Exhibit 1
ASSET PURCHASE AGREEMENT
by and between
Boston Biomedica, Inc. ("Parent") and BBI Biotech Research Laboratories, Inc.
("BBI Biotech")
(collectively "Seller"),
and
SeraCare Life Sciences, Inc.
as "Buyer"
Dated: Xxxxx 00, 0000
XXXXX PURCHASE AGREEMENT
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS............................................................................1
1.1 Defined Terms..........................................................................1
1.2 Other Defined Terms....................................................................8
ARTICLE II PURCHASE AND SALE OF ASSETS............................................................10
2.1 Transfer of Assets.....................................................................10
2.2 Assumption of Liabilities..............................................................10
2.3 Excluded Liabilities...................................................................11
2.4 Purchase Price.........................................................................12
2.5 Post-Closing Adjustment................................................................13
2.6 Inventory Procedures...................................................................14
2.7 Prorations.............................................................................15
2.8 Closing Costs; Transfer Taxes and Fees.................................................15
2.9 Government Contracts...................................................................16
ARTICLE III CLOSING................................................................................18
3.1 Closing................................................................................18
3.2 Conveyances at Closing.................................................................18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER...............................................19
4.1 Organization of Seller.................................................................19
4.2 Subsidiaries...........................................................................20
4.3 Authorization..........................................................................20
4.4 Absence of Certain Changes or Events...................................................20
4.5 Assets.................................................................................22
4.6 Facilities.............................................................................22
4.7 Contracts and Commitments..............................................................23
4.8 Permits................................................................................26
4.9 No Conflict or Violation...............................................................26
4.10 SEC Filings; Financial Statements......................................................27
4.11 Books and Records......................................................................28
4.12 Litigation.............................................................................28
4.13 Labor Matters..........................................................................28
4.14 Liabilities............................................................................29
4.15 Compliance with Law....................................................................30
4.16 No Brokers.............................................................................30
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4.17 No Other Agreements to Sell the Purchased Assets.......................................30
4.18 Proprietary Rights.....................................................................30
4.19 Employee Benefit Plans.................................................................31
4.20 Transactions with Certain Persons......................................................34
4.21 Tax Matters............................................................................34
4.22 Insurance..............................................................................36
4.23 Accounts Receivable....................................................................36
4.24 Inventory..............................................................................36
4.25 Purchase Commitments and Outstanding Bids..............................................37
4.26 Payments...............................................................................37
4.27 Customers, Distributors and Suppliers..................................................37
4.28 Compliance With Environmental Laws.....................................................37
4.29 Minute Books...........................................................................40
4.30 State Takeover Statutes................................................................40
4.31 Fairness Opinion.......................................................................40
4.32 Accuracy of Information................................................................40
4.33 Product Returns and Warranties.........................................................40
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER................................................40
5.1 Organization of Buyer..................................................................40
5.2 Authorization..........................................................................40
5.3 No Conflict or Violation...............................................................41
5.4 No Brokers.............................................................................41
5.5 SEC Filings............................................................................41
5.6 Financial Resources....................................................................42
ARTICLE VI COVENANTS OF SELLER AND BUYER..........................................................42
6.1 Further Assurances.....................................................................42
6.2 No Solicitation........................................................................43
6.3 Notification of Certain Matters........................................................45
6.4 Investigation by Buyer.................................................................46
6.5 Conduct of Business....................................................................46
6.6 Employee Matters.......................................................................48
6.7 Proxy Statement; Special Meeting.......................................................50
6.8 Financing..............................................................................52
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6.9 Notices................................................................................52
6.10 Financial Reporting Cooperation........................................................52
6.11 Compliance with Bulk Sales Laws Requirements...........................................52
6.12 Seller's Covenant Not to Compete.......................................................52
6.13 Retention Program......................................................................53
6.14 Assumption of Mortgage.................................................................53
6.15 Frederick Lease........................................................................53
6.16 Incomplete Contracts...................................................................54
ARTICLE VII CONDITIONS TO SELLER'S OBLIGATIONS.....................................................54
7.1 Representations and Warranties.........................................................54
7.2 Agreements and Covenants...............................................................54
7.3 Consents; Regulatory Compliance and Approval...........................................54
7.4 No Actions or Court Orders.............................................................54
7.5 Opinion of Counsel.....................................................................55
7.6 Corporate Documents....................................................................55
7.7 Assumption Document....................................................................55
7.8 Ancillary Agreements...................................................................55
7.9 Stockholder Approval...................................................................55
7.10 401(k).................................................................................55
7.11 Mortgage...............................................................................55
7.12 Employees..............................................................................55
ARTICLE VIII CONDITIONS TO BUYER'S OBLIGATIONS......................................................55
8.1 Representations, Warranties and Covenants..............................................55
8.2 Agreements and Covenants...............................................................56
8.3 Consents; Regulatory Compliance and Approval..........................................56
8.4 No Actions or Court Orders.............................................................56
8.5 Opinion of Counsel.....................................................................56
8.6 Material Changes.......................................................................56
8.7 Corporate Documents....................................................................56
8.8 Conveyancing Documents; Release of Encumbrances........................................56
8.9 Ancillary Agreements...................................................................56
8.10 Financing..............................................................................56
8.11 Stockholder Approval...................................................................56
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8.12 Title Insurance........................................................................57
8.13 Know-How...............................................................................57
ARTICLE IX CONSENTS TO ASSIGNMENT.................................................................57
9.1 Consents to Assignment.................................................................57
ARTICLE X ACTIONS BY SELLER AND BUYER AFTER THE CLOSING..........................................57
10.1 Collection of Accounts Receivable and Letters of Credit................................57
10.2 Books and Records; Tax Matters.........................................................58
10.3 Survival of Representations, Etc.......................................................58
10.4 Indemnifications.......................................................................59
ARTICLE XI TERMINATION............................................................................61
11.1 Termination............................................................................61
11.2 Notice of Termination; Effect of Termination...........................................63
11.3 Fees and Expenses......................................................................63
ARTICLE XII MISCELLANEOUS..........................................................................64
12.1 Assignment.............................................................................64
12.2 Notices................................................................................64
12.3 Choice of Law..........................................................................65
12.4 Entire Agreement; Amendments and Waivers...............................................65
12.5 Multiple Counterparts..................................................................65
12.6 Expenses...............................................................................66
12.7 Invalidity.............................................................................66
12.8 Titles; Gender.........................................................................66
12.9 Publicity..............................................................................66
12.10 Confidential Information...............................................................66
12.11 Cumulative Remedies....................................................................67
12.12 Specific Performance...................................................................67
12.13 Arbitration............................................................................67
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EXHIBITS
Exhibit
A Facilities........................................................................... A-1
B Escrow Agreement..................................................................... B-1
C Reserved............................................................................. C-1
D Deed................................................................................. D-1
E Xxxx of Sale......................................................................... E-1
F Assignment of Leases................................................................. F-1
G Assignment of Contract Rights........................................................ G-1
H Assignment of Patents and Trademarks................................................. H-1
I Assumption of Certain Liabilities.................................................... I-1
J Reserved............................................................................. J-1
K Reserved............................................................................. K-1
L Agreement Not to Compete............................................................. L-1
M Form of Legal Opinion of Buyer's Counsel............................................. M-1
N Form of Legal Opinion of Seller's Counsel............................................ N-1
O Title Insurance Policy on the Owned Real Property.................................... O-1
P Stockholder Voting Agreement......................................................... P-1
Q Transition Services Agreement........................................................ Q-1
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ASSET PURCHASE AGREEMENT
This
Asset Purchase Agreement, dated as of April 16, 2004, is by and among
Boston Biomedica, Inc., a Massachusetts corporation ("Parent") and BBI Biotech
Research Laboratories, Inc., a Massachusetts corporation ("BBI Biotech", and
together with Parent, the "Seller"), and SeraCare Life Sciences, Inc., a
California corporation ("Buyer").
RECITALS
A. Seller owns certain assets which it uses in the conduct of the
Business (as defined below). BBI Biotech is a wholly owned subsidiary of Parent.
B. Buyer desires to purchase from Seller, and Seller desires to sell
to Buyer, such assets upon the terms and subject to the conditions of this
Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the respective covenants and
promises contained herein and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINED TERMS. As used herein, the terms below shall have the
following meanings. Any of such terms, unless the context otherwise requires,
may be used in the singular or plural, depending upon the reference.
"ACTION" shall mean any action, claim, suit, litigation,
proceeding, labor dispute, arbitral action, criminal prosecution, governmental
audit, inquiry or investigation or unfair labor practice charge or complaint.
"AFFILIATE" shall have the meaning set forth in the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder.
"ANCILLARY AGREEMENTS" shall mean the Non-Competition Agreement,
the Transition Services Agreement and the Voting Agreements.
"ASSUMED LEASES" shall mean all Leases listed on SCHEDULE 4.7, and
all Leases which are not required to be listed on SCHEDULE 4.7 which Buyer, in
its sole discretion, elects to accept and assume.
"BALANCE SHEET" shall mean the audited consolidated balance sheet
of Parent as of December 31, 2003, included in the Financial Statements for the
year ended December 31, 2003, together with the notes thereon.
"BALANCE SHEET DATE" shall mean December 31, 2003.
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"BOOKS AND RECORDS" shall mean (a) all records and lists of Seller
relating to the Purchased Assets or the Business, including lists of customers,
suppliers or personnel of Seller in the Business, (b) all product, business and
marketing plans of Seller relating to the Purchased Assets or the Business, and
(c) all books, ledgers, files, reports, plans, drawings and operating records of
every kind maintained by Seller relating to the Business or the Purchased
Assets, but excluding Seller's minute books, stock books and Tax returns;
provided, however, that copies of such Tax records shall be provided to Buyer at
the Closing and copies of such minute books and stock books shall be made
available by Seller for inspection by Buyer upon reasonable request by Buyer.
"BUSINESS" shall mean the business carried on through Parent's
business unit that is currently known as "BBI Diagnostics" or "BBIDx" which is
the development, manufacture, marketing and sale of quality control products
used to monitor and measure test kits performance, including but not limited to
Accurun Controls, Quality Control Panels, Basematrix, specialty reagents and
Accuchart QC Systems; and the business carried on by BBI Biotech which is the
research and development support for the quality control products, specialty
reagents, contract research for the NIH, and other government contracts,
molecular and cellular biology services, blood and tissue processing and
repository services, clinical trials for domestic and foreign test kits and
device manufacturers.
"CLOSING DATE" shall mean the third business day after the last of
the conditions set forth in Article VII and VIII hereof is satisfied or waived,
other than those conditions that by their nature are to be satisfied at the
Closing, but subject to the fulfillment or waiver of those conditions, or such
other date as Buyer and Seller shall mutually agree upon.
"CODE" shall mean the Internal Revenue Code of 1986, as amended,
and the rules and regulations thereunder.
"CONFIDENTIALITY AGREEMENT" shall mean that certain
Confidentiality Agreement dated January 9, 2003 between Parent and Buyer.
"CONTRACT" shall mean any agreement, contract, note, loan,
evidence of indebtedness, accepted purchase order, letter of credit, indenture,
security or pledge agreement, franchise agreement, covenant not to compete,
employment agreement, license, obligation or commitment to which Seller is a
party or is bound or which relates to the Business or the Purchased Assets,
whether oral or written, but excluding all Leases.
"CONTRACT RIGHTS" shall mean all of Seller's rights and
obligations under the Contracts listed on SCHEDULE 4.7 and under any Contracts
relating to the Business not so listed which Buyer, in its sole discretion,
elects to accept and assume.
"COPYRIGHTS" shall mean all copyrights relating to the Business,
including but not limited to the websites relating to the Business, and all
registrations or applications for registration of any copyright.
"COURT ORDER" shall mean any judgment, decision, consent decree,
injunction, ruling or order of any federal, state or local court or governmental
agency, department or authority that is binding on any person or its property
under applicable law.
"DEFAULT" shall mean (a) a breach of or default under any
Contract, Permit or
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Lease, (2) the occurrence of an event that with the passage of time or the
giving of notice or both would constitute a breach of or default under any
Contract, Permit or Lease, or (3) the occurrence of an event that with or
without the passage of time or the giving of notice or both would give rise to a
right of termination, renegotiation or acceleration under any Contract, Permit
or Lease.
"DISCLOSURE SCHEDULE" shall mean a schedule executed and delivered
by Seller to Buyer as of the date hereof which sets forth the exceptions to the
representations and warranties contained in Article IV hereof and certain other
information called for by this Agreement. Unless otherwise specified, each
reference in this Agreement to any numbered schedule is a reference to that
numbered schedule which is included in the Disclosure Schedule. The sections of
the Disclosure Schedule have been numbered to correspond to the applicable
section of this Agreement and, together with all matters under such heading,
shall be deemed to qualify ONLY that section, unless it is reasonably apparent
upon reading the disclosure that the disclosure is intended to qualify another
section as well, in which case such disclosure shall also be deemed to qualify
such additional section. The Schedules may include items or information which
the Parent or BBI Biotech, as applicable, are not required to disclose under
this Agreement. Inclusion of any item in a Schedule (i) does not represent a
determination by the Parent or BBI Biotech, as applicable, that such item is
material or will have a Material Adverse Effect nor shall it be deemed to
establish a standard of materiality, and (ii) does not represent a determination
by Parent or BBI Biotech, as applicable, that such item did not arise in the
ordinary course of business. Headings have been inserted in sections of the
Schedules for the convenience of reference only and shall to no extent affect
the construction or interpretation of any of the provisions of this Agreement or
the Schedules.
"DOMAIN NAMES" shall mean all Internet domain names used in the
Business.
"ENCUMBRANCE" shall mean any claim, lien, pledge, option, charge,
easement, security interest, deed of trust, mortgage, right-of-way,
encroachment, building or use restriction, conditional sales agreement,
encumbrance or other right of third parties other than Permitted Encumbrances,
whether voluntarily incurred or arising by operation of law or otherwise, and
includes, without limitation, any agreement to give any of the foregoing in the
future, and any contingent sale or other title retention agreement or Lease in
the nature thereof.
"EXCLUDED ASSETS" shall include only:
(a) those assets owned by Parent or BBI BioSeq, Inc. that do not
relate to the Business, all of which are set forth on SCHEDULE 1.1E(i), and all
of the assets owned by BBI Source Scientific, Inc.;
(b) Parent's rights in the capital stock it owns of Panacos
Pharmaceuticals, Inc., and Parent's rights under the investment documents set
forth on SCHEDULE 1.1E(ii).
(c) all Permits listed on SCHEDULE 1.1E(iii);
(d) all computers listed on SCHEDULE 1.1E(iv) and computer
software that both (i) is not material to the Business and (ii) has a
replacement cost of less than $2,500 for all such software;
(e) all insurance policies listed on SCHEDULE 1.1E(v);
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(f) all claims, causes of action, choses in action, rights of
recovery and rights of set-off of any kind against any person or entity not
relating to the Business or arising out of or relating to the Purchased Assets,
to the extent related to the Excluded Liabilities;
(g) all intercompany receivables and payables of Seller which are
owed by or to Parent or any entity which, after the Closing Date, is an
Affiliate of Parent or BBI Biotech;
(h) the loan receivable and accrued interest relating thereto from
Xxxxxxx X. Xxxxxxxxxx appearing on the Parent's Balance Sheet;
(i) the Lease Deposit;
(j) the Contracts listed on SCHEDULE 1.1E(vi);
(k) the representations, warranties and guarantees listed on
SCHEDULE 1.1(E)(vii); and
(l) all cash and cash equivalents of Seller.
"FACILITIES" shall mean all plants, offices, manufacturing
facilities, stores, warehouses, improvements, administration buildings, and all
real property and related facilities which are identified or listed on EXHIBIT A
attached hereto.
"FACILITY LEASES" shall mean all of the Leases of Facilities
listed on SCHEDULE 4.6.
