Document:

EXHIBIT
10.2

 

ASSET PURCHASE AND SALE AGREEMENT

 

THIS AGREEMENT is made as of this 12th day of October, 2004, by and between
LEE PHARMACEUTICALS, INC., a corporation organized and existing under the laws
of the State of California (“Seller”) and THE WOOLFOAM CORPORATION, a
corporation organized and existing under the laws of the State of New York (“Buyer”).

 

1.                                       Sale
and Transfer of Assets. Seller agrees that it will sell, transfer, convey
and deliver to Buyer at the closing provided for in Section 3 hereof (the “Closing”)
certain of the assets of Seller as more specifically defined in Section 2
hereof (the “Assets’).

 

2.                                       Assets
of Seller. The Assets shall consist of the following:

 

(a)                                  All
rights, title and interest, including the goodwill associated therewith, of the
Seller in the following product line (the “Product”), including any and all
agreements (whether purchase, royalty, or license) (the “Ownership Agreements”)
relating to the ownership of the Product, and all “Intangibles” (as defined in Section 8(g)
hereof), related to the Product. The Product is Nose Better.

 

(b)                                 The
existing purchase orders for inventory and other product supplies, supplier and
contract manufacturing agreements, written sales representatives and
distributorship agreements, and customer agreements or arrangements of Seller
relating to the Product (the “Contracts”) are set forth on Exhibit “A”
annexed hereto- Exhibit “A” sets forth all agreements and arrangements
with customers, suppliers, contract manufacturers, sales representatives or
distributors, whether oral or written, concerning the Product, including
commissions, promotional allowances, rebates, return policies, quantity
discounts and the like. Sller represents and warrants that all contracts set
forth on Exhibit “A” hereto can be transferred and assigned by Seller to
Buyer without obtaining the consent of any person or entity.

 

1

 

(c)                                  Copies
of customer, supplier, sales representative and distributor lists,
advertisements and ad sheets, artwork, catalog sheets, printing plates,
historical data and records of Seller which Buyer determines in good faith,
prior to Closing, it needs to carry on the business currently being conducted
by Seller with respect to the Assets.

 

(d)                                 The
finished goods Inventory of Seller related to the Product (as defined in
Sections 8(i) and 15 hereof).  (“Finished
Goods Inventory” is that inventory which the Seller has on hand as of the
closing date and Buyer will purchase immediately after the closing.  “Manufactured Inventory” is that inventory
which the Seller will have a post-closing obligation to manufacture pursuant to
the terms and conditions of paragraph 15 hereof.)

 

(e)                                  The
equipment listed on Exhibit “B” hereto (the “Equipment”).

 

3.                                       Closing.
The Closing of the transaction provided for in Section 1 shall take place
at the office of Seller’s counsel, Warmuth & Niu, LLP, 400 South Atlantic
Blvd., Suite 203, Monterey Park, CA 
91754; simultaneously with the execution thereof however, to the extent
feasible, the Closing will be accomplished by facsimile signature and overnight
courier services. When the transaction provided for in Section 1 hereof is
closed pursuant to this Agreement, the purchase of the Assets shall be
effective as of 5:01 pm P.D.T. on October 12, 2004. Any orders unfilled as
of 5:01 pm P.D.T. on October 12, 2004, or received after such time and
date shall be turned over to Buyer and filled by Buyer and shall belong to
Buyer. For any orders filled by Seller after 5:01 p.m., P.D.T., on October 12,
2004, Seller shall on the Closing remit to Buyer the gross amounts received or
to be received for such sales less the direct cost of such goods, related
freight and related sales commissions.

 

2

 

4.                                       Payment
by Buyer.

 

(a)                                  As
consideration for all the Assets (excluding the Inventory) and the services
provided in Section 14 hereof, Buyer shall pay Seller on the Closing, by
certified check or wire transfer, the sum of Seven Hundred Fifty Thousand Dollars
($750,000).

 

(b)                                 The
parties hereto agree that the consideration for the Assets (except for the
Inventory) shall be allocated as follows: (i) One Hundred Eighty-Seven Thousand
Five Hundred Dollars ($187,500) for the technical assistance services specified
in Section 14(a) hereof, (ii) Two Hundred Fifty Thousand Dollars
($250,000) for the market strategy assistant services specified in Section 14(b)
hereof, (iii) Two Hundred Fifty Thousand Dollars ($250,000) for the
transitional customer services specified in Section 14(c) hereof, and (iv)
Sixty-Two Thousand Five Hundred Dollars ($62,500.00) for the ownership
agreements.  Neither party hereto shall
have any liability to the other party hereto if the allocation of the purchase
price for such Assets is disallowed by the Internal Revenue Service or any
state or local taxing authority.

 

5.                                       Limited
Liabilities Being Assumed: Accounts Receivable.

 

(a)                                  On
the Closing, Buyer shall assume the following liabilities, and only the
following liabilities of Seller and no other liabilities of Seller:

 

(i)                                     The
Contracts provided for in Section 2(b) hereof.

