on or after the Closing;
(e) All product liability and warranty claims involving the
Product Line arising on or after the Closing Date;
(f) Seller's commitments for promoting and advertising the
Product Line existing as of the Closing Date, which consist of the coupon
redemptions, trade promotions and promotional allowances set forth in Schedule
2.7(f);
2.8. Product Returns
(a) Seller shall be responsible for and shall indemnify and hold
harmless Buyer from and against the actual cost of reasonable return obligations
(i.e., customer or wholesaler returns of expired and short-dated (i.e., less
than three (3) months remaining shelf life, damaged, defective, or other
unsaleable Phisoderm Products) for returns made during the first twelve (12)
months after the Closing Date (the "Product Return Period"), relating to
Phisoderm Products shipped and sold by Seller prior to the Closing Date;
provided, however, Seller's obligations for all such returns of Phisoderm
Products for the Product Return Period shall not exceed an aggregate of Six
Hundred Fifty Thousand Dollars ($650,000.00) in any event, including costs of
processing such returns consistent with Seller's past practice. For the
avoidance of doubt, Seller shall have no obligations with respect to, or
liability for, any Phisoderm Product shipped or sold by Buyer. Buyer agrees not
to issue return credits for Phisoderm Products sold and shipped by Seller prior
to the effective time of the Closing Date until it has received the returned
Phisoderm Product from the customer, unless Seller agrees to waive the customer
return of the Phisoderm Product, which waivers shall not be unreasonably
withheld.
(b) Within sixty (60) days after the termination of the Product
Return Period, Buyer shall submit to Seller an invoice and supporting
documentation setting forth all such return obligations individually detailed as
follows: (i) the name and type of the Phisoderm Product returned (including the
applicable SKU number) and the date the returned Phisoderm Product was received
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by Buyer from such customer; (ii) the name, address and telephone number of the
customer returning such Phisoderm Product; (iii) the reason given by such
customer for such return; (iv) the cost of performing such return, provided,
however, such cost shall include only the cost of replacing, or refunding the
allegedly defective Phisoderm Product plus any reasonable shipping costs
associated with such return. If Seller agrees with such invoice, Seller shall
remit the appropriate payment to Buyer within thirty (30) days after its receipt
of such invoice. In the event Seller in good faith disagrees with such invoice,
the Parties shall negotiate in good faith to resolve such dispute; provided,
however if the Parties cannot resolve such dispute within thirty (30) days after
Seller's receipt of such invoice, the dispute shall be settled pursuant to
Section 9.7. At least once per month during the Product Return Period, Buyer and
Seller shall in good faith provide each other with a non-binding estimate of
their respective return obligations related to Phisoderm Products shipped and
sold by Seller prior to the effective time of the Closing Date. After the
earlier of (i) the end of the Product Return Period, or (ii) such customer
return obligations reach the foregoing Six Hundred Fifty Thousand Dollars
($650,000.00) maximum, Seller shall no longer accept returns of Phisoderm
Products and have no further liability with respect thereto, and, accordingly,
Seller shall then direct all returns to Buyer and Buyer shall bear all
responsibility therefore as part of the Assumed Liabilities regardless of which
Party manufactured, shipped, or sold such Phisoderm Products. Each Party agrees
it will not take any action that would provide any incentive or otherwise induce
customers to return Phisoderm Products.
2.9. Regulatory Approvals. The Seller and the Purchaser acknowledge
that Brazil is the only country in which Seller has effected any Product
Registrations related to the Product Line and that such registrations are held
by Farmasa - Laboratorio Americano de Farmacoterapia S.A. on behalf of Seller.
Seller and Purchaser further acknowledge that in certain countries the Purchaser
shall be required to obtain and maintain in effect all applicable regulatory
approvals, required filings pursuant to applicable competition or antitrust
laws, and assignments and recordings of Product Registrations, at Purchaser's
sole cost, in the name of the Purchaser, the Purchaser's Affiliate or the
Purchaser's designee, whether by transfer or otherwise (the "Regulatory
Approvals"), for the Purchaser and/or its Affiliates to operate the Product
Line. The Seller shall, at the Purchaser's cost and expense, cooperate and
furnish the Purchaser or its designee with assistance from the employees of the
Seller or the Seller's Affiliates in connection with the assignment of the
Brazilian Product Registrations held by Farmasa - Laboratorio Americano de
Farmacoterapia S.A. to the Purchaser or its designee
2.10. Post Closing Obligations of Seller
(a) At or following the Closing, the pH20 trademark shall have
cleared any opposition as evidenced by the absence of any opposition filing with
the U.S. Patent and Trademark Office prior to expiration of the opposition
period ending December 1, 2005 and Seller shall have secured the Licensor's
consent to assignment of the Trademark License Agreement or transferred outright
ownership of the pH20 trademark to Purchaser. Upon the completion of this
obligation, Seller and Purchaser shall, within two (2) business days, jointly
notify the Escrow Agent in writing to release and pay to Seller Two Million Five
Hundred Thousand Dollars ($2,500,000.00) from the Escrow Fund.
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(b) At or following the Closing, Seller shall use commercially
reasonable efforts to:
(i) acquire all the Licensed Trademarks from GSK;
(ii) obtain the consent of Farmasa - Laboratorio Americano
de Farmacoterapia S.A. to the assignment of the Distribution
Agreements;
(iii) obtain the consent of Zila Nutraceuticals, Inc. to the
assignment of the Assumed Contracts; and
(iv) obtain from Bank of America documents reasonably
necessary to release the liens on the Acquired Assets of Bank of
America.
