ASSET PURCHASE AGREEMENT
by and between
▇.▇. ▇▇▇▇▇▇▇▇ COMPANY, INC.
and
HOECHST ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CANADA INC.
October 31, 1997
ASSET PURCHASE AGREEMENT
------------------------
ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of October 31,
1997, by and between ▇.▇. ▇▇▇▇▇▇▇▇ COMPANY, INC. (the "Buyer") and HOECHST
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CANADA INC. (the "Seller").
WHEREAS, the Seller is engaged or has been engaged in the business of
developing, manufacturing, marketing, selling and distributing in Canada (the
"Territory") the oral care products identified on Exhibit A annexed hereto and
made a part hereof (collectively, the "Products" and individually, a "Product",
such business being hereinafter referred to as the "Business"); and
WHEREAS, the Buyer desires to purchase from the Seller and the Seller
desires to sell to the Buyer the Purchased Assets (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I.
PURCHASE AND SALE OF ASSETS
---------------------------
1.1. Purchase and Sale of Assets. At the Effective Time (as
hereinafter defined), the Seller shall sell, transfer, assign and deliver to the
Buyer, and the Buyer shall purchase, accept, assume and receive, all of the
Seller's right, title and interest in and to the following assets (the
"Purchased Assets"):
(a) The trademarks or names "CEPACOL" and "CEPASTAT," and all
other trademarks, trade dress, trade names, brand names, service marks, logos,
logotypes, and packaging style and symbols which are or have been used at any
time in respect of the manufacture, marketing, promotion, distribution, sale, or
commercial exploitation of the Products, together with all goodwill associated
therewith, any registrations associated therewith, including any applications,
renewals, modifications or extensions (collectively, "Registrations"), and all
copyrights and slogans, all domain names and web pages and similar internet
properties, in any such case that have been used in the Territory by the Seller
or any affiliate or predecessor owner (or are under development for use by the
Seller in the Territory), in the manufacture, marketing, promotion,
distribution, sale, or commercial exploitation of the Products;
(b) Any existing files pertaining to the manufacture, production,
promotion, advertising, distribution, sale or commercial exploitation of the
Products in whatever format (written or machine readable, or in computer data
bases or other media), including, without limitation, research and development
files and studies, market studies (including studies in respect of competitor's
brands), copies of consumer complaint files, sale histories, quality control
histories, files relating to the Manufacturing Know-How (as hereinafter
defined), and any and all other business records relating to the Products or the
Business generally;
(c) Any (i) formulae, techniques and technical, processing and
manufacturing knowledge and know-how including, without limitation, (ii) all new
developments, inventions, processes, techniques and ideas, including as to batch
processing, all trade secrets, technology, know-how, information relating to
shelf life and stability of the Products, patents and Registrations therefor,
and (iii) all papers, documentation, blue prints, drawings, compositions,
diaries, notebooks, schematics, specifications, designs, methods of manufacture
and production relating to all of the Purchased Assets described in
subparagraphs (i) and (ii) of this Section 1.1(c), in each case which are or
have been owned, used or held for use in the conduct of the Business, or are
under research and development, relating to the manufacture, promotion, sale or
commercial exploitation of the Products or relating to the Business generally
(the "Manufacturing Know-How"), provided, however, that Manufacturing Know-How
expressly does not include the Seller's current continuous flow process
technology as applied to the Products;
(d) Any marketing materials and rights relating to the promotion,
marketing, advertisement or commercial exploitation of the Products, including
slogans, jingles, marketing campaigns, promotional materials, art, mechanical
and artwork for the production of packaging components, television and radio
masters, film or video clips, sound recordings, photographs and similar
materials, including any Registrations associated therewith, that have been
owned, used or held for use in the conduct of the Business, or are under
development, in the promotion, marketing, advertisement or commercial
exploitation of the Products or relating to the Business generally;
(e) Any current and historical lists of customers, manufacturers,
suppliers, vendors and distributors of the Business;
(f) All rights under or pursuant to all warranties,
representations and guaranties made by manufacturers, suppliers or vendors in
connection with the Products, the Business or relating in any manner to the
Purchased Assets;
(g) All goodwill of the Business including, without limitation,
all goodwill attributable to the Products and the other Purchased Assets; and
(h) All assignable permits, governmental licenses, filings,
authorizations, approvals and other indicia of authority used or held for use in
the conduct of the Business.
1.2. Excluded Assets; Excluded Liabilities. All other assets of the
Seller are expressly excluded from the Purchased Assets (collectively, the
"Excluded Assets"). Neither the Buyer nor any of its affiliates shall assume any
liabilities or obligations of the Seller or any of its respective Canadian
affiliates or predecessor owners, or any liabilities or obligations relating to
or arising from the Business or the conduct thereof including, without
limitation, (a) breach of product warranties, product liability and liability in
tort (including in either case unripened liabilities due to Products
manufactured by or on behalf of Seller, any Canadian affiliate or predecessor
owner of the Seller or the Business or any other manufacturer, or liabilities
from actions or sales occurring prior to the Effective Time), (b) indebtedness
for borrowed money, (c) Tax liabilities, (d) obligations to present or former
employees, agents,
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representatives or other personnel, (e) contracts or other agreements, (f)
liabilities relating to the Excluded Assets, (g) all liabilities for the
violation or breach of any environmental laws, rules or regulations and (h) all
liabilities for trade and consumer promotions arising prior to the Effective
Time, in any case whether known or unknown, fixed or contingent, absolute,
conditional or otherwise. Without limiting the generality of the foregoing, the
Seller and/or any of its Canadian affiliates or predecessor owners, as the case
may be, shall remain solely and exclusively liable for all liabilities or
obligations as a result of any act, omission or event occurring prior to the
Effective Time, whether or not the related cause of action or damage occurred
after the Effective Time. All liabilities and obligations retained by the
Seller, its Canadian affiliates or predecessor owners as described in this
Section 1.2, are collectively referred to herein as the "Excluded Liabilities."
After the Effective Time, the Seller shall, directly or indirectly, discharge
and satisfy in full when due the Excluded Liabilities.
