Exhibit 10.1
ASSET PURCHASE AND SALE AGREEMENT
THIS ASSET PURCHASE AND SALE AGREEMENT is made this 18th day of
August, 2004, by and between JOEL, INC., a Pennsylvania corporation
(hereinafter
called "Seller"), and THE QUIGLEY CORPORATION, a Nevada
corporation, or a
wholly-owned subsidiary thereof as its nominee (hereinafter
"Buyer").
Seller operates two businesses known as Simon Candy Company,
located
in Elizabethtown, PA, and Pharmaloz, located in Lebanon, PA
(collectively, the
"Business"). The Business involves the manufacturing, packaging,
distribution
and sale of OTC lozenges and related products under FDA licensing,
and the
manufacturing, packaging, distribution and sale of hard candy
products. Buyer
desires to purchase, and Seller desire to sell, all of the assets
of the
Business described in this Agreement. In addition, Buyer has agreed
to purchase
the parcels of real estate on which the Business is located, in
accordance with
the terms of this Agreement.
NOW, THEREFORE, in consideration of the premises and the covenants
and conditions hereinafter contained, the parties, with the
intention of being
legally bound, covenant and agree as follows:
1. INCORPORATION OF RECITALS AND EXHIBITS. The above recitals and
each Schedule and Exhibit identified in this Agreement are made a
part of this
Agreement by such reference.
2. SALE AND PURCHASE OF ASSETS.
2.1. ASSETS OF SELLER'S BUSINESS. Subject to the terms and
conditions of this Agreement, Buyer agrees to purchase from Seller,
and Seller
agrees to sell, transfer, and assign to Buyer, the following assets
owned by
Seller (and none other) (together with the Real Estate (as
hereinafter defined),
the "Acquired Assets"):
2.1.1 All fixtures, furnishings, office equipment, office
supplies, machinery, manufacturing equipment, tools and replacement
parts
located at the Pharmaloz facility, 500 N. 15th Avenue, Lebanon, PA
17046, and
the Simon Candy facility, 31 North Spruce Street, Elizabethtown, PA
17022, as
set forth on Schedule 2.1.1 hereto, and all warranties and
agreements pertaining
thereto (to the extent transferable), it being understood that
tools and
replacement parts will not be listed on Schedule 2.1.1 and that all
tools and
replacement parts on the premises will be included in the assets
sold hereunder;
2.1.2 All computer equipment, computer systems and software of
the Business, as set forth on Schedule 2.1.2 hereto, and all
warranties and
agreements pertaining thereto;
2.1.3 All material, inventory (including work-in-process), and
supplies of the Business on hand as of the Closing (as defined in
paragraph 4),
it being agreed that such inventory shall be as described in
paragraph 5.1.5 and
shall have a value, based upon Seller's cost, of at least $900,000
(Simon Candy
inventory shall have a value of at least $530,000 and Pharmaloz
inventory shall
have a value of at least $370,000) as of the Closing Date. Seller
shall be
permitted to sell, at any time up to Closing, any of the inventory
in the
ordinary course of its business, and shall be entitled to retain
all of the sale
proceeds; provided, however, that in the event the inventory value
at Closing is
$25,000 more or less than $900,000, the purchase price shall be
adjusted as
provided in paragraph 3.1.3. A physical inspection of the inventory
shall be
made the day prior to the Closing Date by representatives of Seller
and Buyer,
and the parties shall prepare a list of the inventory, with a
calculation of the
value of the inventory;
2.1.4 All records, files, and information pertaining to the
manufacturing of Cold-Eeze lozenges or any other products
manufactured at the
Pharmaloz or Simon Candy locations;
2.1.5 All intangible property, know-how and confidential
information pertaining to the manufacturing of Cold-Eeze lozenges
or any other
products manufactured at the Pharmaloz or Simon Candy locations;
2.1.6 All licenses, permits and approvals for the manufacturing
of OTC products (to the extent transferable), including FDA and MCA
licensing,
as set forth on Schedule 2.1.6;
2.1.7 All lists or information pertaining to customers,
suppliers, vendors, clients, prospective clients or customers,
manufacturers,
distributors, and dealers (as used herein the term "list" shall
include the
name, address, phone number and contact person for each person or
entity
listed), as set forth on Schedule 2.1.7 hereto;
2.1.8 Telephone and fax numbers and listings, web sites, and
internet addresses for the Business;
2.1.9 The name "JOEL", and the trademarks and trade names
"Simon's", "It's a Boy", "It's a Girl", and "College Farm",
"Wedjeez", and
"Pharmaloz";
2.1.10 Goodwill of the Business; and
2.1.11 Seller's leasehold interest in the licenses and equipment
(to the extent assignable) listed upon Schedule 2.1.11 hereto.