Upon the separate completion of any obligation set forth in (i) through (iv)
above, Seller and Purchaser shall, within two (2) business days, jointly notify
the Escrow Agent in writing to release and pay to Seller One Hundred Twenty-Five
Thousand Dollars ($125,000.00) from the Escrow Fund. In the event that one or
more of the foregoing occurs at the Closing, then the amount that would
otherwise be released from the Escrow Fund shall instead be paid by Seller at
the Closing and the Escrow Fund shall be reduced by such amount.
ARTICLE III
REPRESENTATIONS AND WARRANTEES OF SELLER
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The Seller represents and warrants to the Purchaser as follows:
3.1. Organization. Chattem is a corporation duly organized, validly
existing and in good standing under the laws the State of Tennessee and Signal
is a corporation duly organized, validly existing and in good standing under the
laws the State of Delaware and each has all requisite corporate power and
authority to own the Acquired Assets and carry on its business as now conducted.
3.2. Authority. The Seller has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
provided for herein. All actions on the part of the Seller necessary to approve
the transactions contemplated by this Agreement have been duly taken or will be
taken by the Closing Date as required by applicable law. This Agreement has
been, and the other agreements, documents and instruments, required to be
delivered by the Seller in accordance with the provisions hereof will have been
by the Closing Date, duly executed by the Seller and constitute the valid and
binding agreement of the Seller, enforceable in accordance with their respective
terms, except that (i) enforcement may be subject to bankruptcy, insolvency,
moratorium or other similar laws relating to creditors rights generally and (ii)
the remedy of specific performance and injunctive relief and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding may be brought.
3.3. Absence of Violation or Conflicts. Except as set forth in
Schedule 3.3, the execution, delivery and performance of the transactions
contemplated by this Agreement by the Seller does not and will not violate,
conflict with or result in the breach of any term, condition or provision of (a)
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any existing law, ordinance or governmental rule or regulation to which the
Seller is subject, (b) any judgment, order, writ, injunction, decree or award of
any court, arbitrator or governmental or regulatory official, body or authority
which is applicable to the Seller, (c) the certificate of incorporation or
by-laws of the Seller, or (d) other than the Licensor's Consent, require consent
of any third party, which violation, conflict or breach would have a material
adverse effect on the Product Line.
3.4. Title to Acquired Assets. Except as set forth in Schedule 3.4,
Seller has good and valid title to all of the Acquired Assets, free and clear of
all liens and encumbrances other than exceptions to title that do not interfere
with its ability to operate the Product Line as currently conducted. It is
understood that this representation shall not apply to the Owned Trademarks or
the Licensed Trademarks, the titles of which is addressed exclusively in Section
3.6 and 3.7 hereof, respectively.
3.5. Financial Information. The financial information set forth in
Schedule 3.5 with respect to the Acquired Assets has been prepared in accordance
with the books and records of the Seller consistently applied with prior
periods. The financial information fairly presents in all material respects the
results of operations of the Acquired Assets for the periods indicated.
3.6. Owned Trademarks.
(a) The Seller or its Affiliates have the authority to sell,
transfer and assign all of Seller's or its Affiliate's rights, title, and
interest in and to the Owned Trademarks. The Seller has not been notified about
any pending or threatened adverse claim, judgment, injunction, order, decree or
agreement restricting its use of the Owned Trademarks in connection with the
Products or the sale of the Owned Trademarks or of any pending or, to the
Seller's knowledge, threatened litigation.
(b) Schedule 2.1(a)(ii) lists all of the Owned Trademarks.
Except as set forth in Schedule 2.1(a)(ii), the Seller or its Affiliates have
good and, in the United States and Canada, valid title to the Owned Trademarks,
and the goodwill associated therewith, free and clear of all liens and
encumbrances. As of the date hereof, the Seller has not received notice claiming
that any Owned Trademark infringes upon the rights of any Person.
(c) To the Seller's knowledge, except pursuant to the third
party Distribution Agreements or existing manufacturing agreements: (i) no other
Person has a right to use the Owned Trademarks; and (ii) except as set forth in
Schedule 2.1(a)(ii), no other Person is manufacturing, selling or distributing
any product or service which infringes any of the Owned Trademarks.
3.7. Licensed Trademarks.
(a) The Purchaser acknowledges that the Seller is not the owner
of the Licensed Trademarks and that the Seller and its Affiliates only have the
authority to sell, transfer and assign their rights, title, and interest in and
to the Licensed Trademarks with the consent of the Licensor (the "Licensor's
Consent"). The Seller has not been notified about any pending or threatened
adverse claim, judgment, injunction, order, decree or agreement restricting its
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use of the Licensed Trademarks in connection with the Products or the sale or
license of the Licensed Trademarks or of any pending or, to the Seller's
knowledge, threatened litigation.
(b) Schedule 2.1(a)(i) lists all of the Licensed Trademarks.
Except as set forth in Schedule 2.1(a)(i), the Seller or its Affiliates have a
good and valid license to the Licensed Trademarks. As of the date hereof, the
Seller has not received notice claiming that any Licensed Trademark infringes
upon the rights of any Person.
(c) To the Seller's knowledge: (i) no other Person other than
the Licensor has a right to use the Licensed Trademarks; and (ii) except as set
forth in Schedule 2.1(a)(i), no other Person is manufacturing, selling or
distributing any product or service which infringes any of the Licensed
Trademarks.
3.8. Litigation. The Seller has not been notified about, and is not
aware of, any litigation, including any arbitration, investigation or other
proceeding of or before any court, arbitrator or governmental or regulatory
official, body or authority, that is pending nor has the Seller been notified
about, and Seller is not aware of, any litigation threatened against the Seller
(i) in respect of this Agreement or any of the transactions contemplated hereby
that could reasonably be expected to prevent a consummation of, or materially
adversely affect, any of the transactions contemplated hereby, or (ii) except as
set forth in Schedule 3.8, in respect of, involving or related to the Acquired
Assets that could reasonably be expected to have a material adverse effect on
the Product Line.
