EXHIBIT 99.3
AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
DATED AS OF DECEMBER 4, 2001,
BY AND AMONG
ZILA, INC. ("ZILA"),
▇▇▇▇▇ DENTAL OF KENTUCKY, INC. ("SELLER") AND
PRACTICEWARES, INC. ("BUYER")
AMENDED AND RESTATED ASSET PURCHASE AGREEMENT
THIS AMENDED AND RESTATED ASSET PURCHASE AGREEMENT (the "Agreement"),
is made and entered into as of the 4th day of December, 2001, by and among ZILA,
INC., a Delaware corporation ("Zila"), ▇▇▇▇▇ DENTAL OF KENTUCKY, INC. D/B/A ZILA
DENTAL SUPPLY, a Kentucky corporation (the "Seller") and PRACTICEWARES, INC., a
Delaware corporation ("Buyer"). Zila, Seller and Buyer are referred to
collectively herein as the "Parties."
RECITALS:
A. Seller is engaged, among other businesses, in that certain mail
order business known as "Zila Dental Supply" (the "Acquired Business"). Buyer
acknowledges that Seller also has a "full-service" business (the "FS Business"),
the assets of which are not being acquired by Buyer, as such assets are not used
in the Acquired Business, and which Buyer acknowledges that the Seller is
concurrently selling to another party (the "FS Buyer"). All assets used
exclusively in the FS Business are part of the "Excluded Assets" hereunder. To
the extent that certain assets are used in both the Acquired Business and the FS
Business, the Parties' intent is to arrange for joint utilization of such assets
(as further set forth in this Agreement) with the goal of protecting and
maximizing the value of the respective assets purchased by the Buyer and the FS
Buyer, respectively.
▇. ▇▇▇▇ owns one hundred percent (100%) of the issued and outstanding
shares of the capital stock of Bio-Dental Technologies Corporation, a California
corporation ("Bio-Dental") and Bio-Dental owns one hundred percent (100%) of the
issued and outstanding shares of the capital stock of Seller.
C. On the terms and subject to the conditions set forth herein, the
Parties desire to enter into this Agreement, pursuant to which Buyer will
purchase from Seller and Seller will sell to Buyer, substantially all of
Seller's assets and properties relating to the Acquired Business, and Buyer
agrees to assume certain identified liabilities of Seller relating to the
Acquired Business.
COVENANTS:
In consideration of $100.00, the mutual representations, warranties and
covenants contained herein and subject to the conditions herein contained, and
for other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged conclusively, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. PURCHASE AND SALE OF THE ASSETS.
1.1. Purchased Assets. On the terms and subject to the conditions
contained in this Agreement, on the Closing Date (as hereinafter defined), Buyer
shall purchase from Seller, and Seller shall sell, assign and deliver to Buyer,
the Purchased Assets (as hereinafter defined), free and clear of all liens,
security interests, options, charges and other restrictions whatsoever
(hereinafter referred to as "Encumbrances") except for the Permitted
Encumbrances referenced in Section 4.7.1 below. The term "Purchased Assets"
shall mean all the assets, properties, rights,
titles and interests (including without limitation those certain licenses to the
Other Intangible Assets (as hereafter defined)) of every kind and nature,
whether tangible or intangible, and wherever located and by whomever possessed,
related exclusively to the Acquired Business or otherwise designated herein as
Purchased Assets as of the Closing Date including, without limitation, all of
the following assets (but excluding all "Excluded Assets" as defined in Section
1.2):
1.1.1. Cash in the amount of $542,000 (the "Working Capital
Cash"); provided, that the Working Capital Cash shall not be included as an
asset on the Closing Date Balance Sheet (as defined herein), shall be excluded
from the calculation of the Net Worth Adjustment (as described in Section 2.1.1.
herein) and shall be included in the principal amount of the Senior Note A (as
defined herein);
1.1.2. All prepayments and prepaid expenses included on the
Closing Date Balance Sheet (as defined herein) (including, without limitation,
any and all prepaid insurance premiums, lease payments and deposits and customer
deposits (the "Prepayments"), all of which are set forth on SCHEDULE 1.1.2
attached hereto;
1.1.3. All inventories of products, merchandise,
work-in-process, finished goods, scrap, raw materials, supplies and parts
relating to the Acquired Business, including, without limitation, all of
Seller's inventory of items (excluding those certain items of inventory set
forth on SCHEDULE 1.1.3 (the "Excluded Inventory")) included in Seller's most
recent mail order catalog, ZDS part number 00100106 dated June 1, 2001, and all
Obsolete Inventory, Excess Inventory, Heat Sensitive Inventory and Expired
Inventory (each as defined herein);
1.1.4. All rights existing under all supply and distribution
agreements and arrangements, sales and purchase agreements and orders related to
the Acquired Business (including unfilled orders for products and services of
the Acquired Business), customer contracts and license agreements, real and
personal property leases, license agreements, consulting agreements,
confidentiality and non-disclosure agreements, including, without limitation,
such agreements with current or prior customers and current or prior employees,
agents, officers and directors ("Confidentiality Agreements"), and under all
other contracts, agreements and arrangements, except for those agreements,
arrangements, orders and leases set forth on SCHEDULE 1.1.4 attached hereto;
1.1.5. All of Seller's interest as lessee under a lease of
real property located at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
including all options to renew or extend the term of any real property leases or
to purchase all or any part of such property;
1.1.6. All of Seller's interest as lessee under leases of
personal property used in connection with the Acquired Business, including all
options to renew or extend the term of such personal property leases or to
purchase all or any part of such personal property;
1.1.7. All lists and records pertaining to customer accounts
(whether past or current), suppliers, distributors, personnel and agents and all
other books, ledgers, files, documents, correspondence and business records
relating to the Acquired Business;
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1.1.8. All claims, deposits, warranties, guarantees, refunds,
causes of action, rights of recovery, rights of set-off and rights of recoupment
of every kind and nature, other than those relating exclusively to Excluded
Assets or Excluded Liabilities (each as defined below);
1.1.9. All software owned by Seller or under development by
Seller, all of Seller's interest in third-party software that is either offered
or provided to customers of the Seller when Seller's software is licensed to
such customers or used by Seller to provide services to customers of Seller, and
all of Seller's interest in other software that is licensed or marketed to or
from third parties or otherwise used by Seller for any purpose whatsoever
(collectively, the "Software") and all data and documentation, including prior
versions and releases applicable to any operating environment and in any format
related to the Software, except as disclosed on SCHEDULE 1.1.9;
1.1.10. All of Seller's (and all of Seller's right to use any
third party's) trademarks, copyrights, patents, registrations and applications
for registration, flow charts, specifications, designs and plans and any other
Intellectual Property (as defined in Section 4.9.1 herein) used exclusively by
the Acquired Business and all goodwill associated therewith and any other
proprietary rights in the foregoing, and any copies and tangible embodiments of
the foregoing, along with, the toll-free phone numbers and a license to use
certain assets, each as set forth in the Transition Agreement defined in Section
8.9. and incorporated by reference herein (collectively, the "Other Intangible
Assets");
1.1.11. All permits, licenses, franchises, orders,
registrations, certificates, variances, approvals and similar rights necessary
for the conduct of the Acquired Business obtained from governments and
governmental agencies and all data and records pertaining thereto;
1.1.12. All insurance, warranty and condemnation proceeds
received after the Closing Date with respect to damage, non-conformances of or
loss to the Purchased Assets;
1.1.13. All rights to receive mail and other communications
addressed to Seller and relating to the Purchased Assets including, without
limitation, accounts receivable payments;
1.1.14. All fixed assets, furniture, equipment and other
tangible personal property related to the Acquired Business, whether owned,
leased or otherwise (including, without limitation, items which, have been fully
depreciated or expensed), including, without limitation, the assets set forth on
SCHEDULE 1.1.14 attached hereto;
1.1.15. All books, records, ledgers, files, documents,
correspondence, lists, studies and reports and other printed or written
materials related to the Acquired Business;
1.1.16. All accounts, notes and other receivables, including,
without limitation, all receivables from any current or former employee of
Seller related to the Acquired Business (collectively, the "Receivables"); and
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1.1.17. All goodwill as a going concern and associated with
the items listed above (including, without limitation, the goodwill associated
with (i) the items referred to in Sections 1.1.9, 1.1.10 and 1.1.11 above and
(ii) all telephone numbers (subject to the limitations defined herein),
facsimile numbers and the Internet pages owned and used by Seller in connection
with the Acquired Business).
1.2. Excluded Assets. Notwithstanding the foregoing, the following
assets are expressly excluded from the purchase and sale contemplated hereby
(the "Excluded Assets") and, as such, are not included in the Purchased Assets:
1.2.1. Seller's rights under or pursuant to this Agreement
(including, without limitation, Seller's rights to the Purchase Price);
1.2.2. Seller's rights under that certain Lease dated January
26, 2000, by and between Winmar Corporation and Seller relating to the real
property located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇;
1.2.3. The Excluded Inventory;
1.2.4. Seller's general ledger, accounting records, minute
books and corporate seal; provided that Buyer shall be given copies upon request
of the general ledger and accounting records for any calendar year beginning on
or after January 1, 1996, as such documents exist as of the Closing Date;
1.2.5. Any right to receive mail and other communications
addressed to Seller relating exclusively to the Excluded Assets or to all
liabilities other than the Assumed Liabilities (as defined in Section 2.2
below);
1.2.6. The names "The Supply House," "▇▇▇▇▇ Dental," "▇▇▇▇▇
Dental of Kentucky" and "Zila Dental Supply," and the uniform resource locator
known as "▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇" (the "ZDS URL"), subject to the
rights set forth in Section 6.6; and
1.2.7. Those assets of Seller which are set forth on SCHEDULE
1.2.7.
2. PURCHASE PRICE; ASSUMPTION OF LIABILITIES.
2.1. Amount of Purchase Price. In consideration for the purchase of the
Purchased Assets, Buyer agrees to (i) assume the Assumed Liabilities; (ii) issue
to Seller a promissory note (the "Senior Note A") in the principal amount of Six
Million One Hundred Ninety-Four Thousand Two Hundred and No/100 Dollars
($6,194,200.00) substantially in the form of EXHIBIT A-1 attached hereto; (iii)
issue to Seller a promissory note (the "Senior Note B") in the principal amount
of One Million Two Hundred Thousand and No/100 Dollars ($1,200,000.00)
substantially in the form of EXHIBIT A-2 attached hereto and (iv) issue to
Seller a promissory note (the "Junior Note") in the principal amount of One
Million One Hundred Forty-Seven Thousand Eight Hundred and No/100 Dollars
($1,147,800.00) substantially in the form of EXHIBIT A-3 attached hereto. The
"Purchase Price" shall be equal to the sum of the Assumed Liabilities, the
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Senior Note A, the Senior Note B and the Junior Note, subject to the adjustments
set forth in Sections 2.1.1 and 2.1.2 below.
2.1.1. Net Worth Adjustment. The Purchase Price will be
subject to adjustment as described in this Section 2.1.1 below.
A. Within sixty (60) days after the Closing Date,
Seller will deliver to Buyer a calculation of the net worth of the Acquired
Business as of the close of business on the day immediately preceding the
Closing Date (the "Closing Date Net Worth"). For purposes hereof, Closing Date
Net Worth shall be equal to (i) the total assets of the Acquired Business as
reflected on a balance sheet (the "Closing Date Balance Sheet") of the Acquired
Business as of the close of business on the day immediately preceding the
Closing Date (excluding the Excluded Assets); less (ii) the total liabilities of
the Acquired Business as of the close of business on the day immediately
preceding the Closing Date (excluding the Excluded Liabilities). The Closing
Date Balance Sheet shall be audited by Deloitte & Touche, L.L.P. At Closing,
Seller shall deliver a good faith estimate of the Closing Date Balance Sheet.
B. Buyer will have until the later of (i) thirty (30)
days from receipt of the Closing Date Balance Sheet or (ii) the maturity date of
the Senior Note A, to object to the calculation of the Closing Date Net Worth
contained therein by delivering written notice to Seller. If Seller does not
receive notice of an objection within such time, the Closing Date Balance Sheet
prepared by Seller will be final and binding on the parties. If Buyer timely
notifies Seller of an objection, the parties will have thirty (30) days from the
date of Buyer's notice to resolve the objection. If the parties do not resolve
the objection within such time, either Seller or Buyer may submit the dispute to
Ernst & Young, L.L.P. (the "Independent Auditors") for resolution, and such
resolution will be final and binding on the parties. The fees and expenses of
the Independent Auditors will be borne by Seller and Buyer in proportion to the
respective differences between their positions submitted to the Independent
Auditors and the final determination of the Independent Auditors.
