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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 6, 1998
Bionutrics, Inc.
(Exact name of registrant as specified in its charter)
Commission File Number: 0-22011
NEVADA 86-0760991
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2425 E. CAMELBACK RD., SUITE 650 85016-4214
PHOENIX, AZ 85016
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (602) 508-0112
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Item No. 2. Acquisition or Disposition of Assets
On October 6, 1998, registrant received $2.5 million in cash for the
sale of certain rice bran oil processing and related assets held by registrant's
subsidiary, Nutrition Technology Corporation of West Monroe, Louisiana. This
disposition represented the final payment pursuant to the transaction with AC
Humko announced on August 20, 1998. The cash received by registrant and its
subsidiary from AC Humko amounts to $8.5 million for the total transaction.
As previously reported, registrant acquired a perpetual profit-sharing
interest in AC Humko's rice bran business. AC Humko received from registrant the
exclusive right to use and practice registrant's proprietary rice bran
processing technology in North America, with registrant retaining the right to
use and practice the technology worldwide other than in North America. As part
of the transaction, AC Humko will function as the exclusive supplier to
registrant of certain rice bran products.
In connection with the transaction Daniel Antonelli, CEO of AC Humko,
joined registrant's board on September 17, 1998.
AC Humko is a national leader in vegetable oil manufacturing and rice
milling. It has over 60 years' experience manufacturing private label brands and
oil-based ingredient product lines. AC Humko is the former edible oil processing
division of Kraft Foods. Today, AC Humko is a U.S. subsidiary of the $8.5
billion Associated British Foods, Plc.
Item 5. Other Events.
Registrant used a portion of the proceeds of the asset sale to pay off
its bridge lender (approximately $1.1M) and to reduce by $1M a loan from one of
its directors. Pay down of the bridge lender has resulted in the removal of its
loan security interest.
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Item No. 7 Exhibits.
1. Form of Asset Purchase Agreement dated as of October 1998
between AC Humko Corp. and Bionutrics Entities.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934,
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: Bionutrics, Inc.
October ___, 1998
by ________________________________
George E. Duck, Jr.
Chief Financial Officer
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AGREEMENT
FOR
PURCHASE AND SALE OF ASSETS
BETWEEN
AC HUMKO CORP.,
AS PURCHASER
AND
BIONUTRICS, INC.,
AND
NUTRITION TECHNOLOGY CORPORATION,
AS SELLER
OCTOBER, 1998
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS...........................................................1
1.1 DEFINITIONS..................................................1
ARTICLE II
THE TRANSACTION.......................................................3
2.1 PURCHASE AND SALE OF ASSETS..................................3
2.2 PURCHASED ASSETS.............................................3
2.3 EXCLUDED ASSETS..............................................4
2.4 ASSUMED LIABILITIES..........................................4
2.5 EXCLUDED LIABILITIES.........................................4
ARTICLE III
CONSIDERATION FOR TRANSFER............................................5
3.1 CONSIDERATION................................................5
3.2 ROYALTY PAYMENTS.............................................5
3.3 PROPERTY EXPENSE APPORTIONMENT; TRANSFER TAX.................5
3.4 PURCHASE PRICE ALLOCATION....................................6
ARTICLE IV
THE CLOSING AND TRANSFER OF ASSETS....................................6
4.1 CLOSING......................................................6
4.2 DELIVERIES BY PURCHASER......................................6
4.3 DELIVERIES BY SELLER.........................................6
4.4 OTHER AGREEMENTS.............................................7
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF SELLER.............................................................7
5.1 AUTHORITY....................................................7
5.2 VALIDITY.....................................................7
5.3 DUE ORGANIZATION.............................................8
5.4 FINANCIAL INFORMATION........................................8
5.5 INTERIM CHANGE...............................................8
5.6 PURCHASED ASSETS.............................................8
5.7 REAL ESTATE..................................................8
5.8 EMPLOYEE BENEFIT PLANS.......................................8
5.9 ASSUMED CONTRACTS...........................................10
5.10 INTELLECTUAL PROPERTY.......................................10
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5.11 PROPRIETARY INFORMATION.....................................10
5.12 LEGAL PROCEEDINGS...........................................11
5.13 COMPLIANCE WITH LAW.........................................11
5.14 BROKERS.....................................................11
5.15 INTERNAL REVENUE CODE SECTION 1445..........................11
5.16 PERMITS.....................................................11
5.17 TAXES.......................................................11
5.18 EMPLOYEES...................................................12
5.19 INSURANCE...................................................12
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER..........................13
6.1 AUTHORITY...................................................13
6.2 VALIDITY....................................................13
6.3 DUE ORGANIZATION............................................13
6.4 LEGAL PROCEEDINGS...........................................13
6.5 BROKERS.....................................................13
ARTICLE VII
ADDITIONAL COVENANTS AND AGREEMENTS OF SELLER........................14
7.1 INTERIM CONDUCT OF BUSINESS.................................14
7.2 ACCESS......................................................14
7.3 RECORDS AND DOCUMENTS.......................................14
7.4 STORAGE AND BAILMENT........................................14
7.5 POST-CLOSING CLEANOUT.......................................14
ARTICLE VIII
ADDITIONAL COVENANTS OF PURCHASER....................................14
8.1 RECORDS AND DOCUMENTS.......................................14
ARTICLE IX
EMPLOYEES AND EMPLOYEE MATTERS.......................................14
9.1 EMPLOYMENT OF EMPLOYEES.....................................14
9.2 NON-COMPETITION AND CONFIDENTIALITY AGREEMENTS..............15
ARTICLE X
ENVIRONMENTAL MATTERS................................................15
10.1 ENVIRONMENTAL DEFINITIONS...................................15
10.2 REPRESENTATIONS AND WARRANTIES..............................17
10.3 INDEMNIFICATION.............................................17
10.4 NO ASSUMED LIABILITIES......................................17
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ARTICLE XI
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER.....................18
11.1 ACCURACY OF WARRANTIES AND PERFORMANCE OF COVENANTS.........18
11.2 NO PENDING ACTION...........................................18
11.3 CONSENTS....................................................18
11.4 CONDITION OF BUSINESS AND ASSETS............................18
ARTICLE XII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER........................18
12.1 ACCURACY OF WARRANTIES AND PERFORMANCE OF COVENANTS.........18
12.2 NO PENDING ACTION...........................................19
12.3 CONDITION OF ASSETS.........................................19
ARTICLE XIII
SURVIVAL AND INDEMNIFICATION.........................................19
13.1 SURVIVAL....................................................19
13.2 INDEMNIFICATION.............................................19
13.3 GENERAL PROVISIONS RELATING TO INDEMNIFICATION..............19
ARTICLE XIV
TERMINATION AND WAIVER...............................................20
14.1 TERMINATION OR ABANDONMENT..................................20
14.2 EXTENSION OF TIME, WAIVER, ETC..............................21
ARTICLE XV
DUE DILIGENCE........................................................21
15.1 DILIGENCE PERIOD............................................21
ARTICLE XVI
NONCOMPETITION AGREEMENT.............................................21
16.1 NONCOMPETITION AGREEMENT....................................21
ARTICLE XVII
GENERAL PROVISIONS...................................................23
17.1 AMENDMENTS AND WAIVER.......................................23
17.2 NOTICES.....................................................23
17.3 EXPENSES....................................................24
17.4 COUNTERPARTS................................................24
17.5 SUCCESSORS AND ASSIGNS; BENEFICIARIES.......................24
17.6 ENTIRE AGREEMENT............................................24
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17.7 ANNOUNCEMENTS...............................................24
17.8 PARTIAL INVALIDITY..........................................24
17.9 BULK TRANSFER LAWS..........................................24
17.10 GOVERNING LAW...............................................24
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EXHIBITS
Exhibit A - General Assignment and Bill of Sale (4.3(a))
Exhibit B-1 - Estoppel and Consent Certificate (4.3(b))
Exhibit B-2 - General Waiver and Release of Privileges and Consent to Storage
Exhibit C - Opinion of Counsel (4.3(d))
Exhibit D - Storage and Bailment Agreement
Exhibit E - Disbursement Schedule
SCHEDULES
Schedule 2.2(a) - Personal Property
Schedule 2.2(b) - Transferred Proprietary Information
Schedule 3.2 - Royalty Payments
Schedule 3.4 - Purchase Price Allocation
Schedule 5 - Disclosure Schedule to Seller's Representations and
Warranties
Schedule 9.1(a) - Employees to be hired by Purchaser
Schedule 10.2 - Environmental Permits
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AGREEMENT
FOR
PURCHASE AND SALE OF ASSETS
THIS AGREEMENT is made and entered into this ____ day of
______________1998, by and between AC HUMKO CORP., a Delaware corporation
("Purchaser"), and BIONUTRICS, INC., a Nevada corporation, and NUTRITION
TECHNOLOGY CORPORATION, a Nevada corporation (collectively, "Seller").