ARTICLE II.
CONSIDERATION FOR TRANSFER
--------------------------
2.1. Consideration. Buyer is delivering to Seller on the date hereof
Two Million One Hundred Thousand Canadian Dollars ($2,100,000) (such amount
being the "Purchase Price" and sometimes referred to as the "Closing Cash
Payment").
2.2. Payment of Taxes. To the extent any federal taxes, GST and QST
(such terms being defined in Section 4.22 herein), other provincial sales taxes,
any other sales taxes, excise taxes and any other taxes, duties or other like
charges are properly payable upon and in connection with the conveyance and
transfer of the Purchased Assets by the Seller to the Buyer, the Buyer shall be
liable for payment of such amounts. Notwithstanding the foregoing, the Seller
and the Buyer acknowledge that they are not aware of any such amounts which are
due and payable in connection with the conveyance and transfer of the Purchased
Assets by the Seller to the Buyer.
ARTICLE III.
THE CLOSING AND TRANSFER OF THE PURCHASED ASSETS
------------------------------------------------
3.1. Closing. The transfer of Purchased Assets contemplated by this
Agreement (the "Closing") shall occur on the date hereof (the "Closing Date").
The effective time of the Closing shall be 11:59 p.m. on the Closing Date (the
"Effective Time").
3.2. Deliveries by the Buyer. At the Closing, the Buyer is delivering:
(a) The Closing Cash Payment;
(b) A certified copy of resolutions of the Board of Directors of
the Buyer providing authority for the execution, delivery and performance of
this Agreement and the transactions contemplated hereby;
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(c) An opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel to Buyer; and
(d) Such other instruments or documents as may be reasonably
requested by Seller in connection with the transactions.
3.3. Deliveries by the Seller. At the Closing, the Seller is
delivering:
(a) A ▇▇▇▇ of sale and assignment for the Purchased Assets;
(b) Trademark and copyright assignments;
(c) A certified copy of the resolution of the Board of Directors
of the Seller providing authority for the execution, delivery and performance of
this Agreement and the transactions contemplated hereby;
(d) An opinion of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq., general counsel to
Seller; and
(e) Such other instruments or documents as may be reasonably
requested by Seller in connection with the transactions.
ARTICLE IV.
REPRESENTATIONS AND
WARRANTIES OF THE SELLER
------------------------
The Seller represents, warrants and covenants to the Buyer as follows:
4.1. Organization and Qualification. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, with all requisite power and authority and
legal right to own, operate and carry on the Business. The Seller is duly
qualified to do business and is in good standing in every jurisdiction where the
nature of the Business requires such qualification, except in such jurisdictions
where the failure to so qualify would not have a material adverse effect on the
business, revenues, financial condition, properties, assets or prospects of the
Business (a "Material Adverse Effect").
4.2. Authorization. The Seller has full corporate power, authority and
legal right to execute and deliver and to perform its obligations under this
Agreement. The execution and delivery of this Agreement and by the Seller and
the performance by the Seller of its obligations hereunder and thereunder have
been duly authorized by all requisite action, including, without limitation, by
its Board of Directors. No other action on the part of the Seller is necessary
to authorize the execution and delivery of this Agreement, or the performance of
the Seller's obligations hereunder. This Agreement has been or will be duly and
validly executed and delivered by the Seller and constitutes the legal, valid
and binding obligation of the Seller, enforceable against the Seller in
accordance with its terms.
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4.3. No Violation. Neither the execution and delivery of this
Agreement and the Seller Related Agreements by the Seller nor the performance by
the Seller of its obligations hereunder or thereunder will: (a) violate or
result in any breach of any provision of the Articles of Incorporation and
By-laws of the Seller, each as amended; (b) violate, conflict with or result in
a violation or breach of, or constitute a default (with or without due notice or
lapse of time or both), or permit the termination of, or require the consent of
any other party to, or result in the acceleration of, or entitle any party to
accelerate any obligation, or result in the loss of any benefit, or give rise to
the creation of any options, pledges, security interests, liens, mortgages,
claims, debts, charges, voting agreements, voting trusts or other encumbrances
or restrictions on transfer of any kind whatsoever (each, an "Encumbrance") upon
any of the Purchased Assets or the Business, under or pursuant to any contract,
agreement or arrangement, whether oral or in writing, to which the Business, all
or any portion of the Purchased Assets, the Seller or the Seller's assets or
properties is bound; (c) violate any order, writ, judgment, injunction, decree,
statute, law, rule, regulation or ordinance of any court or Governmental
Authority applicable to the Business, the Purchased Assets, the Seller or the
Seller's properties or assets; or (d) require Seller to make any filing or
registration with, or provide notice to or obtain any permit, authorization,
consent or approval of any Governmental Authority, or any other person or
entity, whether under applicable law, order, statute, rule or regulation,
foreign or domestic, or under any contract, agreement or arrangement, whether
oral or in writing, for the execution and delivery of this Agreement and the
Seller Related Agreements, the consummation of the purchase and sale of the
Business and the Purchased Assets, or to enable the Buyer to continue to conduct
the Business and own, use and operate the Purchased Assets after the Closing in
a manner which is consistent with that in which the Business and the Purchased
Assets is presently conducted, owned, used and operated, as applicable.
4.4. Sales Reports. The Seller has delivered to the Buyer copies of
the unaudited internal income statements of the Seller for calendar years ended
1994, 1995 and 1996, and for the eight-month period ended August, 1997 (the
"Income Statements"), and copies of the Seller's internally generated sales
reports for the Business for calendar years ended 1994, 1995 and 1996, and for
the eight- month period ended August, 1997 (the "Sales Reports"). Copies of the
Sales Reports are attached hereto as Schedule 4.4. Each of the Income Statements
and Sales Reports was prepared in the ordinary course of Seller's business from
the Seller's books and records, and represents actual, bona fide transactions,
and accurately reflects the sales of the Business to all customers with whom the
Seller transacted business during the above-referenced time frames.