C. The Closing Date Balance Sheet will be prepared in
accordance with generally accepted accounting principles in the United States
("GAAP"), with all costs associated with the preparation of the Closing Date
Balance Sheet borne by Seller. The Closing Date Balance Sheet shall be subject
to and prepared in conformity with year-end audit accrual and estimation
policies of the Seller such that all pro-rata adjustments, accruals, reserves,
allowances and similar year-end adjustments are prepared for and included in the
Closing Date Balance Sheet, as if the Closing Date Balance Sheet were a year-end
statement; provided, further, that in the event any accounting matter is not
treated in conformity with GAAP in the Seller's historical financial statements,
whether or not consistently applied in such non-conforming manner, the standard
required by GAAP shall be followed regardless of materiality. Notwithstanding
the foregoing, the parties hereby agree that, regardless of whether otherwise
required by GAAP, or whether inconsistent with the past accounting practices of
the Seller, the Closing Date Balance Sheet shall be adjusted as follows:
(i) The Closing Date Balance Sheet shall not
reflect any accruals for the expenses associated with the preparation of the
Closing Date Balance Sheet;
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(ii) The Closing Date Balance Sheet shall not
reflect any fees and expenses incurred by Seller in connection with the
negotiation and preparation of this Agreement and the consummation of the
transactions contemplated hereby;
(iii) The Closing Date Balance Sheet shall be
adjusted to exclude any adjustment involving the write-up of any asset of the
Acquired Business and to exclude any transaction or adjustment that does not
relate to the operation of the Acquired Business in the ordinary course of
business and consistent with past practice unless approved in writing by Buyer;
and
(iv) The inventory value shall exclude all items
of Obsolete Inventory and Excess Inventory (as hereinafter defined).
D. "Obsolete Inventory" means any items of inventory
for which there has been no usage or sales by the Acquired Business or the FS
Business during the twelve (12) months preceding the Closing Date. Such
definition shall further include items on-hand or on-order which are currently
not included in the Seller's most recently published and distributed master
catalog, but shall exclude the Excluded Inventory, and items of inventory that
have been added to the inventory master list within the last six (6) months and
are reasonably determined by the Buyer to be appropriate inventory for the
Acquired Business as listed on SCHEDULE 2.1.1.D (the "Additional Inventory").
E. "Excess Inventory" means any quantities of an item
of inventory which represents more than twelve (12) months requirements based on
the prior twelve (12) months' usage of the Acquired Business and the FS
Business. Such definition shall exclude the Excluded Inventory and the
Additional Inventory.
F. The Purchase Price will be reduced if the Closing
Date Net Worth reflected on the Closing Date Balance Sheet is less than Three
Million Nine Hundred Seventy-Two Thousand Five Hundred Eighty-Nine and No/100
Dollars ($3,972,589.00). The actual amount of the reduction shall be the amount
of such deficiency.
G. The Purchase Price will be increased if the Closing
Date Net Worth reflected on the Closing Date Balance Sheet is greater than Three
Million Nine Hundred Seventy-Two Thousand Five Hundred Eighty-Nine and No/100
Dollars ($3,972,589.00).
H. If there is an adjustment in the Purchase Price
pursuant to this Section 2.1.1, within ten (10) days after final determination
of the adjustment (whether by Buyer's failure to object, agreement of the
parties or determination by the Independent Auditors), Seller or Buyer, as
applicable, will pay the applicable amount as follows: (i) 70.65% of the
applicable amount shall be paid by wire transfer of immediately available funds
to the account(s) designated by Seller or Buyer, as applicable and (ii) 29.35%
of the applicable amount shall be paid by reducing or increasing, as applicable,
the face amount of the Junior Note, or the Senior Note B in the event that
Buyer's obligations under the Junior Note have been satisfied; provided,
however, if the amount of an increase in the Purchase Price exceeds Two Hundred
Fifty
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Thousand and No/100 Dollars ($250,000.00), one hundred percent (100%) of such
excess amount shall be added to the face amount of the Junior Note.
2.1.2. Computer Software Adjustment. Attached hereto as
SCHEDULE 2.1.2 is a list of all Software currently used by the Acquired Business
in connection with its operations (the "Third Party Software"). The Parties
hereby agree that in the event that the Seller is unable to provide evidence of
valid licenses granting the Seller the right to use all of the Third Party
Software on or before the Closing Date, the face amount of the Senior Note A
shall be reduced by an amount equal to the aggregate cost (the "Software
Replacement Cost") of purchasing valid licenses for the unlicensed Third Party
Software. The Software Replacement Cost shall be reasonably determined by the
Buyer.
2.2. Assumed Liabilities. Buyer agrees to and shall at the Closing
assume and agree to pay, discharge and perform when lawfully due only those
liabilities, contracts, commitments and other obligations of Seller that are
listed on SCHEDULE 2.2 hereto (the "Assumed Liabilities"). Seller agrees to
satisfy and discharge all debts, liabilities and obligations of Seller other
than the Assumed Liabilities as they come due in the ordinary course of
business, whether known at the Closing or thereafter determined, and Seller
expressly agrees to hold Buyer harmless with respect thereto. The undertakings
of Buyer referred to in this Section 2.2 shall not in any way limit Buyer's
right of recourse for any breach of the covenants, representations, or
warranties of Seller contained in this Agreement. The assumption by Buyer of the
Assumed Liabilities shall be construed so that none of the Assumed Liabilities
shall be expanded, increased, broadened, or enlarged as to rights or remedies
that any third party might have had against Seller had the acquisition of the
Acquired Business by Buyer not taken place. Nothing in this Agreement shall be
deemed or construed to foreclose either Buyer or Seller from contesting in good
faith the duties and liabilities to third parties that are assumed by Buyer
pursuant to this Agreement or retained by Seller pursuant to this Agreement. On
the Closing Date, Buyer shall deliver to Seller an instrument, substantially in
the form of EXHIBIT G, pursuant to which it will assume the Assumed Liabilities.
2.3. Excluded Liabilities. Notwithstanding any other provision of this
Agreement, except for the Assumed Liabilities expressly specified in Section
2.2, Buyer shall not assume, and shall have no liability for, any debts,
liabilities, obligations, expenses, taxes, contracts or commitments of the
Seller or the Acquired Business of any kind, character or description, whether
accrued, absolute, contingent or otherwise, arising out of any act or omission
occurring or state of facts existing prior to or on the Closing Date including,
but not limited to, (i) all liabilities of Seller for federal, state, local or
foreign taxes arising by reason of the sale of the Acquired Business or
attributable to the operations of the Acquired Business for any taxable year or
portion thereof ending prior to the Closing Date or arising out of the conduct
of the Acquired Business prior to the Closing Date; (ii) all liabilities or
obligations arising out of the termination of any employees of the Acquired
Business prior to or concurrent with the Closing; (iii) any liability of Seller
related to the consummation of the transactions contemplated herein or required
to be paid by Seller pursuant hereto, (iv) any liability of Seller that becomes
a liability of Buyer under any bulk transfer law of any jurisdiction, under any
common law doctrine of de facto merger or successor liability, or otherwise by
operation of law; (v) any liability with respect to any salary, bonus, wages, or
other compensation of any kind owed by Seller to employees of
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Seller for services rendered on or prior to the Closing Date, including any
liability arising under the Employment Agreement, dated as of April 3, 2001, by
and among the Seller and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and (vi) against which Seller is
insured or otherwise indemnified by others, to the extent of the applicable
insurance policy or indemnity limit (collectively, the "Excluded Liabilities"
and individually, an "Excluded Liability"). Seller shall remain fully liable for
the Excluded Liabilities.
2.4. Allocation of the Purchase Price. Within a reasonable time after
the Closing Date Balance Sheet has been finally determined pursuant to Section
2.1.1, the parties shall execute the Allocation Agreement substantially in the
form of EXHIBIT B (including appropriate adjustment to SCHEDULE 1 thereto)
attached hereto.
2.5. Transfer Taxes and Fees. Seller shall be responsible for any
documentary and transfer taxes and any sales, use or other taxes imposed by
reason of the transfer of assets provided hereunder and any deficiency, interest
or penalty asserted with respect thereto.
2.6. Security Agreements; Pledge Agreement. The Senior Note A and the
Senior Note B shall be secured by a security agreement substantially in the form
of EXHIBIT C-1 attached hereto (the "Senior Security Agreement") providing the
Seller with a senior security interest in all of the Purchased Assets. The
Junior Note shall be secured by a security agreement substantially in the form
of EXHIBIT C-2 attached hereto (the "Junior Security Agreement") providing the
Seller with a security interest in all of the Purchased Assets, which shall be
subordinate to the security interest securing payment of the Senior Note A and
the Senior Note B (the "Senior Notes"), and any security interest in some or all
of the Purchased Assets (the "Security Interest") granted hereafter by Buyer to
a bank, a lending institution regularly engaged in the business of lending money
or a specialty finance company (the "Lender"); provided, however, the Lender
shall not be an affiliate of the Buyer and the Junior Note shall be subordinate
to only one Lender at any given time. Buyer hereby authorizes the filing by
Seller of such UCC-1 financing statements as Seller deems reasonably necessary
to perfect Seller's security interest in the Purchased Assets. The Seller agrees
to execute a subordination agreement or any other document reasonably requested
by the Lender to subordinate Seller's security interest granted pursuant to the
Junior Security Agreement to the Security Interest. The Senior Note A, the
Senior Note B and the Junior Note shall each be further secured by a pledge and
irrevocable proxy security agreement substantially in the form of Exhibit C-3
attached hereto (the "Pledge Agreement") providing the Seller with a security
interest in all of the issued and outstanding capital stock of the Buyer.
3. CLOSING.
3.1. Time and Place of the Closing. The parties will use their good
faith effort to assure that the closing of the purchase and sale of the
Purchased Assets takes place at 10:00 a.m. PST at the offices of the Seller at
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, on December 4, 2001;
provided that the closing may take place at such other time, date or location as
the parties hereto may mutually agree upon, but in no event later than December
20, 2001. Throughout this Agreement, such event is referred to as the "Closing"
and such date and time are referred to as the "Closing Date."
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3.2. Procedure at the Closing. At the Closing, the parties agree to
take the following steps in the order listed below (provided, however, that upon
their completion all such steps shall be deemed to have occurred
simultaneously):
3.2.1. Buyer shall execute and deliver to Seller the Senior
Note A, the Senior Note B and the Junior Note referenced in Section 2.1 above.
3.2.2. Buyer shall execute and deliver to Seller the Senior
Security Agreement, the Junior Security Agreement and the Pledge Agreement
referenced in Section 2.6 above.
3.2.3. Seller shall deliver to Buyer a Certificate
substantially in the form of EXHIBIT D hereto, certifying that each of the
conditions to the obligation of Buyer to purchase the Purchased Assets from
Seller which is set forth in Section 8 of this Agreement has been satisfied.
3.2.4. Buyer shall deliver to Seller a Certificate
substantially in the form of EXHIBIT E hereto, certifying that each of the
conditions to the obligations of Seller to sell the Purchased Assets to Buyer
which is set forth in Section 9 in this Agreement has been satisfied.
3.2.5. Seller shall deliver to Buyer such deeds, bills of
sale, endorsements, assignments, lease assignments and estoppel agreements (duly
executed by the lessor under the leases) and other instruments, including a ▇▇▇▇
of Sale substantially in the form of EXHIBIT F hereto, as shall be sufficient to
vest in Buyer good and marketable title to the Purchased Assets, free and clear
of all Encumbrances other than Permitted Encumbrances.
3.2.6. Buyer shall deliver to Seller an instrument,
substantially in the form of EXHIBIT G hereto, as shall be sufficient to effect
the assumption by Buyer of the Assumed Liabilities.
3.2.7. Buyer and Seller shall execute and deliver the Sublease
Agreement substantially in the form of EXHIBIT H hereto relating to the sublease
by Buyer of the facility located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, which sublease shall provide for a term through December 31,
2004, but which shall allow Buyer to terminate the sublease at anytime upon
ninety (90) days prior written notice.
3.2.8. Buyer and Zila shall execute and deliver the
Distribution Agreement substantially in the form of EXHIBIT I hereto pursuant to
which Seller shall agree to sell Buyer certain products, including Peridex and
Pro-Ties.
3.2.9. Buyer and Zila shall execute and deliver the Zila
Restrictive Covenant Agreement and Buyer and FS Buyer shall execute and deliver
the Transition Agreement (as defined in Section 8.9.).
