EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement"), dated as of July 22, 1997, by
and among
▇▇▇▇, INC., a New York corporation having its principal place of
business at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ (the "Acquirer");
THE ▇▇▇▇▇▇ BRUSH COMPANY, INC., a corporation having a principal place
of business at One ▇▇▇▇▇▇ Way Great Bend, Kansas (the "Subsidiary");
IVAX INDUSTRIES, INC., a Delaware corporation having its principal
place of business at Rock Plaza III, ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ (the "Corporation"); and
IVAX CORPORATION, a Florida corporation having its principal place of
business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ("IVAX").
WITNESSETH THAT:
WHEREAS, the Subsidiary is a wholly-owned subsidiary of the Acquirer and
the Acquirer is willing to guarantee all of the Subsidiary's obligations
hereunder (including without limitation obligations of the Subsidiary hereunder
which arise subsequent to the closing described herein);
WHEREAS, IVAX is the sole shareholder of the Corporation;
WHEREAS, the Corporation is dividing its Cleaning Products Division into
two separate businesses which it anticipates selling to different purchasers in
separate transactions;
WHEREAS, the first business, commonly referred to by the Corporation as the
cleaning products business, develops, manufactures and sells specialty cleaning
products to regional and national distributors and directly to large end-user
accounts ("Cleaning Chemicals Customers/Sales Channels") under the Franklin and
Masury Columbia brand names and on a private label basis (the "Business"); and
the second business principally develops, manufactures and/or sells abrasive
products, polyester batting materials, building and construction products, and
products sold under trademarks licensed from The Dial Corporation (the "▇▇▇▇▇
Business"), and includes the entire business of the Corporation with respect to
the products sold under the trademarks licensed from The Dial Corporation;
WHEREAS, pursuant to a Supply/Distribution Agreement entered into by the
Corporation and the Subsidiary concurrently with this Agreement, the Corporation
is appointing the Subsidiary as its distributor of Designated Products (as
hereinafter defined) through Cleaning Chemicals Customers/Sales Channels;
WHEREAS, the Subsidiary desires to purchase certain of the assets of the
Business other than the Excluded Assets listed on Appendix 1.01.10A, and the
-----------------
Subsidiary is willing to assume certain liabilities of the Corporation, in
accordance with the terms and conditions set forth herein;
WHEREAS, the Corporation desires to sell such assets and assign such
liabilities to the Subsidiary, in accordance with the terms and conditions set
forth herein;
WHEREAS, the Corporation and IVAX acknowledge that the Acquirer and the
Subsidiary are entitled to certain long-term protections against such parties'
competing with the Acquirer and the Subsidiary in the Business after the
Closing,
NOW THEREFORE, in consideration of the mutual covenants set forth herein,
the parties hereto hereby agree as follows:
ARTICLE I.
DEFINITIONS AND OTHER GENERAL MATTERS
1.01 Definitions. As used in this Agreement, the following terms shall
-----------
have the following meanings:
1.01.1 Intentionally Reserved.
----------------------
1.01.2 "Assets" means all of the assets of the
------
Corporation at its Marion, Ohio Facility, (other than the Soap Pad
Equipment and equipment and inventory relating to ▇▇▇▇▇ products), and assets of
the Corporation at its Horsham, Pennsylvania and Rock Hill, South Carolina
facilities used primarily in the Business (in each case other than Excluded
Assets as hereinafter defined) as of the Closing Date, including without
limitation the following:
1.01.2.1 all of the accounts receivable of the Business;
1.01.2.2 all of the Inventory of the Business;
1.01.2.3 all machinery, equipment and motor vehicles (if any)
used exclusively in the Business, and certain items of equipment listed on
Appendix 1.01.2.3 located in the Research and Development Facility at Rock
------------------
Hill, South Carolina, or in Westminster, California (under ▇▇▇▇▇▇
▇▇▇▇▇▇▇'▇ control), which equipment is used for the Business;
1.01.2.4 all patents, patent applications, trademarks (both
registered and unregistered), trade names, copyrighted works (both registered
and unregistered), trade secrets (including those trade secrets previously used,
currently used or intended in the future to be used by the Corporation in the
Business), formulae, product development rights, permits, licenses and other
intangible assets used primarily in the Business;
1.01.2.5 licenses to all computer programs and source codes,
which can be assigned without fee, drawings, sketches and blueprints required to
operate the Business;
1.01.2.6 all of the rights of the Business, as of the Closing
Date, under the Personalty Leases, Purchase Orders and Contracts;
1.01.2.7 all of the Records and Financial Records for the period
commencing January 1, 1995 and ending on the Closing Date used exclusively by
the Business, and access to all other Financial Records;
1.01.2.8 the right to use all customer lists used in the
Business, the right to use all trademarks and variations thereof used by the
Corporation in the Business except the "IVAX" and "Purex" names or any variation
thereof, which may only be utilized in the manner and to the extent provided for
in Section 2.07 hereof; and
1.01.2.9 The term "Assets" shall also include those certain
assets of IVAX Industries Canada, Inc. ("IVAX Canada") which are set forth on
Appendix 1.01.2.9 (the "Canadian Assets").
-----------------
1.01.3 "Assumed Liabilities" means those liabilities and
-------------------
obligations of the Corporation and of IVAX Canada relating to the
Business that are to be assumed by the Subsidiary, but only to the extent
expressly set forth in Sections 2.02 and 2.03.
1.01.4 "Best Knowledge" of the Corporation or any similar phrase
--------------
shall be deemed to mean and be limited to the actual knowledge of
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
1.01.5 "Business" means the Business as defined in the fourth
--------
"WHEREAS" clause, as heretofore conducted, or as shall be conducted on
or before the Closing Date.
1.01.6 "Closing" means the closing held pursuant to Section 10.01
-------
and "Closing Date" means the date on which the Closing is held.
1.01.7 "Contracts" means the contracts, leases and commitments
---------
primarily related to the Business, including those listed in Appendix
3.12.1 annexed hereto, except that the term "Contracts" shall not include any
Personalty Leases, Purchase Orders or Vendor Orders. The Subsidiary's
obligations with respect to the Contracts, Personalty Leases, Purchase Orders
and Vendor Orders are described in Section 2.02.
1.01.8 "Designated Products" means those products listed on
-------------------
Appendix 1.01.8, and "Designated Trademarks" means the trademarks
---------------
listed on Appendix 1.01.8.
---------------
1.01.9 "ERISA" means the Employee Retirement Income Security Act of
-----
1974, as amended.
1.01.10 "Excluded Assets" means the assets listed in Appendix
l.01.10A annexed hereto and "Excluded Liabilities" means the liabilities listed
---------------
in Appendix 1.01.10B annexed hereto.
-----------------
1.01.11 "Financial Records" means all books, papers, records and
-----------------
files in the possession of the Corporation pertaining to the conduct
and history of the Business including without limitation the Corporation's
accountants' work papers (to the extent made available by the Corporation's
accountants), financial statements, ledgers, invoices, backlog records,
inventory records and all other accounting records and documents which relate to
the Business.
1.01.12 "Fiscal Year" means the Corporation's Fiscal Year, which
-----------
ends each year on December 31.
1.01.13 "GAAP" means United States generally accepted accounting
----
principles.
1.01.14 "Hazardous Materials" means any hazardous or toxic
-------------------
substance, pollutant, contaminant, hazardous chemical, hazardous
waste, infectious waste, air emission, waste water discharge, radioactive
material or waste, extremely hazardous substance, petroleum product or waste,
petroleum-based product, asbestos, asbestos-containing material, polychlorinated
biphenyls (PCBs) and PCB compounds.
1.01.15 "Inventory" means any and all inventory consisting of raw
---------
materials, work in process, and finished goods located in Marion,
Ohio, and excepting any raw materials, work in process, finished, scrapped or
obsolete inventory relating solely to ▇▇▇▇▇ products manufactured or processed
for Elf Atochem.
1.01.16 "▇▇▇▇▇ Business" means the ▇▇▇▇▇ Business as defined in the
--------------
fourth "WHEREAS" clause, as heretofore conducted, or as shall be
conducted on or before the Closing Date. , The ▇▇▇▇▇ Business includes the
entire business of the Corporation with respect to the Designated Products.
1.01.17 "Net Assets" means the sum of (a) accounts receivable of the
----------
Business adjusted to delete receivables due from institutional
customers of the Corporation, (b) prepaid expenses and (c) Inventory, reduced by
accounts payable and accrued expenses, and increased by the value of equipment
which shall be valued at _$834,000 .
----------
1.01.18 "Operating Working Capital" means the sum of (a) prepaid
-------------------------
expenses, (b) accounts receivable of the Business (reduced by
receivables from the institutional customers of the Corporation), and (c)
Inventory, and reduced by accounts payable and accrued expenses, and all other
expenses or liabilities incurred in connection with the conduct of the Business
in the ordinary course, all as accrued on date of Closing.
1.01.19 "Personalty Leases" means those leases of personal property
-----------------
utilized primarily in the Business.
1.01.20 "Purchase Orders" means all outstanding purchase orders
---------------
received from customers of the Business in the ordinary course of
business; provided, however, that the term "Purchase Orders" shall not include
any purchase order which deviates materially and adversely from the
Corporation's customary pricing practices.
1.01.21 "Records" means all books, papers, records and files
-------
maintained by the Corporation pertaining primarily to the Business,
the Assets, the Assumed Liabilities or compliance by the Business with
applicable governmental obligations other than books, papers, records and files
relating to Excluded Assets. "Records" include without limitation sales
correspondence, customer lists, credit, collection, quality control and sales
records, purchasing records, related data processing records, insurance and
related claims records, employment records relating to Transferred Employees,
and records pertaining to compliance with applicable laws.
1.01.22 "Sellers' Expenses" means all expenses incurred or to be
-----------------
incurred by the Corporation and/or IVAX in connection with the
negotiation, preparation, execution or delivery of this Agreement, the
agreements and documents ancillary hereto and the transactions contemplated
hereby, including without limitation all fees and disbursements of attorneys,
accountants, commercial bankers, investment bankers and other advisors engaged
by the Corporation and/or IVAX in connection with the negotiation, preparation,
execution or delivery of this Agreement, the agreements and documents ancillary
hereto and the transactions contemplated hereby.
1.01.23 "Soap Pad Equipment" means the equipment located within the
------------------
Marion, Ohio Facility used exclusively to manufacture steel wool soap
pads, including soap pad machines, soap storage tanks and conveyors, all as set
forth on Appendix 1.01.23.
----------------
1.01.24 "Subsidiary's Expenses" means all expenses incurred or to be
---------------------
incurred by the Subsidiary and/or the Acquirer in connection with the
negotiation, preparation, execution or delivery of this Agreement, the
agreements and documents ancillary hereto and the transactions contemplated
hereby, including without limitation all fees and disbursements of attorneys,
accountants, commercial bankers, investment bankers and other advisors engaged
by the Subsidiary and/or the Acquirer in connection with the negotiation,
preparation, execution or delivery of this Agreement, the agreements and
documents ancillary hereto and the transactions contemplated hereby.
1.01.25 "Tax Liabilities" means all liabilities for any federal,
---------------
state, local or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
profits, withholding, social security, unemployment, disability, real property,
personal property, franchise, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated or other tax of any kind, including
without limitation any interest, penalty, assessment or addition thereto,
whether disputed or not.
1.01.26 "Trade Liabilities" means, as of the Closing Date, all
-----------------
current liabilities of the Business which have arisen in the ordinary
course of business. Notwithstanding the foregoing or any other provision herein
to the contrary, the term "Trade Liabilities" shall not include any Sellers'
Expenses.
1.01.27 "Transferred Employees" shall have the meaning set forth in
---------------------
Section 11.01.1.