4.5. Absence of Undisclosed Liabilities. The Business has no liability
(whether accrued, absolute, contingent or otherwise, and whether then due or to
become due), and no loss contingency, except as disclosed herein, which would be
required to be included in any financial statement relating to the Business in
accordance with GAAP, and the Seller has no knowledge of any valid basis for the
assertion of any of the foregoing.
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4.6. Open Orders. The Business does not have any open orders with
respect to which it has been prepaid, in whole or in part, or has received
deposits or other advances.
4.7. Absence of Certain Changes. Since March 31, 1997, the Seller has
conducted the Business as it relates solely to the Lozenges Products only in the
ordinary and usual course and, without limiting the generality of the foregoing,
since the date of the Interim Balance Sheet, there has not been any event,
change or condition of any character in or on the business, properties, assets,
financial condition, results of operations or prospects of the Business which,
individually or in the aggregate, has had or could reasonably be expected to
have a Material Adverse Effect.
4.8. Title to Assets. The Seller has good and marketable title to all
of the Purchased Assets, free and clear of any and all Encumbrances. The Seller
is not aware of any liens in the Territory made to perfect a security interest
in all or any portion of the Purchased Assets. Seller acknowledges that it
(through a predecessor entity) obtained title to the Purchased Assets from
▇▇▇▇▇▇▇ ▇▇▇ Pharmaceutical (Canada) Inc. ("▇▇▇▇▇▇▇ ▇▇▇") through an asset
acquisition that was consummated in December of 1994, and, notwithstanding that
▇▇▇▇▇▇▇ ▇▇▇, prior to the Closing Date, was listed as the registered owner of
the Registrations, ▇▇▇▇▇▇▇ ▇▇▇ has no interest in the Registrations or any of
the other Purchased Assets and has had no such interest since such date.
4.9. Contracts. Other than as listed on Schedule 4.9 of the Disclosure
Schedule, there are no contracts, agreements, arrangements or understandings,
whether formal or informal, written or oral, that would be binding on or in any
way impact Purchaser, the Purchased Assets or the Business following the
Closing, including, without limitation, non-compete agreements, agreements
limiting the Territory of the Business or restricting sales of the Products,
agreements with sales representatives or employees, or agreements with lenders.
Each of the contracts, agreements, arrangements and understandings set forth on
Schedule 4.9 are in full force and effect as of the Closing Date, and none of
the parties to such contracts, agreements, arrangements and understandings is in
default thereunder, nor does there exist any event or condition which, with the
passage of time, or the giving of notice, or both, could reasonably be expected
to become a default.
4.10. Compliance with Applicable Laws; Permits and Licenses.
(a) The Seller holds, and at all relevant times has held, all
licenses, franchises, permits, consents and/or authorizations necessary for the
lawful conduct of the Business, and the Business is not being and has not been
conducted in violation of any provision of any federal, provincial, local or
foreign statute, law, ordinance, rule, regulation, judgment, decree, order,
concession, grant, franchise, permit, consent or license or other authorization
or approval of any court or any Governmental Authority.
(b) The Seller has no knowledge or notice of any failure to
comply with any federal, provincial, local or foreign statute, law, ordinance,
rule, regulation, judgment, decree, order, concession, franchise, permit,
consent or license or other authorization or approval of any court or any
Governmental Authority applicable to the Business.
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(c) Section 4.10(c) of the Disclosure Schedule sets forth all of
the licenses, franchises, permits, consents and authorizations necessary for the
lawful conduct of the Business.
4.11. Brokers' Fees and Commissions. Neither the Seller or its
Canadian affiliates nor any of their respective directors, officers, employees
or agents has employed any investment banker, broker, finder or intermediary,
and no fee or other commission is owed to any third party, in connection with
the transactions contemplated herein.
4.12. Proprietary Rights.
(a) All Registrations have been obtained or applied for in
respect of the trademarks and trade names included in the Purchased Assets
(hereinafter referred to as the "Proprietary Rights"). All Registrations of the
Proprietary Rights are current and in good standing, none has lapsed, been
terminated, abandoned or forfeited, and no renewal or expiration of any such
Registration is scheduled to occur at any time within the next six (6) months.
The Seller is the sole and exclusive owner of the Proprietary Rights, and has
the sole and exclusive right to use, license, sublicense, assign or sell the
Proprietary Rights without liability to, or consent of, any person or entity.
The Seller acknowledges that no patents are listed on the Disclosure Schedule
and that, as of the date of Closing, the Seller does not own any patents which
relate to the Purchased Assets.
(b) The use of the Proprietary Rights does not infringe upon the
rights of any person or entity, whether or not registered, patented or
copyrighted. The Seller has not received any notice of a claim of such
infringement nor were any such claims the subject of any action, suit or
proceeding involving the Seller. The Seller has no knowledge of any infringement
or improper use by any person or entity of the Proprietary Rights, nor has the
Seller instituted any action, suit or proceeding in which an act constituting an
infringement in the Territory of any of the Proprietary Rights was alleged to
have been committed by any person or entity.
(c) There are no licenses, sublicenses or agreements relating to
(i) the use by any person or entity of the Proprietary Rights or (ii) the use by
the Seller of the Proprietary Rights, and there is no prior right of any person
or entity or other impediment which would invalidate or adversely affect all or
any portion of the Proprietary Rights in the Territory.
4.13. Regulatory Reports. The Seller has filed all material reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that it was required to file in respect of the Business or
any Product of the Business in the last three (3) year period with any court or
Governmental Authority, and has paid all fees or assessments due and payable in
connection therewith. Furthermore, the Seller is not aware of any filing
required to be made with respect to the Business or any Product of the Business
prior to such three (3) year period or of any unpaid fees or assessments related
thereto. No court or Governmental Authority has initiated any proceeding or
investigation into the business or operations of the Business, nor has the
Seller initiated any such proceeding. There is no unresolved violation,
criticism or exception by any court or Governmental Authority with
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respect to any report or statement relating to an examination of the Business or
any Product thereof.
4.14. Agreements with Governmental Authorities. The Seller is not
subject to any prohibition, cease-and-desist or other order issued by, or a
party to any written agreement or memorandum of understanding with, any court or
Governmental Authority relating to or affecting (or which may affect) the
Business or any Product thereof.
