Exhibit 10.1
ASSET PURCHASE AGREEMENT
by and among
VITARICH LABORATORIES, INC.,
as Seller
and
NBTY FLORIDA, INC.
as Purchaser

and
ARGAN, INC.
(solely for purposes of Sections 2.5 & 10.9)
DATED MARCH 11, 2011

 

 

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Table of Contents

                              Page   ARTICLE 1 DEFINITIONS; CONSTRUCTION     1  
  1.1    
Certain Definitions
    1     1.2    
Certain Matters of Construction
    5          
 
        ARTICLE 2 PURCHASE AND SALE OF ASSETS     6     2.1    
Purchase and Sale of Acquired Assets
    6     2.2    
Excluded Assets
    7     2.3    
Assumption of Liabilities
    8     2.4    
Excluded Liabilities
    9     2.5    
Discharge of Excluded Liabilities
    10          
 
        ARTICLE 3 CLOSING AND DELIVERABLES     10     3.1    
Closing
    10     3.2    
Conditions Precedent to Closing
    11     3.3    
Payment of Initial Closing Payment
    15     3.4    
Holdback Amount
    15     3.5    
Sales and Transfer Taxes
    15     3.6    
Bulk Sales
    15          
 
        ARTICLE 4 PURCHASE PRICE     16     4.1    
Purchase Price
    16     4.2    
Closing Statement
    16     4.3    
Post-Closing Payments of Purchase Price
    16     4.4    
Allocation of Purchase Price
    17          
 
        ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SELLER     17     5.1    
Organization
    17     5.2    
Authority; Enforceability
    17     5.3    
Non-contravention; Consents
    18     5.4    
Subsidiaries
    18     5.5    
Financial Statements
    18     5.6    
Undisclosed Liabilities
    19     5.7    
Absence of Certain Changes or Events
    19     5.8    
Tax Matters
    20     5.9    
Title to Properties
    21     5.10    
Assumed Real Property Leases; Properties
    22     5.11    
Intellectual Property
    23     5.12    
Compliance with Laws
    24     5.13    
Permits; Regulatory Matters
    24     5.14    
Legal Proceedings
    25     5.15    
Employee Plans
    25     5.16    
Employment Matters
    28     5.17    
Environmental Matters
    29     5.18    
Vitarich Contracts
    31  

 

 

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                              Page     5.19    
Inventory
    33     5.20    
Accounts Receivable; Accounts Payable
    33     5.21    
Insurance
    34     5.22    
No Broker’s and Finder’s Fees
    34     5.23    
Customers & Suppliers
    34     5.24    
Vehicles, Equipment & Machinery
    35     5.25    
Products
    35     5.26    
Product Liability
    35     5.27    
No Guarantees
    35     5.28    
Books and Records
    35     5.29    
Affiliate Transactions
    35     5.30    
Advertising Materials
    36     5.31    
No Management Reports
    36     5.32    
Disclosure
    36          
 
        ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF THE BUYER     36     6.1    
Organization
    36     6.2    
Authority; Enforceability
    36     6.3    
Non-Contravention; Consents
    37     6.4    
Legal Proceedings
    37     6.5    
No Broker’s and Finder’s Fees
    37          
 
        ARTICLE 7 TAX MATTERS     37     7.1    
Straddle Period Taxes
    37     7.2    
Preparation of Straddle Period Tax Returns
    38     7.3    
Tax Obligations Generally
    38     7.4    
Cooperation
    38     7.5    
Tax Indemnity
    38          
 
        ARTICLE 8 ADDITIONAL AGREEMENTS     39     8.1    
Further Assurances; Post-Closing Cooperation
    39     8.2    
Public Announcements
    39     8.3    
Confidentiality
    40     8.4    
Product Returns
    40          
 
        ARTICLE 9 INDEMNIFICATION     40     9.1    
Survival
    40     9.2    
Indemnification by the Buyer
    41     9.3    
Indemnification by Seller
    41     9.4    
Claims for Indemnification
    42     9.5    
Third Party Claims Procedures
    43     9.6    
Exclusive Remedy
    43          
 
       

 

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                              Page   ARTICLE 10 MISCELLANEOUS     44     10.1  
 
Governing Law; Consent to Jurisdiction; WAIVER OF JURY TRIAL
    44     10.2    
Notices
    44     10.3    
Entire Agreement; Third-Party Beneficiaries
    45     10.4    
Amendments and Waivers
    45     10.5    
Severability
    45     10.6    
Rules of Construction
    46     10.7    
Assignment
    46     10.8    
Expenses
    46     10.9    
Argan Guaranty
    46     10.10    
Counterparts; Facsimile
    46  

 

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Terms & Definitions not set forth in Section 1.1 hereof

      Term   Definition
Acquired A/R
  2.1.8
Acquired Assets
  2.1
Acquired Inventory
  2.1.4
Acquired Intangible Personal Property
  2.1.1
Acquired Tangible Personal Property
  2.1.2
Affiliate Transactions
  5.29
Agreement
  Preamble
Annual Balance Sheets
  5.5
Annual Financial Statements
  5.5
Argan
  Preamble
Assumed A/P
  2.3.2
Assumed Business Contracts
  2.1.9
Assumed Equipment Leases
  2.1.6
Assumed Liabilities
  2.3
Assumed Orders
  2.1.10
Assumed Real Property Leases
  2.1.5
Business Employee Plan
  5.15.1(b)
Buyer
  Preamble
Buyer Indemnified Persons
  9.3.1
CERCLA
  5.17.1(a)
CERCLIS
  5.17.1(b)
Claim Notice
  9.4.1
Closing
  3.1
Closing Date
  3.1
Closing Statement
  4.2
COBRA
  5.15.1(a)
Credit Agreement
  3.2.1(m)
Damages
  9.2.1
Defined Benefit Plan
  5.15.1(c)
Disclosure Schedule
  ARTICLE 5
Environmental Claims
  5.17.1(c)
Environmental Law
  5.17.1(d)
ERISA
  5.15.1(d)
ERISA Affiliate
  5.15.1(e)
Escrow Agent
  3.4
Excluded Assets
  2.2
Excluded Liabilities
  2.4
Final Purchase Price
  4.1

 

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      Term   Definition
Financial Statements
  5.5
Guaranty
  10.9
Hazardous Materials
  5.17.1(e)
Holdback Account
  3.4
IFN
  3.2.1(j)
Indemnified Person
  9.4.1
Indemnifying Person
  9.4.1
Initial Closing Payment
  3.3
Interim Balance Sheet
  5.5
Inventory Value
  4.2
IP License Contract
  5.11.1
IRS
  5.15.1(f)
Leased Property and Leased Properties
  2.1.5
Multiemployer Plan
  5.15.1(g)
NPL
  5.17.1(f)
Obligations
  10.9
OFAC
  5.13.6
Pension Plan
  5.15.1(i)
Post Closing Statement
  4.3
Post-Closing Tax Period
  7.1
Pre-Closing Tax Period
  7.1
Prepaid Expenses
  2.1.11
Qualified Plan
  5.15.1(h)
Release
  5.17.1(g)
Required Consents
  5.3
Security Deposits
  2.1.7
Seller
  Preamble
Seller Indemnified Persons
  9.2.1
Straddle Period
  7.1
Straddle Period Taxes
  7.1
Third Party Claim
  9.5
Transfer Taxes
  3.5
Vehicles
  2.1.3
Vitarich Contracts
  5.18.1

 

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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of
March 11, 2011, by and among VITARICH LABORATORIES, INC., a Delaware corporation
(“Seller”), NBTY FLORIDA, INC., a Delaware corporation (the “Buyer”), and solely
for purposes of Sections 2.5 and 10.9 hereof, ARGAN, INC., a Delaware
corporation (“Argan”).
WHEREAS, the Buyer wishes to purchase the Acquired Assets (as defined below)
from the Seller and to assume only the Assumed Liabilities from Seller, and the
Seller wishes to sell the Acquired Assets and to transfer only the Assumed
Liabilities to the Buyer;
NOW, THEREFORE, in consideration of the mutual agreements and covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE 1
DEFINITIONS; CONSTRUCTION
1.1 Certain Definitions. As used herein, the following terms have the following
meanings:
1.1.1 “Accounts Receivable” means with respect to the Business, all trade
accounts receivable and all notes, bonds and other evidences of Indebtedness of
and rights to receive payments arising out of sales occurring in the conduct of
the Business and the Security Agreements related thereto, including any rights
of Seller with respect to any third party collection procedures or any other
Legal Proceedings which have been commenced in connection therewith.
1.1.2 “Affiliate” means, with respect to any Person, any Person which, directly
or indirectly, controls, is controlled by, or is under common control with, such
Person. For purposes of this definition, “control,” “controlled by” and “under
common control with” means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of 10% or more of the voting securities, by
contract or otherwise.
1.1.3 “Books and Records” of any Person means all files, documents, instruments,
papers, books and records relating to the business, operations, conditions of
(financial or other), results of operations and assets and properties of such
Person, including without limitation financial statements, Tax Returns and
related workpapers and letters from accountants, budgets, pricing guidelines,
ledgers, journals, deeds, title policies, minute books, stock certificates and
books, stock transfer ledgers, Contracts and other agreements, Permits, customer
lists, computer files and programs, electronic data, emails, retrieval programs,
operating data and plans and environmental studies and plans.

 

 

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1.1.4 “Buildings” means the buildings, properties and premises located at 4365,
4327, 4405, 4206 and 4344 Arnold Avenue, Naples, Florida which are currently
subject to existing leases between Seller and the landlords thereunder.
1.1.5 “Bulk Sales Laws” means the Legal Provisions of any jurisdiction or any
Tax Authority relating to bulk sales.
1.1.6 “Business” means (a) the Liquid Vitamins Business, and (b) the powder and
tablet/capsule Business, in each case, consisting of the related assets and
businesses owned, operated and conducted by the Seller during the period of time
ending on the date hereof. When used herein, unless the text clearly provides
otherwise, the reference to the term Business shall mean the Business taken as a
whole on a consolidated basis.
1.1.7 “Business Day” means any day other than Saturday, Sunday or a day on which
banks are permitted or required to close in State of New York or Florida.
1.1.8 “Business Employee” shall mean any current or former employee, officer or
director of Seller that is employed in the Business.
1.1.9 “Business Intellectual Property Rights” means all intellectual property
rights owned or licensed by Seller and used or held for use in the Business,
including: (i) all trademarks, service marks, trade names, slogans, logos, trade
dress, internet domain names, uniform resource identifiers, rights in design,
brand names, and other similar designations of source or origin, together with
all goodwill, registrations and applications related to the foregoing, as fully
listed on Part 1.1.9 of the Disclosure Schedule (collectively, “Marks”); (ii)
patents, utility, models and industrial design registrations or applications
(including without limitation any continuations, divisionals,
continuations-in-part, provisionals, renewals, reissues, re-examinations and
applications for any of the foregoing, as fully listed on Part 1.1.9 of the
Disclosure Schedule (collectively, “Patents”); (iii) all copyrights and
copyrightable subject matter, database rights and moral rights in both published
works and unpublished works, whether registered or unregistered, and all
registrations or applications for registration thereof, as fully listed on
Part 1.1.9 of the Disclosure Schedule (collectively, “Copyrights”); (iv) mask
works rights and trade secrets and other confidential or proprietary business
information (including manufacturing and production processes and techniques,
research and development information, technology, drawings, specifications,
designs, plans, proposals, technical data, financial, marketing and business
data, pricing and cost information, business and marketing plans, customer and
supplier lists and information, all know-how, details of client or consultant
contracts, pricing policies, marketing plans or strategies, product development
techniques or plans, business acquisition plans, designs and design projects,
inventions and research projects), proprietary processes, formulae, algorithms,
models, and methodologies (collectively, “Secret Information”); (v) computer
software, computer programs, and databases (whether in source code, object code
or other form) and all URLs, websites or domain names and telephone numbers, in
each case used in, usable in, or held for use in or otherwise necessary for the
conduct of the Business, as fully listed on Part 1.1.9 of the Disclosure
Schedule; and (vi) all names that Seller is known by in the Business, including
without limitation, Vitarich.
1.1.10 “Code” means the Internal Revenue Code of 1986, as amended.

 

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1.1.11 “Contract” means any contract, agreement, option, undertaking,
understanding, license, sublicense, lease, consent, note, bond, debenture,
mortgage or other commitment, in each case with all amendments thereto, whether
or not reduced to writing.
1.1.12 “Encumbrance” means any mortgage, pledge, hypothecation, assessment,
security interest, lease, lien, option, right of first refusal, easement,
adverse claim, levy, charge, or other encumbrance or lien of any kind, or any
conditional sale Contract, title retention Contract, or other Contract to give
any of the foregoing.
1.1.13 “FDA” means the United States Food and Drug Administration.
1.1.14 “Formulations” means the formulations for each Product as of the date
hereof.
1.1.15 “GAAP” means generally accepted accounting principles in the U.S.,
consistently applied throughout the specified period.
1.1.16 “Governmental Entity” means any Federal, state, provincial, territorial,
municipal or local, domestic or foreign, government or any court, administrative
agency or commission or other governmental or regulatory authority or agency,
domestic or foreign, including without limitation, the FDA and the Occupational
Safety and Health Administration.
1.1.17 “Holdback Amount” shall mean $2,300,000.
1.1.18 “Indebtedness” of any Person means all obligations of such Person (i) for
borrowed money, (ii) evidenced by notes, debentures, bonds or other similar
instruments, (iii) for deferred purchase price for goods or services (other than
trade payables or accruals incurred in the Ordinary Course of Business),
(iv) under capital leases and (v) in the nature of a guarantee of the
obligations described in clauses (i) through (iv) above of any other Person.
1.1.19 “Inventory” means all inventory of raw materials, work-in-process,
finished goods, products under research and development, demonstration
equipment, office and other supplies, parts, packaging materials and other
accessories related thereto which are held at, or are in transit from or to, the
locations at which the Business is conducted, or located at customers’ premises
on consignment, in each case, which are used or held for use by Seller or its
Affiliates in the conduct of the Business, including any of the foregoing
purchased subject to any conditional sales or title retention agreement in favor
of any other Person, together with the rights of Seller against suppliers of
such inventories, excluding any Excluded Assets.
1.1.20 “Knowledge”, as pertaining to the Seller, means the knowledge of any
officer, director or manager of Seller or executive officer of Argan.
1.1.21 “Legal Proceeding” means any claim, suit, action, arbitration, hearing,
complaint or criminal or civil prosecution, whether at law or at equity, before
or by any court or Governmental Entity, any arbitrator or other tribunal.
1.1.22 “Legal Provision” means any statute, law, ordinance, rule, regulation,
judgment, order or decree of any Governmental Entity.