3.9. Compliance with Law. To the knowledge of the Seller, it is in
material compliance with and is not in material violation of any law, ordinance,
or governmental or regulatory rule or regulation, whether federal, state, local
or foreign, to which the Acquired Assets are subject.
3.10. Brokers, Etc. No broker, investment banker, agent, finder or
other intermediary acting on behalf of Seller or under the authority of Seller
is or will be entitled to any broker's or finder's fee or any other commission
or similar fee directly or indirectly in connection with any of the transactions
contemplated hereby.
3.11. Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
ARTICLE III, SELLER IS MAKING NO REPRESENTATION OR WARRANTY AS TO THE ACQUIRED
ASSETS OR THE PRODUCT LINE AND PURCHASER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS
OTHERWISE PROVIDED HEREIN, SELLER IS SELLING AND CONVEYING THE ACQUIRED ASSETS
ON AN "AS IS" AND "WITH ALL FAULTS" BASIS. EXCEPT TO THE EXTENT OF THE EXPRESS
REPRESENTATIONS, WARRANTIES, AGREEMENTS AND COVENANTS CONTAINED IN THIS
AGREEMENT, PURCHASER IS ACQUIRING THE ACQUIRED ASSETS IN RELIANCE ON ITS OWN
INVESTIGATION AND ON AN "AS IS" AND "WITH ALL FAULTS" BASIS AND WITHOUT RECOURSE
AND WITHOUT ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, FITNESS FOR ANY
PARTICULAR PURPOSE, NON INFRINGEMENT OR ANY OTHER IMPLIED OR EXPRESS WARRANTIES
WHATSOEVER. Purchaser acknowledges and agrees that neither Seller, its
Affiliates nor any of their representatives has made any representation or
11
warranty, express or implied, as to the accuracy or completeness of any
memoranda, charts, summaries, projections or schedules heretofore made available
by Seller, Seller's Affiliates or their representatives to Purchaser, any of its
Affiliates or their representatives or any information that is not included in
this Agreement or the Schedules hereto, and neither Seller, Seller's Affiliates
nor any of their representatives will have or be subject to any liability to
Purchaser, any of its Affiliates or their representatives resulting from the
distribution of any such information to, or the use of any such information by,
Purchaser, any of its Affiliates or any of their representatives.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
The Purchaser hereby represents and warrants to the Seller as follows:
4.1. Organization. Mentholatum is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and Mentholatum Canada is a corporation duly organized, validly existing and in
good standing under the laws of the Province of Ontario, Canada.
4.2. Authority. The Purchaser has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
provided for herein. All actions on the part of the Purchaser necessary to
approve the transactions contemplated by this Agreement have been duly taken or
will be taken by the Closing Date as required by applicable law. This Agreement
has been, and the other agreements, documents and instruments, required to be
delivered by the Purchaser in accordance with the provisions hereof will have
been by the Closing Date, duly executed by the Purchaser and constitute the
valid and binding agreement of the Purchaser, enforceable in accordance with
their respective terms, except that (i) enforcement may be subject to
bankruptcy, insolvency, moratorium or other similar laws relating to creditors
rights generally and (ii) the remedy of specific performance and injunctive
relief and other forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding may be brought.
4.3. Absence of Violation or Conflict. The execution, delivery and
performance of the transactions contemplated by this Agreement by the Purchaser
does not and will not violate, conflict with or result in the breach of any
term, condition or provision of (a) any existing law, ordinance or governmental
rule or regulation to which the Purchaser is subject, (b) any judgment, order,
writ, injunction, decree or award of any court, arbitrator or governmental or
regulatory official, body or authority which is applicable to the Purchaser, (c)
the certificate of incorporation or by-laws of the Purchaser, or (d) any
mortgage, indenture, or other instrument, document or understanding, oral or
written, to which the Purchaser is a party. No authorization, approval or
consent of, and no registration or filing with, any governmental or regulatory
official, body or authority is required in connection with the execution,
delivery or performance of this Agreement by the Purchaser, except as have been
made or obtained.
4.4. Litigation. No litigation, including any arbitration,
investigation or other proceeding of or before any court, arbitrator or
governmental or regulatory official, body or authority, is pending or, to the
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best knowledge of the Purchaser, threatened against the Purchaser in respect of
this Agreement or any of the transactions contemplated hereby that could
reasonably be expected to prevent a consummation of, or materially adversely
affect, any of the transactions contemplated hereby.
4.5. Brokers. No broker, investment banker, agent, finder or other
intermediary acting on behalf of Purchaser or under the authority of Purchaser
is or will be entitled to any broker's or finder's fee or any other commission
or similar fee directly or indirectly in connection with any of the transactions
contemplated hereby.
4.6. Independent Investigation and Valuation. In making the decision
to enter into this Agreement and to consummate the transactions contemplated
hereby, other than reliance on the representations, warranties, covenants and
obligations of Seller set forth in this Agreement, Purchaser has relied solely
on its own independent investigation, analysis and evaluation of the Product
Line and the Acquired Assets (including Purchaser 's own estimate and appraisal
of the value of the financial condition, assets, operations and prospects of the
Product Line and the Acquired Assets). Purchaser confirms to Seller that
Purchaser is sophisticated and knowledgeable in the business of the Product Line
and is capable of evaluating the matters set forth above. The Purchaser has
sufficient funds available to complete the acquisition contemplated by this
Agreement on a timely basis.