3.2.10. Seller will deliver to Buyer all leases, contracts,
commitments, agreements, and rights of Seller to be transferred by Seller to
Buyer pursuant hereto, with assignments thereof and consents to the assignment
thereof as may be necessary, in the opinion of Buyer's counsel, to assure Buyer
of the full benefit of such leases, contracts, commitments,
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agreements, and rights. Seller shall deliver to Buyer all books, records, and
other data relating to the Purchased Assets, the Assumed Liabilities, and the
business and operation of the Acquired Business.
4. REPRESENTATIONS AND WARRANTIES OF SELLER AND ZILA.
In order to induce Buyer to enter into this Agreement and to consummate
the transactions contemplated hereunder, Seller and Zila, jointly and severally,
make the following representations and warranties as of the date hereof and as
of the Closing Date:
4.1. Organization, Power and Authority of Seller. Seller is a
corporation duly organized and legally existing in good standing under the laws
of Kentucky and has full corporate power and authority to carry on the Acquired
Business as it is now being conducted, to own and lease the Purchased Assets, to
enter into this Agreement and to carry out the transactions and agreements
contemplated hereby. Zila is a corporation duly organized and legally existing
in good standing under the laws of Delaware and has full corporate power and
authority to enter into this Agreement and to carry out the transactions and
agreements contemplated hereby. The Seller is in good standing and authorized to
do business in each jurisdiction in which the character of the Acquired Business
makes such qualification necessary except for such jurisdictions where the
failure to be in such standing and so authorized will not have a material
adverse affect on the financial condition, business or operations of the
Acquired Business or the ability of the Seller to perform its obligations
hereunder. Seller has provided Buyer with a true and complete copy of its
articles of incorporation and bylaws.
4.2. No Involvement of Subsidiaries and Affiliates. The Acquired
Business is operated solely by Seller and Seller has never owned or controlled,
and does not own or control, directly or indirectly, any stock, partnership
interest, joint venture interest or other security, equity participation or
interest in any corporation, partnership, trust or other business organization
that performs services for, or conducts business with, the Acquired Business.
4.3. Financial Statements of the Acquired Business. Seller has
delivered to Buyer the following financial statements relating to the Acquired
Business, copies of which are attached as SCHEDULE 4.3: (i) unaudited balance
sheet as of July 31, 2001; (ii) unaudited statements of income for the twelve
(12) month periods ended July 31, 2000 and July 31, 2001; (iii) unaudited
interim balance sheet dated September 30, 2001 (the "September 30 Balance
Sheet") and (iv) unaudited interim statement of income for the two month period
ended September 30, 2001. The foregoing financial statements (collectively the
"Financial Statements") were prepared in accordance with GAAP which have been
consistently applied through the respective periods and present fairly,
accurately and completely the financial condition of the Acquired Business at
each of such balance sheet dates and the results of its operations for each of
the periods covered; provided, however, that the unaudited interim financial
statements are subject to normal year-end adjustments and are without footnotes
and other presentation items. The reserves reflected in the Financial Statements
are adequate. The statements of income included in the Financial Statements do
not contain any items or special or nonrecurring income, and the balance sheets
included in the Financial Statements do not reflect any write-ups or revaluation
increasing the
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book value of any assets, nor have there been any transactions since September
30, 2001, giving rise to special or nonrecurring income or any write-up or
revaluation.
4.4. Liabilities of Seller. Except as set forth in SCHEDULE 4.4 and
except as and to the extent set forth on the September 30 Balance Sheet,
including the notes thereto, Seller does not have any liabilities or obligations
of any nature relating to the Acquired Business (whether accrued, absolute,
contingent or otherwise) that would be required to be reflected on a balance
sheet or in notes thereto prepared in accordance with generally accepted
accounting principles, except for liabilities or obligations incurred in the
ordinary course of business in amounts and for terms consistent, individually
and in the aggregate, with the past practice of Seller.
4.5. Tax Matters.
4.5.1. Except as set forth on SCHEDULE 4.5.1, Seller has
timely filed all tax returns and reports required to be filed by it, including,
without limitation, all federal, state and local tax returns, and has paid in
full or made adequate provision by the establishment of reserves for all taxes
and other charges which have become due or which are attributable to the conduct
of the Acquired Business or ownership of the Purchased Assets prior to Closing.
Seller will continue to make adequate provision for all such taxes and other
charges for all periods through the Closing Date. Except as set forth on
SCHEDULE 4.5.1, Seller has no knowledge of any tax deficiency proposed or
threatened against Seller relating to the Acquired Business. There are no tax
liens upon the Acquired Business or the Purchased Assets.
4.5.2. Except as set forth on SCHEDULE 4.5.2, all taxes and
other assessments and levies which Seller was required by law to withhold or to
collect have been duly withheld and collected, and have been paid over to the
proper governmental entity.
4.6. Real Property.
4.6.1. Seller does not own any real property used by the
Acquired Business.
4.6.2. The leases described in SCHEDULE 4.6 cover all of the
real estate leased, used or occupied by Seller in connection with its Acquired
Business (collectively, the "Real Property"). Except as set forth in SCHEDULE
4.6, the leases described in SCHEDULE 4.6 are in full force and effect and
Seller holds a valid and existing leasehold interest under each of such leases.
Seller has delivered to Buyer complete and accurate copies of such of the leases
described in SCHEDULE 4.6 and none of such leases has been modified, except to
the extent that such modifications are disclosed by the SCHEDULE 4.6. Seller is
not in default and no circumstances exist which would result in a default, under
any of such leases, and no other party to such leases has the right to
terminate, accelerate performance under or otherwise modify (including upon the
giving of notice or the passage of time) any of such leases. No lessor under any
such lease is in default under any of such leases.
4.6.3. Except as set forth on SCHEDULE 4.6, Seller has not
assigned, transferred, conveyed, mortgaged, deeded in trust, granted a security
deed, subleased or encumbered any interest in any of the leaseholds or
subleaseholds described in SCHEDULE 4.6.
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4.7. Good Title to and Condition of Purchased Assets.
4.7.1. Seller has good and marketable title to all of the
Purchased Assets (other than its interest in its leasehold premises and leased
personal property set forth on SCHEDULE 2.2 and SCHEDULE 4.6), free and clear of
all Encumbrances, except for (i) Encumbrances for current taxes, assessments or
government charges or levies on property not yet due or delinquent or which are
being contested in good faith and for which adequate reserves have been
established; (ii) Encumbrances related to the Assumed Liabilities and (iii)
Encumbrances that will be terminated or released in connection with the Closing.
(Encumbrances of the type described in clauses (i), (ii) and (iii) above are
sometimes referred to as "Permitted Encumbrances") which are set forth in
SCHEDULE 4.7.1.
4.7.2. The inventory and supplies of Seller consist of items
of a quality and quantity usable and saleable in the normal course of Seller's
Acquired Business at values in the aggregate at least equal to the values at
which such items are carried on its books. All inventories of Seller are of such
quality as to meet the usual and customary quality control standards of the
Acquired Business and any applicable governmental body. The values of inventory
included in the Purchased Assets which is obsolete, slow moving, or below
standard quality, if any, have been written down to the lower of cost or
realizable market values or have been written off. The value at which such
inventories are carried on the September 30 Balance Sheet and the Closing Date
Balance Sheet reflects, or will reflect, the normal inventory valuation policies
of Seller, stating inventories at the lower of cost or market, all determined in
accordance with GAAP. Except as set forth in SCHEDULE 4.7.2 hereto, the
Purchased Assets constituting property, plant, equipment and other personal
property (i) have in all material respects been properly maintained and (ii) are
in all material respects in good operating condition and repair, subject only to
ordinary wear and tear. Substantially all of Seller's equipment related to the
Acquired Business has been reasonably maintained and is in serviceable
condition, reasonable wear and tear excepted.
4.8. Receivables of Seller. Seller has previously delivered to Buyer a
complete list of all Receivables of Seller as of September 30, 2001, including
accounts receivable, notes receivable and insurance proceeds receivable, which
lists are attached hereto as SCHEDULE 4.8. Except for any reserve for bad debts
shown on the September 30 Balance Sheet, all of the receivables listed thereon
or arising since the date thereof were, as of the dates as of which the
information is given therein, and as of the Closing Date will be valid
Receivables which are or will be current and/or have the aging set forth in
SCHEDULE 4.8 and shall otherwise be subject to the terms of payment as shall
have been agreed upon between Seller and each customer and as have been
disclosed by Seller to Buyer. The allowance for doubtful accounts reflected on
the September 30 Balance Sheet and on the books of Seller were determined in
accordance with GAAP and were and are reasonable in light of historical data and
other relevant information.
4.9. Intellectual Property.
4.9.1. All patents, trademarks, trade names, service marks,
trade dress, internet domain names, copyrights and any renewal rights therefor,
technology, supplier lists, customer lists, trade secrets, know-how, computer
software programs or applications in both
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source and object code form, technical documentation of such software programs,
registrations and applications for any of the foregoing and all other tangible
or intangible proprietary information or materials that are or have been used in
(including, without limitation, in the development of) the Acquired Business
and/or in any product, technology or process (i) currently being or formerly
manufactured, published or marketed by the Acquired Business or (ii) previously
or currently under development for possible future manufacturing, publication,
marketing or other use by the Acquired Business are hereinafter referred to as
the "Intellectual Property."
4.9.2. SCHEDULE 4.9.2 contains a true and complete list of
Seller's patents, patent applications, trademarks, trademark applications, trade
names, service marks, service ▇▇▇▇ applications, internet domain names, internet
domain name applications, copyrights and copyright registrations and
applications and other filings and formal actions made or taken pursuant to
Federal, state, local and foreign laws by Seller to protect its interests in the
Intellectual Property.
4.9.3. All of the Intellectual Property consists solely of
items and rights which are: (i) owned by Seller; (ii) in the public domain or
(iii) rightfully used by Seller pursuant to a valid license (the "Licensed
Intellectual Property"), the parties, date, term and subject matter of each such
license agreement being set forth on SCHEDULE 4.9.3. Except for those
encumbrances that would not individually or collectively materially impact the
value or materially impair the use of the Intellectual Property, Seller has all
rights in Intellectual Property necessary to carry out the Acquired Business'
current activities (and has all rights necessary to carry out its former
activities at the time such activities were being conducted), including, without
limitation, to the extent required to carry out such activities, rights to make,
use reproduce, modify, adopt, create derivative works based on, translate,
distribute (directly and indirectly), transmit, display and perform publicly,
license, rent and lease and, other than with respect to the Licensed
Intellectual Property, assign and sell, the Intellectual Property.
4.9.4. The reproduction, manufacturing, distribution,
licensing, sublicensing, sale or any other exercise of rights in any
Intellectual Property, product, work, technology or process as now used or
offered or proposed for use, licensing or sale by Seller does not infringe on
any copyright, trademark, service ▇▇▇▇, trade name, trade dress, firm name,
internet domain name, logo, trade dress, mask worn or of any person or the
patent, or misappropriate any trade secret, of any person or entity. No claims
(i) challenging the validity, effectiveness or, other than with respect to the
Licensed Intellectual Property, ownership by Seller of any of the Intellectual
Property or (ii) to the effect that the use, distribution, licensing,
sublicensing, sale or any other exercise of rights in any product, work,
technology or process as now used or offered or proposed for use, licensing,
sublicensing or sale by Seller infringes or will infringe on, or be considered a
misappropriation of, any intellectual property or other proprietary right of any
person have been asserted or, to the knowledge of Seller, are threatened by any
person, nor are there, to Seller's knowledge, any valid grounds for any bona
fide claim of any such kind. All registered, granted or issued patents,
trademarks, Internet domain names and copyrights held by Seller are enforceable
and subsisting. There is no unauthorized use, infringement or misappropriation
of any of the Intellectual Property by any third-party, employee or former
employee.
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4.9.5. All personnel, including employees, agents, consultants
and contractors, who have contributed to or participated in the conception and
development of the Intellectual Property on behalf of Seller, have executed
nondisclosure agreements, a form of which has been provided to Buyer, and either
(i) have been a party to a "work-for-hire" arrangement or agreements with Seller
in accordance with applicable national and state law that has accorded Seller,
full, effective, exclusive and original ownership of all tangible and intangible
property thereby arising or (ii) have executed appropriate instruments of
assignment in favor of Seller as assignee that have conveyed to Seller effective
and exclusive ownership of all tangible and intangible property thereby arising.