 

(b)                                 With
respect to the liabilities assumed pursuant to Section 5(a)(i) hereof,
Buyer shall assume those contractual liabilities, obligations and commitments
which arise after and mature after the Closing and those contractual
liabilities, obligations and commitments which arise before the Closing but are
payable or require performance after the Closing as are specifically provided
for herein, and Seller shall be responsible for any liabilities, obligations
and commitments which arise on or before or are payable or require performance
on or before

 

3

 

the Closing or
which arise before the Closing but are payable or require performance after the
Closing (except those specifically assumed herein by Buyer). The agreements set
forth in Section 5(a)(i) hereof shall be transferred by Seller to Buyer on
Closing.

 

(c)                                  After
the Closing, Seller shall hold harmless and indemnify Buyer against any and all
liabilities of Seller not being assumed by Buyer pursuant to Section 5(a)
hereof and any and all claims of whatever nature or kind against Seller. After
the Closing, Buyer shall hold harmless and indemnify Seller against those
liabilities specifically assumed pursuant to this agreement by Buyer hereunder
and no other liabilities.

 

(d)                                 Seller
shall be responsible for collecting any of its accounts receivable that remain
outstanding as of the Closing for the Product. If Buyer receives any payments
for said accounts receivable owed to Seller, Buyer shall promptly remit such
payments to Seller. Payments made by customers shall be credited to the oldest
outstanding invoice unless otherwise specified by the customer. Seller shall
provide Buyer with a then current listing of all such accounts receivable at
Closing. From and after the date hereof, Buyer shall not, directly or
indirectly, enter into any agreement or understanding, written or oral, with
Seller’s customers or take any action which may jeopardize or adversely affect
Seller’s ability to collect any of its accounts receivable.

 

(e)                                  Seller
will be responsible for handling all Products it has sold prior to the Closing
and which are actually returned to Seller or Buyer within 90 days of the Closing.
Buyer will be responsible for handling all other returns of the Product. Buyer
shall not take any action which would encourage any returns of the Products
sold by Seller.

 

(f)                                    Buyer
shall be responsible for any product liability claims arising from an
occurrence or sales of the Assets after the Closing. Buyer shall add the
Product to its

 

4

 

product
liability insurance and name Seller as an additional insured. Seller shall
continue the Product on its liability insurance for six months after the
Closing, and shall thereafter maintain product liability insurance in force as
the contract manufacturer of the product for the Buyer. Buyer shall be
responsible for any liability for the infringement of any Assets it sells after
the Closing and Buyer shall be responsible for all other infringement claims
related to the Assets.

 

(g)                                 Seller
shall pay for all co-op advertising or promotional activities, including
redemption of coupons that can be specifically identified as being issued prior
to the Closing and which pertain to Product sold prior to the Closing, for all
advertising runs, and for any other marketing expenses incurred prior to the
Closing, regardless of when the claim is presented relating to the Product.
Seller shall forward to Buyer invoices for advertising or promotions scheduled
to run after Closing, and Buyer shall make the payments therefore; provided,
however, to the best of Seller’s Knowledge, the advertising and promotional
activities scheduled to run after Closing, including outstanding coupons, and
the expenses therefore are set forth on Exhibit “C” hereto.
Advertising and promotional obligations which are not set forth on Exhibit “C”
that benefit Buyer (and the Product) not exceeding Two Thousand Five Hundred
Dollars ($2,500), individually and up to Five Thousand Dollars ($5,000) in the aggregate shall be
paid by Buyer and any excess amounts shall be paid promptly by Seller.

 

(h)                                 At
the Closing, Seller shall fax all unfilled orders for the Product to the Buyer.
After the Closing, Seller shall promptly forward by  fax, copies of all orders that it receives
for the Product. Seller shall promptly fax to Buyer a receiving report for all
returns Seller receives after the Closing.

 

6.                                       Instruments
of  Conveyance and Transfer. At the Closing, Seller agrees to deliver
to Buyer a Bill of Sale in the form of Annex I hereto for the Assets and an
Trademark Assignment for the Product line in the form of Annex II hereto and
shall assign to Buyer all

 

5

 

Ownership
Agreements and Contracts which Seller has on hand at the date of Closing and
all evidence of Intangibles. Seller shall execute such other instruments
prepared by Buyer as Buyer may from time to time reasonably request to evidence
Buyer’s title to the Assets, including the Intangibles and rights to Ownership
Agreements and Contracts. Seller shall deliver to Buyer at the Closing, all
Ownership Agreements, Contracts and the Intangibles on hand. On the Closing,
Seller shall furnish Buyer three gum labels for each active customer (as
defined in Section 8(1)(i) hereof) Buyer will indemnify Seller for any
sales tax liability owing to the State of California as a result of this
transaction.

 

7.                                       Use
of Name. On and after the Closing, Seller shall cease to use the name of
the Product and all confusingly similar names throughout the world. Buyer shall
not use any finished goods with labels bearing Seller’s name or trade name
beyond twelve months after the Closing, or until the current inventory of
components is utilized by Buyer. Seller shall license to Buyer its rights to
use its name with respect to the sale of inventory included in the Assets in
the ordinary course of business until such time as such inventory has been
sold.

 

8.                                       Representations
and Warranties by Seller. Seller hereby represents and warrants that:

 

(a)                                  Seller’s
Board of Directors has authorized the execution, delivery and performance of
this Agreement by Seller and at the Closing, Seller will deliver a copy of such
authority to the Buyer, certified by the Secretary of Seller.

