ASSET PURCHASE AGREEMENT

 

TABLE OF CONTENTS

 

		Page
ARTICLE I	DEFINITIONS	1
1.1	Definitions	1
1.2	Other Defined Terms	5
1.3	Construction	6
ARTICLE II	PURCHASE AND SALE	7
2.1	Purchase and Sale of the Purchased Assets	7
2.2	Excluded Assets	7
2.3	Assumed Liabilities	9
2.4	Excluded Liabilities	9
2.5	Purchase Price	10
2.6	Closing Date	10
2.7	Closing Deliveries	10
2.8	Allocation	12
ARTICLE III	REPRESENTATIONS AND WARRANTIES OF THE SELLER	12
3.1	Organization and Good Standing	12
3.2	Authority and Enforceability	12
3.3	No Conflicts; Consents	13
3.4	Financial Data	13
3.5	Taxes	14
3.6	Compliance with Law	14
3.7	Title to Purchased Assets	14
3.8	Intellectual Property	15
3.9	Absence of Certain Changes or Events	16
3.10	Assigned Contracts	16
3.11	Litigation; Orders	17
3.12	Product Liability; Product Recall	17
3.13	Customers and Suppliers	17
3.14	Brokers	18

 

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		Page
ARTICLE IV	REPRESENTATIONS AND WARRANTIES OF THE BUYER	18
4.1	Organization and Good Standing	18
4.2	Authority and Enforceability	18
4.3	No Conflicts; Consents	18
4.4	Litigation	19
4.5	Availability of Funds	19
4.6	Brokers	19
4.7	No Other Representations	20
ARTICLE V	COVENANTS OF THE BUYER AND THE SELLER	20
5.1	Conduct of Business	20
5.2	Access to Information; Notification	21
5.3	Confidentiality	22
5.4	Support Services	22
5.5	Financing	22
5.6	Consents	22
5.7	Public Announcements	23
5.8	Transfer Taxes	23
5.9	Bulk Sales Laws	23
5.10	Access to Books and Records	23
5.11	Solicitation of Seller’s or Buyer’s Employees	24
5.12	Prohibited Activities	25
5.13	Consumer Claims and Complaints	25
5.14	Promotion/Pricing Allowance	25
5.15	Administration of Accounts and Related Matters; Customer Inquiries	26
5.16	Termination of Broker Agreements	27
5.17	Packaging Materials and Supplies	27
5.18	Further Assurances	27

 

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		Page
5.19	Exclusivity	27
5.20	Non-Competition; Confidentiality	28
5.21	Notices Prior to Closing	29
5.22	Financial Information Cooperation	29
5.23	Assigned Equipment	30
ARTICLE VI	CONDITIONS TO CLOSING	30
6.1	Conditions to Obligations of the Buyer and the Seller	30
6.2	Conditions to Obligation of the Buyer	31
6.3	Conditions to Obligation of the Seller	31
ARTICLE VII	TERMINATION	32
7.1	Termination	32
7.2	Effect of Termination	33
7.3	Remedies	33
ARTICLE VIII	INDEMNIFICATION	34
8.1	Survival	34
8.2	Indemnification by the Seller	34
8.3	Indemnification by the Buyer	35
8.4	Indemnification Procedure for Third Party Claims	36
8.5	Indemnification Procedures for Non-Third Party Claims	37
8.6	Calculation of Indemnity Payments	38
8.7	Characterization of Indemnification Payments	38
ARTICLE IX	MISCELLANEOUS	39
9.1	Notices	39
9.2	Amendments and Waivers	40
9.3	Expenses	40
9.4	Successors and Assigns	40
9.5	Governing Law	41
9.6	Consent to Jurisdiction	41
9.7	Counterparts	41

 

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		Page
9.8	No Third Party Beneficiaries	41
9.9	Entire Agreement	41
9.10	Captions	42
9.11	Severability	42
9.12	Interpretation	42

 

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ASSET PURCHASE AGREEMENT

 

ASSET PURCHASE AGREEMENT, dated as of December 22, 2005 (the “ Agreement ”), between Mott’s LLP, a Delaware limited liability partnership (the “ Seller ”), and Bloch & Guggenheimer, Inc., a Delaware corporation (the “ Buyer ”).

 

WHEREAS, the Seller is engaged, in part, in the business (the “ Business ”) of developing, manufacturing, marketing, distributing and selling molasses products, including molasses products under the “GRANDMA’S” brand name (the “ Brand ”); and

 

WHEREAS, the parties desire that the Seller sell, assign, transfer, convey and deliver to the Buyer, and that the Buyer purchase, acquire and accept from the Seller, all of the right, title and interest of the Seller in and to the Purchased Assets (as hereinafter defined), and that the Buyer assume the Assumed Liabilities (as hereinafter defined), in each case upon the terms and subject to the conditions of this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing premises and the respective representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

ARTICLE I

DEFINITIONS

 

1.1            Definitions .  When used in this Agreement, the following terms shall have the meanings assigned to them in this Section 1.1.

 

“ Action ” shall mean any civil, criminal, judicial or other action, claim, suit, citation, subpoena, litigation, proceeding, arbitral action, governmental audit, criminal prosecution, inquiry, investigation, charge or complaint.

