AssetPurchase Agreement

 

Exhibit 10.02

 

 

This Asset Purchase Agreement (the “Agreement”) is made as of the 29th day of December 2009, by and among Iceland Health, LLC, a New York limited liability company, (“IH”) and Nutrition 21, Inc., a New York corporation, (“Nutrition 21”) ( collectively referred to herein as the “Sellers”)) and Iceland Health, Inc.,  a Florida corporation (“Buyer”).

 

Whereas, Sellers conduct a “consumer business” which sells finished and packaged nutritional supplement end-products directly to end users by direct response under the name Iceland Health (the “Business”);

 

WHEREAS, Nutrition 21 also conducts (i) a business that sells raw materials, formulations, compounds, blends, and bulk and other materials, whether or not encapsulated, to third party non-end users to be further fabricated, blended or packaged for ultimate sale to end users with or without prescriptions; and (ii) a business that sells finished and packaged end-products to retailers for ultimate sale to end users without further fabrication or packaging, neither of which businesses are included in the Business; and

 

WHEREAS, subject to the terms and conditions hereof, Sellers desire to sell, transfer and assign to Buyer, and Buyer desires to purchase from Sellers, certain of the properties, rights and assets used or held for use in connection with the Business.

 

Now therefore, in consideration of the mutual covenants and agreement herein contained, the parties hereto agree as follow:

 

 

1.1          Sale of Assets.  Upon the terms and subject to the conditions set forth in this Agreement, and the performance by the parties hereto of their respective obligations hereunder, Sellers agrees to sell, assign, transfer and deliver to Buyer, free and clear of all Liens, and Buyer agrees to purchase from Sellers, all of Sellers’ right, title and interest in and to all assets of the Business wherever located, including the following rights, interests, properties and assets, but subject to the exclusions hereinafter expressly set forth:

 

(a)           All inventory owned by Sellers as of the Closing Date relating to the Business and listed as “Included Inventory” in the Working Capital Adjustment Schedule that is Exhibit 1.5 attached hereto, and inclusive of all components, packaging materials and bulk utilized in the production of the Business, but exclusive, of Inventory listed in Exhibit 1.5 as “Excluded Inventory” (the inventory being sold hereunder being collectively referred to as the “Inventory”);;

 

(b)           All accounts receivable exclusive, however, of accounts receivable listed on the Working Capital Adjustment Schedule that is an attachment to Exhibit 1.5 attached hereto(“Excluded Receivables”); the receivables being sold hereunder being collectively referred to as the “Receivables”);

 

(bb) The contracts of Sellers with third parties that are listed on Schedule 1.1(bb) attached hereto (the “Assigned Contracts”);

 

(c)           All Intellectual Property (as defined below) owned or utilized by Sellers in the operation of the Business, all as set forth on Schedule 1.1(c) attached hereto.  For purposes hereof, the term “Intellectual Property” includes:  (i) the names “ Iceland Health,” “Diabetes Essentials,” and “Prescriptix,” all trade names and all trade logos, slogans, Internet domain names, registered and unregistered trademarks and service marks and applications (collectively “Marks”); (ii) all copyrights in both published and unpublished works, including, without limitation, all compilations, databases and computer programs, sales and marketing materials,  and all copyright registrations and applications (collectively, “Copyrights”); (iii) a patent license in the form of Exhibit 6.4(d) (the “Patent License”) in respect of certain patents and patent applications owned by Sellers (collectively, “Patents”), it being understood that certain other Patents used in the Business that are not owned by Sellers shall also be licensed to Buyer as provided elsewhere herein; (iv) all know-how, trade secrets, formulae, products under development, confidential or proprietary information, customer and supplier lists of the Business, (collectively, “Trade Secrets”); (v) all Internet web-sites and addresses (“IP Addresses”), all domain name registrations and reservations, web-site content and underlying software (collectively, “Websites”); and (vi) all goodwill, franchises, licenses, permits, consents, approvals, technical information, and claims of infringement against third parties (the “Rights”);

 

(d)           All of the goodwill of Sellers in, and the going concern value of, the Business, and all of the business assets associated therewith, including customer and supplier lists, sales and marketing materials including, without limitation, all commercials, film and statistical marketing reports and results, catalogs, proprietary information, and trade secrets related to the Business(Exhibit 1.1(d) contains a list of marketing materials of the Business that are not owned by the Sellers);