2.2 REAL ESTATE. Buyer further agrees to purchase from Seller, and
Seller agrees to sell to Buyer, the parcels of real estate on which
Seller's
business is conducted, namely 500 N. 15th Avenue, Lebanon, PA 17046
and 31 North
Spruce Street, Elizabethtown, PA 17022 (collectively, the "Real
Estate"), upon
the following terms:
2.2.1 Buyer's obligation to proceed to Closing is contingent upon
Buyer obtaining, on or before the conclusion of the due diligence
period
referenced in paragraph 3.3, a satisfactory Phase I environmental
assessment
report (the "Report") for the Real Estate, satisfactory to Buyer in
its sole
reasonable discretion, providing that no toxic wastes, hazardous
wastes,
hazardous substances, petroleum, asbestos, asbestos-containing
materials, PCB's,
PCB-containing materials, urea, formaldehyde and/or radon have been
released
from or onto or are present on or in the subject premises or any
improvement
thereon or any part thereof; that the subject premises are in
compliance with
all applicable federal, state and local environmental statutes,
ordinances,
regulations and rules; that there are no conditions on the subject
premises
which may require removal, remediation or corrective action under
any applicable
2
federal, state or local environmental statutes, ordinances,
regulations or
rules; that no operations or conditions on properties surrounding
the subject
premises pose a risk that toxic or hazardous substances or waste
may be released
onto the subject premises. In the event that the Report is not
satisfactory to
Buyer, Buyer may terminate this Agreement as provided in paragraph
3.3.1, and in
such event, the Deposit (as defined in paragraph 3.1.1 below) shall
be returned
to Buyer, this Agreement shall be null and void and thereafter the
parties
hereto shall have no further liabilities or obligations each to the
other.
2.2.2 The Real Estate is to be conveyed free and clear of all
liens, encumbrances, and easements, EXCEPTING HOWEVER, existing
building
restrictions, ordinances, easements of roads, privileges or rights
of public
service companies, and any other restrictions or conditions of
record, that do
not, in Buyer's sole reasonable opinion, affect the use or
marketability of the
Real Estate; otherwise the title to the herein described lot or
piece of ground
shall be good and marketable and such as will be insured by any
reputable Title
Insurance Company at the regular rates. Buyer shall notify Seller,
in writing,
of any objectionable title restrictions within the Due Diligence
Period (as
defined in paragraph 3.3 below), and if such objections are not
resolved to
Buyer's satisfaction by the conclusion of the Due Diligence Period,
Buyer may
terminate this Agreement as provide in paragraph 3.3.1, and in such
event, the
Deposit shall be returned to Buyer, this Agreement shall be null
and void and
thereafter the parties hereto shall have no further liabilities or
obligations
each to the other.
If Buyer fails to timely notify Seller in writing of any objections
to title, then Buyer agrees that any title objections are waived
and title shall
be deemed acceptable to Buyer.
2.2.3 Taxes, rents, interest on mortgage encumbrances, water and
sewer rental, if any, shall be apportioned pro rata as of the date
of
settlement. All Real Estate Transfer Taxes imposed by any
government body shall
be borne equally by Seller and Buyer.
2.2.4 Tender of an executed deed and purchase money is hereby
waived.
2.2.5 All plumbing, heating and lighting fixtures, and systems
appurtenant thereto, and forming a part thereof, as well as all
ranges, and
other permanent fixtures, together with screens, shades and
awnings, if any, and
all trees, shrubbery and plants now in or on the Real Estate herein
intended to
be conveyed, unless specifically excepted in this Agreement, are
included in the
sale and purchase price, and shall become the property of Buyer at
the time of
settlement of this transaction.
2.2.6 Any loss or damage to the Real Estate caused by fire or
other casualty between the date of this Agreement and the time of
settlement
which results in Seller's manufacturing and laboratory facilities
being
inoperable for more than 24 hours shall be immediately repaired by
Seller, at
Seller's expense, such that the Real Estate and Improvements are in
operating
condition at the time of Closing. In the event Seller is unwilling
or unable to
effectuate such repairs, Buyer may void this Agreement. Buyer shall
void this
Agreement by giving written notice of same to Seller, and in such
event, all
deposit monies together with interest shall be returned to Buyer,
and
thereafter, the parties hereto shall have no further liabilities or
obligations
each to the other.
3
2.2.7 [Intentionally omitted]
2.2.8 Except as otherwise expressly set forth herein, Buyer
agrees to accept the Real Estate at Closing in its condition at
that time
provided it is in substantially the same condition as at the time
of this
Agreement, subject to ordinary wear and tear, and further agrees
and confirms
that, (i) Seller, nor any agent, employee or representative of
Seller, has not
made and does not make herein any representation or warranty as to
the condition
of all or any portion of the Real Estate (including, without
limitation, the
condition of the Real Estate's roof and mechanical, electrical,
heating,
plumbing, air conditioning and structural units, systems and
components), and
(ii) the Real Estate is being sold "as is-where is" and without any
express or
implied warranty whatsoever as to the condition thereof, fitness
for a
particular purpose, or otherwise.
2.3 EXCLUDED ASSETS. The following assets are specifically excluded
from the Acquired Assets:
2.3.1 Seller's accounts receivable. Attached hereto as Schedule
2.3.1 is a list of Seller's receivables as of the date of this
Agreement. At
Closing, Seller agrees to provide an updated Schedule 2.3 list of
receivables as
of the Closing Date in the format shown on Schedule 2.3. Any
payments received
after Closing from any customer on account of a receivable shown on
such updated
Schedule 2.3 shall be applied by Seller in payment of such
receivable as is
specifically referenced on the customer's remittance. If the
payment does not
reference an invoice to which payment is to be applied, the payment
shall be
credited to the oldest outstanding receivable first. Seller shall
not be
entitled to retain any payments in excess of those shown on the
updated Schedule
2.3, unless Seller can demonstrate in good faith its entitlement to
same as an
account receivable for goods or services provided prior to the
Closing Date. The
parties agree to reasonably cooperate in their treatment of
accounts receivable;
for example, Buyer agrees to forward promptly to Seller any monies,
checks or
instruments received by Buyer after the Closing Date with respect
to goods or
services provided prior to the Closing Date.