 

“ Affiliate ” means, with respect to any specified Person, any other Person directly or indirectly controlling, controlled by or under common control with such specified Person.

 

“ Ancillary Agreements ” means the Bill of Sale, the Assumption Agreement, the Intellectual Property Assignments, the Transition Services Agreement, the Manufacturing Agreement and the other agreements, instruments and documents delivered at the Closing.

 

“ Business Customer Information ” means any Customer Information that relates to the Business.

 

 

“ Business Day ” means a day other than a Saturday, Sunday or other day on which banks located in New York City, New York are authorized or required by Law to close.

 

“ Business Information ” means all business information, books, files and records (or portions thereof) which are currently used principally in connection with the Business or are necessary to conduct the Business as presently conducted, including any advertising, marketing and sales plans and programs, financial data, customer lists and supplier lists.

 

“ Business Intellectual Property ” means all of the Seller’s rights, title and interest in, to and under Intellectual Property that is used principally in connection with conduct of the Business as currently conducted, including the Intellectual Property set forth on Section 3.8(a) of the Seller Disclosure Schedule .

 

“ Code ” means the Internal Revenue Code of 1986 and the rules and regulations promulgated thereunder.

 

“ Confidentiality Agreement ” means the Confidentiality Agreement executed by Buyer on September 29, 2005.

 

“ Contract ” means any agreement, contract, commitment or arrangement, whether oral or written, to which the Seller or an Affiliate of the Seller is a party or is bound and which relates principally to the Business.

 

“ Copyrights ” means copyrights (whether registered or unregistered) and any registrations and applications therefor.

 

“ Credit Agreement Amendment ” means that certain Third Amendment, dated as of the date hereof, to Revolving Credit Agreement, among B&G Foods, Inc., as Borrower, Lehman Commercial Paper, Inc., as Administrative Agent, and the Lenders parties thereto.

 

“ Customer Information ” means all customer lists, customer contact information, customer correspondence and customer licensing and purchasing histories, customer preferences and all other confidential or proprietary information or data relating to current and former customers.

 

“ Domain Name ” means an alphanumeric string, such as www.ABC.com , that is an address of a computer network connection and any registrations therefor.

 

“ Governmental Entity ” means any entity or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to United States federal, state or local government or foreign, international, multinational or other government, including any department, commission, board, agency, bureau, official or other regulatory, administrative or judicial authority thereof.

 

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“ Indemnitee ” means any Person that is seeking indemnification from an Indemnitor pursuant to the provisions of this Agreement.

 

“ Indemnitor ” means any party to this Agreement from which any Indemnitee is seeking indemnification pursuant to the provisions of this Agreement.

 

“ Intellectual Property ” means (a) (i) Technology, (ii) Patents, (iii) Trademarks, (iv) Copyrights, (v) Domain Names; and (vi) licenses for the Intellectual Property listed in items (i) — (v) above, if any, (b) pending applications to register or otherwise obtain legal protection for any of the foregoing, (c) rights to make application in the future to register or otherwise obtain legal protection for any of the foregoing, (d) rights of priority under national laws and international conventions with respect to any of the foregoing and (e) rights to sue with respect to past and future infringements of any of the foregoing.

 

“ Inventory ” means all of the Business’ raw materials, finished goods, packaging materials, supplies and other inventories.

 

“ Knowledge of the Seller ” or any similar phrase means the current actual knowledge of the persons identified by name, title and functional responsibility on Section 1.1(a) of the Seller Disclosure Schedule .

 

“ Law ” means any statute, law, ordinance, rule or regulation of any Governmental Entity.

 

“ Liabilities ” means liabilities, obligations, indebtedness, claims, deficiencies, guarantees, endorsements or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise.

 

“ Lien ” means, with respect to any property or asset, any mortgage, lien, pledge, charge, claim, option, security interest, hypothecation or any other encumbrance or right of third parties in respect of such property or asset, whether voluntarily incurred or arising by operation of Law, including any agreement to give any of the foregoing in the future.

 

“ Material Adverse Effect ” means any adverse change or effect that, individually or when taken together with all other such adverse changes or effects that have occurred during the period in question, is materially adverse to (i) the Business, the Purchased Assets or the results, operation or condition of the Business (financial or otherwise), taken as a whole or (ii) the ability of the Seller to consummate the transactions contemplated hereby, other than, in the case of clause (i) any such change or effect relating to (a) the United States economy in general, (b) the molasses industry in general  (provided that such change or effect does not affect the Business or the Brand disproportionately relative to other businesses or brands in the molasses industry), (c) any new outbreak of hostilities involving the United States, any declaration of war by the United States Congress or any acts of terrorism involving the United States or (d) the

 

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announcement of the transactions contemplated by this Agreement, including with respect to the identity of the Buyer.

 

“ Order ” means any award, injunction, judgment, decree, order, ruling, subpoena or verdict or other decision issued, promulgated or entered by or with any Governmental Entity of competent jurisdiction.

 

“ Organizational Documents ” means, with respect to any entity, the certificate of incorporation, the articles of incorporation, by-laws, articles of organization, partnership agreement, limited liability company agreement, formation agreement, joint venture agreement or other similar organizational documents of such entity (in each case, as amended through the date of this Agreement).