4.15. Customers and Suppliers of the Seller; Promotions.
(a) Section 4.15(a) of the Disclosure Schedule contains an
accurate and complete list of all customers of the Business in the
thirty-six-month period ended August, 1997. The Seller compiled such list from
the Sales Reports provided to the Buyer for said thirty-six month period. In
addition, the Seller's relationship with certain key customers, namely, each of
Medis Health & Pharmacy and ▇▇▇▇ ▇▇▇▇▇ (PJC) Inc. (collectively, the "Key
Customers"), is good, and the Seller is not aware of any fact, condition or
event (including, without limitation, the consummation of the transactions
contemplated hereby) which would adversely affect the relationship of the Seller
with its Key Customers.
(b) Section 4.15(b) of the Disclosure Schedule sets forth a
detailed description of all trade and consumer promotions that are now in effect
or have been in effect at any time in the past twelve (12) months, including,
without limitation, coupon, rebate and similar programs, two-for-one/buy one get
one free and similar offers, and co-op advertising programs.
(c) Section 4.15(c) of the Disclosure Schedule sets forth an
accurate and complete list of all back orders not yet filled by Seller as of the
Closing Date. Seller hereby expressly waives any right, title or interest it may
have in such back orders beyond the Closing Date.
4.16. Products and Product Warranty.
(a) All Products of the Business manufactured, processed,
assembled, distributed, shipped or sold and any services rendered in the conduct
of the Business have been in conformity with all applicable contractual
commitments and all express or implied warranties. No liability exists, and no
liability is anticipated to arise for damages in connection with such sales or
deliveries. All warranties are in conformity with the labeling and other
requirements of applicable laws. The Product warranty and return experience of
the Business for the three (3) years ended as of the date hereof is set forth in
Section 4.16(a) of the Disclosure Schedule.
(b) Section 4.16(b) of the Disclosure Schedule sets forth an
accurate, correct and complete list and summary description of all existing
claims, duties, responsibilities, liabilities or obligations arising from or
alleged to arise from any injury to person or property as a result of the
ownership, possession or use of any Product of the Business manufactured or sold
prior to the date hereof and the Closing Date ("Product Liability Claims") for
amounts in excess of $3,000, or which could reasonably be expected to
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be material to the Business. All such Product Liability Claims, together with
all existing Product Liability Claims for amounts of less than $3,000, are or
will be fully covered by product liability insurance or otherwise provided for
and the Seller shall properly satisfy and discharge all such Product Liability
Claims. There have been no recalls, and none are threatened or pending, and no
report has been filed or is required to have been filed with respect to any
Products of the Business under any applicable law, rule or regulation. To the
knowledge of the Seller, no circumstances exist affecting the safety of the
Products of the Business which would result in any reporting obligations to any
Governmental Authority or any other person or entity or could result in a claim
against Buyer after the Closing.
4.17. Taxes. There are no agreements, waivers or other arrangements
providing for an extension of time with respect to the payment of any tax or
governmental charge, and there are no actions, suits, proceedings,
investigations or claims now threatened or pending against the Seller in respect
of taxes, governmental charges or assessments or any matters under discussion
with any governmental authorities respecting charges or assessments asserted by
any such authority, provided, however, the representations of the Seller
contained in this sentence relate solely to the Purchased Assets. The Seller is
not liable for any Canadian federal, provincial, municipal or local taxes,
assessments or any other taxes due and unpaid, or to become due, which might
result in a claim or lien of any kind affecting the Purchased Assets.
4.18. Insurance. The Seller has maintained in effect insurance to
cover Product Liability Claims in an amount reasonable and customary in the
industry for the three year period ending on the Closing Date, and Seller will
maintain such coverage for Products manufactured or shipped by Seller prior to
the Closing Date for a period of three years.
4.19. Litigation. There is no action, proceeding or investigation
pending or threatened against the Seller, its affiliates, the Business or the
Purchased Assets, before any court, arbitrator or administrative or Governmental
Authority, nor is there any judgment, decree, injunction, rule or order of any
court, Governmental Authority outstanding against, and unsatisfied by the Seller
relating to the Business or the Purchased Assets, nor does the Seller know of
any fact, event or condition which could reasonably be expected to serve as a
basis for the assertion of any such action or proceeding.
4.20. Residency of Seller. The Seller is a resident in Canada within
the meaning of the Income Tax Act (Canada).
4.21. Compliance with Sale of Enterprise/Bulk Sales Provisions.
Neither the entering into or delivery of this Agreement by the Seller nor the
consummation of the transaction contemplated hereby will result in the violation
of any applicable law, rule or regulation regarding the "sale of an enterprise"
provisions of the Civil Code of Quebec.
4.22. Registration for Purposes of GST. The Seller is duly registered
for purposes of the goods and services tax ("GST") under subdivision (d) of Part
IX of the Excise Tax Act (Canada) under the number 102376738 and is duly
registered for purposes of the
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Quebec sales tax ("QSA") under the Act respecting the Quebec Sales Tax ("QSA
Act") under the number 1001836982.
4.23. Disclosure. No representation or warranty as to the Seller or
any affiliate, the Purchased Assets or the Business contained in this Agreement
and no statement contained in the Disclosure Schedule or any document,
instrument or agreement delivered by the Seller pursuant hereto or in connection
herewith contains any untrue statement of a material fact, or omits to state any
material fact necessary, in light of the circumstances under which it was made,
in order to make the statement herein or therein not misleading.
4.24. Knowledge of the Seller, Etc. To the extent that the Seller
represents and warrants to have had knowledge or belief as to any event, fact,
condition or other matter set forth in this Agreement, "knowledge" or "belief"
(or similar words) shall mean the knowledge or belief of the directors of the
Seller, and the officers of the Seller employed in the Business.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE BUYER
-------------------------------------------
The Buyer represents, warrants and covenants to the Seller as follows:
5.1. Organization and Qualification. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of its
organization, with all requisite power and authority to own, operate and lease
its properties and assets and to carry on its business as it is now being
conducted.