 

(e)           All of the equipment used in the operation of the Business, including, without limitation, the items listed on Exhibit 1.1(e);

 

(f)           All of the Sellers’ revenue producing contracts related to the Business, including, without limitation, those listed on Exhibit 1.1 (f); and

 

(g)           The telephone and facsimile numbers, e-mail addresses, restrictive covenants, licenses, computer software, customer lists, manufacturer, vendor and supplier lists, operating guides and manuals, financial and accounting records, creative materials, advertising and marketing  materials and data, promotional materials, studies, reports, correspondence and other similar documents and records.

 

The assets, properties and business of Sellers being sold to and purchased by Buyer under and as identified in this Section 1.1 are referred to herein collectively as the “Assets.”

 

1.2          Excluded Assets.  In addition to the Excluded Inventory and the Excluded Receivables, there shall also be excluded from the Assets and retained by Sellers (i) to the extent in existence on the Closing Date, cash, cash equivalents, (ii) barter agreements with Active International and Icon International, Inc.; (iii) deposits related to credit card processing; and (iv) all patents. All assets that are excluded from the Assets are collectively referred to as “Excluded Assets”).

 

1.3         Liabilities; Excluded Liabilities; Employees.

 

(a)           Assumption of Liabilities.  The Buyer shall assume (i) the Sellers’ trade accounts payable for the Business as of the Closing, specifically excluding  payables which are subject to litigation against the Seller, (ii) present and future obligations of Sellers under the Assigned Contracts, (iii) and any existing or future claims by retailers for returns and allowances, charge backs, "unsalables" and promotional allowances, or equivalent deductions or charges however called,  whether known on unknown and (iv) any future product liability claims in respect of any Product  sold by Buyer after Closing excluding sale of Sellers’ existing Inventory sold and delivered to Buyer hereunder (collectively “Assumed Liabilities”). Other than the Assumed Liabilities, Buyer does not and shall not accept or assume, and shall have no liability or responsibility for or with respect to any liability or obligation of the Sellers (“Excluded Liabilities.”).  The term Excluded Liabilities means, except for the Assumed Liabilities, (i) any and all liabilities or obligations arising out of Sellers’ ownership of the Assets or Sellers’ operation of the Business; and (ii) any and all other obligations and liabilities of Sellers of any nature whatsoever at any time existing, arising or asserted, whether, known, unknown, fixed, contingent or otherwise, including, without limitation, for vacation pay, sick pay and holiday pay with respect to the Employees (as defined below), patent claims against Sellers related to the sale by Sellers of any product  that is a combination of glucosamine and fish oil, and for any obligations, “earn-out” or notes of Sellers associated with the Sellers’ acquisition of the Business.

 

(b)          Excluded Liabilities.  It is expressly understood that, notwithstanding anything herein to the contrary, Buyer shall not assume, pay or be liable for any of the Excluded Liabilities, all of which shall be retained, and remain the responsibility and obligation of Sellers.

 

(c)          Employees, Wages and Benefits.

 

Buyer shall have no obligation to offer employment to any persons who, as of the Closing Date, are employed in the operation of the Business or otherwise by Sellers.  Buyer shall not be obligated under and hereby specifically disclaims any assumption of any liability with respect to any employee benefit plan policy, plant closing obligation, practice or agreement including but not limited to group health, post-retirement medical or life insurance benefits, severance benefits, qualified retirement plans, non-qualified plans to which Sellers are parties or under which any of Sellers’ employees or former employees is covered, all of which are included in Excluded Liabilities.

 

1.4          The Closing.  The transactions contemplated by this Agreement shall take place at a closing (the “Closing”) to be held at 2:00 p.m. a.m., local time, at the offices of Buyer’s counsel, on December 29, 2009 (the “Closing Date”) or at such other time as shall be agreed by Sellers and Buyer.

 

1.5          Purchase Price  In consideration of the sale by the Sellers to Buyer of the Assets, and subject to the satisfaction of the terms and conditions contained herein, Buyer shall pay Sellers $2,200,000, plus or minus any adjustment to be made at Closing in accordance with Exhibit 1.5 hereto (the “Purchase Price”), which Purchase Price is payable by wire transfer on the Closing Date.