 

“ Patents ” means patents (including all provisionals, reissues, divisions, continuations, continuations-in-part and extensions thereof) and patent applications.

 

“ Permit ” means any authorization, approval, consent, certificate, license, permit or franchise of or from any Governmental Entity or pursuant to any Law.

 

“ Permitted Liens ” means (a) statutory Liens for current Taxes that are not yet due and payable or that the validity of which are being contested in good faith by appropriate proceedings, (b) statutory Liens of workers’, carriers’, materialmens’, suppliers’ and mechanics’ or other like Liens incurred in the ordinary course of business and not yet due and payable or the validity of which are being contested in good faith by appropriate proceedings, (c) other Liens which in the aggregate do not materially interfere with the present use, or affect the value, of the properties they affect, (d) Liens that will be released prior to or as of the Closing as set forth on Section 1.1(b) of the Disclosure Schedule , (e) Liens that will not be released prior to or as of the Closing as set forth on Section 1.1(c) of the Disclosure Schedule , (f) Liens arising under this Agreement or the Ancillary Agreements and (g) Liens created by or through the Buyer.

 

“ Person ” means an individual, a corporation, a partnership, a limited liability company, a trust, an unincorporated association, a Governmental Entity or any agency, instrumentality or political subdivision of a Governmental Entity, or any other entity or body.

 

“ Tax ” or “ Taxes ” means all federal, state, provincial, local and foreign income, profits, franchise, gross receipts, environmental, customs duty, capital stock, severance, stamp, payroll, sales, employment, unemployment, disability, use, personal and real property, withholding, excise, production, transfer, alternative minimum, value added, occupancy and other taxes (including any interest, penalty or addition thereto).

 

“ Tax Returns ” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

 

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“ Technology ” means trade secrets, inventions, confidential and proprietary information, know-how, formulae and processes.

 

“ Trademarks ” means trademarks, service marks, trade names, trade dress, brand names, logos (whether registered, unregistered or existing at common law, including all goodwill attaching thereto) and any registrations and applications therefor.

 

“ Transfer Taxes ” means sales, use, transfer, real property transfer, recording, documentary, stamp, registration and stock transfer Taxes and any similar Taxes.

 

“ U.S. Business Intellectual Property ” means all of Business Intellectual Property that is used in connection with conduct of the Business in the United States as currently conducted.

 

“ $ ” means United States dollars.

 

1.2            Other Defined Terms .  The following terms have the meanings assigned to such terms in the Sections of the Agreement set forth below:

 

Accounting Principles		3.4(a)
Agreement		Preamble
Allocation Statement		2.8
Applicable Survival Period		8.1(c)
Assigned Contracts		2.1(a)
Assigned Equipment		2.1(d)
Assumed Liabilities		2.3
Assumption Agreement		2.7(a)(ii)
Bill of Sale		2.7(a)(i)
Brand		Preamble
Business		Preamble
Buyer		Preamble
Buyer Closing Certificate		6.3(c)
Buyer Covered Losses		8.3(b)
Buyer Deductible		8.3(b)
Buyer Indemnitees		8.2(a)
Buyer’s Deductions		5.14(b)
Cash Consideration		2.5
Closing		2.6
Closing Date		2.6
Covered Losses		8.2(b)

 

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Deductible		8.2(b)
Equipment		2.2(d)
Excluded Assets		2.2
Excluded Liabilities		2.4
Financial Data		3.4(a)
Financing		4.5
GAAP		3.4(a)
Intellectual Property Assignments		2.7(a)(iii)
Losses		8.2(a)
Manufacturing Agreement		2.7(a)(v)
Notice of Claim		8.4(a)
Purchase Price		2.5
Purchased Assets		2.1
Registered Business Intellectual Property		3.8(a)
Returned Products		2.3(e)
Section 1060 Forms		2.8
Seller		Preamble
Seller Closing Certificate		6.2(c)
Seller Disclosure Schedule		Preamble to Article III
Seller Disclosure Schedule Supplement		5.2(b)
Seller Indemnitees		8.3(a)
Seller’s Deductions		5.14(a)
Third Party Claim		8.4(a)
Third Party Defenses		8.4(b)
Transition Services Agreement		2.7(a)(iv)
U.S. Registered Business Intellectual Property		3.8(b)

 

1.3            Construction .  For the purposes of this Agreement, except as otherwise expressly provided herein or unless the context otherwise requires:  (a) the meaning assigned to each term defined herein shall be equally applicable to both the singular and the plural forms of such term and vice versa, and words denoting either gender shall include both genders as the context requires; (b) where a word or phrase is defined herein, each of its other grammatical forms shall have a corresponding meaning; (c) the terms “hereof”, “herein”, “hereunder”, “hereby” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement; (d) when a reference is made in this Agreement to an Article, Section, paragraph, Exhibit or Schedule, such reference is

 

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to an Article, Section, paragraph, Exhibit or Schedule to this Agreement unless otherwise specified; (e) the word “include”, “includes”, and “including” when used in this Agreement shall be deemed to incorporate the words “without limitation”, unless otherwise specified; (f) a reference to any party to this Agreement or any other agreement or document shall include such party’s predecessors, successors and permitted assigns; and (g) all accounting terms used and not defined herein have the respective meanings given to them under GAAP.