"FIXTURES AND EQUIPMENT" shall mean all of the furniture,
fixtures, furnishings, machinery, automobiles, trucks, spare parts, supplies,
equipment, tooling, molds, patterns, dies and other tangible personal property
owned by Parent or BBI Biotech and used in connection with the Business,
wherever located and including any such Fixtures and Equipment in the possession
of any of Seller's suppliers, including all warranty rights with respect
thereto.
"FORMER FACILITY" shall mean each plant, office, manufacturing
facility, store, warehouse, improvement, administrative building and all real
property and related facilities which was owned, leased or operated by Seller in
connection with the Business at any time prior to the date hereof, but excluding
any Facilities.
"FREDERICK LEASE" means that certain lease agreement, dated March
1, 2004, between MIE Properties, Inc. and BBI Biotech for the property located
at 8425 Progress Drive, Suites A-Y, Frederick, Maryland.
"INSURANCE POLICIES" shall mean the insurance policies listed on
SCHEDULE 4.22.
"INVENTORY" shall mean all inventory relating to the Business held
for resale in the Business or used in connection with the Business and all of
Parent's and BBI Biotech's raw materials, work in process, finished products,
wrapping, supply and packaging items and similar items with respect to the
Business, in each case wherever the same may be located. Such inventory shall
consist of new and unused items of a quality and quantity usable or saleable in
the ordinary course of business and valued in accordance with GAAP at the lower
of cost or market on a first-in-first-out basis consistent with the Past
Practices.
"LEASE DEPOSIT" shall mean that certain cash deposit of $110,000
deposited by
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Parent with MIE Properties, Inc. under the Frederick Lease.
"LEASED REAL PROPERTY" shall mean all property described in the
Facility Leases.
"LEASEHOLD ESTATES" shall mean all of Seller's rights and
obligations as lessee under the Leases.
"LEASEHOLD IMPROVEMENTS" shall mean all leasehold improvements
situated in or on the Leased Real Property and owned by Seller.
"LEASES" shall mean all of the existing leases with respect to the
personal or real property of Seller, including but not limited to all leases
with respect to the personal and real property of Parent and BBI Biotech used in
the Business.
"LIABILITIES" shall mean any direct or indirect liability,
indebtedness, obligation, commitment, expense, claim, deficiency, guaranty or
endorsement of or by any person of any type, whether accrued, absolute,
contingent, matured, unmatured or other.
"MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE" shall mean
with respect to the Business or the Purchased Assets any material adverse effect
or change in the financial condition, business, results of operations, Purchased
Assets, Liabilities or operations of the Business or on the ability of Seller to
consummate the transactions contemplated hereby, or any event or condition which
would, with the passage of time, reasonably be expected to constitute a
"Material Adverse Effect" or "Material Adverse Change."
"MORTGAGE" shall mean that certain Mortgage and Security Agreement
between Commerce Bank and Trust Company and Parent, dated March 31, 2000.
"NON-COMPETITION AGREEMENT" shall mean the Non-Competition
Agreement to be entered into between Buyer and Xxxxxxx Xxxxxxxxxx, the form of
which is attached hereto as EXHIBIT L.
"ORDINARY COURSE OF BUSINESS" or "ORDINARY COURSE" or any similar
phrase shall mean the ordinary course of the Business and consistent with
Seller's past practice.
"OWNED REAL PROPERTY" shall mean all real property used in the
Business and owned by Seller, including without limitation all rights, easements
and privileges appertaining or relating thereto, all buildings, fixtures, and
improvements located thereon and all Facilities thereon, if any.
"PAST PRACTICES" means the principles and procedures set forth on
SCHEDULE 1.1P
"PARENT'S RIGHTS PLAN" shall mean that certain Rights Agreement
dated as of February 27, 2003 between Boston Biomedica, Inc., and Computershare
Trust Company, Inc.
"PATENTS" shall mean all patents and patent applications and
registered design and registered design applications relating to the technology
or know-how used in the Business.
"PERMITS" shall mean all licenses, permits, franchises, approvals,
authorizations, consents or orders of, or filings with, any governmental
authority, whether foreign, federal, state or local, necessary for the present
conduct of, or relating to the operation of the Business.
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"PERMITTED ENCUMBRANCES" shall mean (a) liens for Taxes and other
governmental assessments or charges not yet due and payable or which are set
forth on SCHEDULE 1.1Q and are being contested in good faith and by appropriate
proceedings; (b) minor liens which in the aggregate related to claims totaling
less than $25,000, do not materially detract from the value or transferability
of the property or assets subject thereto or materially interfere with the
present use and have not arisen other than in the ordinary course of business;
(c) title exceptions identified on the title insurance policy attached hereto as
EXHIBIT O; and (d) the Mortgage.
"PERSON" shall mean an association, a corporation, an individual,
a partnership, a trust or any other entity or organization, including any
governmental entity.
"PROPRIETARY RIGHTS" shall mean all Copyrights, Patents,
Trademarks, Domain Names, technology rights and licenses, computer software
(including without limitation any source or object codes therefor or
documentation relating thereto), confidential information, trade secrets,
franchises, know-how, inventions, designs, specifications, plans, drawings and
all other intellectual property rights all as used in the Business.
"PURCHASED ASSETS" shall mean all of the business, properties,
assets, privileges, claims, contracts and rights of every kind and nature,
whether tangible or intangible, real or personal, absolute or contingent,
wherever located, used in connection with, or relating to, the Business,
including those assets identified on the Balance Sheet and any additional assets
which may be acquired by Parent or BBI Biotech for the Business after the
Balance Sheet Date through the date of Closing, and which specifically include
all of Seller's right, title and interest in the following:
(a) all accounts and notes receivable (whether current or
noncurrent), refunds (including without limitation any prepaid insurance
premiums) relating to the Business;
(b) all Contract Rights (but excluding all rights and obligations
under the Contracts listed on SCHEDULE 1.1(E)(vi);
(c) all Assumed Leases and Leasehold Estates;
(d) all Owned Real Property;
(e) all Leasehold Improvements;
(f) all Fixtures and Equipment;
(g) all Inventory;
(h) all Books and Records;
(i) all Proprietary Rights;
(j) all Permits other than those non-transferable Permits listed
on SCHEDULE 1.1(E)(iii);
(k) all computers and software used in the Business, including but
not limited to I Renaissance software, data entry software, government
contracting software, including Procas, Microsoft Office, but excluding (i)
computer software that both (A) is not material to the Business
6
and (B) has a replacement cost of less than $2,500 for all such software and
(ii) the computers listed on SCHEDULE 1.1(E)(iv);
(l) all Insurance Policies, other than the Insurance Policies
listed on SCHEDULE 1.1(E)(v);
(m) all supplies, sales literature, promotional literature,
customer, supplier and distributor lists, art work, display units, telephone and
fax numbers and purchasing records related to the Business;
(n) all rights under or pursuant to all warranties,
representations and guarantees made by suppliers in connection with the
Purchased Assets or services furnished to Seller pertaining to the Business or
affecting the Purchased Assets, other than the warranties, representations and
guarantees listed on SCHEDULE 1.1(E)(vii);
(o) all deposits, prepayments and prepaid expenses of Parent or
BBI Biotech relating to the Business, but excluding the Lease Deposit;
(p) all assets of BBI Biotech; and
(q) all claims, causes of action, choses in action, rights of
recovery and rights of set-off of any kind, against any person or entity,
including without limitation, any liens, security interests, pledges or other
rights to payment or to enforce payment in connection with products delivered by
Parent or BBI Biotech in the Business on or prior to the Closing Date;
For the avoidance of doubt, the Purchased Assets shall exclude the Excluded
Assets and shall exclude any assets sold by Seller in the ordinary course of
Business subsequent to the Balance Sheet Date to the extent such sale is
permitted under Section 6.5.
"REGULATIONS" shall mean any laws, statutes, ordinances,
regulations, rules, FDA guidelines, EU-IVDD guidelines and orders of any
foreign, federal, state or local government and any other governmental
department or agency, including without limitation Environmental Laws, energy,
motor vehicle safety, public utility, zoning, building and health codes,
occupational safety and health and laws respecting employment practices,
employee documentation, terms and conditions of employment and wages and hours.
"REPRESENTATIVE" shall mean any officer, director, principal,
attorney, agent, employee or other representative.
"REVOLVING CREDIT AND SECURITY AGREEMENT" means that certain
Revolving Credit and Security Agreement by and among Parent, BBI Biotech, BBI
Source Scientific, Inc., BBI Bioseq, Inc. and CapitalSource Finance LLC, dated
February 5, 2004.
"SUBSIDIARY" shall mean any Person in which Seller has a direct or
indirect equity or ownership interest in excess of 20% and which participates in
the conduct of the Business or which owns any of the Purchased Assets.
"TAX" shall mean any federal, state, local, foreign or other tax,
levy, fee, assessment or other government charge, including without limitation
income, estimated income, business, occupation, franchise, property, payroll,
personal property, sales, transfer, use,
7
employment, occupancy, franchise or withholding taxes, including without
limitation interest, penalties and additions in connection therewith.
"TRADEMARKS" shall mean registered trademarks, registered service
marks, trademark and service xxxx applications and unregistered trademarks and
service marks used in the Business.
"TRANSITION SERVICES AGREEMENT" shall mean the Transition Services
Agreement to be entered into by and among Buyer and Parent, the form of which is
attached hereto as EXHIBIT Q.
"VOTING AGREEMENTS" shall mean, collectively, (i) that certain
Voting Agreement, dated as of the date hereof, by and between Buyer and Xxxxxxx
Xxxxxxxxxx in the form attached hereto as EXHIBIT P-1, and (ii) that certain
Voting Agreement, dated as of the date hereof, by and among Buyer, Xxxxxxx X.
Xxxxxxx, Xxxxxxx Xxxxxxx and Shoreline Mircrocap Fund I, L.P. in the form
attached hereto as EXHIBIT P-2.
1.2 OTHER DEFINED TERMS. The following terms shall have the
meanings defined for such terms in the Sections set forth below:
Term Section
---- -------
Adjustment Amount 2.5(b)
Acquisition Proposal 6.2(c)
Acquisition Transaction 6.2(c)
Assumed Liabilities 2.2
Assumption Document 3.2(b)
Benefit Arrangement 4.19(a)
BBI Biotech Recitals
Buyer Recitals
Buyer SEC Filings 5.5(a)
CERCLA 4.28(a)
Claim 10.4(d)
Claim Notice 10.4(d)
Closing 3.1
Closing Balance Sheet 2.5(a)
Closing Net Asset Value 2.5(b)
Commitment Letters 5.6
Confidential Information 12.1(b)
Damages 10.4(a)
Defaulting Party 11.3
Employee Plans 4.19(a)
Environmental Conditions 4.28(a)
Environmental Laws 4.28(a)
ERISA 4.19(a)
ERISA Affiliate 4.19(a)
Escrow Agreement 2.4(b)
Escrowed Amount 2.4(b)
Estimated Adjustment Amount 2.4(c)
Evaluation Date 4.11
Exchange Act 4.10(a)
Excluded Liabilities 2.3
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Expenses 11.3
FAR 2.9(e)
Financial Statements 4.10(b)
Financing 6.9
GAAP 4.10(b)
Government Contracts 2.9(a)
Hazardous Substance 4.28(a)
Incomplete Contracts 6.16
Independent Accountant 2.5(d)
Inventory Service 2.6
JAMS 12.13
Long-term Government Contracts 2.9(b)
Objection Notice 2.5(d)
Outside Date 11.1(b)
Parent Recitals
Parent SEC Filings 4.10(a)
Parent Stockholders 6.7(a)
Proper Authorities 2.9(e)
Proxy Statement 6.7(a)
Purchase Price 2.4(a)
RCRA 4.28(a)
Release 4.28(a)
Rehired Employee 6.6(a)
SEC 4.10(a)
Securities Act 4.10(a)
Short-term Government Contracts 2.9(b)
SOPs 8.13
Special Meeting 6.7(a)
Stockholder Approval Matters 6.7(a)
Superior Offer 6.2(b)
Target Net Asset Value 2.5(b)
Termination Fee 11.3
Triggering Event 11.1(i)
WARN Act 4.12(d)
Welfare Plan 4.19(a)
Work 2.9(f)
9
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 TRANSFER OF ASSETS. Upon the terms and subject to the conditions
contained herein, at the Closing, Seller will sell, convey, transfer, assign and
deliver to Buyer, and Buyer will acquire from Seller, the Purchased Assets, free
and clear of all Encumbrances.
2.2 ASSUMPTION OF LIABILITIES. Upon the terms and subject to the
conditions contained herein, at the Closing, Buyer shall assume the following,
and only the following, Liabilities of Seller (the "Assumed Liabilities"):
(a) accounts payable set forth on the Balance Sheet or incurred
after the Balance Sheet Date but prior to the Closing, in the ordinary course of
business, but excluding any intercompany accounts payable, and in each case,
only to the extent such payable is included on the Closing Balance Sheet;
(b) accrued expenses set forth on the Balance Sheet or incurred
after the Balance Sheet Date but prior to the Closing, in the ordinary course of
business, and in each case, only to the extent such accrued expense is included
on the Closing Balance Sheet;
(c) accrued compensation and vacation set forth on the Balance
Sheet or incurred after the Balance Sheet Date but prior to the Closing, in the
ordinary course of business and in each case, only to the extent such accrued
compensation or vacation is included on the Closing Balance Sheet;
(d) notes payable set forth on the Balance Sheet, but only to the
extent such note payable is included on the Closing Balance Sheet;
(e) accruing, arising out of, or relating to events or occurrences
happening after the Closing Date under (i) the Assumed Leases, (ii) Contracts
listed on SCHEDULE 4.7 and including those identified on SCHEDULE 2.9, and (iii)
Contracts which are not listed on SCHEDULE 4.7 but which Buyer, in its sole
discretion, elects to accept and assume, but in each case not including any
Liability for any Default under any Contract or Assumed Lease occurring on or
prior to the Closing Date;
(f) the Mortgage;
(g) any Tax arising from the operation of the Business for periods
(including portions of Taxable periods) beginning after the Closing Date; and
(h) in respect of Rehired Employees to the extent expressly
assumed by Buyer pursuant to Section 6.6.
The assumption by Buyer of the Assumed Liabilities shall not expand the rights
or remedies of any third party against Buyer or Seller as compared to the rights
or remedies which such third party would have had against Seller had Buyer not
assumed the Assumed Liabilities. Without limiting the generality of the
preceding sentence, the assumption by Buyer of the Assumed Liabilities shall not
create any third party beneficiary rights.