5.2. Authorization. The Buyer has full corporate power, authority and
legal right to execute and deliver and to perform its obligations under this
Agreement and all other agreements, documents, certificates and other
instruments contemplated hereby or required herein to which Buyer is a party or
by which Buyer's assets or properties are bound (the "Buyer Related
Agreements"). The execution and delivery of this Agreement and the Buyer Related
Agreements by the Buyer and the performance by the Buyer of its obligations
hereunder and thereunder have been duly authorized by all requisite action
including, without limitation, by its Board of Directors. No other action on the
part of the Buyer is necessary to authorize the execution and delivery of this
Agreement or the Buyer Related Agreements, or the performance of the Buyer's
obligations hereunder and thereunder. This Agreement and the Buyer Related
Agreements have been or will be duly and validly executed and delivered by the
Buyer and constitute or will constitute legal, valid and binding obligations of
the Buyer, enforceable against the Buyer in accordance with their respective
terms, except to the extent that such enforcement may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights and remedies generally.
5.3. No Violation. Neither the execution and delivery of this
Agreement and the Buyer Related Agreements by the Buyer, nor the performance by
the Buyer of its obligations hereunder and thereunder, will: (a) violate or
result in any material breach of any
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provision of the Certificate of Incorporation or By-laws of the Buyer, each as
amended; (b) violate any order, writ, judgment, injunction, decree, statute,
rule or regulation of any court or Governmental Authority applicable to the
Buyer or its properties or assets which, any case, could reasonably be expected
to have a material adverse effect on the business, revenues, financial
condition, results of operations, properties, assets or prospects of the Buyer;
or (c) require any filing or registration with, or any notice to or any permit,
authorization, consent or approval of any person or entity or any Governmental
Authority on the part of the Buyer for the consummation by the Buyer of the
transactions contemplated hereby and under the Buyer Related Agreements.
5.4. Broker's Fees and Commissions. Neither the Buyer nor any of its
affiliates, shareholders, directors, officers, employees or agents has employed
any investment banker, broker, finder or intermediary, and no such fee or other
commission is owed to any third party, in connection with the transactions
contemplated herein.
5.5. Disclosure. No representation or warranty as to the Buyer
contained in this Agreement or the Disclosure Schedule contains any untrue
statement of a material fact, or omits to state any material fact necessary, in
light of the circumstances under which it was made, in order to make the
statement herein or therein not misleading.
ARTICLE VI.
COVENANTS
---------
6.1. Use of Name. For a period of twelve (12) months from the Closing
Date, Seller shall permit Buyer to use the marks and logos, or any other related
logos, tradenames or trademarks used on the Products or their packaging within
the past thirty-six (36) months, in connection with the sale and distribution of
the Products; provided, however, that Buyer shall not order any new packaging
from six (6) months after the Closing Date which bears any of such other
tradenames, trademarks or logos; and provided further that Buyer shall acquire
no interest in any such other logos, tradenames and trademarks. In addition,
nothing herein shall restrict the continued existence in the wholesale or retail
marketplace of products bearing such other logos, tradenames or trademarks
following the Closing Date.
6.2. Confidentiality. After the Closing, the Seller shall not use,
publish or disclose to any person or entity any confidential or proprietary
information comprising part of the Purchased Assets or relating to the Business;
provided, however, that the foregoing restrictions shall not apply to
information: (i) that is necessary to enforce its rights under or defend against
a claim asserted under this or any other agreement with the Buyer or any
agreement with a third party, (ii) that is necessary or appropriate to disclose
to any regulatory authority or governmental agency having jurisdiction over the
Seller or as otherwise required by law or (iii) that is or becomes generally
known other than through a breach of this Agreement by Seller.
-11-
6.3. Further Assurances. After the Closing, each of the Seller and the
Buyer shall take all actions reasonably requested by the other party to confirm
or perfect the transfer of the Purchased Assets.
6.4. Trade and Consumer Promotions.
(a) The Seller shall promptly discharge and honor all commitments
and obligations with respect to trade promotions, refunds and similar
promotional campaigns arising out of any sales of Products of the Business prior
to the Closing Date and any consumer coupons or similar items that were issued
or distributed prior to the Closing Date.
(b) The Buyer shall promptly discharge and honor all commitments
and obligations with respect to trade promotions, refunds and similar
promotional campaigns arising out of any sales of Products of the Business on or
after the Closing Date and any consumer coupons or similar items that will be
issued or distributed by the Buyer on or after the Closing Date.
6.5. Trade Returns.
(a) Following the Closing Date, returns of inventory to Seller
from the trade will be accepted by Buyer in accordance with its usual trade
practices and Buyer shall be responsible thereafter for any refund or credit due
to the customer.
(b) Seller shall promptly reimburse Buyer the dollar amount
represented by (i) all returns of Cepacol mouthwash and (ii) all returns of
Lozenges Products in excess of $1,000 per month, which are accepted by Seller
prior to December 31, 1997, provided that such returns were not caused or
generated by material changes to the Business (i.e., competitive entries, new
packaging or returns solicited by or brought on by Buyer).
6.6. Consumer Returns. After the Closing, Seller shall refer any
consumer complaints or returns to Buyer, and Buyer shall be responsible for
responding thereto. Nothing herein shall cause Buyer to be liable in respect of
such consumer complaints except as specifically provided herein.
ARTICLE VII.
SURVIVAL AND INDEMNIFICATION
----------------------------
7.1. Survival. All representations, warranties, covenants and
agreements contained in this Agreement, and in any certificate, schedule,
document or other writing delivered pursuant hereto or in connection with the
transactions contemplated hereby shall be in all cases deemed to have been
relied upon by the parties hereto, and shall survive the Closing for a period of
two (2) years, except that (i) the representations and warranties set forth in
(ii) Section 4.8 (Title to Assets), and Section 4.17 (Taxes) and (ii) the
indemnification obligations in respect of the Excluded Liabilities, shall
survive indefinitely. Additionally, the parties agree that the indemnification
obligations set forth in this Article VII shall survive with respect to any
claims made within the applicable survival period until finally resolved or
-12-
judicially determined, including any appeal thereof. The representations,
warranties, covenants and agreements contained in this Agreement or any
certificate, schedule, document or other writing delivered pursuant hereto shall
not be affected by any investigation, verification or examination by any party
hereto or by any person acting on behalf of any such party.