 

ARTICLE II

PURCHASE AND SALE

 

2.1            Purchase and Sale of the Purchased Assets .  Upon the terms and subject to the conditions of this Agreement, at the Closing, the Seller shall sell, assign, transfer, convey and deliver, to the Buyer, and the Buyer shall purchase, acquire and accept from the Seller, all of the Seller’s right, title and interest in, to and under the Purchased Assets, free and clean of all Liens, other than Permitted Liens.  For purposes of this Agreement, the “ Purchased Assets ” shall mean all of the Seller’s right, title and interest in, to and under the following:

 

(a)            all Business Intellectual Property and Business Customer Information;

 

(b)            the Contracts set forth on Section 2.1(b) of the Seller Disclosure Schedule (the “ Assigned Contracts ”);

 

(c)            all Business Information; provided that, subject to Section 5.3, the Seller shall be entitled to retain copies of any Business Information;

 

(d)            the Equipment set forth on Section 2.1(d) of the Seller Disclosure Schedule (the “ Assigned Equipment ”);

 

(e)            all Returned Products;

 

(f)             all goodwill of the Business as a going concern; and

 

(g)            any refunds or credits (including interest thereon or claims therefore) with respect to any Taxes to the extent that the Taxes being refunded are an Assumed Liability.

 

2.2            Excluded Assets .  Notwithstanding anything to the contrary herein, the Seller shall not sell, assign, transfer, convey or deliver to the Buyer, and the Buyer shall not purchase, acquire or accept delivery or have any rights to purchase, acquire or accept, delivery of any assets of the Seller (the “ Excluded Assets ”) other than those specifically

 

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set forth in Section 2.1.  Without limiting the generality of the foregoing sentence the following shall constitute Excluded Assets:

 

(a)            all of the Business’ cash and cash equivalents, including bank deposits, investments in so-called “money market” funds, commercial paper funds, certificates of deposit, Treasury bills and accrued interest thereon, in each case, to the extent on hand on the Closing Date;

 

(b)            all accounts receivables and other receivables or rights to payment of the Business arising prior to the Closing Date;

 

(c)            except as contemplated by the Manufacturing Agreement, all Inventory;

 

(d)            all real property owned, leased or otherwise used by the Seller;

 

(e)            except for Assigned Equipment or as otherwise provided in the Manufacturing Agreement, all machinery, vehicles, computers, furniture, fixtures and equipment and related supplies, accessories, materials and parts (collectively, “ Equipment ”) owned, leased or used by the Seller, including all machinery, vehicles, computers, furniture, fixtures and equipment and related supplies used by the Seller in the operation of the Business or the manufacture of the Business’ products;

 

(f)             all Contracts to which the Seller is a party other than the Assigned Contracts;

 

(g)            all Permits owned or used by the Seller;

 

(h)            except as provided in Section 2.1(g), any refunds or credits (including interest thereon or claims therefore) with respect to any Taxes relating to the Business or the Purchased Assets for any period or portion thereof ending on or before the Closing Date;

 

(i)             any Contracts of insurance in respect of the Business and all rights thereunder; and

 

(j)             any Universal Product Code number used by the Seller; provided , however , that the Seller consents to the Buyer (i) manufacturing finished goods inventory containing the Universal Product Code number used by the Seller in connection with the Business’ products until the eighteen (18) month anniversary of the Closing Date, (ii) selling any finished goods inventory existing as of the Closing Date or manufactured prior to the eighteen (18) month anniversary of the Closing Date pursuant to clause (i), (iii) using any packaging existing as of the Closing Date or manufactured prior to the eighteen (18) month anniversary of the Closing Date pursuant to clause (i), and (iv) reselling any inventory that is returned prior to the eighteen (18) month anniversary of the

 

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Closing Date which contains the Universal Product Code number used by the Buyer in connection with the Business’ products.

 

2.3            Assumed Liabilities .  Upon the terms and subject to the conditions set forth herein, at the Closing the Buyer shall assume from the Seller (and thereafter pay, perform, discharge or otherwise satisfy in accordance with their respective terms, subject to any defenses or claimed offsets asserted by the Buyer in good faith against the Person to whom such Liabilities are owed), and the Seller shall irrevocably transfer and assign to the Buyer, only the following Liabilities of the Seller (collectively, the “ Assumed Liabilities ”):

 

(a)            all Liabilities which arise on account of the operation of the Business, the use of the Purchased Assets and/or sale of any products manufactured and/or sold by the Buyer or the Business (including products using the Brand) on or after the Closing Date, except to the extent any Liability relates to or arises out of any fact, event or circumstance that constitutes a breach of Seller’s representations, warranties, covenants or agreements under this Agreement or the Manufacturing Agreement (without regard to any survival limitations hereunder);

 

(b)            all Taxes related to the Business attributable to taxable periods or portions thereof beginning on or after the Closing Date;

 

(c)            all Liabilities under the Assigned Contracts to the extent related to performance following the Closing Date, other than any Liability arising as a result of a breach thereof by Seller or its Affiliates prior to the Closing Date;

 

(d)            all Liabilities (i) for returns in the ordinary course of business consistent with past practice of the Business’ products received after the Closing Date for products sold prior to the Closing Date and (ii) for returns of the Business’ products received after the Closing Date for products sold on or after the Closing Date (all such returned products, the “ Returned Products ”); and

 

(e)            the Liabilities set forth in Section 5.16.