 

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1.1.23 “Liquid Vitamins Business” shall mean the research, development,
manufacture and sale of premium liquid vitamins and minerals, whole-food dietary
supplements and products and activities incidental thereto, as conducted by the
Seller during the period of time ending on the date hereof, anywhere in the
world.
1.1.24 “Loss” and “Losses” means any and all out-of-pocket damages, fines, fees,
penalties, deficiencies, losses and expenses (including without limitation
interest, penalties, court costs, fees of attorneys, accountants and other
experts or other expenses of any Legal Proceeding or of any claim, default, or
assessment).
1.1.25 “Material Adverse Effect” means, with respect to any Person, any state of
facts, change, effect, condition, development, event or occurrence that has
been, is or would reasonably be likely to be material and adverse to the
financial condition, business, assets, liabilities, or results of operations or
prospects of such Person and its subsidiaries, taken as a whole, or the ability
of such Person and its subsidiaries to consummate the transactions contemplated
by this Agreement, except, in each case, to the extent that such change or
effect results from or arises out of (i) general economic, industry or political
conditions, that does not disproportionately affect such Person or such Person’s
Business, or (ii) the performance by such Person of its obligations under the
terms of this Agreement. Any failure of a Person to meet any particular revenue
or earnings forecast or estimate, shall not, in and of itself, constitute a
Material Adverse Effect.
1.1.26 “Order” means any judgment, order, decision, consent decree, writ,
injunction, ruling or decree of, or any settlement under the jurisdiction of,
any court or Governmental Entity.
1.1.27 “Ordinary Course of Business” means the ordinary course of conduct of the
Business, consistent with the Seller’s and the Affiliates’ past practice.
1.1.28 “Permits” means all permits, certificates of occupancy, licenses,
variances, exemptions, and other Orders and approvals from Governmental Entities
that are necessary or useful for the operation of the Business or the Acquired
Assets.
1.1.29 “Permitted Encumbrances” means (i) statutory liens for Taxes not yet due
and payable or being contested in good faith by appropriate proceedings, for
which adequate reserves have been established in accordance with GAAP, (ii) any
statutory or common law lien arising in the Ordinary Course of Business by
operation of any Legal Provision with respect to a liability that is not yet due
or delinquent, and (iii) statutory liens, such as carriers’ and warehousemen’s
liens incurred in the Ordinary Course of Business.
1.1.30 “Person” means any individual, corporation, association, partnership,
limited liability company, proprietorship, firm, joint venture, joint stock
company, estate, trust, unincorporated organization, Governmental Entity and any
other entity or organization.
1.1.31 “Processing Instructions” means the processing instructions for each
Product as of the date hereof.

 

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1.1.32 “Products” means any and all products produced, marketed, or sold by or
on behalf of the Seller in connection with the Business.
1.1.33 “Properties” means the Leased Properties and Buildings.
1.1.34 “Security Agreements” means any security arrangement and collateral
securing the repayment or other satisfaction of the Accounts Receivable.
1.1.35 “Specifications” means the raw materials, manufacturing, packaging,
labeling and quality assurance specifications for each Product, as of the date
hereof.
1.1.36 “Tangible Personal Property” means all furniture, fixtures, racking,
equipment, machinery and other tangible personal property (other than Inventory
and Vehicles) used or held for use in the conduct of the Business at the
locations at which the Business is conducted or at customers’ premises on
consignment, or otherwise used or held for use by Seller or its Affiliates in
the conduct of the Business, including any of the foregoing purchased subject to
any conditional sales or title retention agreement in favor of any other Person.
1.1.37 “Tax” or “Taxes” means any federal, state, local, or non-U.S. income,
alternative or add-on minimum, gross receipts, sales, use, transfer,
registration, value added, estimated, gains, ad valorem, franchise, profits,
license, withholding, payroll, direct placement, employment, excise, severance,
stamp, procurement, occupation, premium, property, escheat, environmental or
windfall profit tax, custom, duty, capital stock, social security, unemployment,
disability, real property, personal property, or any other tax of any kind
whatsoever, whether computed on a separate or consolidated, unitary or combined
basis or in any other manner, together with any interest, additions or penalties
with respect thereto, whether disputed or not, and including any obligation to
indemnify or otherwise assume or succeed to the Tax liability of any other
Person.
1.1.38 “Tax Authority” means a Governmental Entity responsible for the
imposition of Taxes.
1.1.39 “Tax Return” means any return, declaration, report, claim for refund, or
information return or statement with respect to any Taxes filed or required to
be filed with a Tax Authority, including any schedule or attachment thereto, and
including any amendment thereof.
1.1.40 “Transaction Documents” means all agreements, instruments, certificates
and documents delivered by the parties hereto pursuant to this Agreement, as
each may be amended, modified or supplemented from time to time in accordance
with its terms.
1.1.41 “Vehicle” means all motor vehicles, owned or leased by Seller and used or
held for use in the conduct of the Business including, but not limited to, the
vehicles in Part 2.1.3 of the Disclosure Schedule.
1.2 Certain Matters of ConstructionA reference to an Article, Section, Exhibit
or Schedule shall mean an Article of, a Section in, or Exhibit or Schedule to,
this Agreement unless otherwise expressly stated. The titles and headings herein
are for reference purposes only and shall not in any manner limit the
construction of this Agreement which shall be considered as a whole. The words
“include,” “includes” and “including” when used herein shall be deemed in each
case to be followed by the words “without limitation.”

 

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ARTICLE 2
PURCHASE AND SALE OF ASSETS
2.1 Purchase and Sale of Acquired Assets. Subject to Buyer’s satisfactory review
of complete and accurate due diligence materials to be provided by Seller, and
on the terms and subject to the conditions of this Agreement, at the Closing,
the Seller shall sell, transfer and assign to the Buyer, and the Buyer shall
purchase and acquire from Seller, free and clear of any Encumbrances (other than
Permitted Encumbrances and the Assumed Liabilities), all of Seller’s right,
title and interest in and to all of the following assets and rights, that, in
each case, are owned, leased or used or held for use by Seller or its Affiliates
in connection with Seller’s conduct of the Business, other than Excluded Assets,
in each case as the same shall exist on the Closing Date (collectively, the
“Acquired Assets”):
2.1.1 The intangible property and rights (including the Business Intellectual
Property Rights) of the Business, including but not limited to those identified
on Part 2.1.1 of the Disclosure Schedule, the goodwill and going concern value
relating thereto, and all rights, privileges, claims, causes of action, options
income, royalties, damages and payments relating to any of the foregoing or to
the Business or the Acquired Assets, including, without limitation, the name
Vitarich (the “Acquired Intangible Personal Property”);
2.1.2 The furniture, fixtures, machinery, equipment, racking and other Tangible
Personal Property of the Business, including but not limited to those identified
on Part 2.1.2 of the Disclosure Schedule (the “Acquired Tangible Personal
Property”);
2.1.3 All vehicles of the Business, including but not limited to those listed on
Part 2.1.3 of the Disclosure Schedule (the “Vehicles”);
2.1.4 The Inventory of the Business, as reflected on the Closing Statement and
as updated through the Closing Date (the “Acquired Inventory”);
2.1.5 The rights under the real property leases identified on Part 2.1.5 of the
Disclosure Schedule (the “Assumed Real Property Leases”) and all other rights,
privileges given to Seller in connection with such leases, including, but not
limited to the use of all fixtures, machinery, equipment, racking and other
items of personal property owned by Seller at the leased premises (each of the
leased premises being a “Leased Property” and collectively referred to herein as
the “Leased Properties”), all governmental permits, licenses, approvals, and
certificates relating to any Property; and all guaranties and warranties owned
by Seller in connection with any Property;
2.1.6 The rights under the personal property leases identified on Part 2.1.6 of
the Disclosure Schedule (the “Assumed Equipment Leases”);
2.1.7 All security deposits deposited by or on behalf of the Seller as lessee or
sublessee under the Assumed Real Property Leases or Assumed Equipment Leases or
otherwise (the “Security Deposits”);

 

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2.1.8 The Accounts Receivable of the Business, as reflected on the Closing
Statement and as updated through the Closing Date (the “Acquired A/R”);
2.1.9 The rights under the Contracts of the Business identified on Part 2.1.9 of
the Disclosure Schedule (collectively with the Assumed Real Property Leases and
the Assumed Equipment Leases, the “Assumed Business Contracts”);
2.1.10 All rights under the unfilled, standing or open supplier and customer
purchase orders in connection with the Business, incurred in the Ordinary Course
of Business (the “Assumed Orders”);
2.1.11 All prepaid expenses relating to the Business, including but not limited
to the items listed on Part 2.1.11 of the Disclosure Schedule (the “Prepaid
Expenses”);
2.1.12 The Books and Records of Seller that relate to the conduct of the
Business;
2.1.13 The Permits held by Seller that relate to the conduct of the Business;
2.1.14 The website and domain names identified on Part 2.1.14 of the Disclosure
Schedule;
2.1.15 All customer lists, supplier lists and sales information;
2.1.16 All Formulations, Specifications and Processing Instructions for each
Product;
2.1.17 All applications systems and software, including all computer software,
programs and source disks, and related program documentation, tapes, manuals,
forms, guides and other materials, computer hardware and other systems hardware
and networking and communication assets, including servers, databases, backup,
and peripherals;
2.1.18 All documents including marketing materials, Product literature, printed
advertising and promotional materials, training materials, and advertising
materials;
2.1.19 Rights, claims, credits, causes of action or rights of setoff against
third parties under vendors’ or manufacturers’ warranties, indemnities and
guaranties;
2.1.20 All Legal Proceedings where Seller is a plaintiff; and
2.1.21 All other assets, properties and rights of any kind, nature and
description, real, personal and mixed, tangible and intangible, wherever
located, owned, leased, licensed, or used or held for use in the Business.
2.2 Excluded Assets. Notwithstanding anything herein to the contrary, the
following assets and rights of the Seller are the only excluded items from the
purchase and sale of assets of the Business hereunder, and are not included in
the definition of Acquired Assets (collectively, the “Excluded Assets”):

 

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2.2.1 all cash, commercial paper, certificates of deposit, treasury bills, cash
equivalents and bank accounts;
2.2.2 all Books and Records, accounts, ledgers, files, documents,
correspondence, studies, reports and other printed or written material related
to any Excluded Assets or Excluded Liabilities;
2.2.3 all employee benefit plans and arrangements, including all Business
Employee Plans, and any trusts, insurance arrangements or other assets held
pursuant to, or set aside to fund the obligations of Seller or Argan under, any
such Business Employee Plans or benefit arrangements;
2.2.4 all rights to insurance claims, related refunds and proceeds arising from
or related to the Excluded Assets or Excluded Liabilities;
2.2.5 all rights relating to refunds or recoupment of Taxes paid by Seller which
can not be assigned by law;
2.2.6 all rights of the Seller under this Agreement and the Transaction
Documents;
2.2.7 all rights of the Seller in and to the Inventory relating in any way to or
known as the Adaptogen inventory or materials (“Adaptogen”), including, without
limitation, (i) the raw materials known as Russian Herbal Adaptogen Extract
Blend and Eleutherococcus, (ii) any knowledge, trade secrets, or written works
relating to Adaptogen, or (iii) the Adaptogen pilot clinical study.
2.2.8 any shares of capital stock or other securities of any corporation,
limited liability company, or any other Person;
2.2.9 all Legal Proceedings arising before, on or after the Closing relating to
any Excluded Asset or to any Excluded Liabilities; and
2.2.10 the items listed on Part 2.2.10 of the Disclosure Schedule.
2.3 Assumption of Liabilities. Subject to Buyer’s satisfactory review of
complete and accurate due diligence materials to be provided by Seller, and on
the terms and subject to the conditions of this Agreement, at the Closing, the
Buyer shall assume and hereby agrees to fully and timely perform and discharge,
only the following liabilities and obligations of the Seller (collectively, the
“Assumed Liabilities”), and no other liabilities, obligations or commitments:
2.3.1 All liabilities and obligations arising under the Assumed Business
Contracts and the Assumed Orders arising and to be performed after the Closing
Date and excluding any such liability and obligation arising or to be performed
on or prior to the Closing Date;
2.3.2 All accounts payable and accrued expenses of Seller in connection with the
Business, not to exceed $685,000 in the aggregate (collectively, the “Assumed
A/P”);

 

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2.3.3 Fifty percent (50%) of the liabilities and obligations relating to
retention bonuses of certain Business Employees as identified in, and in such
amounts as described in, Part 2.3.3 of the Disclosure Schedule, but only in
amounts not to exceed $48,500, in the aggregate; and
2.3.4 All obligations to pay the auction fees to Harry Davis & Co., but only in
amounts not to exceed $50,000, in the aggregate, provided that if such fees have
been paid by Seller prior to Closing, Buyer shall reimburse Seller for such
amounts.
2.4 Excluded Liabilities. The Seller and Buyer acknowledge that the Assumed
Liabilities shall include only those liabilities set forth in Section 2.3
hereof. The Buyer shall not assume, or in any way be liable for the payment,
performance or discharge of, without limitation, the following liabilities or
obligations of the Seller or any of its Affiliates (collectively, the “Excluded
Liabilities”):
2.4.1 All liabilities to the extent arising out of or otherwise relating to the
Excluded Assets;
2.4.2 All liabilities, obligations and commitments for any Taxes, including
those arising on or prior to or relating to any period on or prior to the
Closing Date, including any liabilities, obligations or commitments for income,
transfer, sales, use or other Taxes arising in connection with the consummation
of the transactions contemplated hereby (including any income Taxes arising from
the sale of the Acquired Assets);
2.4.3 Any liabilities with respect to Products produced, shipped or sold on or
prior to the Closing Date, including without limitation, product warranty
liabilities;
2.4.4 Any liabilities or obligations for customer returns of Products that were
sold on or prior to the Closing Date;
2.4.5 Except as set forth in Section 2.3.3 hereof, any liabilities to present or
former employees, consultants or agents, whether for liabilities relating to
Business Employee Benefits or otherwise, including any liabilities to Dennis
Madden under the severance arrangements identified on Parts 5.16.1 and 5.18.1 of
the Disclosure Schedule;
2.4.6 Any liabilities for injury to or death of persons or damages to or
destruction of property (including, without limitations, any products liability
claim or worker’s compensation claim), regardless of when said claim or
liability is asserted, including, without limitation, any claim for
consequential damages in connection with the foregoing;
2.4.7 Any liabilities arising out of infringement of the rights of any Persons;
2.4.8 All liabilities arising out of violations of any Legal Provision;
2.4.9 All liabilities, obligations and commitments arising out of all pending or
threatened Legal Proceedings (whether asserted or commenced before or after the
Closing Date);

 

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2.4.10 Any and all liabilities or obligations under any Assumed Business
Contract or any Assumed Order arising or to be performed on or before the
Closing Date;
2.4.11 All liabilities, obligations and commitments for trade and consumer
promotions occurring on or prior to Closing Date, including those that were
commenced prior to but concluded on or after the Closing Date;
2.4.12 Any and all liabilities or obligations under this Agreement, the
Transaction Documents, and the transactions contemplated by this Agreement, the
Transaction Documents and such other agreements and instruments;
2.4.13 All accounts payable and accrued expenses in support of the production
(including payrolls and related expenses) of Seller in connection with the
Business in excess of $685,000;
2.4.14 All liabilities, obligations and commitments under any Business Employee
Plan sponsored by Seller or any Affiliates or to which any of such entities may
have any liability or obligation;
2.4.15 All liabilities in connection with the Assumed Real Property Leases, the
Assumed Equipment Lease or the other leases which arose on or prior to the
Closing Date; and
2.4.16 Without limitation by the specific enumeration of the foregoing, all
other liabilities, obligations and commitments of the Seller or any Affiliates,
except the Assumed Liabilities, pursuant to the provisions of Section 2.3.
2.5 Discharge of Excluded Liabilities. The Seller and Argan shall pay and
discharge when due all Excluded Liabilities, including, without limitation, all
of those liabilities of the Seller which Buyer has not specifically agreed to
assume pursuant to the provisions of Section 2.3. Notwithstanding the foregoing,
Seller and Argan shall not be required to pay or discharge any liability owing
from Seller to Argan or from Argan to Seller provided that Argan and Seller
deliver to Buyer at Closing a general release with respect to such liabilities
in accordance with Section 3.2.1(k).
ARTICLE 3
CLOSING AND DELIVERABLES
3.1 Closing. The closing of the transactions contemplated by this Agreement (the
“Closing”) shall take place at the offices of Farrell Fritz, P.C., 1320 RXR
Plaza, Uniondale, NY 11556, simultaneously with the execution and delivery of
this Agreement (the date on which the Closing occurs, the “Closing Date”). The
Closing shall be deemed to have occurred at 11:59 p.m. Eastern Standard Time on
the Closing Date.