1.01.28 "Unassumed Liens" means liens, security interests and
---------------
encumbrances other than liens, security interests and encumbrances
which solely secure the obligations to pay liabilities of the Business to be
assumed by the Subsidiary pursuant to Section 2.02.
1.01.29 "Vendor Orders" means all outstanding purchase orders issued
-------------
to suppliers of the Business in the ordinary course of business.
1.02 General Interpretive Principles. For purposes of this Agreement,
-------------------------------
except as otherwise expressly provided or unless the context otherwise
requires:
1.02.1 the terms defined in this Agreement have the meanings
assigned to them in this Agreement and include the plural as well as the
singular, and the use of any gender herein shall be deemed to include the other
genders;
1.02.2 references herein to "Articles", "Sections", Subsections",
"Paragraphs" and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;
1.02.3 a reference to a Section or Article without further
reference to Subsections within such Section or without further reference to
Subsections or Sections within such Article shall constitute a reference to all
Subsections within such Section or all Sections and Subsections within such
Article unless the context otherwise expressly indicates;
1.02.4 the words "herein", "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
1.02.5 the term "include" or "including" shall mean without
limitation by reason of enumeration.
ARTICLE II
STRUCTURE OF THE TRANSACTION; PURCHASE PRICE
2.01 Structure. Subject to the terms and conditions of this Agreement, the
---------
Corporation agrees to sell, assign, convey, transfer and deliver to the
Subsidiary at the Closing on the Closing Date, and the Subsidiary agrees to
purchase and acquire from the Corporation at the Closing on the Closing Date,
all of the Corporation's right, title and interest in and to the Assets, free
and clear of all Unassumed Liens whatsoever. The Corporation further agrees
that, subject to the terms and conditions of this Agreement, the Corporation
shall at the Closing on the Closing Date cause IVAX Canada to sell, assign,
convey, transfer and deliver to the Subsidiary, or to such other affiliate of
the Subsidiary as the Subsidiary may designate, all of the Canadian Assets free
and clear of all Unassumed Liens whatsoever.
2.02 Liabilities Assumed. Subject to the limitations set forth in Section
-------------------
2.03 and the terms and conditions of this Agreement, upon consummation of
the Closing, the Subsidiary shall assume the following obligations of the
Corporation and IVAX Canada:
2.02.1 to complete all Purchase Orders not completed as of the
Closing Date;
2.02.2 to pay suppliers for goods received by the Subsidiary after
the Closing pursuant to Vendor Orders issued by the Corporation or IVAX Canada
prior to the Closing;
2.02.3 to perform the obligations of the Business arising after the
Closing Date under the Personalty Leases and the Contracts; and
2.02.4 to pay the accounts payable, accrued expenses, and all other
expenses or liabilities incurred in connection with the conduct of the Business
in the ordinary course, all as accrued on the date of Closing.
2.03 Limitations. EXCEPT FOR THE OBLIGATIONS SET FORTH IN SECTION 2.02,
-----------
THE SUBSIDIARY AND THE ACQUIRER SHALL NOT ASSUME OR DISCHARGE ANY DEBTS,
OBLIGATIONS, LIABILITIES OR COMMITMENTS OF THE CORPORATION OR IVAX, WHETHER
ACCRUED NOW OR HEREAFTER, WHETHER FIXED OR CONTINGENT, AND WHETHER KNOWN OR
UNKNOWN. IN ADDITION, NOTWITHSTANDING ANY PROVISION TO THE CONTRARY IN SECTION
2.02, THE SUBSIDIARY AND THE ACQUIRER SHALL NOT ASSUME OR DISCHARGE ANY EXCLUDED
LIABILITIES (AS DEFINED IN SECTION 1.01.10).
2.04 Purchase Price. Upon consummation of the Closing, the Subsidiary
--------------
shall assume the Assumed Liabilities and shall pay to the Corporation the
sum of Seventeen Million Dollars ($17,000,000.00) (the "Purchase Price"), which
amount shall be subject to adjustment as provided in Section 2.05 below.
2.05 Purchase Price Adjustment.
-------------------------
2.05.1 Within 60 days after the Closing, the Corporation shall
deliver to the Subsidiary a balance sheet of the Assets and Assumed Liabilities
as of 11:59 p.m. on the Closing Date (the "Closing Date Balance Sheet") prepared
by the Corporation and accompanied by a report from the Corporation's
independent certified public accountants that the Closing Date Balance Sheet has
been prepared in accordance with GAAP, consistently applied except as noted on
Appendix 2.05.1 (the "Closing Date Balance Sheet GAAP Exceptions"), and, subject
---------------
to Closing Date Balance Sheet GAAP Exceptions, presents fairly, in all
material respects, the Assets and Assumed Liabilities at Closing. The amount of
Inventory included on the Closing Date Balance Sheet shall be determined
pursuant to physical inventories conducted not later than 10 days after Closing,
as adjusted for additions and deletions occurring between Closing and the taking
of such physical inventories. The Subsidiary's independent certified public
accountants shall have the right to personally observe all such physical
inventories. The Corporation and the Subsidiary shall each pay one half of the
Corporation's accountants' fees and expenses incurred in connection with the
preparation and audit of the Closing Date Balance Sheet.
2.05.2 If the Subsidiary has any objection(s) to the Closing Date
Balance Sheet, it shall deliver to the Corporation a statement describing such
objection(s) within 15 banking days after the Subsidiary's receipt of the
Closing Date Balance Sheet. During this 15 day period, the Subsidiary and its
accountants shall have reasonable access to the work papers relating to the
preparation of the Closing Date Balance Sheet. The Subsidiary and the
Corporation shall use reasonable efforts to resolve these objection(s). If the
Subsidiary and the Corporation are unable to finally resolve these objection(s)
within 15 banking days after the Corporation's receipt of such objection(s), the
Subsidiary and the Corporation shall, within 15 banking days after this 15 day
period, select a mutually acceptable neutral "Big Six" accounting firm ("Neutral
Arbitrator") to determine any remaining unresolved objection(s). A firm shall
be considered neutral if it has not within the past three years performed, and
does not currently perform or contemplate performing, any accounting, consulting
or other services with an aggregate value in excess of $100,000 for any of the
parties. The Corporation and the Subsidiary will present their remaining
unresolved objection(s) in writing, along with supporting documentation, to the
Neutral Arbitrator and opposing party, within 10 days after retaining the
Neutral Arbitrator. The Neutral Arbitrator will, utilizing the standards
prescribed in Section 2.05.1 hereof, render its decision to the parties in
writing within 30 days after being retained. The Neutral Arbitrator's decision
will be based solely on each parties written documentation and shall be final
and binding upon the parties. The Neutral Arbitrator's fees and expenses shall
be shared equally by the Subsidiary and the Corporation. The Corporation will
revise the Closing Date Balance Sheet to reflect the resolution of any
objections thereto pursuant to this Paragraph.
2.05.3 If the Operating Working Capital, as reflected on the
Closing Date Balance Sheet and revised to reflect any revisions thereto made
pursuant to Section 2.05.2 ("Closing Operating Working Capital"), is greater or
less than Five Million Seven Hundred Thirty-Three Thousand Dollars ($5,733,000)
("Threshold Operating Working Capital"), (i) the amount, if any, by which the
Closing Operating Working Capital is greater than the Threshold Operating
Working Capital shall be added to the Purchase Price, and (ii) the amount, if
any, by which the Closing Operating Working Capital is less than the Threshold
Operating Working Capital shall be deducted from the Purchase Price.
2.05.4 On or before the third business day following the date on
which the Closing Date Balance Sheet is finally determined, the Subsidiary shall
pay the amount of any net upward adjustment of the Purchase Price pursuant to
Section 2.05.3 to the Corporation together with interest at the prime rate from
the Closing Date to the day of payment, or the Corporation shall pay the amount
of any net downward adjustment of the Purchase Price pursuant to Section 2.05.3
to the Subsidiary, together with interest at the prime rate from the Closing
Date to the day of payment, in either case, by wire transfer of immediately
available funds.
2.06 Allocation of the Purchase Price. The Purchase Price payable
--------------------------------
hereunder for the Assets conveyed by the Corporation hereunder shall be
allocated among the Assets in accordance with the allocation to be mutually
agreed upon by the parties.
2.07 Use of Names.
------------
2.07.1 IVAX Name. Upon consummation of the Closing, the Subsidiary
---------
and the Acquirer shall cease to use the name IVAX or any other name used by
the Corporation in the conduct of the Business prior to the Closing other than
trademarks or tradenames purchased in this Agreement which do not utilize the
"IVAX" name. However, the Corporation has agreed that for a period of 18 months
after Closing, the Subsidiary may use labels, products, or containers bearing
the name of the Corporation.
2.07.2 PUREX Name. The Subsidiary shall have the right to use the
----------
Purex Industrial company name on all products included within the Assets which
currently have United States Environmental Protection Agency, United States
Department of Agriculture or other federal or state registrations (the "PUREX
Registered Products"), but not on any new or different products, through March
31, 1998, solely in connection with: (i) selling PUREX Registered Products
bearing the PUREX Industrial company name until the registrations and licenses
for such products under the Purex Industrial company name have been renewed or a
recordal of the name change entered against same has been affected reflecting
the deletion of the name PUREX therefrom, and (ii) as may otherwise be
reasonably necessary to effect an orderly discontinuance of its use of said name
in accordance with the foregoing. In no event shall the Subsidiary use the
PUREX name in any way for any reason beyond March 31, 1998. The Subsidiary
agrees to submit, by December 31, 1997, all regulatory filings necessary to
discontinue all use of the PUREX name. Additionally, within thirty days from
the final use date, the Subsidiary shall certify in writing to IVAX and, in a
form approved by IVAX, to The Dial Corporation at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attn: Commercial Business General Manager, with a
copy to the Law Department at the same address, that the Subsidiary has ceased
all use of the PUREX name, and has destroyed any unused inventory of product
labels bearing the PUREX name.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION AND
IVAX
The Corporation and IVAX hereby represents and warrants to the Acquirer and
the Subsidiary as follows, knowing and intending that the Acquirer and the
Subsidiary shall rely upon such representations and warranties in entering into
this Agreement and performing the obligations to be performed by the Acquirer
and the Subsidiary under this Agreement:
3.01 Organization.
------------
3.01.1 The Corporation is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
all requisite corporate power, franchises, and licenses to own its property,
conduct the Business and execute, deliver and perform this Agreement.
3.01.2 True and complete copies of the Corporation's certificate
of incorporation and by-laws, in each case as amended, are set forth in Appendix
3.01.2 annexed hereto.
3.02 Capitalization; Options and Convertible Securities; Funded Debt.
---------------------------------------------------------------
3.02.1 The Corporation has authorized capital stock consisting
solely of three thousand (3,000) shares of the Corporation's common stock, par
value ten cents ($.10) per share (the "Corporation Common Stock"). IVAX is the
legal and beneficial owner of all of the outstanding shares of the Corporation
Common Stock.
3.02.2 No debt or other agreement of IVAX prevents or would be
violated by the transfer of assets contemplated by this Agreement.
3.03 Foreign Qualifications. Appendix 3.03 annexed hereto
---------------------- --------------
identifies all jurisdictions in which the Corporation is required to be
qualified to do business as a foreign corporation, except where the failure
would not have an adverse effect on the Business taken as a whole (an "Adverse
Effect"). The Corporation has delivered to Acquirer true and complete copies of
certificates establishing its authorization to transact business as a foreign
corporation.
3.04 Other Business Names. Appendix 3.04 annexed hereto is a complete list
-------------------- -------------
of the business names or trade names currently used by the Business.