7.2. Indemnification of the Buyer. After the Closing Date for a period
of two (2) years, the Seller agrees to indemnify, defend and save the Buyer and
its directors, officers, employees, owners, agents and affiliates and their
successors and assigns (each a "Buyer Indemnified Party"), harmless from and
against, and to promptly pay to a Buyer Indemnified Party or reimburse a Buyer
Indemnified Party for any and all losses, damages, expenses (including, without
limitation, court costs, amounts paid in settlement, judgments, reasonable
attorneys' fees or other expenses for investigating and defending, including,
without limitation, those arising out of the enforcement of this Agreement),
suits, actions, claims, deficiencies, liabilities or obligations (collectively,
the "Losses") sustained or incurred by such Buyer Indemnified Party relating to,
caused by or resulting from:
(a) Any misrepresentation or breach of warranty, or failure to
fulfill or satisfy any covenant or agreement made by the Seller contained herein
or in any certificate, schedule, document or other writing delivered by the
Seller pursuant hereto or any covenant or agreement made by the Seller herein or
in any certificate, schedule, document or other writing delivered by the Seller
pursuant hereto;
(b) Any liability of the Buyer for causes of action arising in
connection with the Business, the Purchased Assets based, in whole or in part,
upon actions or omissions which occurred prior to or on the Closing Date, or
relating to the period prior to or on the Closing Date;
(c) The Excluded Liabilities;
(d) Any liability of the Buyer to any creditor of the Seller
and/or any liability which the Buyer may suffer or incur as a result of, in
respect of, or arising out of the non-compliance of the purchase and sale of the
Purchased Assets with the provisions respecting the sale of an enterprise of the
Civil Code of Quebec; and
(e) Any liability of the Buyer for any federal taxes, GST, QST,
other provincial sales taxes or other sales taxes, excise taxes, other
provincial taxes and all other taxes, duties, governmental assessments or other
like charges payable by Seller in connection with the conveyance and transfer of
the Purchased Assets or otherwise.
7.3. Indemnification of the Seller. After the Closing Date for a
period of two (2) years, the Buyer agrees to indemnify, defend and save the
Seller and its directors, officers, employees, owners, agents and affiliates and
their successors and assigns (each, a "Seller Indemnified Party") harmless from
and against, and to promptly pay to a Seller Indemnified Party or reimburse a
Seller Indemnified Party for, any and all Losses sustained or incurred by such
Seller Indemnified Party relating to, caused by or resulting from any
-13-
misrepresentation or breach of warranty, or failure to fulfill or satisfy any
covenant or agreement made by the Buyer contained herein or in any certificate,
schedule, document or other writing delivered by the Buyer pursuant hereto, any
covenant or agreement made by the Buyer in any certificate, schedule, document
or other writing delivered by the Buyer pursuant hereto, or any liability of the
Seller for causes of action arising in connection with the Business or the
Purchased Assets based upon actions or omissions which occurred following the
Closing Date, or relating to the period following the Closing Date.
7.4. Indemnification Procedure for Third Party Claims.
(a) In the event that subsequent to the Closing any Buyer
Indemnified Party or Seller Indemnified Party (each, an "Indemnified Party")
receives notice of the assertion of any claim or of the commencement of any
action, suit or proceeding by any person or entity which is not a party to this
Agreement (including, without limitation, any Governmental Authority) (a "Third
Party Claim") against such Indemnified Party, with respect to which the Buyer or
the Seller (the "Indemnifying Party"), as the case may be, are required to
provide indemnification under this Agreement, the Indemnified Party shall
promptly give written notice, together with a statement of any available
information regarding such claim (collectively, the "Third Party Indemnification
Notice"), to the Indemnifying Party within thirty (30) days after learning of
such claim (or within such shorter time as may be necessary to give the
Indemnifying Party a reasonable opportunity to respond to such claim). The
Indemnifying Party shall have the right, upon delivering written notice to the
Indemnified Party (the "Defense Notice") within thirty (30) days after receipt
from an Indemnified Party of a Third Party Indemnification Notice, to conduct,
at the Indemnifying Party's sole cost and expense, the defense against such
Third Party Claim in the Indemnifying Party's own name, or, if necessary, in the
name of the Indemnified Party; provided, however, that the Indemnified Party
shall have the right to reasonably approve the defense counsel representing the
Indemnifying Party, which approval shall not be unreasonably withheld, and in
the event that the Indemnifying Party and the Indemnified Party cannot agree
upon such counsel within ten (10) days after the Defense Notice is provided,
then the Indemnifying Party shall propose an alternate defense counsel, which
shall be subject again to the Indemnified Party's reasonable approval in
accordance with the terms hereof.
(b) In the event that the Indemnifying Party shall fail to give
the Defense Notice within the time and as prescribed by Section 7.4(a) hereof,
then in any such event the Indemnified Party shall have the right to conduct
such defense in good faith with counsel reasonably acceptable to the
Indemnifying Party, but the Indemnified Party shall be prohibited from
compromising or settling any such claim without the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld and shall
be deemed given in the absence of providing the Indemnified Party with a written
response within ten (10) days of any request therefor. If the Indemnified Party
fails to diligently defend such claim with counsel reasonably satisfactory to
the Indemnifying Party, or settles any such claim without the Indemnifying
Party's prior written consent or otherwise breaches this Article VII, the
Indemnified Party will be liable for all costs, expenses, settlement amounts or
other Losses paid or incurred in connection therewith and the Indemnifying Party
shall have no obligation to indemnify the Indemnified Party with respect to such
claim.
-14-
(c) In the event that the Indemnifying Party does deliver a
Defense Notice and thereby elects to conduct the defense of the subject Third
Party Claim, the Indemnified Party will cooperate with and make available to the
Indemnifying Party such assistance and materials as the Indemnifying Party may
reasonably request, all at the sole cost and expense of the Indemnifying Party.