 

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3.2 Conditions Precedent to Closing.
3.2.1 Conditions Precedent to the Obligations of Buyer to Complete the Closing.
The obligations of Buyer to enter into this Agreement and to complete the
Closing are subject to the fulfillment on or prior to the Closing Date of the
following conditions, any one of which may be waived by Buyer and, in the event
the Closing has occurred, shall be deemed to have been waived by Buyer:
(a) Seller shall have performed and complied with each agreement, covenant, and
obligation required to be performed or complied with under this Agreement at or
prior to the Closing, and Buyer shall have received a certificate of an
executive officer of the Seller certifying to the same;
(b) All corporate proceedings of the Seller and Argan that are required in
connection with the transactions contemplated hereby shall be reasonably
satisfactory in form and substance to Buyer and its counsel and Buyer and its
counsel shall have received evidence of such proceedings, certified by the
Secretary of Seller and Argan, as applicable;
(c) Seller shall have delivered to Buyer (i) a copy of Seller’s articles of
incorporation, including all amendments thereto, (ii) a certificate from the
Secretary of State of the State of Delaware that the Seller is in good standing
and attesting to its payment of all franchise or similar Taxes, and (iii) a
certificate from the Secretary of State in each jurisdiction in which the Seller
is qualified to do business to the effect that the Seller is duly qualified and
in good standing in such jurisdiction as of the Closing Date;
(d) Seller shall have delivered to Buyer (i) a copy of Argan’s articles of
incorporation, including all amendments thereto, (ii) a certificate from the
Secretary of State of the State of Delaware that Argan is in good standing and
attesting to Argan’s payment of all franchise or similar Taxes, and (iii) a
certificate from the Secretary of State in each jurisdiction in which Argan is
qualified to do business to the effect that Argan is duly qualified and in good
standing in such jurisdiction as of the Closing Date;
(e) Seller shall have executed and delivered to Buyer good and sufficient
instruments of transfer transferring to the Buyer all right, title and interest
in and to all of the Acquired Assets sold by Seller hereunder, including one or
more lease assignments, bills of sale, and patent, copyright and trademark
assignments in recordable forms. All such instruments of transfer (x) shall be
in the form which is usual and customary for transferring the type of property
involved under the Legal Provisions of the jurisdictions applicable to such
transfers, and (y) shall be in form and substance reasonably satisfactory to the
Buyer;
(f) Buyer shall have received the Formulations, Specifications and Processing
Instructions corresponding to each Product, in each case in a form reasonably
acceptable to Buyer;
(g) Buyer shall have received the Closing Statement, certified by the President
or the Chief Executive Officer of the Seller, certifying the Acquired A/R and
Assumed A/P as of the Closing Date;

 

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(h) Buyer shall have received evidence that as of immediately prior to the
Closing, the Seller has no (i) outstanding Indebtedness owed by it to another
Person, (ii) liabilities in connection with pension obligations to Business
Employees, or (iii) contingent liabilities, including those that would result
from the consummation of this Agreement, with the exception of any of the
foregoing resulting from an Affiliate Transaction by and between Argan and
Seller (all of which exceptions are set forth on Part 5.29 of the Disclosure
Schedule), the sufficiency of such evidence being reasonably satisfactory to
Buyer.
(i) Seller shall have executed and delivered to Buyer an affidavit stating that
under the penalties of perjury the Seller’s United States taxpayer
identification number and that the Seller is not a foreign Person pursuant to
Section 1445 of the Code;
(j) Seller shall have delivered the Properties free of all tenancies and
occupants other than the personnel of the Seller and the sub-tenant,
International Food & Nutrition Research LLC (“IFN”), with respect to the
building known as 4206 Arnold Avenue, Naples, Florida; provided that (x) IFN
shall have entered into an assignment and amendment of their agreement with
Seller on terms, conditions and in form acceptable to Buyer and (y) IFN shall
have provided an estoppel certificate to Buyer in form and content satisfactory
to Buyer;
(k) Seller shall have executed and delivered to Buyer a general release
releasing Buyer from any and all liabilities owing from Seller to Argan or from
Argan to Seller, in form and substance reasonably satisfactory to Buyer;
(l) All Required Consents shall have occurred, been filed or been obtained, as
the case may be;
(m) Buyer shall have received evidence of the release of Seller from any and all
obligations to Bank of America under the Second Amended and Restated Financing
and Security Agreement dated December 11, 2006 by and among Argan, Southern
Maryland Cable, Inc., Seller, Gemma Power Systems, LLC, Gemma Power, Inc., Gemma
Power Systems California, Gemma Power Hartford, LLC and Bank of America, N.A, as
amended to the date hereof (the “Credit Agreement”);
(n) Buyer shall have received evidence that all Encumbrances on the Acquired
Assets (including those pursuant to the Credit Agreement and other than
Permitted Encumbrances) shall have been released, in each case in a form and
substance satisfactory to Buyer;
(o) There shall not be in effect any Order or Legal Provision restraining,
enjoining or otherwise prohibiting or making illegal the consummation of any of
the transactions contemplated in this Agreement or which could reasonably be
expected to otherwise result in a material diminution of the benefits to Buyer
of the transactions contemplated in this Agreement, and there shall not be
pending or threatened any Legal Proceeding or any other action in, before or by
any Governmental Entity which could reasonably be expected to result in the
issuance of any such Order or the enactment or promulgation of any such Legal
Provision;

 

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(p) Buyer shall have received the opinion of Robinson & Cole LLP, counsel to
Seller, dated the Closing Date, in form and substance reasonably satisfactory to
Buyer and Buyer’s counsel;
(q) Buyer shall have received from Seller a certificate signed on behalf of
Seller by an authorized officer certifying that the representations and
warranties of Seller contained in this Agreement, any Transaction Document and
the Disclosure Schedule are true and correct in all material respects on and as
of the Closing Date, and any representation or warranty made as of a specified
date earlier than the Closing Date is true and correct in all material respects
on and as of such earlier date;
(r) Buyer shall have received originals or facsimiles of all documents or
instruments pertaining to the Assumed Real Property Leases, including without
limitation all licenses and Permits and Books and Records of Seller, to the
extent such documents or instruments are in the possession of Seller;
(s) Buyer shall have received a Landlord’s estoppel certificate for each Assumed
Real Property Lease executed and delivered by each respective Landlord, in form
and content reasonably acceptable to Buyer, including confirmation by each such
landlord that (i) all rent has been paid in full through March 31, 2011, (ii)
Buyer’s first rent payment will be due on April 1, 2011 and (iii) there has been
no default by Seller under such Assumed Real Property Lease through the Closing
Date;
(t) Buyer shall have entered into direct leases with the landlords of the
following Buildings: 4365, 4327 and 4405 Arnold Avenue, Naples, Florida, on
terms and conditions and in form and content acceptable to Buyer, and the
existing lease for such Buildings between Seller and each of the respective
landlords shall be terminated by Seller and the respective Landlords prior to
Closing. With respect to each existing lease for such Buildings, Seller shall
deliver prior to Closing copies of each termination agreement executed by Seller
and each of the respective landlords which shall be in a form and content
acceptable to Buyer;
(u) Seller shall have provided to Buyer evidence of the Florida Department of
Agriculture that the violation dated November 25, 2008 has been removed and no
fines or penalties are outstanding with respect to such violation;
(v) Seller shall have provided from the appropriate Governmental Entities
“zoning compliance letters” setting forth the current and specific use at each
of the Buildings is in compliance with all zoning codes and/or regulations, in
form and content reasonably acceptable to Buyer;

 

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(w) Buyer shall have received the original leases executed by Seller in
connection with each Assumed Real Property Lease, and any and all amendments
thereto; as well as all other original documents or instruments referred to
herein, including without limitation all licenses and Permits and Books and
Records pertaining to each Assumed Real Property Lease;
(x) Buyer shall have received copies of all certificates of occupancy that are
required for each of the Buildings; and
(y) Buyer shall have received the original plans and specifications for the
improvements being leased in connection with each Assumed Real Property Lease,
as well as all documentation and instruments used in connection with the
operation of the property, including, but not limited to all licenses, Permits,
warranties, security and access codes, combinations and keys, in each case to
the extent such plans, specifications, documentation and instruments are in the
possession of Seller.
3.2.2 Conditions Precedent to Seller’s Obligation to Close. The obligations of
Seller to enter into and complete the Closing are subject to the fulfillment on
or prior to the Closing Date of the following conditions, any one of which may
be waived by Seller:
(a) Buyer shall have delivered the Initial Closing Payment and the Holdback
Amount, in accordance with Sections 3.3 and 3.4 herein;
(b) Buyer shall have delivered to Seller good and sufficient instruments of
assumption, pursuant to which the Buyer shall assume and agree to fully and
timely perform and discharge the Assumed Liabilities. All such instruments of
assumption (i) shall be in the form which is usual and customary for assuming
the type of liabilities and obligations being assumed under the Legal Provisions
of the jurisdiction applicable to such assumption, and (ii) shall be in form and
substance reasonably satisfactory to Seller;
(c) Buyer shall have delivered to Seller (i) proof of payment of the auction
fees to Harry Davis & Co. or (ii) an amount equal to the auction fee paid by
Seller to Harry Davis & Co., in each case not to exceed $50,000;
(d) Buyer shall have delivered to Seller an amount equal to the pro-rated amount
of 2011 rent payments for each Leased Property and for the Buildings at 4365 and
4327 Arnold Avenue, Naples, Florida, in each case from the Business Day
immediately following the Closing Date until March 31, 2011. The Seller and
Buyer agree that there shall be no adjustments for security deposits with
respect to any of the Buildings;
(e) With respect to the Building at 4405 Arnold Avenue, Naples, Florida, Buyer
shall deliver to Seller an amount equal to the prorated amount of 2011 rent
payments from the Business Day immediately following the Closing Date until
March 31, 2011; provided that Seller shall have obtained and delivered to Buyer
a letter from the owner of the Building certifying that the March 2011 rent
payment has been made in full and such rent will be attributed to the Buyer.

 

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(f) There shall not be in effect any Order or Legal Provision which has the
effect of making the transactions contemplated by this Agreement illegal or
otherwise restraining or prohibiting consummation of such transactions; and
(g) Seller shall have received from Buyer a certificate signed on behalf of
Buyer by an authorized officer certifying that the representations and
warranties of Buyer contained in this Agreement shall be true and correct in all
material respects on and as of the Closing Date.
3.3 Payment of Initial Closing Payment. The “Initial Closing Payment” shall be
$800,000, payable at Closing by wire transfer of immediately available funds to
the bank account designated by Seller in writing at least 2 Business Days prior
to the date hereof.
3.4 Holdback Amount. The Holdback Amount shall be placed in a segregated account
under the control of Farrell Fritz, P.C. (the “Holdback Account”). The Holdback
Amount shall be retained by Farrell Fritz, P.C. (the “Escrow Agent”) in the
Holdback Account for a period of nine months following the Closing to fund the
post-Closing payments of Purchase Price pursuant to Section 4.3 and (b) to
satisfy claims by Buyer for indemnification by Seller pursuant to ARTICLE 9
herein. The Holdback Amount shall be held by the Escrow Agent pursuant to the
terms of an Escrow Agreement to be entered among the parties hereto.
3.5 Sales and Transfer Taxes. Seller will pay all sales, use, value-added,
business, goods and services, transfer, documentary, conveyancing or similar
taxes or expenses that may be imposed as a result of the sale and transfer of
the Acquired Assets (including any stamp duty, any realty transfer tax, any
mansion Tax, or other tax chargeable in respect of any instrument transferring
property and any taxes, including income taxes, payable in connection with the
sale and transfer of the Acquired Assets), together with any and all penalties,
interest and additions to tax with respect thereto (“Transfer Taxes”). Seller
and Buyer will cooperate in timely making all filings, returns, reports and
forms as may be required to be made by Buyer and Seller respectively, to comply
with the provisions of such Tax Legal Provisions.
3.6 Bulk Sales. Each of the parties hereby waives compliance with the
notification and all other requirements of the Bulk Sales Laws in force in the
jurisdiction in which such laws are applicable to the Business or the Acquired
Assets or the transactions contemplated by this Agreement. Seller shall
indemnify Buyer and its officers, directors, employees, agents and Affiliates in
respect of, and hold each of them harmless from and against, any and all Damages
suffered, occurred or sustained by any of them or to which any of them may be
subject, resulting from, arising out of, or relating to the failure of the Buyer
or Seller to comply with the terms of any Bulk Sales Laws.

 

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ARTICLE 4
PURCHASE PRICE
4.1 Purchase Price. The aggregate purchase price for the Acquired Assets will be
up to THREE MILLION ONE HUNDRED THOUSAND DOLLARS ($3,100,000) and will be
finally determined in accordance with the provisions of this ARTICLE 4 (the
“Final Purchase Price”).
4.2 Closing Statement. Not fewer than two (2) Business Days before the Closing
Date, Seller shall prepare and deliver to the Buyer a statement (the “Closing
Statement”) setting forth Seller’s good faith estimate of (a) the value of the
Acquired Inventory (the “Inventory Value”), (b) the Acquired A/R, and (c) the
Assumed A/P, in each case as of the Closing. For purposes of calculating the
Inventory Value, Seller and Buyer have conducted a physical taking of the
Inventory not more than five (5) Business Days prior to the Closing and have
prepared an itemized list of the Acquired Inventory and Seller’s cost basis for
each item of Acquired Inventory. The Inventory Value shall be equal to Seller’s
actual cost basis for each item of Acquired Inventory. The Inventory Value, the
Acquired A/R, and the Assumed A/P set forth on the Closing Statement shall
(i) be derived from and be in accordance with the Books and Records of the
Business, (ii) be prepared in accordance with GAAP and past practices of the
Business, and (iii) fairly present in all material respects the Inventory Value,
the Acquired A/R and the Assumed A/P, in each case as of the Closing Date.
4.3 Post-Closing Payments of Purchase Price. For a period of nine (9) months
following the Closing, the Buyer shall prepare and deliver to Seller, within
15 days following the end of each calendar quarter following the Closing, a
statement (each a “Post Closing Statement”) setting forth, in reasonable detail
and with supporting evidence, (if requested by Seller) (a) the Inventory Value
of the Acquired Inventory that has been sold, used or consumed, in each case as
determined by reference to Seller’s cost basis in accordance with Section 4.2
hereof, by Buyer during the immediately preceding period, (b) the amount of
Acquired A/R that has been collected by Buyer during such period and (c) the
amount of Assumed A/P that had been paid by Buyer during such period.
Simultaneously with delivery of each Post Closing Statement, (i) Buyer shall pay
to Seller from the Holdback Amount an amount equal to the Inventory Value of the
Acquired Inventory sold and Acquired A/R collected and (ii) Buyer may deduct
from the Holdback Amount any amount by which the aggregate Assumed A/P paid by
the Buyer from and after the Closing Date exceeds $685,000, in each case as
reflected on such Post Closing Statement. After the second full calendar quarter
immediately following the Closing, any of the Acquired A/R that is uncollected
shall be conveyed to Seller for no consideration. If after the nine (9) month
anniversary of the Closing any Acquired Inventory remains unsold, unused or
unconsumed, Buyer shall have no further obligation to pay to Seller any amounts
for such Acquired Inventory or any of the Acquired Assets hereunder. Any amounts
remaining in the Holdback Account after the nine (9) month anniversary of the
Closing that are not payable to Seller pursuant to this Section 4.3 shall be
released to Buyer.