ARTICLE V
OTHER AGREEMENTS
----------------
5.1. Manufacturing/Supply. Seller agrees to manufacture and supply
Purchaser with the Products for a period of eighteen (18) months from the date
of this Agreement pursuant to the terms of the Supply Agreement in the form
attached hereto as Exhibit C; provided, however, that Seller's obligation to
manufacture and supply the Products shall not include the Phisoderm(R) Skin
Cleansing Bar, and shall be limited to countries in which the Seller currently
has the requisite Product Registrations and Regulatory Approvals to manufacture
and sell the Product. Thereafter, Seller shall have no obligation whatsoever to
manufacture and supply Purchaser with the Products. Purchaser may terminate the
Manufacturing/Supply by Seller with ninety (90) days written notice provided
Purchaser agrees to purchase all finished product, materials in production, and
raw materials from Seller. Seller's Supply pricing shall not change for a period
of twelve (12) months from the date of Closing.
5.2. Technical Assistance. The Seller shall provide such technical
assistance as the Purchaser may reasonably request in connection with the
manufacture, sale, distribution or promotion of the Products from and after the
Closing for a period of eighteen (18) months, at the Purchaser's expense,
provided that the obligation to provide technical assistance shall not require
Seller to expend significant time, resources, incur any economic burden or
disclose any confidential information related to Sellers' other Products. The
Seller and the Purchaser agree that in all cases such assistance and
consultation shall be subject to prior notice to the Seller and the availability
of appropriate representatives of the Seller.
5.3. Payments of Accounts Receivable. In the event that either party
shall receive any instrument or other payment in respect of any account
receivable belonging to the other party, such party shall forthwith deliver the
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same to the Seller if the accounts receivable arose prior to the Closing Date,
or to the Purchaser if it arose on or after the Closing Date, endorsed where
necessary, without recourse, in favor of the other party. Each party agrees to
exercise good faith and to cooperate in resolution and documentation of any such
accounts receivable. The Purchaser agrees to give the Seller such assistance as
Seller may reasonably request in collecting pre-Closing Date receivables.
5.4. Commercially Reasonable Efforts. Subject to the terms and
conditions of this Agreement, each of the parties hereto will use its
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement. In case at any time after the
Closing Date any further action is reasonably necessary or desirable to carry
out the purposes of this Agreement, including action to fully vest in the
Purchaser its rights in the Acquired Assets, the proper officers of the Seller
and the Purchaser shall on the written request of either of them take all such
reasonably necessary desirable action.
5.5. Public Announcements. The Seller and the Purchaser will consult
with each other before issuing any press releases or otherwise making any public
statements or statements to the trade with respect to this Agreement and the
transactions contemplated hereby and neither of them shall issue any such press
release or make any such public or trade statement prior to such consultations,
except as may be required by law or by obligations pursuant to any listing
agreement with any national securities exchange.
5.6. Records.
(a) After the Closing, the Seller and the Purchaser shall make
available to each other and their Affiliates , agents and representatives all
books, records, returns, schedules and work papers and all material records or
other documents relating to the Acquired Assets and shall keep and preserve all
such books and records until the later of (i) six (6) years from the Closing
Date, or (ii) period required by applicable governmental statute or regulation.
Until such expiration, duly authorized representatives of the Seller and the
Purchaser shall, upon reasonable notice, have access thereto during normal
business hours to examine, inspect and copy such books and records, subject to
the confidentiality obligations set forth in Section 5.7.
(b) Subject to the confidentiality obligations as set forth in
Section 5.7 below, the Seller and the Purchaser will provide each other with
cooperation and information as either of them may reasonably request of the
other in filing any tax return, amended return or claim for refund, determining
a liability for taxes or a right to a refund of taxes, or in conducting any
audit or other proceeding in respect of taxes at the cost and expense of the
requesting party.
(c) If in order properly to prepare documents required to be
filed with governmental authorities or its financial statements, it is necessary
that any party hereto be furnished with additional information relating to the
Acquired Assets and such information is in the hands of another party, such
party agrees to use reasonable efforts to furnish such information to such other
party, at the cost and expense of the party being furnished such information.
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5.7. Confidentiality. Except as required by applicable law, all
confidential or proprietary information related to the Product Line supplied to
Purchaser by Seller shall be maintained in strict confidence by Purchaser,
Purchaser's Affiliates and their employees, advisors and agents. In the event
that this Agreement is terminated, all written materials relating thereto shall
be returned to Seller or destroyed as directed in writing by Seller, and
Purchaser shall deliver an officer's certificate to Seller certifying as to such
return or destruction. In such event, Purchaser and its employees, advisors and
agents shall make no further use of such information whatsoever. However,
Purchaser will be allowed to retain one copy of the Confidential documents in
its vault for reference.
5.8. Non-Solicitation. For a period of one (1) year following the
Closing, the Purchaser shall not actively solicit any current employee of the
Seller or any of its Affiliates to leave such employment and become any employee
of Purchaser or any of its Affiliates, except with the consent of the Seller.
5.9. Inspection and Due Diligence. Except as prohibited or limited by
law or regulation, the Seller shall allow the Purchaser and its authorized
representatives or designees access after the date hereof with reasonable prior
notification during normal business hours in such a manner as not to unduly
disrupt normal business activities to the Acquired Assets and furnish to the
Purchaser and its representatives with all such information reasonably requested
by the Purchaser and concerning the affairs of the Product Line.
5.10. Inventory and Packaging. The Purchaser shall have the right to
use and sell all of the Inventory and all packaging materials existing as of the
Closing Date or manufactured by Seller using the Seller's name or UPC codes
until all such Inventory shall have been disposed of by the Purchaser.
Notwithstanding the foregoing, the Purchaser shall use their reasonable best
efforts to cause all such inventory to be disposed of within twelve (12) months
following the Closing Date.
5.11. Expenses. Except as otherwise provided herein, each party hereto
shall pay its own expenses and costs incurred in connection with the negotiation
and consummation of this Agreement and the transactions contemplated hereby. All
transfer, sales or related taxes related to the transactions contemplated by
this Agreement shall be paid by the Purchaser.