2.3.2 Any and all life insurance policies owned by the Seller.
2.3.3 Any stock of Buyer owned by the Seller.
2.3.4 The titled motor vehicles described on Schedule 2.3.4.
2.3.5 All assets whatsoever of Seller not included within the
Acquired Assets, subject to the provisions of paragraph 5.1.29.
2.3.6 All assets in Seller's possession that are already owned by
Buyer, as listed on Schedule 2.3.6.
3.
PURCHASE PRICE AND TERMS OF PAYMENT; DUE DILIGENCE PERIOD
3.1 PURCHASE PRICE FOR JOEL'S ASSETS. The total purchase price for
the Acquired Asset is FIVE MILLION ONE HUNDRED THOUSAND DOLLARS
(U.S.$5,100,000)
(except as provided in paragraph 3.1.3), payable as follows:
4
3.1.1 Buyer shall deposit the sum of $100,000 in an
interest-bearing escrow account with Eastburn and Gray, P.C. and
McNees Wallace
& Nurick LLC, as joint escrow agents, pursuant to an Escrow
Agreement in the
form attached hereto as Exhibit "A" and made a part hereof, said
deposit (the
"Deposit") to be credited against the purchase price at Closing,
unless this
Agreement is rightfully terminated by Buyer prior to Closing as
provided herein.
Interest on the Deposit shall accrue to Buyer unless Buyer defaults
hereunder.
3.1.2 Buyer shall pay to Seller at Closing (i) FOUR MILLION
DOLLARS (U.S. $4,000,000), in cash, or by wire transfer if
requested by Seller,
(except as provided in paragraph 3.1.3) and (ii) shares of stock of
Buyer issued
in the name of the shareholders of Seller (the "Shareholders") (in
proportions
provided by Seller not less than 5 business days prior to the
Closing Date),
having a value of $1,000,000 based upon the average closing price
per share of
such stock for the period commencing on September 23, 2003 and
terminating on
September 23, 2004 (or, if the Closing Date is earlier than October
1, 2004,
terminating on the date which is 5 business days immediately prior
to the
Closing Date) (the "Shares"). The treatment of the Shares shall
otherwise be in
accordance with the terms and conditions of the Registration Rights
Agreement in
the form attached hereto as Exhibit "B" and made a part hereof. The
Shareholders
join in this Agreement for the sole and limited purpose of
acknowledging that
until the Shares are registered, (i) the Shares must be held until
an exemption
from such registration is available, and (ii) the shareholders are
acquiring the
Shares for their own account for investment, and not with a view to
distribution
or resale.
3.1.2.1 If the Shares are registered more than 120 days but less
than 180 days after Closing, and at the time of registration the
Shares have a
value (based upon their price per share at the time of
registration) of less
than $1,000,000, Buyer shall make cash payments to the Shareholders
(in
proportions provided by Seller not less than 5 business days prior
to the
Closing Date) equal to the difference between such value of the
Shares and
$1,000,000, said payment to be made within ten (10) business days
after the date
of registration; provided that, in lieu of making such payment,
Buyer shall have
a "call" right, exercisable no later than ten (10) business days
after the date
of registration, to purchase the Shares from the registered owners
for a cash
payment of $1,000,000, with such payment to be made in exchange for
the Shares
within five (5) business days of exercise of such call right.
3.1.2.2. If the Shares are not registered by the 179th day after
Closing, then (subject to Section 3.1.2.3 below) the Shareholders
shall each
have a "put" right, for a period of thirty (30) days thereafter
(i.e., from the
180th day through and including the 210th day after Closing), to
elect to sell
to Buyer, and Buyer shall purchase, all of such Shareholder's
Shares for a cash
amount equal to the Shareholder's pro-rata percentage of the Shares
multiplied
times $1,000,000, such payment to be made within five (5) business
days after
notice of the election to sell the Shares. By way of example, if a
Shareholder
exercising the put right holds 20% of the Shares, the Shareholder
shall be
entitled to a cash payment of $200,000.
3.1.2.3 In computing the time periods described in paragraphs
3.1.2.1 and 3.1.2.2, the parties shall not take into account any
time period of
delay that is solely the result of Seller's need to address any
regulatory
agency concerns about the adequacy of Seller's financial
statements.
5
3.1.3 If the value of the Simon Candy and Pharmaloz inventory
referenced in paragraph 2.1.3 is $25,000 more or less than $900,000
as of the
Closing Date, the cash portion of the purchase price shall be
adjusted at
Closing as follows: the price shall be reduced by the amount, if
any, by which
the value of the Simon Candy and Pharmaloz inventory is less than
$875,000 as of
the Closing Date, and the price shall be increased by the amount,
if any, by
which the value of the Simon Candy and Pharmaloz inventory is
greater than
$925,000 as of the Closing Date.
3.2 ALLOCATION OF PURCHASE PRICE. The purchase price for the
Acquired Assets shall be allocated as follows:
Land and improvements:
$
200,000
Buildings:
$ 2,000,000
Machinery and equipment:
$ 1,500,000
Inventory:
$
900,000
Goodwill:
$
500,000
===========
$ 5,100,000;
PROVIDED, however, that the parties agree to reasonably adjust such
allocation
to take into account the results of the appraisals of the land,
buildings, and
machinery and equipment being obtained by Buyer, to the extent
required by
applicable law or regulation.