RECITALS
WHEREAS, Seller, Purchaser and certain subsidiaries of Bionutrics, Inc.
have entered into that certain Technology Agreement and that certain Exclusive
Supply Agreement, each dated as of August 14, 1998, providing in the case of the
former, among other things, for the assignment and transfer to Purchaser of the
Intellectual Property and Joint Subject Matter Patents (as those terms are
defined therein) and in the case of the latter, among other things, for the
supply by Purchaser of Bionutrics Distillate Products and Rice Bran Products (as
those terms are defined therein); and
WHEREAS, in connection with the execution of such Agreements, the
parties hereto agreed to enter into this Agreement; and
WHEREAS, Seller and Purchaser desire to enter into this Agreement.
AGREEMENTS
Now, therefore, in consideration of the representations, warranties,
covenants and agreements herein contained, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. The following terms, as used herein, have the
following meanings:
"Adjustment Date" - as defined in Section 3.3.
"Affiliate" - an entity controlling, controlled by or under common
control with another entity, with majority ownership being deemed
necessary for control.
"Books and Records" - as defined in Section 2.2(c).
"Business" - the commercialization, manufacturing, sale and
distribution of rice bran derivative products, co-products and
by-products, and various activities related thereto, including research
and development, and technical support and marketing.
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"Closing" - as defined in Section 4.1.
"Closing Date" - as defined in Section 4.1.
"Code" - as defined in Section 5.8(e).
"Effective Time" - 11:59 p.m. on the Closing Date.
"Employee Plans" - as defined in Section 5.8(a).
"Environmental Permits" - as defined in Section 10.2(a).
"Equipment Lease" - collectively, those two certain Equipment Leasing
Agreements dated December 17, 1997, by and between Bionutrics, Inc.,
and Hibernia National Bank covering extruders, cooler, associated parts
and a forklift.
"ERISA" - as defined in Section 5.8(a).
"Excluded Assets" - as defined in Section 2.3.
"Excluded Liabilities" - as defined in Section 2.5.
"Indemnified Party" - as defined in Section 13.3(e).
"Indemnifying Party" - as defined in Section 13.3(e).
"Initial Purchase Price" - as defined in Section 3.1.
"NTC Lease" - that certain Lease Agreement dated August, 1997, by and
between Yazoo Valley Oil Mill, Inc., as Landlord, and Nutrition
Technology Corporation, as Tenant.
"PBGC" - as defined in Section 5.8(d).
"Purchase Price" - as defined in Section 3.1.
"Purchased Assets" - as defined in Section 2.2.
"Purchaser" - as defined in the Preamble.
"Purchaser Employee" - as defined in Section 9.1(a).
"Remedial Activities" - as defined in Section 10.3(c).
"Royalty Payments" - the payments required to be made pursuant to
Schedule 3.2.
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"Stock Purchase Agreement" - that certain Stock Purchase Agreement
dated August 14, 1998, by and between Bionutrics, Inc., and Purchaser.
"Supply Agreement" - that certain Exclusive Supply Agreement dated
August 14, 1998, by and among Purchaser, Bionutrics, Inc., and various
subsidiaries of Bionutrics, Inc.
"Tax(es)" - as defined in Section 5.17(a).
"Tax Returns" - as defined in Section 5.17(b).
"Technology Agreement" - that certain Technology Agreement dated August
14, 1998, by and among Purchaser, Bionutrics, Inc., and various
subsidiaries of Bionutrics, Inc.
"Third Party Claim" - as defined in Section 13.3(e).
"Transferred Proprietary Information" - as defined in Section 2.2(b).
ARTICLE II
THE TRANSACTION
2.1 PURCHASE AND SALE OF ASSETS. At the Closing, Seller shall sell,
transfer, assign and deliver to Purchaser, and Purchaser shall purchase, accept
and receive, the Purchased Assets.
2.2 PURCHASED ASSETS. The "Purchased Assets" means all of Seller's
rights, titles and interest in and to all of the following assets (tangible and
intangible and wherever located):
(a) all assets which are listed on Schedule 2.2, together with
any rights or claims of Seller arising out of the breach of any express
or implied warranty by the manufacturers or sellers of any of such
assets or any component part thereof;
(b) all commercial and technical information ("Transferred
Proprietary Information"), including licenses, know-how, trade secrets,
inventions, drawings (whether for engineering, production, or
development purposes), specifications (whether for products, processes,
equipment, or otherwise), and formulas, to the extent such information
is associated with the operation of the assets listed on Schedule 2.2,
and is necessary to perform Purchaser's obligations and exploit rights
pursuant to the Technology Agreement and the Supply Agreement,
including the right to make use of such information in the manufacture
of products, the right to create modifications and improvements
thereof, and the right to defend its interests therein with respect to
third parties, such information to be inclusive of all the subject
matter described in Schedule 2.2(b);
(c) all personnel records relating to the Purchaser Employees,
all books, records, engineering notebooks, notes, and all receipts and
other information relating to the assets listed on Schedule 2.2 (the
"Books and Records"); and
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(d) any and all goodwill and going concern value of the
Business.
2.3 EXCLUDED ASSETS. All personnel records relating to employees of
Seller other than the Purchaser Employees (the "Excluded Assets") are not
included in the Purchased Assets.
2.4 ASSUMED LIABILITIES. Seller acknowledges that it is retaining and
will pay, perform and discharge when due all of its obligations and liabilities
of whatever kind and nature, primary or secondary, direct or indirect, absolute
or contingent, known or unknown, relating in any way to the Business or the
Purchased Assets, and that Purchaser will not be responsible in any manner
whatsoever for any such obligations or liabilities arising or otherwise
attributable in any manner to the ownership, operation, management or use of the
Business or the Purchased Assets in any period prior to Closing.