Regardless of which party defends such claim, the other party hereto shall have
the right at its own cost and expense to participate in the defense assisted by
counsel of its own choosing. Without the prior written consent of the
Indemnified Party, which consent shall not be unreasonably withheld, the
Indemnifying Party will not enter into any settlement of any Third Party Claim
if pursuant to or as a result of such settlement, such settlement would lead to
liability or create any financial or other obligation on the part of the
Indemnified Party for which the Indemnified Party is not entitled to
indemnification hereunder. If a firm decision is made to settle a Third Party
Claim, which offer the Indemnifying Party is permitted to settle under this
Section 7.4(c), and the Indemnifying Party desires to accept and agree to such
offer, the Indemnifying Party will give at least five (5) days' prior written
notice to the Indemnified Party to that effect, setting forth in reasonable
detail the terms and conditions of any such settlement (the "Settlement
Notice"). If the Indemnified Party objects to such firm offer within ten (10)
calendar days after its receipt of such Settlement Notice, the Indemnified Party
may continue to contest or defend such Third Party Claim and, in such event, the
maximum liability of the Indemnifying Party as to such Third Party Claim will
not exceed the amount of such settlement offer described in the Settlement
Notice, plus costs and expenses paid or incurred by the Indemnified Party up to
the point through the date of such Settlement Notice. If an Indemnified Party
settles any Third Party Claim without the prior written consent of the
Indemnifying Party, the Indemnifying Party shall have no obligation to indemnify
the Indemnified Party under this Article VII with respect to such Third Party
Claim.
(d) Any judgment entered or settlement agreed upon in the manner
provided herein shall be binding upon the Indemnifying Party, and shall be
conclusively deemed to be an obligation with respect to which the Indemnified
Party is entitled to prompt indemnification hereunder, subject to the
Indemnifying Party's right to appeal an appealable judgment or order. Such
indemnification shall be required to be made no later than the tenth (10th) day
following the expiration of any period in which an appeal may be taken, and
shall be satisfied by payment of the amount thereof in cash.
7.5. Failure to Give Timely Notice. Any failure by an Indemnified
Party to give a timely, complete or accurate Third Party Indemnification Notice
as provided in this Article VII will not affect the rights or obligations of any
party hereunder except and only to the extent that, as a result of such failure,
any party entitled to receive such Third Party Indemnification Notice was
deprived of its right to recover any payment under its applicable insurance
coverage or was otherwise adversely affected or damaged as a result of such
failure to give a timely, complete and accurate Third Party Indemnification
Notice.
7.6. Notice of Claims. In the case of a claim, other than a Third
Party Claim, for indemnification under Section 7.2 or Section 7.3 hereof, upon
determination by a Buyer Indemnified Party or a Seller Indemnified Party, as the
case may be, that it has a claim for indemnification, the Indemnified Party
shall deliver notice of such claim to the
-15-
Indemnifying Party, setting forth in reasonable detail the basis of such claim
for indemnification (each, an "Indemnification Notice"). Upon the
Indemnification Notice having been given to the Indemnifying Party, the
Indemnifying Party shall have thirty (30) days in which to notify the
Indemnified Party in writing (the "Dispute Notice") that the amount of the claim
for indemnification is in dispute, setting forth in reasonable detail the basis
of such dispute. In the event that a Dispute Notice is not given to the
Indemnified Party within the required thirty (30) day period the Indemnifying
Party shall be obligated to pay to the Indemnified Party the amount set forth in
the Indemnification Notice within sixty (60) days after the date that the
Indemnification Notice had been given to the Indemnifying Party.
In the event that a Dispute Notice is timely given to an Indemnified
Party, the parties hereto shall have thirty (30) days to resolve any such
dispute. In the event that such dispute is not resolved by such parties within
such period, the parties shall have the right to pursue all available legal
remedies to resolve such dispute.
7.7. Liability Limitations. The parties agree that the maximum
aggregate liability of either party under this Article VII shall be the amount
of the Purchase Price, and, in addition, either party shall only be liable to
the other under this Article VII to the extent that any Third Party Claim or
other claim is in excess of $1,000; provided, however, once all claims of less
than $1,000 total an amount equal to $25,000 or more, then the indemnifying
party shall thereafter be liable for all Third Party Claims and/or other claims
regardless of amount.
ARTICLE VIII.
MISCELLANEOUS PROVISIONS
------------------------
8.1. Waiver; Modification. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by a duly authorized representative of each of
the parties hereto. No waiver by either party hereto at any time of any breach
by the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
8.2. Invalidity. If any provision of this Agreement shall be
determined by any court of competent jurisdiction to be unenforceable or invalid
to any extent, the remainder of this Agreement shall not be affected thereby,
and this Agreement shall be construed to the fullest extent possible to as to
give effect to the intentions of the provision found unenforceable or invalid.
8.3. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
expressed or implied, is intended to confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
-16-
8.4. Expenses. Except as otherwise specifically provided for herein,
each party hereto shall bear all expenses incurred by it in connection with this
Agreement including, without limitation, the charges of its counsel, accountants
and other experts.
8.5. Notices. All notices and other communications provided for
hereunder shall be in writing and shall be delivered to each party hereto by
hand or sent by reputable overnight courier, with receipt verified, or
facsimile, with receipt verified, or registered or certified mail, return
receipt requested, addressed as follows:
(a) If to the Buyer:
▇.▇. ▇▇▇▇▇▇▇▇ Company, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Four Stamford Plaza
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(a) If to the Seller:
Hoechst ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Canada Inc.
▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Vice President, General Counsel and Secretary
▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
-17-
or at such other address as either party may specify by notice to the other
party given as aforesaid. Such notices shall be deemed to be effective when the
same shall be deposited, postage prepaid, in the mail and/or when the same shall
have been delivered by hand or overnight courier, and/or upon facsimile
transmission, as the case may be.