4.9.6. Seller is not, nor as a result of the execution or
delivery of this Agreement, or performance of Seller's obligations hereunder,
will Seller be, in violation of any license, sublicense, agreement or instrument
to which Seller is a party or otherwise bound, nor will execution or delivery of
this Agreement, or performance of Seller's obligations hereunder, cause the
diminution, termination or forfeiture of any Intellectual Property except as set
forth on SCHEDULE 4.9.6.
4.9.7. SCHEDULE 4.9.7 contains a true and complete list of all
of Seller's proprietary software programs (the "Software Programs") related to
the Acquired Business. Seller owns a full and unencumbered right and has good,
valid and marketable title to the Software Programs, free and clear of all
mortgages, pledges, liens, security interests, conditional sales agreements,
encumbrances or charges of any kind.
4.9.8. The source code and system documentation relating to
the Software Programs (i) have at all times been maintained in strict
confidence; (ii) have been disclosed by Seller only to (1) employees who have a
"need to know" the contents thereof in connection with the performance of their
duties to Seller and who have entered into the nondisclosure agreements referred
to in Section 4.9.5 or (2) third parties who have first entered into a written
nondisclosure agreement sufficient to maintain the confidentiality of the source
code and system documentation.
4.10. Adequacy of Purchased Assets. The Purchased Assets, and the
rights provided under the Transition Agreement (subject to the limitations set
forth therein), constitute, in the aggregate, all of the property necessary for
the conduct of the Acquired Business in the manner in which and to the extent to
which it is currently being conducted.
4.11. Contracts; Insurance.
4.11.1. SCHEDULE 4.11.1 accurately and completely sets forth a
true and complete list of all of the contracts (other than contracts arising
from purchase orders from Seller's customers or to Seller's vendors in the
ordinary course of business) of Seller which are material (solely for purposes
of this Section 4.11.1, a contract shall be "material" if it includes the
committed future expenditure by Seller in any twelve (12) month period of at
least Ten Thousand and No/100 Dollars ($10,000.00)) to the Purchased Assets or
the Acquired Business (the "Material Contracts"). The contracts listed on
SCHEDULE 4.11.1 together with the License Agreements listed on SCHEDULE 4.9.3
are referred to herein as the "Material Contracts." Seller
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has previously furnished Buyer with a true and complete copy of each such
agreement, contract or commitment listed in SCHEDULE 4.11.1. There has not been
any default in any obligation to be performed by Seller, nor to the best
knowledge of Seller, any other party, under any such agreement, contract or
commitment. Except as set forth on SCHEDULE 4.9.3 and SCHEDULE 4.11.1, Seller is
not a party to or bound by any other Material Contracts. All Material Contracts
have been entered into in the ordinary course of business, are on normal and
reasonable commercial terms.
4.11.2. Seller carries insurance, which is customary in scope
and reasonable in character and amount, with reputable insurers, covering all of
the assets and properties relating to the Acquired Business, and it has provided
all required performance or other surety bonds. All premiums and other payments
which become due under the policies of insurance listed in SCHEDULE 4.11.2 have
been paid in full and, to the extent relating to periods prior to the Closing
Date, will be paid in full on or prior to the Closing Date. All of such policies
are now in full force and effect and Seller has received no notice from any
insurer, agent or broker of the cancellation of, or any increase in premium with
respect to, any of such policies or bonds. No insurer has the right to make
retrospective premium adjustments with respect to any of such policies. Except
as set forth in SCHEDULE 4.11.2, Seller has received no notification from any
insurer, agent or broker denying or disputing any claim made by Seller or
denying or disputing any coverage for any such claim or the amount of any claim.
Except as set forth in SCHEDULE 4.11.2, Seller has no claim against any of its
insurers under any of such policies pending or anticipated and there has been no
occurrence of any kind, which would give rise to any such claim.
4.12. Litigation Involving Seller. Except as set forth on SCHEDULE
4.12, there are no actions, suits, claims, governmental investigations or
arbitration proceedings pending or, to the best knowledge of Seller, threatened
against or affecting Seller or any of its assets or properties with respect to
or relating to (i) the Acquired Business; (ii) the ownership or operation of the
Purchased Assets or (iii) the transactions contemplated by this Agreement. There
are no outstanding orders, decrees or stipulations issued by any federal, state,
local or foreign judicial or administrative authority in any proceeding to which
Seller is or was a party and which relates to (i) the Acquired Business; (ii)
the ownership or operation of the Purchased Assets or (iii) the transactions
contemplated by this Agreement.
4.13. No Adverse Change. Since July 31, 2001, all changes in the
business or properties relating to the Acquired Business, or in its financial
condition, including changes occurring in the ordinary course of business, have
not had or will not have a material adverse effect on the business, properties,
financial condition, business prospects or operating results of the Acquired
Business. There is not, to the best knowledge of Seller, any threatened event or
condition of any character whatsoever that could have a material adverse affect
on the assets, properties, business, financial condition or results of
operations of the Acquired Business.
4.14. Absence of Certain Acts or Events. Since July 31, 2001, Seller
has conducted the Acquired Business only in the ordinary course consistent with
past practices. Except as set forth in SCHEDULE 4.14, since July 31, 2001, with
respect to the Acquired Business, during such period:
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4.14.1. Neither the business, properties nor assets of Seller
related to the Acquired Business has suffered a material adverse loss (whether
or not covered by insurance), as a result of fire, explosion, earthquake,
accident, labor trouble, condemnation or taking of property by any governmental
entity, flood, windstorm, pestilence, embargo, riot, act of God or the public
enemy or any other casualty of similar event;
4.14.2. Seller has not made any acquisition of all or any part
of the assets, properties, capital stock or business of any other entity, other
than inventory, equipment and supplies acquired in the ordinary course of
business consistent with past practice;
4.14.3. Seller has not, except in the ordinary course of
business consistent with past practice, sold or otherwise disposed of any
material assets of Seller related to the Acquired Business;
4.14.4. Seller has not sold, assigned, transferred, conveyed
or licensed, or committed itself to sell, assign, transfer, convey or license,
any Intellectual Property (as defined in Section 4.9.1), other than in the
ordinary course of business;
4.14.5. Except with Buyer's prior written consent, Seller has
not waived or released any right or claim of material value to the Acquired
Business, including any write-off or other compromise of any material account
receivable of Seller otherwise than in the ordinary course of business
consistent with past practice;
4.14.6. Except with Buyer's prior written consent, Seller has
not paid, directly or indirectly, any material liability related to the Acquired
Business before the same became due in accordance with its terms or otherwise
than in the ordinary course of business consistent with past practice;
4.14.7. Except with Buyer's prior written consent, Seller has
not made any wage or salary increase or bonus, or increase in any other direct
or indirect compensation for or to any employee, officer, director, consultant,
agent or other representative related to the Acquired Business, other than to
non-officers or director employees, consultants, agents or other representatives
in the ordinary course of business consistent with past practices;
4.14.8. Except with Buyer's prior written consent, Seller has
not made any loan or advance to any of its equity owners, officers, directors,
employees, consultants, agents or other representatives (other than travel
advances made in the ordinary course of business), or made any other loan or
advance otherwise than in the ordinary course of business consistent with past
practice;
4.14.9. Seller has not pledged or otherwise, voluntarily or
involuntarily, encumbered any assets or property related to the Acquired
Business, except for liens for current taxes which are not yet delinquent and
purchase-money liens arising out of the purchase or sale of products made in the
ordinary and usual course of business and in any event not in excess of Ten
Thousand and No/100 Dollars ($10,000.00) for any single item or Fifty Thousand
and No/100 Dollars ($50,000.00) in the aggregate;
16
4.14.10. Seller has not materially changed any of its
accounting methods, principles, procedures or practices;
4.14.11. Seller has not materially changed any of its business
policies or practices, including advertising, marketing, pricing, purchasing,
personnel, sales or budget policies;
4.14.12. Seller has not suffered or incurred any damage,
destruction or loss, whether or not covered by insurance, which will have or
could reasonably be expected to have a material adverse effect on the Acquired
Business; and
4.14.13. Seller has not entered into any agreement to do any
of the foregoing other than the agreement to sell the FS Business to the FS
Buyer.
4.15. Compliance With Laws by Seller. Seller is in material compliance
with all laws, regulations and orders applicable to the Purchased Assets or the
Acquired Business. Seller has not received notification of any asserted past or
present failure to comply with any such laws, regulations and orders.
4.16. Employment and Labor Matters.
4.16.1. SCHEDULE 4.16 lists all employees and agents who on
the date hereof perform services on a regular basis in the Acquired Business
operations of or for Seller. In addition, Seller shall deliver to Buyer prior to
Closing the current salary and bonus level, and date of employment for each of
such employees and agents. No such employee or agent has terminated or given
notice of termination of his employment as of the date hereof, nor, to the
knowledge of Seller, plans to refuse employment with Buyer after the Closing
Date.
A. Prior to the Closing Date, Buyer may offer
employment to commence on or after the Closing Date to any or all of the
employees of Seller related to the Acquired Business as it may determine. Buyer
shall have full and absolute discretion in determining the terms, conditions and
benefits relating to such offered employment. Nothing in this Agreement shall
obligate Buyer to employ any employee of Seller or to offer employment to any
employee of Seller on the same terms or conditions or with the same benefits
offered by Seller. Nothing in this Agreement shall create any claim or right on
the part of any employee of Seller and no such employee shall be entitled to
assert any claim or right hereunder. Seller agrees to reasonably cooperate with
Buyer, and Buyer similarly agrees to reasonably cooperate with Seller, in
connection with any notices required by law including, without limitation, the
WARN Act and its state law equivalent and regarding any written communications
made to the employees of Seller during the period from the date hereof until the
Closing Date which relate to the transactions contemplated by this Agreement.
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B. With respect to the group medical and dental
plan(s) sponsored and maintained by the Seller (excluding any flexible spending
arrangements of Seller providing group health benefits) (the "Seller Medical
Plan(s)"), Seller acknowledges that the Buyer intends that the employees hired
by Buyer and the dependents of such employees who were covered under the Seller
Medical Plan(s) as of the Closing will be entitled to receive group health
coverage under a group health plan of the Buyer immediately upon the Closing.
C. Seller shall remain liable for all "Seller Employee
Liabilities," regardless of when or how such liability arose, and regardless of
whether such liability may result in or has resulted in a claim upon the
Purchased Assets. For purposes of the preceding sentence, the term "Seller
Employee Liabilities" shall mean any claims, liabilities, costs, expenses or
compensation which exist, which arise by reason of, or which are in any way
connected with or based on (i) an employee's employment relationship with Seller
and/or the termination of such relationship; (ii) foreign, federal, state,
county or municipal fair employment practices act and/or any law, ordinance or
regulation promulgated by any foreign, federal, state, county, municipality or
other state subdivision as applied to employees of Seller; (iii) interference
with and/or breach of contract with employees of Seller; (iv) retaliatory or
wrongful discharge of any employee of Seller; (v) intentional or negligent
infliction of emotional distress or mental anguish upon employees of Seller;
(vi) outrageous conduct with respect to employees of Seller; (vii) interference
with business relationships, contractual relationships or employment
relationships involving employees of Seller and any third party; (viii) breach
of duty, fraud, fraudulent inducement to contract, breach of right of privacy,
libel, slander, or tortuous conduct of any kind with respect to employees of
Seller; (ix) violations of Title VII of the Civil Rights Act of 1964 and/or the
Civil Rights Act of 1991 and/or 42 U.S.C. Section 1981 with respect to employees
of Seller; (x) violations of the Age Discrimination in Employment Act of 1967,
the Age Discrimination Claims Assistance Act of 1988 and/or the Older Workers'
Benefit Protection Act with respect to employees of Seller; (xi) violations of
state or federal handicap or disability discrimination laws or acts, including,
but not limited to, the Rehabilitation Act of 1973 and the Americans with
Disabilities Act with respect to employees of Seller; (xii) discriminatory or
wrongful acts against employees of Seller; (xiii) violations of ERISA or the
Family and Medical Leave Act with respect to employees of Seller; (xiv)
violations of the workers' compensation laws of any state or other jurisdiction
or (xv) violations of any other federal, state, county or municipal law or
regulation with respect to employees of Seller.
4.16.2. Seller has complied, in all material respects, with
all applicable federal, state and local laws, rules and regulations and
ordinances respecting health, safety and working conditions of its employees,
including, without limitation, the Occupational Safety and Health Act of 1970,
Pub. L. 91-596, as amended, and all similar applicable federal, state and local
laws, rules, regulations and ordinances, and has provided Buyer with copies of
all reports filed and notices provided under any such laws, rules, regulations
and ordinances during the last five (5) years. Seller's operations relating to
the Acquired Business do not involve any unusual risk to the health or safety of
its employees (including, without limitation, any risk associated with hazardous
airborne contaminants or hazardous chemicals or waste materials).