 

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4.4 Allocation of Purchase Price. Buyer shall prepare an allocation of the
Purchase Price and the Assumed Liabilities (and all other capitalized costs)
among the Acquired Assets in accordance with Section 1060 of the Code and the
Treasury regulations thereunder (and any similar Legal Provision, as
appropriate), which allocation shall be subject to review and approval by
Seller. Upon such approval, such allocation shall become binding upon all
parties. Buyer shall deliver such allocation to Seller within 90 days after the
Closing, and the Seller will respond within 30 days thereof (it being understood
and agreed that no written objection by Seller within such 30-day period shall
be deemed approval by Seller of the allocation prepared by Buyer). Each of the
parties and their respective Affiliates shall report, act and file Tax Returns
(including, but not limited to, Internal Revenue Service Form 8594) in all
respects and for all purposes consistent with the allocation agreed to by Seller
and the Buyer pursuant to this Section. Each of the parties agrees that the
allocation provided for under this Section may subsequently be adjusted by Buyer
in accordance with Section 1060 of the Code and the Treasury regulations
thereunder to reflect the payments of Final Purchase Price pursuant to ARTICLE
4, which adjustment shall be subject to review and approval by Seller, which
approval shall not be unreasonably withheld, conditioned or delayed.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to the Buyer as of the date hereof as set forth
in this ARTICLE 5, subject to any exceptions stated in the disclosure schedule
delivered by Seller to the Buyer dated as of the date hereof (the “Disclosure
Schedule”). The Disclosure Schedule is arranged in parts corresponding to the
numbered and lettered sections and paragraphs contained in this ARTICLE 5. The
Disclosure Schedule is intended to be construed as an integrated document,
however, and each section or paragraph thereof should be read in conjunction
with the all other sections and paragraphs thereof.
5.1 Organization. Each of the Seller and Argan (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
respective organization; (b) has the legal power and authority to own, lease and
operate its assets and properties used in, and to carry on, the Business as now
being conducted; and (c) is duly qualified or licensed to do business in each
jurisdiction where the character of the properties owned, leased or operated by
Seller or Argan, as the case may be, or the nature of its respective activities
makes such qualification or licensing necessary. The jurisdictions in which each
of the Seller and Argan is so qualified is set forth on Part 5.1 of the
Disclosure Schedule.
5.2 Authority; Enforceability. The Seller and Argan have the requisite corporate
power and authority and legal capacity to execute and deliver this Agreement and
each Transaction Document contemplated hereunder to be executed and delivered by
Seller and/or Argan, as the case may be, on or before the Closing Date, and to
consummate the transactions contemplated hereby and to comply with the
provisions hereof and thereof. The execution, delivery and performance by Seller
and/or Argan, as the case may be, of this Agreement and the Transaction
Documents contemplated hereunder to be executed and delivered by Seller and/or
Argan, as the case may be, on or before the Closing Date, the consummation by
Seller and/or Argan, as the case may be, of the transactions contemplated hereby
and thereby, and the compliance by Seller and/or Argan, as the case may be, with
the provisions hereof and thereof, have been duly authorized by all necessary
corporate action on the part of Seller and/or Argan, as the case may be, and no
other corporate action on the part of Seller or Argan is necessary to authorize
this Agreement and such Transaction Documents or to consummate the transactions
contemplated hereby and thereby. This Agreement has been, and each Transaction
Document contemplated hereunder to be executed and delivered by Seller and/or
Argan, as the case may be, on or before the Closing Date will have been, duly
executed and delivered by Seller and/or Argan, as the case may be, and, assuming
the due authorization, execution and delivery by the Buyer, constitutes or will
constitute upon such execution and delivery a valid and binding obligation of
Seller and/or Argan, as the case may be, enforceable against Seller and/or
Argan, as the case may be, in accordance with its terms.

 

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5.3 Non-contravention; Consents. The execution and delivery by Seller and/or
Argan, as the case may be, of this Agreement and the Transaction Documents
contemplated hereunder to be executed and delivered by Seller and/or Argan, as
the case may be, on or before the Closing Date, the consummation by Seller
and/or Argan, as the case may be, of the transactions contemplated hereby and
thereby (alone or in combination with any other event), and the compliance by
Seller and/or Argan, as the case may be, with the provisions hereof and thereof,
do not and will not conflict with, or result in any violation or breach of, or
default under, or give rise to a right of, or result in, termination,
cancellation or acceleration of any obligation or to a loss of a benefit under,
or result in the creation of any Encumbrance in or upon any of the Acquired
Assets under, or give rise to any increased, additional, accelerated or
guaranteed rights or entitlements under, any provision of (a) the certificate of
incorporation or bylaws of Seller or Argan, (b) any Contract to which Seller or
Argan is a party or by which they or any of their properties or assets may be
bound or affected, or (c) any Legal Provision or Order applicable to the
Business or to the Seller or Argan. Except as set forth on Part 5.3 of the
Disclosure Schedule, no consent, approval, Order or authorization of, or
registration, declaration or filing with, any Governmental Entity or any other
Person (including landlords under the Assumed Real Property Leases), is required
by or with respect to the Seller or Argan in connection with the execution and
delivery of this Agreement or the Transaction Documents, the consummation of the
transactions contemplated hereby or thereby (alone or in combination with any
other event), or the compliance with the provisions hereof or thereof
(collectively, the “Required Consents”).
5.4 Subsidiaries. The Seller has no subsidiaries.
5.5 Financial Statements. Seller has made available to the Buyer complete and
accurate copies of (a) the unaudited balance sheets of the Business as of
January 31, 2010 (the “Annual Balance Sheet”), and the related unaudited
statement of operations of the Business for the fiscal year ended January 31,
2010 (collectively, the “Annual Financial Statements”) and (b) the unaudited
balance sheet of the Business as of December 31, 2010 (the “Interim Balance
Sheet”), and the related unaudited statement of operations of the Business for
the eleven month period ended December 31, 2010 (collectively, the “Financial
Statements”). The Financial Statements (i) were derived from and are in
accordance with the Books and Records of the Business, regularly maintained by
management and used to prepare the financial statements of Seller in accordance
with the principles stated therein, (ii) were prepared consistent with the past
practice of the Business and (iii) fairly present in all material respects the
income, expenses, assets and liabilities of the Business as of the dates thereof
and the respective periods covered thereby. Notwithstanding the foregoing, it is
agreed and understood that Financial Statements prepared for interim periods
which are not fiscal quarter and fiscal year ends are not updated for accruals
associated with legal expenses and for inventory overstocks and obsolescence.
All other adjustments necessary to fairly present in all material respects the
income, expenses, assets and liabilities of the Business for and as of such
interim periods have been made.

 

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5.6 Undisclosed Liabilities. The Business does not have any direct or indirect
Indebtedness, liability, claim, loss, damage, deficiency, obligation or
responsibility, fixed or unfixed, choate or inchoate, liquidated or
unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise
of a kind required by GAAP to be set forth on a Financial Statement that is not
fully and adequately reflected or reserved against on the Interim Balance Sheet
other than as disclosed on Part 5.6 of the Disclosure Schedule. The Business has
not incurred any of the foregoing since the date of the Interim Balance Sheet
which individually or in the aggregate would be material to the Business or the
operations or condition (financial or otherwise) of the Acquired Assets or
Assumed Liabilities.
5.7 Absence of Certain Changes or Events. Except as set forth on Part 5.7 of the
Disclosure Schedule, since December 31, 2010, the Business has been conducted in
the Ordinary Course of Business, and there has not been:
5.7.1 any material damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the tangible Acquired Assets or tangible assets
of the Seller which losses in the aggregate exceed $50,000;
5.7.2 any acquisition, sale, lease or other disposition of any material asset of
the Business with an original purchase price, when acquired, in excess of
$50,000, except for the disposition of Inventory in the Ordinary Course of
Business and the disposition of obsolete or immaterial or worthless assets not
necessary for the conduct of the Business;
5.7.3 any incurrence, assumption or guarantee by Seller of any Indebtedness for
borrowed money that would be binding upon Buyer;
5.7.4 any creation or other incurrence of any Encumbrance (other than Permitted
Encumbrances) on any Acquired Asset;
5.7.5 any entering into, amendment, modification, termination (partial or
complete) or granting of a waiver under or giving any consent with respect to
any Assumed Business Contract;
5.7.6 capital expenditures or commitments for additions to property, plant or
equipment used or held for use in the conduct of the Business constituting
capital assets in an aggregate amount exceeding $50,000;
5.7.7 in connection with the Business, any transaction with any officer,
director, or Affiliate of the Seller or any relative, beneficiary, spouse or
Affiliate of such officer, director or Affiliate (i) outside the Ordinary Course
of Business consistent with past practice, (ii) other than on an arm’s length
basis, (iii) other than with respect to Adaptogen, or (iv) other than with
respect to transactions between Seller and Argan which are disclosed on
Part 5.29 of the Disclosure Schedule;
5.7.8 any distribution or dividend authorized or made by Seller, nor any
redemption, repurchase, defeasance or acquisition of any equity interest in
Seller;

 

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5.7.9 any Contract with regard to the acquisition or disposition of any Business
Intellectual Property Rights;
5.7.10 any grant by Seller to any current or former Business Employee of any
severance, change in control, termination or similar compensation or benefits;
5.7.11 any entry by Seller into, any amendment of or modification to or Contract
to amend or modify (or announcement of an intention to amend or modify) or any
termination of (A) any employment, deferred compensation, severance, change in
control, termination, employee benefit, loan, indemnification, retention, stock
repurchase, stock option, stock appreciation right, performance unit,
stock-based award, consulting or similar Contract between Seller and any
Business Employee, or (B) any Contract between Seller and any Business Employee,
the benefits of which are contingent, or the terms of which are altered, upon
the occurrence of a transaction involving the Seller of the nature contemplated
by this Agreement or any Transaction Document (alone or in combination with any
other event);
5.7.12 any entering into of a contract or agreement to do or engage in any of
the foregoing after the date hereof; or
5.7.13 any other transaction involving or development affecting the Business or
the Acquired Assets outside the Ordinary Course of Business.
5.8 Tax Matters.
5.8.1 The Seller:
(a) has timely filed or caused to be filed, with all appropriate Governmental
Authorities, all Tax Returns that it was required to file, including for each
taxable period in which the Seller was a member of a consolidated group. All
such Tax Returns were correct and complete in all respects and were prepared in
substantial compliance with all applicable Legal Provisions; and
(b) has timely paid all Taxes owed by the Seller (whether or not shown or
required to be shown on any Tax Return) to the appropriate taxing authorities.
5.8.2 There are no Encumbrances for Taxes upon the Acquired Assets or any other
assets, tangible or intangible, of Seller or the Business. There is no
examination or proceeding pending or threatened by any Governmental Entity or
agency relating to the assessment or collection of, or any delinquencies in
filing relating to, any Taxes from Seller, nor does any basis exist for any such
assessment. Seller is a United States Person within the meaning of the Code. No
power of attorney has been executed on behalf of Seller or the Business with
respect to any matter relating to Taxes which is currently in force.
5.8.3 Seller has withheld and paid all Taxes required to have been withheld and
paid in connection with amounts paid to any employee, independent contractor,
creditors, stockholder or other third party with respect to Seller and the
Business, and all Forms W-2 and 1099 required with respect thereto have been
properly completed and timely filed.

 

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5.8.4 Seller is not a party to any agreement, contract, arrangement or plan that
has resulted or could result, separately or in the aggregate, in the payment of
(i) any “excess parachute payment” within the meaning of Section 280G of the
Code (or any corresponding provision of state, local or foreign Tax Legal
Provision) and (ii) any amount that will not be fully deductible as a result of
Section 162(m) of the Code (or any corresponding provision of state, local or
foreign Tax Legal Provision). Seller is not and has never been a United States
real property holding corporation within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in Section 897(c)(l)(A)(ii) of the
Code.
5.8.5 Seller has not participated in nor has any liability or obligation with
respect to any “reportable transaction” within the meaning of Treasury
Regulations Section 1.6011-4.
5.8.6 The unpaid Taxes of Seller (i) did not, as of the most recent fiscal
month-end, exceed the reserve for Tax liability (rather than any reserve for
deferred Taxes established to reflect timing differences between book and Tax
income) set forth on the face of the most recent balance sheet (rather than in
any notes thereto), and (ii) do not exceed the reserve as adjusted for the
passage of time through the Closing Date in accordance with the past custom and
practice of Seller in filing its Tax Returns.
5.8.7 Seller is not a party to any Tax allocation or sharing agreement with any
party whose financial information is not included in the consolidated financial
statements of Argan. Seller (i) has not ever been a member of an Affiliated
group filing a consolidated federal income Tax Return (other than a group the
common parent of which was Argan), or (ii) has no liability for Taxes of any
Person under Regulation Section 1.1502-6 (or any similar provision of state,
local or non-U.S. law) as a transferee or successor, by contract or otherwise.
5.9 Title to Properties.
5.9.1 Part 5.9.1 of the Disclosure Schedule lists all real property leased by
Seller and used in the Business, and each lease agreement to which Seller is a
party with respect to such leased real property that is in effect as of the date
of this Agreement (including the Assumed Real Property Leases). All such current
leases are in full force and effect, are valid and effective in accordance with
their respective terms, and there is not, under any of such leases, any existing
default or event of default (or event which with notice or lapse of time, or
both, would constitute a default) that would reasonably be expected to give rise
to a claim against the Seller. Seller does not own any real property.
5.9.2 Seller has good and marketable title to, or, in the case of leased
properties and assets, valid leasehold interests in, all of the Acquired Assets
sold by Seller under this Agreement, free and clear of any Encumbrances, except
for Permitted Encumbrances and the Assumed Liabilities.
5.9.3 Seller intended to sell all of the Acquired Assets at an auction to be
conducted by Harry Davis & Co. Seller terminated the contemplated auction
because the Purchase Price provided in Article 4 is significantly in excess of
the auction price guaranteed by Harry Davis & Co.

 

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5.10 Assumed Real Property Leases; Properties.
5.10.1 Seller has delivered to Buyer a true, correct and complete copy of the
Assumed Real Property Leases (including amendments and modifications). After the
date hereof, the Assumed Real Property Leases shall not be amended except as
agreed to by Buyer. Except as specifically set forth in the Assumed Real
Property Leases, Seller has no obligations under the Assumed Real Property
Leases. Except as set forth on Part 5.10.1 of the Disclosure Schedule, Seller
has not received any written notice from the landlord claiming that the tenant
is in default of the Assumed Real Property Leases. A copy of any notice of
default received or delivered by or to Seller after the date hereof shall be
delivered to Buyer. Seller has not furnished landlord with notice of a default
under the Assumed Real Property Leases. From and after the date hereof, Seller
shall deliver a copy of any such notice to Buyer.
5.10.2 All work, alterations, improvements or repairs required to be made as of
the date hereof or required to be made prior to the Closing Date, in connection
with the Assumed Real Property Leases have in all respects been (or will be)
carried out, performed and complied with, and other than as specifically set
forth in the Assumed Real Property Leases, there is no agreement with the
landlord for the performance of any work to be done in the future or any payment
to be made by the tenant to the landlord under the Assumed Real Property Leases.
Unless otherwise specifically agreed to herein, all bills and claims for labor
performed and materials furnished to or for the benefit of the Properties will
be paid in full on the Closing Date.
5.10.3 Seller has not assigned or otherwise Encumbered their interest in the
Assumed Real Property Leases.
5.10.4 There are no outstanding written requirements or written recommendations
received by Seller specifically with reference to the Properties from (i) the
insurance company(s) currently insuring the respective properties; (ii) any
board of fire underwriters or other body exercising similar functions, or
(iii) the holder of any mortgage encumbering any of the Properties, which
require or recommend any repairs or work to be done the Properties. In the event
Seller receives such a notice, Seller shall deliver a copy of the same to Buyer.
5.10.5 Seller has received no written notice and has no Knowledge of (i) any
pending or contemplated annexation or condemnation proceedings, or private
purchase in lieu thereof, affecting or which may affect the Properties, or any
part thereof. Seller agrees to furnish Buyer with a copy of any such notice
received within five (5) Business Days after receipt.
5.10.6 Except as set forth on Part 5.10.6 of the Disclosure Schedule, the
certificates of occupancy for the Properties reflect the use of the Properties
as manufacturing. All Permits for the operations of each of the Properties are
in full force and effect and have been delivered to Seller. There are no
additional permits required in connection with the operation or the use and
occupancy of either of the properties. Seller has not received any written
notice of violation of any permit material to the operation of any Property that
remains uncured.