8.6. Governing Law; Forum. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the Province
of Quebec without regard to its conflicts of law principles. The parties hereto
do hereby consent and submit to the venue and jurisdiction of the courts in the
Province of Quebec as the sole and exclusive forum for such matters of dispute,
and further agree that, in the event of any action or suit as to any matters of
dispute between the parties, service of any process may be made upon the other
party by mailing a copy of the summons and/or complaint to the other party at
the address set forth herein and a party's refusal to accept any such notice
shall be equivalent to service.
8.7. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
8.8. Integration. This Agreement, together with the Exhibits hereto,
the Disclosure Schedule, and all other documents to be delivered in connection
herewith, set forth the entire agreement of the parties hereto in respect of the
subject matter contained herein and supersede all prior and contemporaneous
agreements, covenants, understandings, arrangements, communications,
representations or warranties, whether oral or written, by any officer, employee
or representative of any party hereto; and any prior agreement of the parties
hereto in respect of the subject matter contained herein is hereby terminated
and cancelled. No agreements or representations, whether written, oral, express
or implied, with respect to the subject matter hereof have been made by either
party that are not set forth expressly in this Agreement and the other documents
to be delivered in connection herewith and therewith.
8.9. Assignment. Neither party may assign its rights hereunder without
the prior written consent of the other party; provided, however, that the Buyer
may assign its rights to (a) any wholly-owned subsidiary of the Buyer or (b) any
successor of the Buyer in connection with the sale of all or substantially all
of the assets of the Buyer or the merger or consolidation of the Buyer with
another party, provided such affiliate or successor agrees in writing to be
bound to all of the terms and liabilities of this Agreement to the same extent
that the Buyer is bound, and provided, further, that the Seller may assign any
of its rights that survive the Closing under this Agreement to any wholly-owned
subsidiary or affiliate of the Seller. Any assignment in contravention of this
Section 8.9 shall be null and void.
-18-
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
▇.▇. ▇▇▇▇▇▇▇▇ COMPANY, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
HOECHST ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CANADA INC.
By: /s/ ▇▇▇▇▇▇ ▇. BELLE
-------------------------------
Name: ▇▇▇▇▇▇ ▇. Belle
Title: President
EXHIBIT A - Product List
SCHEDULE 4.4 - Sales Reports
SCHEDULE 4.9 - Contracts
SCHEDULE 4.10(c) - Licenses, Franchises, Permits, Etc.
SCHEDULE 4.15(a) - List of Customers
SCHEDULE 4.15(b) - Trade and Consumer Promotions
SCHEDULE 4.16(a) - Product Warranty and Return Experience
SCHEDULE 4.16(c) - Product Liability Claims
-19-
EXHIBIT A
---------
Product List
------------
Hoechst ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Canada Inc.
▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
October 31, 1997
▇.▇. ▇▇▇▇▇▇▇▇ Company, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Re: Sale of Inventory
Dear Sirs:
As further consideration for the transaction contemplated under that
certain Asset Purchase Agreement dated as of the date hereof (the "Agreement;"
terms used herein and not otherwise defined having the meaning set forth in the
Agreement) between Hoechst ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Canada Inc. (the "Seller") and ▇.▇.
▇▇▇▇▇▇▇▇ Company, Inc. (the "Buyer"), the Seller has agreed to sell, and the
Buyer has agreed to cause SmithKline ▇▇▇▇▇▇▇ Consumer Healthcare Canada, L.P.
("SmithKline") to purchase directly from the Seller, at the effective time, on
the Closing Date, certain finished goods being inventory of the Business
consisting solely of the Lozenges Products referred to on Exhibit A annexed
hereto (the "Inventory"). SmithKline is a distributor of products acquired by
the Buyer and sold in Canada. The Inventory will be sold to SmithKline by
purchase order and invoice and pursuant to the customary business practices of
the Seller and SmithKline.
The Seller hereby covenants that all of the Inventory to be purchased
by SmithKline shall (i) be of good and merchantable quality, saleable and usable
in the ordinary course of business (including the packaging thereof) and,
without limiting the generality of the foregoing, not obsolete, (ii) be in
conformity with all applicable warranties and guaranties made by the Seller,
(iii) have at least a twelve (12) month shelf-life remaining as of the date upon
which such inventory could reasonably be expected to be sold based upon the
average monthly sales rate for each product, and (iv) be at levels not excessive
in relation to the circumstances of the Business and in accordance with past
inventory stocking practices of the Business. In addition, the Seller covenants
that there will be sufficient finished goods of each category of Product, which
finished goods shall be either (i) on hand or (ii) scheduled for production
following the Closing Date (except for the backorders specifically disclosed to
the Buyer in Section 4.15(c) of the Agreement and listed in Schedule 4.15(c) of
the Agreement and attached hereto as Exhibit B) for the continuation of sales of
the Products in the ordinary course by the Buyer for the three (3) month period
following the Closing Date, based on Seller's experience in the past year (and
without interruption other than minor interruptions consistent with the Seller's
past experience).
After the Closing for a period of two (2) years, the Seller agrees to
indemnify, defend and save the Buyer and its directors, officers, employees,
owners, agents and affiliates and their successors and assigns (each a "Buyer
Indemnified Party"), harmless from and against, and to promptly pay to a Buyer
Indemnified Party or reimburse a Buyer Indemnified Party for any and all losses,
damages, expenses (including, without limitation, court costs, amounts paid in
settlement, judgments, reasonable attorneys' fees or other expenses for
investigating and defending, including, without limitation, those arising out of
the enforcement of this Agreement), suits, actions, claims, deficiencies,
liabilities or obligations (collectively, the "Losses") sustained or incurred by
such Buyer Indemnified Party relating to, caused by or resulting from any
failure by the Seller to comply with any of the provisions of this Letter
Agreement with respect to the sale of the Inventory to SmithKline.
Please indicate your consent and acknowledgment of the foregoing by
executing this Letter Agreement in the space provided below.
Sincerely,
HOECHST ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CANADA INC.
By
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. Belle
Title: President
Accepted and agreed to as of this
31st day of October, 1997 by:
▇.▇. ▇▇▇▇▇▇▇▇ COMPANY, INC.
By
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
-2-
EXHIBIT A
---------
Lozenges Products
-----------------
-3-
EXHIBIT B
---------
List of Backorders
------------------