4.16.3. Except as set forth on SCHEDULE 4.16.3, Seller is not
a party to any agreement, contract or arrangement, written or oral, providing
for any payments to any person
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resulting from the consummation of the transactions contemplated hereby.
Seller's obligation to make any such payments shall constitute Excluded
Liabilities.
4.17. Employee Benefits Matters.
4.17.1. SCHEDULE 4.17.1 sets forth a complete and accurate
listing and description of all plans, agreements, arrangements, commitments,
policies or understandings of any kind (whether written or oral) related to the
Acquired Business (i) which relate to present or former employees, retirees, or
independent contractors (or their beneficiaries, dependents or spouses) of
Seller and of the Acquired Business and (ii) which are currently, were within
the last seven (7) years, or are expected to be, adopted, maintained by,
sponsored by, or contributed to by, Seller, any of its predecessors in interest
or any ERISA Affiliate of Seller, or as to which Seller, any of its predecessors
in interest or any ERISA Affiliate of Seller has any ongoing liability or
obligation whatsoever, including, but not limited to, all employee benefit plans
as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), deferred compensation, early retirement, incentive,
profit-sharing, thrift, stock ownership, stock appreciation, bonus, stock
option, stock purchase, welfare, nonqualified benefit, and fringe benefit plans
as defined in Section 6039D of the Internal Revenue Code of 1986, as amended
(the "Code") (hereinafter, such plans, agreements, etc., are referred to as the
"Plan" or "Plans"). For purposes of this Agreement, the term ERISA Affiliate of
Seller shall mean any other entity or person whose employees would, along with
the employees of Seller, be treated as employed by a single employer under Code
Section 414(b), (c), (m) or (o), and/or under Sections 210 and/or 4001 of ERISA.
Seller has provided to Buyer true, correct and complete copies of all documents
relating to the Plans which it has requested, with all amendments, modifications
and supplements thereto, including, without limitation, all plan texts (and
amendments thereto), all trust agreements (if any), all insurance and annuity
contracts (if any), all summary plan descriptions and annual reports (if any)
for the most recent three (3) years, and all correspondence with the I.R.S. or
the U.S. Department of Labor concerning such Plans.
A. Seller, its predecessors in interest and all ERISA
Affiliates of Seller have complied in all respects with all of their respective
obligations under applicable law (including the Code and ERISA) with respect to
the Plans, and have maintained the Plans in compliance with all applicable laws
and regulations.
B. Neither Seller nor any ERISA Affiliate of Seller
contributes to, ever has contributed to, or ever has been required to contribute
to any pension plan (as defined in ERISA Section 3(35)), any pension plan (as
defined in ERISA Section 3(2) subject to the minimum funding standards of Code
Section 412 and/or any multi-employer plan (as defined in ERISA Section
3(37)(A)), and neither Seller nor any ERISA Affiliate of Seller has any
liability (including withdrawal liability) under or with respect to any pension
plan and/or multi-employer plan.
C. There is no liability of Seller or any ERISA
Affiliate of Seller with respect to any Plan which could result in the
imposition of any liability being imposed upon Buyer after the Closing of the
transactions contemplated by this Agreement, including, but not limited to, any
minimum funding liability under ERISA Section 302 or Code Section 412, any plan
termination liability under ERISA Sections 4041, 4042, 4062, 4068 and/or
4069, multi-employer plan
19
liabilities under ERISA Section 4201-4205 or 4212, COBRA liability under
Code Section 4980B or ERISA Section 601 through 608.
D. The parties hereto agree that Buyer shall have no
liability with respect to any Plan.
4.17.2. With respect to each Plan to the extent applicable:
A. No litigation or administrative or other proceeding
is pending or threatened involving such Plan.
B. The Plan has been administered and operated in
substantial compliance with, and has been amended to comply with all applicable
laws, rules, and regulations, including, without limitation, ERISA, the Internal
Revenue Code, and the regulations issued under ERISA and the Internal Revenue
Code.
C. Seller has made and as of the Closing Date will
have made or accrued, all payments and contributions required, or reasonably
expected to be required, to be made under the provisions of such Plan or
required to be made under applicable laws, rules and regulations, with respect
to any period prior to the Closing Date, such amounts to be determined using the
ongoing actuarial and funding assumptions of the Plan.
D. Such Plan is and on the Closing Date will be fully
funded in an amount sufficient to pay all liabilities accrued (including
liabilities and obligations for health care, life insurance and other benefits
after termination of employment) and claims incurred to the date hereof and to
the Closing Date, or the Closing Date Balance Sheet contains adequate reserves
or paid-up insurance has been provided, therefor.
E. Such Plan has been administrated and operated only
in the ordinary and usual course and in accordance with its terms, and there has
not been in the four (4) years prior hereto any increase in the liabilities of
such Plan beyond increases typically experienced by employers similar to Seller.
4.17.3. The parties hereto agree that Buyer shall have no
liability with respect to any "Seller Controlled Group Plan." The preceding
sentence applies to any liability (herein "Seller Controlled Group Plan
Liabilities") with respect to a "Seller Controlled Group Plan," regardless of
when or how such liability arose, regardless of whether such liability involves
employees of the Acquired Business, and regardless of whether such liability may
result in or has resulted in a claim upon the assets purchased under this
Agreement. For purposes of this Agreement, the term "Seller Controlled Group
Plan" shall mean each and every plan, agreement, arrangement, commitment, policy
or understanding of any kind (whether written or oral) (i) which relate to
present or former employees, directors, retirees, or independent contractors (or
their beneficiaries, dependents or spouses) of the Seller or (ii) which are
currently, were, or are expected to be, adopted, maintained by, sponsored by, or
contributed to by, the Seller, any of its predecessors in interest or any ERISA
Affiliate of the Seller, or as to which the Seller, any of its predecessors in
interest or any ERISA Affiliate of the Seller has any ongoing liability or
20
obligation whatsoever, including, but not limited to, employee benefit plans as
defined in ERISA Section 3(3), deferred compensation, early retirement,
incentive, profit-sharing, thrift, stock ownership, stock appreciation, bonus,
stock option, stock purchase, welfare, nonqualified benefit, and fringe benefit
plans as defined in Code Section 6039D.
4.18. Due Authorization; Binding Obligation. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by necessary corporate action of
each of Seller and Zila. This Agreement has been duly executed and delivered by
each of Seller and Zila and is a valid and binding obligation of each of Seller
and Zila, enforceable in accordance with its terms. Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will: (i) conflict with or violate any provision of the articles of
incorporation or bylaws of Seller or Zila, or of any law, ordinance or
regulation or any decree or order of any court or administrative or other
governmental body which is either applicable to, binding upon or enforceable
against Seller or (ii) result in any breach of or default under any mortgage,
contract, agreement, indenture, will, trust or other instrument which is either
binding upon or enforceable against Seller or Zila or the assets and properties
of Seller or Zila. Without limiting the generality of the foregoing, neither
Seller nor Zila is a party to any continuing agreement or understanding, made by
it or on its behalf, which limits in any way the ability of: (i) Seller or Zila
to enter into this Agreement and perform its obligations hereunder; (ii) Seller
or Zila to sell the Purchased Assets to Buyer, all on the terms and subject to
the conditions set forth herein or (iii) Seller or Zila to consummate the
transactions contemplated hereby, nor has Seller or Zila breached any such
agreement, which breach would entitle the other party thereto to any equitable
or monetary remedies.
4.19. Consents and Approvals. Except as set forth in SCHEDULE 4.19, no
consent, authorization or approval of, or exemption by, or filing with, any
governmental, public or self-regulatory body or authority (a "Governmental
Agency") or any other third party, including, without limitation, the licensors
of any Software, is required in connection with the execution, delivery and
performance by Seller of this Agreement or the consummation of the transactions
contemplated hereby or thereby.
4.20. Accuracy of Information Furnished by Zila or Seller. No
representation, statement or information in writing made or furnished by Zila or
Seller to Buyer, including, without limitation, those contained in this
Agreement and the various schedules attached hereto and the other information
and statements previously furnished by Zila or Seller to Buyer in writing,
contains or shall contain any untrue statement of a material fact or omits or
shall omit any material fact necessary to make the information contained therein
in light of circumstances in which they were made, not misleading.
4.21. Books and Records. The books of account and other financial
records to be transferred to Buyer pursuant hereto are complete and correct, are
maintained in accordance with all applicable laws, and are accurately reflected
in the Financial Statements.
4.22. Customers and Suppliers. At Closing, Seller shall deliver to
Buyer a complete list of all of Seller's customers and suppliers related to the
Acquired Business that have received
21
products and services from, or provided products and services to the Acquired
Business within the last three (3) years, which list shall be certified as true
and correct by Seller's President. To Seller's knowledge, Seller's relationship
with its customers and suppliers are good commercial working relationships, and
no material customer or supplier has cancelled or otherwise terminated, or
threatened to cancel, terminate, limit or modify its relationship with Seller
since July 31, 2000. Seller has no agreements or arrangements establishing,
creating or relating to any rebate, promotion or other allowance that involves
any obligation or liability to any customer that is material or outside the
ordinary course of business other than as may be disclosed herein. Neither
Seller nor Zila has provided the FS Buyer with a copy of, or access to, the list
of customers referenced in this SCHEDULE 4.22.
4.23. Internet Presence. Except as set forth on SCHEDULE 4.23 attached
hereto, Seller does not have any public, private or reserved presence on the
world wide web, multi-party extranet, virtual private network, or similar
internet based, linked system related to the Acquired Business ("Internet
Presence"). Seller's domain name(s), if any, are currently registered with the
currently authorized Internet Domain Name Registrar and are in good standing.
Seller warrants that its Internet Presence, if any, is wholly passive and
informational in nature and involves no interactivity between third parties and
Seller including purchases, sales, leases or other commercial transactions
conducted in any degree by or through the Internet Presence.
4.24. Absence of Certain Business Practices. Except as disclosed in
SCHEDULE 4.24, neither the Seller nor any person acting on its behalf has,
directly or indirectly, within the past six (6) years given or agreed to give
any gift or similar benefit to any customer, supplier, governmental employee or
other person who is or may be in a position to help or hinder the Acquired
Business which (i) might subject the Seller or the Acquired Business to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding; (ii) if not given in the past, might have had an adverse effect on
the financial condition, business or results of operations of the Acquired
Business or (iii) if not continued in the future, might adversely affect the
financial condition, business or operations of the Acquired Business or which
might subject the Seller or the Acquired Business to suit or penalty in any
private or governmental litigation or proceedings.
4.25. Trade Regulation. Except as set forth on SCHEDULE 4.25, (i) all
of the prices charged by the Seller or the Acquired Business in connection with
the marketing, sale or distribution of any products or services have been in
compliance with all applicable laws and (ii) no claims have been communicated
or, to the knowledge of Zila or the Seller, threatened in writing against the
Seller or the Acquired Business with respect to discriminatory pricing, price
fixing, unfair competition, false advertising, or any other violation of any
applicable laws relating to anti-competitive practices or unfair trade practices
of any kind, and to Zila's or the Seller's knowledge, no specific situation, set
of facts, or occurrence provides any basis for any such claim against the Seller
or the Acquired Business.
22
5. REPRESENTATIONS AND WARRANTIES OF BUYER.
In order to induce Seller to enter into this Agreement and consummate
the transactions contemplated hereunder, Buyer makes the following
representations and warranties:
5.1. Organization, Power and Authority of Buyer. Buyer is a corporation
duly organized and validly existing under the laws of the State of Delaware,
with full corporate power and authority to enter into this Agreement and to
carry out the transactions and agreements contemplated hereby.
5.2. Due Authorization; Binding Obligation. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate actions
of Buyer. This Agreement has been duly executed and delivered by Buyer and is a
valid and binding obligation of Buyer, enforceable in accordance with its terms.
Neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) conflict with or violate any provision
of the articles of incorporation or bylaws of Buyer or of any decree or order of
any court or administration or other governmental body which is either
applicable to, binding upon or enforceable against Buyer or (ii) result in any
breach of or default under any mortgage, contract, agreement, indenture, will,
trust or other instrument which is either binding upon or enforceable against
Buyer.
5.3. Litigation. There are no action, suits, or proceedings at law or
in equity or by or before any governmental instrumentality or other agency now
pending or, to the knowledge of Buyer threatened, against Buyer which could have
a material adverse effect on the ability of Buyer to consummate the transactions
contemplated hereby.