2.5 EXCLUDED LIABILITIES. Purchaser shall not assume any obligations or
liabilities of Seller or the Business of whatsoever kind and nature, primary or
secondary, direct or indirect, absolute or contingent, known or unknown, whether
or not accrued, and whether arising before, on or after the Closing Date,
including successor liability (collectively, together with all other obligations
and liabilities of Seller which are not being specifically assumed by Purchaser
pursuant to this Agreement, the "Excluded Liabilities"). Without limiting the
generality of the foregoing, Purchaser shall not assume or be liable for any of
the following obligations or liabilities:
(a) any and all liabilities and obligations to the extent
relating to the ownership or use of any of the Purchased Assets or the
Business;
(b) any and all liabilities for or resulting from the products
of the Business manufactured, sold, distributed or handled in any
manner including liabilities for any product guaranties, warranties,
recalls, rebates or similar promotions and claims based on negligence
or under any theory of tort or strict liability;
(c) any and all liabilities related to the Excluded Assets;
(d) except to the extent specifically assumed by Purchaser
pursuant to the terms of Article IX, any and all liabilities of Seller
relating to (i) employees of Seller to the extent attributable to the
period prior to the Effective Time, or (ii) employees of Seller who do
not become Purchaser Employees or (iii) the Employee Benefit Plans;
(e) all legal, accounting, broker and other costs and expenses
of Seller incident to the negotiation, preparation, approval or
authorization of this Agreement and the performance of the transactions
contemplated by this Agreement;
(f) any obligation or liability of Seller with respect to
Taxes (except Taxes specifically allocated to, prorated to or assumed
by Purchaser pursuant to Section 3.3 of this Agreement);
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(g) any and all environmental liabilities, if any, arising out
of Seller's ownership or operation of the Purchased Assets or the
Business;
(h) all claims resulting from the negligence of any person or
under any theory of tort or strict liability involving personal injury
arising or attributable to periods prior to the Effective Time or a
breach or violation of any law by Seller; and
(i) any and all liabilities of every type and nature of Seller
relating to the Business or the Purchased Assets and not expressly
assumed in writing by Purchaser.
ARTICLE III
CONSIDERATION FOR TRANSFER
3.1 CONSIDERATION. The aggregate consideration for the Purchased Assets
("Purchase Price") shall be cash aggregating Two Million Four Hundred Thousand
U.S. Dollars (U.S. $2,400,000), plus $144,000, the approximate amount required
to be paid to the Lessor under the Equipment Lease (the "Initial Purchase
Price"), increased or decreased, as the case may be, in accordance with Section
3.3. All payments hereunder shall be made in U.S. dollars by wire transfer or
other immediately-available funds, and all currency amounts referred to
throughout this Agreement are to U.S. Dollars.
3.2 ROYALTY PAYMENTS. After the Closing, Purchaser shall also be
obligated to pay to Bionutrics, Inc. the Royalty Payments, if any, which shall
be calculated and paid as set forth in Schedule 3.2.
3.3 PROPERTY EXPENSE APPORTIONMENT; TRANSFER TAX The following items
relating to the Purchased Assets shall be apportioned at the Closing in an
equitable manner as of the Closing Date (the "Adjustment Date") so that the
income and expense items with respect to the period up to and including the
Adjustment Date shall be for Seller's account and the income and expense items
with respect to the period after the Adjustment Date shall be for Purchaser's
account:
Personal property Taxes, if any, on the basis of the fiscal year for
which assessed. If the Closing Date shall occur before the Tax rate or
assessment is fixed for any fiscal year, the apportionment of such
Taxes at the Closing shall be based upon a reasonable estimate mutually
agreed upon by Seller and Purchaser; provided that Seller and Purchaser
shall recalculate and reprorate said Taxes and make the necessary cash
adjustments promptly upon the issuance, and on the basis, of the actual
Tax bills received for any such fiscal year.
At Closing, Seller shall pay or provide for all transfer Taxes and recording
fees payable as a result of the transfer of the Purchased Assets provided for
herein.
3.4 PURCHASE PRICE ALLOCATION. The consideration for the Purchased
Assets shall be allocated pursuant to Schedule 3.4, which Purchaser shall
prepare on or before 90 days after the
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Closing. Such allocation shall be used for all purposes, including preparation
and filing of Internal Revenue Service Form 8594. Seller shall cooperate with
Purchaser in filing this form 8594.
ARTICLE IV
THE CLOSING AND TRANSFER OF ASSETS
4.1 CLOSING. The transfer of assets contemplated by this Agreement (the
"Closing") shall occur at the offices of Seller in Phoenix, Arizona at 10:00
A.M. on October 1, 1998, or at such other time or place as may be mutually
agreed upon by the parties (the "Closing Date"). Upon consummation, the Closing
shall be deemed to take place as of the Effective Time.
4.2 DELIVERIES BY PURCHASER. At the Closing, Purchaser shall deliver
the following:
(a) The Initial Purchase Price as adjusted pursuant to Section
3.3 payable by wire transfer of immediately available funds to the
account of First American Title Insurance Company, National Division,
for disbursement to pay all of the matters set forth on Exhibit E, with
the remainder thereof to be paid by wire transfer by such title company
to Seller to an account designated by Seller;
(b) any resale exemption certificates as other similar items
as may be reasonably requested by Seller;
(c) an executed Storage and Bailment Agreement in the form
attached hereto as Exhibit D; and
(d) such other instruments or documents as may be reasonably
necessary or appropriate to carry out the transactions contemplated
hereby.
4.3 DELIVERIES BY SELLER. At the Closing, Seller shall deliver the
following:
(a) a general assignment and bill of sale executed by Seller
to convey the Purchased Assets in the form attached hereto as Exhibit
A;
(b) an estoppel certificate in the form attached hereto as
Exhibit B-1, executed by the Landlord under the NTC Lease;
(c) a General Waiver and Release of Privileges and Liens and
Consent to Storage in the form attached hereto as Exhibit B-2, executed
by the Landlord under the NTC Lease;
(d) an opinion of counsel in the form of Exhibit C;
(e) the Code Section 1445 certificate referred to in Section
5.15;
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(f) all Books and Records;
(g) a UCC-1 covering the Purchased Assets and identifying
Purchaser as the owner of the Purchased Assets, which will be stored at
Seller's facility in accordance with the terms and provisions of
Section 7.4;
(h) an executed Storage and Bailment Agreement in the form
attached hereto as Exhibit D; and
(i) such other instruments or documents as may be reasonably
necessary or appropriate to carry out the transactions contemplated by
this Agreement.
4.4 OTHER AGREEMENTS. At the Closing, the parties shall execute,
acknowledge and deliver such other instruments or documents as may be reasonably
necessary or appropriate to carry out the transactions contemplated by this
Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF SELLER
Except as set forth in the Disclosure Schedule keyed to the applicable
Section in this Article, each of the parties constituting Seller hereby jointly
and severally represents and warrants to Purchaser, as of the date hereof, and
as of the Closing Date, as set forth below.
5.1 AUTHORITY. Seller has full right, power and authority, without the
consent of any other person, to execute and deliver this Agreement and the
agreements contemplated hereby and to consummate the transactions contemplated
hereby and thereby, including the transfer of each of the Purchased Assets. All
corporate acts required to be taken by Seller to authorize the execution and
delivery of this Agreement and all agreements and transactions contemplated
hereby have been duly and properly taken.
5.2 VALIDITY. This Agreement has been, and the agreements and other
documents to be delivered by Seller at Closing will be, duly executed and
delivered and constitute the valid and legally binding obligations of Seller, as
applicable, enforceable in accordance with their respective terms. The execution
and delivery by Seller of this Agreement and the agreements contemplated hereby
and the consummation of the transactions contemplated hereby and thereby will
not (immediately, with notice, the passage of time or both) result in the
creation of any lien, charge or encumbrance or the acceleration of any
indebtedness or other obligation of Seller and are not prohibited by, do not
violate or conflict with any provision of, and do not and will not (immediately,
with notice, the passage of time or both) constitute a default under or a breach
of (i) the charter or by-laws of each party constituting Seller, (ii) any note,
bond, indenture, contract, agreement, permit, license or other instrument to
which either party constituting Seller is a party or by which either of such
parties is bound, (iii) any order, writ, injunction, decree or judgment of any
court or governmental agency, or (iv) any law, rule or regulation applicable to
either party constituting Seller is bound.