 

1.6          Debt Satisfaction.  With respect to the following matters (the “Debt”), on or before the Closing:

 

(a)           Except for the Assumed Liabilities, all secured and unsecured liabilities and obligations of Sellers affecting the Assets or the Business shall have been fully satisfied, paid and extinguished by Sellers and Sellers shall have provided to Buyer satisfactory evidence thereof (with the exception of the “earn-out” or notes of Sellers associated with the Sellers’ acquisition of the Business, trade payables that are the subject of litigation or good faith dispute, and other liabilities and obligations not to exceed $25,000);

 

(b)           Sellers shall have fully satisfied all Taxes accrued and due and payable by Sellers that affect the Assets or the Business;

 

(c)           Sellers shall have provided to Buyer satisfactory evidence that any and all Liens affecting the Assets and Business have been released, terminated and extinguished on or before the Closing Date. No advertising obligation shall be due in connection with the telephone numbers or web addresses of the Business.

 

1.7          Purchase Price Allocation.  The Buyer and Sellers agree that the Buyer shall supply to the Sellers the allocation of the Purchase Price within 30 days of Closing.  Such allocation shall be binding upon Buyer and Sellers for all purposes.  Buyer and Sellers each further agree to file their Federal income tax returns and other tax returns reflecting such allocation, Form 8594 and any other reports required by Section 1060 of the Code.

 

1.8          Further Assurances.  Sellers from time to time after the Closing at the request of Buyer and without further consideration, shall execute and deliver further instruments of transfer and assignment and take such other action as Buyer may reasonably require to more effectively transfer and assign to, and vest in, Buyer the Assets free and clear of all Liens (as defined hereinafter).

 

1.9          Sales and Transfer Taxes.  All sales, transfer, use, recordation, documentary, stamp, excise taxes, personal property taxes, fees and duties, (including any real estate transfer taxes) under applicable law incurred in connection with this Agreement or the transactions contemplated thereby will be borne and paid by Sellers, and Sellers shall promptly reimburse Buyer for the payment of any such tax, fee or duty which Buyer is required to make under applicable law.

 

 

After the Closing, at reasonable times and on reasonable notice, Sellers shall have access to the books and records pertaining to operations of the Business prior to the Closing, and Buyer shall retain such books and records, for a period of three years after the Closing, and prior to disposing of such records shall offer to deliver them to Sellers.

 

 

Sellers agree that until the 180th day after the Closing they will not contact any obligor to collect an Excluded Receivable, and Buyer shall forward to Sellers all payments received thereon. Should Buyer generate any new receivables after the Closing from any obligor, payments from that obligor shall be applied to receivables from that obligor based on the indication of the obligor on or accompanying the payment.

 

 

In order to induce Buyer to enter into this Agreement, Sellers, jointly and severally, hereby make the following representations and warranties to Buyer subject to exceptions that are fully disclosed on schedules attached hereto (collectively, the “Schedules”).  For the purposes of this Agreement, a “Material Adverse Effect” means an unfavorable or harmful effect upon the assets, properties, business prospects, condition (financial or other) or results of operations of the Business which is material in magnitude, nature or other respects.

 

 

 

 

 

2.5          Compliance with Laws.  Sellers have operated the Business, and presently Sellers’ operation of the Business is, in compliance in all material respects with, and Sellers are responsible for no act or omission which reasonably could be expected to result in material liability under, any and all applicable statutes, ordinances, orders, rules and regulations promulgated by any federal, state, municipal or other governmental authority (collectively, “Laws”), and Sellers have not received notices of violations or alleged violations of any such Laws.  Sellers have not received any information to indicate that any of its policies or practices are being audited or investigated by any government.  Sellers are not bound by any order, decree or judgment or similar administrative government arrangement which may have a Material Adverse Effect.