 

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5.10.7 Seller shall deliver to Buyer copies of all of the Permits and licenses
in Seller’s possession with respect to the Properties. Seller is current in the
payment of any fees required to be paid for the Permits and licenses. All
Permits and licenses delivered to Buyer are and shall be in full force and
effect, are transferable with the respective Property and shall be transferred
to Buyer by Seller at the Closing.
5.10.8 Except as set forth on Part 5.10.8 of the Disclosure Schedule, to
Seller’s Knowledge, Seller has not received any notice of violation of building,
fire, sanitary, or environmental regulations against the Properties. In the
event Seller receives notice of a violation, Seller shall have the same removed
prior to the Closing, with no liability to Buyer.
5.10.9 Seller has not received any written notice from any Governmental Entity
regarding (a) any actual, alleged, possible or potential violation of, or
failure to comply with, any Legal Provision with respect to any Property that
remains uncured, or (b) any actual, possible or potential obligation on the part
of Seller to undertake, or to bear all or any portion of the cost of, any action
to correct a violation of, or failure to comply with, any Legal Provision.
5.11 Intellectual Property.
5.11.1 Part 5.11.1 of the Disclosure Schedule sets forth a true, complete and
correct list of (i) all Business Intellectual Property Rights used or useful in
connection with the Business that is registered or subject to an application for
registration or that is otherwise material to the Business, and (ii) all
agreements to which Seller is a party or by which any of them is bound that
relate to Business Intellectual Property Rights (the “IP License Contracts”),
including: (A) licenses of Business Intellectual Property Rights to Seller by
any other Person except for off-the-shelf software and licenses implied in the
sale of such software, (B) licenses of Business Intellectual Property Rights to
any other Person by Seller; (C) agreements otherwise granting or restricting the
right to use Business Intellectual Property Rights; and (D) agreements
transferring, assigning, indemnifying with respect to or otherwise relating to
Business Intellectual Property Rights. No other Intellectual Property is used or
necessary in the conduct of the Business.
5.11.2 Except as disclosed on Part 5.11.2 of the Disclosure Schedule, Seller:
(i) owns all right, title and interest in and to the Business Intellectual
Property Rights, free and clear of all Encumbrances, other than Permitted
Encumbrances, or (ii) is licensed to use, or otherwise possess legally valid and
enforceable rights to use, the Business Intellectual Property Rights that they
do not so own.
5.11.3 To the Knowledge of Seller, there are no restrictions on the direct or
indirect transfer of any agreements, instruments and documents, or any interest
therein, held by Seller in respect of such Business Intellectual Property Right;
5.11.4 To the Knowledge of Seller, the Seller is not, nor has it received any
notice that it is, in default (or with the giving of notice or lapse of time or
both, would be in default) under any IP License Contract.

 

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5.11.5 Except as disclosed on Part 5.11.5 of the Disclosure Schedule, neither
the Business Intellectual Property Rights owned or purported to be owned by the
Seller nor any of the Products of the Business infringe any intellectual
property rights of any Person, and no claim in pending or has been made to such
effect. There are no pending, threatened actions, causes of action, claims,
suits, proceedings, Orders, writs, injunctions, or decrees which involve a claim
of infringement, unauthorized use, or violation of the Business Intellectual
Property Rights by any Person against Seller, or challenging Seller’s ownership
or use, validity or enforceability of, any Business Intellectual Property Right.
The Seller has not received notice of any such threatened claim of infringement,
unauthorized use, or violation from or on behalf of any such Person against the
Seller, or challenging the ownership, use, validity or enforceability of any
Business Intellectual Property Right.
5.11.6 No Business Intellectual Property Right owned or leased by the Business
is subject to any outstanding Order or Legal Proceeding (other than pending
proceedings pertaining to applications for patent or trademark or copyright
registration as set forth on Part 5.11.6 of the Disclosure Schedule) or
stipulation that has been served upon or filed against, the Seller that
restricts or is reasonably likely to restrict in any manner the ownership,
licensing or use thereof in connection with the Business.
5.12 Compliance with Laws
5.12.1 Seller has not received any notice that it is in conflict with or in
default or violation of any Legal Provision or Order applicable to it in
connection with the Business, nor does Seller have any outstanding liabilities
relating to any of the foregoing, including without limitation, any notices of
violation of law or municipal ordinances, orders or requirements of the
Departments of Housing and Buildings, Fire, Labor, Health or other state or
municipal departments having jurisdiction against or affecting the real property
used by Seller in conducting the Business. No investigation or review by any
Governmental Entity is pending or, to the Knowledge of Seller, threatened in
writing against Seller or Argan in connection with the Business. Except as
disclosed on Part 5.12.1 of the Disclosure Schedule, there is no Contract or
Order binding upon Seller which has, or is reasonably expected to have, the
effect of prohibiting or impairing the Business, any acquisition of material
property used in the Business or the conduct of Business as conducted by the
Seller on the date hereof.
5.13 Permits; Regulatory Matters.
5.13.1 Seller and, to the extent required, each officer and employee of the
Seller, holds all Permits necessary for the operation of the Business and the
Acquired Assets as conducted as of the date hereof or the Acquired Assets.
Part 5.13.1 of the Disclosure Schedule sets forth a list of the Permits,
including without limitation Permits issued or granted to Seller by any
Governmental Entity regulating food businesses, products, or services
authorizing Seller in connection with the operation of the Business or the
Acquired Assets.
5.13.2 Such Permits shall continue to be in full force and effect and in good
standing immediately following the consummation of the transactions contemplated
by this Agreement.
5.13.3 The Seller has not received any notice or communication from any
Governmental Entity alleging noncompliance of the Business with any FDA/OSHA
Law. There are no Legal Proceedings pending or, to Knowledge of the Seller,
threatened against Seller or any of its directors, officers or employees, that
involves any violation of any FDA/OSHA Law with respect to the Business.

 

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5.13.4 With respect to the Business, neither the Seller nor any of its
respective directors, officers or employees, is or has been: (i) convicted of,
charged with, or under investigation for or related to any criminal offense in
respect of any FDA/OSHA Law, (ii) debarred or disqualified from participation in
regulated activities for any violation or alleged violation of any FDA/OSHA Law,
or (iii) assessed a civil money penalty 21 U.S.C. §§ 333 or 307 or any Legal
Provisions promulgated thereunder. Neither the Seller nor any of its respective
directors, officers or employees, has received any written requests for
information or subpoenas claiming or raising concerns with respect to violations
or potential violations of any FDA/OSHA Law with respect to the Business.
5.13.5 With respect to the Business, the Seller is in compliance with all
applicable FDA/OSHA Law governing advertising, marketing or promotional
activities.
5.13.6 Seller is not, and shall not become, a Person or entity with whom Buyer
is restricted from doing business with under regulations of the Office of
Foreign Asset Control (“OFAC”) of the Department of the Treasury (including, but
not limited to, those named on OFAC’s Specially Designated and Blocked Persons
list) or under any statute, executive order (including, but not limited to,
Executive Order 13224 Blocking Property and Prohibiting Transactions With
Persons Who Commit, Threaten to Commit, or Support Terrorism), or other
governmental action and is not and shall not engage in any dealings or
transactions or be otherwise associated with such Persons or entities.
5.14 Legal Proceedings. Except as set forth on Part 5.14 of the Disclosure
Schedule, there is no Legal Proceeding pending against the Seller, or, to the
Knowledge of Seller, threatened against the Seller or Argan with respect to the
Business or the Acquired Assets. There is no Legal Proceeding pending against
the Seller or Argan, or, to the Knowledge of the Seller, threatened against the
Seller or Argan, that questions or challenges (a) the validity of this Agreement
or any Transaction Document or (b) any action taken or to be taken by the Seller
pursuant to this Agreement or any Transaction Document or in connection with the
transactions contemplated hereby and thereby. There are no facts or
circumstances in existence on the Closing Date that could reasonably be expected
to give rise to any actions, suits, claims or legal, administrative or
arbitration proceedings, hearings, inquiries, subpoenas, or governmental
investigations.
5.15 Employee Plans.
5.15.1 For purposes of this Agreement, the following terms shall have the
meanings set forth below:
(a) “COBRA” shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended;

 

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(b) “Business Employee Plan” shall mean each “employee benefit plan” as such
term is defined in Section 3(3) of ERISA and all stock purchase, stock option,
severance, employment, change-in-control, fringe benefit, collective bargaining,
bonus, incentive, deferred compensation, employee loan and all other employee
benefit plans, agreements, programs, policies or other arrangements, whether or
not subject to ERISA (including any funding mechanism therefor now in effect or
required in the future as a result of the transaction contemplated by this
Agreement or otherwise), under which any current or former employee, director or
consultant of Seller has any present or future right to benefits or which has
ever or are contributed to, sponsored by or maintained by Seller for current or
former employee, director or consultant.
(c) “Defined Benefit Plan” shall mean each Business Employee Plan which is
subject to Part 3 of Title I of ERISA, Section 412 of the Code of Title IV of
ERISA;
(d) “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended;
(e) “ERISA Affiliate” shall mean any other Person or entity under common control
with Seller within the meaning of Sections 414(b), (c), (m) or (o) of the Code
and the regulations issued thereunder;
(f) “IRS” shall mean the Internal Revenue Service;
(g) “Multiemployer Plan” shall mean any “Pension Plan” (as defined below) which
is a “multiemployer plan,” as defined in Section 3(37) of ERISA;
(h) “Qualified Plan” shall mean each Business Employee Plan which is intended to
qualify under Section 401 of the Code; and
(i) “Pension Plan” shall mean each Business Employee Plan which is an “employee
pension benefit plan,” within the meaning of Section 3(2) of ERISA.
5.15.2 Part 5.15.2 of the Disclosure Schedule sets forth (i) a true and complete
list and description of each Business Employee Plan maintained or to which
contributions are made by the Seller or to which the Seller has any obligation
to contribute or to which Seller has any liability, (ii) identifies each
Business Employee Plan that is a Qualified Plan, (iii) identifies each Business
Employee Plan which at any time during the five-year period preceding the date
of this Agreement was a Defined Benefit Plan, and (iv) lists, describes and
identifies each other plan maintained, established, sponsored or contributed to
by an ERISA Affiliate, or any predecessor thereof, which, during the five-year
period preceding the date of this Agreement, was at any time a Defined Benefit
Plan. The Seller has furnished to the Buyer true, correct, and complete copies
of the plan documents and summary plan descriptions for each plan, the most
recent determination letter received from the IRS, the two most recent years
annual reports (Form 5500 with all applicable attachments) for each plan, and
all related trust agreements, insurance contracts and other funding arrangements
that implement each such Business Employee Plan. The Seller has no liability
with respect to the plans that have not been accrued on the Financial
Statements. The Buyer shall assume no liability with respect to any such
Business Employee Plan. Prior to the Closing Date, the Seller shall terminate
any and all such plans in accordance with all Legal Provisions, as such Legal
Provisions apply to Business Employees terminated prior to Closing. The Seller
shall indemnify defend and hold harmless the Buyer with respect to any liability
associated with any such Business Employee Plan.

 

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5.15.3 Each Business Employee Plan (and each related trust, insurance contract
or fund) has been maintained, funded and administered in accordance with its
terms, and complies in form and in operation with the applicable requirements of
ERISA, the Code and other applicable laws, rules and regulations. Each Business
Employee Plan intended to meet the requirements of a “qualified plan” under
Section 401(a) of the Code has received a favorable determination letter or
opinion letter from the IRS with respect to such Plan’s qualified status under
the Code, and nothing has occurred, whether by action or failure to act, that
could reasonably be expected to cause the loss of such qualification. All such
Business Employee Plans have been timely amended for all such requirements and
have been submitted to the IRS for a favorable determination letter within the
latest applicable remedial amendment period. No event has occurred and no
condition exists that would subject any Acquired Asset, the Seller, or the
Business or to any tax, fine, lien, penalty or other liability imposed by ERISA,
the Code or other applicable laws, rules and regulations. The Seller has not
incurred any current or projected liability or will incur as a result of the
consummation of the transaction contemplated herein in respect of a severance or
post-employment or post-retirement health, medical or life insurance benefits
for current, former or retired employees of the Business, except as required to
avoid an excise tax under Section 4980B of the Code or otherwise except as may
be required pursuant to any other applicable law.
5.15.4 All contributions (including all employer contributions and employee
salary reduction contributions) that are due with respect to any of the Business
Employee Plans have been made as required under ERISA and the Code, and all
contributions for any period ending on or before the Closing Date that are not
yet due have been made or accrued, in compliance with ERISA and the Code, and in
accordance with past custom and practice of Seller.
5.15.5 Neither Seller nor any ERISA Affiliate of Seller has ever maintained,
established, sponsored, participated in, or contributed to, or has or had any
liability to or any obligation to contribute to, any Pension Plan which is
subject to Title IV of ERISA or Section 412 of the Code. No asset of Seller is
subject to any Encumbrance under ERISA or the Code.
5.15.6 Neither Seller nor any ERISA Affiliate of a Seller has ever contributed
to or been required to contribute, or has any liability (including withdrawal
liability as defined in ERISA Section 4201) to any Multiemployer Plan.
5.15.7 No securities or real property owned by the Seller is included in the
assets of any Business Employee Plan.
5.15.8 There are no prohibited transactions with respect to any Business
Employee Plan. No fiduciary of any Business Employee Plan has any liability for
breach of fiduciary duty or any other failure to act or comply in connection
with the administration or the investment of assets of any Business Employee
Plan. No action, suit, proceeding, hearing, or investigation with respect to the
administration or the investment of the assets of any such Business Employee
Plan (other than routine claims for benefits) is pending or threatened. There is
no basis for any such action, suit, proceeding, hearing or investigation.