 

(b)                                 Seller
has good and marketable title to all of the Assets in each case subject to no
security interest, lien, pledge, restriction, charge, claim or encumbrance and
has the legal authoirty to transfer and convey the Assets free of any such
claims. Other than as set forth in Exhibit “D” hereto, no consent of any
governmental authority is required to be obtained on the part of Seller to
permit the transactions contemplated by this Agreement.

 

6

 

(c)                                  Other
than as set forth in Exhibit “D” hereto Seller has good and marketable
title to all the Assets in each case subject to no security interest, lien,
pledge, restriction, charge or encumbrance other than those which will be paid
or satisfied at Closing. None of the Assets nor the operation or maintenance
thereof, contravenes any administrative regulation or any provision of law in
such a way as to materially and adversely affect the business or properties of
Seller or involves any hazardous materials or waste.

 

(d)                                 Seller
is not in default under any Ownership Agreement or Contract and there have been
no claims or defaults and there are no existing facts or conditions which, if
continued or upon the giving of notice, will result in any claims or defaults
under any Ownership Agreement or Contracts.

 

(e)                                  There
is no pending litigation or product liability claims relating to the Product.

 

(f)                                    The
execution, delivery and performance by Seller of this Agreement, and the
consummation of the transactions herein contemplated, will not conflict with or
result in the breach or violation of, any judgment, order, writ, injunction or
decree of any domestic court or governmental department, commission, board,
bureau, agency, or instrumentality, and Seller is not in default with respect
to any such judgment, order, writ, injunction or decree. No governmental agency
has at any time challenged or questioned the legal right or proposed any
restriction on the legal right of Seller to produce, manufacture, offer or sell
any of its products, including the Product, and services in the present manner
or style thereof.

 

(g)                                 Exhibit
“E” correctly sets forth a list of all Ownership Agreements, and all
patents, patent applications, copyrights, copyright registrations and

 

7

 

applications,
trademarks, trademark registrations and applications, trade names or commercial
names, and any other intangible assets (except for computer programs;
industrial models; manufacturing procedures, process and design; assay and
control data; and trade secrets, know-how and formulas to manufacture the
Product), both domestic and foreign, presently owned, licensed, possessed, used
or held by Seller (collectively, the “Listed Intangibles”) relating to the
Product. As of the Closing, Seller will transfer to Buyer all Listed
Intangibles and all computer programs; industrial models, manufacturing
procedures, process and designs; assay and control data; trade secrets,
know-how and formulas presently owned by Seller needed and necessary to
manufacture the Product as they are currently made (the “Manufacturing
Intangibles”). Seller owns the entire right, title and interest in and to the
Listed Intangibles and the Manufacturing Intangibles (collectively the “Intangibles”)
and there are no computer programs, industrial models, process and designs,
trade secrets and know-how not presently owned by Seller needed and necessary
to manufacture the Product as it is currently made. Except as set forth herein
or on any Exhibit hereto, there are no licenses, sublicenses or grants
(including any contractors who manufacture any of the Product) relating to the
use of any of the same which are not owned by Seller and none of them so owned
are being infringed by others or subject to a pending, or threatened challenge
of infringement of the rights of others. Seller owns all right, title and
interest in all Intangibles needed and necessary for the manufacture of the
Product, including but not limited to all formulas and know-how to manufacture
the Product. There is no contract manufacturer which has any rights to or
ownership interest in any Intangibles needed to manufacture the Product. To
Seller’s Knowledge, the conduct of the business of Seller relating to the
Assets does not infringe any patent, patent rights, copyright, trademark, trade
secret, trade right, trade name, commercial name, trade secret or other
intangible assets. On the Closing, all Intangibles shall be transferred and
disclosed to Buyer by Seller including those in the possession of manufacturing
contractors.

 

8

 

(h)                                 Seller
is not obligated, absolutely or contingently, to any  person for a
finder’s fee, brokerage commission, or other similar payment in connection with
the transactions contemplated by this Agreement, and Seller agrees to indemnify
and hold Buyer harmless from any such payments or claims for such payments made
or threatened.

 

(i)                                     As
exhibited on Exhibit “F” annexed hereto, a physical inventory for
the finished goods of the Product was taken by Seller on dates set forth in
such Exhibit “F.” The finished goods inventory of Seller on Exhibit
“F” hereto, does, and the finished goods inventory of Seller on the Closing
(the “Inventory”) will, consist of items of quality which are good, usable and
salable in the ordinary course of the business of Seller if Seller had remained
in the business of selling the Inventory, has and will as of the Closing have
expiration dates of not less than one year from the Closing and is not in any
material respect water spotted, torn, physically deteriorated or otherwise
damaged. All of the items included in the finished goods inventory (including
the Inventory) on the dates such finished goods inventory (including the
Inventory) was or will be at the Closing the property of Seller. The Inventory
purchased at the Closing shall include only finished goods and shall not
include work in process, raw materials, labels, display materials, bottles,
bottling caps, packaging, shipping cartons and stickers and other supplies and
components necessary to manufacture the Product nor any packaging materials and
finished Product. No Inventory of Seller has been placed on consignment.