 

2.6          Contracts.  Schedule 2.6 attached hereto contains a true, correct and complete list of all  leases, contracts, agreements and arrangements, whether oral or written, (the “Contracts”) (and a description of each oral Contract, if any), and Sellers have provided Buyer with true and complete copies of all written Contracts related to the Business.  Neither the Sellers nor, to the knowledge of the Sellers,  any other party is in default or in arrears in performance under any Contract, nor does any condition exist that with notice or lapse of time or both would constitute such a default, and no waiver or indulgence has been granted by any party under any Contract.  Sellers have not received notice of, and Sellers have no knowledge of, any fact which would result in a termination, repudiation or breach of any Contract.  Sellers have not entered into any other agreement or arrangement with any other party with respect to the sale, transfer or any other disposition of the Business or the Assets, in whole or in part.  Sellers are not subject to or bound by any agreement which may have a Material Adverse Effect.

 

2.7          Title.  Sellers have good and marketable title to all of the Assets free and clear of all Liens.  Except for the Excluded Assets, the Assets include all of the assets and properties (i) held for use by Sellers to conduct the Business as presently conducted; (ii) necessary for Buyer to operate the Business in the same manner as such business is currently operated by Seller; and all data related to the Business that is housed with or serviced by a third party vendor.  All of the tangible Assets have been well maintained and are in good condition, and comply in all material respects with applicable laws, ordinances and regulations. Sellers warrant to Buyer that, at the time of Closing, all Assets shall be free and clear of all any charge, claim, community or other marital property interest, condition, equitable interest, lien, option, pledge, security interest, mortgage, right of way, easement, encroachment, building or use restriction, servitude, conditional sales agreement, right of first option, right of first refusal or similar restriction, encumbrance or right of third parties, whether voluntarily or by operation of law, and includes, without limitation, any agreement to give any of the foregoing in the future, and any contingent sale or other title retention agreement or lease in the nature thereof.

 

2.8          No Litigation.  Sellers are not involved in nor, to the knowledge of Sellers, are Sellers threatened to be involved in any litigation or legal or other proceedings related to or affecting the Business or any Asset or which would prevent or hinder the consummation of the transactions contemplated by this Agreement.  Sellers have not been operating the Business under, and the Business is not subject to, any order, injunction or decree of any federal, state or municipal court or other governmental agency.

 

2.9          Employee; Labor Matters.  Sellers are not delinquent in payment to any of their employees for any wages, salaries, commissions, bonuses or other direct compensation for any services performed for them to the date hereof or amounts required to be reimbursed to such employees.  Neither the termination of the employment of any of said employees, nor the consummation of the transactions contemplated hereby will result in any liability to any of said employees for any bonus, accrued sick, vacation or holiday severance or other compensation payments.  There are no charges of employment discrimination or unfair labor practices threatened against or involving Sellers.  No collective bargaining agreement exists and no question concerning representation exists, respecting any group of employees of Sellers.

 

2.10          Financial Statements.  Included in Schedule 2.10 attached hereto are copies of the: (1) unaudited balance sheet of Sellers as of September 30, 2009 (the “Base Balance Sheet”), (2) the unaudited statement of income and expense and statement of retained earnings of Sellers for the period July 1 to September 30, 2009, (3) the audited Comparative Balance Sheet of Sellers as of June 30 of 2007 and 2008, (collectively the “Financial Statements”).  The Financial Statements have been prepared in accordance with GAAP and Sellers’ historical accounting practices during the periods covered thereby, and present fairly and accurately the financial condition of the Business, as combined with the business described in clause (ii) of the second Whereas clause at the head of this Agreement, at the dates of said balance sheets and the results of operations of the Business as so combined for the periods covered by such Statements of Income and Expenses.   Sellers had no liabilities or obligations of any kind with respect to the Business, whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), that are not disclosed and adequately reserved against on the Base Balance Sheet, except that the representation as to  any future claims by retailers for returns and allowances, charge backs, "unsalables" and promotional allowances, or equivalent deductions or charges however called related to the sale of Products by Sellers, is made only to the knowledge of Sellers.

 

2.11          Business Since the Base Balance Sheet Date.  Since the Base Balance Sheet Date, there has been no material adverse change, material obligation in liability incurred by Sellers or with respect to the Business or the Assets, operations or financial condition of the Business; and the Business has been conducted in the ordinary course of business and in substantially the same manner as it was conducted before the date of the Base Balance Sheet.