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5.3 DUE ORGANIZATION. Each party constituting Seller is a corporation
duly organized, in good standing and validly existing under the laws of Nevada
and is qualified and in good standing as a foreign corporation under the laws of
each jurisdiction in which qualification is required.
5.4 FINANCIAL INFORMATION. [Intentionally Omitted.]
5.5 INTERIM CHANGE. Except as set forth in Schedule 5.5, Seller has not
subjected any of the Purchased Assets to any mortgage, pledge, lien or other
encumbrance or entered into any agreement or commitment (other than this
Agreement or any arrangement provided for in or contemplated by this Agreement)
to take so subject any of the Purchased Assets.
5.6 PURCHASED ASSETS. Seller has good title to all of the Purchased
Assets.
5.7 REAL ESTATE.
(a) The NTC Lease is in full force and effect and no defaults
exist under the NTC Lease by either party to the NTC Lease, and all
payments required to be made by Tenant under the NTC Lease have been
paid through August 31, 1998. The termination date of the NTC Lease is
February 28, 1999.
(b) Seller has not received notice and does not otherwise have
knowledge of any condemnation, requisition or taking by any public
authority of any portion of the real estate covered by the NTC Lease.
5.8 EMPLOYEE BENEFIT PLANS.
(a) Schedule 5.8 lists all the following that are sponsored,
maintained or contributed to by Seller for the benefit of the employees
of Seller currently performing services at the facility covered by the
NTC Lease (collectively, the "Employee Plans"):
(i) each "employee benefit plan," as such term is
defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"); and
(ii) each personnel policy, stock option or
purchase plan, collective bargaining agreement, bonus plan or
arrangement, incentive award plan or arrangement, vacation
policy, sick pay policy, severance pay plan, policy or
agreement, deferred compensation agreement or arrangement,
annuity contract, executive compensation or supplemental
income arrangement, consulting agreement, employment
agreement, and each other employee benefit plans, agreement,
arrangements, program, practice or understanding that is not
described in Section 5.8(a)(i).
(b) Seller has performed all obligations, whether arising with
respect to the Employee Plans, by operation of law or by contract,
required to be performed by it in connection with the Employee Plans,
and there have been no defaults or
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violations by any other party to the Employee Plans. All contributions
required to be made to the Employee Plans pursuant to their terms and
provisions and applicable law have been timely made.
(c) All reports and disclosures relating to the Employee Plans
required to be filed with or furnished to governmental agencies,
Employee Plan participants, or Employee Plan beneficiaries have been
filed or furnished in accordance with applicable law in a timely
manner, and each Employee Plan has been administered in substantial
compliance with its governing documents and applicable law.
(d) With respect to the Employee Plans, (1) there are no
actions, suits or claims pending (other than routine claims for
benefits) or, to the knowledge of Seller, threatened against, or with
respect to, any of the Employee Plans or their assets, (2) there is no
matter pending (other than routine qualification determination filings)
with respect to any of the Employee Plans before the Internal Revenue
Service, the Department of Labor, or the Pension Benefit Guaranty
Corporation (the "PBGC"), (3) Seller has not received notification of
the commencement of an audit by any such agency of any of the Employee
Plans, (4) there are no expenses that are required to have been paid as
of the date hereof by any of the Employee Plans that have not been so
paid, and (5) the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not (i)
require any larger contribution to, or the payment of greater benefits
under, any Employee Plan than otherwise would have been required or
(ii) create or give rise to any additional vested rights or service
credits under any Employee Plan.
(e) In connection with the consummation of the transactions
contemplated by this Agreement, no payments have or will be made under
the Employee Plans that, in the aggregate, would result in imposition
of a penalty, sanction, or Tax imposed under Section 280G and 4999 of
the Internal Revenue Code of 1986, as amended (the "Code").
(f) None of the Employee Plans is a "multiemployer plan" as
defined in Section 3(37) of ERISA.
(g) All the Employee Plans are in compliance in all respects
with the requirements prescribed by applicable statutes, orders, or
governmental rules and regulations currently in effect with respect
thereto.
(h) Each Employee Plan intended to be qualified under Section
401(a) of the Code has heretofore been determined by the Internal
Revenue Service to so qualify, and, such Employee Plan has not been
amended or operated in any manner that is reasonably likely to cause
any such Employee Plan to fail to qualify under Section 401(a) of the
Code. As to any Employee Plan intended to be qualified under Section
401 of the Code, there has been no termination of, partial termination
of, or, in the case of a plan to which Section 412 of the Code does not
apply, complete discontinuance of contributions under the Employee Plan
within the meaning of Section 411(d)(3) of the Code for which the
rights of all affected employees to
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benefits accrued to the date of such termination, partial termination,
or discontinuance, to the extent funded as of such date, or the amounts
credited to the employees' accounts, have not been vested 100% and
thereby rendered nonforfeitable.
(i) Seller has not incurred any liability to the PBGC under
Section 4001 et seq. of ERISA. All premiums payable to the PBGC have
been paid when due.
(j) Seller has delivered to Purchaser copies of all written
Employee Plans and, where applicable, amendments thereto, related
trusts, the most recent determination letter from the Internal Revenue
Service, summary plan descriptions and the most recent annual reports
filed pursuant to ERISA or the Internal Revenue Code with respect to
the Employee Plans.
(k) No prohibited transaction, as defined in Section 4975 of
the Code or Section 406 of ERISA, has occurred with respect to any
Employee Plan. No breach of any fiduciary duty imposed with respect to
an Employee Plan pursuant to Title I of ERISA has occurred.
5.9 ASSUMED CONTRACTS. [Intentionally omitted.]
5.10 INTELLECTUAL PROPERTY. [Intentionally omitted.]
5.11 PROPRIETARY INFORMATION. Subject to the Technology Agreement, with
respect to the Transferred Proprietary Information, (i) Seller is the owner or
has the right to authorize the use of or convey the Transferred Proprietary
Information to third parties; (ii) no action, suit or proceeding is pending or,
to Seller's knowledge, threatened with respect to the Transferred Proprietary
Information; (iii) to the knowledge of Seller, none of the Transferred
Proprietary Information infringes upon the rights of others or is subject to any
outstanding order, decree or judgment; (iv) there are no royalty, commission or
similar arrangements, and no licenses, sublicenses or agreements, pertaining to
any of the Transferred Proprietary Information. All rights of Seller in and to
the Transferred Proprietary Information are transferable to Purchaser as
contemplated herein without any consent or other approval.
5.12 LEGAL PROCEEDINGS. (i) Seller is not engaged in or a party to or,
to the knowledge of Seller, threatened with any action, suit or other legal
proceeding involving the Purchased Assets, (ii) Seller has no knowledge of any
investigation threatened by any governmental or regulatory authority with
respect to the Purchased Assets, and (iii) the Purchased Assets are not subject
to any judgment, order, writ, injunction, stipulation or decree of any court or
any governmental agency.
5.13 COMPLIANCE WITH LAW. Seller has complied with all applicable
statutes, codes, laws, ordinances, rules and regulations, in operating the
Business at the facility covered by the NTC Lease and elsewhere. All
Improvements and equipment situated on the facility covered by the NTC Lease
comply with all applicable statutes, codes, laws, ordinances, rules and
regulations including specifically (i) NFPA standards with regard to materials
to be used in the area's class of service including integral fire sprinklers or
special protection devices for the hazards in the area's class of
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<PAGE> 17
service, (ii) the Occupational Safety and Hazards Act health and safety
standards with regard to materials to be used in the area's class of service and
(iii) all pollution control regulations and permitting requirements including
but not limited to a spill prevention control and countermeasure plan, storm
water pollution control plan, and land use documentation.