 

(j)                                     Set
forth on Exhibit “G” annexed hereto is a list of all licenses,
permits or other authorizations held by Seller from Federal, state or local
authorities (except local business licensees), including the Food and Drug
Administration, and such licenses, permits or other authorizations are the only
ones required by Seller to manufacture, offer and sell the

 

9

 

Product, and
to operate Seller’s facilities (or any manufacturing contractor’s facilities)
relating to the Product as currently conducted by Seller (and such contractors)
to the extent applicable. There is currently no government action relating to
the Product, nor was there any government action for the five (5) years
preceding the date of Closing.

 

(k)                                  Seller
will pay all of its own expenses whether or not the transactions contemplated
hereto are consummated. Seller will pay all income, franchise, payroll, sales
and all other taxes arising out of Seller’s operations prior to and subsequent
to Closing.

 

(l)                                     Attached
as (i) Exhibit “H” hereto is a list of active wholesale customers
(customers who purchased any Product on or after January 1, 2003), (ii) Exhibit
“I” hereto sets is a list of wholesale customers for the Product since January 1,
2002, but who have not purchased products after December 31, 2002, (iii) Exhibit
“J” hereto are the customers who do not pay the full list price for the
Product and (iv) Exhibit “K” hereto are lists of (A) each current
supplier for components of the Product, including individual names and a copy
of the last invoice and (B) all previous suppliers since January 1, 2002.

 

9.                                       Definitions
of Knowledge. References herein to “Seller’s or Buyer’s Knowledge” or “to
the Knowledge of Seller or Buyer” or similar references shall mean information
actually known by an officer of Seller or Buyer, as the case may be, with due
inquiry.

 

10.                                 Representations
and Warranties by Buyer.

 

(a)                                  Buyer
is a corporation duly organized, validly existing and in good standing under
the laws of the State of New York and has all the requisite power and authority
to own its properties as presently owned and to carry on its business as now
conducted.

 

10

 

(b)                                 Buyer’s
Board of Directors, if necessary, has authorized the execution, delivery and
performance of this Agreement.

 

(c)                                  This
Agreement constitutes a legal, valid and binding obligation of Buyer
enforceable against it in accordance with its terms.

 

(d)                                 Buyer
is not obligated, absolutely or contingently, to any person for a finder’s fee,
brokerage commission, or other similar payment in connection with the
transactions contemplated hereto this Agreement, and Buyer agrees to indemnify
and hold Seller harmless from any such claims for such payments made or
threatened.

 

(e)                                  Buyer
will pay all of its own expenses whether or not the transactions contemplated
hereto are consummated. Buyer will pay all income, franchise, payroll, sales
and all other taxes relating to the sale of the Product subsequent to the
Closing. Any applicable state, county or city sales and transfer taxes for the
sale of the Assets shall be paid by Buyer.

 

(f)                                    To
Buyer’s knowledge, the execution and delivery by Buyer of this Agreement, and
the performance by Buyer of this Agreement and the consummation of the
transactions herein contemplated, will not conflict with, or result in a breach
of the terms of, or constitute a default under or violation of, any law or
regulation of any domestic governmental authority, or the Articles or
Certificate of Incorporation or By-Laws of Buyer or any material agreement or
instrument to which Buyer is a party or by which Buyer is bound or to which it
is subject, nor will it give to others any interests or rights, including
rights or termination, acceleration or cancellation, in or with respect to any
of the properties, assets, agreements, contracts or business of Buyer. To Buyer’s
knowledge no consent of any governmental authority is required to be obtained
on the part of Buyer to permit the transactions contemplated by this Agreement.

 

11

 

(g)                                 To
Buyer’s knowledge, the execution, delivery and performance by Buyer of this
Agreement, and the consummation of the transactions herein contemplated, will
not conflict with or result in the breach or violation of, any judgment, order,
writ, injunction or decree of any domestic court or governmental department,
commission, board, bureau, agency, or instrumentality, and Buyer is not in
default with respect to any such judgment, order, writ, injunction or decree.

 

11.                                 Expenses
of Proceedings. In the event that any party hereto brings any type of
proceeding to enforce the terms and conditions of this Agreement or any Exhibit
hereto, the prevailing party in such proceeding shall be entitled to recover
from the unsuccessful party all reasonable attorneys’ fees and actual
out-of-pocket costs incurred by said prevailing party.

 

12.                                 Non-Disclosure.
Seller shall not disclose any records relating to the Product post-closing,
except as required by law, including the rules and regulations of the
Securities and Exchange Commission, and except to its employees, attorneys and
accountants.

 

13.                                 Public
Disclosure. Buyer and Seller agree not to make or cause to be made, whether
orally or in writing or otherwise, any public announcement or disclosure with
respect to the transactions contemplated by this Agreement or any of the
provisions of this Agreement without prior written approval, which approval
shall not be unreasonably withheld, conditioned or delayed, by the other
parties hereto of the form and content of such announcement or disclosure and
except as may be required by the rules and regulations of the Securities and
Exchange Commission.