3.3 DUE DILIGENCE PERIOD. Buyer acknowledges that it has been
engaged in extensive due diligence prior to the date of this
Agreement. Buyer
shall have the right, until 5 p.m., local time, on August 31, 2004
(the "Due
Diligence Period") to continue to conduct such inspections,
studies, and
evaluations of the Acquired Assets, as Buyer in Buyer's sole
discretion deems
necessary, to determine the suitability and fitness of such assets
and property
for its intended uses by Buyer. During the Due Diligence Period,
Buyer shall
have reasonable access to (i) the Acquired Assets, (ii) any
records,
information, or documents relating to the Acquired Assets, and
(iii) any
governmental agencies having jurisdiction over any matters
affecting the
Acquired Assets. Seller shall reasonably furnish Buyer with any
such records,
information, or documents in Seller's possession at the
commencement of the Due
Diligence Period.
3.3.1 Buyer shall notify Seller in writing, on or before the
expiration of the Due Diligence Period, of Buyer's intention to (1)
waive this
contingency or (2) terminate this Agreement. If Buyer elects to
waive this
contingency, Buyer shall be deemed to have accepted the Acquired
Assets subject
to any matters discovered during the Due Diligence Period and "as
is where is",
and the Deposit shall immediately become completely non-refundable
except in the
event of (i) Seller's default, or (ii) the non-occurrence of a
condition
precedent to Buyer's obligation to close contained in paragraph 8
below. If
Buyer elects to terminate this agreement (which Buyer may do for
any reason
during the Due Diligence Period), the Deposit, together with
interest earned
thereon, shall be returned to Buyer, and thereafter the parties
hereto shall
have no further liabilities or obligations each to the other.
3.3.2 Nothing contained herein shall prevent the parties from
modifying the provisions of this Agreement as a result of matters
discovered by
Buyer during the Due Diligence Period, provided that any such
modification shall
be in writing and signed by all parties.
6
4. CLOSING
4.1 TIME AND PLACE. Closing shall take place at the offices of
Eastburn and Gray, P.C., Doylestown, PA, on or before October 1,
2004 (the
"Closing Date"); provided that all conditions precedent to each
party's
obligations hereunder have been satisfied or waived by such date in
accordance
with the terms and conditions of this Agreement. Time shall be of
the essence of
this Agreement.
4.2 TRANSACTIONS AT CLOSING. At Closing, the following transactions
shall take place:
4.2.1 Seller shall execute and deliver to Buyer a Bill of Sale
for all equipment, machinery and fixtures shown on Exhibits 2.1.1
and 2.1.2;
4.2.2 Seller shall execute any documentation necessary to
transfer the licenses (to the extent transferable) described in
paragraph 2.1.6
to Buyer, and shall execute such further documentation as may be
reasonably
required after Closing to complete the transfer of such licenses to
Buyer;
4.2.3 Seller and Buyer shall execute any documentation necessary
to transfer the remaining assets described in paragraph 2 to Buyer;
4.2.4 Buyer shall pay the balance of the purchase price to
Seller, and deliver the Shares to the shareholders of Seller, each
in the manner
provided in paragraph 3.1; and
4.2.5 Buyer and Seller shall complete the sale and purchase of
the Real Estate, and execute and deliver all necessary documents in
connection
with such purchase, and Buyer shall pay any consideration required
in connection
with such purchase of the Real Estate.
5. REPRESENTATIONS AND WARRANTIES BY SELLER.
5.1 Seller warrants and represents to Buyer as follows:
5.1.1 Seller is a duly organized, existing corporation in good
standing under Pennsylvania law, with full power, right and
authority to enter
into and perform this Agreement and to grant all of the rights,
powers and
authorities herein granted;
5.1.2 Except as disclosed on Schedule 5.1.2, the execution,
delivery and performance of this Agreement do not conflict with,
violate, or
breach any agreement to which Seller is a party, or Seller's
Articles of
Incorporation or By-Laws;
5.1.3 All actions taken, or required to be taken, by Seller under
this agreement have been duly authorized by the shareholders,
directors and
officers of Seller;
5.1.4 Except as disclosed on Schedule 5.1.4 or the title
commitment and materials, Seller holds good and marketable title to
all of the
assets and property described in section 2.1 above, and has the
ability to sell,
transfer, license and convey such property, free and clear of
rights,
7
agreements, claims, or interests of any other persons or entities,
and free and
clear of any liens, restrictions, or encumbrances of any kind;
5.1.5 Except as disclosed on Schedule 5.1.5, all inventory
described in paragraph 2.1.3 is undamaged, has been manufactured
within six
months prior to the Closing Date, and has not been removed from its
original
packaging;
5.1.6 All equipment and machinery described in paragraph 2.1.1 is
in good working order and in compliance with FDA standards for good
manufacturing practices, and Seller has no knowledge of any
uncorrected material
defects in or damage to such machinery and equipment;
5.1.7 All computer systems and software used in the Business are
in good working order;
5.1.8 All records and documents pertaining to the manufacturing
and packing of OTC lozenges and other products of the Business are
properly
maintained and in compliance with applicable federal, state, and
local laws and
regulations;
5.1.9 Except as disclosed on Schedule 5.1.9, there are no claims,
complaints, lawsuits of any kind pending or threatened against
Seller or any of
Seller's officers, directors or shareholders in any jurisdiction;
5.1.10 There are no investigations, judicial, administrative, or
regulatory proceedings of any kind pending or threatened against
Seller or any
of Seller's officers, directors or shareholders involving any
federal, state or
local government agency, including but not limited to claims based
upon
applicable environmental, labor, manufacturing, safety, zoning, or
municipal
laws;
5.1.11 Except as disclosed on Schedule 5.1.11, all local, state,
and federal taxes, including but not limited to income,
withholding, sales, and
franchise taxes, owed by Joel have been paid, and all tax returns
required to be
filed by Joel have been timely filed;
5.1.12 There are no unpaid or delinquent accounts of the Business
that would give rise to a lien or claim against the assets being
sold hereunder;
5.1.13 Seller is not in default under any contract, agreement or
lease to which it is a party, and Seller has timely paid or
performed all
obligations under any such agreements;
5.1.14 Seller is not in default in any payments due to any
suppliers, vendors, or manufacturers, and has timely paid or
performed any
obligations to such entities;
5.1.15 Seller has not entered into any agreements or otherwise
dealt with any other party with respect to any matters contained in
this
Agreement; provided, however, that Buyer acknowledges that in
November, 2003,
Seller engaged Chapman Associates in order to pursue a possible
sale of the
Business; and
5.1.16 All licenses, approvals and permits necessary to the
conduct of the Business (including but no limited to FDA licensing,
MCA
licensing, Pennsylvania labor and industry and department of
health, county and
8
local department of health, and municipal zoning, use and
occupancy) are valid
and in full force and effect, and Seller is not aware of any
impediments to the
transfer and/or issuance of new licenses, permits and approvals to
Buyer for the
conduct of the Business.