5.12. Seller's Marks. Purchaser hereby acknowledges and agrees that as
between Seller and Purchaser, Seller or its Affiliates are the exclusive owners
of the Seller's Marks. Purchaser now asserts no claim and will hereafter assert
no claim to any goodwill, reputation or ownership of any of the Seller's Marks.
Purchaser agrees that it will not do or permit to be done any act or thing in
derogation of the rights of the Seller or its Affiliates with respect to the
Seller's Marks at any time hereafter.
5.13. Supplemental Disclosure. The Seller shall have the right from
time to time prior to the second business day preceding the Closing to
supplement or amend the Schedules attached hereto with respect to any matter
hereafter arising or discovered which if existing or known at the date of this
Agreement would have been required to be set forth or described in any such
15
Schedule. Any such supplemental or amended disclosure shall not be deemed to
have cured any breach of any representation or warranty made in this Agreement
for purposes of determining whether or not the conditions set forth in Article
VIII have been satisfied, but will be deemed to have cured any such breach of
representation or warranty made in this Agreement and to have been disclosed as
of the date of this Agreement for purposes of Article VI hereof.
5.14 Non-Competition. As an inducement of Purchaser to enter into this
Agreement, Seller covenants and agrees that for a period of five (5) years from
the Closing Date, neither Seller not Seller's Affiliates shall, directly or
indirectly, control or manage, or otherwise participate or engage in any
business, or own any interest in (other than ownership of five percent (5%) or
less of the outstanding equity interests of any entity listed on the New York
Stock Exchange, the American Stock Exchange or any foreign stock exchange or
included in the National Association of Securities Dealers Automated Quotation
System), any partnership, corporation, limited liability company, joint venture,
trust or any other form of entity, whether as a proprietor, partner,
shareholder, joint venture, trustee or in any other capacity whatsoever, if such
business or entity is engaged in developing, manufacturing, marketing or selling
acne related products competitive with the Product Line. Notwithstanding
anything to the contrary herein contained, Seller may acquire a business that
otherwise would violate the foregoing restrictions as long as no more than ten
percent (10%) of the annual sales of the acquired business is in businesses that
violate the foregoing restrictions.
5.15 Notification of Certain Events. For the transition period during
which Seller's products remain in the stream of commerce, Seller and Purchaser
agree that each will notify the other if either party is notified or becomes
aware of an adverse medical, safety, or health event involving any aspect of the
Product Line. Any report shall contain: (i) the date the report/information was
received by the receiving party; (ii) the name, address and telephone number of
the representative reporting the event; (iii) consumer details, product,
description of the event, and any other relevant information. Each party will
fax the information to the other within seven (7) working days for serious
adverse events and thirty (30) calendar days for other adverse reactions. The
notifying party will endeavor to obtain any additional information on the
reports as requested by the other party. Seller will inform the Purchaser of any
medical, safety, or health issues with any aspect of the Product Line of which
it becomes aware.
ARTICLE VI
INDEMNIFICATION
---------------
6.1. Survival The parties agree that the representations and
warranties contained in this Agreement shall survive the Closing for one (1)
year after the Closing Date except for Sections 3.4 and 3.6 which shall survive
indefinitely. The covenants and other agreements set forth in this Agreement
shall survive for the specific applicable period or indefinitely if no time
period has been expressed.
6.2. Indemnification by Seller. The Seller shall indemnify, hold
harmless and defend Purchaser and its Affiliates after the Closing Date against
and in respect of any and all claims, damage, loss, liability, costs, levies,
penalties, expenses (including, without limitation, reasonable legal, accounting
and other expenses) (collectively, "Damages") suffered or incurred by the
Purchaser or its Affiliates in connection with, resulting from or relating to:
16
(a) any breach of the warranties and representations of the
Seller set forth in Article III hereof;
(b) any breach of the covenants or agreements of the Seller
contained herein;
(c) any Excluded Assets; or
(d) the ownership or operation of the Acquired Assets or the
Product Line prior to the Closing Date, except for the Assumed Liabilities and
the Product Returns.
6.3. Limitations on Indemnification by the Seller.
(a) With the exception of Section 2.8 above, the Purchaser
and/or its Affiliates shall not seek, or be entitled to, indemnification from
the Seller and/or its Affiliates for any Damages, unless and until the aggregate
amount of all such Damages incurred exceeds Two Hundred Fifty Thousand Dollars
($250,000.00) in which event such Damages may be claimed only to the extent that
they exceed Two Hundred Fifty Thousand Dollars ($250,000.00).
(b) The maximum aggregate amount of Damages incurred by the
Purchaser and/or its Affiliates for which the Seller shall be liable under this
Article VI shall be limited to twenty-five percent (25%) of the Purchase Price.
(c) The calculation of Damages shall be net of (i) payments that
the Purchaser has received or is entitled to receive under any insurance policy,
(ii) any prior or subsequent recovery by the Purchaser from any other third
party, and (iii) any tax benefit to the Purchaser with respect to such Damages.
6.4. Indemnification by Purchaser. The Purchaser shall indemnify, hold
harmless and defend the Seller and its Affiliates after the Closing Date against
and in respect of any Damages suffered or incurred by Seller or its Affiliates
in connection with, resulting from or relating to:
(a) any breach of the warranties and representations of the Purchaser
set forth in Article IV hereof;
(b) any breach of the covenants or agreements of the Purchaser
contained herein;
(c) any Assumed Liability; or
(d) the ownership or operation of the Acquired Assets or the Product
Line on or after the Closing Date.
6.5. Limitation on Indemnification by the Purchaser.
(a) The Seller and/or its Affiliates shall not seek, or be
entitled to, indemnification from the Purchaser and/or its Affiliates for any
17
Damages, unless and until the aggregate amount of all such Damages incurred
exceeds Two Hundred Fifty Thousand Dollars ($250,000.00) in which event such
Damages may be claimed only to the extent that they exceed Two Hundred Fifty
Thousand Dollars ($250,000.00).