 

2.12          Approvals; Consents.  No approval, consent, authorization permit, license or exemption from or filing with any government agency or any person or entity not a party to this Agreement is required to be obtained or made by Sellers in connection with the execution and delivery of this Agreement and the Seller Documents and the consummation of the transactions contemplated hereby and thereby.

 

2.13          Customers and Suppliers; Warranties.  Sellers’ relations with their customers and suppliers are good and there are not pending or, to Sellers’ knowledge, threatened claims or controversies with any customer or suppliers that are material to the Assets or the Business or reasonably can be deemed to pose a risk of resulting in a Material Adverse Effect.  The products of the Business have the warranties listed on Schedule 2.13 hereto. Also set forth on Schedule 2.13 hereto is, to the best knowledge of Sellers, a list of existing or future claims by retailers for returns and allowances, charge backs, "unsalables" and promotional allowances, or equivalent deductions or charges of any nature.

 

2.14       Inventory. The Inventory is merchantable and fit for the purpose for which it was procured or manufactured and none of which is damaged, or defective. No material supplier of the Sellers has indicated any intention to not continue its business relations with Sellers or Buyer as a result of the transaction contemplated hereby or otherwise.

 

2.15        Brokers.  Other than Nature’s Equity, LLC, Sellers  have not retained, nor are Sellers aware of, any broker or finder or other person who would have any valid claim against any of the parties to this Agreement for a commission or brokerage fee in connection with this Agreement or the transactions contemplated hereby. The fee of Nature’s Equity is the sole responsibility of the Sellers.

 

2.16        Intellectual Property.

 

(a)           Identity of Intellectual Property. Schedule 1.1(c) attached hereto sets forth all Intellectual Property of Sellers which is or has been utilized in the operation of the Business.

 

(b)           Title to Intellectual Property.  Sellers have exclusive ownership of, and have good, valid and marketable title or interest as a licensee in and to, all of the Intellectual Property, free and clear of any Liens, and have the right to use, license, transfer, distribute and bring infringement actions with respect to all of the Intellectual Property without payment to any third party.  Sellers have not licensed or granted any rights in the Intellectual Property and Sellers’ rights in all of such Intellectual Property are freely transferable.  There are no claims or demands pending or, to the knowledge of Sellers, threatened by any other person pertaining to any of such Intellectual Property and no proceedings have been instituted or are pending or, to the knowledge of Sellers, threatened against Sellers and/or their officers, employees and consultants which challenge the validity and enforceability of Sellers’ rights in respect of the Intellectual Property.  The use of the Intellectual Property in the Business has not infringed and currently does not infringe (and, following Closing, Buyer will be able to continue to use the Intellectual Property in the same manner as heretofore used by Sellers without infringing) on the proprietary rights of any third party, and Sellers have not received any notice or allegation of infringement.  The Patents, Marks and Copyrights are currently in compliance with formal legal requirements (including without limitations payment of filing, examination and maintenance fees and proofs of working or use), are valid and enforceable, and are not subject to any maintenance fees, taxes or actions falling due within ninety (90) days after the Closing Date.  In each case where a Patent, Mark or Copyright is held by Sellers by assignment, the assignment has been duly recorded with the appropriate governmental authority and all other jurisdictions of registration.  No Patent has been or is now involved in any interference, reissue, re-examination or opposition proceeding.  There is no potentially interfering Patent of any third party.  Any products made, used or sold under the Patents have been marked with the proper patent notice.  No Mark has been or is now involved in any opposition, invalidation or cancellation proceeding and, to the knowledge of Sellers, no such actions are threatened with respect to any of the Marks.  All products and materials containing a Mark bear the proper notice where permitted by law.  All copies of works encompassed by the Copyrights have been marked with the proper copyright notice.

 

2.17          Absence of Certain Business Practices.   Neither Sellers nor any present officer, employee or agent of Sellers nor any other person or entity acting on their behalf, including to the best knowledge of the Sellers any past officer of the Sellers, has, directly or indirectly, during the ownership of the Business or Assets given or agreed to give any gift or similar benefit to any customer, supplier, governmental employee or other Person who is or may be in a position to help or hinder the Business (or assist Sellers in connection with any actual or proposed transaction relating to the Business) which (a) if not given in the past, might have had a material and adverse effect on the assets, business or operations of the Sellers as reflected in the Financial Statements, or (b) if not continued in the future, might materially and adversely affect the Sellers’ assets, business, operations or prospects or which might subject Sellers  to suit or penalty in any private or governmental litigation or proceedings.