5.1.17 Except as disclosed on Schedule 5.1.17, there are no
leases, tenancies, licenses or other rights of occupancy or use for
any portion
of the Real Estate in effect as of the date of this Agreement.
Seller agrees not
to enter into any lease, license or agreement for the occupancy or
use of any
portion of the Real Estate after the date of this Agreement without
Buyer's
written consent.
5.1.18 No assessments for public improvements have been made
against the Real Estate which remain unpaid and Seller has no
knowledge and has
received no notice of any proposed assessment for public
improvements or of any
proposed public improvements for which an assessment may be levied
against the
Real Estate.
5.1.19 Except as disclosed on Schedule 5.1.19, the current use of
the Real Estate is in compliance with such zoning classification.
5.1.20 There is no suit, action, or proceeding pending or
threatened against or affecting Seller or the Real Estate before or
by any
court, administrative agency or other governmental or
quasi-governmental
authority, or which brings into question the validity of this
Agreement or this
transaction or which could adversely affect title to, or the use
and enjoyment
of, or value of the Real Estate.
5.1.21 Except as otherwise disclosed in this Agreement or the
Schedules, Seller has as of the date of this Agreement, and will
have as of the
date of the Closing, good, marketable and indefeasible title to the
Pharmaloz
and Simon Candy Real Estate subject only to the matters set forth
in this
Agreement (including, without limitation intended, the terms and
conditions of
paragraph 2.2.2 above).
5.1.22 To the best of Seller's knowledge, and except as disclosed
on Schedule 5.1.22: (1) there are no Hazardous Substances (as
defined below)
stored, used or present in, or at the Real Estate; (2) the Real
Estate has never
been used by the Seller to refine, produce, store, handle,
transfer, process or
transport Hazardous Substances; (3) there has been no Release (as
defined
below), actual or threatened, of any Hazardous Substances by Seller
on, over,
into, through or from the Real Estate; (4) there has been no
Release of any
Hazardous Substances for which Seller is or may be liable. To the
best of
Seller's knowledge, and except as disclosed on Schedule 5.1.22,
there have been
no air emissions, or discharges to surface waters or groundwaters,
of Hazardous
Substances which have occurred prior to the date hereof. In
addition, except as
identified in this Agreement or disclosed on Schedule 5.1.22, there
are no above
ground or underground storage tanks, vessels or related equipment
or containers
located on the Real Estate that are subject to federal, state or
local laws,
statutes, rules, regulations or ordinances. For purposes of this
Agreement, each
of the terms "Release", "Environmental Law" and "Hazardous
Substance" shall be
defined as follows:
9
(i) "Hazardous Substance" means any substance presently
listed, defined, designated or classified as hazardous, toxic,
radioactive or dangerous, or otherwise regulated, under any
Environmental Law, whether by type or by quantity, including any
material containing any such substance as a component. Hazardous
Substance includes without limitation petroleum or any derivative
or by-product thereof, asbestos, radioactive material, and
polychlorinated biphenyls;
(ii) "Environmental Law" means any federal, state or local
law, statute, ordinance, rule, regulation, code license, permit,
authorization, approval, consent order, judgment, decree,
injunction or agreement by or with any governmental entity
relating to (1) the protection, preservation or restoration of
the environment (including, without limitation, air, water vapor,
surface water, groundwater, drinking water supply, surface soil,
subsurface soil, plant and animal life or any other natural
resource), and/or (2) the use, storage, recycling, treatment,
generation transportation, processing, handling, labeling,
production, release or disposal of Hazardous Substances. The term
Environmental Law includes without limitation: (1) the
Comprehensive Environmental Response, Compensation and Liability
Act, as amended, 42 U.S.C. ss.9601, ET SEQ.; the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. ss.6901, ET
SEQ.; the Clean Air Act, as amended, 42 U.S.C. ss.7401, ET SEQ.;
the Federal Water Pollution Control Act, as amended, 33 U.S.C.
ss.1251, ET SEQ.; the Toxic Substances Control Act, as amended 15
U.S.C. ss.9601, ET SEQ.; the Emergency Planning and Community
Right to Know Act, 42 U.S.C. ss.11001, ET SEQ.; the Safe Drinking
Water Act, 42 U.S.C ss.300(f), ET SEQ.; and all comparable state
and local laws, and (2) any common law (including without
limitation common law that may impose strict liability) that may
impose liability or obligations for injuries or damages due to,
or threatened as a result of, the presence of or exposure to any
Hazardous Substance;
(iii) "Release" means the releasing, spilling, leaking,
discharging, disposing, discarding or dumping of any Hazardous
Substance from, on, into or about the Pharmaloz and Simon Candy
Real Estate.