 

2.4            Excluded Liabilities .  Except as expressly provided in Section 2.3 or elsewhere in this Agreement, the Buyer shall not assume any Liabilities relating to the Business, the Purchased Assets or the Seller.  All such Liabilities including the following liabilities are, and shall remain, the Liabilities of the Seller (collectively, the “ Excluded Liabilities ”):

 

(a)            all Liabilities arising out of or relating to the Excluded Assets;

 

(b)            all Liabilities of the Seller that do not arise out of or are not related to the Business;

 

(c)            all trade payables of the Seller;

 

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(d)            all Liabilities for coupons dropped on or before the Closing Date (regardless of when such coupon is or was redeemed);

 

(e)            all Liabilities related to (i) Taxes of the Seller and (ii) any other Taxes related to the Business attributable to taxable periods or portions thereof ending on or prior to the Closing Date;

 

(f)             all Liabilities for commissions and sales incentives payable to brokers or other representatives for periods through (but not including) the Closing Date;

 

(g)            all Liabilities arising out of or incurred in connection with the negotiation, preparation and execution of this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby, including fees and expenses of counsel, accountants and other experts;

 

(h)            all Liabilities for product liability claims for products sold by the Seller prior to the Closing Date;

 

(i)             all Liabilities for infringement by the Seller of any Intellectual Property rights of any Person;

 

(j)             all Liabilities of the Seller for environmental matters; and

 

(k)            all Liabilities expressly retained or agreed to be discharged by Seller pursuant to this Agreement.

 

2.5            Purchase Price .  The aggregate consideration to be paid by the Buyer to the Seller for the Purchased Assets (the “ Purchase Price ”) shall be (i) Thirty Million Dollars ($30,000,000) (the “ Cash Consideration ”) plus (ii) the assumption of the Assumed Liabilities.

 

2.6            Closing Date . The consummation of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at the offices of Morgan, Lewis & Bockius LLP, 101 Park Avenue, New York, New York at 10:00 a.m. on January 4, 2006, or on such other date or at such other time and place as may be mutually agreed upon by the parties.  The date on which the Closing occurs is referred to in this Agreement as the “ Closing Date ”.   For purposes of this Agreement, the Closing will be treated as if it occurred at 12:01 a.m. on the Closing Date.

 

2.7            Closing Deliveries .

 

(a)            Deliveries by the Seller at the Closing .  At the Closing, the Seller shall deliver to the Buyer the following:

 

(i)             a bill of sale, substantially in the form of Exhibit A hereto (the “ Bill of Sale ”), duly executed the Seller;

 

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(ii)            an assumption agreement, substantially in the form of Exhibit B hereto (the “ Assumption Agreement ”), duly executed by the Seller;

 

(iii)           intellectual property assignments in a form to be agreed by the Seller and the Buyer (the “ Intellectual Property Assignments ”), duly executed by the Seller;

 

(iv)           a transition services agreement, substantially in the form of Exhibit D hereto (the “ Transition Services Agreement ”), duly executed by the Seller;

 

(v)            a contract manufacturing agreement, substantially in the form of Exhibit E hereto (the “ Manufacturing Agreement ”), duly executed by the Seller;

 

(vi)           the Seller Closing Certificate; and

 

(vii)          the consents, certificates and other documents required by Section 6.2, each in a form reasonably satisfactory to the Buyer and such other good and sufficient instruments of transfer as the Buyer reasonably deems necessary and appropriate to vest in the Buyer all right, title and interest in, to and under the Purchased Assets, free and clear of all Liens, other than Permitted Liens.

 

(b)            Deliveries by the Buyer at the Closing . At the Closing, the Buyer shall deliver to the Seller the following:

 

(i)             an amount in cash equal to the Cash Consideration, by wire transfer of immediately available funds to the account designated in writing by the Seller to the Buyer at least two (2) Business Days prior to the Closing Date;

 

(ii)            the Bill of Sale, duly executed by the Buyer;

 

(iii)           the Assumption Agreement, duly executed by the Buyer;

 

(iv)           the Intellectual Property Assignments, duly executed by the Buyer;

 

(v)            the Transition Services Agreement, duly executed by the Buyer;

 

(vi)           the Manufacturing Agreement, duly executed by the Buyer;

 

(vii)          the Buyer Closing Certificate; and

 

(viii)         the consents, certificates and other documents required by Section 6.3, each in a form reasonably satisfactory to the Seller.