3.05 Real Estate. The parcel of land of approximately 26 acres with the
------------
buildings and improvements thereon situate in Marion, Ohio, as more
particularly described on Appendix 3.05 annexed hereto, is referred to herein as
-------------
the Real Estate. The Real Estate is the only real property owned by the
Corporation and used exclusively in the Business.
3.06 Leased Real Estate.
------------------
3.06.1 The Lease between Jerwel Enterprises, a partnership, and the
Corporation for office space located in Huntington Beach, California is the only
lease of real estate presently used exclusively in the Business. A true and
complete copy of such lease, as amended, has been delivered to the Acquirer.
The Corporation is not in default under such lease and to the Best Knowledge of
the Corporation there are no facts which, with notice and/or the passage of
time, would constitute such a default.
3.06.2 There are no subtenants of the Corporation under the real
estate lease described in Section 3.06.1.
3.07 Composition of Assets. The tangible assets of the Corporation located
---------------------
at Horsham, Pennsylvania and at Rock Hill, South Carolina which are devoted
primarily to the Business and which are included in this sale are set forth on
Appendix 3.07.
-------------
3.08 Condition of Assets. The equipment located in the Marion, Ohio
-------------------
Facility necessary to manufacture the products produced by the Business is
in operating condition.
3.09 Intellectual Property; Infringement Claims.
------------------------------------------
3.09.1 Appendix 3.09.1 annexed hereto contains a true and complete
----------------
list of all patents and trademarks owned or used by the Business and
necessary to produce, market and sell the products of the Business, including
patents, patent applications, trademarks and trademark applications
(collectively, along with inventions primarily for the Business which are also
assigned, the "Intellectual Property"). True and complete copies of all written
instruments which evidence such Intellectual Property have been delivered to the
Acquirer. Except as set forth on Appendix 3.09.1, the Corporation is the sole
---------------
and exclusive owner of each of said item of Intellectual Property;
there are no known claims or demands against the Corporation with respect to any
of such items of Intellectual Property which could reasonably be expected to
have an Adverse Effect, and no proceedings have been instituted, are pending, or
to the Best Knowledge of the Corporation have been threatened which challenge
the right of the Corporation to use any of such assets which could reasonably be
expected to have an Adverse Effect. No consent is required prior to the
transfer to the Subsidiary of any asset or agreement referenced in this Section
3.09.1. The Corporation has the unrestricted right to use and transfer to the
Acquirer, free from any rights or claims of others, all trade secrets and
customer lists which it is now using in connection with the sale of any and all
products or services which have been or are being sold by the Business. To the
Best Knowledge of the Corporation, no portion of the Business carried on by the
Corporation infringes the patent, trademark, trade names, trade secret,
copyright, or other Intellectual Property rights of any other person in a manner
which could reasonably be expected to have an Adverse Effect; the Corporation
has not been notified in writing pursuant to any third-party claims that the
Corporation has effected any such infringement which could reasonably be
expected to have an Adverse Effect; and to the Best Knowledge of the Corporation
there are no facts which would reasonably serve as the basis, in whole or in
part, of any such claim.
3.10 Accounts Receivable; Inventory.
------------------------------
3.10.1 All trade accounts receivable of the Business have originated
in the ordinary course of its business, are valid, are not subject to any
defense, counterclaim or setoff. No accounts receivable of the Business have
been factored.
3.10.2 The Corporation has no security agreements with its account
debtors (excluding agreements referenced in Appendix 3.10.2 annexed hereto),
----------------
relating to the Assets.
3.10.3 The Inventory in the possession of the Corporation, taken as
a whole, has been produced or purchased in the ordinary course of conduct of the
Business and satisfies in all respects the applicable specifications therefor.
3.11 Title to Assets. The Business has good and valid title in and to all
---------------
of the Assets owned by it as reflected in the most recent balance sheet
provided in Appendix 3.22.1 annexed hereto (the "Most Recent Balance Sheet") as
---------------
of the date thereof (the "Most Recent Balance Sheet Date") plus all assets
purchased by the Business since the Most Recent Balance Sheet Date (less all
assets which the Business has disposed of in the ordinary course of business
since the Most Recent Balance Sheet Date), which property shall be transferred
to the Acquirer or the Subsidiary at the Closing, free and clear of all
Unassumed Liens, except as described in the next sentence hereof. The only
liens or security interests which, at the Closing, will exist on the Assets are
those which either (a) are liabilities disclosed in the Most Recent Balance
Sheet, (b) secure the ownership interests of lessors of equipment used by the
Corporation and are disclosed in Appendix 3.11 annexed hereto, (c) are liens for
-------------
current taxes or assessments not yet due and delinquent, (d) are otherwise
disclosed in the notes to the Most Recent Balance Sheet, or (e) are reflected in
Appendix 3.11 annexed hereto.
-------------
3.12 Contracts.
---------
3.12.1 Appendix 3.12.1 annexed hereto identifies the following
---------------
contracts, leases and other contractual obligations to which the
Business is currently a party or by which the Business is currently bound: (i)
contracts with or loans to any of the stockholders, officers, directors,
employees, agents, consultants, advisors, salesmen, distributors or sales
representatives of the Corporation; (ii) any collective bargaining agreement;
(iii) contracts with suppliers, other than purchase orders in the ordinary
course of business; (iv) contracts with customers other than purchase orders in
the ordinary course of business; (v) leases as lessor of real estate or
equipment involving an annual expenditure in excess of $50,000; (vi) deeds of
trust, mortgages, conditional sales contracts, security agreements, pledge
agreements, trust receipts, or any other agreements or arrangements whereby any
of the Assets is subject to a lien, encumbrance, charge or other restriction;
(vii) agreements evidencing loans or lines of credit; (viii) contracts
restricting the Business from doing business in any areas or in any way limiting
competition in any respect; (ix) contracts which are not required to be
disclosed pursuant to any other clause of this Section 3.12.1 ("Other
Contracts") and which in the aggregate (i.e., when considered with all similar
Other Contracts) require payments of more than $75,000 per year; (x) contracts
providing for the installation or maintenance of equipment purchased or leased
by the Corporation involving the expenditure of at least $50,000 per year; (xi)
any distribution marketing alliance, strategic alliance, joint venture,
partnership or limited partnership agreement; (xii) guarantees by the
Corporation of the obligations of IVAX or any other person except those
resulting from the endorsement of customer checks deposited by the Corporation
for collection; (xiii) contracts or arrangements pursuant to which the
Corporation has agreed to indemnify, hold harmless or defend any person or
entity; (xiv) all commitments to enter into any contract, lease or obligation of
the type described in this Section 3.12; and (xv) escrow arrangements of any
sort. The Corporation has performed all obligations required on its part to be
performed to date under any of such contracts, leases or other commitments to
which it is a party or otherwise bound and no default has occurred thereunder
(or will occur thereunder upon the giving of notice or the passage of time or
both) which is likely to have an Adverse Effect. To the Best Knowledge of the
Corporation, all parties to such contracts and leases with the Corporation are
in substantial compliance therewith and no event has occurred which, through the
giving of notice or the passage of time or both, would cause or constitute a
default under any such contract or lease or would cause the acceleration of any
obligation of any party thereto.
3.12.2 Except as shown on Appendix 3.12.2 the Business has no
binding outstanding bids, sales proposals, contracts, or unfilled orders for
sales in excess of One Hundred Thousand Dollars ($100,000.00) annually quoting
prices which reflect discounts other than commercially reasonable discounts
given in the ordinary course of business.
3.12.3 True and complete copies of the contracts and leases listed
or referred to on Appendix 3.12.1 annexed hereto and in any other Appendix
---------------
annexed hereto have been provided to the Acquirer's counsel.
3.12.4 Except as described in Appendix 3.12.4 annexed hereto, none
---------------
of the agreements referenced in Section 3.12.1 or any other agreement
of the Business requires the consent of or prior notice to any third-party in
connection with the execution of this Agreement or the consummation of the
transactions contemplated hereby where the failure to procure such consent would
have an Adverse Effect, or such consent has been obtained or such prior notice
has been given.
3.13 Customers and Suppliers.
-----------------------
3.13.1 Appendix 3.13.1 annexed hereto lists the top twenty (by
---------------
revenue) customers of the Business which purchased goods and services
from the Corporation during Fiscal Year 1996 or Fiscal Year 1995, the total
value of business transacted with such customers during the five (5) months
ended May 31, 1997 by the Corporation, and the payment terms currently in effect
with respect to each customer listed on that Appendix.
3.13.2 Appendix 3.13.2 annexed hereto lists the top ten (by
---------------
expenses) suppliers from whom the Business purchased goods and
services during Fiscal Year 1996 and the total value of business transacted by
the Business with such suppliers during the five (5) months ended May 31, 1997.
3.13.3 Except as disclosed in Appendix 3.13.3 annexed hereto, none
---------------
of the top twenty (by revenues) customers listed on Appendix 3.13.1,
---------------
none of the top ten (by expenses) suppliers listed on Appendix 3.13.2
---------------
and none of the distribution marketing alliance partners or strategic
alliance partners referred to in agreements listed on Appendix 3.12.1 have,
---------------
since January 1, 1997, terminated or, to the Corporation's Best
Knowledge, changed significantly their relationships with the Business or
advised the Business or IVAX that they intend to terminate or change
significantly their relationships with the Corporation on and after the Closing
Date.
3.14 Intentionally Reserved.
3.15 Current Employees and Employment Practices.
------------------------------------------
3.15.1 Annexed hereto as Appendix 3.15.1 is a list, as of the date
----------------
hereof, showing the names of all Transferred Employees of the Business, their
original dates of employment, their job titles and their annual base pay.
3.15.2 Except as indicated on Appendix 3.15.2 annexed hereto, (a)
---------------
all Transferred Employees of the Business are employees at will who
may be terminated by the business at any time with no obligation to make any
payment except wages, and vacation pay to the date of termination and (b) all
consultants of the Business may be terminated by the Corporation at any time
with no obligation to make any payment except consultation fees to the date of
termination and except as provided in the consulting agreements.
3.15.3 As it effects the Business, the Corporation is in compliance
in all material respects with all federal and state laws respecting employment,
wages and hours. The Corporation with respect to the Transferred Employees has
not engaged in any discriminatory hiring or employment practices or any unfair
labor practices nor have any employment discrimination or unfair labor practice
complaints against the Corporation been filed by any Transferred employee, or,
to the Best Knowledge of the Corporation, been threatened to be filed, with any
federal or state agency having jurisdiction over the labor matters of the
Corporation. To the Best Knowledge of the Corporation, the Corporation has not
since December 31, 1996 been threatened by any former employee of the Marion
Ohio Facility with any suit alleging wrongful termination. To the Best
Knowledge of the Corporation there are no facts which could reasonably be
expected to form a basis for any complaint or suit of a type described in this
Section 3.15.3. To the Best Knowledge of the Corporation none of the Transferred
Employees are aliens who do not have a valid permit to work in the United States
of America.
3.15.4 Appendix 3.15.4A annexed hereto is a copy of the current
----------------
Confidentiality and Non-Disclosure policy of the Corporation which governs
employees of the Rock Hill, South Carolina facility. Appendix 3.15.4B is a
copy of the Non-Disclosure and Confidentiality Agreement that employees at the
Rock Hill, South Carolina facility were expected to sign. Appendix 3.15. 4C
contains a list of those employees of the Rock Hill, South Carolina facility who
worked on research and development for the Business for whom the Corporation has
been unable to locate executed agreements in the form attached as Appendix
3.15.4B.