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2.3 EXCLUDED LIABILITIES. Notwithstanding any other provision of this
Agreement, except for the Assumed Liabilities expressly specified in Section
2.2, Buyer shall not assume, or otherwise be responsible for, any Liabilities of
Seller, whether liquidated or unliquidated, or known or unknown, whether arising
out of occurrences prior to, at or after the date hereof ("Excluded
Liabilities"). Seller shall remain liable for and shall discharge the Excluded
Liabilities. Without limiting the generality of the foregoing, the Excluded
Liabilities include, without limitation:
(a) Except as otherwise provided in Section 6.6, any Liability to
or in respect of any employees or former employees of Seller including without
limitation (i) any employment or severance agreement or arrangement, whether or
not written, between Seller and any person, (ii) any Liability under any
Employee Plan at any time maintained, contributed to or required to be
contributed to by or with respect to Seller or under which Seller may incur
Liability, or any contributions, benefits or Liabilities therefor, or any
Liability with respect to Seller's withdrawal or partial withdrawal from or
termination of any Employee Plan and (iii) any claim of an unfair labor
practice, or any claim under any state unemployment compensation or worker's
compensation law or regulation or under any federal or state employment
discrimination law or regulation, which shall have been asserted on or prior to
the Closing Date or is based on acts or omissions which occurred on or prior to
the Closing Date;
(b) Any Liability of Parent or BBI Biotech in connection with any
Tax for periods ending on or prior to the Closing, including any Taxes arising
in connection with the transactions contemplated by this Agreement;
(c) any Tax arising from the operation of the Business for periods
(including portions of Taxable periods) ending on or before the Closing Date;
(d) Any Liability arising from any injury to or death of any
person or damage to or destruction of any property, whether based on negligence,
breach of warranty, strict liability, enterprise liability or any other legal or
equitable theory arising from defects in products manufactured or from services
performed by or on behalf of Seller or any other person or entity on or prior to
the Closing Date;
(e) Any Liability of Seller arising out of or related to any
Action against Seller or any Action which adversely affects the Purchased Assets
in any material respect and which shall have been asserted on or prior to the
Closing Date or to the extent the basis of which shall have arisen on or prior
to the Closing Date;
(f) Any Liability of Parent or BBI Biotech resulting from
negotiating, entering into, performing its obligations pursuant to or
consummating the transactions contemplated by, this Agreement;
(g) Any Liability related to any Former Facility;
(h) Any Liability related to any site where Seller or any of its
Affiliates formerly disposed of solid or hazardous waste;
(i) Any fees and expenses of Seller in connection with the
transactions contemplated by this Agreement;
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(j) Any Liabilities to stockholders or former stockholders of
Seller relating to matters arising on or prior to Closing (including but not
limited to the transactions contemplated by this Agreement or by the Proxy
Statement);
(k) Any amounts due under any Insurance Policy, to the extent such
amounts relate to periods prior to the Closing;
(l) Any Liabilities arising from or relating to the Excluded
Assets;
(m) Any Liabilities under any Contract, Lease, Permit or
Government Contract relating to actions or omissions occurring prior to the
Closing;
(n) (i) indebtedness for borrowed money or for the deferred
purchase price of property or services (other than trade payables) in respect of
which Seller is liable, contingent or otherwise, as obligor or otherwise and any
commitment by which Seller assures a creditor against loss, including contingent
reimbursement obligations with respect to letters of credit (including but not
limited to all Liabilities and obligations under the Revolving Credit and
Security Agreement); (ii) indebtedness guaranteed in any manner by Seller,
including a guarantee in the form of an agreement to repurchase or reimburse;
(iii) except for capitalized leases listed on SCHEDULE 4.7, obligations under
capitalized leases in respect of which Seller is liable, contingent or
otherwise, as obligor, guarantor or otherwise, or in respect of which
obligations Seller assures a creditor against loss; and (iv) all interest,
prepayment penalties, premiums, fees and expenses payable with respect to any of
the foregoing;
(o) any Liabilities which Buyer may become liable for as a result
of or in connection with the failure by Seller to comply with any bulk sale or
bulk transfer laws or as a result of any "defacto merger" or "successor in
interest" theories of liabilities;
(p) any Liabilities to the extent relating to violations or
alleged violations of, or any liabilities or obligations under, law (including
Environmental Laws, Permits and Environmental Permits) that arise from the
operation of the Business prior to the Closing;
(q) any Liabilities with respect to the matters set forth on
SCHEDULES 4.12 (but excluding those Liabilities specified on SCHEDULE 4.12 under
the heading "Post-Closing Obligations of Buyer"), 4.13 (b, c, d and e), 4.20,
4.21 and 4.28; and
(r) All intercompany Liabilities of Parent, BBI Biotech or any
Subsidiary.
2.4 PURCHASE PRICE.
(a) PURCHASE PRICE. At the Closing, upon the terms and subject to
the conditions set forth herein, Buyer shall pay to Seller for the sale,
transfer, assignment, conveyance and delivery of the Purchased Assets, the
aggregate amount of Thirty Million Dollars ($30,000,000.00) (the "Purchase
Price"), SUBJECT, HOWEVER, to the adjustment as set forth in Section 2.5, and
shall assume the Assumed Liabilities.
(b) PAYMENT OF PURCHASE PRICE. At the Closing, Buyer shall (A) pay
the aggregate amount of the Purchase Price less (i) the Estimated Adjustment
Amount and (ii) $2.5 million (the "Escrowed Amount"), to Seller by wire transfer
of immediately available funds to an account designated by Seller and (B)
deliver the Escrowed Amount by wire transfer of
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immediately available funds to the escrow agent under the escrow agreement to be
executed at the Closing in the form attached hereto as EXHIBIT B (the "Escrow
Agreement"). The term of the Escrow Agreement shall be for a period of 18 months
from the Closing Date and shall be used to secure payment for indemnification
claims pursuant to Section 10.4(a) hereof.
(c) PURCHASE PRICE ALLOCATION. The Purchase Price and the Assumed
Liabilities shall be allocated by Buyer among the Purchased Assets in the manner
required by Section 1060 of the Code and regulations thereunder. Buyer shall
deliver to Seller a copy of such allocation within seventy five (75) days after
the Closing. Buyer and Seller agree to each prepare and file on a timely basis
with the Internal Revenue Service substantially identical initial and
supplemental Internal Revenue Service Forms 8594 "Asset Acquisition Statements
Under Section 1060" consistent with such allocation and which gives effect to
any Adjustment Amount determined in accordance with Section 2.5 hereof.
2.5 POST-CLOSING ADJUSTMENT.
(a) CLOSING BALANCE SHEET. On or before sixty (60) days after
Closing, Buyer shall prepare (i) a balance sheet of the Business dated as of the
Closing Date (the "Closing Balance Sheet"), and (ii) a reasonably detailed
calculation of the Adjustment Amount (as defined below). The Closing Balance
Sheet shall be prepared in accordance with generally accepted accounting
principles, applied on a consistent basis with the Balance Sheet and the Past
Practices, and shall fairly and accurately present the Purchased Assets and
Assumed Liabilities (including reserves) as of the Closing Date, subject to any
adjustments pursuant to Section 2.5(b) hereof, and appropriately adjusted to
exclude any amounts subject to proration under Section 2.7. Seller's personnel
and Representatives shall be entitled to be present and to observe all aspects
of the preparation of the Closing Balance Sheet.
(b) ADJUSTMENT AMOUNT. The "Adjustment Amount" shall be an amount
equal to the Closing Net Asset Value less $8.5 million (the "Target Net Asset
Value"). "Closing Net Asset Value" shall mean the net amount of Purchased Assets
less Assumed Liabilities as set forth on the Closing Balance Sheet. The parties
understand and agree that an adjustment to the Closing Net Asset Value
calculation will be made to eliminate the impact of normal incremental
accumulated depreciation on Purchased Assets that are included on the Balance
Sheet, calculated on a basis consistent with prior periods, and recorded from
January 1, 2004 through and including the Closing Date; provided, however, that
in no event shall such incremental accumulated depreciation exceed $100,000 per
month. The parties also understand and agree that an adjustment to the Closing
Net Asset Value calculation will be made to eliminate the impact of any
expenditures made by Parent after the date hereof, but prior to Closing with
respect to the Xxxxxxxxx Lease, but only to the extent that such expenses are
approved in advance in writing by Buyer (which writing must (i) specify the
amount of the approved expenses and (ii) state that such approved expenses will
be added to the Closing Net Asset Value for purposes of determining the
Adjustment Amount).
If the Target Net Asset Value is greater than the Closing Net
Asset Value, then the Purchase Price shall be reduced by an amount equal to such
deficiency, and the Seller shall wire transfer the amount of such deficiency in
immediately available funds to an account designated by the Buyer. If the
Closing Net Asset Value is greater than the Target Net Asset Value, then the
Purchase Price shall be increased by an amount equal to such surplus and the
Buyer shall wire transfer the amount of such surplus in immediately available
funds to an account designated by the Seller. The payments to be made pursuant
to this Section 2.5(b) shall be adjusted as appropriate to
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reflect any reduction in the Purchase Price paid at Closing resulting from the
Estimated Adjustment Amount.
(c) ESTIMATED ADJUSTMENT AMOUNT. Seller shall deliver to Buyer,
not less than three business days prior to the Closing Date, a certificate,
signed by Parent's chief financial officer (or the principal financial officer
of Parent, if Parent does not then have a chief financial officer), setting
forth (i) an estimated Closing Balance Sheet, (ii) an estimate of the Closing
Net Asset Value and (iii) an estimate of the Adjustment Amount (the "Estimated
Adjustment Amount"); provided however, that if the estimate of the Adjustment
Amount is greater than zero, then the Estimated Adjustment Amount shall equal
zero. The estimated Closing Balance Sheet, the estimate of the Closing Net Asset
Value and the Estimated Adjustment Amount will each be determined and prepared
according to the principles set forth in Section 2.5(a) and (b).
(d) DISPUTED ADJUSTMENT AMOUNT. Seller will have thirty (30) days
after receipt of the Closing Balance Sheet and the Adjustment Amount to review
and deliver a written notice of objection (the "Objection Notice") to Buyer. The
Objection Notice shall state each item to which Seller takes exception. The
Objection Notice shall specify in reasonable detail the nature and amount of any
such exception. In connection with such review, the Seller will have the right
to review the methods used in the preparation of the Closing Balance Sheet and
the Adjustment Amount, and to confer with Buyer. If Seller does not provide an
Objection Notice to Buyer within thirty (30) days after receipt of the Closing
Balance Sheet and the Adjustment Amount, Seller will be deemed to have accepted
and agreed to the Closing Balance Sheet and the Adjustment Amount, and the
deficiency or surplus, as the case may be, shall immediately be paid to the
appropriate party in accordance with Section 2.5(b) hereof. If Seller delivers
an Objection Notice to Buyer within such time period, then within ten (10) days
after the Objection Notice is received by Buyer, the Buyer and the Seller shall
(i) meet to consider such objections and may agree to revise the Adjustment
Amount, in which case the amount so agreed will be binding on the Buyer and the
Seller, and the deficiency or surplus, as the case may be, shall immediately be
paid to the appropriate party in accordance with Section 2.5(b) hereof, or (ii)
specify that an independent firm of public accountants of nationally recognized
standing mutually selected by the Seller and the Buyer, it being agreed that
Ernst & Young LLP is mutually acceptable (the "Independent Accountant"), will
review the Closing Balance Sheet and the Adjustment Amount and the Objection
Notice and report to the Seller and the Buyer the Independent Accountant's
determination of the Adjustment Amount (using the methodologies agreed to
herein), which determination will be made within sixty (60) days after the date
that the Independent Accountant receives the Closing Balance Sheet, the
Adjustment Amount and the Objection Notice. Such determination by the
Independent Accountant will be final and binding on the Buyer and the Seller.
Once the final determination has been made by the Independent Accountant, the
deficiency or surplus, as the case may be, shall immediately be paid to the
appropriate party in accordance with Section 2.5(b) hereof. All of the fees and
expenses of the Independent Accountant, if any, shall be paid equally by the
Buyer, on the one hand, and the Seller, on the other hand.
(e) TAX TREATMENT. Buyer and Seller agree to treat any payments
under this Section 2.5 as an adjustment to the Purchase Price for all federal,
state and local Tax purposes.
2.6 INVENTORY PROCEDURES. Within five days of Closing, the quantities
of Inventory to be purchased and sold hereunder shall be determined by an
itemized inventory to be taken at such time as Buyer and Seller mutually agree
and shall be adjusted to book as of the Closing Date based upon a physical
inventory pursuant to which all Inventory will be counted as to quantity and
value by personnel of Seller and Buyer using the same procedures normally used
by Seller to take
14
inventories of the type of Inventory being counted consistent with the Past
Practices (a written copy of such procedures has been provided by Seller to
Buyer and is attached as Schedule 1.1(P)); provided, that if Buyer and Seller
shall mutually agree, an outside inventory service or services (the "Inventory
Service") mutually selected by Seller and Buyer may be selected to take such
inventory. The Inventory Service shall follow GAAP and the Past Practices in
taking such inventory. Both Buyer and Seller will have the right to have
Representatives present to observe the physical inventories. Any disputes as to
the physical count of any item of Inventory will, if possible, be resolved while
such physical inventory is being taken. Any unresolved disputes regarding the
physical count of any item of Inventory not resolved by the Closing Date will be
separately listed and settled as soon as expeditiously practicable thereafter by
the parties or by another independent third party mutually acceptable to both
parties, or if they are unable to agree then by the Inventory Service. The
determination of any third party so engaged shall be final and binding on the
parties. The fees and expenses of the Inventory Service shall be borne by Buyer
and Seller equally. Any disputes as to the usability, valuation or salability of
any item of Inventory will be resolved in connection with the determination of
the Closing Net Asset Value, or sooner if the parties can so agree. Any
unresolved disputes with respect to the usability, valuation or salability of
any item of Inventory will be referred to the Independent Accountant and
resolved pursuant to the procedures set forth in Section 2.5(d) as if the amount
was the subject of an Objection Notice. The Independent Accountant shall follow
GAAP and the Past Practices in determining the usability, valuation or
salability of any item of Inventory and the determination of the Independent
Accountant on any such matter shall be final and binding on the parties.
2.7 PRORATIONS.
(a) INTEREST. On the Closing Date, or as promptly as practicable
following the Closing Date, but in no event later than sixty (60) calendar days
thereafter, all prepaid interest and interest payable with respect to any
interest bearing obligations assumed by Buyer hereunder shall be prorated
between Buyer and Seller as of the Closing Date.
(b) UTILITIES; TAXES. On the Closing Date, or as promptly as
practicable following the Closing Date, but in no event later than sixty (60)
calendar days thereafter, the real and personal property Taxes, water, gas,
electricity and other utilities, common area maintenance reimbursements to
lessors, local business or other license fees or Taxes, merchants' association
dues and other similar periodic charges payable with respect to the Purchased
Assets or the Business shall be prorated between Buyer and Seller effective as
of the Closing Date. To the extent practicable, utility meter readings for the
Facilities shall be determined as of the Closing Date. Real and personal
property Taxes shall be prorated on a per diem basis. If the real property Tax
rate for the current Tax year is not established by the Closing Date, the
prorations shall be made on the basis of the rate in effect for the preceding
Tax year and shall be adjusted when the exact amounts are determined. All such
prorations shall be based upon the most recent available assessed value of any
Facility prior to the Closing Date.
(c) RENTS. Seller shall pay all rent under the Assumed Leases
through the end of the calendar month in which the Closing Date occurs, and, on
the Closing Date, Buyer shall reimburse Seller for such rent accrued from the
Closing Date through the end of such month as part of the post-Closing
proration.
2.8 CLOSING COSTS; TRANSFER TAXES AND FEES. Seller shall be
responsible for any documentary and transfer Taxes and any sales, use or other
Taxes imposed by reason of the transfers of Purchased Assets provided hereunder
and any deficiency, interest or penalty asserted
15
with respect thereto. Buyer shall pay the fees and costs of recording or filing
all applicable conveyancing instruments described in Section 3.2(a). Buyer shall
pay the costs of any title searches or insurance premiums for title insurance to
be obtained by Buyer with respect to the Owned Real Property. Buyer shall pay
all costs of applying for new Permits and Seller shall pay the costs incurred
prior to Closing to transfer all of the existing Permits which may be lawfully
transferred to Buyer at the Closing.
2.9 GOVERNMENT CONTRACTS.
(a) Attached hereto as SCHEDULE 2.9 is a list describing all of
Seller's United States government contracts, subcontracts, agreements, grants
and awards relating to the Business which have not yet been fully performed by
Seller and all of Seller's pending proposals and applications therefor
(collectively, the "Government Contracts"). For the avoidance of doubt,
"Government Contracts" shall not include, and Buyer shall not have any liability
for, any United States government contracts, subcontracts, agreements, grants
and awards relating to the Business whose period of performance is complete
(irrespective of whether such contract has been subject to final audit by the
relevant governmental entity).
(b) Seller and Buyer acknowledge and agree that they shall seek a
prompt novation into the name of the Buyer of those Government Contracts so
designated on SCHEDULE 2.9 (the "Long-term Government Contracts") and that they
shall not seek a novation into the name of the Buyer of those Government
Contracts so designated on SCHEDULE 2.9 (the "Short-term Government Contracts").