 

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2.8            Allocation .  The Buyer and the Seller shall agree, promptly following the Closing Date, as to the allocation of the Purchase Price for Tax purposes among the Purchased Assets and the covenant not to compete (described in Section 5.20), such allocation to be made pursuant to Section 1060 of the Code and any other applicable Tax Laws (as the same may be revised pursuant to the following sentence, the “ Allocation Statement ”).  Except as otherwise required by Law, the Buyer and the Seller shall file all Tax Returns (such as IRS Form 8594 or any other forms or reports required to be filed pursuant to Section 1060 of the Code or any comparable provisions of Law (the “Section 1060 Forms”)) in a manner that is consistent with the Allocation Statement and refrain from taking any action inconsistent therewith and shall notify the other party if any taxing authority challenges the allocation set forth in the Allocation Statement.  The Buyer and the Seller shall cooperate in the preparation of the Section 1060 Forms and file such the Section 1060 Forms timely and in the manner required by applicable Law.  The Buyer and the Seller agree to treat any payments made pursuant to the indemnification provisions of this Agreement as an adjustment to the Purchase Price for Tax purposes.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE SELLER

 

                The Seller represents and warrants to the Buyer that each statement contained in this Article III, subject and giving effect to the disclosure schedule accompanying this Agreement, which is attached to this Agreement and is designated therein as being the “seller disclosure schedule” (the “ Seller Disclosure Schedule ”), is true and correct as of the date hereof.  Each section of the Seller Disclosure Schedule shall be deemed to incorporate by reference all information disclosed in any other section of the Seller Disclosure Schedule so long as the nature of the exception is readily apparent from the text of such disclosure.

 

3.1            Organization and Good Standing .  The Seller is a limited liability partnership duly organized, validly existing and in good standing under the Laws of the State of Delaware, has all requisite power to own, lease and operate its properties and to carry on its business as now being conducted, and is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which it owns or leases property or conducts any business so as to require such qualification, except where the failure to be so qualified would not reasonably be expected to have a Material Adverse Effect.

 

3.2            Authority and Enforceability .  The Seller has the requisite power and authority to enter into this Agreement and each of the Ancillary Agreements and to consummate the transactions contemplated hereby and thereby.  The execution and delivery by the Seller of this Agreement and each of the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Seller.  This Agreement has been duly executed and delivered by the Seller and, when executed and delivered by the Seller,

 

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each of the Ancillary Agreements will be duly executed and delivered by the Seller.  Assuming due authorization, execution and delivery by the Buyer and each other party thereto, this Agreement constitutes, and, when executed and delivered by the Seller, each of the Ancillary Agreements will constitute, the valid and binding obligation of the Seller, enforceable against the Seller in accordance with its terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to creditors’ rights generally and (b) the availability of injunctive relief and other equitable remedies. 

 

3.3            No Conflicts; Consents .

 

(a)            The execution and delivery of this Agreement and the Ancillary Agreements by the Seller does not, and the consummation of the transactions contemplated hereby and thereby (in each case, with or without the giving of notice or lapse of time, or both) will not, (i) violate or conflict with the provisions of any of the Organizational Documents of the Seller, (ii) violate, breach or constitute a default under, or result in the termination, cancellation or acceleration of any term or provision of (A) the Assigned Contracts or (B) any other Contract to which the Seller or any of its Affiliates is a party or by which the Purchased Assets are bound, (iii) violate or conflict with any Law, Permit or Order applicable to the Seller on the date hereof, or (iv) result in the creation of any Liens upon any of the Purchased Assets (other than any Permitted Lien), except in the case of clause (ii)(B) where such violation, breach, default, termination, cancellation or acceleration would not reasonably be expected to have a Material Adverse Effect.  

 

(b)            Except as set forth in Section 3.3(b) of the Seller Disclosure Schedule , no material Permit or Order of, registration, declaration or filing with, or notice to, or authorization, clearance, consent or approval of, any Governmental Entity or any other Person is required to be made or obtained by the Seller in connection with the execution and delivery of this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby.

 

3.4            Financial Data . 

 

(a)            Section 3.4(a)(i) of the Seller Disclosure Schedule contains true and complete copies of certain historical financial data of the Business for each of the 2003 and 2004 fiscal years and the eleven periods ended November 6, 2005, including any notes related thereto (collectively, the “ Financial Data ”).  The Financial Data (A) has (i) in the case of the financial data related to the 2003 and 2004 fiscal years, been prepared in accordance with United Kingdom generally accepted accounting principles (“ GAAP ”) applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto) and under the Seller’s accounting principles, methodologies and policies set forth on Section 3.4(a)(ii) of the Seller Disclosure Schedule (the “ Accounting Principles ”) applied on a consistent basis throughout the periods involved (except as may be indicated on Section 3.4(a)(ii) of the Seller Disclosure Schedule ) and (ii) in the case of the financial data related to the eleven periods

 

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ended November 6, 2005, been prepared in accordance with International Financial Reporting Standards (except as may be indicated in the notes thereto) and under the Accounting Principles and (B) is in all material respects consistent with the Business’ books and records.  Each item set forth in the Financial Data fairly presents in all material respects the financial information contemplated by such item as of the respective dates and for the respective periods thereof.  Notwithstanding the foregoing, the Financial Data is qualified by the fact that the Business has not been operated as a separate “stand-alone” entity within the Seller’s organization.  As a result, the Business has received certain allocated charges as specifically identified in the notes to the Financial Data.  Such charges, while believed by the Seller to be reasonable, do not necessarily reflect the amounts which would have resulted from arms-length transactions.  In addition, in order to present stand-alone financial data for the Business, a number of significant assumptions regarding the basis of presentation have been made, all of which are believed by the Seller to be reasonable. 