 

12

 

14.                                 Services
by Seller.

 

(a)                                  For
three years after the Closing, Seller shall provide to Buyer technical
assistance services relating to manufacturing of the Product, as set forth in
the Technical Assistance Agreement in the form of Annex III hereto.

 

(b)                                 For
three years after the Closing, Seller shall provide to Buyer services relating
to the development of a marketing strategy for the Product, as set forth in the
Marketing Strategy Assistance Agreement in the form of Annex IV hereto.

 

(c)                                  For
four years after the Closing, Seller shall provide to Buyer services relating
to transitioning customers for the Product from Buyer to Seller, as set forth
in the Transitional Customer Service Agreement in the form of Annex V hereto.

 

15.                                 Sale
of Manufactured Inventory.

 

(a)                                  Seller
agrees to supply Buyer with Nose Better gel and spray finished goods
representing approximately two (2) years usage as defined by the unit movement
for the 12 months ended July 31, 2004. 
For Nose Better gel, that number is 69,626 units; for Nose Better spray,
that number is 25,547 units.  In October 2004,
Seller will provide approximately six months worth of finished goods.  Upon six weeks’ notice, Seller will provide
additional finished goods as needed in minimum orders of 12,000 units of Nose
Better gel and 6,000 units of Nose Better spray.  After 139,252 units of gel and 51,094 units
of spray have been delivered, Seller will have no obligation to manufacture any
additional goods.   The fixed price
(F.O.B. So. El Monte, CA) per unit is shown on Exhibit “L”.  After the first two initial shipments of
finished goods, Seller will then sell its Nose Better packaging raw materials
to Buyer that are brand specific to Nose Better:   bottles, tubes, caps, labels, kit boxes,
instruction sheets, etc., at Seller’s landed cost.  After the first two shipments, the fixed
price will then be adjusted downward to reflect the raw

 

13

 

materials
being provided from Buyer’s inventory, which will be stored by Seller at no
charge.  Seller will be invoicing Buyer
for the remaining items which are provided by Seller, including, but not
limited to, chemicals, labor and non-brand specific packaging items such as
ziplock bags and corrugated shippers. 
This price can be found on Exhibit “L”.

 

(b)                                 On
the Closing, Seller shall sell to Buyer all items of Inventory of Seller on
hand at the Closing and all items of Inventory owned by Seller and not on hand
on the Closing, and Buyer shall purchase from Seller all such Inventory on the
Closing, provided, however, that the Inventory shall comply with Section 8(i)
hereof.

 

(c)                                  Buyer,
at Buyer’s expense and with Seller’s cooperation, shall arrange to pick up and
remove all Inventory from Seller’s premises (or such other location where such
items are located) promptly after Closing. Seller shall cause and pay for the
reasonable loading of the Inventory on to Buyer’s trucks or trucks of a common
carrier selected by Buyer. Title to the Assets shall be assumed to have passed
upon the Closing, and upon Closing Buyer shall insure the Assets.

 

(d)                                 For
a period not to exceed thirty (30) days or until shipped to Buyer, whichever is
less, Seller shall warehouse at no cost to Buyer the Inventory and Equipment
acquired pursuant to this Section 15 at the Closing. After the earlier of
(i) said thirty (30) days or (ii) shipment to Buyer, Seller shall have no
further warehousing obligations; provided, however, that if Seller undertakes
any additional warehouse storage on Buyer’s behalf, Buyer shall be liable for
the direct costs of such warehousing plus a fifteen percent (15%) service fee.

 

(e)                                  Upon
receipt of the Product by Buyer, Buyer shall conduct a physical count of the
Inventory as of the Closing. Within fifteen (15) days after the receipt of the

 

14

 

Inventory,
Buyer shall make or cause to be made a calculation of the Inventory Amount of
each component of the Inventory of the Product as of the Closing (the “Calculation”).
The Calculation shall be made by appropriate accounting personnel in accordance
with generally accepted accounting principles applied consistently with Seller’s
past practice and using the values set forth in Section 15(b) hereof Buyer
shall promptly provide Seller with a copy of the Calculation and all work
papers associated therewith.

 

(f)                                    If  Seller disagrees with all or any part of the
Calculation, Seller shall have the right to notify Buyer of such disagreement
and its reasons for so disagreeing, in which case Seller and Buyer shall
attempt to resolve the disagreement. If within ten (10) days after the delivery
of the Calculation and all work papers associated therewith to Seller, Seller
and Buyer are unable to resolve the differences, if any, arising as a result of
the Calculation, they or either of them shall submit a statement of all
unresolved differences together with copies of the Calculation to a mutually
agreed-upon independent certified public accounting firm (the “Accountants”)
for a binding and nonappealable determination to be rendered within thirty (30)
days after such submission. All fees and expenses of the Accountants incurred
in this capacity shall be billed to and shared by Seller and Buyer equally.

 

(g)                                 For
thirty days after the second yearly anniversary of the Closing, Buyer can buy
any and all raw material Seller has on hand for the Product at Seller’s actual
landed cost of such material FOB South El Monte, California. If Buyer is going
to exercise its right to buy such raw material, it shall notify Seller in
writing immediately prior to the second yearly anniversary of the Closing. The
provisions of Section 15(d), (e), and (f) shall apply to any such purchase
and the full purchase price for such materials shall be paid within 30 days of
the determination of the purchase price.