5.1.23 Subject to the terms and conditions of this Agreement
(including, without limitation intended, the terms and conditions
of paragraph
2.2.2 above), any buildings or improvements on the Real Estate
("Improvements")
are located within the boundaries of the Property and do not
encroach on the
property of others. The Improvements (including all roads, parking
areas, curbs,
sidewalks, sewers and utilities) have been completed and installed
in accordance
with plans, specifications, and/or requirements approved by all
governmental or
quasi-governmental authorities having jurisdiction.
5.1.24 To the best of Seller's knowledge, and except as disclosed
in the title commitment and materials, no default or breach exists
under any of
the covenants, conditions, restrictions, rights of way or
easements, if any,
affecting all or any portion of the Real Estate which are to be
performed or
complied with by the Seller.
5.1.25 Subject to the terms and conditions of this Agreement
(including, without limitation intended, the terms and conditions
of paragraph
2.2.2 above), all public utilities required for the operation of
the Real Estate
either enter the Real Estate through adjoining public streets or,
if they
10
enter through adjoining private land, do so in accordance with
valid, permanent,
public or private easements which will inure to the benefit of
Buyer at Closing.
5.1.26 Seller has no knowledge of any uncorrected material
defects in or damage to the Improvements.
5.1.27 Subject to the terms and conditions of this Agreement
(including, without limitation intended, the terms and conditions
of paragraph
2.2.2 above), to the extent the existing legal description of the
Real Estate is
not adequate to convey good, marketable and insurable title, any
survey which
may be required for the preparation of an adequate legal
description of the
Property (or correction thereof) shall be secured and paid for by
the Seller.
However, survey or surveys desired by the Buyer or required by any
mortgagee
shall be secured and paid for by the Buyer.
5.1.28 Except as disclosed on Schedule 5.1.28, no work has been
performed at, or is in progress at, and no materials have been
furnished to, the
Real Estate which though not presently the subject of might give
rise to
mechanics or materialmens or other liens against the Property or
any portion
thereof.
5.1.29 All assets necessary to operate the Business are included
in the assets being sold hereunder.
5.2 To Seller's knowledge, Seller's representations and warranties
set forth in this Agreement do not contain any untrue statement of
material fact
or omit to state a material fact necessary in order to make such
representations
and warranties and information, in light of the circumstances under
which they
have been made, not misleading, and to Seller's knowledge Seller
has not
withheld from Buyer its knowledge of any material fact or event
that has
occurred or is about to occur regarding the Business which has had
or, so far as
it can reasonably foresee, will have an adverse affect on the
Business.
5.3 All of the foregoing representations and warranties shall be
true and correct at the time of Closing, and shall survive Closing
for a period
of twenty-four (24) months from the date of Closing. It is further
agreed that
if Seller dissolves after Closing, the shareholders of Seller shall
agree to be
bound as successors-in-interest to Seller's obligations hereunder.
6. REPRESENTATIONS AND WARRANTIES BY BUYER.
6.1 Buyer hereby represents, warrants, and covenants to Seller the
following:
6.1.1 Buyer is a corporation duly organized, existing and in good
standing under the laws of the State of Nevada, and qualified to do
business in
the State of Pennsylvania, with full right, power, and authority to
enter into
and perform this Agreement and to grant all of the rights, powers,
and
authorities herein granted.
6.1.2 The execution, delivery, and performance of this Agreement
do not conflict with, violate, or breach any agreement to which
Buyer is a
party, or Buyer's articles of incorporation or bylaws.
11
6.1.3 All actions taken, or required to be taken, by Buyer under
this agreement have been duly authorized by the shareholders,
directors and
officers of Buyer.
6.1.4 This Agreement has been duly executed and delivered by
Buyer and is a legal, valid, and binding obligation enforceable
against Buyer in
accordance with its terms.
6.2 All of the foregoing representations and warranties shall be
true and correct at the time of Closing, and shall survive Closing
for a period
of twenty-four (24) months from the date of Closing.
6.3 Buyer acknowledges and agrees that the disclosure of
confidential information of Seller is subject to the terms of the
Supply
Agreement between them, as amended, and that Buyer shall not,
except as and to
the extent required by law or to pursue the financing and approvals
necessary to
consummate this transaction, without the prior written consent of
Buyer,
directly or indirectly, make any public comment, statement or
communication with
respect to, or otherwise disclose or permit the disclosure of, the
existence of
the proposed transaction or the terms and conditions of this
Agreement. Further,
Buyer agrees that, in the event the transaction contemplated by
this Agreement
is not consummated, Buyer will promptly deliver to Seller any and
all
confidential information as Buyer might then have in its possession
or control.
6A. Contracts and Commitments
6A.1 Buyer agrees to be responsible for those obligations of
Seller relating to existing contractual commitments as of the
Closing Date,
pursuant to an Assignment and Assumption Agreement in customary
form and content
and to be executed and delivered by the parties at the Closing.
Seller's current
commitments are as set forth on Schedule 6A.1 hereof. An updated
Schedule 6A.1
shall be prepared by Seller and attached to this agreement at
Closing. Except as
set forth on such updated Schedule 6A.1, Buyer shall have no
responsibility for
any debts, liabilities, or obligations of Seller.