(c) With regard to the Short-term Government Contracts, after
Closing the parties shall make interim legal arrangements whereby the Buyer, on
behalf of the Seller, shall alone perform all of the duties and obligations of
the Seller under each of said Short-term Government Contracts in return for
which the Buyer shall be entitled to receive all payments to which the Seller is
entitled thereunder with respect to such post-Closing performance of each of
said Short-term Government Contracts.
(d) With regard to the Long-term Government Contracts, until the
appropriate United States government authority has consented to the novation
into the name of the Buyer of each such Long-term Government Contract or in the
event such consent is not granted, the parties shall make interim legal
arrangements whereby the Buyer, on behalf of the Seller, shall alone perform all
of the duties and obligations of the Seller under each of said Long-term
Government Contracts as a subcontractor to Seller in return for which the Buyer
shall be entitled to receive all payments to which the Seller is entitled
thereunder with respect to such post-Closing performance of each of said
Long-term Government Contracts.
(e) Promptly after Closing the parties hereto shall advise the
proper government authorities with respect to the Long-term Government Contracts
(the "Proper Authorities") of this Agreement and shall request from the Proper
Authorities formal novations into the name of the Buyer of the Long-term
Government Contracts (for example, by filing United States government standard
novation agreements in accordance with applicable Federal Acquisition
Regulations ("FAR")). If possible, such novation agreements shall provide for
the novations to be effective as of the date of Closing. The parties hereto
shall each cooperate with each other, and shall each use reasonable efforts, to
effect the prompt novation into the name of the Buyer of the Long-term
Government Contracts.
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(f) Pending execution and delivery of such a novation agreement by
all parties thereto with respect to a Long-term Government Contract, and at all
times with respect to the Short-term Government Contracts, the Buyer shall carry
out and perform all of the duties and obligations of the Seller under said
Long-term Government Contracts and Short-term Government Contracts arising after
the date of Closing (collectively, the "Work"). Buyer shall carry out and
perform the Work in accordance with the time periods, standards of quality, and
other terms and conditions set forth in the applicable Government Contracts,
consistent with Seller's past practices. After execution and delivery of a
novation agreement by all parties thereto with respect to a Long-term Government
Contract, if the Seller has guaranteed the performance of the Buyer or is
otherwise directly or indirectly liable or obligated for the Buyer's performance
of said novated Long-term Government Contract, then the Buyer shall carry out
and perform all of the duties and obligations of the Buyer under said novated
Long-term Government Contract in accordance with the times periods, standards of
quality, and other terms and conditions set forth in the applicable novated
Long-term Government Contract.
(g) After Closing, the Buyer shall from time to time xxxx the
Seller for Work, and the Seller shall in turn, xxxx the Proper Authorities for
the Work in the same amount, each in accordance with the payment schedules and
terms and conditions of the respective Government Contracts. Promptly upon
Seller's receipt of payment of such bills (but in no event more than three (3)
business days after receipt of such payments), Seller shall endorse the same to
the order of the Buyer and deliver the same to the Buyer, or shall wire transfer
such payment to an account designated by Buyer. With regard to work-in-process
and unbilled costs and expenses with respect to Government Contracts performed
by the Seller on or before the date of Closing but not billed on or before the
date of Closing, such work-in-process and unbilled costs and expenses shall be
included in the next appropriate bills to the respective Proper Authorities
(which bills may include post-Closing Work performed by the Buyer) and the
Seller, to the extent such amounts were not included on the Closing Balance
Sheet, shall be entitled to the payments therefor (with an appropriate
allocation of the payment of the applicable bills if such bills included
post-Closing Work performed by the Buyer). The Seller hereby represents and
warrants that set forth in SCHEDULE 2.9(g) is a complete and accurate list of
the total dollar amount billed under each such Government Contract through
February 29, 2004. For the period February 29, 2004 through the Closing, Seller
shall xxxx for the Government Contracts at the same overhead and general and
administrative rates as has been previously used for each such Government
Contract in the past. Whichever party pays invoices relating to the Government
Contracts shall also be entitled to xxxx therefor. Seller will pay for direct
labor and will be entitled to xxxx therefor through the Closing. Neither party
shall seek a higher overhead or general and administrative rate for services
performed through Closing.
(h) In the event at any time after Closing, the United States
government declares or gives notice of a Default either under any Long-term
Government Contract which has not been novated into the name of the Buyer or
under any Short-term Government Contract, and, in either case such Default
results from the performance of, or failure to perform by Buyer the duties and
obligations of Seller or Buyer under the Government Contracts arising after the
date of Closing, and if Buyer has not cured such alleged Default within sixty
(60) days of such governmental notice, then the Seller shall be entitled to
(subject to any required consent of the United States government), but shall not
be obligated to, immediately take over performance of the applicable Government
Contract in place of the Buyer, to seek to cure the applicable Default, and to
otherwise seek to mitigate any damages which the Seller may suffer as a result
of such Default. In such event, the Buyer shall use its commercially reasonable
efforts to cooperate with the Seller
17
to cure the applicable Default, and to otherwise mitigate any damages which the
Seller may suffer as a result of such Default.
(i) Until the earlier to occur of the date such Government
Contract is novated or six months after the Closing Date, Buyer shall not amend,
modify, supplement, renew or extend in any respect either (A) any Short-term
Government Contract or (B) any Long-term Government Contract the performance by
Buyer under which has been guaranteed by Seller or under which Seller is
otherwise directly or indirectly liable or obligated for Buyer's performance,
without prior written consent of Seller, which consent shall not be unreasonably
withheld or delayed. After such time, Buyer shall not amend, modify, supplement,
renew or extend in any respect either (X) any Short-term Government Contract or
(Y) any Long-term Government Contract the performance by Buyer under which has
been guaranteed by Seller or under which Seller is otherwise directly or
indirectly liable or obligated for Buyer's performance, without prior written
consent of Seller, which consent shall not be unreasonably withheld or delayed;
provided, however, that Seller's prior written consent shall not be necessary
for any (1) amendment, supplement, modification, renewal or extension that would
not materially expand the liability of Seller under such Government Contract, or
(2) Government Contract that has been novated.
ARTICLE III
CLOSING
3.1 CLOSING. The Closing of the transactions contemplated herein (the
"Closing") shall be held at 10:00 a.m. local time on the Closing Date at the
offices of O'Melveny & Xxxxx LLP, 000 Xxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx
00000, unless the parties hereto otherwise agree.
3.2 CONVEYANCES AT CLOSING.
(a) INSTRUMENTS AND POSSESSION. To effect the sale and transfer
referred to in Section 2.1 hereof, Seller will, at the Closing, execute and
deliver to Buyer:
(i) one or more deeds, in the form attached hereto as
EXHIBIT D, conveying good and marketable fee simple title to all Owned Real
Property included in the Purchased Assets, subject to the exceptions set forth
in Section 4.6(a), to Buyer or its designee;
(ii) one or more bills of sale, in the form attached hereto
as EXHIBIT E, conveying in the aggregate all of Seller's owned personal property
included in the Purchased Assets;
(iii) subject to Section 9.1, Assignments of Lease in the
form attached hereto as EXHIBIT F with respect to the Assumed Leases;
(iv) subject to Section 9.1, Assignments of Contract Rights,
each in the form of EXHIBIT G attached hereto, with respect to the Contract
Rights;
(v) Assignments of Patents and Trademarks and other
Proprietary Rights, each in the form attached hereto as EXHIBIT H, in recordable
form to the extent necessary to assign such rights;
18
(vi) all documentation required to exempt Seller or Buyer
from the withholding requirements of Section 1445 of the Code, consisting of an
affidavit from Seller to Buyer stating under penalty of perjury that Seller is
not a foreign person and providing Seller's U.S. taxpayer identification number;
(vii) the keys and/or codes to all locks located on or in the
Purchased Assets (and any and all cards, devices or things necessary to access
any Purchased Assets); and
(viii) such other instruments as shall be reasonably requested
by Buyer to vest in Buyer title in and to the Purchased Assets in accordance
with the provisions hereof.
(b) ASSUMPTION DOCUMENT. Upon the terms and subject to the
conditions contained herein, at the Closing Buyer shall deliver to Seller an
instrument of assumption substantially in the form attached hereto as EXHIBIT I,
evidencing Buyer's assumption, pursuant to Section 2.2, of the Assumed
Liabilities (the "Assumption Document").
(c) FORM OF INSTRUMENTS. To the extent that a form of any document
to be delivered hereunder is not attached as an Exhibit hereto, such documents
shall be in form and substance, and shall be executed and delivered in a manner,
satisfactory to Buyer and Seller.
(d) CERTIFICATES; OPINIONS. Buyer and Seller shall deliver the
certificates, opinions of counsel and other matters and documents described in
Articles VII and VIII.
(e) CONSENTS. Subject to Sections 8.3 and 9.1, Seller shall
deliver all Permits and any other third party consents required for the valid
transfer of the Purchased Assets as contemplated by this Agreement.
(f) MORTGAGE. On the Closing, Buyer shall, at its sole discretion,
either pay or, if permitted by the mortgagee and the lender, assume the
outstanding principal and accrued interest on the outstanding loan relating to
the Facilities in West Bridgewater, Massachusetts and, if paid at Closing, then
upon receipt of such payment, Seller will cause its mortgage lender to terminate
the Mortgage.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Parent and BBI Biotech, jointly and severally, hereby represent and
warrant to Buyer as follows, except as otherwise set forth on the Disclosure
Schedule.
4.1 ORGANIZATION OF SELLER. Each of Parent and BBI Biotech is a
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Massachusetts with full corporate power and authority to
conduct the Business as it is presently being conducted and to own and lease its
properties and assets. Each of Parent and BBI Biotech is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the character of its properties owned or leased or the nature of its
respective activities make such qualification necessary, except where the
failure to be so qualified or in good standing would not have a Material Adverse
Effect. True and complete copies of the Articles of Incorporation and Bylaws of
each of Parent and BBI Biotech, and all amendments thereto, have been delivered
by
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Seller to Buyer. SCHEDULE 4.1 contains a true, correct and complete list of all
jurisdictions in which Parent or BBI Biotech is qualified to do business as a
foreign corporation.
4.2 SUBSIDIARIES. Except for BBI Biotech, Seller does not have any
Subsidiaries which participate in the conduct of the Business or which own any
of the Purchased Assets. BBI Source Scientific, Inc. does not own any assets
that relate to the Business.
4.3 AUTHORIZATION. Seller has all requisite corporate power and
authority, and except for obtaining approval of Parent's stockholders, has taken
all corporate action necessary, to execute and deliver this Agreement, to
consummate the transactions contemplated hereby and to perform its obligations
hereunder. Seller has all requisite corporate power and authority and has taken
all corporate action necessary, to execute and deliver the Ancillary Agreements
to which it is a party, to consummate the transactions contemplated thereby and
to perform its obligations thereunder. The execution and delivery of this
Agreement and the Ancillary Agreements by the Seller and the consummation by the
Seller of the transactions contemplated hereby and thereby have been duly
approved by the board of directors. Except for obtaining approval of Parent's
stockholders, no other corporate proceedings on the part of Seller are necessary
to authorize this Agreement and the Ancillary Agreements and the transactions
contemplated hereby and thereby. This Agreement has been duly executed and
delivered by the Seller and constitutes the legal, valid and binding obligations
of the Seller enforceable against Seller in accordance with its terms, except as
limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors' rights and
(ii) general principles of equity that restrict the availability of equitable
remedies (regardless of whether enforceability is considered in a proceeding in
equity or at law). Each of the Ancillary Agreements to which Seller is a party,
upon their execution and delivery by the Seller, will constitute the legal,
valid and binding obligations of the Seller enforceable against Seller in
accordance with its terms, except as limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights and (ii) general principles of equity
that restrict the availability of equitable remedies (regardless of whether
enforceability is considered in a proceeding in equity or at law). The
affirmative vote of the holders of at least two-thirds of the shares of Parent's
common stock outstanding and entitled to vote at the Special Meeting is the only
vote of the holders of any of Parent's or BBI Biotech's capital stock necessary
to approve and adopt this Agreement, the Ancillary Agreements and the
transactions contemplated hereby and thereby.
4.4 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the Balance Sheet
Date, except as set forth on SCHEDULE 4.4, there has not been any:
(a) actual or threatened Material Adverse Change in the financial
condition, working capital, Purchased Assets, Assumed Liabilities, reserves,
revenues, income, or earnings of the Business;
(b) change in Tax or accounting methods, principles or practices
by Seller affecting the Purchased Assets, Assumed Liabilities or the Business;
(c) material revaluation by Seller of any of the Purchased Assets,
including without limitation writing down the value of inventory or writing off
notes or accounts receivable;
(d) damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting the Purchased Assets taken as a
whole or the Business;
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(e) cancellation of any indebtedness or waiver or release of any
right or claim of Seller relating to the Purchased Assets or Business which had
or will have a Material Adverse Effect on the Purchased Assets or the Business;
(f) other than in the ordinary course of Business, increase in the
rate of compensation payable or to become payable to any officer or other
employee of Seller involved in the Business or any consultant, Representative or
agent of Seller involved in the Business, including without limitation the
making of any loan to, or the payment, grant or accrual of any bonus, incentive
compensation, service award or other similar benefit to, any such person, or the
addition to, modification of, or contribution to any Employee Plan, arrangement,
or practice described in the Disclosure Schedule;
(g) adverse change in employee relations which has or is
reasonably likely to have a Material Adverse Effect on the Business or the
Purchased Assets or the relationships between the employees of Seller and the
management of Seller involved in the Business;
(h) amendment, cancellation or termination of any material
Contract, Lease, or Permit relating to the Purchased Assets or the Business or
entry into any Contract, Lease, or Permit which is not in the ordinary course of
business, including without limitation any employment or consulting agreements;
(i) mortgage, pledge or other Encumbrance of any Purchased Assets,
except purchase money liens arising in the ordinary course of business;
(j) sale, assignment or transfer of any of the Purchased Assets,
other than in the ordinary course of business;
(k) incurrence by Seller of Liabilities relating to the Business,
except Liabilities incurred in the ordinary course of the Business;
(l) increase or change in any assumptions underlying, or methods
of calculating, any doubtful account contingency or other reserves for the
Business;
(m) payment, discharge or satisfaction of any Liabilities of
Seller relating to the Business other than the payment, discharge or
satisfaction in the ordinary course of the Business of Liabilities set forth or
reserved for on the Financial Statements or incurred in the ordinary course of
business;
(n) capital expenditure by Seller for the Business in excess of
$10,000, or the incurring of any obligation by Seller to make any such capital
expenditure;
(o) failure to pay or satisfy when due any Liability of Seller
relating to the Business, except where the failure would not have a Material
Adverse Effect on the Purchased Assets or the Business;
(p) disposition or lapsing of any material Proprietary Rights or
any disposition or disclosure to any person of any material Proprietary Rights
not theretofore a matter of public knowledge;
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(q) existence of any other event or condition which in any one
case or in the aggregate has or might reasonably be expected to have a Material
Adverse Effect on the Business or the Purchased Assets;
(r) other than as set forth in SCHEDULE 4.4(r), payment not in the
ordinary course of Business from Seller to or on behalf of Seller or any
officer, director, stockholder or employee of Seller, pursuant to any agreement
or otherwise between Seller or any such person or otherwise;
(s) any agreement, condition, action or omission which would be
proscribed by (or require consent under) Section 6.5 had it existed, occurred or
arisen after the date of this Agreement; or
(t) agreement by Seller to do any of the things described in the
preceding clauses (a) through (s) other than as expressly provided for herein.