 

(b)            The Seller does not make any representations or warranties with respect to any financial information for the Business delivered to the Buyer other than as specifically set forth in this Section 3.4.  The Seller makes no other representations or warranties with respect to the financial information presented in the Financial Data.

 

3.5            Taxes .  Except as disclosed in Section 3.5 of the Seller Disclosure Schedule , the Seller has filed or will have filed on a timely basis all material Tax Returns required to be filed by it with respect to the Business, and the Seller has or will have timely paid all such Taxes shown thereon to be due.  None of the Purchased Assets is subject to any Lien in favor of the United States pursuant to Section 6321 of the Code for nonpayment of Taxes, or any lien in favor of any state, provincial or locality pursuant to any comparable provision of state, provincial or local Law, under which transferee liability might be imposed upon the Buyer as a buyer of such Purchased Assets pursuant to Section 6323 of the Code or any comparable provision of state, provincial or local Law.

 

3.6            Compliance with Law .

 

(a)            The Business is in compliance with all Laws to which the Business is subject, except where such failure to comply would not reasonably be expected to have a Material Adverse Effect.  The Seller has not received any notice of any claim of a violation of any Law to which the Business is subject, except for such matters that would not reasonably be expected to have a Material Adverse Effect.

 

(b)            To Knowledge of the Seller, except as disclosed in Section 3.6(b) of the Seller Disclosure Schedule , (i) each of the Business’ products that is subject to the Federal Food Drug and Cosmetic Act (the “ FFDCA ”), is manufactured and sold in compliance with all applicable requirements under the FFDCA and similar laws in any domestic or foreign jurisdiction and (ii) none of the Business’ products is adulterated or misbranded within the meaning of the FFDCA or any pure food laws or ordinances of any state, province or city to which such articles are shipped or to be shipped, except in

 

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the case of clauses (i) and (ii), where such failure to comply would not reasonably be expected to have a Material Adverse Effect

 

3.7            Title to Purchased Assets .

 

(a)            The Seller has good title to, or a valid interest in, all of the Purchased Assets, free and clear of all Liens, other than Permitted Liens.  This Agreement and the instruments of transfer to be executed and delivered pursuant hereto will vest in the Buyer title to all of the Purchased Assets, free and clear of all Liens, other than Permitted Liens.

 

(b)            The Seller owns all Business Customer Information free and clear of all Liens, other than Permitted Liens.  Other than any rights which the Seller’s current of former customers may have in and to such Business Customer Information, no Person other than the Seller and its Affiliates possesses any rights with respect to the use of the Business Customer Information.

 

(c)            This Section 3.7 does not relate to Intellectual Property, such items being the subject of Section 3.8.

 

3.8            Intellectual Property .

 

(a)            Section 3.8(a) of the Seller Disclosure Schedule sets forth a complete and accurate list of all Intellectual Property owned by the Seller or its Affiliates that (i) is used or held for use principally in connection with the conduct of the Business as currently conducted and (ii) is registered or subject to an application for registration (such scheduled Intellectual Property, the “ Registered Business Intellectual Property ”). 

 

(b)            Except as set forth on Section 3.8(b) of the Seller Disclosure Schedule , all of the Registered Business Intellectual Property which is U.S. Business Intellectual Property (the “ U.S. Registered Business Intellectual Property ”) is valid and in full force, is in the name of the Seller and is not the subject of any cancellation or reexamination proceeding, and all necessary registration, maintenance and renewal fees required to be paid as of the date hereof have been paid, and all necessary documents required to be filed as of the date hereof have been filed, with the U.S. Patent and Trademark Office for the purposes of maintaining such registrations.  Except as set forth on Section 3.8(b) of the Seller Disclosure Schedule , there are no actions that would otherwise have to be taken by the Seller within 60 days of the date hereof, including the payment of any registration, maintenance or renewal fees or the filing of any documents, applications or certificates for the purposes of maintaining any rights in any U.S. Registered Business Intellectual Property.

 

(c)            Except as set forth on Section 3.8(c) of the Seller Disclosure Schedule , the U.S. Business Intellectual Property constitutes all of the material intellectual property necessary for the conduct of the Business in the United States as currently conducted.  Except as set forth on Section 3.8(c) of the Seller Disclosure

 

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Schedule , the Seller owns, is licensed or otherwise has the right to use all U.S. Business Intellectual Property.   Except as set forth on Section 3.8(c) of the Seller Disclosure Schedule , (i) the U.S. Business Intellectual Property that is owned by the Seller is held free and clear of all Liens, other than Permitted Liens; (ii) no proceedings have been instituted, are pending or, to the Knowledge of the Seller, threatened, which challenge the rights of the Seller in or the validity or enforceability of the U.S. Business Intellectual Property, and, to the Knowledge of the Seller, there is no basis for such a challenge; (iii) to the Knowledge of the Seller, neither the use of the U.S. Business Intellectual Property nor the conduct of the Business as currently conducted infringes, dilutes, misappropriates or otherwise violates in any material respect the intellectual property rights of any Person and no claim has been made, notice given, or dispute arisen to that effect; and (iv) the Seller has not made any claim of a violation, infringement, misuse or misappropriation by any Person, of their rights to, or in connection with, the U.S. Business Intellectual Property and, to the Knowledge of the Seller, there is no basis for such a claim.