5.14 BROKERS. Seller has not retained any broker, finder or agent or
incurred any liability or obligation for any brokerage fees, commissions or
finders fees with respect to this Agreement or the transactions contemplated
hereby other than brokers' whose fees will be the sole responsibility of Seller.
5.15 INTERNAL REVENUE CODE SECTION 1445. Seller is not a "foreign
person" within the meaning of Code Section 1445 (26 U.S.C. Section 1445). Seller
shall furnish Purchaser on or before the Closing Date with a certificate of
non-foreign status signed by the appropriate party and sufficient in form and
substance to relieve Purchaser of all withholding obligations under Code Section
1445.
5.16 PERMITS. [Intentionally omitted.]
5.17 TAXES.
(a) Seller has paid or will pay when due or finally settled
all Federal, state, local and provincial and other foreign net or gross
income Taxes together with any interest thereon, any penalties,
additions to Tax or additional amounts with respect thereto and any
interest in respect of such penalties, additions or additional amounts
(collectively referred to as "Taxes" and individually as a "Tax")
relating to the Business which are imposed on Seller or which are
attributable to the period of time prior to the Effective Time.
(b) Seller has filed, or will file when due, all reports and
returns ("Tax Returns") of all Federal, state, local and provincial and
other foreign, gross receipts, sales, use, ad valorem, value added,
franchise, withholding, payroll, employment, excise, property or other
Taxes, assessments or other governmental charges, together with any
penalties, additions to Tax or additional amounts with respect thereto
and any interest required to be filed relating to the Business or the
Purchased Assets for the periods up to the Effective Time.
(c) There are no liens for any Taxes upon the Purchased Assets
other than liens for Taxes not yet delinquent.
(d) The Purchased Assets (other than intangible personal
property, and motor vehicles, if any, required to be titled) were
obtained by Seller for its own use, and Purchaser's purchase of the
Purchased Assets (other than intangible personal property, and motor
vehicles, if any, required to be titled) is exempt from sales and use
Tax.
(e) Seller will file within fifteen days of Closing a final
sales and use Tax return from all applicable jurisdictions and will
request from each applicable tax
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commissioner for presentation to Purchaser a receipt showing that all
Taxes, interest and penalties have been paid or a certificate
indicating that no Taxes are due.
5.18 EMPLOYEES.
(a) All employees and former employees employed by Seller
shall be paid in full all wages, salaries, commissions, bonuses,
severance, vacation, and termination pay, in each case if any, and
other cash compensation due, if any, for all services performed by them
through the date of Closing.
(b) With respect to the employees at the facility covered by
the NTC Lease (i) to the knowledge of Seller, Seller has complied in
all respects with all applicable laws regarding labor, employment and
employment practices, terms and conditions of employment, occupational
safety and health and wages and hours, including, without limitation,
any bargaining or other obligations under the National Labor Relations
Act, (ii) Seller is not a party to or bound by, any collective
bargaining agreement or other written contract concerning employment,
or any affirmative action plan established pursuant to any local, state
or federal law or order of any Governmental Body or court, (iii) there
is no labor strike or labor dispute, slowdown or stoppage actually
pending or threatened against or affecting Seller, and Seller has not
experienced any labor strikes or material labor disputes, slowdowns or
stoppages during last three years, and (iv) there is no dispute
concerning representation as to any collective bargaining
representative concerning employees of Seller, and no union claims to
or is seeking to represent non-union employees of Seller.
5.19 INSURANCE. Schedule 5.19 herein sets forth a list of all policies
of insurance maintained for the benefit of the Business and owned by Seller
(other than employee benefit plans), setting forth the applicable underwriter,
type of coverage, policy number and policy periods. All such insurance policies
shall be maintained by Seller and shall continue in full force and effect so
long as the NTC Lease shall remain in full force and effect or, if earlier, the
time when there are no Purchased Assets at the facility covered by the NTC
Lease.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as of the date
hereof, and as of the Closing Date, as set forth below.
6.1 AUTHORITY. Purchaser has full right, power and authority, without
the consent of any other person, to execute and deliver this Agreement and the
agreements contemplated hereby and to consummate the transactions contemplated
hereby and thereby. All corporate acts required to be taken by Purchaser to
authorize the execution and delivery of this Agreement and the agreements
contemplated hereby and all transactions contemplated hereby and thereby have
been duly and properly taken.
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<PAGE> 19
6.2 VALIDITY. This Agreement has been, and the agreements and other
documents to be delivered by Purchaser at Closing will be, duly executed and
delivered by Purchaser and will constitute lawful, valid and legally binding
obligations of Purchaser, enforceable in accordance with their respective terms.
The execution and delivery by Purchaser of this Agreement and the agreements
contemplated hereby and the consummation of the transactions contemplated hereby
and thereby will not (immediately, with notice, the passage of time or both)
result in the creation of any lien, charge or encumbrance or the acceleration of
any indebtedness or other obligation of Purchaser and are not prohibited by, do
not violate or conflict with any provision of, and do not and will not
(immediately, with notice, the passage of time or both) result in a default
under or a breach of (i) the charter or by-laws of Purchaser , (ii) any
contract, agreement, permit, license or other instrument to which Purchaser is a
party or by which either is bound, (iii) any order, writ, injunction, decree or
judgment or any court or governmental agency, or (iv) any law, rule or
regulation applicable to Purchaser, except for such creations, accelerations,
terminations, violations, conflicts, breaches, defaults, charges or encumbrances
that, in the aggregate will not have an adverse effect on Purchaser's ability to
consummate the transactions contemplated hereby.
6.3 DUE ORGANIZATION. Purchaser is a corporation duly organized, in
good standing and validly existing under the laws of Delaware.
6.4 LEGAL PROCEEDINGS. Purchaser is not engaged in or a party to or, to
the knowledge of Purchaser, threatened with any action, suit or other legal
proceeding involving the Purchased Assets or affecting its ability to engage in
the transactions contemplated hereby.
6.5 BROKERS. Purchaser has not retained any broker or finder or
incurred any liability or obligation for any brokerage fees, commissions or
finders fees with respect to this Agreement or the transactions contemplated
hereby.
ARTICLE VII
ADDITIONAL COVENANTS AND AGREEMENTS OF SELLER
7.1 INTERIM CONDUCT OF BUSINESS. [Intentionally omitted]
7.2 ACCESS. Seller shall give Purchaser and its representatives access
during normal business hours and under reasonable circumstances to all
properties and records of the Business and furnish Purchaser with all financial
and other information in its possession relating to the Business and the
Purchased Assets as Purchaser may from time to time reasonably request.
7.3 RECORDS AND DOCUMENTS. Following the Closing Date, Seller shall
grant to Purchaser and its representatives, at Purchaser's reasonable request,
reasonable access to and the right to make copies at its expense of those
records and documents in Seller's possession related to the Business or the
Purchased Assets that Seller has retained with the approval of Purchaser, as may
be reasonably necessary for Purchaser's operation of the Business after the
Closing.
7.4 STORAGE AND BAILMENT. From and after the Closing Date until the end
of the term of the NTC Lease (i.e. February 28, 1999), Seller shall grant to
Purchaser the right to store the
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Purchased Assets at Seller's leased facility situated at 520 Trenton, West
Monroe, Louisiana pursuant to the Storage and Bailment Agreement.
7.5 POST-CLOSING CLEANOUT. Within sixty (60) days after the Closing,
Seller shall cause all of the Purchased Assets which are listed on Schedule 2.2
to be purged of all chemicals by causing all pipes to be blown out with
pressured air and all storage tanks, if any included therein, to be emptied of
their contents.