4.5 ASSETS. Excluding the Owned Real Property and the Leased Real
Property, Seller has and will transfer good and marketable title to the
Purchased Assets and upon the consummation of the transactions contemplated
hereby, Buyer will acquire good and marketable title to all of the Purchased
Assets, free and clear of any Encumbrances. At the Closing, Seller will transfer
title to the Owned Real Property to Buyer free and clear of any Encumbrances
other than Permitted Encumbrances. The Purchased Assets, including the Owned
Real Property and the Leased Real Property, include without limitation all
assets reasonably necessary for the conduct of the Business. SCHEDULE 4.5
contains accurate lists of all Purchased Assets, excluding the Owned Real
Property and the Leased Real Property, where the value of an individual item
exceeds $2,500.00 or where an aggregate of similar items exceeds $10,000.00. To
Seller's knowledge and except as set forth on SCHEDULE 4.5, all tangible assets
and properties included on the Balance Sheet at a value of at least $25,000 per
asset, reasonably necessary for the conduct of the Business which are part of
the Purchased Assets, excluding the Owned Real Property and the Leased Real
Property, are in good operating condition and repair and are usable in the
ordinary course of the Business and conform in all material respects to all
applicable Regulations (including Environmental Laws) relating to their
construction, use and operation. To Seller's knowledge and except as set forth
on SCHEDULE 4.5, all other tangible assets and properties reasonably necessary
for the conduct of the Business which are part of the Purchased Assets,
excluding the Owned Real Property and the Leased Real Property, are in operating
condition and repair and are usable in the ordinary course of the Business and
conform in all material respects to all applicable Regulations (including
Environmental Laws) relating to their construction, use and operation.
4.6 FACILITIES. SCHEDULE 4.6 contains a complete and accurate list
of all Owned Real Property.
(a) OWNED REAL PROPERTY. Seller has not granted any mortgages,
pledges, liens, security interests or encumbrances of any kind that would
materially and adversely affect the marketability of title of the Owned Real
Estate or the Facility Leases, except for the Mortgage and Permitted
Encumbrances and Seller has provided to Buyer a copy of the title report
attached hereto as EXHIBIT O confirming Seller's ownership of the Owned Real
Estate and lack of Encumbrances as of the date of such report. Except for the
Permitted Encumbrances, Seller holds title to and enjoys peaceful and
undisturbed possession of, all Owned Real Property. Seller has received no
notice of any proposed special assessments or eminent domain actions, nor any
proposed material changes in property Tax or land use laws affecting the Owned
Real Estate or the Facility Leases.
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(b) ACTIONS. There are no pending Actions relating to the Owned
Real Property or, to the knowledge of Seller, threatened Actions relating to any
Facility.
(c) LEASES OR OTHER AGREEMENTS. Except for Facility Leases listed
on SCHEDULE 4.7, to Seller's knowledge, there are no Leases, subleases,
licenses, occupancy agreements, options, rights, concessions or other agreements
or arrangements, written or oral, granting to any person the right to purchase,
use or occupy any Facility, or any real property in connection with the Business
or any portion thereof or interest in any such Facility or real property.
(d) FACILITY LEASES AND LEASED REAL PROPERTY. Except for the
Permitted Encumbrances, Seller enjoys and will transfer to Buyer at the Closing
peaceful and undisturbed possession of all the Leased Real Property.
(e) CERTIFICATE OF OCCUPANCY. All Facilities have received all
required approvals of governmental authorities (including without limitation
Permits and a certificate of occupancy or other similar certificate permitting
lawful occupancy of the Facilities) required in connection with the operation
thereof and, to Seller's knowledge, have been operated and maintained in
accordance with applicable Regulations, except as disclosed in SCHEDULE 4.6(e)
or where the failure to obtain such approvals or operate or maintain the
Facilities in accordance with applicable Regulations would not have a Material
Adverse Effect. Seller has provided to Buyer a true and complete copy of the
certificate of occupancy for each of the Facilities.
(f) UTILITIES. All Facilities are supplied with utilities
(including without limitation water, sewage or septic, disposal, electricity,
gas and telephone) and other services necessary for the operation of such
Facilities as currently operated, and, to Seller's knowledge, there is no
condition which would reasonably be expected to result in the termination of the
present access from any Facility to such utility services.
(g) IMPROVEMENTS, FIXTURES AND EQUIPMENT. Except as set forth in
SCHEDULE 4.6(g), the improvements constructed on the Facilities, including
without limitation all Leasehold Improvements, and all Fixtures and Equipment
and other tangible assets owned, leased or used by Seller in the Business and at
the Facilities are (i) in operating condition and repair, (ii) insured to the
extent and in a manner customary in the industry and (iii) except as disclosed
in SCHEDULE 4.6(e), in conformity with all applicable Regulations, except where
the failure to be in conformity would not reasonably be likely to have a
Material Adverse Effect.
4.7 CONTRACTS AND COMMITMENTS.
(a) CONTRACTS. SCHEDULE 4.7 sets forth a complete and accurate
list of all Contracts relating to the Business of the following categories,
except for any Contracts entered into in the ordinary course of the business
which may be terminated by Seller on less than thirty (30) days notice without
penalty:
(i) Contracts not made in the ordinary course of the
Business;
(ii) Employment, consulting and independent contractor
contracts with an annualized payment obligation of Seller thereunder in excess
of $10,000.00 and severance agreements, including without limitation contracts
(A) to employ or terminate executive officers or other personnel and other
contracts with present or former officers, directors or shareholders of
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Seller or (B) that will result in the payment by, or the creation of any
Liability to pay on behalf of Buyer or Parent or BBI Biotech any severance,
termination, parachute payments within the meaning of the Code, or other similar
payments to any present or former personnel following termination of employment
or otherwise as a result of the consummation of the transactions contemplated by
this Agreement;
(iii) Labor or union contracts;
(iv) Distribution, supply, purchase, development, OEM
franchise, license, technical assistance, sales, commission, consulting, agency
or advertising contracts related to the Purchased Assets or the Business other
than purchase orders received or written in the ordinary course of business;
(v) Options with respect to the purchase of any property,
real or personal, whether Seller shall be the grantor or grantee thereunder;
(vi) Contracts involving future expenditures or Liabilities,
actual or potential, in excess of $10,000.00 or otherwise material to the
Business or the Purchased Assets and not cancelable without Liability within 30
calendar days;
(vii) Contracts or commitments relating to commission
arrangements with others;
(viii) Promissory notes, loans, agreements, indentures,
evidences of indebtedness, letters of credit, guarantees, or other instruments
relating to an obligation to pay money, individually in excess of $5,000.00 or
in the aggregate in excess of $15,000.00, whether Seller shall be the borrower,
lender or guarantor thereunder or whereby any Purchased Assets are pledged
excluding credit provided by Seller in the ordinary course of business to
purchasers of its products;
(ix) Contracts containing covenants limiting the freedom of
Seller or any officer, director, employee or affiliate of Seller to engage in
any line of business or compete with any person;
(x) Any Contract with the United States, or any state or
local government or any agency or department thereof;
(xi) Leases of real property;
(xii) material Leases of personal property;
(xiii) Any Contract that grants a power of attorney, agency or
similar authority to another person or entity;
(xiv) Any Contract with an Affiliate of Seller or any
Subsidiary or any Representative of Seller, any Subsidiary or any of their
respective Affiliates; and
(xv) All other material Contracts (including all Government
Contracts).
Except for the Incomplete Contracts, Seller has delivered to Buyer true, correct
and complete
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copies of all of the written Contracts and Leases listed on SCHEDULE 4.7,
including all amendments and supplements thereto.
(b) ABSENCE OF DEFAULTS. All of the Contracts and Leases to which
Seller is party or by which it or any of the Purchased Assets is bound or
affected are valid, binding and enforceable in accordance with their terms,
except as limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights and (ii) general principles of equity that restrict the
availability of equitable remedies (regardless of whether enforceability is
considered in a proceeding in equity or at law). Seller has fulfilled all of its
material obligations under each of such Contracts and Leases. To the Seller's
knowledge, all parties to such Contracts and Leases have complied in all
material respects with the provisions thereof, no party is in material Default
thereunder and no notice of any claim of Default or termination has been given
to or by Seller. With respect to any Leases, Seller has not received any notice
of cancellation or termination under any option or right reserved to the lessor,
or any notice of Default, thereunder.
(c) GOVERNMENT CONTRACTS.
(i) The Government Contracts are in full force and effect.
Seller has complied with all material terms and conditions of each Government
Contract to which it is a party as required and complied in every material
respect with, and has conducted its operations in every material respect in
accordance with, each applicable Regulation pertaining to Government Contracts
including compliance in all material respects with the cost accounting standards
set forth in the FAR. All representations and certifications made by Seller with
respect to such Government Contracts were accurate in every material respect as
of their effective date and Seller has complied with all such representations
and certifications in all material respects. No termination, Default, cure or
show cause notice has been issued with respect to Seller under any Government
Contract since June 30, 2000 and no such notice remains unresolved. Seller has
not submitted any quality or test report pursuant to any Government Contract
that was inaccurate, untruthful or misleading in any material respect. There
exist no outstanding requests for equitable adjustment or other contractual
action for relief against Seller either by the U.S. Government or by any prime
contractor, subcontractor, vendor or other Person, arising under or relating to
any Government Contract and Seller has not requested an equitable adjustment
with respect to any Government Contract under which Seller is currently
providing services.
(ii) Neither Seller, nor to Seller's knowledge, any of
Seller's respective employees, consultants or agents is (or during the last
three years has been) under administrative, civil or criminal indictment by any
governmental entity or has pled guilty to any criminal offense which could
reasonably be expected to lead to (A) suspension, (B) debarment or (C) in the
case of Seller, other ineligibility to be a party to a Government Contract or
which could reasonably be expected to subject Seller to any additional reporting
obligation under FAR or other Regulations applicable to Government Contracts;
and neither Seller, nor to Seller's knowledge, any employee, consultant or agent
of Seller, has received any written notice that any investigation is pending
with respect to any criminal Regulations and, to the knowledge of Seller, there
is no such investigation with respect to any criminal Regulations pending.
Seller (and, to the knowledge of Seller, no employee, consultant or agent of
Seller) has not received written notice of a pending audit (including any draft
audit report received by Seller) or investigation of the Seller or any of
Seller's respective officers, employees or representatives by any governmental
entity or any other third-party auditor acting on their behalf, nor within the
last three years has there been any such audit or investigation of Seller or any
of its respective officers, employees or representatives with
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respect to any Government Contract with respect to which Seller has received
written notice or otherwise has knowledge. No audit of Seller by any
governmental entity has resulted in an adverse finding with respect to any
material irregularity or any misstatement or fraudulent omission arising under
or relating to any Government Contract. Since January 1, 2001, Seller has not
made any voluntary disclosure in writing to the U.S. Government with respect to
any alleged irregularity, misstatement or fraudulent omission arising under or
relating to a Government Contract. Seller has not had any such irregularities,
misstatements or omissions arising under or relating to any such Government
Contract that has led to any suspension, debarment or other ineligibility of
Seller to be a party to a Government Contract or any other material damage,
penalty assessment, recoupment of payment or disallowance of cost.
(iii) Except as set forth on SCHEDULE 4.7, there are (i) no
outstanding material written claims against Seller, either by the U.S.
Government or by any prime contractor, subcontractor, vendor or other third
party arising under or relating to any Government Contract, and (ii) no material
written disputes between Seller and the U.S. Government under the Contract
Disputes Act or any other federal statute or between Seller and any prime
contractor, subcontractor or vendor, arising under or relating to any such
Government Contract.
4.8 PERMITS.
(a) SCHEDULE 4.8(a) sets forth a complete list of all Permits used
in the operation of the Business. Except as disclosed in Section 4.6(e), Seller
has, and at all times has had, all Permits required under any Regulation
(including Environmental Laws) in the operation of the Business or in the
ownership of the Purchased Assets, where, the failure to obtain the same would
have a Material Adverse Effect and owns or possesses such Permits free and clear
of all Encumbrances. Seller is not in material Default, nor has it received any
notice of any claim of Default, with respect to any such Permit. Except as
otherwise governed by law, all such Permits are renewable by their terms or in
the ordinary course of business without the need to comply with any special
qualification procedures or to pay any amounts other than routine filing fees
and, except as set forth on SCHEDULE 4.8, will not be adversely affected by the
completion of the transactions contemplated by this Agreement. No present or
former director, officer or employee of Seller or any affiliate thereof, or to
Seller's knowledge, any other person, firm, corporation or other entity, owns or
has any proprietary, financial or other interest (direct or indirect) in any
Permit which Seller owns, possesses or uses in the Business.
(b) To Seller's knowledge, except as disclosed on SCHEDULE 4.8(b),
no notice to, declaration, filing or registration with, or Permit from, any
domestic or foreign governmental or regulatory body or authority, or any other
person or entity, is required to be made or obtained by Parent or BBI Biotech in
connection with the execution, delivery or performance of this Agreement or any
of the Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby. For purposes of this Section 4.8(b) only,
Seller shall be deemed to have knowledge of all declarations, filings,
registrations, authorizations, consents, approvals or permits required to be
made or obtained by Seller if the business conducted by Buyer as of the date
hereof was identical to the Business.
4.9 NO CONFLICT OR VIOLATION. The execution, delivery and performance
of this Agreement and each of the Ancillary Agreements to which Seller is a
party, the consummation of the transactions contemplated hereby and thereby, and
compliance by Parent or BBI Biotech with any of the provisions hereof or
thereof, will not (a) violate or conflict with any provision of the Articles of
Incorporation or Bylaws of Parent or BBI Biotech, (b) except as set forth in
SCHEDULE
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4.9, violate, conflict with, or result in or constitute a material Default
under, or result in the termination of, trigger a material penalty provision
under, or accelerate the performance required by, or result in a right of
termination or acceleration under, or otherwise accelerate any obligation of
Seller under any of the terms, conditions or provisions of any material
Contract, Lease or Permit, (c) result in the imposition of any Encumbrance
against any assets or properties of the Seller or any of the Purchased Assets,
or (d) violate any Regulation or Court Order.
4.10 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Except as set forth in SCHEDULE 4.10, Parent has timely filed
with the Securities and Exchange Commission (the "SEC") all reports, schedules,
forms, statements and other documents (including exhibits) required to be filed
by it under the Securities Act of 1933 (the "Securities Act") and the Securities
Exchange Act of 1934 (the "Exchange Act") from January 1, 2000 through the date
of this Agreement. All reports, schedules, forms, statements and other documents
(including exhibits) filed by Seller with the SEC pursuant to the Securities Act
and the Exchange Act since January 1, 2000 are referred to herein as the "Parent
SEC Filings." The Parent SEC Filings (i) were prepared in compliance, in all
material respects, with the applicable requirements of the Securities Act and
the Exchange Act, as the case may be, and the rules and regulations thereunder,
and (ii) did not at the time they were filed contain any untrue statement of
material fact or omit to state a material fact required to be stated in such
Parent SEC Filings or necessary to make the statements therein, in light of the
circumstances in which they were made, not false or misleading, and (iii) in the
event of subsequent modifications of the circumstances or the basis on which
they had been made, were, to the extent required by the Securities Act and the
Exchange Act, as the case may be, timely amended prior to the date of this
Agreement in order to make them not false or misleading in any material respect
in the light of such new circumstances or basis; provided, however, that Parent
is not making any representations with respect to information contained in the
Parent SEC Filings that does not relate to the Business or the Purchased Assets.
None of the Subsidiaries is required to file any forms, reports or other
documents with the SEC. Except as set forth in SCHEDULE 4.10(a), all documents
required to be filed as exhibits to the Parent SEC Filings have been so filed
and Parent has made available to Buyer all exhibits to the Parent SEC Filings
filed prior to the date hereof, and will promptly make available to Buyer all
exhibits to any additional Parent SEC Filings filed prior to the Closing.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Parent SEC Filings, (i)
was complete and correct in all material respects as of their respective dates,
(ii) complied as to form in all material respects with the then current
published rules and regulations of the SEC with respect thereto, (iii) was
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited interim financial statements, as may be permitted by the SEC on Form
10-Q under the Exchange Act) and (iv) fairly presented the consolidated
financial position of Parent and its subsidiaries at the respective dates
thereof and the consolidated results of its operations and cash flows for the
periods indicated, except that the unaudited interim financial statements were
or are subject to normal and recurring year-end adjustments which were not, or
are not expected to be, material in amount. The consolidated financial
statements contained in the Parent SEC Filings are referred to hereinafter as
the "Financial Statements." At the respective dates of the Financial Statements,
there were no material Liabilities of Seller, which, in accordance with
generally accepted accounting principles, should have been reserved for in the
Financial Statements and/or disclosed in the notes thereto, which are not
reserved for in the Financial Statements and/or disclosed in the notes thereto.