 

(d)            Except as set forth in Section 3.8(d) of the Seller Disclosure Schedule , the Seller has not permitted or licensed any Person to use any Business Intellectual Property owned by the Seller.

 

(e)            The Seller has not entered into any licenses, sublicenses, consents and other agreements (whether written or otherwise), other than licenses for “off the shelf” commercially available software programs, pertaining to (i) any Intellectual Property that is material to and used in the conduct of the Business, or (ii) by which the Seller or any Affiliate licenses or otherwise authorizes a Person to use any Business Intellectual Property. 

 

(f)             The representations and warranties contained in this Section 3.8 are the Seller’s sole representations and warranties with respect to intellectual property matters.

 

3.9            Absence of Certain Changes or Events .  Except as set forth in Section 3.9 of the Seller Disclosure Schedule , during the period from November 4, 2005 until the date of this Agreement, (a) the Business has been conducted, in all material respects, in the ordinary course of business consistent with past practice and (b) no event or change has occurred that has had, or would reasonably be expected to have, a Material Adverse Effect.

 

3.10          Assigned Contracts .  The Seller has furnished or made available to the Buyer a true and correct copy of the Assigned Contracts.  Each of the Assigned Contracts is valid and enforceable in accordance with its terms and (i) the Seller is not (with or without the giving of notice or lapse of time, or both) in default, and, to the Knowledge of the Seller, no other party is in default under any of the Assigned Contracts, (ii) there is no written claim of default by either party in the performance, observance or fulfillment of any obligation, covenant or condition contained in any of the Assigned Contracts and (iii) no event, act or omission has occurred that (with or without the giving of notice or lapse of time, or both) would constitute a default by the Seller or, to the Knowledge of the

 

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Seller, any other party under any of the Assigned Contracts, or would permit modification, acceleration, or termination of any of the Assigned Contracts, or result in the creation of any Lien on any of the Purchased Assets, other than a Permitted Lien, in each case, except where such default, claim, event, act or omission would not reasonably be expected to have a Material Adverse Effect.  Other than the Assigned Contracts and Contracts for the procurement of raw materials and supplies, there are no other Contracts to which the Seller is a party or by which the Seller is bound that principally relates to the operation of the Business.

 

3.11          Litigation; Orders .  Except as set forth on Section 3.11 of the Seller Disclosure Schedule :

 

(a)            There is no Action pending or, to Knowledge of the Seller,  threatened, against the Seller which (i) challenges or seeks to enjoin, alter or materially delay the consummation of the transactions contemplated by this Agreement or the Ancillary Agreements or (ii) would reasonably be expected to have a Material Adverse Effect.  There is no material unsatisfied judgment, penalty, award or Order against the Seller.  

 

(b)            The Seller is in compliance with each Order entered, issued or rendered by any Governmental Entity to which the Seller is subject and the Seller has not received any written notice of any claim of a violation of any Order, except where such failure to comply would not reasonably be expected to have a Material Adverse Effect.

 

3.12          Product Liability; Product Recall . 

 

(a)            Except as set forth in Section 3.12(a) of the Seller Disclosure Schedule , the Seller does not know nor have any reason to know of any claim in the last thirty-six (36) months based on any product liability or warranty in connection with the Business other than consumer complaints in the ordinary course of business which would not reasonably be expected to have a Material Adverse Effect.

 

(b)            Except as set forth in Section 3.12(b) of the Seller Disclosure Schedule , there has not been, since December 31, 2002, any product recall of any product manufactured, shipped or sold by the Business. 

 

3.13          Customers and Suppliers .  Section 3.13(i) of the Seller Disclosure Schedule sets forth a list of the ten largest customers of the Business and the ten largest suppliers to the Business, in each case based on dollar volume during the Seller’s 2004 fiscal year.  Except as set forth in Section 3.13(ii) of the Seller Disclosure Schedule , since the start of the Seller’s 2005 fiscal year, no material and adverse change has occurred in the relationship between the Seller or any Affiliate of the Seller and customers and suppliers of the Business, taken as a whole, in each case, as it relates to the Business.  Since the start of the Seller’s 2005 fiscal year, except as set forth in Section 3.13(ii) of the Seller Disclosure Schedule , none of the customers or suppliers set forth on Section 3.13(i) of the Seller Disclosure Schedule has terminated or has provided written notice of

 

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an intention to terminate its relationship with the Business, and the Seller has not received written notice that that a material supplier of the Business will not sell a material amount of raw materials, supplies, merchandise or other goods to, or that any material customer of the Business will not purchase a material amount of the Business’ products from, the Seller on terms and conditions similar to those used in current sales to and purchases from the Business.

 

3.14          Brokers .  Except for fees and commissions of Winchester Capital which will be paid solely by the Seller, no broker, finder or investment banker is entitled to any brokerage, finder’s, investment banker’s or other fee or commission in connection with the transactions contemplated by this Agreement or the Ancillary Agreements based upon arrangements made by or on behalf of the Seller or its Affiliates.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE BUYER

 

                The Buyer represents and warrants to the Seller that each statement contained in this Article IV is true and correct as of the date hereof. 

 

4.1            Organization and Good Standing .  The Buyer is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware, has