ARTICLE VIII
ADDITIONAL COVENANTS OF PURCHASER
8.1 RECORDS AND DOCUMENTS. Following the Closing Date, Purchaser shall
grant to Seller and its representatives, at Seller's reasonable request,
reasonable access to and the right to make copies at its expense of those
records and documents related to the Business or the Purchased Assets to the
extent they relate to the period prior to Closing as may be reasonably necessary
for litigation, preparation of financial statements, tax returns and audits or
other valid business purposes.
ARTICLE IX
EMPLOYEES AND EMPLOYEE MATTERS
9.1 EMPLOYMENT OF EMPLOYEES.
(a) Purchaser does not intend to hire any employees of Seller except
each Purchaser Employee. Except as otherwise specifically provided in this
Agreement, Purchaser intends to implement its own wage structure, benefits,
conditions of employment and other terms and conditions of employment with
respect to each Purchaser Employee, and the terms and conditions of any medical,
mental health, dental, prescription drug, vision, or severance plan, program, or
policy to be offered to any Employee shall be determined solely by Purchaser and
no such plan, program or policy is required to be reasonably equivalent to any
such plan, program, or policy provided by Seller immediately prior to the
Closing Date. Purchaser shall control and be responsible for the process of
offering employment to and hiring the prospective Purchaser Employees. The term
"Purchaser Employee" as used in this Agreement shall mean each employee of
Seller listed on Schedule 9.1(a).
(b) Seller shall provide to all employees and former employees of
Seller sufficient group health plan benefits to satisfy the obligations, if any,
of Seller, Purchaser, and any commonly controlled entity with respect to
qualified beneficiaries on or before the Closing Date under the continuation of
coverage provisions described in Section 4980B of the Code and Sections 601
through 608 of ERISA and any similar continuation of health coverage provisions
of applicable state law.
(c) Nothing contained in this Article IX is intended to confer upon any
Employee any right to continued employment or any right to wages or benefits at
any time after the
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Closing Date. Further, notwithstanding any provision in this Agreement to the
contrary, Purchaser expressly reserves the right to amend, modify, or terminate
any benefit plan or program established or maintained by Purchaser for the
benefit of any Employee.
(d) Effective as of the Closing Date, Purchaser shall provide the
Purchaser Employees with benefits (except for severance benefits, which
Purchaser shall not provide to any of the Purchaser Employees) on a basis
consistent with Purchaser's normal practice, including qualified and
nonqualified retirement plans, welfare plans, health care coverage, and all
other benefit arrangements and personnel policies, under the terms, conditions
and eligibility requirements of each such plan, policy, or arrangement.
9.2 NON-COMPETITION AND CONFIDENTIALITY AGREEMENTS. To the extent that
Seller has non-competition and confidentiality agreements with its employees,
Seller shall release, relinquish or waive any rights it may have pursuant to
such agreements for any Purchaser Employees provided that such release,
relinquishment or waiver shall not enlarge Purchaser's or diminish Seller's
rights under the Technology Agreement.
ARTICLE X
ENVIRONMENTAL MATTERS
10.1 ENVIRONMENTAL DEFINITIONS. For purposes of this Agreement, the
following terms shall have the following meanings:
"Environmental Laws" means any and all laws, statutes,
ordinances, rules, regulations, orders, or determinations of any governmental
authority at the federal, state, and local level pertaining to pollution of the
environment and protection of health and the environment including without
limitation, the Clean Air Act, as amended, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the
Federal Water Pollution Control Act, as amended, the Occupational Safety and
Health Act of 1970, as amended, the Resource and Conservation and Recovery Act
of 1976, ("RCRA") as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendments and Reauthorization
Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended,
all implementing rules and regulations , and any other environmental
conservation or protection laws at the federal, state, and local level regarding
the Release, Threatened Release, or Disposal of Petroleum Products, Hazardous
Substances, or Solid Wastes.
"Petroleum Product" means any material, product, or substance
that is included within the definitions of "petroleum," "petroleum products,"
"petroleum substances," "crude oil," or "oil" in or pursuant to any
Environmental Law, or subject to regulation under any Environmental Law.
"Hazardous Substance" means any material, waste, or substance,
that is: (A) included within the definitions of "hazardous substances,"
"hazardous materials," or "toxic substances," in or pursuant to any
Environmental Law, or subject to regulation under any Environmental Law; (B)
listed in the United States Department of Transportation Optional Hazardous
Materials Table, 49 C.F.R. Section 172.101, as amended, or in the United States
Environmental Protection Agency List of
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Hazardous Substances and Reportable Quantities, 40 C.F.R. Part 302, as amended;
or (C) explosive, radioactive, asbestos, a polychlorinated biphenyl, oil, or a
petroleum product.
"Solid Waste" means any material, waste, or substance included
within the definition of "solid waste" in or pursuant to any Environmental Law,
or subject to regulation under any Environmental Law.
"Release", "Threatened Release" and "Disposal" shall have the
meanings provided within the definitions of "release," "threatened release," or
"disposal" in or pursuant to any Environmental law, or subject to regulation
under any Environmental Law.
"Governmental Authority" means the United States, the state,
county, city, and political subdivisions in which the facility covered by the
NTC Lease is located or that exercise jurisdiction over such facility, and any
agency, department, commission, board, bureau, or instrumentality that exercises
jurisdiction over the facility covered by the NTC Lease.
"Losses" as used in this Article X shall mean losses, damages,
costs and expenses incurred as a result of the violation of any Environmental
Laws or incurred pursuant to Environmental Laws, including, without limitation,
penalties, fines, interest, amounts paid in settlement and reasonable attorneys
fees.
"Materials of Environmental Concern" includes chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
hazardous wastes, hazardous materials, hazardous chemical, petroleum and
petroleum products, regulated materials, radioactive materials, and pesticides.
10.2 REPRESENTATIONS AND WARRANTIES. Seller hereby represents and
warrants to Purchaser as of the date hereof and as of the Closing Date, that the
following are true:
(a) Seller has obtained with respect to the facility covered
by the NTC Lease, all permits, licenses, other authorizations,
registrations and other governmental consents ("Environmental Permits")
required under Environmental Laws.
(b) The facility covered by the NTC Lease is in compliance
with all terms and conditions of such Environmental Permits.
10.3 INDEMNIFICATION.
(a) The responsibility of Seller for the payment of Losses
arising out of matters covered by Article X shall be governed
exclusively by the provisions of this Article X and Article XIII,
without regard to any other representations and warranties herein.
(b) Subject to the provisions of Article XIII, Seller shall
indemnify, defend and hold harmless Purchaser against all Losses
arising out of breach of any representation or warranty contained in
Section 10.2.
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(c) Seller and Purchaser shall consult and cooperate fully and
in good faith with each other in respect to the planning,
implementation and control of actions taken to remediate conditions or
to contest proposed remediation giving rise to Losses covered by
Section 10.3(b) ("Remedial Activities"). All Remedial Activities shall
be taken in the business judgment of Purchaser (exercised without
regard to the availability of indemnification hereunder). Each party
shall designate an individual responsible for the initial phase of all
such consultation and cooperation.
(d) Seller shall be obligated to indemnify Purchaser for
Remedial Activities only to the extent that such Remedial Activities
are necessary to achieve compliance with or fulfill duties under
Environmental Laws in effect at the Closing and in no event shall
Seller have any liability hereunder arising from any Losses (whether
from increased remediation costs or otherwise) resulting from any
change in Environmental Laws after the Closing.
10.4 NO ASSUMED LIABILITIES Purchaser assumes no liability of Seller
with respect to environmental conditions, contamination, or pollution.