5.4. No Brokers. Neither Buyer nor any of its affiliates has employed
or is subject to the valid claim of any broker, finder, consultant or other
intermediary in connection with the transactions contemplated by this Agreement
who will be entitled to a fee or commission in connection with such
transactions.
6. ADDITIONAL COVENANTS OF SELLER.
6.1. Commercial Efforts. Each of Zila and Seller will use its
respective reasonable commercial efforts to cause to be satisfied, as soon as
practicable and prior to the Closing Date, all of the conditions set forth in
Section 8 to the obligation of Buyer to purchase the Purchased Assets.
6.2. Conduct of Acquired Business Pending the Closing. From and after
the execution and delivery of this Agreement and until the Closing Date, except
as otherwise provided by the prior written consent of Buyer, with respect to the
Acquired Business:
6.2.1. Seller will: (i) conduct the Acquired Business and its
operations in substantially the same manner in which the same have heretofore
been conducted; (ii) preserve its business organization intact (other than as
may occur as a result of the sale of the FS Business); (iii) use its reasonable
commercial efforts to keep available the services of its officers,
23
employees, agents and distributors and (iv) use its reasonable commercial
efforts to preserve its relationships with customers, suppliers and others
having dealings with Seller;
6.2.2. Seller will maintain all of its properties in customary
repair, order and condition, reasonable wear and use and damage by unavoidable
casualty excepted, and to maintain insurance of such types and in such amounts
upon all of its properties and with respect to the conduct of its Acquired
Business as are in effect on the date of this Agreement;
6.2.3. Seller will: (i) not sell or transfer any of its assets
other than in the ordinary course of business consistent with past practices
(other than the contemplated sale of the FS Business) or (ii) not incur any
material obligations or liabilities or enter into any material transaction,
contract, arrangement or agreement without the prior written consent of Buyer;
and
6.2.4. Seller will not increase the compensation payable or to
become payable to any director, officer, employee or agent of Seller, make any
profit-share payment or other arrangement (whether current or deferred) to or
with any director, officer, employee or agent, hire any employee, officer or
director, consultant, or agent without the prior written approval of Buyer.
6.3. Access to Acquired Business' Properties and Records. From and
after the execution and delivery of this Agreement, Seller will afford to the
representatives of Buyer access, during normal business hours and upon
reasonable prior notice, to Seller's premises sufficient to enable Buyer to
inspect the assets and properties of the Acquired Business, and Seller will
furnish to such representatives during such period all such information relating
to the foregoing investigation as Buyer may reasonably request; provided,
however, that any furnishing of such information to Buyer and any investigation
by Buyer shall not affect the right of Buyer to rely on the representations and
warranties made by Seller in or pursuant to this Agreement, and, provided
further that Buyer will hold in confidence all documents and information
concerning Seller so furnished.
6.4. Supplements to Schedules. Prior to the Closing Date, Seller will
promptly supplement or amend the Schedules with respect to any matter hereafter
arising which, if existing or occurring at the date of this Agreement, would
have been required to be set forth or described in the Schedules. For purposes
of determining the accuracy of representations and warranties of Seller
contained in Article 4 and for the purpose of determining the fulfillment of the
conditions set forth in Section 8 (but not for purposes of the indemnification's
set forth in Article 11 for which the Schedules shall be deemed to include all
information contained in any supplement or amendment), the Schedules delivered
by Seller shall be deemed to include only that information contained therein on
the date of this Agreement and shall be deemed to exclude any information
contained in any subsequent supplement or amendment thereto.
6.5. Transition Cooperation; Mail Received After Closing. Seller agrees
to reasonably cooperate with Buyer to facilitate the transfer of all utilities
into Buyer's name, including the transfer of telephone numbers, electrical
service, water and sewage. Following the Closing, Buyer may receive and open all
mail addressed to Seller and, to the extent that such mail and the contents
thereof relate solely to the Acquired Business or the Purchased Assets, deal
with the
24
contents thereof at its discretion. Buyer shall notify Seller of (and provide
Seller complete copies of) any mail that obliges Seller to take any action or
indicates that action may be taken against Seller and any mail applicable to
Seller or the Excluded Assets. Following the Closing, Seller agrees to continue
to pay or discharge in a timely manner, or to contest in good faith, all
obligations relating to the Acquired Business which are not Assumed Liabilities.
In addition and notwithstanding any provisions in this Agreement to the
contrary, Seller agrees to promptly reimburse Buyer for any out of pocket
expenses and reasonable and necessary labor charges incurred by Buyer in
responding to questions raised by Zila or Seller following Closing Date with
respect to the operation of the Acquired Business (excluding expenses and
charges incurred by Buyer related to resolving issues that arise pursuant to
this Agreement and the Exhibits attached hereto).
7. ADDITIONAL COVENANTS OF BUYER; AGREEMENTS OF BOTH PARTIES.
7.1. Additional Covenants of Buyer.
7.1.1. Commercial Efforts. Buyer will use its reasonable
commercial efforts to cause to be satisfied, as soon as practicable and prior to
the Closing Date, all of the conditions set forth in Section 9 to the obligation
of Seller to sell the Purchased Assets pursuant to this Agreement.
7.1.2. Security Agreements and Pledge Agreement. Buyer shall
comply with all of the representations and warranties, covenants and agreements
set forth in the Senior Security Agreement, the Junior Security Agreement and
the Pledge Agreement all of which are incorporated herein by this reference.
7.1.3. Expenses and Charges. Notwithstanding any provisions in
this Agreement to the contrary, Buyer agrees to promptly reimburse Seller for
any out-of-pocket expenses and reasonable and necessary labor charges incurred
by Seller or Zila in responding to questions raised by Buyer following Closing
Date with respect to the operation of the Acquired Business (excluding expenses
and charges incurred by Seller or Zila related to resolving issues that arise
pursuant to this Agreement and the Exhibits attached hereto).
7.2. Agreements of Both Parties.
7.2.1. Consent. Each of the parties hereto will use its
commercially reasonable efforts and shall fully cooperate with each other party
to make promptly all registrations, filings and applications, give all notices
and obtain all governmental and third party consents, permits, approvals,
orders, authorities, qualifications, and waivers necessary for the consummation
of the transactions contemplated by this Agreement or that thereafter may be
necessary to effectuate the transfer or renewal of any other license, approval
or authorization.
7.2.2. Further Assurances. 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
25
transactions contemplated by this Agreement. From time to time, after the date
hereof, without further consideration, Seller will execute and deliver such
documents to Buyer as Buyer may reasonably request in order to more effectively
vest in Buyer title to the Purchased Assets.
7.2.3. Cooperation in Litigation.
A. Buyer agrees to take commercially reasonable
actions necessary to make former employees of the Acquired Business available to
Seller after the Closing Date with respect to any action, suit, proceeding or
investigation to which Seller or Zila is a party or is otherwise involved with
regard to the Acquired Business whether commenced before or after the Closing
Date. Seller agrees to reimburse Buyer, and Buyer agrees to reimburse Seller,
for reasonable out-of-pocket expenses and labor costs incurred by Buyer, or
Seller as the case may be, in connection with requests by Seller, or the Buyer
pursuant to this Section 7.2.3. (excluding expenses and charges incurred by
either party relating to resolving issues that arise pursuant to this Agreement
and the Exhibits attached hereto)
B. Seller and Buyer shall cooperate, to the extent
reasonably requested by either of them, in the handling and disposition of any
actions, whether or not listed on the Schedules and whether or not pending or
threatened prior to the Closing, that arise out of or are related to any event
or occurrence with respect to the Acquired Business prior to the Closing.
7.2.4. Preservation of and Access to Books and Records. Buyer
agrees that it shall preserve and keep all books and records of the Acquired
Business and all information relating to the accounting, business, financial and
tax affairs of the Acquired Business in existence on the Closing Date or which
come into existence after the Closing Date, but relate to the Acquired Business
prior to the Closing Date (such books, records and information hereafter
referred to as the "Historical Documentation") for a period of six (6) years
thereafter, or for any longer period (i) as may be required by any federal,
state, local or foreign governmental body or agency; (ii) as may be reasonably
necessary with respect to the prosecution or defense of any audit, suit, action,
litigation or administrative arbitration or other proceeding or investigation
that is then pending or threatened or (iii) that is equivalent to the period
established by any applicable statute of limitations (or any extension or waiver
thereof) with respect to matters pertaining to taxes. Buyer agrees not to
destroy any books, records or other documents containing such information
without the prior written consent of Zila. Buyer shall afford to Zila and its
employees, counsel and other authorized representatives (i) complete access, at
all reasonable times to the books and records of the Acquired Business and all
information relating to such accounting, business, financial or tax affairs
relating to the Acquired Business, concerning (x) any matter relating to this
Agreement; (y) any business of the Acquired Business prior to the Closing or (z)
other business of Seller where Acquired Business information is required and
(ii) reasonable services of Buyer's employees to assist Seller or Zila with
respect to such matters. The Seller agrees to remove all documents and records
not related to the Acquired Business or the FS Business from the Acquired
Business' facilities within seven (7) days following the Closing Date.
7.2.5. Cooperation on Tax Matters. Buyer and Seller agree to
furnish or cause to be furnished to each other, as promptly as practicable, such
information and assistance relating to
26
the Acquired Business as is reasonably necessary for the preparation and filing
of any return, claim for refund or other required or optional filings relating
to tax matters, for the preparation for and proof of facts during any tax audit,
for the preparation of any tax protect, for the prosecution or defense of any
suit or other proceeding relating to tax matters and for the answer to any
governmental or regulatory inquiry relating to tax matters.
8. CONDITIONS TO THE OBLIGATION OF BUYER.
The obligation of Buyer to purchase the Purchased Assets shall be
subject to the fulfillment at or prior to the Closing Date of each of the
following conditions, each of which is for the benefit of Buyer and any one (1)
or more of which may be waived by Buyer:
8.1. Accuracy of Representations and Warranties and Compliance With
Obligations.
A. The representations and warranties of Zila and Seller
contained in this Agreement shall have been true and correct at and as of the
date hereof, and they shall be true and correct at and as of the Closing Date
with the same force and effect as though made at and as of that time.
▇. ▇▇▇▇ and Seller shall have performed and complied with all
of their obligations required by this Agreement to be performed or complied with
at or prior to the Closing Date.
▇. ▇▇▇▇ and Seller shall each deliver to Buyer a Certificate
in the form of EXHIBIT D hereto, certifying that each of the conditions to the
obligations of Buyer to purchase the Purchased Assets from Seller which is set
forth in Section 8 of this Agreement has been satisfied.
8.2. ▇▇▇▇ of Sale. Zila and Seller shall have executed and delivered
the ▇▇▇▇ of Sale.
8.3. Assignment and Assumption Agreement. Zila and Seller shall have
executed and delivered the Assignment and Assumption Agreement.
8.4. Sublease Agreement. Seller shall have executed and delivered the
Sublease Agreement.
8.5. Distribution Agreement. Seller shall have executed and delivered
the Distribution Agreement.
8.6. Opinions of Counsel. Buyer shall have received an opinion dated
the Closing Date from ▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, LLP, counsel for Seller,
substantially in form and substance as set forth on EXHIBIT J-1 attached hereto.
Buyer shall have received an opinion dated the Closing Date from ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ LLC, counsel for Seller, substantially in form and substance as set forth
on EXHIBIT J-2 attached hereto.
8.7. Receipt of Necessary Consents. All necessary consents or approvals
of third parties to any of the transactions contemplated hereby, the absence of
which would have a
27
material adverse effect on Buyer's rights hereunder, shall have been obtained
and shown by written evidence reasonably satisfactory to Buyer or reasonable
efforts to obtain such consents or approvals shall have been demonstrated to
Buyer by such evidence.
8.8. No Adverse Litigation. There shall not be pending or threatened
any action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit or invalidate the sale of the Purchased Assets
to Buyer or any other transaction contemplated hereby, or which might affect the
right of Buyer to own the Purchased Assets or to operate the business formerly
operated by Seller and which, in the judgment of Buyer, makes it inadvisable to
proceed with the purchase of the Purchased Assets.
8.9. Restrictive Covenant Agreements. Zila and Seller shall have each
entered into a restrictive covenant agreement (the "Zila Restrictive Covenant
Agreement") with Buyer, substantially in the form of EXHIBIT K hereto. In
addition, Zila, Seller and the FS Buyer shall have executed and delivered the
transition agreement (the "Transition Agreement"), substantially in the form of
EXHIBIT L hereto.