 

15

 

16.                                 Notices.
All notices and other communications hereunder shall be in writing arid shall
be deemed to have been duly given when received, if mailed, first class and
certified or registered, postage prepaid or sent by telefax, Federal Express or
another air courier service for next business day delivery which requires a
recipient, addressed to the party for whom they are intended at the fo1lowing
addresses:

 

(a)                                  If to Buyer:

 

THE WOOLFOAM CORPORATION

3000 Hempstead Turnpike

Levittown, NY 11756

Attention:  Robin S. Stessel,
President

Telefax:  (516) 731-5607

 

with a copy
to:

 

Mark R. Blaustein, Esq.

Blaustein & Weinick, Esqs.

1205
Franklin Avenue, Suite 340

Garden
City, New York  11530

Telefax:  (516) 248-5839

 

(b)                                 If to Seller:

 

LEE PHARMACEUTICALS, INC.

1434 Santa Anita Avenue

South El Monte, California 91273

Attn:  Ronald G. Lee, President

Telefax:  (626) 575-0513

 

with a copy to:

 

Scott Warmuth, Esq.

Warmuth & Niu, LLP

400 S. Atlantic Blvd., Suite 203

Monterey Park, California 91754

Telefax:  (626) 284-7186

 

Such names,
addresses, telefaxes may be changed by written notice, as described in this Section 16.

 

16

 

17.                                 Entire
Agreement and Amendments. This Agreement, including the Exhibits and
certificates referred to herein which are a part hereof, contains the entire
understanding of the parties hereto with respect to the subject matter
contained herein and may be amended or terminated only by a written instrument
executed by Seller and Buyer or their respective legal representatives,
successors or permitted assigns. The Section headings contained in this
Agreement are for reference and convenience only and shall not be used in the
interpretation of this agreement.

 

18.                                 Governing
Law. This Agreement shall be construed in accordance with the laws of the
State of California, without regard to conflicts of law.

 

19.                                 Parties
in Interest. This Agreement shall inure to the benefit of and be binding
upon Seller and Buyer, and their respective successors and permitted assigns.

 

20.                                 No
Merger. This Agreement and all Exhibits and Annexes hereto shall survive
the closing and remain in fill force and effect under their respective terms.

 

21.                                 Facsimile.
Execution. Execution of this Agreement or any Exhibits hereto shall be deemed
binding upon the party executing this Agreement or such Exhibits and
notwithstanding that delivery of the executed document may be by facsimile
transmission. Any party shall be entitled to rely on a faxed execution copy of
this Agreement and such Exhibits with the same force and effect as if an
originally inked execution copy were delivered. Inked original documents shall
be delivered to the other parties by Federal Express within three business day
of the facsimile transmission.

 

17

 

N WITNESS
WHEREOF, the parties hereto have duly executed this Agreement as of the date
first written above.

 

	
   

  	
  LEE
  PHARMACEUTICALS, INC.

  
	
   

  	
  a California
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  RONALD G.
  LEE

  	
   

  
	
   

  	
   

  	
  RONALD G.
  LEE, President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE WOOLFOAM
  CORPORATION

  
	
   

  	
  a New York
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  ROBIN
  STESSEL

  	
   

  
	
   

  	
   

  	
  ROBIN S.
  STESSEL, President

  
						

 

18

 

EXHIBITS

 

	
  A -

  	
   

  	
  Contracts

  
	
   

  	
   

  	
   

  
	
  B -

  	
   

  	
  Equipment

  
	
   

  	
   

  	
   

  
	
  C -

  	
   

  	
  Advertising

  
	
   

  	
   

  	
   

  
	
  D -

  	
   

  	
  Governmental
  Orders,

  
	
   

  	
   

  	
  Security
  Interest, Etc.

  
	
   

  	
   

  	
   

  
	
  E -

  	
   

  	
  Ownership Agreement and Patents

  
	
   

  	
   

  	
   

  
	
  F -

  	
   

  	
  Inventory

  
	
   

  	
   

  	
   

  
	
  G -

  	
   

  	
  Licenses

  
	
   

  	
   

  	
   

  
	
  H -

  	
   

  	
  Customers

  
	
   

  	
   

  	
   

  
	
  I -

  	
   

  	
  Former Customers

  
	
   

  	
   

  	
   

  
	
  J -

  	
   

  	
  Special Pricing

  
	
   

  	
   

  	
   

  
	
  K.

  	
   

  	
  List of Suppliers

  
	
   

  	
   

  	
   

  
	
  L.

  	
   

  	
  Two-Year Supply Agreement

  

 

19

 

ANNEX

 

	
  I.

  	
   

  	
  Bill of Sale

  
	
   

  	
   

  	
   

  
	
  II.

  	
   

  	
  Assignment

  
	
   

  	
   

  	
   

  
	
  III.

  	
   

  	
  Technical
  Assistance Agreement

  
	
   

  	
   

  	
   

  
	
  IV.

  	
   

  	
  Marketing
  Strategy Assistance Agreement

  
	
   

  	
   

  	
   

  
	
  V.