 

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5.15.9 All required reports and descriptions (including Form 5500 annual
reports, summary annual reports, and summary plan descriptions) have been timely
filed and/or distributed in accordance with the applicable requirements of ERISA
and the Code with respect to each Business Employee Plan. The requirements of
COBRA have been met with respect to each Business Employee Plan subject to
COBRA.
5.15.10 Part 5.15.10 of the Disclosure Schedule lists each agreement, contract,
plan, or other arrangement, whether or not written and whether or not a Business
Employee Plan, to which Seller is a party that is a “nonqualified deferred
compensation plan” subject to Code Section 409A. Each such plan described in the
preceding sentence complies with the requirements of Code Section 409A(a)(2,
(3) and (4) and any IRS guidance issued thereunder and no amounts under any such
plan is or has been, subject to the interest and additional Tax set forth under
Code Section 409A(a)(1)(B). Seller has no any actual or potential obligation to
reimburse or otherwise “gross-up” any Person for the interest and additional tax
set forth under Code Section 409A(a)(1)(b).
5.16 Employment Matters.
5.16.1 The Seller: (a) has been in compliance in all material respects with all
applicable Legal Provisions respecting employment, employment practices,
immigration, terms and conditions of employment and wages and hours, in each
case, with respect to Business Employees, including the requirements of ERISA,
the Code, the Age Discrimination in Employment Act, the Equal Pay Act and Title
VII of the Civil Rights Act of 1964; (b) has withheld all amounts required by
law or by agreement to be withheld from the wages, salaries and other payments
to Business Employees; (c) has properly classified independent contractors for
purposes of Tax Legal Provisions and Legal Provisions applicable to employee
benefits; (d) is not liable for any arrears of wages or any Taxes or any penalty
for failure to comply with any of the foregoing; and (e) is not liable for any
material payment to any trust or other fund or to any Governmental Entity with
respect to unemployment compensation benefits, social security or other benefits
or obligations for Business Employees (other than routine payments to be made in
the normal course of business and consistent with past practice). The Seller is,
with respect to the Business Employees, in compliance in all material respects
with the terms and provisions of the Immigration Reform and Control Act of 1986,
as amended, and all related regulations promulgated thereunder and each employee
providing services to the Business is either (i) a U.S. citizen or (ii) is in
compliance with all U.S. immigration laws and regulations and has fulfilled all
the necessary visa and other requirements to work legally in the United States.
Except as set forth on Part 5.16.1 of the Disclosure Schedule, there are no
employment contracts or severance agreement with any Business Employee, and all
Business Employees are terminable at will.

 

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5.16.2 Except as set forth on Part 5.16.2 of the Disclosure Schedule, during the
past five years there have been no strikes, slowdowns, work stoppages, disputes,
lockouts, or threats thereof, by or with respect to any employees of Seller and
there are no pending, or, to the Knowledge of Seller, threatened or anticipated
labor disputes, work stoppages, requests for representation, pickets, work
slow-downs due to labor disagreements or any actions or arbitrations which
involve the labor or employment relations of Seller or the Business. The Seller
has no Knowledge of any activities or proceedings of any labor union to organize
any Business Employees. There are no actions, suits, claims, labor disputes,
grievances or other Legal Proceeding pending or, to the Knowledge of the Seller,
threatened relating to any labor, safety or discrimination matters involving any
Business Employee, including charges of unfair labor practices or discrimination
complaints. Except as set forth on Part 5.16.2 of the Disclosure Schedule, there
is no workman’s compensation liability or similar matter outstanding outside the
Ordinary Course of Business. Except as set forth on Part 5.16.2 of the
Disclosure Schedule, there is no employment-related charge, complaint,
grievance, investigation, inquiry, or obligation of any kind, pending or
threatened in any forum, related to an alleged violation or breach by Seller of
any Legal Provision or Contract. With respect to the Business, the Seller has
not engaged in any unfair labor practices within the meaning of the National
Labor Relations Act. With respect to the Business, the Seller has not been a
party to, or bound by, any collective bargaining agreement or union contract
with respect to Business Employees.
5.16.3 Except as set forth on Part 5.16.3 of the Disclosure Schedule, Seller has
provided notice to the Business Employees as required under the Worker
Adjustment Retraining Notification Act.
5.17 Environmental Matters.
5.17.1 For all purposes of this Agreement, the following terms shall have the
following meanings:
(a) “CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, and the rules and regulations promulgated
thereunder.
(b) “CERCLIS” means the Comprehensive Environmental Response and Liability
Information System promulgated pursuant to CERCLA.
(c) “Environmental Claims” means any and all administrative, regulatory or
judicial actions, suits, Orders, demands, directives, claims, investigations,
proceedings or written notices of noncompliance or violation by or from any
Person alleging liability of any kind or nature (including liability or
responsibility for the costs of enforcement proceedings, investigations,
cleanup, governmental response, removal or remediation, natural resource
damages, property damages, personal injuries, medical monitoring, penalties,
contribution, indemnification and injunctive relief) arising out of, based on or
resulting from (a) the presence or Release of, or exposure to, any Hazardous
Material at any location, or (b) the failure to comply with any Environmental
Law. The term “Environmental Claim” shall include, without limitation, any claim
by any Governmental Entity for enforcement, clean up, removal, response,
remedial or other actions or damages pursuant to any applicable Environmental
Law, and any claim by a third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
the presence of Hazardous Materials or arising from alleged injury or threat of
injury to health, safety or the environment

 

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(d) “Environmental Law” means any Legal Provision or Order issued, promulgated
or entered into by or with any Governmental Entity relating to the regulation or
protection of human health, safety or the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes into the
environment (including, without limitation, ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes.
(e) “Hazardous Materials” means any petroleum or petroleum products, radioactive
materials or wastes, asbestos in any form, polychlorinated biphenyls and any
other hazardous chemical, material, substance or waste that is prohibited,
limited or regulated under any Environmental Law.
(f) “NPL” means the National Priorities List under CERCLA.
(g) “Release” means any actual release, spill, emission, leaking, dumping,
injection, pouring, deposit, disposal, discharge, dispersal, leaching or
migration into or through the environment or within any building, structure,
facility or fixture.
5.17.2 Seller has obtained all Permits which are required under applicable
Environmental Law in connection with the conduct of the Business or the Acquired
Assets. Each of such Permits is in full force and effect. Seller has conducted
the Business in compliance in all material respects with the terms and
conditions of all such Permits and with all applicable Environmental Law.
5.17.3 Except as set forth on Part 5.17.3 of the Disclosure Schedule, there are
no Hazardous Materials at, below or above the Properties or any Properties
formerly owned, leased, operated or used in connection with the Business, and no
Order has been issued, no Environmental Claim has been filed, no penalty has
been assessed and no investigation or review is pending or threatened by any
Governmental Entity with respect to any alleged failure by Seller to have any
Permit required under applicable Environmental Laws in connection with the
conduct of the Business or with respect to any generation, treatment, storage,
recycling, transportation, discharge, disposal or Release of any Hazardous
Material in connection with the Business and there are no facts or circumstances
in existence which could reasonably be expected to form the basis for any such
Order, Environmental Claim, penalty or investigation. There are no underground
or above ground storage tanks located on the Properties. There are no pending
or, to the Knowledge of Seller, threatened suits, actions or proceedings arising
under or pursuant to any Environmental Laws with respect to or affecting the
Business, the Properties, or any Properties formerly owned, leased, operated, or
used in connection with the Business.

 

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5.17.4 Except as disclosed on Part 5.17.4 of the Disclosure Schedule, the Seller
does not own, operate or lease a treatment storage or disposal facility on any
of the real property used in connection with the conduct of the Business that
requires a Permit under any Environmental Law; and, without limiting the
foregoing, (i) no polychlorinated biphenyl is or has been present, (ii) no
asbestos or asbestos-containing material is or has been present, (iii) there are
no underground storage tanks or surface impoundments for Hazardous Materials,
active or abandoned, and (iv) no Hazardous Material has been Released in a
quantity reportable under, or in violation of, any Environmental Law or
otherwise Released, in the cases of clauses (i) through (iv), at, on or under
any such site or facility during any period that Seller owned, operated, or
leased such property.
5.17.5 The Seller has not transported or arranged for the transportation of any
Hazardous Material in connection with the operation of the Business to any
location that is (i) listed on the NPL under CERCLA, (ii) listed for possible
inclusion on the NPL by the Environmental Protection Agency in CERCLIS or on any
similar state or local list or (iii) the subject of enforcement actions by
federal, state or local Governmental Authorities that may lead to Environmental
Claims against Seller.
5.17.6 No Hazardous Material generated in connection with the operation of the
Business has been recycled, treated, stored, disposed of or Released by Seller
at any location.
5.17.7 No oral or written notification of a Release of a Hazardous Material in
connection with the operation of the Business has been filed by or on behalf of
Seller and no site or facility now or previously owned, operated or leased by
Seller on any of the real property is listed or proposed for listing on the NPL,
CERCLIS or any similar state or local list of sites requiring investigation or
clean-up.
5.17.8 No Encumbrances have arisen under or pursuant to any Environmental Law on
any site or facility owned, operated or leased by Seller on any of the real
property used in the conduct of the Business, and no federal, state or local
Government Entity action has been taken or is in process that could subject any
such site or facility to such Encumbrance, and Seller would be required to place
any notice or restriction relating to the presence of Hazardous Materials at any
such site or facility in any deed to the real property on which such site or
facility is located.
5.17.9 There have been no environmental investigations, studies, audits, tests,
reviews or other analyses conducted by or that are in the possession of Seller
in relation to any site or facility now or previously owned, operated or leased
by Seller and used in the conduct of the Business which have not been delivered
to Buyer prior to the execution of this Agreement.
5.18 Vitarich Contracts.
5.18.1 Part 5.18.1 of the Disclosure Schedule sets forth each of the following
Contracts in excess of $50,000 (i) which applies to the Business or to the
Acquired Assets, (ii) to which the Seller is a party, or by which the Seller is
bound, or to which Seller’s respective properties or assets related to the
Business are subject, and (iii) for which Seller or the other party to such
Contract has current or future rights or obligations (collectively, the
“Vitarich Contracts”):
(a) each Contract made outside the Ordinary Course of Business or inconsistent
with past practice;

 

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(b) each employment, severance or similar agreement with any Business Employee
or consultant (including all standard offer letters, employee confidentiality,
non-disclosure, non-compete, non-solicitation and/or invention assignment
agreements and similar agreements);
(c) each partnership, joint venture, shareholders’ or other similar Contract
with any Person;
(d) each Contract relating to Indebtedness;
(e) each Contract with distributors, dealers, manufacturer’s representatives,
sales agencies or franchisees;
(f) each Contract relating to (A) the future disposition or acquisition of any
assets or properties, other than dispositions or acquisitions in the Ordinary
Course of Business, and (B) any business combination;
(g) all Contracts between or among Seller, on the one hand, any officer,
director, or Affiliate of Seller on the other hand;
(h) each Contract pursuant to which a Seller has agreed not to compete with any
Person or not to solicit any Person or to engage in any activity or business, or
pursuant to which any benefit is required to be given or lost as a result of so
competing or engaging; and each Contract (including consulting and services
agreements) which provides for “exclusivity” or any similar requirement in favor
of any Person other than the Seller, or under which Seller is restricted in any
respect in the distribution, licensing, marketing, purchasing, development or
manufacturing of their respective products or services in the United States or
any foreign jurisdiction;
(i) each Contract that requires consent, approval or waiver of, or notice to, a
Governmental Entity or other third party in the event of or with respect to a
transaction such as the transactions contemplated by this Agreement or any
Transaction Document, including in order to avoid termination of or loss of a
benefit under any such Contract;
(j) each Contract containing any provisions (i) prohibiting or providing for
termination upon a “change of control” or similar event with respect to Seller,
the definition of which would cover the transactions contemplated by this
Agreement, or (ii) having the effect of providing that the consummation of any
of the transactions contemplated by this Agreement or compliance by Seller with
the provisions of this Agreement (alone or in combination with any other event
specified therein) will in any material respect conflict with, result in a
violation or breach of, or constitute a default under (with or without notice or
lapse of time, or both), such Contract or give rise under such Contract to any
right of, or result in, a termination, right of first refusal, amendment,
revocation, cancellation or acceleration, or loss of a benefit, or the creation
of any Encumbrance in or upon any Acquired Asset;

 

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(k) each IP License Contract; and each Contract providing for payments of
royalties, franchise fees, commissions, other license fees or other
transactional fees to third parties; and
(l) all other Contracts that (i) involve the payment or potential payment,
pursuant to the terms of any such Contract, by or to Seller or the Business of
more than $50,000 annually, (ii) during the life of the Contract, involve the
payment or potential payment, pursuant to the terms of any such Contract, by or
to Seller or the Business of more than $50,000 in the aggregate, and
(iii) cannot be terminated within 60 calendar days after giving notice of
termination without resulting in any material cost or penalty.
5.18.2 Each Vitarich Contract is in full force and effect and is a valid and
binding agreement of the Seller and of each other party thereto, enforceable
against Seller and against the other party or parties thereto, in each case, in
accordance with its terms. Seller has performed all obligations required to be
performed by it under each Vitarich Contract to which it is a party and is not
(with or without notice or lapse of time or both) in breach or default
thereunder, and, to the knowledge of the Seller, no other party to any Vitarich
Contract is (with or without notice or lapse of time, or both) in breach or
default thereunder. Seller has made available to the Buyer complete and correct
copies of all Seller Contracts.
5.19 Inventory. Part 5.19 of the Disclosure Schedule sets forth a breakdown of
all Inventory of the Business, based on the Business’s established
cycle-counting processes as of the date which is within three Business Days
immediately prior to the date hereof. All items included in the Inventory of the
Business are the property of Seller, free and clear of any Encumbrance other
than Permitted Encumbrances, have not been pledged as collateral, and are not
held by Seller on consignment from others.
5.20 Accounts Receivable; Accounts Payable.
5.20.1 All Acquired A/R represent (i) bona fide claims against debtors for sales
and other charges and are not subject to discount except for trade discounts
made in the Ordinary Course of Business and for the reserves for doubtful
accounts and allowances set forth in the Closing Statement and (ii) valid and
binding obligations due to Seller, enforceable in accordance with their terms.
The Seller has not received written notice of any asserted or threatened setoff,
counterclaim or other defense in respect of the Acquired A/R. The amount carried
for doubtful accounts and allowances disclosed in the Closing Statement was
calculated in a manner consistent with prior accounting periods.
5.20.2 All Assumed A/P represent bona fide claims by creditors against the
Business for sales and other charges incurred in the Ordinary Course of
Business. Since December 31, 2010, with respect to the Business, the Seller has
not altered its ordinary practices, including by delaying payment, with respect
to accounts payable, and accounts payable have been paid in the ordinary course.
None of the Assumed A/P are the result of an Affiliate Transaction.

 

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5.21 Insurance. Part 5.21 of the Disclosure Schedule contains a true and
complete list (including names and addresses of the insurers, the names of the
Persons to whom such policies have been issued, the expiration dates thereof,
the annual premiums and payment terms thereof and a brief description of the
interests insured thereby) of all liability, property, workers’ compensation,
directors’ and officers’ liability and other insurance policies in effect as of
the date hereof that insure any Acquired Assets, the Seller (including its
assets and properties), the Business or any Product. Seller or Argan, on
Seller’s behalf, has continuously maintained insurance coverage on an
“occurrence” basis for the Acquired Assets, the Business and Products, including
all of their operations, personnel and assets for the Business. The insurance
policies listed on Part 5.21 of the Disclosure Schedule will not terminate or
lapse by reason of the transactions contemplated by this Agreement. Each policy
listed on Part 5.21 of the Disclosure Schedule is valid and binding and in full
force and effect, no premiums due thereunder have not been paid and the Seller
(i) is not in default or breach with respect to any provision contained in any
such insurance policies, nor has it failed to give any notice or to present any
claim thereunder in due and timely fashion or (ii) has received any notice of
cancellation or termination in respect of any such policy or that the insurer
under any such policy is denying liability with respect to a claim thereunder or
defending under a reservation of rights clause. There are no pending insurance
claims relating to the Business. The insurance policies listed on Part 5.21 of
the Disclosure Schedule are placed with financially sound and reputable
insurers, and, in the light of the Acquired Assets, the Seller, the Business and
the Products, are in amounts and have coverages that are reasonable and
customary for Persons engaged in such businesses and operations and having such
assets and properties.
5.22 No Broker’s and Finder’s Fees. Except as disclosed in Part 5.22 of the
Disclosure Schedule, no broker, investment banker, financial advisor or other
Person is entitled to any broker’s, finder’s, financial advisor’s or other
similar fee or commission, or the reimbursement of expenses, in connection with
the transactions contemplated by this Agreement based upon arrangements made by,
on behalf of, or in connection with, the Seller.
5.23 Customers & Suppliers.
(a) Part 5.23(a) of the Disclosure Schedule sets forth a true and complete list
of (a) the names and addresses of the twenty (20) largest customers that ordered
Products from the Seller during the twelve-month period ended January 31, 2011
and (b) the amount of purchases by each such customer during such period. Except
as set forth on Part 5.23(a) of the Disclosure Schedule, Seller has not received
any notice that any customer listed on Part 5.23(a) of the Disclosure Schedule
(i) has ceased, or will cease, to purchase the Products, (ii) has materially
reduced or will materially reduce, its purchase of the Products, or (iii) has
sought to reduce the price it will pay for the Products.