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(c) Parent has heretofore furnished to Buyer a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by Parent with the SEC
pursuant to the Securities Act or the Exchange Act.
4.11 BOOKS AND RECORDS. Seller has made and kept (and given Buyer
access to) Books and Records and accounts, which, in reasonable detail,
accurately and fairly reflect in all material respects the activities of Seller
pertaining to the Business and the Purchased Assets. In connection with the
operation of the Business, Seller has not engaged in any transaction, maintained
any bank account or used any corporate funds except for transactions, bank
accounts and funds which have been and are reflected in the normally maintained
Books and Records of Seller. Seller maintains internal controls over financial
reporting (as defined in Exchange Act Rule 13a-15(f)), which provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with GAAP. Parent
maintains disclosure controls and procedures (as defined in Exchange Act Rule
13a-15(e)). As of the Balance Sheet Date, Parent carried out an evaluation,
under the supervision and with the participation of Parent's management,
including its President (Principal Executive Officer and Principal Financial
Officer) of the effectiveness of the design and operation of Parent's disclosure
controls and procedures and, based upon that evaluation, the certifying officer
concluded that Parent's disclosure controls and procedures are effective in
enabling Parent to record, process, summarize and report information required to
be included in Parent's periodic reports filed with the SEC within the required
time period. Since the Balance Sheet Date, there have been no changes in
Seller's internal controls over financial reporting that have materially
affected or are reasonably likely to materially affect, Seller's internal
control over financial reporting.
4.12 LITIGATION. Except as set forth on SCHEDULE 4.12, there are no
Actions pending, or to the Seller's knowledge threatened (a) against, related to
or affecting (i) the Business or the Purchased Assets (including with respect to
Environmental Laws), or (ii) any officers or directors of Seller, (b) seeking to
delay, limit or enjoin the transactions contemplated by this Agreement or (c) in
which Seller is a plaintiff, including any derivative suits brought by or on
behalf of Seller. Seller is not in Default with respect to or subject to any
Court Order, and there are no unsatisfied judgments against Seller, the Business
or the Purchased Assets. There are no Court Orders or agreements with, or liens
by, any governmental authority or quasi-governmental entity relating to any
Environmental Law which regulate, obligate, bind or in any way affect Seller,
the Purchased Assets, any Facility or any Former Facility.
4.13 LABOR MATTERS.
(a) Except as set forth in SCHEDULE 4.13(a), Seller is not a party
to any collective bargaining agreements and there are no labor unions or other
organizations representing any employee of Seller involved in the Business.
Except as set forth in SCHEDULE 4.13(a), there are no labor unions or other
organizations which have filed a petition with the National Labor Relations
Board or any other Governmental Agency seeking certification as the collective
bargaining representative of any employee of Seller involved in the Business,
and to the knowledge of Seller no labor union or organization is engaged in any
organizing activity with respect to any employee of Seller involved in the
Business. In the three (3) years prior to the date hereof, there has not been,
there is not presently pending or existing, and to Seller's knowledge there is
not threatened, (i) any strike, lockout, slowdown, picketing, or work stoppage
with respect to the employees of Seller involved in the Business or (ii)any
unfair labor practice charge against the Seller.
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(b) With respect to employees of Seller involved in the Business,
Seller has complied, and is presently in compliance, in all material respects
with all statutes, laws, ordinances, rules or regulations, or any orders,
rulings, decrees, judgments or arbitration awards of any court, arbitrator or
any government agency relating to employment, equal opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar Taxes, occupational safety and
health, and/or privacy rights of employees.
(c) Except as set forth in SCHEDULE 4.13(c), in the three (3)
years prior to the Closing Date, Seller has not been a party to any court or
administrative proceeding in which Seller, with respect to an employee involved
in the Business, was, or is, alleged to have violated any statutes, laws,
ordinances, rules or regulations, or any orders, rulings, decrees, judgments or
arbitration awards of any court, arbitrator or any government agency relating to
employment, equal opportunity, nondiscrimination, immigration, wages, hours,
benefits, collective bargaining, the payment of social security and similar
Taxes, occupational safety and health, and/or privacy rights of employees.
(d) Except as set forth in SCHEDULE 4.13(d), in the three (3)
years prior to the Closing Date, Seller has not effectuated (i) a "plant
closing" as defined in the Worker Adjustment and Retraining Notification Act, 29
U.S.C. Sections 2101 et seq. (the "WARN Act"), or any similar state, local or
foreign law affecting any site of employment or one or more facilities or
operating units within any site of employment or facility of Seller or (ii) a
"mass layoff" as defined in the WARN Act, or any similar state, local or foreign
law affecting any site of employment or facility of Seller.
(e) Except as set forth in SCHEDULE 4.13(e), Seller is not a party
to any contract, agreement, or arrangement with any employee of Seller involved
in the Business that (i) restricts Seller's right to terminate the employment of
any employee without cause or (ii) obligates Seller to pay severance to any
employee of Seller upon termination of such employee's employment with Seller.
(f) Section 4.13 of Seller's Disclosure Schedule sets forth the
names and current annual salary rates or current hourly wages of all present
employees of Seller involved in the Business, and also sets forth the earnings
for each of such employees as reflected on Form W-2 for the 2003 calendar year.
4.14 LIABILITIES. Other than the Assumed Liabilities and the Excluded
Liabilities and as set forth on SCHEDULE 4.14, Seller has no Liabilities
relating to the Business due or to become due, except (a) Liabilities which are
set forth or reserved for on the Balance Sheet, which have not been paid or
discharged since the Balance Sheet Date, (b) Liabilities arising in the ordinary
course of business relating to the Business under Contracts, Leases, Permits and
other business arrangements described in the Disclosure Schedule (and under
those Contracts, Leases and Permits which are not required to be disclosed on
the Disclosure Schedule), arising prior to Closing none of which, individually
or in the aggregate, has or would have a Material Adverse Effect on the Business
or the Purchased Assets and (c) Liabilities incurred since the Balance Sheet
Date in the ordinary course of business relating to the Business and in
accordance with this Agreement and none of which, individually or in the
aggregate, has or would have a Material Adverse Effect on the Business or the
Purchased Assets.
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4.15 COMPLIANCE WITH LAW. Seller's conduct of the Business has not
violated and is in compliance with all Regulations and Court Orders relating to
the Purchased Assets or the Business or operations of Seller relating to the
Business, the failure to comply with which would have a Material Adverse Affect.
Seller has not received any notice to the effect that, or otherwise been advised
that, it is not in compliance with any such Regulations or Court Orders.
4.16 NO BROKERS. Except as set forth in the SCHEDULE 4.16, neither
Parent, BBI Biotech nor any of their respective Affiliates or Representatives
has employed or made any agreement with any broker, finder or similar agent or
any person or firm which will result in the obligation of Buyer or any of its
Affiliates to pay any finder's fee, brokerage fees or commission or similar
payment in connection with the transactions contemplated hereby.
4.17 NO OTHER AGREEMENTS TO SELL THE PURCHASED ASSETS. Neither Parent
nor BBI Biotech nor any of their respective Affiliates or Representatives have
any commitment or legal obligation, absolute or contingent, to any other person
or firm other than the Buyer to sell, assign, transfer or effect a sale of any
of the Purchased Assets, other than sales of inventory in the ordinary course of
business.
4.18 PROPRIETARY RIGHTS.
(a) PROPRIETARY RIGHTS. SCHEDULE 4.18 lists all of the Patents,
registered Trademarks, Domain Names, registered Copyrights, and licenses for the
foregoing. SCHEDULE 4.18 also sets forth: (i) for each Patent, the number,
normal expiration date and subject matter for each country in which such Patent
has been issued, or, if applicable, the application number, date of filing and
subject matter for each country, (ii) for each registered Trademark, the
application serial number or registration number, the class of goods covered and
the expiration date for each country in which a Trademark has been registered
and (iii) for each registered Copyright, the number and date of filing for each
country in which a Copyright has been filed. The Patents, Domain Names,
registered Copyrights, registered Trademarks and licenses for the foregoing
listed in the Disclosure Schedule are all those Patents, Domain Names,
registered Copyrights, registered Trademarks and licenses used by Seller
relating to the Business. True and correct copies of all Patents (including all
pending applications) owned, controlled, created or used by or on behalf of
Seller or in which Seller has any interest whatsoever will be provided to Buyer
by Seller as soon as practicable, but in any event prior to the Closing.
(b) ROYALTIES AND LICENSES. Except as set forth in SCHEDULE 4.18,
Seller does not have any obligation to compensate any person for the use of any
Proprietary Rights nor has Seller granted to any person any license, option or
other rights to use in any manner any of its Proprietary Rights, whether
requiring the payment of royalties or not.
(c) OWNERSHIP AND PROTECTION OF PROPRIETARY RIGHTS. Seller owns or
has a valid right to use each of the Proprietary Rights, and the Proprietary
Rights are transferable and shall not cease to be valid by reason of the
execution, delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby unless so stated in SCHEDULE 4.18. The
Proprietary Rights are sufficient for the conduct of the Business as currently
conducted. All of the pending Patent applications have been duly filed, all
necessary Patent, registered Trademark and Domain Name registration, maintenance
and renewal fees currently due have been paid, and unless stated in SCHEDULE
4.18, no acts are required to be taken within 90 days of the date hereof with
respect to any Proprietary Rights in order to avoid prejudice to, or impairment
of, such rights. Seller has not received any notice of invalidity or
infringement of any rights of others with respect
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to the Trademarks. Seller has taken commercially reasonable steps to protect the
Proprietary Rights from infringement or misappropriation by any other person.
Except as set forth on SCHEDULE 4.18, no other person (i) to the Seller's
knowledge, has the right to use any of Seller's Trademarks on the goods on which
they are now being used either in identical form or in such near resemblance
thereto as to be likely, when applied to the goods of any such person, to cause
confusion with such Trademarks or to cause a mistake or to deceive, (ii) has
notified Seller that it is claiming any ownership of or right to use such
Proprietary Rights, or (iii) to the Seller's knowledge, is infringing upon any
such Proprietary Rights in any way. Except as set forth on SCHEDULE 4.18, to
Seller's knowledge, Seller's use of the Proprietary Rights does not and will not
conflict with, infringe upon or otherwise violate or misappropriate the valid
rights of any third party in or to such Proprietary Rights, and no Action has
been instituted against (or to the knowledge of Seller, threatened) or notices
received by Seller that are presently outstanding alleging that Seller's use of
the Proprietary Rights infringes upon or otherwise violates any rights of a
third party in or to such Proprietary Rights, and Seller has no knowledge of any
facts which would give rise to such a claim. Other than as otherwise provided by
law, there are not, and it is reasonably expected that after the Closing there
will not be, any restrictions on Seller's, or Buyer's, as the case may be, right
to make, use or sell products manufactured by Seller or Buyer, as the case may
be, in connection with the Business.
4.19 EMPLOYEE BENEFIT PLANS.
(a) DEFINITIONS. The following terms, when used in this Section
4.19, shall have the following meanings. Any of these terms may, unless the
context otherwise requires, be used in the singular or the plural depending on
the reference.
(i) BENEFIT ARRANGEMENT. "Benefit Arrangement" shall mean
any employment, consulting, severance or other similar contract, arrangement or
policy and each plan, arrangement (written or oral), program, agreement or
commitment providing for insurance coverage (including without limitation any
self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits,
life, health, disability or accident benefits (including without limitation any
"voluntary employees' beneficiary association" as defined in Section 501(c)(9)
of the Code providing for the same or other benefits) or for deferred
compensation, profit-sharing bonuses, stock options, stock appreciation rights,
stock purchases or other forms of incentive compensation or post-retirement
insurance, compensation or benefits.
(ii) EMPLOYEE PLANS. "Employee Plans" shall mean all Benefit
Arrangements, Multiemployer Plans, Pension Plans and Welfare Plans as defined in
Section 4001(a)(3) of ERISA which Seller or any ERISA Affiliate maintains,
administers, contributes to or was required to contribute to at any time during
the last five (5) years; Pension Plans shall mean any "employee pension benefit
plan" as defined in Section 3(2) ERISA (other than a Multiemployer Plan); and
Welfare Plans shall mean any "employee welfare benefit plan" as defined in ERISA
Section 3(1) any of which Seller or any ERISA Affiliate maintains, administers,
contributes to or is required to contribute to, or under which Seller or any
ERISA Affiliate may incur any Liability and which covers any employee or former
employee of Seller or any ERISA Affiliate (with respect to their relationship
with such entities).
(iii) ERISA. "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended.
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(iv) ERISA AFFILIATE. "ERISA Affiliate" shall mean any
entity which is (or at any relevant time was) a member of a "controlled group of
corporations" with, under "common control" with, or a member of an "affiliated
service group" with, Seller as defined in Section 414(b), (c), (m) or (o) of the
Code.
(b) DISCLOSURE; DELIVERY OF COPIES OF RELEVANT DOCUMENTS AND OTHER
INFORMATION. SCHEDULE 4.19 contains a complete list of Employee Plans which
cover current or continues to cover former employees of Seller involved in the
Business (with respect to their relationship with such entities). True and
complete copies of each of the following documents have been delivered by Seller
to Buyer: (i) each Employee Plan and Multiemployer Plan (and, if applicable,
related trust agreements) which covers or has covered employees of Seller
involved in the Business (with respect to their relationship with such entities)
and all amendments thereto, all written interpretations thereof and written
descriptions thereof which have been distributed to Seller's employees and all
annuity contracts or other funding instruments, (ii) each Employee Plan which
covers current or continues to cover former employees of Seller involved in the
Business (with respect to their relationship with such entities) including
written interpretations thereof and written descriptions thereof which have been
distributed to Seller's employees and a complete description of any Employee
Plan which is not in writing, (iii) the most recent determination or opinion
letter issued by the Internal Revenue Service with respect to each Employee Plan
(other than a "multiemployer plan", as defined in Section 3(37) of ERISA) which
covers or has covered employees of Seller (with respect to its relationship with
such entities), (iv) for the three most recent plan years, Annual Reports on
Form 5500 Series (including all schedules and attachments thereto) required to
be filed with any governmental agency for each Pension Plan which covers or has
covered employees of Seller (with respect to its relationship with such
entities), (v) all actuarial reports prepared for the last three plan years for
each Pension Plan which covers or has covered employees of Seller involved in
the Business (with respect to its relationship with such entities), (vi) for
each such Pension Plan, a description of complete age, salary, service and
related data as of the last day of the last plan year for employees and former
employees of Seller, and (vii) a description setting forth the amount of any
Liability of Seller as of the Closing Date for payments more than thirty (30)
calendar days past due with respect to each Welfare Plan which covers or has
covered employees or former employees of Seller involved in the Business.
(c) REPRESENTATIONS. Except as set forth in SCHEDULE 4.19, Seller
represents and warrants as follows:
(i) EMPLOYEE PLANS
(A) Each Employee Plan which covers or has covered
employees or former employees of Seller involved in the Business (with respect
to their relationship with such entities) has been maintained in compliance in
all material respects with its terms and, both as to form and operation, with
the requirements prescribed by any and all Regulations and Courts' Orders which
are applicable to such Employee Plan, including without limitation ERISA and the
Code.
(B) None of Seller, any ERISA Affiliate or any
Employee Plan has any present or future obligation to make any payment to, or
with respect to any present or former employee of Seller or any ERISA Affiliate
pursuant to, any retiree medical benefit plan, or other retiree Employee Plan,
and no condition exists which would prevent Seller from amending or terminating
any such benefit plan or Welfare Plan.