 

2.18          Disclosure   The representations, warranties and statements contained in this Agreement and in the certificates, exhibits, and Schedules delivered by Sellers to Buyer pursuant to this Agreement do not contain any untrue statement of a material fact, and, when taken together, do not omit to state a material fact required to be stated therein or necessary in order to make such representations, warranties or statements not materially misleading in light of the circumstances under which they were made.  There are no facts known to Sellers about the Business or Assets which presently or would in the future have a Material Adverse Effect which have not been specifically disclosed herein or in a Schedule furnished.

 

 

As a material inducement to Sellers entering into this Agreement, Buyer hereby represents and warrants to Sellers as follows:

 

3.1          Organization.  Buyer is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.  Buyer has all requisite power and authority to conduct its business as it is now conducted and to own, lease and operate its properties and assets.

 

3.2          Required Actions.  All actions and proceedings necessary to be taken by or on the part of Buyer in connection with the transactions contemplated by this Agreement have been duly and validly taken, and this Agreement and each other agreement, document and instrument to be executed and delivered by or on behalf of Buyer pursuant to, or as contemplated by, this Agreement (collectively, the “Buyer Documents”) has been, or by the Closing Date will have been, duly and validly authorized, executed and delivered by Buyer.  Buyer has full right, authority, power and capacity to execute and deliver this Agreement and each other Buyer Document and to carry out the transactions contemplated hereby and thereby.  This Agreement and each other Buyer Document constitutes, or when executed and delivered will constitute, the legal, valid and binding obligation of Buyer enforceable in accordance with its respective terms.

 

3.3          No Conflicts.  The execution, delivery and performance by Buyer of this Agreement and each other Buyer Document does not and will not (a) violate any provision of the Articles of Incorporation of Buyer, as amended to date, (b) constitute a violation of, or conflict with or result in any breach or, acceleration of any obligation under, right of termination under, or default under, any agreement or instrument to which Buyer is a party of by which it is bound, (c) violate any judgment, decree, order, statute, rule or regulation applicable to Buyer, (d) require Buyer to obtain any approval, consent or waiver of, or to make any filing with, any person or entity (governmental or otherwise) that has not been obtained or made.  The officers who execute this Agreement and the other Buyer Documents contemplated hereby on behalf of Buyer have and shall have all requisite power to do so in the name of and on behalf of Buyer.

 

3.4          No Litigation.

 

  Buyer is not now involved in nor, to the knowledge of Buyer, is Buyer threatened to be involved in any litigation or legal or other proceedings which would prevent or hinder the consummation of the transactions contemplated by this Agreement.  Buyer is not operating under and is not subject to, any order, injunction or decree of any federal, state or municipal court or other governmental agency.

 

3.5          Brokers.

 

  Buyer has not retained, nor is Buyer aware of, any broker or finder or other person who would have any valid claim against any of the parties to this Agreement for a commission or brokerage fee in connection with this Agreement or the transactions contemplated hereby.

 

3.6          Disclosure.

 

The representations, warranties and statements contained in this Agreement and in the certificates, exhibits, and Schedules delivered by Buyer to Sellers pursuant to this Agreement do not contain any untrue statement of a material fact, and, when taken together, do not omit to state a material fact required to be stated therein or necessary in order to make such representations, warranties or statements not materially misleading in light of the circumstances under which they were made.

 

 

Sellers covenant and agree that, from the date hereof until consummation of the transactions contemplated hereby at the Closing (and thereafter, as specified below), Sellers shall comply with the following provisions.

 

4.1          Access to Premises and Records.  Commencing on the date hereof and thereafter prior to the Closing, Sellers (a) shall give Buyer and its representatives, free access to Sellers’ employees and other representatives (including accountants and other professional consultants)  and,  (b)  shall give Buyer and its representatives, free access to the properties, books and records of Sellers, the Business and with respect to the Assets, and (c) will furnish to Buyer and its representatives such information regarding Sellers, the Business and the Assets as Buyer or its representatives may from time to time reasonably request in order that Buyer may have full opportunity to make a diligent investigation.