3.16 Employment.
----------
3.16.1 Appendix 3.16.1 annexed hereto contains a true and complete
---------------
list of all funded or unfunded, written or oral, employee benefit
plans, incentives and salary, wage or other compensation plans or arrangements,
including but not limited to all pension and profit sharing plans, savings
plans, bonus plans, deferred compensation plans, incentive compensation plans,
stock purchase plans, supplemental retirement plans, severance or termination
pay plans, stock option plans, hospitalization plans, medical plans, life
insurance plans, dental plans, disability plans, cafeteria plans, dependent care
plans, tuition reimbursement plans, educational assistance plans, salary
continuation plans, vacation plans, supplemental unemployment benefit plans,
collective bargaining agreements, retiree benefits and agreements, severance
agreements and each other employee benefit program, plan, policy or arrangement
(each a "Benefit Plan") maintained, contributed to, or required to be
contributed to by the Corporation with respect to any current or former
employees, directors, officers, agents or consultants of the Corporation, or for
which the Business may be responsible or with respect to which the Corporation
may have any liability, whether or not subject to the Employee Retirement Income
Security Act of 1974 ("ERISA"), and whether legally binding or not, that
involves the payment by the Corporation of an annual amount of more than $1,000
in the aggregate.
3.16.2 Each of the Benefit Plans listed in Appendix 3.16.1 annexed
---------------
hereto is and has at all times been in compliance in all respects with
all applicable provisions of ERISA, the Code, the Age Discrimination in
Employment Act of 1967, the Americans with Disabilities Act of 1990, the Family
Medical Leave Act of 1993 and all other laws applicable to the Benefit Plans,
except where the failure would not have an Adverse Effect.
3.16.3 Each "employee pension benefit plan" as defined in 3(2) of
ERISA (each a "Pension Plan") which is intended to meet the requirements of
Section 401(a) of the Code meets the requirements for qualification under
Section 401 (a) of the Code and nothing has occurred which would materially and
adversely affect the qualified status of any such Pension Plan except for
compliance with the requirements imposed by the Small Business Job Protection
Act of 1996. Except as set forth in Appendix 3.16.3 annexed hereto, the
---------------
Internal Revenue Service has issued a favorable determination letter
with respect to the qualification under the Code (including without limitation
the Tax Reform Act of 1986) of each Pension Plan (true and complete copies of
which have been delivered to the Acquirer's counsel) and the Internal Revenue
Service has not taken any action to revoke any such letter.
3.16.4 Each fiduciary of each Benefit Plan is bonded to the extent
required by Section 412 of ERISA. The Corporation has not maintained,
contributed to or been required to contribute to (i) any Pension Plan under
which more than one employer makes contributions (as defined in Section 4064(a)
of ERISA) or (ii) a "multiemployer plan" as defined in Section 3(37)(A) and (D)
of ERISA, nor has it withdrawn from any Pension Plan as a "substantial employer"
as defined in Section 4001 (a)(2) of ERISA so as to become subject to the
provisions of Section 4063 of ERISA, or ceased operations at any facility so as
to become subject to the provisions of Section 4062 of ERISA. Except as set
forth in Appendix 3.16.4 by their terms, each of the Benefit Plans can be
---------------
amended, terminated or otherwise discontinued after the Closing Date
without liability to the Acquirer or the Subsidiary.
3.16.5 Except as set forth in Appendix 3.16.5 annexed hereto, the
---------------
execution and performance of the transactions contemplated by this
Agreement will not constitute an event under any Benefit Plan or individual
agreement that will or will likely result in any payment (whether of severance
pay or otherwise), acceleration, vesting or increase in benefits with respect to
any current or former employee, officer, consultant, agent or director of the
Corporation for which the Acquirer or the Subsidiary may have liability.
3.16.6 Except as set forth in Appendix 3.16.6 annexed hereto, each
---------------
group health plan (within the meaning of Section 5000(b)(1) of the
Code) maintained by the Corporation has been administered in substantial
compliance with the coverage continuation requirements contained in the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") and as provided
under Section 4980B of the Code and any regulations promulgated or proposed
under the Code. Except to the extent required by COBRA and except for
obligations which either are not to be assumed by the Acquirer or the Subsidiary
or are described in Appendix 3.16.6 annexed hereto, the Corporation has never
---------------
maintained, sponsored or contributed to any plan or program or
arrangement providing post-termination employment, health, dental, disability or
life insurance benefits with respect to current or former employees, officers,
consultants, agents or directors and/or their spouses or dependents.
3.16.7 The Corporation has made all contributions required to be
made to each Benefit Plan under the terms of the plan and applicable law. No
prohibited transaction (as defined in Section 4975 of the Code or Section 406 of
ERISA) has occurred with respect to any Benefit Plan which could subject any
Benefit Plan or any related trust, the Corporation, the Acquirer or the
Subsidiary or any director or employee of any of them to any tax or penalty
imposed under Section 4975 of the Code or Section 502(i) or 502(l) of ERISA,
either directly or indirectly, and whether by way of indemnity or otherwise.
3.17 Licenses and Permits. The Corporation, with respect to the operation
--------------------
of the Business, has all certifications, licenses, permits, orders,
approvals and authorizations required for the conduct of the Business as
presently conducted. The Corporation with respect to the operation of the
Business is acting within the terms of such certifications, licenses, permits,
orders, approvals and authorizations, except where the failure would not have an
Adverse Effect. To the Best Knowledge of the Corporation, no suspension or
cancellation of any such certifications, licenses, permits, orders, approvals
and authorizations have been threatened or have occurred within the past two (2)
years. Appendix 3.17 contains to the Best Knowledge of the Corporation a
--------------
complete list of all such certifications, licenses, permits, orders,
approvals and authorizations.
3.18 Authority Relative to Agreement; Enforceability. The execution,
-----------------------------------------------
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby are within the legal capacity and power of the
Corporation and IVAX and have been duly authorized by all requisite corporate
action (including, without limitation, shareholder approval by shareholders of
the Corporation) on the part of the Corporation. This Agreement is a legal,
valid and binding obligation of the Corporation and IVAX, enforceable against
the Corporation and IVAX in accordance with its terms. All persons who executed
this Agreement on behalf of the Corporation and IVAX have been duly authorized
to do so.
3.19 Compliance With Other Instruments; Consents. Except as set forth in
-------------------------------------------
Appendix 3.19 annexed hereto, neither the execution of this Agreement nor
-------------
the consummation of the transactions contemplated hereby will conflict
with, violate or result in a breach of or constitute a default under (or an
event which, with the giving of notice or lapse of time or both, would
constitute a default), or result in the termination of, or accelerate the
performance required by, or result in the creation of any lien or encumbrance
upon any of the Assets, any provision of the articles of incorporation and by-
laws of the Corporation or any indenture, mortgage, lien, lease, agreement,
contract, instrument, or other restriction of any kind or character to which the
Corporation is subject or is bound, or requires the consent of any third party
or governmental agency.
3.20 Compliance With Applicable Laws.
-------------------------------
3.20.1 The Corporation, with respect to the operation of the
Business, is in compliance in all respects with all federal, state, county, and
municipal laws, ordinances, regulations, judgments, orders or decrees applicable
to the conduct of the Business or to the Assets, except where the noncompliance
would not have an Adverse Effect. The Corporation, with respect to the
Business, has received no written notice or advice to the contrary. All reports
required by federal, state and local governments, including, but not limited to,
reports to the Environmental Protection Agency ("EPA"), the Occupational Safety
and Health Administration ("OSHA"), state equivalents of such federal agencies,
all reports required under licenses or qualifications to import, export,
manufacture, assemble or sell various classes and types of products sold by the
Corporation, if such licenses or qualifications are necessary, and all other
reports to similar agencies, board groups or administrations have been timely
filed by the Corporation and all information contained therein is true and
correct, except where the failure would not have an Adverse Effect. Since
January 1, 1996, the Corporation has not received any written governmental
inquiries or responses with respect thereto other than inquiries or responses
which could not reasonably be expected to have an Adverse Effect.
3.20.2 Except as otherwise disclosed in Appendix 3.20.2 to this
---------------
Agreement, neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will (a) violate any order,
writ, injunction, statute, rule or regulation applicable to the Corporation or
(b) require (with respect to the Corporation) the consent, approval,
authorization or permission of, or the filing with, or the notification of, any
federal, state or local government agency, except where the violation or failure
to procure the consent, approval, authorization, or permission, or to make any
filing, would not have an Adverse Effect.
3.21 Environmental Compliance. Except as disclosed on Appendix 3.21, to
------------------------ -------------
the Best Knowledge of the Corporation:
3.21.1 The Corporation with respect to the operation of the
Business, is in compliance in all respects with all federal, state, county, and
municipal laws, ordinances, regulations, judgments, orders or decrees applicable
to the conduct of the Business or to the Assets and relating to the protection
of the environment, including, but not limited to, those which impose liability
for or standards of conduct concerning discharges, emissions, releases or
threatened releases of Hazardous Materials into the Environment, including, but
not limited to, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended or the Resource Conservation and Recovery Act
of 1976, as amended ("Environmental Laws"), except where the noncompliance would
not have an Adverse Effect;
3.21.2 The Corporation, with respect to the operation of the
Business, has all certifications, licenses, permits, orders, approvals and
authorizations required under applicable Environmental Laws for the conduct of
the Business as presently conducted ("Environmental Permits"). The Corporation
with respect to the operation of the Business is acting within the terms of such
Environmental Permits, except where the failure would not have an Adverse
Effect. To the Best Knowledge of the Corporation, no suspension or cancellation
of any such Environmental Permits has been threatened or has occurred within the
past two (2) years; and
3.21.3 There are no investigations, inquiries, notices of
violations, enforcement actions or other proceedings now pending by any federal,
state or local governmental body with respect to the Business or the Real
Property in connection with the actual or alleged failure to comply with any
requirement of any Environmental Law or Environmental Permit, which would have
an Adverse Effect.
3.21.4 The Corporation's storage, transportation, handling, use or
disposal, if any, of Hazardous Substances on or under the Marion, Ohio Facility
and/or disposal elsewhere, if any, of Hazardous Substances generated on or from
the Marion, Ohio Facility is currently, and at all times during Corporation's
ownership or operation thereof has been, in compliance with all applicable
Environmental Laws.
3.21.5 The Corporation has not transported or arranged for the
transportation of any Hazardous Substances to any location which is: (i) listed
on the EPA's National Priorities List of Hazardous Waste Sites (the "National
Priorities List"); (ii) listed for possible inclusion on the National Priorities
List, in CERCLA or on any similar state list; or (iii) the subject of any
regulatory action which would reasonably be expected to lead to claims against
the Subsidiary for damages to natural resources, personal injury, clean-up costs
or clean-up work.
3.21.6 There are no liens against the Marion, Ohio Facility arising
under any Environmental Law, or based upon a regulatory action and/or third
party claim under any environmental law.
3.22 Financial Statements.
--------------------
3.22.1 The Corporation has delivered to the Acquirer the audited
statements of net assets of the Business as of December 31, 1996 and 1995 and
the related statements of revenues and expenses of the Business for the years
then ended (the "Audited Financial Statements"). A true and complete copy of
the Audited Financial Statements, including related notes thereto and
independent auditor's report thereon, is set forth in Appendix 3.22.1 annexed
----------------
hereto.
3.22.2 The Audited Financial Statements have been prepared in
conformity with GAAP, consistently applied, and present fairly, in all material
respects, the net assets of the Business at December 31, 1996 and 1995 and the
revenues and expenses of the Business for the years then ended.
3.23 Illegal Purposes. Within the last twelve months, no funds or assets
----------------
of the Corporation with respect to the operation of the Business have been
knowingly used for illegal purposes; no false or artificial entry has been
knowingly made in such books and records; and the Corporation, with respect to
the operation of its Business, has not knowingly made, directly or indirectly,
any illegal contributions to any political party or candidate, either domestic
or foreign, or to any other person, which in each such case would have an
Adverse Effect.