6A.2. The parties shall use reasonable best efforts to obtain all
consents to assignments which are required under the assigned
contracts, with
Seller being primarily responsible therefor. If any such consent is
not
obtained, then Seller and Buyer shall cooperate in any reasonable
arrangement
designed to provide for Buyer the benefit of the particular
assigned contract;
provided, however, that unless some other reasonable arrangement is
selected by
the parties hereto, Buyer shall be appointed the attorney-in-fact
for Seller to
enforce, perform and enjoy such the particular Assigned Contract in
the name of
Seller. It is expressly understood and agreed that the lack of any
such consent
shall not be a condition precedent for the benefit of either Buyer
or Seller.
7. OPERATION OF THE BUSINESS BY SELLER
7.1 From and after the date hereof, until Closing, Seller shall
operate the Business in the ordinary course in a manner consistent
with prior
practices. Seller shall timely pay all taxes, fees, debts and
liabilities of the
Business, shall not breach or be in default under any existing
agreements, and
shall not allow any material adverse change to take place with
respect to any
aspect of the Business. Seller shall not incur any contractual
obligations in
12
excess of $25,000 without Buyer's consent, which shall not be
unreasonably
withheld or delayed. Seller shall not sell or encumber any of the
Acquired
Assets outside of the ordinary course of business without Buyer's
consent.
7.2 Seller shall promptly notify Buyer of any claim that is
threatened or commenced against Seller after the date hereof and
prior to
Closing.
7.3 Seller shall notify Buyer of any claim that is threatened or
commenced against Seller for a period of two (2) years after
Closing, to the
extent that such claim could be a lien against the Acquired Assets
being sold to
Buyer hereunder.
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASER TO CLOSE
The obligation of Buyer to complete the transactions contemplated
herein shall be subject to the satisfaction of all of the
conditions set forth
in this Section 8, on or before the Closing Date:
8.1 All representations and warranties of Seller shall be
materially
true and correct as of the Closing date as though originally made
on such date;
8.2 Seller shall not be in default hereunder and all obligations of
Seller to have been performed on or before the Closing Date shall
have been duly
performed by Seller;
8.3 No suit or proceeding shall have been threatened or commenced
against Seller which affects the Acquired Assets and which claims
an amount in
excess of $100,000.
9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER TO CLOSE
The obligation of Seller to complete the transactions contemplated
herein shall be subject to the satisfaction of all of the
conditions set forth
in this Section 9, on or before the Closing Date:
9.1 All representations and warranties of Buyer shall be materially
true and correct as of the Closing date as though originally made
on such date;
9.2 Buyer shall not be in default hereunder and all obligations of
Buyer to have been performed on or before the Closing Date shall
have been duly
performed by Buyer;
9.3 No claim, suit or proceeding shall have been threatened or
commenced against Buyer;
9.4 Buyer shall enter into an employment agreement with David Deck
in the form attached as Exhibit C";
9.5 Buyer shall enter into an employment agreement with David Hess
in the form attached as Exhibit "D"; and
9.6 Buyer shall have agreed to hire any employees of Seller
13
who are employed by Seller at the time of Closing, on an "at-will"
basis for a
90-day trial period, and to have available to its employees
benefits not less
favorable to those currently offered by Seller to its employees.
10. TERMINATION; DEFAULT; REMEDIES
10.1 Either party may terminate this Agreement in the event that
the
conditions precedent contained in paragraph 8 (with respect to
Buyer) and 9
(with respect to Seller) have not been satisfied or waived prior to
Closing.
10.2 Either party may terminate this Agreement prior to Closing in
the event of breach or default by the other party and failure to
cure such
default after ten days' written notice of such default.
10.3 If Buyer terminates this Agreement when permitted to do so in
accordance with the terms and conditions of this Agreement, the
Deposit,
together with all interest thereon, shall be returned to Buyer.
10.4 In the event of a breach by Buyer under this Agreement, Seller
shall be entitled to retain the Deposit, together with all interest
thereon, as
liquidated damages for such breach, which shall be Seller's sole
remedy.
10.5 In the event of a breach by Seller, Buyer shall have such
rights and remedies as are available under this Agreement and
applicable law.
11. MISCELLANEOUS PROVISIONS
11.1 In the event that any provision of this Agreement is declared
invalid or contrary to any law, rule, regulation or public policy
of the United
States or any state, all of the remaining provisions hereof shall
continue in
full force and effect.
11.2 Each of the parties hereto and their respective officers and
directors shall, prior to and after Closing, cooperate with each
other and use
their reasonable best efforts to take or cause to be taken all
actions, and do
or cause to be done all things, necessary, proper or advisable on
their part
under this Agreement and applicable laws to consummate and make
effective the
transactions contemplated by this Agreement as soon as practicable.
11.3 This Agreement has been made and executed in the Commonwealth
of Pennsylvania and shall in all respects be governed by the laws
of the
Commonwealth of Pennsylvania. In the event of any dispute
hereunder, the parties
consent to the exclusive jurisdiction and venue of the Court of
Common Pleas of
Bucks County, Pennsylvania.
11.4 Any notice or other communication required or permitted to be
given pursuant to this Agreement shall be deemed to have been
sufficiently given
if in writing and delivered by hand or by telefax transmission
(with a mandatory
written confirmation, via a recognized overnight courier, as
provided below) or
sent by registered or certified mail (postage prepaid) or by
express courier or
express mail, fees prepaid, addressed as indicated below:
14
(a) If to Seller:
Joel, Inc.