ARTICLE XI
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligation of Purchaser to consummate the transactions contemplated
by this Agreement are subject to fulfillment prior to or at the Closing of the
following conditions (unless waived in writing in the sole discretion of
Purchaser):
11.1 ACCURACY OF WARRANTIES AND PERFORMANCE OF COVENANTS. The
representations and warranties of Seller contained herein shall be accurate in
all material respects when made and as of the Closing Date. Seller shall have
performed all obligations and complied with each of the covenants, agreements
and conditions required to be performed or complied with on or prior to the
Closing.
11.2 NO PENDING ACTION. No action, suit, proceeding or investigation
before any court, administrative agency or other governmental authority shall be
pending or threatened wherein an unfavorable judgment, decree or order would
prevent the carrying out of this Agreement or any of the transactions
contemplated hereby, declare unlawful the transactions contemplated hereby or
cause such transactions to be rescinded.
11.3 CONSENTS. All notices to, consents, approval, authorizations and
waivers from third parties and governmental agencies required for the transfer
of any of the Purchased Assets or that are otherwise required for the
consummation of the transactions contemplated hereby upon the terms hereof shall
have been obtained or provided for and shall remain in effect.
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11.4 CONDITION OF BUSINESS AND ASSETS. The Purchased Assets shall not
have been adversely affected since the date hereof in any material way by any
act of God, fire, flood, accident, war, or other event or occurrence, whether or
not covered by insurance.
11.5 OPINION OF COUNSEL. Seller shall have delivered the opinion of
counsel referred to in Section 4.3(d).
ARTICLE XII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligation of Seller to consummate the transactions contemplated by
this Agreement are subject to the fulfillment prior to or at the Closing of the
following conditions (unless waived in writing in the sole discretion of
Seller):
12.1 ACCURACY OF WARRANTIES AND PERFORMANCE OF COVENANTS. The
representations and warranties of Purchaser contained herein shall be accurate
in all material respects as if made on and as of the Closing Date. Purchaser
shall have, in all material respects, performed all its obligations and complied
with each of the covenants, agreements and conditions required to be performed
or complied with on or prior to the Closing.
12.2 NO PENDING ACTION. No action, suit, proceeding or investigation
before any court, administrative agency or other governmental authority shall be
pending wherein an unfavorable judgment, decree or order would prevent the
carrying out of this Agreement or any of the transactions contemplated hereby in
a way materially adverse to Seller, declare unlawful the transactions
contemplated hereby or cause such transactions to be rescinded.
12.3 CONDITION OF ASSETS. The Purchased Assets shall not have been
adversely affected in any material way by any act of God, fire, flood, accident,
war, or other event or occurrence, whether or not covered by insurance.
ARTICLE XIII
SURVIVAL AND INDEMNIFICATION
13.1 SURVIVAL. Unless otherwise specified herein, all covenants,
agreements, representations and warranties contained in this Agreement shall
survive the Closing for a period of six months from the date hereof except that
the representations and warranties set forth in Sections 5.1, 5.2, 5.8, 5.11,
5.12, 5.17(c) and 5.18 shall survive for twenty-four months from the date
hereof. Any claim for indemnification that is asserted by written notice as
provided in Section 13.3 within the survival period shall survive until resolved
pursuant to a final non-appealable judicial determination or otherwise.
13.2 INDEMNIFICATION. Seller shall indemnify, defend and hold harmless
Purchaser from and against any and all loss, damage, cost or expenses (including
reasonable attorneys' fees and
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expenses) (i) caused by any misrepresentation, breach of warranty or failure to
fulfill any covenant or agreement of Seller contained herein, (ii) for which
indemnification is required pursuant to Article X, (iii) arising from the
Excluded Liabilities, or (iv) arising out of or resulting from the failure to
comply with any applicable bulk sales act. Purchaser shall indemnify and hold
harmless Seller from and against any and all loss, damage, cost or expense
(including reasonable attorneys' fees) (i) caused by any misrepresentation,
breach of warranty or failure to fulfill any covenant or agreement of Purchaser
contained herein or in any agreement or other document delivered pursuant
hereto, or (ii) arising from the Assumed Liabilities.
13.3 GENERAL PROVISIONS RELATING TO INDEMNIFICATION.
(a) No claim may be made against Seller for indemnification
pursuant to this Article XIII for any individual claim of less than
$5,000. The maximum aggregate amount recoverable from Seller pursuant
to Section 13.2 shall be equal to the Purchase Price.
(b) No party shall have any obligation to indemnify any other
party for special, indirect or consequential damages, or lost profits.
(c) The party entitled to indemnification shall take all
reasonable steps to mitigate all indemnifiable liabilities and damages
upon and after becoming aware of any event that could reasonably be
expected to give rise to any liabilities and damages indemnifiable
hereunder. No party shall be entitled to indemnification to the extent
of any insurance, Tax or other benefits resulting from the facts and
circumstances relating to any indemnifiable claim.
(d) The party seeking indemnification shall give written
notice to the indemnifying party of the facts and circumstances giving
rise to any claim for indemnification as soon as reasonably possible
but in any event within one month after it obtains knowledge of the
basis for a claim for indemnification hereunder.
(e) With respect to each third party claim subject to this
Article XIII (a "Third Party Claim"), the party seeking indemnification
(the "Indemnified Party") must give prompt notice to the indemnifying
party (the "Indemnifying Party") as provided in (d) above of the Third
Party Claim. The Indemnifying Party may, at its sole cost and expense,
upon notice to the Indemnified Party within thirty (30) days after the
Indemnifying Party receives notice of the Third Party Claim, assume the
defense of the Third Party Claim, with counsel of its choice. The
Indemnifying Party shall not consent to a settlement of, or the entry
of any judgment arising from, any Third Party Claim, unless (i) the
settlement or judgment is solely for money damages, or (ii) the
Indemnified Party consents thereto, which consent shall not be
unreasonably withheld. The Indemnifying Party shall provide the
Indemnified Party with fifteen (15) days prior notice before it
consents to a settlement of, or the entry of a judgment arising from,
any Third Party Claim. The Indemnified Party shall be entitled to
participate in the defense of (but not control) any Third Party Claim,
the defense of which is assumed by the Indemnifying Party, with its own
counsel and at
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its own expense. The parties shall cooperate in the defense of any
Third Party Claim and the relevant records of each party shall be made
available on a timely basis.
ARTICLE XIV
TERMINATION AND WAIVER
14.1 TERMINATION OR ABANDONMENT. Notwithstanding anything contained in
this Agreement to the contrary, this Agreement may be terminated and abandoned
at any time prior to the Closing:
(a) by the mutual written consent of Seller and Purchaser;
(b) by Seller or Purchaser, if any court of competent
jurisdiction or governmental body, authority or agency having
jurisdiction shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree,
ruling or other action shall have become final and nonappealable;
(c) by Purchaser, if one or more of the conditions to the
obligation of Purchaser to Close has not been fulfilled; or
(d) by Seller, if one or more of the conditions to the
obligation of Seller to Close has not been fulfilled.
In the event of termination of this Agreement pursuant to this Section
14.1, this Agreement shall terminate and there shall be no other liability on
the part of Seller to Purchaser or on the part of Purchaser to Seller under this
Agreement except liability arising out of a breach of this Agreement, or the
failure by a party to fulfill its conditions hereunder, in which event the
non-breaching party reserves the right to seek all available remedies. The
termination of this Agreement pursuant to this Section 14.1 shall become
effective on the date (x) in the case of a termination pursuant to Section
14.1(a), the consent is executed and (y) in the case of a termination pursuant
to Section 14.1(b), (c), or (d), written notice is given by the terminating
party to the other party hereto.