3.24 Litigation. Except as disclosed in Appendix 3.24 annexed hereto,
---------- -------------
there are no legal, administrative, arbitration or other proceedings, and
no other claims pending or, to the Best Knowledge of the Corporation threatened,
against the Business, nor is the Corporation subject to any existing judgment;
nor has the Corporation received any written inquiry from any agency of the
federal or of any state or local government about this Agreement or the
transactions contemplated hereby, or about any violation or possible violation
of any law, regulation or ordinance materially adversely affecting the Business
or the Assets; nor has the Business received any material claims regarding the
performance of its products during the past three years.
3.25 Insolvency. The Corporation is not bankrupt or insolvent, and the
----------
transfer of the Assets pursuant to this Agreement will not violate any
bankruptcy or insolvency laws.
3.26 Adverse Business Changes. Except as described in Appendix 3.26
------------------------ -------------
annexed hereto or as otherwise described in Appendices annexed hereto,
since the last day of Fiscal Year 1996 there has not been:
3.26.1 any material (either when taken by itself or in conjunction
with all other such changes) adverse change in the financial condition, assets,
liabilities (whether absolute, contingent or otherwise), or business of the
Business taken as a whole;
3.26.2 any damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting the Business;
3.26.3 any disposition, mortgage, pledge, or subjection to any
lien, claim, charge, option, or encumbrance of any material property or asset of
the Business, any material commitment made or liability incurred by the
Business, or any cancellation or compromise of any material debt or claim of the
Business, otherwise than in the ordinary course of business;
3.26.4 any employment or consultation contract entered into by the
Corporation with respect to the Business or any Transferred Employees, or any
increase or decrease in the rates of compensation payable or to become payable
by the Business to ▇▇▇▇▇▇ ▇▇▇▇▇▇ or any Transferred Employees over or under the
rates in effect during the 12 months ended on the last day of Fiscal Year 1996,
except as required by existing contracts or Benefit Plans or in the ordinary
course of business consistent with past practices; any material amendment or
modification of any Benefit Plan; or any commitment or obligation of any kind
for the payment by the Business of any bonus, additional salary or compensation,
to officers, directors, employees or agents, except as required by existing
contracts or Benefit Plans or in the ordinary course of business consistent with
past practices;
3.26.5 any amendment, termination or threatened termination of any
contract, agreement, lease, or license to which the Corporation is a party and
which relates to the Business or by which any such entity may be bound except in
the ordinary course of its Business; or
3.26.6 any write down of the value of good will or fixed assets.
3.27 Other Changes. Except as described in Appendix 3.27 annexed hereto or
------------- -------------
as otherwise described in Appendices annexed
hereto, there has not been with respect to the Business since January 1,
1997:
3.27.1 any strike, shutdown, picketing, work stoppage, labor
dispute or threat of a labor dispute or any attempt or threat of an attempt by a
labor union to organize the employees of the Business, or any application or
complaint filed by an employee or union of the Corporation with the National
Labor Relations Board of any comparable state or local agent, which could
reasonably be expected to have an Adverse Effect.
3.27.2 any adverse change in the sources of supply or method of
doing business of the Business other than the ordinary course of business;
3.27.3 any distribution or disposition of the material assets of
the Business other than in the ordinary course of business;
3.27.4 any catastrophic event affecting the Business or the Assets
such as but not limited to fire, explosion, earthquake, accident, flood,
condemnation, act of God or public enemy, riot or civil disturbance;
3.27.5 any loss or to the Corporation's Best Knowledge threatened
loss of any customer which purchased more than $100,000 of goods and services
from the Business (taken as a whole) during the 12 months ended on the last day
of Fiscal Year 1996;
3.27.6 any loss or to the Corporation's Best Knowledge threatened
loss of a raw material or packaging supplier from whom the Corporation purchased
for use by the Business more than $100,000 of goods during the 12 months ended
or the last day of Fiscal Year 1996, which cannot reasonably be expected to be
replaced on substantially equivalent terms; or
3.27.7 any termination of any permit or license issued to the
Corporation with respect to the Business or to any of its Transferred Employees
or agents upon which the Business is dependent.
3.27.8 since December 31, 1994, any order, judgment, writ,
injunction, decree or permit of any court or any
governmental or regulatory body specifically naming the Corporation adopted or
entered or to the Best Knowledge of the Corporation proposed to be adopted or
entered which may reasonably be expected to adversely affect the Business.
3.28 Brokerage. Except as disclosed in Appendix 3.28 annexed hereto, no
--------- -------------
broker or finder has rendered services to the Corporation (or any other
shareholder of the Corporation) in connection with this Agreement or the
transactions contemplated hereby.
3.29 Appendices. All of the facts recited in the Appendices referred to in
----------
this Article III shall be deemed to be representations of facts as though
recited in this Article III in their entirety.
3.30 Sales Tax Law Relating to Bulk Sales. The Corporation has paid, or
------------------------------------
will pay any sales taxes due to the State of Ohio for transactions occurring
prior to the Closing Date.
3.31 Full Disclosure. To the Corporation's Best Knowledge, no
---------------
representation or warranty made by the Corporation in this Agreement, and
no certification furnished or to be furnished to the Acquirer pursuant to this
Agreement, when taken as a whole and in light of the circumstances in which they
were made, contain any untrue statement of a material fact, or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading. Notwithstanding the foregoing, no representation or warranty based
upon this Section 3.31 is given, and no disclosure to the Acquirer or the
Subsidiary is required, with respect to events, conditions or facts which are in
the public domain, or which affect the international, national, state or local
economy, political situation or the industry generally in which the Business is
engaged. All representations, warranties, exhibits and appendices and other
writings required to be delivered hereunder shall be read and construed together
in their entirety.
3.32 Insurance. The Corporation has Product Liability Insurance written on
---------
a claims made basis in the amount of at least Two Million Dollars
($2,000,000.00) covering product claims. Any claim for product liability which
relates to a product manufactured and distributed by the Corporation prior to
the Closing Date is an Excluded Liability.
3.33 License to use Dial Trademark. IVAX and the Corporation represent
-----------------------------
that the Corporation is licensed to use certain Dial Trademarks as listed
on Schedule 1.1(c) to a Reciprocal Supply and Distribution Agreement (the
"Supply Agreement") being executed on even date herewith.
3.33.1 Said Dial Trademark license is a valid license which has a
perpetual term subject to the provisions of the Dial Trademark License
Agreements.
3.33.2 No provision of the aforementioned Reciprocal Supply and
Distribution Agreement violates said Dial Trademark license or is cause for
termination of said license.
3.33.3 The sale of the ▇▇▇▇▇ Business will not violate said Dial
Trademark license nor will it be cause for termination of said license.
3.33.4 During the term of the Supply Agreement, the Corporation (or
the purchaser of the ▇▇▇▇▇ Business) shall comply with all of the terms and
conditions of the Dial Trademark License Agreements and shall not terminate its
rights thereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE ACQUIRER AND THE SUBSIDIARY
The Acquirer and the Subsidiary hereby represent and warrant to the
Corporation and IVAX as follows, knowing and intending that the Corporation and
IVAX shall rely upon such representations and warranties in entering into this
Agreement and performing the obligations to be performed by the Corporation and
IVAX under this Agreement:
4.01 Organization and Power. The Acquirer is a corporation duly organized,
----------------------
validly existing and in good standing under the laws of the State of New
York and the Subsidiary is a corporation duly organized, validly existing and in
good standing under the laws of the State of New York.
4.02 Authority. The execution, delivery and performance by the Subsidiary
---------
and the Acquirer of this Agreement and all ancillary agreements
contemplated hereunder (collectively the "Buyer's Closing Documents") have been
duly and validly authorized by all necessary action (corporate and other). This
Agreement has been duly and validly executed and delivered by the Subsidiary and
the Acquirer and the Buyer's Closing Documents will be duly and validly executed
and delivered by the Subsidiary and the Acquirer, to the extent applicable. The
Subsidiary and the Acquirer have the power (corporate and other) to execute and
deliver this Agreement and, to the extent applicable, the Buyer's Closing
Documents, to perform this Agreement and the Buyer's Closing Documents and to
consummate the transactions contemplated hereby and thereby. This Agreement
constitutes, and the Buyer's Closing Documents will constitute, legal, valid and
binding obligations of the Subsidiary and, to the extent applicable, the
Acquirer, enforceable in accordance with their terms. All persons who execute
this Agreement on behalf of the Subsidiary and the Acquirer have been duly
authorized to do so.
4.03 No Violation. Neither the Subsidiary's nor the Acquirer's execution,
------------
delivery or performance of this Agreement or the Buyer's Closing Documents
nor the consummation of the transactions contemplated hereby or thereby by the
Subsidiary or the Acquirer will, with or without notice or the passage of time,
or both, result in (i) a conflict with, or breach or violation of or default
under, the certificate of incorporation or by-laws of the Subsidiary or the
Acquirer or (ii) a breach or violation of, or liability under, any of the terms
or provisions of, or constitute a default pursuant to, any covenant or agreement
to which the Subsidiary or the Acquirer is a party or by which the Subsidiary or
the Acquirer is bound, or any judgment, order, decree, law, ordinance, rule or
regulation to which the Subsidiary or the Acquirer is subject. No governmental
or other authorization, approval, order, consent or waiting period that has not
been complied with will be required in connection with the execution, delivery
and performance by the Subsidiary or the Acquirer of this Agreement and the
Buyer's Closing Documents.
4.04 Broker. The Subsidiary and the Acquirer have utilized ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, 1
------
Point ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ as finder with respect
to this Agreement. The Subsidiary and the Acquirer shall indemnify the
Corporation and IVAX from any obligation to pay any fees and disbursements to
which ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ is entitled with respect to this Agreement.
4.05 Insolvency. The Subsidiary is not bankrupt or insolvent, and the
----------
transfer or the Assets pursuant to this Agreement will not violate any
bankruptcy or insolvency laws, and the Subsidiary has the ability to pay its
current debts, perform its obligations under this Agreement, and satisfy the
Assumed Liabilities under this Agreement.
4.06 Full Disclosure. To the Subsidiary's and the Acquirer's best
---------------
knowledge, no representation or warranty made by the Subsidiary or the Acquirer
in this Agreement, and no certification furnished or to be furnished to the
Corporation or IVAX pursuant to this Agreement, when taken as a whole and in
light of the circumstances in which it was made, contain any untrue statement of
a material fact, or omits to state a material fact necessary to make the
statements contained herein or therein not misleading. Notwithstanding the
foregoing, no representation or warranty based upon this Section 4.06 is given,
and no disclosure to the Acquirer or the Subsidiary is required, with respect to
events, conditions or facts which are in the public domain, or which affect the
international, national, state or local economy, political situation or the
industry generally in which the Business is engaged. All representations,
warranties, exhibits and appendices and other writings required to be delivered
hereunder shall be read and construed together in their entirety.
ARTICLE V
ENVIRONMENTAL COVENANTS
5.01 Covenant. Certain areas of the Marion, Ohio Facility were used by the
--------
Corporation to produce products for Elf Atochem North America, Inc. (▇▇▇▇▇
Products). IVAX and the Corporation covenant that they will as quickly as
possible subsequent to the date of this Agreement:
5.01.1 remove all raw materials, work in process, samples taken for
quality control purposes, finished, scrapped or obsolete inventory related
solely to ▇▇▇▇▇ Products;
5.01.2 remove or clean all equipment owned by Elf.
5.01.3 clean up the area in a manner not harmful to employees of the
Subsidiary so that the area is not harmful to employees working in the area.