 

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(b) Part 5.23(b) of the Disclosure Schedule sets forth a true and complete list
of (a) the names and addresses of the twenty (20) largest suppliers (including
any Affiliates) from which Seller ordered raw materials, supplies or other
Products or services in connection with the Business during the twelve-month
period ended January 31, 2011 and (b) the amount of purchases from each such
supplier during such period. Except as set forth on Part 5.23(b) of the
Disclosure Schedule, Seller has not received any notice that (i) there has been
any material adverse change in the price of such raw materials, supplies or
other products or services or (ii) any such supplier will not sell raw
materials, supplies and other products and services to the Business at any time
after the Closing Date on terms and conditions similar to those used in its
current sales to the Seller.
5.24 Vehicles, Equipment & Machinery. The Vehicles, equipment and machinery
listed on Part 5.24 of the Disclosure Schedule accurately describes the
Vehicles, machinery, equipment, furniture, furnishings, fixtures, tools, and
other tangible personal property used by Seller in connection with Seller’s
conduct of the Business. All Vehicles, equipment and machinery listed on
Part 5.24 of the Disclosure Schedule are to be acquired by the Buyer at the
Closing.
5.25 Products. Part 5.25 of the Disclosure Schedule lists all of the Products
sold by the Seller in the Ordinary Course of Business in connection with the
Business.
5.26 Product Liability. There are no pending or threatened actions, causes of
action, claims, suits, proceedings, or injunctions which involve a claim
relating to a harm allegedly caused by the ownership, possession, advertising or
use of any Product manufactured, sold, leased, or delivered by the Seller in
connection with the conduct of the Business, including without limitation, the
Products. Seller has not received written notice of any such actual or
threatened claim relating to a harm allegedly caused by any such Products by any
attorney for any Person against Seller.
5.27 No Guarantees. All obligations of the Business that are guaranteed by
Seller or Argan are set forth on Part 5.27 of the Disclosure Schedule. None of
the liabilities of the Business or of the Seller incurred in connection with the
conduct of the Business is guaranteed by or subject to a similar contingent
obligation of any other Person, nor has Seller guaranteed or become subject to a
similar contingent obligation in respect of the liabilities of any customer,
supplier, or other Person to whom the Seller sells goods or provides services in
the conduct of the Business or with whom Seller otherwise have significant
business relationships in the conduct of the Business.
5.28 Books and Records. Each of the Books and Records (or copies thereof) and
instruments furnished by the Seller to the Buyer prior to the Closing Date or
concurrently therewith (whether under separate delivery or by way of attached to
any Schedule hereto), are genuine and authentic originals or true and correct
duplicate copies of such items.
5.29 Affiliate Transactions. Except as set forth on Part 5.29 of the Disclosure
Schedule, no officer, director, Affiliate of Seller nor any relative,
beneficiary, spouse or Affiliate of the foregoing provides or causes to be
provided any assets, guarantees, services or facilities used or held for use in
connection with the Business, and the Business does not provide or cause to be
provided any assets, guarantees, services or facilities to any of the foregoing
(each, an “Affiliate Transaction”).

 

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5.30 Advertising Materials. Seller has delivered to Buyer true and correct
copies of all marketing materials, Product literature, printed advertising and
promotional materials, training materials and advertising materials used since
January 1, 2008 in connection with the Products.
5.31 No Management Reports. Since January 1, 2006, there have been no written
management reports to the board of directors of Seller.
5.32 Disclosure. All material facts relating to the condition of the Business
and Acquired Assets have been disclosed to Buyer in or in connection with this
Agreement. No representation or warranty contained in this Agreement, and no
statement contained in the Disclosure Schedule or in any certificate, list or
other writing furnished to Buyer pursuant to any provision of this Agreement,
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements herein or therein, in the light
of the circumstances under which they were made, not misleading.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as set forth in this ARTICLE 6.
6.1 Organization. The Buyer (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has the
legal power and authority to own, lease and operate its assets and property and
to carry on its business as now being conducted, and (c) is duly qualified or
licensed to do business in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its activities makes
such qualification or licensing necessary.
6.2 Authority; Enforceability. The Buyer has the requisite corporate power and
authority and legal capacity to execute and deliver this Agreement and each
Transaction Document contemplated hereunder to be executed and delivered by the
Buyer on or before the Closing Date, and to consummate the transactions
contemplated hereby and to comply with the provisions hereof and thereof. The
execution, delivery and performance by the Buyer of this Agreement and the
Transaction Documents contemplated hereunder to be executed and delivered by the
Buyer on or before the Closing Date, the consummation by the Buyer of the
transactions contemplated hereby and thereby, and the compliance by the Buyer
with the provisions hereof and thereof, have been duly authorized by all
necessary corporate action on the part of the Buyer, and no other corporate
action on the part of the Buyer are necessary to authorize this Agreement and
such Transaction Documents or to consummate the transactions contemplated hereby
and thereby. This Agreement has been, and each Transaction Document contemplated
hereunder to be executed and delivered by the Buyer on or before the Closing
Date will have been, duly executed and delivered by Seller and, assuming the due
authorization, execution and delivery by the Buyer, constitutes or will
constitute upon such execution and delivery a valid and binding obligation of
the Buyer enforceable against the Buyer in accordance with its terms.

 

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6.3 Non-Contravention; Consents. The execution and delivery of this Agreement
and the Transaction Documents contemplated hereunder to be executed and
delivered by the Buyer on or before the Closing Date, the consummation of the
transactions contemplated hereby and thereby (alone or in combination with any
other event), and the compliance by the Buyer with the provisions hereof and
thereof, do not and will not conflict with, or result in any violation or breach
of, or default under, or give rise to a right of, or result in, termination,
cancellation or acceleration of any obligation or to a loss of a benefit under,
or result in the creation of any Encumbrance in or upon any of the properties or
assets of the Buyer under, or give rise to any increased, additional,
accelerated or guaranteed rights or entitlements under, any provision of (a) the
Buyer’s certificate of incorporation, bylaws, operating agreement or other
organizational documents, (b) any Contract to which Buyer is a party or by which
it or any of its properties or assets may be bound or affected, or (c) subject
to the governmental filings and other matters referred to in the immediately
succeeding sentence, any Legal Provision or Order applicable to the Buyer or
Seller or any of their respective properties or assets. No consent, approval,
Order or authorization of, or registration, declaration or filing with, any
Governmental Entity, is required by or with respect to the Buyer in connection
with the execution and delivery of this Agreement or the Transaction Documents,
the consummation of the transactions contemplated hereby or thereby (alone or in
combination with any other event), or the compliance with the provisions hereof
or thereof.
6.4 Legal Proceedings. There is no Legal Proceeding pending against the Buyer,
or, to the knowledge of the Buyer, threatened in writing against the Buyer, that
questions or challenges (a) the validity of this Agreement or any Transaction
Document or (b) any action taken or to be taken by the Buyer pursuant to this
Agreement or any Transaction Document or in connection with the transactions
contemplated hereby.
6.5 No Broker’s and Finder’s Fees. No broker, investment banker, financial
advisor or other Person is entitled to any broker’s, finder’s, financial
advisor’s or other similar fee or commission, or the reimbursement of expenses,
in connection with the transactions contemplated by this Agreement based upon
arrangements made by, on behalf of, or in connection with, the Buyer.
ARTICLE 7
TAX MATTERS
7.1 Straddle Period Taxes. For the purposes of this Agreement, “Straddle Period
Taxes” means any Taxes levied with respect to the assets of the Business
attributable to a taxable period relating to such Taxes that begins before and
ends after the Closing Date (a “Straddle Period”). For the purposes of this
Agreement, a “Pre-Closing Tax Period” means the portion of a Straddle Period
ending on or before the Closing Date, and a “Post-Closing Tax Period” means the
portion of a Straddle Period beginning after the Closing Date. The portion of
any Straddle Period Taxes allocable to a Pre-Closing Tax Period shall be deemed
equal to the amount of such Taxes for the entire Straddle Period multiplied by a
fraction the numerator of which is the number of calendar days in the
Pre-Closing Tax Period and the denominator of which is the number of calendar
days in the Straddle Period. Any remaining Straddle Period Taxes for such
Straddle Period shall be allocable to the Post-Closing Tax Period.

 

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7.2 Preparation of Straddle Period Tax Returns.
7.2.1 Seller shall prepare and timely file or shall cause to be prepared and
timely filed all Straddle Period Tax Returns required to be filed pursuant to
any Legal Provision (and only to the extent so required) that are due on or
before the Closing Date, if any. Seller shall make or cause to be made all Tax
payments required with respect to any such Tax Returns. The Buyer shall promptly
reimburse Seller for the amount of any such Taxes paid by Seller or any
Affiliate thereof to the extent such Straddle Period Taxes are allocable to a
Post-Closing Tax Period of the Business (as determined under Section 7.1).
7.2.2 The Buyer shall prepare and timely file or shall cause to be prepared and
timely filed all Straddle Period Tax Returns required to be filed pursuant to
any Legal Provision (and only to the extent so required) that are due after the
Closing Date, if any. The Buyer shall make all Tax payments required with
respect to any such Tax Returns. Seller or an Affiliate thereof shall promptly
reimburse the Buyer for the amount of any such Taxes paid by the Buyer to the
extent such Straddle Period Taxes are allocable to a Pre-Closing Tax Period (as
determined under Section 7.1).
7.3 Tax Obligations Generally.
7.3.1 Seller shall prepare and timely file or shall cause to be prepared and
timely filed all Tax Returns that relate solely to periods ending on or before
the Closing Date. Seller shall make or cause to be made all Tax payments
required with respect to any such Tax Returns.
7.3.2 The Buyer shall prepare and timely file or shall cause to be prepared and
timely filed all Tax Returns that relate solely to periods commencing after the
Closing Date. The Buyer shall make all Tax payments required with respect to any
such Tax Returns.
7.4 Cooperation. The Buyer and Seller shall reasonably cooperate, and shall
cause their respective Affiliates, officers, employees, agents, auditors and
other representatives to reasonably cooperate, in preparing and filing all Tax
Returns and in resolving all disputes and audits with respect to all taxable
periods relating to Taxes, including by retaining, maintaining and making
available to each other all records reasonably necessary in connection with
Taxes and making employees reasonably available on a mutually convenient basis
to provide additional information or explanation or to testify at proceedings
relating to Taxes.
7.5 Tax Indemnity. Seller shall be obligated to indemnify, defend and hold
harmless Buyer from and against the entirety of any Damages Buyer may suffer
resulting from, arising out of, relating to, in the nature of, or caused by any
liability of Seller for unpaid Taxes with respect to any Tax year or portion
thereof ending on or before the Closing Date (or any Tax year beginning before
and ending after the Closing Date to the extent allocable to the portion of such
period beginning before and ending on the Closing Date).

 

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ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Further Assurances; Post-Closing Cooperation
8.1.1 From time to time after the Closing, each party shall, at the request of
the other parties and without additional consideration, execute and deliver any
further instruments or documents and take any such further action as such
parties may reasonably request in order to consummate the transactions
contemplated by this Agreement and the Transaction Documents, including
executing, acknowledging and delivering, or cause to be done, executed,
acknowledged or delivered, all such further acts, deeds, assignments,
assumptions, transfers, conveyances, powers of attorney or assurances as may be
reasonably required for (a) the transferring, assigning, conveying, granting,
assuring and confirming to the Buyer, or for aiding and assisting in the
collection of or reducing to possession by the Buyer, any of the Acquired Assets
or to vest in the Buyer all of the Seller’s right, title and interest in and to
the Acquired Assets, or (b) assignment by the Seller, and assumption by the
Buyer, of the Assumed Contracts, Assumed Orders and Assumed Liabilities.
8.1.2 Following the Closing, each party will provide the other party, its
counsel and its accountants, with hard copies or, at the Buyer’s option,
electronic copies of Books and Records relating to the Business in its
possession with respect to periods prior to the Closing to the extent that such
Books and Records and other data may be reasonably required by the requesting
party in connection with (i) the preparation of Tax Returns, (ii) the
determination or enforcement of rights and obligations under this Agreement,
(iii) compliance with the requirements of, or pursuant to any investigation by,
any Governmental Entity, stock exchange, or other entity having jurisdiction
over the requesting party, (iv) the determination or enforcement of the rights
and obligations of any Indemnified Person, (v) in connection with any actual or
threatened Legal Proceeding, or (vi) an audit by any Tax Authority or in
connection with any audit of financial statements or other financial
information. Further each party agrees for a period extending six (6) years
after the Closing Date not to destroy or otherwise dispose of any such Books and
Records. The requesting party shall bear all reasonable costs and expenses
relating to retrieving and copying any such Books and Records. The providing
party shall deliver such Books and Records to the requesting party within a
reasonable period of time and will not unreasonably withhold or delay the
provision of such Books and Records to the requesting party.
8.2 Public Announcements. Except as required by applicable Legal Provision or
the rules and regulations of the Securities and Exchange Commission, as
applicable, the Seller, on the one hand, and the Buyer on the other hand, will
not make and will cause their respective Affiliates to not make, any public
announcements or disclosures of any kind whatsoever regarding this Agreement or
the transactions contemplated hereby unless they have first obtained the consent
of (a) Seller, in the case of announcement by the Buyer, and (b) the Buyer in
the case of announcement by Seller, which consent shall not be unreasonably
withheld. If a party believes that a disclosure is required by Legal Provision
or by a rule or regulation as set out above, such party shall use reasonable
efforts to consult with (i) Seller, in the case of the Buyer, and (ii) the
Buyer, in the case of Seller, and obtain consent for a mutually worded
disclosure, such consent not to be unreasonably withheld, conditioned or
delayed. Seller and Buyer will also obtain the other party’s prior approval of
any press release to be issued immediately following the Closing announcing the
consummation of the transactions contemplated by this Agreement.