  	
   

  	
  Transitional
  Customer Service Agreement

  

 

20Exhibit 10.1

 

Execution Version

 

January 27, 2005

 

	
  Precision Castparts Corp.

  
	
  Executive Office, Suite 440

  
	
  4650 S.W. Macadam Avenue

  
	
  Portland, Oregon 97201-4254

  
	
  Attention: Mr. William D. Larsson

  

 

Re:          Amendment
No. 1 to Credit Agreement

 

Ladies and Gentlemen:

 

Reference is hereby made to that certain Credit Agreement dated as of
December 9, 2003 by and among PRECISION CASTPARTS CORP., an Oregon corporation
(the “Borrower”), as the Borrower, BANK OF AMERICA, N.A., a national
banking association organized and existing under the laws of the United States,
in its capacity as administrative agent for the Lenders (as defined in the
Credit Agreement (as defined below)) (in such capacity, the “Administrative
Agent”), and the Lenders (as hereby amended and as from time to time
hereafter further amended, modified, supplemented, restated, or amended and
restated, the “Credit Agreement”). 
All capitalized terms not otherwise defined herein shall have the
meaning given thereto in the Credit Agreement.

 

Pursuant to the request of the Borrower, each of the Administrative
Agent and each Lender, by its respective execution of this amendment letter
(this “Amendment Letter”), as acknowledged by the Borrower, hereby
agrees, subject to the terms and conditions set forth herein, to amend the
Credit Agreement as follows:

 

 

1.             The table found in the definition of “Applicable Rate”
is hereby deleted in its entirety and replaced with the following:

 

	
  Pricing

  Level

  	
   

  	
  Debt Rating

  S&P/Moody’s

  	
   

  	
  Commitment

  Fee

  	
   

  	
  Eurodollar Rate

  Loans and

  Letters of Credit

  	
   

  	
  Base

  Rate Loans

  	
   

  
	
  1

  	
   

  	
  BBB+ or better and Baa1 or better

  	
   

  	
  0.150

  	
  %

  	
  0.625

  	
  %

  	
  0.000

  	
  %

  
	
  2

  	
   

  	
  BBB and Baa2

  	
   

  	
  0.175

  	
  %

  	
  0.750

  	
  %

  	
  0.000

  	
  %

  
	
  3

  	
   

  	
  BBB- and Baa3

  	
   

  	
  0.200

  	
  %

  	
  1.000

  	
  %

  	
  0.000

  	
  %

  
	
  4

  	
   

  	
  BBB- and Ba1 or BB+ and Baa3

  	
   

  	
  0.250

  	
  %

  	
  1.250

  	
  %

  	
  0.250

  	
  %

  
	
  5

  	
   

  	
  BB+ and Ba1

  	
   

  	
  0.325

  	
  %

  	
  1.500

  	
  %

  	
  0.500

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6

  	
   

  	
  Lower than BB+ and Ba1 or unrated by either S&P
  or Moody’s

  	
   

  	
  0.450

  	
  %

  	
  1.750

  	
  %

  	
  0.750

  	
  %

  

 

2.             Section 2.08(c) is hereby deleted in its entirety and
replaced with the following:

 

(c)           the principal amount of the Term Loan
A in quarterly installments in the amounts set forth below opposite each
quarter end date below, subject to adjustments for prepayments made pursuant to
Section 2.06, each such payment to be made on the dates set forth below,
provided that all Outstanding Amounts of the Term Loan A will be repaid
on the Term Loan A Maturity Date:

 

	
  March 31, 2005

  	
   

  	
  $

  	
  3,750,000

  	
   

  
	
  June 30, 2005

  	
   

  	
  $

  	
  3,750,000

  	
   

  
	
  September 30,
  2005

  	
   

  	
  $

  	
  3,750,000

  	
   

  
	
  December 29,
  2005

  	
   

  	
  $

  	
  3,750,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 31, 2006

  	
   

  	
  $

  	
  3,750,000

  	
   

  
	
  June 30, 2006

  	
   

  	
  $

  	
  3,750,000

  	
   

  
	
  September 29,
  2006

  	
   

  	
  $

  	
  3,750,000

  	
   

  
	
  December 28,
  2006

  	
   

  	
  $

  	
  3,750,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 30, 2007

  	
   

  	
  $

  	
  7,500,000

  	
   

  
	
  June 29, 2007

  	
   

  	
  $

  	
  7,500,000

  	
   

  
	
  September 28,
  2007

  	
   

  	
  $

  	
  7,500,000

  	
   

  
	
  December 28,
  2007

  	
   

  	
  $

  	
  7,500,000

  	
   

  

 

2

 

	
  March 28, 2008

  	
   

  	
  $

  	
  10,000,000

  	
   

  
	
  June 27, 2008

  	
   

  	
  $

  	
  10,000,000

  	
   

  
	
  September 26,
  2008

  	
   

  	
  $

  	
  10,000,000

  	
   

  

 

3.             Sections 7.08(b), (c)
and (d) are hereby deleted in their entirety.

 

4.             Schedule 5.12 is hereby amended by adding the
items set forth on Annex A to this Amendment Letter thereto.