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(C) Each Employee Plan which covers or has covered
employees or former employees of Seller and which is a "group health plan," as
defined in Section 607(1) of ERISA, has been operated in compliance in all
material respects with provisions of Part 6 of Title I, Subtitle B of ERISA and
Sections 162(k) and 4980B of the Code at all times.
(D) Neither Seller nor any ERISA Affiliate has
incurred any Liability with respect to any Employee Plan that is a
"multiemployer plan", as defined in Section 3(37) of ERISA, under the terms of
such Employee Plan, any collective bargaining agreement or otherwise resulting
from any cessation of contributions, cessation of obligation to make
contributions or other form of withdrawal from such Employee Plan.
(E) If, as of the Closing Date, Seller (and all ERISA
Affiliates) were to have a cessation of contributions, cessation of obligations
to make contribution or other form of withdrawal from all Employee Plans and
Pension Plans that are "multiemployer plans", as defined in Section 3(37) of
ERISA, it (and they) would incur no Liabilities with respect to any such
Employee Plans and Pension Plans under the terms of such Employee Plans and
Pension Plans, any collective bargaining agreement or otherwise.
(ii) BENEFIT ARRANGEMENTS. Each Benefit Arrangement which
covers current employees or continues to cover former employees of Seller (with
respect to their relationship with such entities) involved in the Business has
been maintained in compliance in all material respects with its terms and with
the requirements prescribed by any and all Regulations and Court Orders which
are applicable to such Benefit Arrangement, including without limitation the
Code. Except as set forth in the Disclosure Schedule, and except as provided by
law, the employment of all persons presently employed or retained by Seller is
terminable at will.
(iii) UNRELATED BUSINESS TAXABLE INCOME. No Employee Plan (or
trust or other funding vehicle pursuant thereto) is subject to any Tax under
Code Section 511.
(iv) DEDUCTIBILITY OF PAYMENTS. There is no Contract
covering any employee or former employee of Seller (with respect to its
relationship with such entities) involved in the Business that, individually or
collectively, provides for the payment by Seller of any amount (i) that is not
deductible under Section 162(a)(1) or 404 of the Code or (ii) that is an "excess
parachute payment" pursuant to Section 280G of the Code.
(v) FIDUCIARY DUTIES AND PROHIBITED TRANSACTIONS. To the
knowledge of Seller, neither Seller nor any plan fiduciary of any Employee Plan
or Pension Plan which covers or has covered employees or former employees of
Seller or any ERISA Affiliate, has engaged in any transaction in violation of
Sections 404 or 406 of ERISA or any "prohibited transaction," as defined in
Section 4975(c)(1) of the Code, for which no exemption exists under Section 408
of ERISA or Section 4975(c)(2) or (d) of the Code, or has otherwise violated the
provisions of Part 4 of Title I, Subtitle B of ERISA. Seller has not knowingly
participated in a violation of Part 4 of Title I, Subtitle B of ERISA by any
plan fiduciary of any Employee Plan or Pension Plan and has not been assessed
any civil penalty under Section 502(l) of ERISA.
(vi) VALIDITY AND ENFORCEABILITY. Each Employee Plan and
Pension Plan and each related trust agreement, annuity contract or other funding
instrument which covers current employees or continues to cover former employees
of Seller involved in the Business (with respect to their relationship with such
entities) is legally valid and binding and in full force and effect.
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(vii) LITIGATION. There is no Action or Court Order
outstanding, relating to or seeking benefits under any Employee Plan that is
pending, or to Seller's knowledge threatened against Seller, any ERISA Affiliate
or any Employee Plan.
(viii) NO AMENDMENTS. Neither Seller nor any ERISA Affiliate
has any announced plan or legally binding commitment to create any additional
Employee Plans which are intended to cover employees or former employees of
Seller (with respect to their relationship with such entities) involved in the
Business or to amend or modify any existing Employee Plan which covers or has
covered employees or former employees of Seller (with respect to their
relationship with such entities) involved in the Business.
(ix) NO OTHER MATERIAL LIABILITY. To Seller's knowledge, no
event has occurred in connection with which Seller or any ERISA Affiliate or any
Employee Plan, directly or indirectly, could be subject to any material
Liability under any Regulation or Court Order relating to any Employee Plans or
pursuant to any obligation of Seller to indemnify any person against Liability
incurred under any such Regulation or Court Order as they relate to the Employee
Plans. To Seller's knowledge, no lien has been imposed under ERISA or the Code
with respect to Seller, any Employee Plan or any ERISA Affiliate.
(x) UNPAID CONTRIBUTIONS. Neither Seller nor any ERISA
Affiliate has any Liability for unpaid contributions under Section 515 of ERISA
with respect to any Pension Plan, Multiemployer Plan or Employee Plan.
(xi) INSURANCE CONTRACTS. Neither Seller nor any Employee
Plan (other than a "multiemployer plan", as defined in Section 3(37) of ERISA)
holds as an asset of any Employee Plan any interest in any annuity contract,
guaranteed investment contract or any other investment or insurance contract
issued by an insurance company that is the subject of bankruptcy,
conservatorship or rehabilitation proceedings.
(xii) NO ACCELERATION OR CREATION OF RIGHTS. Except as set
forth in SCHEDULE 4.19(c)(xii), neither the execution and delivery of this
Agreement or the Ancillary Agreements by Seller nor the consummation of the
transactions contemplated hereby or thereby will result in the acceleration or
creation of any rights of any person to benefits under any Employee Plan
(including, without limitation, the acceleration of the vesting or
exercisability of any stock options, the acceleration of the vesting of any
restricted stock, the acceleration of the accrual or vesting of any benefits
under any Pension Plan or the acceleration or creation of any rights under any
severance, parachute or change in control agreement)
4.20 TRANSACTIONS WITH CERTAIN PERSONS. Except as set forth in SCHEDULE
4.20, no officer, or director of Seller nor any member of any such person's
immediate family is presently, or within the past three years has been, a party
to any transaction with Seller relating to the Business or the Purchased Assets
of the type that would be required to be disclosed pursuant to Item 404 of
Regulation S-K.
4.21 TAX MATTERS.
(a) FILING OF TAX RETURNS. Since January 1, 2000, Seller (and any
affiliated group of which Seller is now or has been a member) has timely filed
(including by taking advantage of applicable extensions) with the appropriate
Taxing authorities all returns (including without limitation information returns
and other material information) in respect of Taxes required
34
to be filed through the date hereof and will timely file any such returns
required to be filed on or prior to the Closing Date. The returns and other
information filed are complete and accurate in all material respects. Except as
specified in SCHEDULE 4.21, neither Seller, nor any group of which Seller now or
was a member, has requested any extension of time within which to file returns
(including without limitation information returns) in respect of any Taxes.
Seller has delivered to Buyer complete and accurate copies of Seller's federal,
state and local Tax returns for the years 2000, 2001 and 2002.
(b) PAYMENT OF TAXES. All Taxes, in respect of periods beginning
before the Closing Date, have been timely paid, or will be timely paid, or an
adequate reserve has been established therefor, as set forth in the Disclosure
Schedule or the Financial Statements, and Seller does not have any material
Liability for Taxes in excess of the amounts so paid or reserves so established.
(c) AUDITS, INVESTIGATIONS OR CLAIMS. Except as set forth in the
SCHEDULE 4.21, the consolidated federal income Tax returns of Seller have been
audited by the Internal Revenue Service for all periods since 1995 to and
including those set forth in SCHEDULE 4.21, and except to the extent shown
therein, no material deficiencies for Taxes, have been claimed, proposed or
assessed by any Taxing or other governmental authority against Seller. Except as
set forth in SCHEDULE 4.21, there are no pending or to the Seller's knowledge
threatened audits, investigations or claims for or relating to any material
additional Liability in respect of Taxes, and there are no matters under
discussion between the Seller and any governmental authorities with respect to
Taxes that in the reasonable judgment of Seller is likely to result in a
material additional Liability for Taxes. Audits of federal, state, and local
returns for Taxes by the relevant Taxing authorities have been completed for
each period set forth in SCHEDULE 4.21 and, except as set forth in the SCHEDULE
4.21, Seller has not been notified that any Taxing authority intends to audit a
return for any period. Except as set forth in SCHEDULE 4.21, no extension or
waiver of a statute of limitations relating to Taxes is in effect with respect
to Seller.
(d) LIEN. There are no liens for Taxes (other than for current
Taxes not yet due and payable) on the Purchased Assets.
(e) SAFE HARBOR LEASE PROPERTY. None of the Purchased Assets is
property that is required to be treated as being owned by any other person
pursuant to the so-called safe harbor lease provisions of former Section
168(f)(8) of the Code.
(f) SECURITY FOR TAX-EXEMPT OBLIGATIONS. None of the Purchased
Assets directly or indirectly secures any debt the interest on which is
Tax-exempt under Section 103(a) of the Code.
(g) TAX-EXEMPT USE PROPERTY. None of the Purchased Assets is
"tax-exempt use property" within the meaning of Section 168(h) of the Code.
(h) FOREIGN PERSON. Seller is not a person other than a United
States person within the meaning of the Code.
(i) NO WITHHOLDING. The transaction contemplated herein is not
subject to the Tax withholding provisions of Section 3406 of the Code, or of
Subchapter A of Chapter 3 of the Code or of any other provision of law. Seller
has withheld all Taxes required to have been
35
withheld and paid all Taxes required to have been paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other third party.
4.22 INSURANCE. SCHEDULE 4.22 contains a complete and accurate list of
all policies or binders of fire, liability, title, worker's compensation,
product liability and other forms of insurance maintained by Seller on the
Business, the Purchased Assets or its employees involved in the Business. All
such insurance coverage applicable to Seller, the Business and the Purchased
Assets is in full force and effect, insures Seller in reasonably sufficient
amounts against all risks usually insured against by persons operating similar
businesses or properties of similar size in the localities where such businesses
or properties are located, and provides coverage as may be required by
applicable Regulation and by any and all Contracts to which Seller is a party.
There is no material Default under any such coverage nor has there been any
failure to give notice or present any claim under any such coverage in a due and
timely fashion. There are no outstanding unpaid premiums except in the ordinary
course of business and no notice of cancellation or nonrenewal of any such
coverage has been received. There are no provisions in such insurance policies
for retroactive or retrospective premium adjustments other than for normal
ordinary course premium adjustments, all of which adjustments are Excluded
Liabilities to the extent relating to periods prior to the Closing. All products
liability, general liability and workers' compensation insurance policies
maintained by Seller have been occurrence policies and not claims made policies.
There are no outstanding performance bonds covering or issued for the benefit of
the Seller. No insurer has advised Seller that it intends to reduce coverage,
increase premiums or fail to renew existing policy or binder.
4.23 ACCOUNTS RECEIVABLE. Except as set forth in SCHEDULE 4.23, the
accounts receivable set forth on the Balance Sheet, and all accounts receivable
arising since the Balance Sheet Date, represent bona fide claims of Seller
against debtors for sales, services performed or other charges arising on or
before the date hereof, and all the goods delivered and services performed which
gave rise to said accounts were delivered or performed in all material respects
in accordance with the applicable orders, Contracts or customer requirements and
in the ordinary course of business. To Seller's knowledge, said accounts
receivable are subject to no defenses, counterclaims or rights of setoff and are
fully collectible in the ordinary course of business without cost in collection
efforts therefor, except to the extent of the appropriate reserves for bad debts
on accounts receivable as set forth on the Balance Sheet and, in the case of
accounts receivable arising since the Balance Sheet Date, to the extent of a
reasonable reserve rate for bad debts on accounts receivable which is not
greater than the rate reflected by the reserve for bad debts on the Balance
Sheet. Except as set forth on SCHEDULE 4.23, since the Balance Sheet Date,
Seller has not discounted or sold any of its accounts receivables or any portion
thereof (either to the debtor(s) or in connection with the sale of such
receivables to a third party).
4.24 INVENTORY. SCHEDULE 4.24 contains a complete and accurate list of
all Inventory set forth on the Balance Sheet and the addresses at which the
Inventory is located. The Inventory as set forth on the Balance Sheet or arising
since the Balance Sheet Date was acquired and has been maintained in accordance
with the regular business practices of Seller, consists of new and unused items
of a quality and quantity usable or saleable in the ordinary course of business,
and is valued in accordance with GAAP at the lower of cost or market on a
first-in-first-out basis consistent with the Past Practices. Except as set forth
in SCHEDULE 4.24, none of such Inventory is obsolete, unusable, damaged or
unsalable in the ordinary course of business, except for such items of Inventory
which have been written down to realizable market value, or for which adequate
reserves have been provided, in the Balance Sheet.
36
4.25 PURCHASE COMMITMENTS AND OUTSTANDING BIDS. As of the date of this
Agreement, except as set forth on SCHEDULE 4.25, there are no material claims
against Seller in connection with the Business to return merchandise by reason
of alleged overshipments, defective merchandise or otherwise, or of merchandise
in the hands of customers under an understanding that such merchandise would be
returnable. Except as set forth in SCHEDULE 4.25, no outstanding purchase or
outstanding Lease commitment of Seller relating to the Business presently is in
excess of the normal, ordinary and usual requirements of the Business. There is
no outstanding bid, proposal, Contract or unfilled order which relates to the
Business or Purchased Assets which will or would, if accepted, have a Material
Adverse Effect, individually or in the aggregate, on the Business or the
Purchased Assets.
4.26 PAYMENTS. Seller has not, directly or indirectly, paid or
delivered any fee, commission or other sum of money or item or property, however
characterized, to any finder, agent, client, customer, supplier, government
official or other party, in the United States or any other country, which is in
any manner related to the Business or Purchased Assets, which is illegal under
any federal, state or local laws of the United States (including without
limitation the U.S. Foreign Corrupt Practices' Act) or any other country having
jurisdiction; and Seller has not participated, directly or indirectly, in any
boycotts or other similar practices affecting any of its actual or potential
customers of the Business and has at all times done business in an open and
ethical manner.
4.27 CUSTOMERS, DISTRIBUTORS AND SUPPLIERS. SCHEDULE 4.27 sets forth a
complete and accurate list of the names and addresses of Seller's twenty largest
(i) customers, distributors and other agents and representatives of or for the
Business showing the approximate total sales in dollars by Seller to each such
customer during the fiscal year ended December 31, 2003; and (ii) suppliers from
whom Seller has purchased products or services for the Business in excess of
$50,000 showing the approximate total purchases in dollars by Seller from each
such supplier during such fiscal year. Except as set forth on SCHEDULE 4.27,
since the Balance Sheet Date, there has been no Material Adverse Change in the
business relationship of Seller with any customer, distributor or supplier named
on SCHEDULE 4.27. Except as set forth on SCHEDULE 4.27, Seller has not received
any communication from any customer, distributor or supplier named on SCHEDULE
4.27 of any intention to terminate or materially reduce purchases from or
supplies to Seller.
4.28 COMPLIANCE WITH ENVIRONMENTAL LAWS.
(a) DEFINITIONS. The following terms, when used in this Section
4.28, shall have the following meanings. Any of these terms may, unless the
context otherwise requires, used in the singular or the plural depending on the
reference.
(i) "SELLER" For purposes of this Section, the term
"Seller" shall include (i) all Affiliates of Seller, (ii) all partnerships,
joint ventures and other entities or organizations in which Seller was at any
time or is a partner, joint venturer, member or participant and (iii) all
predecessor or former corporations, partnerships, joint ventures, organizations,
businesses or other entities, whether in existence as of the date hereof or at
any time prior to the date hereof, the assets or obligations of which have been
acquired or assumed by Seller or to which Seller has succeeded.
(ii) "RELEASE" shall mean and include any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing into
37
the environment or the workplace of any Hazardous Substance, and otherwise as
defined in any Environmental Law.