 

4.2          Continuity and Maintenance of Operations of the Business.  Except as to actions which Buyer has been advised and to which Buyer has consented to in writing, and except as specifically permitted or required by this Agreement, Sellers shall (a) operate the Business in the ordinary course consistent with past practices, use its commercially reasonable efforts to keep available the services of the employees who are involved in the operation of the Business, and use best efforts to preserve any beneficial business relationships with customers, suppliers and others having business dealings with Sellers relating to the Business, (b) use and operate the Assets in a manner consistent with past practice and maintain the Assets in good operating condition, ordinary wear and tear excepted; and (c) refrain from taking or allowing to be taken any action which would interfere with consummation of the transactions contemplated hereunder or which would diminish the value of the Assets or the Business.

 

4.3          Consents.  Prior to Closing, Sellers shall obtain, as soon as practicable and at their expense, the consent of all third parties required to transfer the Assets to Buyer.  Such consents shall be in form and substance reasonably satisfactory to Buyer.

 

4.4          Notification of Certain Matters.  Sellers shall promptly notify Buyer of (i) any fact, event, circumstances or action the existence or occurrence of which would cause any of Sellers’ representations or warranties under this Agreement, or the disclosures in any Schedules or exhibits attached hereto, not to be true in any material respect, (or if it had existed or occurred prior to the date of this Agreement, would have caused the same not to be true in any material respect); (ii) any failure on Sellers’ part to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement;  (iii) anything which, if not corrected prior to the Closing Date, would prevent Sellers from fulfilling any condition to Closing described in ARTICLE 6 hereof; and (iv) any planned material changes, including, without limitation, any increase in customary levels of inventory. Should Buyer proceed to Closing despite the matters disclosed in such notice, Sellers shall not be obligated to indemnify Buyer therefor.

 

4.5          No Solicitation.  Until the earlier of the Closing and the termination of this Agreement as provided herein, Sellers shall refrain, and Sellers shall cause its officers, employees, stockholders, directors, agents and representatives and all other employees who perform services with respect to the operation of the Business to refrain, from soliciting or engaging in any discussions with any person relating to the possible sale of the Assets or Business (or any material portion thereof) or the capital stock of Sellers or the merger, consolidation or joint venture of Sellers or the Business.  During the period aforesaid, Sellers shall promptly inform Buyer of any inquiries or proposals regarding the same and shall provide all pertinent documentation related thereto.

 

4.6          Cooperation.  Sellers shall use their best efforts to take all steps necessary or appropriate in order to carry out the intent of this Agreement and consummate the transactions contemplated hereby and shall cooperate with all requests of Buyer and its counsel in connection with Buyer’s due diligence investigation of the Business and Assets.

 

 

Buyer covenants and agrees that, from the date hereof until consummation of the transactions contemplated hereby at the Closing, Buyer shall:

 

5.1          Cooperation.  Buyer shall use its reasonable best efforts to take all steps necessary or appropriate in order to carry out the intent of this Agreement and consummate the transactions contemplated hereby.

 

5.2          Notification of Certain Matters

 

  Buyer shall promptly notify Sellers of (i) any fact, event, circumstances or action the existence or occurrence of which would cause any of Buyer’s representations or warranties under this Agreement not to be true in any material respect, (or if it had existed or occurred prior to the date of this Agreement, would have caused the same not to be true in any material respect); (ii) any failure on Buyer’s part to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement, or (iii) anything which, if not corrected prior to the Closing Date, would prevent Buyer from fulfilling any condition to Closing described in ARTICLE 7 hereof.

 

 

Buyer’s obligation to consummate the transactions contemplated by this Agreement is subject to the satisfaction, on or prior to the Closing Date, of each of the following conditions, unless otherwise waived by Buyer in writing:

 

6.1          Accuracy of Representations and Warranties.  The representations and warranties of Sellers contained in this Agreement shall be true and correct in all material respects as of the Closing Date with the same effect as though made at such time and the representations and warranties of Sellers contained in this Agreement which are qualified by materiality shall be true and correct in all respects as of the Closing Date with the same effect as though made at such time.