(b) The maximum aggregate amount of Damages incurred by the
Seller and/or its Affiliates for which the Purchaser shall be liable under this
Article VI shall be limited to twenty-five percent (25%) of the Purchase Price.
(c) The calculation of Damages shall be net of (i) payments that
the Seller has received or is entitled to receive under any insurance policy,
(ii) any prior or subsequent recovery by the Seller from any other third party,
and (iii) any tax benefit to the Seller with respect to such Damages.
6.6. Resolution of Claims.
(a) Upon obtaining knowledge thereof, the Seller or the
Purchaser, as the case may be ("Indemnified Party"), shall notify the other
party (the "Indemnifying Party") in writing of any damage, claim, loss,
liability or expense which the Indemnified Party has determined has given or
could give rise to a claim (each, a "Claim") under this Article VI (such written
notice being hereinafter referred to as a "Notice of Claim"). A Notice of Claim
shall contain a brief description of the nature and estimated amount of any such
claim giving rise to a right of indemnification. If the Indemnifying Party
desires to dispute such claim, it shall, within thirty (30) days after receipt
of the Notice of Claim, give counter notice, setting forth the basis for
disputing such claim, to the Indemnified Party. If no such counter notice is
given within such thirty (30) day period or if the Indemnifying Party
acknowledges liability for indemnification, then such claim shall be promptly
satisfied.
(b) With respect to any claim or demand set forth in a Notice of
Claim relating to a third party claim ("Third Party Claim"), the Indemnifying
Party may defend, in good faith and at its expense, any such claim or demand,
and the Indemnified Party, at its expense, shall have the right to participate
in, but not control, the defense of any such Third Party Claim. So long as the
Indemnifying Party is defending in good faith any such Third Party Claim, the
Indemnified Party shall not settle or compromise such Third Party Claim. The
Indemnifying Party may, in its discretion, settle any Third Party Claim which it
is defending, so long as such settlement includes (i) an unconditional release
of the Indemnified Party from all liability in respect of such Third Party
Claim, and (ii) does not subject the Indemnified Party to any injunctive relief
or other equitable remedy. If requested by the Indemnifying Party, the
Indemnified Party agrees, at the cost and expense of the Indemnifying Party
(excluding costs and expenses not owed to third parties by the Indemnified
Party), to cooperate with the Indemnifying Party and its counsel in contesting
any Third Party Claim which the Indemnifying Party elects to contest. If the
Indemnifying Party fails to notify the Indemnified Party within thirty (30) days
after receipt of a Notice of Claim with respect to a Third Party Claim that the
Indemnifying Party elects to defend the Indemnified Party pursuant to this
Section 6.6, or if the Indemnifying Party elects to defend the Indemnified Party
but fails to prosecute or settle the Third Party Claim diligently and promptly,
then the Indemnified Party shall have the right to defend, at the sole cost and
expense of the Indemnifying Party, the Third Party claim by all appropriate
proceedings.
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6.7. Other Matters.
(a) If the Closing shall occur, the indemnification provisions
of this Article VI shall be the sole and exclusive remedy of the Seller and the
Purchaser for any breach of any covenants, representations or warranties made by
the other party in this Agreement and each party hereby waives all statutory,
common law and other claims with respect thereto, other than claims for
indemnification pursuant to this Article VI.
(b) Indemnification hereunder shall include liability for any
special, incidental, punitive or consequential damages to the extent the
Indemnified Party is required to pay such amount to a third party in respect of
a final, non-appealable judgment or order obtained by such third party. Except
as expressly provided in the preceding sentence, there shall be no
indemnification by the Seller or the Purchaser for any special, incidental,
punitive or consequential damages.
(c) Upon making any payment to an Indemnified Party for any
indemnification claim pursuant to this Article VI, the Indemnifying Party shall
be subrogated, to the extent of such payment, to any rights which the
Indemnified Party or its affiliates may have against any other Persons with
respect to the subject matter underlying such indemnification claim and the
Indemnified Party shall take such actions as the Indemnifying Party may
reasonably require to perfect such subrogation or to pursue such rights against
such other Persons as the Indemnified Party or its affiliates may have.
(d) If and to the extent that prior to the Closing a party has
actual knowledge of the breach of or inaccuracy in or of facts that such party
should reasonably have known would constitute a breach of or inaccuracy in a
representation, warranty or covenant made by the other party, and the Closing
nonetheless occurs, then such party shall not have the right to assert a claim
for indemnification in respect to such breach or inaccuracy, and the party
against whom such claim could otherwise be asserted shall have no liability or
obligation in respect thereof.
ARTICLE VII
TERMINATION AND ABANDONMENT
---------------------------
7.1. Termination and Abandonment. This Agreement may be terminated and
the purchase and sale of the Acquired Assets abandoned at any time prior to the
Closing:
(a) by mutual agreement of the Seller and the Purchaser;
(b) by the Purchaser if the conditions set forth in Section 8.2
and the deliveries required by Section 8.4 shall not have been complied with and
performed in any material respect and such noncompliance or nonperformance shall
not have been cured or eliminated (or by its nature cannot be cured or
eliminated) on or before the Closing Date;
(c) by the Seller, if the conditions set forth in Section 8.3
and the deliveries required by Section 8.5 shall not have been complied with and
performed in any material respect and such noncompliance or nonperformance shall
not have been cured or eliminated (or by its nature cannot be cured or
eliminated) on or before the Closing Date; or
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(d) by either Purchaser or Seller if the Closing shall not have
occurred on or before February 3, 2006, for any reason whatsoever, other than
such party's breach of or failure to perform or comply with any agreement herein
or provision hereof to be performed or complied with by such party on or prior
to the Closing Date.