14.2 EXTENSION OF TIME, WAIVER, ETC. At any time prior to the Closing,
Seller and Purchaser may by written instrument:
(a) extend the time for the performance of any of the
obligation or acts of the other party; and
(b) waive compliance with any of the agreement of the other
party contained herein; provided, however, that no failure or delay by
Seller or Purchaser in exercising any right hereunder shall operate as
a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any
other rights hereunder.
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ARTICLE XV
DUE DILIGENCE
15.1 DILIGENCE PERIOD. [Intentionally omitted.]
ARTICLE XVI
NONCOMPETITION AGREEMENT
16.1 NONCOMPETITION AGREEMENT.
(a) Each of the parties constituting Seller, in order to induce
Purchaser to enter into this Agreement, expressly covenants and agrees that for
a period of five years from the date of this Agreement, neither of such parties
shall, and each of such parties will cause their Affiliates not to, directly or
indirectly, own, manage, operate, join, control or participate in or be
connected with any business, individual, partnership, firm or corporation, which
engages in any business that provides services within the Purchaser Field of Use
(as defined below) in North America.
(b) Notwithstanding the restrictions contained in Section 16.1(a), each
of the parties constituting Seller or any of their Affiliates may own an
aggregate of not more than 2.5% of the outstanding stock of any class of any
corporation engaged in a business within the Purchaser Field of Use, if such
stock is listed on a national securities exchange or regularly traded in the
over-the-counter market by a member of a national securities exchange, without
violating the provisions of Section 16.1(a), provided that neither of the
parties constituting Seller or their Affiliates have the power, directly or
indirectly, to control or direct the management or affairs of any such
corporation and are not involved in the management of such corporation.
(c) The parties constituting Seller further expressly covenant and
agree that for a period of two years from and after the Closing Date, neither of
the parties constituting Seller will, and the parties constituting Seller will
cause their Affiliates not to engage or employ, or solicit or contact with a
view to the engagement or employment any Purchaser Employee or any of Seller's
employees who are employed by Purchaser within three months after the Closing.
(d) To the extent that any part of this Article XVI may be invalid,
illegal or unenforceable for any reason, it is intended that such part shall be
enforceable to the extent that a court of competent jurisdiction shall determine
that such part, if more limited in scope, would have been enforceable, and such
part shall be deemed to have been so written and the remaining parts shall as
written be effective and enforceable in all events.
(e) Seller and Purchaser agree and acknowledge that the limitations as
to time, geographical area and scope of activity to be restrained as set forth
in this Article XVI do not impose any greater restraint than is necessary to
protect the legitimate business interests of Purchaser. Seller and Purchaser
further agree and acknowledge that, in the event of a breach or threatened
breach of any of the provisions of this Article XVI, Purchaser shall be entitled
to immediate injunctive relief, as any such breach would cause Purchaser
irreparable injury for which it would have no adequate remedy at law.
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Nothing herein shall be construed so as to prohibit Purchaser from pursuing any
other remedies available to it hereunder, at law or in equity for any such
breach or threatened breach.
(f) Each of the parties constituting Seller, hereby represents to
Purchaser that it has read and understands, and agrees to be bound by, the terms
of this Article XVI. Each of the parties constituting Seller acknowledge that
the geographic scope and duration of the covenants contained in this Article XVI
are the result of arm's-length bargaining and are fair and reasonable in light
of (i) the nature and wide geographic scope of the operations of Nutrition
Technology Corporation, (ii) Bionutrics, Inc. level of control over and contact
with Nutrition Technology Corporation business and operations in all
jurisdictions where same are conducted, (iii) the fact that Seller's business is
conducted throughout the geographic area where competition is restricted by this
Agreement, and (iv) the amount of consideration that Seller is receiving in
connection with this Agreement and the amount of the goodwill for which
Purchaser is paying. It is the desire and intent of the parties that the
provisions of this Agreement be enforced to the fullest extent permitted under
applicable law, whether now or hereafter in effect and therefore, to the extent
permitted by applicable law, the parties hereto waive any provision of
applicable law that would render any provision of this Article XVI invalid or
unenforceable.
(g) The "Purchaser Field of Use" shall have the meaning ascribed to the
ACH Field of Use in the Technology Agreement.
ARTICLE XVII
GENERAL PROVISIONS
17.1 AMENDMENTS AND WAIVER. No amendment, waiver or consent with
respect to any provision of this Agreement shall in any event be effective,
unless the same shall be in writing and signed by the parties hereto, and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
17.2 NOTICES. All notices, requests, consents, demands and other
communications hereunder must be in writing and shall be delivered in person, by
courier service or by telecopy, telegram or telex as follows:
(a) If to Seller: c/o Bionutrics, Inc.
2425 E. Camelback Road, Suite 650
Phoenix, Arizona 85016
Attention: Ronald H. Lane
Telecopy No.: 602-508-0115
With copies to: Friedman Siegelbaum LLP
399 Park Avenue, 20th Floor
New York, New York 10022-4689
Attention: J. Robert Horton
Telecopy No.: 212-980-6991
(b) If to Purchaser: AC Humko Corp.
7171 Goodlett Farms Parkway
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Memphis, Tennessee 38018
Telecopy No. 901-381-3066
Attention: Dennis Koerner
With copies to: Vinson & Elkins L.L.P.
2500 First City Tower
1001 Fannin
Houston, Texas 77002-6760
Telecopy No.: 713-615-5234
Attention: James B. Rylander
Any party may change its address or add or change parties for receiving notice
by written notice given to the others names above.
17.3 EXPENSES. Except as otherwise expressly provided herein, each
party to this Agreement shall pay its own costs and expenses in connection with
the transactions contemplated hereby.
17.4 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
17.5 SUCCESSORS AND ASSIGNS; BENEFICIARIES. This Agreement shall bind
and inure to the benefit of the parties named herein and their respective
successors and assigns. No Party may assign any rights, benefits, duties or
obligations under this Agreement without the prior written consent of the other
party. No third party shall be entitled to enforce any provision hereof; and no
third party is intended to benefit from this Agreement.
17.6 ENTIRE AGREEMENT. This Agreement and the documents referred to
herein contain the entire agreement and understanding among the parties with
respect to the transactions contemplated hereby and supersede all other
agreements, understandings and undertakings among the parties on the subject
matter hereof.
17.7 ANNOUNCEMENTS. No announcement of the specific terms of this
Agreement shall be made by any party without the written approval of the other
party (which approval shall not be unreasonably withheld), except for filings
required by applicable law.
17.8 PARTIAL INVALIDITY. In the event that any provision of this
Agreement shall be held invalid or unenforceable by any court or competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
17.9 BULK TRANSFER LAWS. Purchaser hereby waives compliance by Seller
with the provisions of any so-called bulk transfer laws of any jurisdiction in
connection with the sale of the Purchased Assets. Notwithstanding anything to
the contrary in Section 13, Seller shall indemnify, defend and hold Purchaser
harmless from any losses, damages, claims, costs, and expenses which Purchaser
may incur due to the failure of the parties to comply with the provisions of any
so-called bulk transfer laws.
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17.10 GOVERNING LAW. This Agreement shall be interpreted in accordance
with the substantive laws of the State of New York applicable to contracts made
and to be performed wholly within said State.
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IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by a duly authorized officer all as of
the date first written above.
AC HUMKO CORP.
By: ________________________________
Wayne Briesemeister
Vice President
"Purchaser"
BIONUTRICS, INC.
By: __________________________________
Ronald H. Lane
President and Chief Executive Officer
NUTRITION TECHNOLOGY
CORPORATION
By: __________________________________
Michael Wells
President
"Seller"
[Signature Page 1]