ARTICLE VI
OTHER COVENANTS OF THE PARTIES
6.01 Sellers' Expenses. The parties hereto acknowledge that neither the
-----------------
Subsidiary nor the Acquirer shall bear any of the Sellers' Expenses, either
directly or indirectly, except that the Acquirer has agreed to pay expenses
incurred by the Corporation to provide audited financial statements of the
Business as a "stand alone" company.
6.02 Subsidiary's Expenses. The parties hereto acknowledge that neither
---------------------
the Corporation nor IVAX shall bear any of the Subsidiary's Expenses,
either directly or indirectly including, without limitation, Expenses incurred
in connection with the Acquirer's and the Subsidiary's environmental due
diligence prior to Closing and the retention of Environmental Resources
Management in connection therewith. Subsidiary and Acquirer shall have no
liability for environmental testing or remediation after Closing unless based
upon events occurring on or after the Closing Date , and shall not conduct any
environmental testing without the prior written consent of IVAX.
ARTICLE VII
POST-CLOSING COVENANT
The Acquirer shall preserve and keep the Corporation's books and records
delivered hereunder for a period of five (5) years from the Closing Date and
shall during such period, make such books and records available to officers and
directors of IVAX or their designees for any reasonable purpose.
ARTICLE VIII
[INTENTIONALLY LEFT BLANK]
ARTICLE IX
[INTENTIONALLY LEFT BLANK]
ARTICLE X
CLOSING
10.01 Closing Date. The Closing shall take place concurrently with the
------------
execution of this Agreement at 10:00 a.m. on July 22, 1997 at the principal
offices of the Corporation, or on such other date as shall be mutually
acceptable to the parties hereto.
10.02 The Corporation's and IVAX's Closing Obligations. At the
------------------------------------------------
Closing, the Corporation, IVAX Canada, and IVAX shall deliver possession of
the Assets to the Subsidiary and shall execute and deliver or cause to be
executed and delivered all documents, certificates and instruments of conveyance
and assignment required by this Agreement or as may be reasonably requested by
the Subsidiary, including but not limited to:
10.02.1 A general ▇▇▇▇ of sale in form and substance reasonably
satisfactory to the Subsidiary;
10.02.2 an assignment and assumption agreement (the "Assignment and
Assumption Agreement"), in the form and substance agreed to by the parties
pursuant to which the Corporation shall assign to the Subsidiary all of its
rights under the Personalty Leases, the Contracts, the Vendor Orders and the
Purchase Orders and the Subsidiary shall agree to pay the Corporation's Trade
Liabilities, and shall assume and agree to punctually discharge and fulfill all
of the Corporation's obligations arising subsequent to the Closing Date under
the Personalty Leases, the Contracts, the Purchase Orders and the Vendor Orders
and all other obligations or liabilities assumed in accordance with the
provisions hereof;
10.02.3 such other assignments (patent, patent application trademark
and otherwise) as the Subsidiary shall reasonably determine to be necessary to
transfer the Assets to the Subsidiary;
10.02.4 a secretary's certificate dated as of the Closing Date and
signed by the secretary or an assistant secretary of the Corporation and IVAX,
as to the incumbency of any officer of the Corporation and IVAX executing this
Agreement and covering such other matters as the Acquirer may reasonably
request;
10.02.5 an opinion of counsel in the form agreed to by the parties ;
10.02.6 the titles for all of the motor vehicles (if any) included
in the Assets;
10.02.7 all Records and Financial Records included in the Assets and
to all obligations of the Corporation being assumed by the Subsidiary; and
10.02.8 all consents necessary from any third party with respect to
the transfer of Assets, the failure of which to obtain would have an Adverse
Effect.
10.02.9 an occupancy agreement, in form and substance agreed to by
the parties, relative to the Corporation's Marion, Ohio Facility (the "Occupancy
Agreement").
10.03 Subsidiary's Closing Obligations. At the Closing, the Acquirer
--------------------------------
shall make the payment required by Section 2.04 and shall execute and/or
deliver or cause to be executed and/or delivered all documents of assumption and
other documents, certificates and instruments required by this Agreement or as
may be reasonably requested by the Corporation, including but not limited to:
10.03.1 the opinion of counsel in the form agreed to by the parties;
10.03.2 a secretary's certificate dated as of the Closing Date and
signed by the secretary or an assistant secretary of the Acquirer and the
Subsidiary, as to the incumbency of any officer of the Acquirer and the
Subsidiary executing this Agreement and covering such other matters as the
Corporation may reasonably request;
10.03.3 the Assignment and Assumption Agreement described in Section
10.02.2; and
10.03.4 the Occupancy Agreement.
ARTICLE XI
EMPLOYEES
11.01 Obligation to Hire.
------------------
11.01.1 The Subsidiary will hire all employees located at the
Marion, Ohio Facility, excluding employees who were employed in the processing
of ▇▇▇▇▇ products for Elf, and certain other employees of the Business, all of
whom are listed on Appendix 11.01 (said ▇▇▇▇▇▇ employees and listed employees
--------------
being collectively the "Transferred Employees"). The Corporation
shall have no responsibility for payment of severance pay, if any, to
Transferred Employees at the Marion, Ohio Facility unless and to the extent that
such obligation is incurred because severance results from closing of the soap
pad business within three (3) months after Closing or within three (3) months
after sale of the ▇▇▇▇▇ Division of the Corporation, whichever is later. The
Corporation will be responsible for the severance pay, if any, for any non-
Transferred Employees not located at the Marion, Ohio Facility. The Subsidiary
shall promptly reimburse the Corporation for any and all payments made to or for
the benefit of an employee in connection with the termination of the employee's
employment with the Corporation ("Severance Payments") made by the Corporation
to any person who was an employee of the Business during the one (1) month
period ending on the Closing Date and who is employed with the Subsidiary or the
Acquirer within one (1) year after the Closing Date; provided, however, that
this reimbursement provision shall not apply to employees who were employed in
the processing of ▇▇▇▇▇ products for Elf. Additionally, in the event that any
of the Transferred Employees listed on Appendix 11.01B are terminated by the
Subsidiary within 24 days following the Closing, the Corporation will promptly
reimburse the Subsidiary for any Severance Payments made to such terminated
employees by the Subsidiary; provided, however, that in no event shall the
Corporation be responsible for any amount in excess of the Severance Payments
which such employees would otherwise have been entitled to receive from the
Corporation had
such employees not been Transferred Employees. Furthermore, IVAX will reimburse
the Subsidiary for Severance Payments made by the Subsidiary to any other
Transferred Employees following the Closing up to a maximum amount equal to the
difference between Five hundred Thousand Dollars ($500,000.00) and the sum of
all Credits (as defined in the Occupancy Agreement) provided to the Subsidiary
by the Corporation under the Occupancy Agreement. The Subsidiary acknowledges
that it will offer employment to ▇▇▇▇▇▇ ▇▇▇▇▇▇.
11.01.2 Effective as of the Closing Date, the employment by the
Corporation of the Transferred Employees shall terminate, and each Transferred
Employee shall be offered employment at will by the Acquirer at a salary or
hourly rate not less than that indicated on Appendix 11.01.2. The Acquirer
----------------
shall provide such benefits, holidays, vacation days and the like as
the Subsidiary provides to its employees generally. The Corporation shall
cooperate with the Acquirer in the orderly transfer of the Transferred Employees
to the Acquirer. In administering employee benefit plans for the Transferred
Employees after the Closing Date, the Acquirer will credit each Transferred
Employee solely for vesting and eligibility purposes with all years of service
of such Transferred Employee credited for such purpose with the Corporation.
Without limiting the generality of the foregoing, no waiting period or exclusion
from coverage of any pre-existing medical condition shall apply to the
Transferred Employees' participation in any employee benefit plan of the
Acquirer after the Closing Date if such Transferred Employee was a participant
in the Corporation's benefit plans for at least 30 days prior to the date of
employment of such Transferred Employee by the Acquirer to the extent permitted
by Subsidiary's insurance company.
11.02 Compliance with WARN Act. The Acquirer and the Subsidiary shall
------------------------
take or cause to be taken all actions required under the Workers Adjustment and
Retaining Notification Act applicable to the Transferred Employees or the
operations of the Business after the Closing Date at the Marion, Ohio Facility.
11.03 No Right Conferred. This Article XI confers no legal rights or
------------------
responsibilities upon any person other than the parties hereto. Without
further limitation, no past, present or future employee of the Corporation, the
Subsidiary or the Acquirer shall have any rights hereunder, [other than as
provided in the Employment Agreements.]
ARTICLE XII
TAXES
12.01 Responsibility. Any Tax Liabilities imposed by the United States,
--------------
a state of the United States, or any political subdivision thereof with
respect to the Business relating to any period prior to and including the
Closing Date and any Tax Liabilities imposed by such entities with respect to
the transactions contemplated hereunder (including taxes occasioned by the
recapture of depreciation and tax credits) will be the responsibility of and
will be paid by the Corporation; provided, however, that all sales tax and
transfer Tax Liabilities payable in connection with the transactions
contemplated hereby shall be paid by the Subsidiary. Any Tax Liabilities
imposed by the United States, a state of the United States or any political
subdivision thereof with respect to the Subsidiary's or the Acquirer's operation
of the Business relating to any period after the Closing Date will be the
responsibility of and will be paid by the Subsidiary.
12.02 Access. Each party shall provide the other with access to all
------
relevant documents and other information that may be needed by such other
party for the purpose of preparing tax returns or responding to an audit by any
governmental agency with respect to the Business. Such access will be during
normal business hours.
12.03 Tax Returns. The Corporation will file all required tax returns,
-----------
including but not limited to sales and use tax returns relating to
activities of the Business prior to Closing, will pay all taxes required, and
will make copies of such returns available to the Subsidiary.
ARTICLE XIII
SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS
13.01 Survival of Certain Tax Representations. All representations and
---------------------------------------
warranties made by the Corporation or IVAX relating to title to assets or
tax matters shall survive until ninety (90) days after the expiration of the
applicable statute of limitations.
13.02 Survival of Environmental Covenants. The environmental covenants
-----------------------------------
contained in Article V of this Agreement shall survive until six (6) months
after Subsidiary ceases to occupy the Marion, Ohio Facilities , shall not be
subject to any limitations other than those set forth in Article V, and may be
enforced by an action for damages or an action for specific performance or both.
13.03 Survival of Environmental Representations. The environmental
-----------------------------------------
representations set forth in Section 3.21 survive for a period of seven (7)
years after Closing; provided, however:
13.03.1 no claim for indemnification for Losses attributable to
an inaccuracy or breach of any of the representations set forth in Section 3.21
shall be made in the first year after Closing unless such claim exceeds the sum
of One Thousand Dollars.
13.03.2 no claim for indemnification for Losses attributable to
an inaccuracy or breach of any of the representations set forth in Section 3.21
shall be made in the second through seventh years after Closing unless such
claim exceeds the sum of Ten Thousand Dollars ($10,000.00).
13.03.3 the indemnification of Acquirer or Subsidiary for
damages arising from the breach of representations contained in Section 3.21
shall be limited to (i) 100% of the Losses incurred by the Subsidiary or the
Acquirer in the first four (4) years after Closing, (ii) 75% of the Losses
incurred by the Subsidiary or the Acquirer in the fifth year after Closing,
(iii) 50% of the Losses incurred by the Subsidiary or the Acquirer in the sixth
year after Closing, and (iv) 25% of the Losses incurred by the Subsidiary or
the Acquirer in the seventh year after Closing.