8.10. Directors Resolutions; Good Standing. Seller shall have delivered
to Buyer a certificate evidencing the good standing of Seller as of a recent
practicable date, and a certified copy of the resolutions of the Directors of
Seller (and Seller's shareholders if required by Seller's organizational
documents) approving the execution, delivery and performance by Seller of this
Agreement and all the other transactions to be taken by Seller contemplated
herein.
8.11. Relationship With 3M. Buyer shall have received comfort to its
satisfaction (e.g., through a consent to the assignment of an existing supply
agreement or the execution of a new supply agreement) on or before the Closing
Date that Buyer will have in place as of Closing a continuing relationship with
the Minnesota Mining and Manufacturing Company.
9. CONDITIONS TO OBLIGATION OF SELLER.
The obligation of Seller to sell the Purchased Assets shall be subject
to the fulfillment at or prior to the Closing Date of each of the following
conditions, each of which is for the benefit of Seller any one (1) or more of
which may be waived by Seller:
9.1. Promissory Notes, Security Agreements and Pledge Agreement. Buyer
shall have executed and delivered the (i) the Senior Notes; (ii) Senior Security
Agreement; (iii) the Junior Note; (iv) the Junior Security Agreement and (v) the
Pledge Agreement.
9.2. Accuracy of Representations and Warranties and Compliance With
Obligations.
A. The representations and warranties of Buyer contained in
this Agreement shall have been true and correct at and as of the date hereof,
and they shall be true and correct at and as of the Closing Date with the same
force and effect as though made at and as of that time.
B. Buyer shall have performed and complied with all of their
respective obligations required by this Agreement to be performed or complied
with at or prior to the Closing Date.
28
C. Buyer shall each deliver to Seller a Certificate in the
form of EXHIBIT D hereto, certifying that each of the conditions to the
obligations of Seller to sell the Purchased Assets to Buyer which is set forth
in Section 9 of this Agreement has been satisfied.
9.3. Assignment and Assumption Agreement. Buyer shall have executed and
delivered the Assignment and Assumption Agreement.
9.4. Transition Agreement. Buyer and FS Buyer shall have entered into
the Transition Agreement.
9.5. Opinion of Counsel. Seller shall have received an opinion, dated
the Closing Date, from ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., counsel to Buyer,
substantially in form and substance as set forth in EXHIBIT M attached hereto.
9.6. No Adverse Litigation. There shall not be pending or threatened
any action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit or invalidate the sale of the Purchased Assets
by Seller or any other transaction contemplated hereby or which, in the judgment
of Seller, makes it inadvisable to proceed with the sale of the Purchased
Assets.
9.7. Lender Approval. Seller shall have obtained the approval of its
lender, Congress Financial Corporation (Western), to the sale of the Acquired
Business.
10. ADDITIONAL AGREEMENTS.
10.1. Execution of Further Documents. From and after the Closing, upon
the reasonable request of Buyer, Seller shall execute, acknowledge and deliver
all such further acts, deeds, assignments, transfers, conveyances, powers of
attorney and assurances as may be required to convey and transfer to and vest in
Buyer and protect its rights, title and interest in the Purchased Assets and as
may be appropriate otherwise to carry out the transactions contemplated by this
Agreement.
10.2. Nonassignable Contracts. To the extent that the assignment
hereunder by Seller to Buyer of any contract, commitment, license, lease or
other agreement of Seller (the "Contracts") is prohibited or is not permitted
without the consent of any other party to the Contract, this Agreement shall not
be deemed to constitute an assignment of any such Contract if such consent is
not given or if such assignment otherwise would constitute a breach of, or cause
a loss of contractual benefits under, any such Contract, and Buyer shall assume
no obligations or liabilities thereunder. Prior to the Closing, Seller shall
advise Buyer promptly in writing with respect to any Contract as to which it
knows it will not receive any required consent. Without in any way limiting
Seller's obligation pursuant to Section 8.8 to make efforts to obtain all
consents and waivers necessary for the sale, transfer, assignment and delivery
of the Contracts and the Purchased Assets to Buyer hereunder, if any such
consent is not obtained or if such assignment is not permitted irrespective of
consent and the Closing hereunder is consummated, Seller shall, if requested by
Buyer, cooperate with Buyer in any reasonable arrangement designed to provide
Buyer with the rights and benefits (subject to the obligations) under the
Contract, including, if
29
reasonably requested by Buyer, by enforcing for the benefit of Buyer any and all
rights of Seller against any other person arising out of breach or cancellation
by such other person, acting as an agent on behalf of Buyer, subcontracting to
Buyer the right to perform under the Contract on the same economic terms as
applied to Seller prior to the Closing and acting as Buyer shall otherwise
reasonably require, in each case at Buyer's expense.
10.3. Announcements. Seller and Buyer shall work together before and
after the Closing to coordinate the preparation and mailing by each of any
announcements each of them desires to make to customers relating to this
transaction at or following the Closing.
10.4. Sales Taxes on Acquisition. Notwithstanding anything to the
contrary elsewhere in this Agreement, all transfer, documentary, sales, use,
stamp, registration and other such taxes and fees (including penalties and
interest) incurred in connection with this Agreement (including the acquisition
by Buyer of the Acquired Business and the Purchased Assets) shall be paid by
Zila or the Seller when due, and Zila or the Seller will, at its own expense,
file all necessary tax returns and other documentation with respect to such
transfer, documentary, sales, use, stamp, registration and other taxes and fees.
10.5. Disclosure. Zila, Seller, and Buyer each agree not to issue any
press release or make any public announcement or other disclosure to
competitors, customers, employees or any other person (except to employees and
agents on a need-to-know basis in order to complete the transactions
contemplated by this Agreement and who agree to maintain the confidentiality of
the disclosed information) concerning this Agreement except as required by law
or with the advance written approval of the other parties, which approval will
not be unreasonably withheld.
11. INDEMNIFICATION.
11.1. Agreement by Seller to Indemnify. Zila and Seller, jointly and
severally, agree to indemnify and hold harmless Buyer and its officers,
directors, shareholders, successors and assigns (collectively, the "Seller
Indemnified Parties") in respect of the aggregate of all indemnifiable damages
caused to the Acquired Business or any of the Seller Indemnified Parties. The
parties agree that the indemnification provisions set forth in this Article 11
are the sole remedy for any claims of the Seller Indemnified Parties relating to
the Acquired Business or Purchased Assets and this Agreement; provided, however,
nothing in this Section 11 shall preclude Buyer from seeking damages that arise
from fraud.
11.1.1. For this purpose, "indemnifiable damages" caused to
the Acquired Business or any of the Seller Indemnified Parties means the
aggregate of all expenses, losses, penalties, costs, deficiencies, liabilities
and damages (including related reasonable and necessary counsel fees and
expenses) incurred or suffered by the Acquired Business or any of the Seller
Indemnified Parties (in each case net of any insurance or other third-party
recoveries) resulting from:
A. The breach of any representation or warranty made
by Zila and Seller in or pursuant to Section 4 of this Agreement;
30
B. The breach of any of the covenants or agreements
made by Zila or Seller in this Agreement, including the ancillary documents to
be executed and/or delivered by Zila or Seller;
C. The failure of Seller to pay, discharge or perform
any liability or obligation of Seller which is not an Assumed Liability;
D. Any actions, claims, proceedings, demands,
grievances or disputes brought or initiated by third parties against the
Acquired Business or any of the Seller Indemnified Parties in connection with an
Excluded Liability;
E. The conduct of the Acquired Business by Seller
through and including the Closing Date;
F. Any actions, claims, proceedings, demands,
grievances or disputes brought or initiated by third parties against the
Acquired Business or any of the Seller Indemnified Parties in connection with
any Plan (as defined in Section 4.17.1) or any Seller Employee Liabilities (as
defined in Section 4.16.1.C);
G. The total cost of any inventory that is a Purchased
Asset and that is determined to be Heat Sensitive Inventory on or after the date
hereof, including any additional costs for handling and reshipping replacement
products to customers. "Heat Sensitive Inventory" means any ▇▇▇▇▇▇▇ Kodak
Company anesthesia, that is a Purchased Asset, which is determined to be
unusable as a result of exposure to excessive heat (this determination shall be
made pursuant to a written evaluation from ▇▇▇▇▇▇▇ Kodak Company, or another
qualified lab as may be reasonably approved by the Buyer). The Buyer shall have
the right to have all of the Heat Sensitive Inventory evaluated in the event
that the Buyer determines in good faith that such products are being returned at
an unusually high rate relative to the normal historic return rate of the
Acquired Business;
H. The total cost of any inventory that is a Purchased
Asset and that is determined to be Expired Inventory within the twelve (12)
month period ending on the first (1st) anniversary of the Closing Date (the
"Measurement Period"). "Expired Inventory" means any inventory that expires
during the Measurement Period. Buyer shall not submit to Seller and/or Zila
requests for reimbursement for Expired Inventory more frequently than quarterly;
or I. Any actions, claims, proceedings, demands, grievances or disputes brought
or initiated by third parties against the Acquired Business or any of the Seller
Indemnified Parties in connection with the lawsuit filed by the Environmental
Law Foundation against the Seller and certain other defendants in the Superior
Court of the State of California for the County of San ▇▇▇▇▇▇▇▇ (Case No.
316647) relating to alleged violations of the Safe Drinking Water and Toxic
Enforcement Act of 1986.
11.1.2. The foregoing obligation of Zila and Seller to
indemnify the Seller Indemnified Parties shall be subject to each of the
following principles or qualifications:
31
A. Each of the representations and warranties made by
Zila and Seller in Section 4 of this Agreement or pursuant hereto, shall survive
until May 31, 2003, notwithstanding any investigation at any time made by or on
behalf of Buyer, and thereafter all such representations and warranties shall be
extinguished; provided, however, that the representations and warranties made by
Zila and Seller to the extent they relate to Seller's title to the Purchased
Assets shall survive forever; the representations and warranties made by Seller
to the extent they relate to any Plan or Seller Employee Liabilities shall
survive until no possible liability with respect thereto can be asserted; and
that the representations and warranties made by Seller in Section 4.4 hereof
("Tax Matters") shall in each case survive until the applicable statute of
limitations expires.
B. No claim for the recovery of indemnifiable damages
pursuant to Section 11.1.1.A may be asserted by any of the Seller Indemnified
Parties against Seller or its successors in interest after such representations
and warranties shall be thus extinguished; provided, however, that claims first
asserted in writing within the applicable period shall not thereafter be barred.
In addition, the Seller shall have no liability with respect to indemnifiable
damages until the total of all such damages exceeds Eighty Thousand and No/100
Dollars ($80,000.00) in which event Buyer shall be entitled to claim the total
amount of such damages; provided, however, any claim brought pursuant to
Sections 11.1.1.C, 11.1.1.D, 11.1.1.F, 11.1.1.G, 11.1.1.H and 11.1.1.I shall not
be subject to this limitation. Notwithstanding the foregoing, in no event shall
the aggregate liability of Zila and Seller under this Section 11 exceed the
Purchase Price.
C. Notwithstanding any prior provision of this
Agreement to the contrary, to the extent that there exists, or there shall
arise, any "Seller Controlled Group Plan Liability", as that term is defined in
Section 4.17.3 of this Agreement, the Seller shall indemnify and hold harmless
Buyer and their subsidiaries, any successors or assigns thereto, and all
employees, officers, directors, agents, independent contractors and other
persons affiliated with Buyer and/or its subsidiaries or its successors and
assigns (herein the "Indemnitees") from and against any and all such
liabilities, and any losses, damages, claims, liabilities, actions, suits,
proceedings and costs and expenses of defense thereof, including reasonable
attorneys' fees, and the Seller shall take any action reasonably requested by
Buyer to prevent the imposition of such liability. Notwithstanding any provision
of this Agreement to the contrary, to the extent that there exists, or there
shall arise, any Seller Employee Liabilities (as defined in Section 4.16.1.C) as
of and from and after the Closing Date, the Seller shall indemnify and hold
harmless the Indemnitees from and against any and all such liabilities, and any
losses, damages, claims, liabilities, actions, suits, proceedings and costs and
expenses of defense thereof, including reasonable attorneys' fees, and the
Seller shall take any action reasonably requested by Buyer to prevent the
imposition of such liability. Notwithstanding any provision of this Agreement to
the contrary, the indemnification of the preceding two (2) sentences shall
survive the Closing Date and shall remain in effect until no Seller Controlled
Group Plan Liability and no Seller Employee Liabilities could possibly be
asserted against any of the Indemnitees.