 

In order to induce the Administrative Agent and the Lenders to enter
into this Amendment Letter, the Borrower represents and warrants to the
Administrative Agent and the Lenders as follows:

 

(a)           The representations and warranties
made by each Loan Party in Article V of the Credit Agreement and in each
of the other Loan Documents to which such Loan Party is a party are true and
correct on and as of the date hereof (giving effect, with respect to the representations
and warranties in Section 5.12, to the amendment to Schedule 5.12
set forth above), except to the extent that such representations and warranties
expressly relate to an earlier date, and except that the representations and
warranties contained in Sections 5.05(a) and (c) of the Credit
Agreement shall be deemed to refer to the most recent statements furnished
pursuant to Sections 6.01(a) and (b), respectively;

 

(b)           Since the date of the most recent
financial reports of the Borrower delivered pursuant to Section 6.01 of
the Credit Agreement, no act, event, condition or circumstance has occurred or
arisen which, singly or in the aggregate with one or more other acts, events,
occurrences or conditions (whenever occurring or arising), has had or could
reasonably be expected to have a Material Adverse Effect;  and

 

(c)           After giving effect to this Amendment
Letter, no Default or Event of Default has occurred and is continuing.

 

None of the terms or conditions of this Amendment Letter may be
changed, modified, waived, or canceled, except in the manner as provided in the
Credit Agreement with respect to any such change, modification, waiver, or
cancellation.  Except as specifically
amended, modified or supplemented by this Amendment Letter, the Credit Agreement
and all other Loan Documents are hereby confirmed and ratified in all respects
and shall be and remain in full force and effect according to their respective
terms.

 

This Amendment Letter shall in all respects be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts executed and to be performed entirely within such State, and shall be
further subject to the provisions of Sections 10.16 and 10.17 of
the Credit Agreement.

 

3

 

This Amendment Letter may
be executed in any number of counterparts, each of which shall be deemed to be
an original as against any party whose signature appears thereon, and all of
which shall together constitute one instrument.

 

[Signature pages follow.]

 

4

 

Precision Castparts Corp.

Amendment No. 1 Letter

Signature Pages

 

 

Annex A

(to
Amendment No. 1 Letter)

 

Addition to Schedule 5.12 of the Credit Agreement:

 

As of January 27, 2005, the Borrower has recently sold certain of its
ERISA Affiliates to unrelated buyers, causing the sold affiliates to cease to
be members of the controlled group for the Pension Plans Borrower and its
remaining ERISA Affiliates continue to maintain.  Consequently, a Reportable Event under ERISA
Section 4043(c)(9) has occurred with respect to each of these sales, as
follows:

 

•                  The
first series of sales related to the pumps and valves businesses of PCC Flow
Technologies Holdings, Inc., PCC Flow Technologies LP and their related
entities.  A PBGC Form 10 was filed on
November 19, 2004 notifying the PBGC of this Reportable Event.

 

•                  The
second series of sales related to the sale of the magnetics business of SPS
Technologies, LLC, SPS Technologies Limited and their related entities.  The sale agreement for these transactions was
executed on December 30, 2004.  The
closing date for these transactions was generally effective as of January 11,
2005.  A PBGC Form 10 is currently being
prepared and will be filed with the PBGC, on or before the date the Form 10 is
due, to notify the PBGC of this Reportable Event.

 

A minimum installment required under Code Section 412
for the Terry Machine (a/k/a SPS Technologies Waterford) Company Pension Plan
was inadvertently late, although the delinquency has now been cured.  The minimum required installment payment was
$118,295 and was due May 15, 2004.  That
amount was contributed on August 13, 2004. 
On September 10, 2004, a late PBGC Form 10 notice was filed notifying
the PBGC that this delinquency resulted in a Reportable Event under ERISA
Section 4043(c)(5).  The PBGC issued a
letter dated September 23, 2004 indicating that the PBGC accepted the notice as
filed and would not take further action with respect to this Reportable Event.

 

 

Sincerely yours,

 

BANK OF AMERICA, N.A., as Administrative Agent

 

 

ACCEPTED AND AGREED TO:

 

PRECISION
CASTPARTS CORP.

 

BANK OF
AMERICA, N.A., as a Lender, L/C Issuer and Swing Line Lender

 

KEYBANK
NATIONAL ASSOCIATION

 

MIZUHO
CORPORATE BANK, LTD.

 

PNC BANK,
NATIONAL ASSOCIATION

 

U.S. BANK
NATIONAL ASSOCIATION

 

WACHOVIA
BANK, N.A.

 

THE BANK
OF NOVA SCOTIA

 

THE BANK
OF NEW YORK

 

WELLS
FARGO BANK, N.A.

 

THE ROYAL
BANK OF SCOTLAND PLC

 

BNP
PARIBAS

 

SUMITOMO
MITSUI BANKING CORPORATION

 

UNION BANK
OF CALIFORNIA, N.A.

 

KBC BANK,
N.V.

 

COMERICA
BANK

 

UFJ BANK
LIMITED

 

BANCA
NAZIONALE DEL LAVORO S.P.A. NEW YORK BRANCH

 

COMMERZBANK AG, NEW YORK AND GRAND CAYMAN BRANCHES

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00078-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00078-of-00352.parquet"}]]