13.04 Survival of Other Representations. All other representations and
---------------------------------
warranties made by the parties hereto in this Agreement, the appendices
annexed thereto, the documents delivered at the Closing and any certificates
delivered pursuant thereto will survive the Closing for a period of two (2)
years provided that no claim for indemnification for any Losses suffered by the
Subsidiary or the Acquirer will be made which is less than Ten Thousand Dollars
($10,000.00), and neither the Corporation nor IVAX shall be obligated to provide
indemnification under this Agreement until the aggregate of all Losses exceeds
Three Hundred Thousand Dollars ($300,000.00), in which case the Corporation or
IVAX shall only be liable for the excess amount. The provisions of this Section
13.04 shall not apply to environmental indemnification set forth in Section
14.03 and shall not apply to the Purchase Price Adjustment under Section 2.05,
and shall not apply to the representations set forth in Section 3.33 which shall
survive the Closing for a period of five (5) years.
ARTICLE XIV
INDEMNIFICATION
14.01 Indemnification of the Subsidiary and the Acquirer. Subject to
--------------------------------------------------
the provisions of this Article XIV, and the limitations in Article XIII,
IVAX will indemnify, defend and hold the Subsidiary and the Acquirer and their
respective officers, directors and other representatives harmless from and
against (a) all claims, costs, losses, suits, proceedings, judgments, out-of-
pocket expenses (including without limitation reasonable attorneys' fees) and
damages (excluding punitive damages) (collectively, "Losses") caused by or
arising out of the untruth, inaccuracy or breach of any representation (or any
omission therefrom), warranty, covenant or agreement given or made by the
Corporation or IVAX in this Agreement, the appendices annexed hereto, or any
other documents or certificates delivered pursuant to this Agreement, (b) any
failure by the Corporation or any shareholders of the Corporation to pay or
discharge any Tax
Liabilities relating to the Business arising or accrued through the Closing
Date (except as otherwise provided in Section 12.01 hereof) and (c) all Losses
arising from any liabilities of the Business relating to the period prior to the
Closing Date which were not specifically assumed hereunder.
14.02 Limitations. Notwithstanding any provisions contained in this
-----------
Agreement to the contrary, the obligations of IVAX as set forth in this
Article XIV shall be subject to and limited by the following:
14.02.1 No claim for indemnification under Section 14.01(a) shall be
made unless written notice is provided to IVAX within the time period specified
for such breach of representation and warranty in Article XIII hereof.
14.02.2 In determining the extent of any Losses which the Acquirer
or the Subsidiary suffers or become subject to as a result of matters for which
it is entitled to indemnification under this Article XIV, appropriate deductions
shall be made for any insurance proceeds which inure to or are available for the
benefit of such party, including, any proceeds which inure to or are available
to any affiliate of such party.
14.02.3 IVAX's (and its affiliates') aggregate obligations to
indemnify the Acquirer and the Subsidiary under this Agreement shall in no event
exceed the aggregate purchase price actually received by the Corporation
hereunder less the final value of the Net Assets determined on the Closing Date
Balance Sheet in accordance with the provisions of Section 2.05 hereof. IVAX
(and its affiliates) shall in no event be liable for any consequential, special
or incidental Losses of Subsidiary or Acquirer (or their respective officers,
directors and other representatives) and shall only be liable for actual direct
out-of-pocket expenses expended by the Subsidiary or the Acquirer.
14.02.4 In determining the Losses incurred by the Subsidiary or the
Acquirer hereunder, and the amount to be paid pursuant to the provisions of
Article XIV hereof, the tax benefits related to the payment of any Losses shall
be taken into account and the indemnification payment shall be net of all tax
effects, including any tax effect associated with the receipt of the
indemnification payment.
14.02.5 In no event shall the Corporation have any liability or
responsibility or obligations of any nature whatsoever with respect to the
breach of any representation, warranty or covenant contained in this Agreement,
or fulfillment of any indemnification obligations hereunder, it being understood
that IVAX will be and has sole responsibility for all such matters. The
Acquirer and the Subsidiary specifically agree to and acknowledge the foregoing
and agree not to make any demand or claim or to bring any action or proceeding
against the Corporation or its successors or assigns after the Closing for any
matter of any nature whatsoever relating to this Agreement or the transactions
contemplated hereby.
14.03 Environmental Indemnity
-----------------------
14.03.1 Indemnification by IVAX for Environmental Matters. Subject
-------------------------------------------------
to the provisions of this Article XIV, and the limitations in
Article XIII, IVAX agrees to indemnify and hold harmless the Acquirer and the
Subsidiary from and against any and all Losses incurred by the Acquirer or the
Subsidiary in connection with or arising from the breach of any representation
in Section 3.21 and from any claim, action or suit by any third party, or any
proceeding, investigation or order by any governmental body under any
Environmental Law based upon events occurring prior to the Closing Date in
connection with the operation of the Business prior to the Closing Date or to
conditions created or arising in respect of the Assets prior to the Closing
Date.
14.03.2 Indemnification by the Acquirer and the Subsidiary for
Environmental Matters. Subject to the provisions of this Article XIV, the
Acquirer and the Subsidiary agree to indemnify and hold harmless the
Corporation and IVAX from and against any and all Environmental Losses incurred
by the Corporation or IVAX in connection with or arising from any claim, action
or suit by any person or any proceeding, investigation or order by any
governmental body under any Environmental Law and based upon events occurring on
or after the Closing Date in connection with the operation of the Business on or
after the Closing Date or to conditions created or arising in respect of the
Assets on or after the Closing Date.
14.04 Indemnification of the Corporation and IVAX. Subject to the
-------------------------------------------
provisions of this Article XIV, the Subsidiary and the Acquirer will
indemnify, defend and hold the Corporation, IVAX and the respective officers,
directors and other representatives of IVAX and the Corporation harmless from
and against (a) all Losses caused by or arising out of the untruth, inaccuracy
or breach of any representation (or any omission therefrom), warranty, covenant
or agreement given or made by the Subsidiary or the Acquirer in this Agreement,
the appendices annexed hereto, the Buyer's Closing Documents or any other
documents or certificates delivered pursuant to this Agreement; (b) all Losses
arising from the use by the Acquirer or the Subsidiary of the name "IVAX" or any
derivation thereof in connection with the Business after the Closing Date,
excluding any claims relating to the ownership of the name "IVAX" (the provision
of this Section 14.04(b) being solely for the benefit of IVAX); and (c) all
Losses arising from the operation of the Business after the Closing Date. No
claim for indemnification under Section 14.04(a) shall be made unless written
notice is provided to the Acquirer or the Subsidiary within the time period
specified for such breach of representation and warranty in Article XIII hereof.
No claim for indemnification shall be made under Section 14.04(b) and (c) shall
be made unless written notice is provided to the Acquirer or the Subsidiary
within ninety (90) days after the expiration of the applicable statute of
limitations.
14.05 Procedures for Claims Arising from a Third Party Claim. In the case
------------------------------------------------------
of any claim for indemnification arising from a claim of a third party, an
indemnified party shall give prompt written notice, in no event more than thirty
(30) days following such indemnified party's receipt of such claims or demand,
to the indemnifying party of any claims or demand of which such indemnifying
party has knowledge and as to which it may request indemnification hereunder.
The indemnifying party shall have the right to defend and to direct the defense
against any such claims or demand, in its name or in the name of the indemnified
party, as the case may be, at the expense of the indemnifying party, and with
counsel selected by the indemnifying party. Notwithstanding anything in this
Agreement to the contrary, the indemnified party shall, at the expense of the
indemnifying party, cooperate with the indemnifying party, and keep the
indemnifying party fully informed, in the defense of such claim or demand. The
indemnified party shall have the right to participate in the defense of any
claim or demand with counsel employed at its own expense. The indemnifying
party shall have no indemnification obligations with respect to any such claim
or demand which shall be settled by the indemnified party without the prior
written consent of the indemnifying party, which consent shall not be
unreasonably withheld or delayed. The indemnifying party shall have the ability
to settle any claim with the prior written consent of the indemnified party,
which consent shall not be unreasonably withheld or delayed. Any settlement
involving solely the payment of monies by the indemnifying party shall
presumptively be deemed reasonable.
14.06 Exclusive Remedy. The sole and exclusive remedy for the breach of
----------------
any representation, warranty or covenant of this Agreement or otherwise
relating to this Agreement shall be the indemnification provisions contained in
this Article XIV, and any action for damages or specific performance of
covenants set forth in Article V.
ARTICLE XV
COVENANT NOT TO COMPETE
15.01 Prohibited Acts. Each of the Corporation, so long as it is owned,
---------------
directly or indirectly, by IVAX, and IVAX hereby agrees that it will not
from and after the Closing Date, either directly or indirectly, whether through
an affiliated company or otherwise, in any capacity whatsoever (provided that if
an after acquired entity is engaged in a business competitive with the
Prohibited Business (as hereinafter defined)and the annual revenues of such
after acquired entity related to the Prohibited Business are in excess of
Twenty-five Million Dollars ($25,000,000.00), IVAX or its affiliate, as the case
may be, shall, as quickly as reasonably possible, use reasonable efforts to sell
that segment of the after acquired entity related to the Prohibited Business
after offering the Subsidiary and the Acquirer a 60 day right to purchase such
segment), do any of the following:
15.01.1 Except for the sale of cleaning chemicals produced by the
Subsidiary for sale under the Dial Trademarks (as defined in the Supply
Agreement) or conduct of business by the Corporation after the consummation of
the transactions contemplated hereby with its remaining business lines, engage
in or carry on, at any time during the first five (5) years after the Closing,
any business (the "Prohibited Business") which designs, plans, develops,
manufactures, assembles, markets, distributes or sells (or consults with respect
to designing, planning, developing, manufacturing, assembling, marketing,
distributing or selling) products which are substantially similar to or directly
competitive with products designed, planned, developed, manufactured, assembled,
marketed, distributed or sold by the Business (as it was conducted on or before
the Closing Date) and which does business anywhere in the United States or
Canada;
15.01.2 The Corporation recognizes and acknowledges that it has in
the past, currently has, and in the future may possibly have, access to certain
confidential information about the Business, such as lists of customers,
operational policies, and pricing and cost policies, formulas and processes.
The Corporation agrees that for a period of five (5) years after the Closing it
will not use any such confidential information for its own benefit or disclose
such confidential information to any person or entity for any purpose
whatsoever, except to the Acquirer, unless such information becomes known to the
public generally through no fault of the Corporation or unless the Corporation
is required by law or subpoena to disclose such information. If the Corporation
is requested to provide such information pursuant to requirements of applicable
law or by subpoena, it shall notify the Acquirer as promptly as possible and
shall allow the Acquirer the opportunity to oppose such request or to seek an
appropriate protective order. Notwithstanding the preceding, the Corporation
may use and disclose its confidential information in connection with (i) the
sale or disposition of its stock or assets, provided such disclosure is limited
to information which (a) is shared among the Corporation's operating divisions
and which is not exclusively related to the Business or (b) relates to the
liabilities or obligations of the Corporation which are not assumed by the
Subsidiary or the Acquirer; (ii) the performance of any of its obligations to
the Subsidiary or the Acquirer under this or any other agreement with the
Acquirer; (iii) as required by law, and (iv) in the course of any litigation
brought by or against the Corporation or its successors.
15.01.3 For a period of five (5) years after the Closing, cause,
induce or encourage (other than through general solicitation such as newspaper
advertisements) any Transferred Employee at any time to leave his employment
with the Business
except with the written consent of the Subsidiary.
15.01.4 The provisions of this Section 15.01 shall not apply to an
after-acquired entity of IVAX which has a segment of its business which is
competitive with the Business if such segment has annual revenue of less than
twenty-five million dollars, or if it has revenue in excess of that amount and
as quickly as reasonably possible after acquisition of the entity IVAX or its
affiliate, as the case may be, uses reasonable efforts to sell such segment and
IVAX or its affiliate, as the case may be, has offered the Acquirer a 60 day
right to purchase such segment.