11.2. Agreements by Buyer to Indemnify. Buyer agrees to indemnify and
hold Seller and Zila and each of their respective officers, directors,
shareholders, successors and assigns
32
(collectively, for purposes of this Section 11.2, "Seller") harmless in respect
of the aggregate of all indemnifiable damages of Seller.
11.2.1. For this purpose, "indemnifiable damages" of Seller
means the aggregate of all expenses, losses, costs, deficiencies, liabilities
and damages (including related counsel fees and expenses) incurred or suffered
by Seller (in each case net of any insurance or other third party recoveries)
from:
A. The breach of any representation or warranty made
by Buyer pursuant to Section 5 of this Agreement;
B. The breach of any of the covenants or agreements
made by Buyer in this Agreement, including the ancillary documents to be
executed and/or delivered by Buyer;
C. The failure of Buyer to pay, discharge and perform
the Assumed Liabilities in accordance with their terms;
D. Any actions, claims, proceedings, demands,
grievances or disputes brought or initiated by third parties against the Seller
in connection with the Assumed Liabilities, and in connection with Buyer's
employment practices and contractual obligations to third parties after the
Closing Date; and
E. The conduct of the Acquired Business by Buyer after
the Closing Date.
11.2.2. The foregoing obligation of Buyer to indemnify Seller
shall be subject to each of the following principles or qualifications:
A. Each of the representations and warranties made by
Buyer in Section 5 of this Agreement shall survive until May 31, 2003, and
thereafter all such representations and warranties shall be extinguished.
B. No claim for the recovery of indemnifiable damages
pursuant to Section 11.2.1.A may be asserted by Seller against Buyer or its
successors in interest after such representations and warranties shall be thus
extinguished; provided, however, that claims first asserted in writing within
the applicable period shall not thereafter be barred.
11.3. Matters Involving Third Parties. If any third party shall notify
Buyer or Seller (the "Indemnified Party") with respect to any matter which may
give rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Section 11 then the Indemnified Party shall
notify each Indemnifying Party thereof promptly; provided, however, that no
delay on the part of the Indemnified Party in notifying any Indemnifying Party
shall relieve the Indemnifying Party from any liability or obligation hereunder
unless (and then solely to the extent that) the Indemnifying Party thereby is
damaged.
33
If any Indemnifying Party notifies the Indemnified Party within fifteen
(15) days after the Indemnified Party has given notice of the matter that the
Indemnifying Party is assuming the defense thereof, then:
A. The Indemnifying Party will defend the Indemnified Party
against the matter with counsel of its choice satisfactory to the Indemnified
Party;
B. The Indemnified Party may retain separate co-counsel at its
sole cost and expense (except that the Indemnifying Party will be responsible
for the fees and expenses of the separate co-counsel to the extent the
Indemnified Party concludes that the counsel the Indemnifying Party has selected
has a conflict of interest);
C. The Indemnified Party will not consent to the entry of any
judgment or enter into any settlement with respect to the matter without the
written consent of the Indemnifying Party (not to be withheld or delayed
unreasonably); and
D. The Indemnifying Party will not consent to the entry of any
judgment with respect to the matter, or enter into any settlement which does not
include a provision whereby the plaintiff or claimant in the matter releases the
Indemnified Party from all liability with respect thereto, without the written
consent of the Indemnified Party (not to be withheld or delayed unreasonably).
If no Indemnifying Party notifies the Indemnified Party within fifteen
(15) days after the Indemnified Party has given notice of the matter that the
Indemnifying Party is assuming the defense thereof, then the Indemnified Party
may defend against, or enter into any settlement with respect to, the matter in
any manner it may deem appropriate.
11.4. Other Agreements. Any indemnification obligations which Zila and
Seller may have to Buyer for damages hereunder may, at Buyer's sole discretion,
be offset against any payments due to the Seller pursuant to the Junior Note
(beginning with the first payment after the date an indemnification payment is
due and continuing with each subsequent payment thereafter), and thereafter
against the Senior Note B in the event that Buyer has no further payment
obligations under the Junior Note, including, but not limited to, any
indemnification obligations of Seller pursuant to Section 11.1 hereof. In the
event that Buyer becomes aware of a claim or a substantial likelihood of a
claim, Buyer may withhold an amount reasonably anticipated to be incurred due to
such claim from any future payments due under the Junior Note, or the Senior
Note B if applicable, until resolution of such claim.
12. MISCELLANEOUS.
12.1. Brokers' Commission. Buyer will indemnify and hold harmless
Seller from the commission, fee or claim of any person, firm or corporation
employed or retained or claiming to be employed or retained by Buyer to bring
about, or to represent it in, the transactions contemplated hereby. Seller will
indemnify and hold harmless Buyer from the commission, fee or claim of any
person, firm or corporation employed or retained or claiming to be employed or
retained by Seller to bring about, or to represent them in the transactions
contemplated hereby.
34
12.2. Amendment and Modification. The Parties hereto may amend, modify
and supplement this Agreement in such manner as may be agreed upon by them in
writing.
12.3. Termination.
12.3.1. Anything to the contrary herein notwithstanding, this
Agreement may be terminated and the transactions contemplated hereby may be
abandoned:
12.3.1.1. By the mutual written consent of all of the
Parties hereto at any time prior to the Closing Date;
12.3.1.2. Unless terminated pursuant to Section
12.3.1.1, by any Party in the event of the breach by any other Party of any
provision of this Agreement, which breach is not remedied by the breaching Party
within ten (10) days after receipt or notice thereof from the terminating party;
12.3.1.3. Unless terminated pursuant to Section
12.3.1.1, by any Party hereto if the Closing has not taken place by December 20,
2001. If this Agreement is terminated pursuant to clause 12.3.1.1 of this
Section 12.3.1, no Party shall have any liability for any costs, expenses, loss
of anticipated profit or any further obligation for breach of warranty or
otherwise to any other Party to this Agreement. Any termination of this
Agreement pursuant to clauses 12.3.1.2 or 12.3.1.3 of this Section 12.3.1 shall
be without prejudice to any other rights or remedies of the respective parties
12.3.2. The risk of any loss to the properties to be sold by
Seller hereunder and all liability with respect to injury and damage occurring
in connection therewith shall be the sole responsibility of Seller until the
completion of the Closing. If, in the opinion of Buyer, any material part of
said properties shall be damaged by fire or other casualty prior to the
completion of the Closing hereunder, then Buyer shall have the right and option:
12.3.2.1. To terminate this Agreement, without
liability to any party thereto; or
12.3.2.2. To proceed with the Closing hereunder, in
which event such casualty shall not constitute a breach by Seller of any
representation, warranty or covenant in this Agreement, and Buyer shall be
entitled to receive and retain the insurance proceeds arising from such casualty
reasonably allocable to such properties that would otherwise constitute
Purchased Assets as mutually agreed by Buyer and Seller.
12.4. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors, assigns,
heirs and legal representatives. This Agreement may not be assigned by Buyer,
jointly and severally, except to another corporation controlled by or under
common control with Buyer. In any such event, Buyer, jointly and severally,
shall remain directly liable for all undertakings and obligations hereunder.
This Agreement, including any rights to receive payments hereunder, may not be
assigned by Seller except to its shareholders upon a dissolution or liquidation
of Seller.
35
12.5. Entire Agreement. This Agreement and the exhibits and schedules
attached hereto contain the entire agreement of the parties hereto with respect
to the purchase of the Purchased Assets and the other transactions contemplated
herein, and supersede all prior understandings and agreements of the parties
with respect to the subject matter hereof. Any reference herein to this
Agreement shall be deemed to include the schedules and exhibits attached hereto.
12.6. Headings. The descriptive headings in this Agreement are inserted
for convenience only and do not constitute a part of this Agreement.
12.7. Execution in Counterparts and Facsimile Signatures. This
Agreement and all ancillary documents may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which
together will constitute one and the same instrument. The counterparts of this
Agreement and all ancillary documents may be executed and delivered by facsimile
signature by any of the Parties to any other Party and the receiving Party may
rely on the receipt of such document so executed and delivered by facsimile as
if the original had been received.
12.8. Notices. Any notice, request, information or other document to be
given hereunder to any of the Parties by any other Party shall be in writing and
delivered personally or sent by facsimile or certified or registered mail,
postage prepaid, as follows:
If to Seller, addressed to:
▇▇▇▇▇ Dental of Kentucky, Inc.
c/o Zila, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
If to Zila, addressed to:
Zila, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, LLP
Renaissance ▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
36
If to Buyer, addressed to:
PracticeWares, Inc.
c/o ProLog Logistics, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
With copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq.
Any party may change the address to which notices hereunder are to be sent to it
by giving written notice of such change of address in the manner herein provided
for giving notice. Any notice delivered personally shall be deemed to have been
given on the date it is so delivered, and any notice delivered by registered or
certified mail shall be deemed to have been given on the date it is received or
refused, if delivery is refused.
12.9. Governing Law/Consent to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of California
applicable to contracts made and to be performed herein. With respect to any
dispute, controversy or claim arising out of, relating to or in connection with,
this Agreement, or the breach, termination or validity hereof, the parties shall
first attempt to resolve the matter in good faith for a period of fourteen (14)
days, thereafter, any such dispute, controversy or claim shall be finally
settled by arbitration conducted in accordance with this Section. The
arbitration shall be conducted in accordance with the Commercial Arbitration
Rules of the American Arbitration Association (the "AAA") in effect at the time
of the arbitration, except as they may be modified herein or by mutual agreement
of the parties. The seat of the arbitration shall be Sacramento, California and
each party hereto irrevocably submits to the jurisdiction of the arbitration
panel in Sacramento, California. The arbitration shall be conducted by three (3)
arbitrators, at least two (2) of which are attorneys having more than seven (7)
years experience in the general mergers and acquisitions field. The party
initiating arbitration (the "Claimant") shall identify its arbitrator within
twenty (20) days of receipt of a request for arbitration (the "Request") and
shall notify the Claimant of such appointment in writing. If the Respondent
fails to identify an arbitrator within such twenty (20) day period, the
arbitrator named in the Request shall decide the controversy or claim as the
sole arbitrator. Otherwise, the two (2) arbitrators appointed by the parties
shall appoint a third (3rd) arbitrator within twenty (20) days after the
Respondent has notified Claimant of the appointment of the Respondent's
arbitrator. When the third (3rd)
37
arbitrator has accepted the appointment, the two (2) party-appointed arbitrators
shall promptly notify the parties of the appointment. If the two (2) arbitrators
appointed by the parties fail or are unable to so appoint a third (3rd)
arbitrator, then the appointment of the third (3rd) arbitrator shall be made by
the AAA, which shall promptly notify the parties of the appointment. The third
(3rd) arbitrator shall act as chair of the panel. The arbitration award shall be
in writing and shall be final and binding on the parties. The award may include
an award of costs, including reasonable attorneys' fees and disbursements.
Judgment upon the award may be entered by any court having jurisdiction thereof
or having jurisdiction over the parties or their assets. Notwithstanding the
foregoing, the parties may apply to any court of competent jurisdiction for a
temporary restraining order, preliminary injunction, or other interim or
conservatory relief, as necessary, without breach of this Section and without
any abridgment of the powers of the arbitrators. The parties agree to be subject
to the jurisdiction of the Superior Court of Sacramento County or United States
District Court for the Eastern District of California (provided said court has
subject matter jurisdiction), which shall be the exclusive venue and
jurisdiction for such adjudication, and the parties hereby agree to subject
themselves to the jurisdiction and venue of such court for all such purposes and
agree to waive any objections thereto.
[SIGNATURES BEGIN ON THE FOLLOWING PAGE]
38
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
BUYER:
PracticeWares, Inc.
By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
SELLER:
▇▇▇▇▇ Dental of Kentucky, Inc.
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Treasurer
ZILA:
Zila, Inc.
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Treasurer
EXHIBITS
Exhibit A-1 Senior Note A
Exhibit A-2 Senior Note B
Exhibit A-3 Junior Note
Exhibit B Allocation Agreement
Exhibit C-1 Senior Security Agreement
Exhibit C-2 Junior Security Agreement
Exhibit C-3 Pledge Agreement
Exhibit D Certificate of Seller
Exhibit E Certificate of Buyer
Exhibit F ▇▇▇▇ of Sale
Exhibit G Assignment and Assumption Agreement
Exhibit H Sublease Agreement
Exhibit I Distribution Agreement
Exhibit J-1 Opinion of Seller's Counsel
Exhibit J-2 Opinion of Seller's Counsel
Exhibit K Zila Restrictive Covenant Agreement
Exhibit L Transition Agreement
Exhibit M Opinion of Buyer's Counsel