Attention: David B. Deck, President
P.O. Box 488
31 North Spruce Street
Elizabethtown, PA 17022-0488
With a copy to:
Bruce R. Spicer, Esq.
McNees Wallace & Nurick LLC
100 Pine Street
P. O. Box 1166
Harrisburg, PA 17108-1166
(a) If to Buyer:
The Quigley Corporation
Attention:
Guy Quigley, President
P.O. Box 1349
621 N. Shady Retreat Road
Doylestown, PA
18901
With a copy to:
Thomas F. J. MacAniff, Esq.
Eastburn and Gray, P.C.
P.O. Box 1389
60 East Court Street
Doylestown, PA 18901
Either party may, by notice as aforesaid, designate a different
address for notices or other communications intended for it.
Any notice which is delivered in the manner provided herein
(provided mandatory confirmation copies are sent) shall be deemed
to have been
duly given to the party to whom it is directed upon actual receipt
by such
party.
11.5 Buyer and Seller represent to each other that no brokerage
commissions are due to any party as a result of this transaction;
PROVIDED,
however, that Seller will owe a commission to Chapman Associates,
for which
Seller shall be solely responsible. Any party violating this
representation
shall indemnify, defend and hold the other party harmless from and
against all
commissions due and any other costs, losses, liabilities and
expenses, including
attorneys' fees, incurred as a result of such violation.
11.6 Neither party shall assign or transfer this Agreement or their
rights or obligations hereunder without the prior written consent
of the other
party, except that Buyer may assign this Agreement to a
wholly-owned subsidiary
of Buyer; provided that Buyer shall at all times be responsible for
and
guarantee the payment or performance of all obligations of such
subsidiary. This
Agreement shall bind the successors and assigns of the parties
hereto.
11.7 This Agreement constitutes the entire understanding between
the
parties relating to the subject matter of this Agreement and
supersedes and
cancels any and all previous agreements or understandings between
the parties.
15
This Agreement may not be altered or amended except by a written
instrument
executed by duly authorized representatives of the parties.
11.8 The headings contained herein are inserted for convenience
only
and shall not be deemed to have any substantive meaning.
11.9 Any failure to either party to notify the other of a
violation,
default or breach of this Agreement or to terminate this Agreement
on account
thereof shall not constitute a waiver of such violation, default or
breach, or a
consent, acquiescence or waiver of any later violation, default or
breach,
whether of the same or a different character.
11.10 Each party hereto warrants and represents to the other that
all necessary corporate and individual actions and approvals have
been taken and
given, and that upon execution by its duly authorized
representative, this
Agreement shall be a binding obligation of such party.
11.11 This Agreement shall legally bind the parties and their
respective successors (including the shareholders receiving
distribution of the
assets of a dissolved corporation) and assigns.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
16
IN WITNESS WHEREOF, the parties hereto have caused this Asset
Purchase and Sale Agreement to be executed on the day and year
first above
written.
JOEL, INC.
By: /s/ David B. Deck
-------------------------------------------------------
David B. Deck, President
Shareholders of JOEL, INC.:
Joinder for the sole and limited purpose of the matters
described in paragraphs 3.1.2, 3.1.2.1, 3.1.2.2,
3.1.2.3, and 5.3 above
/s/ David B. Deck
-------------------------------------------------------
David B. Deck
/s/ Cheryl K. Deck
-------------------------------------------------------
Cheryl K. Deck
/s/ Sandra K. Sattazahn
-------------------------------------------------------
Sandra K. Sattazahn
/s/ Kristin L. Deck
-------------------------------------------------------
Kristin L. Deck
/s/ Andrew D. Deck
-------------------------------------------------------
Andrew D. Deck
THE QUIGLEY CORPORATION
By: /s/ Guy J. Quigley
-------------------------------------------------------
17
LIST OF SCHEDULES
-----------------
SCHEDULE REFERENCE
SCHEDULE DESCRIPTION
------------------
--------------------
2.1.1
Machinery, equipment, etc.
2.1.2
Computer equipment, software
2.1.6
Licenses and permits
2.1.7
Customer lists
2.1.11
Equipment and licenses
2.3.1
Accounts receivable
2.3.4
Excluded motor vehicles
2.3.6
Assets of Buyer in Seller's possession
5.1.2
Breaches
5.1.4
Current liens
5.1.5
Inventory
5.1.9
Threatened litigation
5.1.11
Tax matters
5.1.17
Third-party rights
5.1.19
Zoning
5.1.22
Environmental matters
5.1.28
Work
6A.1
Contractual commitments
18
LIST OF EXHIBITS
----------------
EXHIBIT REFERENCE
EXHIBIT DESCRIPTION
-----------------
-------------------
"A"
Escrow Agreement
"B"
Registration Rights Agreement
"C"
David Deck Employment Agreement
"D"
David Hess Employment Agreement
EXHIBIT "A"
ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Agreement") is made this 18th day of
August,
2004, by and among JOEL, INC., a Pennsylvania corporation
("Seller") and THE
QUIGLEY CORPORATION, a Nevada corporation ("Buyer"); and EASTBURN
AND GRAY, P.C.
("Eastburn") and MCNEES WALLACE & NURICK LLC ("MWN") as escrow
agents (Eastburn
and MWN are sometimes collectively referred to as the "Escrow
Agent").
RECITALS
WHEREAS, Buyer and Seller have entered into a certain Asset
Purchase and
Sale Agreement dated August 18, 2004 (the "Asset Purchase
Agreement"), pursuant
to which Buyer agreed to purchase substantial