15.02 Damages for Breach. The Corporation and IVAX hereby acknowledge
------------------
that the covenants contained in Section 15.01 are of the essence of this
Agreement and that if it or he violates any such covenants, monetary damages
would be inadequate. The Corporation and IVAX hereby agree that in the event of
any such violation, the Subsidiary, subject to the provisions hereof, shall be
entitled to injunctive relief, as a matter of right, and to all other remedies
and rights to which the Subsidiary might be entitled at law or in equity and
under this Agreement.
15.03 Notice. If the Acquirer and the Subsidiary will not be materially
------
prejudiced by giving IVAX notice of any alleged breach of the covenants set
forth in this Article XV, the Acquirer or the Subsidiary shall, prior to
commencing any action for relief under this Article XV, provide IVAX with
written notice of such alleged breach and an opportunity (not to exceed ten
days) to cure such alleged breach.
15.04 Other Matters. The Corporation and IVAX agree that each of the
-------------
provisions of this Article XV, including without limitation the period of
time, geographical area and types and scope of the restrictions on the
activities of the Corporation and IVAX specified herein, are intended to be and
shall be divisible. The Corporation and IVAX further acknowledge the
reasonableness of these provisions as an integral part of the terms of this
Agreement. If any provision of this Article XV (including any sentence, clause
or part thereof) shall be adjudicated to be invalid or unenforceable, such
provision shall be deemed amended to delete therefrom the portion thus
adjudicated to be invalid or unenforceable, such deletion to apply only with
respect to the operation of such provision in the
particular jurisdiction in which such adjudication is made. In addition,
if any particular provision contained in this Article XV shall for any reason be
held to be excessively broad as to duration, geographical scope, activity or
subject, it shall be construed by limiting and reducing such provision as to
such characteristic so that the provision is enforceable to the fullest extent
compatible with the applicable law as it shall then appear.
ARTICLE XVI
OTHER MATTERS
16.01 Further Assurances. Each party will from time to time at the
------------------
request of the other parties, whether on or after the Closing Date, do,
make, execute, acknowledge and deliver (or cause the doing of the same) all such
other further acts and instruments of conveyance, assignment, transfer and
consent as may reasonably be required for the more effective implementation of
any of the transfers or transactions contemplated herein. The Corporation or
IVAX will designate an individual to work with the Subsidiary and execute
documents required to effect required governmental consents and approvals.
16.02 Publicity. Except as required by law, NASDAQ, or stock exchange
---------
rules, no public announcement (other than to employees) concerning this
Agreement or the transactions contemplated hereby will be made by either party
without the written consent of the other party. Notwithstanding the preceding,
in the event of a public announcement concerning a sale of another business
segment (other than the Business), by the Corporation or an affiliate, the
Corporation may include a reference to this proposed transaction so long as the
Subsidiary is not identified as a party without its consent.
16.03 Expenses. Except as otherwise provided in this Agreement, each
--------
party to this Agreement shall bear and pay its own costs and expenses,
including without limitation legal and accounting fees, incurred with respect to
this Agreement and the transactions contemplated hereby.
16.04 Risk of Loss. The risk of loss by fire or other casualty with
------------
respect to the Assets to be transferred hereunder shall remain with the
Corporation and IVAX until consummation of the Closing.
16.05 Transitional Services Agreement. For a period not to exceed four
--------------------------------
months following the Closing, IVAX will provide transitional services to
the Subsidiary as agreed between the parties from time to time, covering such
areas as personnel training, inventory control, accounts receivable collection,
order entry, and information systems management. If it appears that four months
will not be sufficient to complete this transition, the Corporation will discuss
an extension of the period upon terms to be mutually agreeable.
16.06 Soap Pad Equipment. Located within the manufacturing facility of
------------------
the Business at the Marion, Ohio Facility is Soap Pad Equipment. This
equipment is an Excluded Asset. The Corporation or its assignee shall have the
right to remove at Corporation's sole expense this Soap Pad Equipment at any
time within 12 months after Closing, or if it has entered into a contract for
sale of the equipment within such 12 month period, the Corporation, or its
assignee, may remove the same within 12 months of Closing. If the Corporation
has not removed the equipment, within 12 months of the Closing Date, the
Corporation will sell the equipment to the Subsidiary, and the Subsidiary will
purchase the same for the sum of One Dollar.
16.07 Funds. Any funds received by IVAX or the Corporation subsequent to
-----
Closing in payment of receivables of the Business shall be transmitted to
the Subsidiary within one week of receipt.
16.08 Guarantees. The Acquirer hereby unconditionally guarantees all of
----------
the Subsidiary's obligations under this Agreement. IVAX hereby
unconditionally guarantees all of the Corporation's obligations under this
Agreement and in accordance with the provisions of Article XIV, the Acquirer and
the Subsidiary agree, subject to the Closing, to look solely to IVAX to fulfill
any obligations of the Corporation which might otherwise have arisen herein.
16.09 ▇▇▇▇▇▇ Equipment. Upon written notice from the Subsidiary delivered
------------------
to IVAX at least six months prior to the end of the term of the Occupancy
Agreement, IVAX or its designee shall be obligated to purchase, at the end of
the term of the
Occupancy Agreement, such of the equipment and machinery included within
the Assets and located at the Marion, Ohio Facility (collectively, the "▇▇▇▇▇▇
Equipment"), as is designated by Subsidiary for an aggregate purchase price of
One Dollar ($1.00). The Subsidiary hereby covenants that such ▇▇▇▇▇▇ Equipment
will be in the same condition as on the Closing Date, normal wear and tear
excepted, at the time of sale to IVAX to IVAX or its designee pursuant to this
Section 16.09.
ARTICLE XVII
MISCELLANEOUS
17.01 Notices. Any notices or other communications required or permitted
-------
hereunder shall be sufficiently given if delivered (regardless of whether
such delivery is accepted or refused) personally or sent by facsimile, courier
service or by registered mail (return receipt requested) or certified mail
(return receipt requested), postage prepaid, addressed as follows:
To the Acquirer:
▇▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, President
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇▇ D'▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
To the Corporation or IVAX:
IVAX Industries, Inc.
Rock Plaza III
▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
and
IVAX Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
17.02 Binding Agreement. This Agreement shall be binding upon and inure
-----------------
to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that this Agreement may not be assigned by the
Corporation without the prior written consent of the Subsidiary.
Notwithstanding anything contained herein to the contrary, the Corporation shall
have the right to assign this Agreement, without the prior written consent of
the Subsidiary to IVAX or one of its subsidiaries, and upon making such
assignment, which shall not reduce the obligations of IVAX, the Corporation
shall be released from all of its obligations hereunder, except, so long as it
is owned directly or indirectly by IVAX, for its obligations under the covenant
not to compete described in Article XV hereunder. The Subsidiary shall have the
right to assign this Agreement to any affiliate of the Acquirer, provided that
such assignment shall not relieve the Acquirer of any of its obligations
hereunder.
17.03 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and
the same agreement, and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the other
parties.
17.04 Entire Agreement. This Agreement, together with the exhibits and
----------------
other writings referred to herein, embodies or reflects the entire
agreement between the parties hereto, supersedes any prior agreements or
understandings between the parties and the parties hereby confirm that there are
no agreements, understandings, representations, or warranties between the
parties hereto other than those set forth in this Agreement and the appendices
annexed hereto.
17.05 Headings. The section and other headings of this Agreement are for
--------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
17.06 Section References. Except as otherwise expressly indicated, all
------------------
references in this Agreement to Sections refer to sections of this
Agreement.
17.07 Amendment and Waiver. This Agreement may be amended or modified in
--------------------
whole or in part at any time by an instrument in writing executed in the
same manner as this Agreement. In addition, any party may, at its option, by an
instrument in writing executed in the same manner as this Agreement, waive or
extend the time for the fulfillment of any or all of the conditions herein
contained to which its obligations hereunder are subject.
17.08 Disclosure Exhibits. Notwithstanding any provision contained herein
-------------------
to the contrary, any matter, fact, event, information or item disclosed in
any of the Exhibits, Schedules and Appendices hereto shall be deemed to have
been made in all of the Exhibits, Schedules and Appendices and no liability
shall attach to IVAX or the Corporation for failure to make appropriate
disclosure in any particular Exhibit, Schedule and Appendix in the event that
any matter, fact, event, information or item which should have been disclosed in
such particular Exhibit, Schedule or Appendix is disclosed or contained in any
other Exhibit, Schedule or Appendix.
17.09 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Florida without application of
principles of conflicts of laws.
IN WITNESS WHEREOF, this Agreement has been executed and delivered as of
the date first above written.
IVAX INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
IVAX CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ CEO
-------------------------------------------
THE ▇▇▇▇▇▇ BRUSH COMPANY, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ CEO
-------------------------------------------
IVAX INDUSTRIES, INC./▇▇▇▇
ASSET PURCHASE AGREEMENT
List of Appendices
------------------
1.01.2.3 - Certain R&D Equipment
1.01.2.9 - Canadian Assets
1.01.8 - Designated Products
1.01.10A - Excluded Assets
1.01.10B - Excluded Liabilities
1.01.23 - Soap Pad Equipment
2.05.1 - Closing Date Balance Sheet GAAP Exceptions
3.01.2 - Certificate of Incorporation/By-Laws of the
Corporation
3.03 - Foreign qualifications
3.04 - Other business names
3.05 - Real estate
3.07 - Tangible Assets Located in Horsham and Rock Hill
3.09.1 - Intellectual Property; Infringement Claims
3.10.2 - Security Agreements
3.11 - Liens or Security Interests Securing Equipment Leases
3.12.1 - Material Contracts
3.12.2 - Outstanding Bids or Contracts
3.12.4 - Consents or Notices required under Material Contracts
3.13.1 - Customers
3.13.2 - Suppliers
3.13.3 - Termination or Significant Change in Relationship with Customers,
Suppliers or Others
3.15.1 - Transferred Employees
3.15.2 - Transferred Employees not Terminable at Will
3.15.4A - Confidentiality and Non-Disclosure Policy
3.15.4B - Confidentiality and Non-Disclosure Agreement that Employees at Rock
Hill were Expected to Sign
3.15.4C - Rock Hill R&D Employees without Executed Confidentiality and Non-
Disclosure Agreements
3.16.1 - Employee Benefit Plans
3.16.3 - IRS Determination Letter Matters
3.16.4 - Certain Benefit Plans
3.16.5 - "Event" under Benefit Plan
3.16.6 - Compliance with COBRA
3.17 - Licenses and Permits
3.19 - Compliance with Other Instruments; Consents
3.20.2 - Conflicts with Orders; Consent of a Governmental Agency
3.21 - Environmental Compliance
3.22.1 - Financial Statements
3.24 - Litigation
3.26 - Adverse Business Changes
3.27 - Other Changes
3.28 - Brokerage
4.05 - Compliance with Other Instruments; Consents by the Subsidiary or
Acquirer
11.01A - Transferred Employees
11.01B - Transferred Employees Requiring Severance Payments
that would be Reimbursed by the Corporation
11.01.2 - Compensation Schedule
Other - Reciprocal Supply and Distribution Agreement between IVAX
Industries, Inc. and The ▇▇▇▇▇▇ Brush Company, Inc.
- Occupancy Agreement between IVAX Industries, Inc. and The ▇▇▇▇▇▇
Brush Company, Inc.
The Registrant shall undertake to furnish to the Securities and Exchange
Commission, any and all of the above referenced schedules and documents
pertaining to this acquisition, upon request.