ARTICLE VIII
THE CLOSING
-----------
8.1. Time, Date and Place of Closing. Subject to the provisions
hereof, the deliveries contemplated by this Agreement to be made at the Closing
shall be made at the offices of the Seller, at 10:00 A.M., local time, on or
before November 30, 2005, or at such later date and location as may be mutually
agreeable. The date on which the last of such deliveries occurs is hereinafter
referred to as the "Closing Date", and the events comprising such deliveries are
hereinafter referred to as the "Closing". The "Effective Time" of the Closing
shall be 5:00 p.m. Eastern Time on the Closing Date.
8.2. Conditions to Obligations of Purchaser. All of the obligations of
the Purchaser under this Agreement are subject to the fulfillment prior to or at
the Closing Date of each of the following conditions, any one or more of which
may be waived by the Purchaser:
(a) Except as otherwise permitted or contemplated by this
Agreement and except for representations and warranties that by their terms
speak only as of a specified date, each of the representations and warranties of
the Seller contained herein shall be true and correct in all material respects
as of the date when made, shall be deemed to be made again at and as of the
Closing Date and shall be true and correct in all material respects at and as of
the Closing Date;
(b) The Seller shall have performed and complied with all
covenants and agreements required by this Agreement to be performed or complied
with by Seller prior to or at the Closing Date;
(c) The Licensor shall have consented to the assignment of the
Seller's license of the Licensed Trademarks to the Purchaser or the Seller shall
have acquired the Licensed Trademarks from GSK; and
(d) No federal, state or local governmental unit, agency, body
or authority with competent jurisdiction over the subject matter shall have
given official written notice of its intention to institute proceedings to
prohibit the transactions contemplated by this Agreement, or which would
interfere with the use of the Acquired Assets or the operation of the Acquired
Assets.
8.3. Conditions to Obligations of Seller. All of the obligations of
the Seller under this Agreement are subject to the fulfillment prior to or at
the Closing Date of each of the following conditions, any one or more of which
may be waived by the Seller:
(a) Except as otherwise permitted or contemplated by this
Agreement and except for representations and warranties that by their terms
speak only as of a specified date, each of the representations and warranties of
the Purchaser contained herein shall be true as of the date when made, shall be
20
deemed to be made again at and as of the Closing Date and shall be true and
correct in all material respects at and as of the Closing Date;
(b) The Purchaser shall have performed and complied with all
covenants and agreements required by this Agreement to be performed or complied
with by Purchaser prior to or at the Closing Date; and
(c) No federal, state or local governmental unit, agency, body
or authority with competent jurisdiction over the subject matter shall have
given official written notice of its intention to institute proceedings to
prohibit the transactions contemplated by this Agreement.
8.4. Deliveries by Seller at the Closing. Delivery by the Seller of
the following at the Closing shall be a condition of the Purchaser under this
Agreement:
(a) a certificate dated the Closing Date executed by the
President of Seller certifying that (i) the representations and warranties of
Seller hereunder are true and correct in all material respects on the Closing
Date as if made on and as of such date, and (ii) Seller has performed and
complied in all material respects with all agreements, covenants, and conditions
required by this Agreement to be performed or complied with by it prior to or at
the Closing;
(b) the Trademark License Assignment and Assumption Agreement,
substantially in the form of Exhibit A, executed by the Seller and/or an
Affiliate of Seller owning the Owned Trademarks;
(c) the Trademark Assignment, substantially in the form of
Exhibit B, executed by the Seller and/or an Affiliate of Seller owning the
license to the Licensed Trademarks; (d) the Supply Agreement, substantially in
the form of Exhibit C, executed by Seller and/or its Affiliates;
(e) the Bill of Sale, substantially in the form of Exhibit D,
conveying all of the tangible property included in the Acquired Assets;
(f) the Distribution Agreement, substantially in the form of
Exhibit G, executed by the Seller and/or its Affiliates; and
(g) the Escrow Agreement, substantially in the form of Exhibit
F, executed by Seller and/or its Affiliates.
8.5. Deliveries by Purchaser at the Closing. Delivery by Purchaser of
the following at the Closing shall be a condition to the obligation of the
Seller under this Agreement:
(a) a wire transfer of immediately available federal funds, in
the amount of the Purchase Price, less the agreed holdback of Three Million
21
Dollars ($3,000,000.00), to an account designated by Seller with the holdback to
be released upon Seller's completion of conditions set forth in Section 2.10
above;
(b) a certificate dated the Closing Date executed by the
President of Purchaser certifying that (i) the representations and warranties of
Purchaser in this Agreement are true and correct in all material respects on the
Closing Date as if made on and as of such date, and (ii) Purchaser has performed
and complied in all material respects with all agreements, covenants and
conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing;
(c) the Trademark License Assignment and Assumption Agreement,
substantially in the form of Exhibit A, executed by the Purchaser or an
Affiliate of Purchaser;
(d) the Trademark Assignment, substantially in the form of
Exhibit B, executed by the Purchaser;
(e) the Supply Agreement, substantially in the form of Exhibit
C, executed by the Purchaser;
(f) the Bill of Sale, substantially in the form of Exhibit D,
executed by the Purchaser;
(g) the Distribution Agreement, substantially in the form of
Exhibit G, executed by the Purchaser and/or its Affiliates; and
(h) the Escrow Agreement, substantially in the form of Exhibit
F, executed by the Purchaser.
ARTICLE IX
MISCELLANEOUS PROVISIONS
------------------------
9.1. Good Faith; Further Assurances; Further Cooperation. The parties
to this Agreement shall in good faith undertake to perform their obligations
under this Agreement, to satisfy all conditions and to cause the transactions
contemplated by this Agreement to be carried out promptly in accordance with the
terms of this Agreement. Upon the execution of this Agreement and thereafter,
each party shall do such things as may be reasonably requested by another party
hereto in order more effectively to consummate or document the transaction
contemplated by this Agreement.