 

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8.3 Confidentiality. Each party hereto will hold, and will use its best efforts
to cause its Affiliates, and their respective Affiliates to hold, in strict
confidence from any Person (other than any such Affiliate or representative),
unless (i) compelled to disclose by judicial or administrative process
(including without limitation in connection with obtaining the necessary
approvals of this Agreement and the transactions contemplated hereby of
Governmental or Regulatory Authorities) or by other requirements of any
applicable Legal Provision or (ii) disclosed in a Legal Proceeding brought by a
party hereto in pursuit of its rights or in the exercise of its remedies
hereunder, all documents and information concerning the other party or any of
its Affiliates furnished to it by the other party or such other party’s
representatives in connection with this Agreement or the transactions
contemplated hereby, except to the extent that such documents or information can
be shown to have been (a) previously known by the party receiving such documents
or information, (b) in the public domain (either prior to or after the
furnishing of such documents or information hereunder) through no fault of such
receiving party or (c) later acquired by the receiving party from another source
if the receiving party is not aware that such source is under an obligation to
another party hereto to keep such documents and information confidential;
provided that following the Closing the foregoing restrictions will not apply to
Buyer’s use of documents and information concerning the Business, the Acquired
Assets or the Assumed Liabilities furnished by Seller hereunder. In the event
the transactions contemplated hereby are consummated, upon the request of Buyer,
Seller will, and will cause its Affiliates and their respective representatives
to, promptly deliver or cause to be delivered all copies of documents and
information with respect to Seller, the Acquired Assets or the Business and
destroy or cause to be destroyed all notes, memoranda, summaries, analyses,
compilations and other writings related thereto or based thereon.
8.4 Product Returns.
8.4.1 From and after the Closing Date, Seller shall reimburse the Buyer
periodically for any and all charges incurred by the Buyer during the period
ending one (1) year from the Closing Date in connection with returns of Products
sold prior to the Closing Date that occur after the Closing Date. Buyer shall
invoice Seller on a monthly basis for all such charges incurred by Buyer. Each
invoice shall be submitted along with a copy of the applicable remittance
summary and customer debit note, if any. Seller shall pay to Buyer all of such
invoices within thirty (30) days of receipt. In the event Seller fails to make
any such payment, Buyer may deduct amounts equal to the amount set forth in the
respective invoice from the Holdback Amount.
ARTICLE 9
INDEMNIFICATION
9.1 Survival. All representations and warranties made by a party in this
Agreement, any other Transaction Documents, or in any Schedule, certificate or
agreement executed and delivered by such Party pursuant to this Agreement or any
Transaction Document shall survive the Closing, and continue in full force and
effect until the first anniversary of the Closing Date, except that the
representations and warranties contained in Section 5.8 (Tax Matters),
Section 5.9 (Title), Section 5.15 (Employee Plans) and Section 5.17
(Environmental Matters) shall continue indefinitely (subject to any application
statutes of limitations). Each of the agreements and covenants of the parties to
this Agreement that are intended to survive the Closing, shall survive the
Closing and continue in full force and effect until fully performed.

 

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9.2 Indemnification by the Buyer.
9.2.1 Subject to the provisions of this ARTICLE 9, from and after the Closing,
the Buyer hereby agrees to indemnify, defend and hold harmless Seller and each
of its members, managers, officers, employees, Affiliates, agents, successors,
and permitted transferors and assignees (collectively, the “Seller Indemnified
Persons”) from and against and in respect of any and all claims, Losses,
damages, costs, expenses, obligations, liabilities, charges, actions, suits,
proceedings, deficiencies, interest, penalties and fines (including costs of
collection, attorney’s fees and other costs of defense, costs of enforcing
indemnification provisions, and expenses of investigation) in each case to the
extent resulting in out-of-pocket costs (collectively, “Damages”) imposed on,
sustained, incurred or suffered by or asserted against them, directly or
indirectly, but only in respect of the following and without duplication:
(a) any inaccuracy in any of the Buyer’s representations and warranties when
made or deemed made in this Agreement, any other Transaction Documents, or in
any Schedule, Exhibit, certificate, agreement, instrument or document delivered
by the Buyer pursuant to or in connection with this Agreement or any Transaction
Document;
(b) the Buyer’s failure to perform or otherwise fulfill any of its agreements,
covenants, obligations or undertakings under this Agreement or under any other
Transaction Document;
(c) the Assumed Liabilities; and
(d) the Buyer’s or its Affiliate’s ownership, operation or use of the Acquired
Assets or the conduct of the Business by the Buyer and its Affiliates after the
Closing Date.
9.2.2 With respect to any Seller Indemnified Person, the Buyer acknowledges and
agrees that Seller is contracting on its own behalf and for such Seller
Indemnified Persons and Seller shall have the right to obtain and hold the
rights and benefits provided for in this Section ý9.2 and on behalf of such
Seller Indemnified Persons.
9.3 Indemnification by Seller.
9.3.1 Subject to the provisions of this ARTICLE 9, from and after the Closing,
the Seller hereby agrees to indemnify, defend and hold harmless the Buyer and
each of its Affiliates and each of their respective directors, officers,
employees, agents, advisors, representatives managers, stockholders, members,
successors, and permitted transferors and assignees (collectively, the “Buyer
Indemnified Persons”), from and against and in respect of any and all Damages
imposed on, sustained, incurred or suffered by or asserted against them,
directly or indirectly, but only in respect of the following and without
duplication (in each case resulting in Damages):
(a) any inaccuracy in Seller’s representations and warranties when made or
deemed made in this Agreement, any other Transaction Documents, or in any
Schedule, Exhibit, certificate, agreement, instrument or document delivered by
Seller pursuant to or in connection with this Agreement or any Transaction
Document;

 

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(b) the Seller’s breach or failure to perform or otherwise fulfill any of their
agreements, covenants, obligations or undertakings under this Agreement or under
any other Transaction Document;
(c) any Excluded Assets or Excluded Liabilities, including without limitation,
the Legal Proceeding set forth on Part 5.14 of the Disclosure Schedule;
(d) the Seller’s ownership, operation or use of the Acquired Assets or the
conduct of the Business by the Seller on or before the Closing Date; and
(e) the Seller’s failure to deliver any of the Required Consents set forth on
Part 5.3 of the Disclosure Schedule on or before the Closing Date.
9.3.2 With respect to any Buyer Indemnified Person, Seller acknowledges and
agrees that the Buyer is contracting on its own behalf and for such Buyer
Indemnified Persons and the Buyer shall have the right to obtain and hold the
rights and benefits provided for in this Section 9.3 for and on behalf of such
Buyer Indemnified Persons.
9.4 Claims for Indemnification.
9.4.1 If any claim for indemnification hereunder arises, the Person seeking
indemnification (the “Indemnified Person”), shall promptly notify in writing the
party from whom indemnification is sought (the “Indemnifying Person”) of the
claim (“Claim Notice”) and, when known, the facts constituting the basis for
such claim and the amount or an estimate of the amount of the liability arising
therefrom. The failure of the Indemnified Person to give the Indemnifying Person
prompt notice as provided herein shall not relieve the Indemnifying Person of
any of its obligations under this ARTICLE 9, except to the extent that the
Indemnifying Person is irreparably prejudiced by such failure.
9.4.2 If the Claim Notice does not involve a third party claim, and if the
Indemnifying Person objects in writing within 20 Business Days of its receipt of
the Claim Notice to any indemnity in respect of any such Claim Notice, then the
Indemnifying Person and the Indemnified Person delivering such Claim Notice
shall attempt in good faith to agree upon the rights of the respective parties
with respect to each claim. If the Indemnifying Person and the Indemnified
Person so agree, the Indemnifying Person shall promptly make the agreed-upon
payment. If no such agreement can be reached after good faith negotiation, then
such dispute shall be resolved in accordance with the terms of Section 9.5.

 

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9.5 Third Party Claims Procedures. If a claim or demand in respect of which an
Indemnified Person might seek indemnity is asserted against or sought to be
collected from such Indemnified Person by a Person other than Seller or any
Affiliate of Seller, Buyer or any Affiliate of Buyer (a “Third Party Claim”),
such Indemnified Person shall promptly (and in any event within two Business
Days) notify the Indemnifying Person in writing of such claim or demand setting
forth such claims in reasonable detail. The failure of the Indemnified Person to
give the Indemnifying Person prompt notice as provided herein shall not relieve
the Indemnifying Person of any of its obligations under this ARTICLE 9, except
to the extent that the Indemnifying Person is irreparably prejudiced by such
failure. The Indemnifying Person shall have 30 days after receipt of such notice
to undertake, conduct and control, through counsel of its own choosing (but
reasonably satisfactory to the Indemnified Person) and at its own expense, the
settlement or defense thereof, and the Indemnified Person shall cooperate with
the Indemnifying Person in connection therewith; provided, however, that the
Indemnified Person may participate in such settlement or defense through counsel
chosen by such Indemnified Person and the fees and expenses of such counsel
shall be borne by such Indemnified Person unless (i) the employment thereof has
been specifically authorized by the Indemnifying Person in writing, or (ii) the
Indemnifying Person has after a reasonable time failed to employ counsel and to
assume or to diligently continue to maintain such defense, in each of which
events the Indemnified Person may retain counsel which shall be reasonably
satisfactory to the Indemnifying Person, and the Indemnifying Person shall pay
the reasonable fees and expenses of such counsel for the Indemnified Person (but
in no event shall the Indemnifying Person be obligated to pay the fees and
expenses of more than one firm for all Indemnified Parties). So long as the
Indemnifying Person is reasonably contesting any such claim in good faith, the
Indemnified Person shall not pay or settle any such claim without the prior
written consent of the Indemnifying Person. If the Indemnifying Person does not
notify the Indemnified Person within 30 days after the receipt of the
Indemnified Person’s notice of a claim of indemnity hereunder that it elects to
undertake the defense thereof (or does not fulfill its commitment to undertake
such defense), the Indemnified Person shall have the right to contest, settle or
compromise the claim but shall not thereby waive any right to indemnity therefor
pursuant to this Agreement. The Indemnifying Person shall not, except with the
prior written consent of the Indemnified Person, consent to entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the Person asserting such claim to all Indemnified
Parties (i.e., Seller Indemnified Persons or Buyer Indemnified Persons, as the
case may be) an unconditional release from all liability with respect to such
claim.
9.6 Exclusive Remedy. Except in case of fraud, intentional misrepresentation or
omission or intentional misconduct by any party, the rights and remedies of the
parties to assert indemnification claims and receive indemnification payments
pursuant to this ARTICLE 9 shall be the parties’ exclusive right and remedy for
monetary damages with respect to any breach by any party of any representation,
warranty, covenant or agreement (including with respect to Excluded Liabilities
and Assumed Liabilities) set forth in this Agreement or any Transaction
Document, or in connection with the transactions contemplated by this Agreement
or any Transaction Document. Notwithstanding the foregoing, each party shall be
entitled to seek equitable relief, including specific performance, with respect
to any breach by any party of any covenants or agreements set forth in this
Agreement.

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ARTICLE 10
MISCELLANEOUS
10.1 Governing Law; Consent to Jurisdiction; WAIVER OF JURY TRIAL. This
Agreement and the transactions contemplated hereby shall be governed by and
construed in accordance with the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law thereof. In any action or proceeding between any of the parties arising out
of or relating to this Agreement or any of the transactions contemplated by this
Agreement, each of the parties hereto: (a) irrevocably and unconditionally
consents and submits, for itself and its property, to the exclusive jurisdiction
and venue of any New York court; (b) agrees that all claims in respect of such
action or proceeding must be commenced, and may be heard and determined,
exclusively in such New York court (or, if applicable, such Federal court); (c)
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any such
action or proceeding in such New York court (and, if applicable, such Federal
court); and (d) waives, to the fullest extent permitted by law, the defense of
an inconvenient forum to the maintenance of such action or proceeding in such
New York court (or, if applicable, such Federal court). Each of the parties
hereto agrees that a final judgment in any such action or proceeding may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 10.1. Nothing in this
Agreement shall affect the right of any party to this Agreement to serve process
in any other manner permitted by applicable law. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT OF
ANY LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT
IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT,
BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION
110.1.
10.2 Notices. All notices and other communications hereunder shall be in writing
and shall be deemed given if delivered by hand, sent by facsimile transmission
with confirmation of receipt, sent via a reputable courier service with
confirmation of receipt requested, to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice):

To Seller:
Vitarich Laboratories, Inc.
c/o Argan, Inc.
One Church Street, Suite 201
Rockville, Maryland 20850
Facsimile No.: (301) 315-0064
Attention: Chairman and Chief Executive Officer

with a copy to:

Robinson & Cole LLP
1055 Washington Boulevard
Stamford, CT 06901
Facsimile: (203) 462-7599
Attention: Richard A. Krantz, Esq.

 

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To the Buyer:
NBTY, Inc.
2100 Smithtown Avenue
Ronkonkoma, New York 11779
Facsimile No.: (631) 218-7341
Attention: General Counsel

with a copy to:

Farrell Fritz, P.C.
1320 RXR Plaza
Uniondale, New York 11556
Facsimile No.: (516) 336-2205
Attention: Robert C. Creighton, Esq.
10.3 Entire Agreement; Third-Party Beneficiaries. This Agreement, the Exhibits
and Schedules, the Transaction Documents, and the agreements, instruments and
documents among the parties hereto as contemplated by or referred to herein,
including the Disclosure Schedule constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, and contain the sole and entire agreement
between the parties hereto with respect to the subject matter hereof. Nothing in
this Agreement, express or implied, is intended to or shall confer upon any
other Person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement other than as specifically provided in ARTICLE 7 or
ARTICLE 9.
10.4 Amendments and Waivers. This Agreement may be amended or modified only with
a written instrument executed by Seller and the Buyer. No waiver of any
provision of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), shall constitute a continuing
waiver unless otherwise expressly provided nor shall be effective unless in
writing and executed (a) by Seller in the case of a waiver by Seller, (b) by the
Buyer in the case of a waiver by the Buyer. No waiver by any party of any breach
or violation or, default under or inaccuracy in any representation, warranty or
covenant hereunder, whether intentional or not, will be deemed to extend to any
prior or subsequent breach, violation, default of, or inaccuracy in, any such
representation, warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent such occurrence. No delay or
omission on the part of any party in exercising any right, power or remedy under
this Agreement will operate as a waiver thereof.
10.5 Severability. In the event that any provision of this Agreement or the
application thereof becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to use their
commercially reasonable efforts to replace such void or unenforceable provision
of this Agreement with a valid and enforceable provision that will achieve, to
the extent possible, the economic, business and other purposes of such void or
unenforceable provision.

 

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10.6 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
10.7 Assignment. No party may assign (including whether by operation of law or
otherwise) either this Agreement or any of its rights, interests, or obligations
hereunder without the prior written consent of the other party, provided,
however, Buyer may assign this Agreement or any of its rights, interests or
obligations hereunder to one or more of its Affiliates without the prior written
consent of the Seller. Subject to the preceding sentence, this Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Any purported assignment in
violation of this Section 10.7 shall be void.
10.8 Expenses. Except as otherwise expressly provided in this Agreement, each
party will pay its own costs and expenses, incurred in connection with the
negotiation, execution and closing of this Agreement and the Transaction
Documents and the transactions contemplated hereby and thereby.
10.9 Argan Guaranty. Argan hereby unconditionally and irrevocably guarantees the
full payment and performance of any and all of Seller’s obligations under this
Agreement and the ancillary documents hereto, including without limitation, all
of Seller’s obligations to indemnify Buyer hereunder (the “Obligations”) if, as,
when and to the extent that such Obligations are required to be performed
pursuant to this Agreement (the “Guaranty”). Argan hereby waives all rights and
defenses of a surety under applicable law, including without limitation, any
right to require the pursuit of any remedies against Seller, including
commencement of a suit, before enforcing the Guaranty. The Guaranty is a
guarantee of both payment and collection.
10.10 Counterparts; Facsimile. This Agreement may be executed in counterparts,
all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other party, it being understood that all parties need not
sign the same counterpart. This Agreement may be executed and delivered by
facsimile or electronic mail.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties have executed this Asset Purchase Agreement as
of the date first above written.

          VITARICH LABORATORIES, INC.   NBTY FLORIDA, INC.    
 
       
By:
  By:    
 
 
 
   
Name:
  Name:    
 
 
 
 
 
       
Title:
  Title:    
 
 
 
 
 
       

ARGAN, INC. (solely for purposes of Sections 2.5 and 10.9)

         
 
       
By:
       
 
       
Name:
       
 
   
 
       
Title:
       
 
   

 

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