9.2. Notices. All notices, communications and deliveries under this
Agreement shall be made in writing, signed by the party making the same, shall
specify the Section of this Agreement pursuant to which it is given, and shall
be deemed given on the date delivered if delivered in person or on the third
business day after mailed if mailed certified mail (with postage prepaid),
return receipt requested, as follows:
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To Seller:
Chattem, Inc.
1715 West 38th Street
Chattanooga, TN 37409
Attention: Theodore K. Whitfield, Jr., General Counsel
With a copy to:
Miller & Martin PLLC
1000 Volunteer Building
832 Georgia Avenue
Chattanooga, TN 37402
Attention: Hugh F. Sharber, Esq.
To Purchaser:
The Mentholatum Co., Inc.
707 Sterling Drive
Orchard Park, NY 14127
Attention: Francis Chan, President International
With a copy to:
Magavern, Magavern & Grimm, LLP
1100 Rand Building
14 Lafayette Square
Buffalo, NY 14203
Attention: Thomas E. Schofield
or to such other representative or to such other address as the parties hereto
may furnish to the other parties in writing. If notice is given pursuant to this
section of a permitted successor or assign of a party of this Agreement, then
notice shall be given as set forth above to such successor or assign of such
party.
9.3. Successors; Assignment. This Agreement may not be transferred,
assigned, pledged or hypothecated by any party hereto, except with the prior
written consent of the other parties hereto, which consent will not be
unreasonably withheld. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto, and their respective successors and permitted
assigns.
9.4. Captions; Definitions. The titles or captions of articles,
sections and subsections contained in this Agreement are inserted only as a
matter of convenience and for reference and in no way define, limit, extend or
describe the scope of this Agreement or the intent of any provision hereof. The
parties agree to all definitions in the statement of parties to this Agreement
and in the other introductory language to this Agreement.
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9.5. Amendment; Waiver.
(a) This Agreement may not be altered or amended except in
writing signed by the Purchaser and the Seller.
(b) The failure of any party hereto at any time to require
performance of any provisions hereof shall in no manner affect the right to
enforce the same. No waiver by any party hereto of any condition, or of the
breach of any term, provision, warranty, representation, agreement or covenant
contained in this Agreement, whether by conduct or otherwise, in any one or more
instances shall be deemed or construed as a further or continuing waiver of any
such condition or breach or a waiver of any other condition or of the breach of
any other terms, provision, warranty, representation, agreement or covenant
herein contained.
9.6. Controlling Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware, without regard to any
applicable principles of conflicts of law.
9.7. Dispute Resolution.
(a) In the event that any dispute arises with respect to this
Agreement and the parties are unable to resolve such dispute after a good faith
effort to do so, either party may send the other party a written demand for
arbitration at any time within time limitations set forth for such claim in this
Agreement, which written demand shall contain a brief description of the nature
of such dispute and a good faith estimate of the damages (if quantifiable)
incurred by the party sending the written demand. The issue shall then be
submitted to and settled by, arbitration in Atlanta, Georgia, pursuant to the
commercial arbitration rules then in effect of the American Arbitration
Association (or at any time or at any other place or under any other form of
arbitration mutually acceptable to the parties so involved). The arbitration
shall be conducted as follows:
(b) Seller and Purchaser shall each select one (1) arbitrator
and the two (2) arbitrators shall select a third arbitrator. In the event of the
death, resignation or disability of any such arbitrator, his successor shall be
chosen in the same manner as the arbitrator so succeeded.
(c) The arbitrators shall have full power to determine whether
either party is responsible and obligated to pay damages under this agreement in
accordance with the terms of this Agreement. Their determination shall be final
and conclusive upon the parties. Any determination of an issue of fact or law
made by the arbitrators, shall be binding upon the parties only with respect to,
and in connection with, the particular arbitration proceeding and the specific
final decision or award of the arbitrators made therein and shall not be binding
upon the parties nor shall it be admissible in any other proceeding for any
other purpose; provided that nothing herein shall prevent any party from
enforcing the specific decision or award of the arbitrators through appropriate
and lawful means.
(d) The cost of arbitration (not including attorneys' fees)
shall be borne equally by Seller and Purchaser
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(e) The arbitrators shall not have the power to determine any
issue or matter other than those expressly set forth in the written demand and
shall in no event have any right or power to award or assess punitive,
incidental, or consequential damages to or against either party.
(f) The provisions of this Section 9.7 may be enforced by any
court of competent jurisdiction, and the party seeking enforcement shall be
entitled to an award of all costs, fees and expenses, including attorneys' fees,
to be paid by the party against whom enforcement is ordered.
9.8. Entire Agreement. This Agreement, together with the other
agreements, documents, certificates and instruments referenced herein,
constitutes the entire agreement among the parties hereto with respect to the
transactions contemplated and supersedes all prior agreements, understandings,
and negotiations, both written and oral, among the parties with respect thereto.
9.9. Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement or the terms of this Agreement to
produce or account for more than one (1) of such counterparts.
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IN WITNESS WHEREOF, this Asset Purchase and Sale Agreement is duly executed
by the parties hereto as of the date and year first above written.
PURCHASER:
THE MENTHOLATUM CO., INC.
By:
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Name: Akiyoshi Yoshida, Ph.D.
Title: President and Chief Executive Officer
THE MENTHOLATUM COMPANY OF CANADA LTD.
By:
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Name: James W. Ingham
Title: Treasurer
SELLER:
CHATTEM, INC.
By:
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Name:
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Title:
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SIGNAL INVESTMENT
& MANAGEMENT CO.
By:
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Name:
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Title:
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