(iii) "HAZARDOUS SUBSTANCE" shall mean any pollutants,
contaminants, and any toxic, infectious, carcinogenic, reactive, corrosive,
ignitable or flammable chemical or chemical compound or hazardous substance,
material or waste, whether solid, liquid or gas, including without limitation
any quantity of asbestos in any form, urea formaldehyde, PCB's, radon gas, crude
oil or any fraction thereof, all forms of natural gas, petroleum products or
by-products or derivatives, radioactive substance, sludges, slag and any other
substance, material or waste that is subject to regulation, control or
remediation under any Environmental Laws.
(iv) "ENVIRONMENTAL LAWS" shall mean all Regulations which
regulate or relate to the protection or clean-up of the environment, the use,
treatment, storage, transportation, generation, manufacture, processing,
distribution, handling or disposal of, or emission, discharge or other release
or threatened release of, Hazardous Substances or otherwise dangerous
substances, wastes, pollution or materials (whether, gas, liquid or solid), the
preservation or protection of waterways, groundwater, drinking water, air,
wildlife, plants or other natural resources, or the health and safety of persons
or property, including without limitation protection of the health and safety of
employees. Environmental Laws shall include without limitation the Federal Water
Pollution Control Act, Resource Conservation & Recovery Act ("RCRA"), Clean
Water Act, Safe Drinking Water Act, Atomic Energy Act, Occupational Safety and
Health Act, Toxic Substances Control Act, Clean Air Act, Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), Hazardous
Materials Transportation Act and all analogous or related federal, state or
local law, each as amended.
(v) "ENVIRONMENTAL CONDITIONS" means the introduction into
the environment of any Hazardous Substance (whether or not upon any Facility or
Former Facility or other property and whether or not such Hazardous Substance
constituted at the time thereof a violation of any Environmental Law as a result
of any Release of any kind whatsoever of any Hazardous Substance) as a result of
which Seller has or may become liable to any person or by reason of which any
Facility, Former Facility or any of the Purchased Assets may suffer or be
subjected to any lien.
(b) FACILITIES. Except as set forth on SCHEDULE 4.28(b), the
Facilities are, and at all times have been, and all Former Facilities were at
all times when owned, leased or operated by Seller, owned, leased and operated
in compliance with all Environmental Laws, the failure to comply with which
would not have a Material Adverse Effect, and in a manner that will not give
rise to any material Liability under any Environmental Laws. Without limiting
the foregoing and except as set forth on SCHEDULE 4.28(b), (i) there is not and
has not been any Hazardous Substance used, generated, treated, stored,
transported, disposed of, handled or otherwise existing on, under, about or from
any Facility or any Former Facility, except for quantities of any such Hazardous
Substances stored or otherwise held on, under or about any such Facility in
compliance with all Environmental Laws, the failure to comply with which would
not have a Material Adverse Affect, and necessary for the operation of the
Business, (ii) Seller has at all times used, generated, treated, stored,
transported, disposed of or otherwise handled its Hazardous Substances in
compliance with all Environmental Laws, the failure to comply with which would
not have a Material Adverse Affect, and in a manner that will not result in any
material Liability of Seller under any Environmental Law, (iii) there is not now
and has not been at any time in the past while Seller has owned the Owned Real
Property or leased the Leased Real Property any underground or above-ground
storage tank or pipeline at any Facility or Former Facility where the
installation, use,
38
maintenance, repair, testing, closure or removal of such tank or pipeline was
not in compliance with all Environmental Laws and, while Seller has owned the
Owned Real Property or leased the Leased Real Property there has been no Release
from or rupture of any such tank or pipeline, including without limitation any
Release from or in connection with the filling or emptying of such tank, (iv) in
connection with the Business and the Purchased Assets, Seller does not
manufacture or distribute any product in the State of California which requires
the warning mandated by the California Safe Drinking Water and Toxic Enforcement
Act of 1986, and (v) in connection with the Business and the Purchased Assets,
Seller has not made and has never been required to make any filing under the New
Jersey Industrial Site Recovery Act or any other state law of similar effect.
(c) NOTICE OF VIOLATION. Except as set forth on SCHEDULE 4.28(c),
Seller has not received any notice of alleged, actual or potential
responsibility for, or any inquiry or investigation regarding, (i) any Release
or threatened Release of any Hazardous Substance at any location, whether at the
Facilities, the Former Facilities or otherwise or (ii) an alleged violation of
or non-compliance with the conditions of any Permit required under any
Environmental Law or the provisions of any Environmental Law, which violation or
failure to comply with which would result in a Material Adverse Affect. Except
as set forth on SCHEDULE 4.28(c), Seller has not received any notice of any
other claim, demand or Action by any individual or entity alleging any actual or
threatened injury or damage to any person, property, natural resource or the
environment arising from or relating to any Release or threatened Release of any
Hazardous Substances at, on, under, in, to or from any Facilities or Former
Facilities, or in connection with any operations or activities thereat.
(d) ENVIRONMENTAL CONDITIONS. Except as set forth on SCHEDULE
4.28(d), there are no present or past Environmental Conditions in any way
relating to the Business or the Purchased Assets or at any Facility or Former
Facility.
(e) ENVIRONMENTAL AUDITS OR ASSESSMENTS. True, complete and
correct copies of the written reports, and all parts thereof, including any
drafts of such reports, if such drafts or reports are in the possession or
control of Seller, of all environmental audits or assessments which have been
conducted at any Facility or Former Facility, either by Seller or any attorney,
environmental consultant or engineer engaged for such purpose by Seller, have
been delivered to Buyer and a list of all such reports, audits and assessments
and any other similar report, audit or assessment of which Seller has knowledge
is included on the Disclosure Schedule.
(f) INDEMNIFICATION AGREEMENTS. Except as set forth in SCHEDULE
4.28, Seller is not a party, whether as a direct signatory or as successor,
assign or third party beneficiary, or otherwise bound, to any Lease or other
Contract (excluding insurance policies disclosed on the Disclosure Schedule)
under which Seller is obligated by or entitled to the benefits of, directly or
indirectly, any representation, warranty, indemnification, covenant, restriction
or other undertaking concerning environmental conditions.
(g) RELEASES OR WAIVERS. Except as set forth on SCHEDULE 4.28,
Seller has not released any other person from any claim under any Environmental
Law or waived any rights concerning any Environmental Condition.
(h) NOTICES, WARNINGS AND RECORDS. Seller has given all notices
and warnings, made all reports, and has kept and maintained all records required
to be in material compliance with all Environmental Laws.
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4.29 MINUTE BOOKS. The minute books of Seller made available to Buyer
contain a complete and accurate summary (as it relates to the Business or
Purchased Assets) of all meetings of directors and stockholders or actions by
written consent since January 1, 2000 through the date of this Agreement, and
reflect all transactions (as they relate to the Business or Purchased Assets)
referred to in such minutes accurately in all material respects.
4.30 STATE TAKEOVER STATUTES. Except as set forth on SCHEDULE 4.30,
neither Parent's Rights Plan nor any state takeover, business combination
statute or similar statute or regulation applies to or purports to apply to this
Agreement, any of the Ancillary Agreements or the transactions contemplated
hereby and thereby.
4.31 FAIRNESS OPINION. Parent has received a written opinion from its
financial advisor, Xxxxxxx Xxxxx & Company, L.L.C., dated as of the date hereof,
to the effect that as of the date hereof, the consideration to be received by
Seller pursuant to this Agreement is fair, from a financial point of view, and
has delivered to Buyer a copy of such opinion.
4.32 ACCURACY OF INFORMATION. Taken as a whole (i) all documents listed
on SCHEDULE 4.32, (ii) the representations and warranties in this Agreement and
the Ancillary Agreements, and (iii) the information contained in the Disclosure
Schedules is true and complete in all material respects and does not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
4.33 PRODUCT RETURNS AND WARRANTIES. There are no liabilities for
product returns other than those arising in the ordinary course of the Business
or otherwise fully reserved for in the Financial Statements. Except as set forth
in SCHEDULE 4.33, to Seller's knowledge, there are no threatened claims for (a)
product returns, (b) warranty obligations or (c) product services other than in
the ordinary course of the Business. Except as set forth on SCHEDULE 4.33,
Seller has not made any express or implied warranties with respect to products
sold or distributed by Seller (other than passing on warranties made by the
manufacturers thereof). Seller has no knowledge of any presently existing
circumstances that could reasonably be expected to constitute a valid basis for
any voluntary or governmental recall of any product sold or distributed by
Seller in the course of or that relates to the Business.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
5.1 ORGANIZATION OF BUYER. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of California.
5.2 AUTHORIZATION. Buyer has all requisite power and authority, and
has taken all corporate action necessary, to execute and deliver this Agreement
and each of the Ancillary Agreements to which it is a party, to consummate the
transactions contemplated hereby and thereby and to perform its obligations
hereunder and thereunder. The execution and delivery of this Agreement and each
of the Ancillary Agreements to which it is a party by Buyer and the consummation
by Buyer of the transactions contemplated hereby and thereby have been duly
approved by the board of directors of Buyer. Buyer is not required to obtain the
approval of the
40
shareholders of Buyer to execute and deliver this Agreement and the Ancillary
Agreement or to consummate the transactions contemplated hereby and thereby. No
other corporate proceedings on the part of Buyer are necessary to authorize this
Agreement and each of the Ancillary Agreements to which it is a party and the
transactions contemplated hereby and thereby. This Agreement has been duly
executed and delivered by the Buyer and constitutes the legal, valid and binding
obligations of the Buyer enforceable against Buyer in accordance with its terms,
except as limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights and (ii) general principles of equity that restrict the
availability of equitable remedies (regardless of whether enforceability is
considered in a proceeding in equity or at law). Each of the Ancillary
Agreements to which it is a party, upon their execution and delivery by the
Buyer, will constitute the legal, valid and binding obligations of the Buyer
enforceable against Buyer in accordance with its terms, except as limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights and (ii) general
principles of equity that restrict the availability of equitable remedies
(regardless of whether enforceability is considered in a proceeding in equity or
at law).
5.3 NO CONFLICT OR VIOLATION.
(a) Neither the execution, delivery or performance of this
Agreement nor the consummation of the transactions contemplated hereby, nor
compliance by Buyer with any of the provisions hereof, will (i) violate or
conflict with any provision of the Articles of Incorporation or Bylaws of Buyer,
(ii) violate, conflict with, or result in or constitute a material Default
under, or result in the termination of, or accelerate the performance required
by, or result in a right of termination or acceleration under, or result in the
creation of any Encumbrance upon any of Buyer's assets under, any of the terms,
conditions or provisions of any material contract, indebtedness, note, bond,
indenture, security or pledge agreement, commitment, license, lease, franchise,
permit, agreement, authorization, concession, or other instrument or obligation
to which Buyer is a party, or (iii) violate any Regulation or Court Order.
(b) To Buyer's knowledge, except as set forth on SCHEDULE 5.3
hereto, no notice to, declaration, filing or registration with, or
authorization, consent or approval of, or permit from, any domestic or foreign
governmental or regulatory body or authority, or any other person or entity, is
required to be made or obtained by Buyer, in connection with the execution,
delivery and performance of this Agreement and each of the Ancillary Agreements
to which it is a party and the consummation of the transactions contemplated
hereby and thereby. For purposes of this Section 5.3(b) only, Buyer shall be
deemed to have knowledge of all declarations, filings, registrations,
authorizations, consents, approvals or permits required to be made or obtained
by Buyer if the Business was identical to the business conducted by Buyer as of
the date hereof.
5.4 NO BROKERS. Neither Buyer nor any of its Affiliates or
Representatives has employed or made any agreement with any broker, finder or
similar agent or any person or firm which will result in the obligation of
Seller or any of its Affiliates to pay any finder's fee, brokerage fees or
commission or similar payment in connection with the transactions contemplated
hereby.
5.5 SEC FILINGS.
(a) Buyer has timely filed with the SEC all reports, schedules,
forms, statements and other documents (including exhibits) required to be filed
under the Securities Act
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and the Exchange Act from January 1, 2000 through the date of this Agreement.
All reports, schedules, forms, statements and other documents (including
exhibits) filed by Buyer with the SEC pursuant to the Securities Act and the
Exchange Act since January 1, 2000 are referred to herein as the "Buyer SEC
Filings." The Buyer SEC Filings (i) were prepared in compliance, in all material
respects, with the applicable requirements of the Securities Act and the
Exchange Act, as the case may be, and the rules and regulations thereunder, and
(ii) did not at the time they were filed contain any untrue statement of
material fact or omit to state a material fact required to be stated in such
Buyer SEC Filings or necessary to make the statements therein, in light of the
circumstances in which they were made, not false or misleading, and (iii) in the
event of subsequent modifications of the circumstances or the basis on which
they had been made, were, to the extent required by the Securities Act and the
Exchange Act, as the case may be, timely amended in order to make them not false
or misleading in any material respect in the light of such new circumstances or
basis.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Buyer SEC Filings, (i)
was complete and correct in all material respects as of their respective dates,
(ii) complied as to form in all material respects with the then current
published rules and regulations of the SEC with respect thereto, (iii) was
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited interim financial statements, as may be permitted by the SEC
on Form 10-Q under the Exchange Act) and (iv) fairly presented the consolidated
financial position of Buyer and its subsidiaries at the respective dates thereof
and the consolidated results of its operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which were not, or are not
expected to be, material in amount.
5.6 FINANCIAL RESOURCES. Buyer has previously delivered to Seller debt
and equity financing commitment letters for the transactions contemplated hereby
(the "Commitment Letters"). Buyer obtained the Commitment Letters in the good
faith belief that, subject to completion of customary due diligence
investigation by the lenders, all of the terms or conditions applicable to Buyer
in the Commitment Letter can be satisfied. Provided that Buyer is able to obtain
the financing contemplated by the Commitment Letters, Buyer has as of the date
hereof, and at the Closing will have, sufficient funds, including cash on hand
together with funds available under bank or other credit facilities currently in
place, to consummate the transactions contemplated by the Agreement and the
Ancillary Agreements and to fulfill its obligations hereunder and thereunder,
including without limitation, payment to Seller of the Purchase Price at the
Closing and any adjustments to the Purchase Price following the Closing. Buyer
is entering into this Agreement in good faith.
ARTICLE VI
COVENANTS OF SELLER AND BUYER
The Parent, BBI Biotech and Buyer each covenant with the other as
follows:
6.1 FURTHER ASSURANCES.
(a) Upon the terms and subject to the conditions contained herein,
the parties agree, both before and after the Closing, (i) to use all
commercially reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or
42
advisable to consummate and make effective the transactions contemplated by this
Agreement, (ii) to execute any documents, instruments or conveyances of any kind
which may be reasonably necessary or advisable to carry out any of the
transactions contemplated hereunder, and (iii) to cooperate with each other in
connection with the foregoing. Without limiting the foregoing, the parties agree
to use their respective commercially reasonable efforts (A) to obtain all
necessary waivers, consents and approvals from other parties to the Contracts
and Leases to be assumed by Buyer; PROVIDED, HOWEVER that neither party shall be
required to make any payments, commence litigation or agree to modifications of
the terms thereof in order to obtain any such waivers, consents or approvals,
(B) to obtain all necessary Permits as are required to be obtained under any
Regulations unless the failure to obtain any such Permits would not have a
Material Adverse Effect, (C) to defend all Actions challenging this Agreement or
the consummation of the transactions contemplated hereby; provided, however,
that neither party shall be required to make any payments, commence or defend
any litigation, or take any other actions with respect to shareholder or
derivative litigation brought by or on behalf of the shareholders of the other
parties, (D) to lift or rescind any injunction or restraining order or other
Court Order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby; provided, however, that neither party shall be
required to make any payments, commence or defend any litigation, or take any
other actions with respect to shareholder or derivative litigation brought by or
on behalf of the shareholders of the other parties, (E) to give all notices to,
and make all registrations and filings with third parties, including without
limitation submissions of information requested by governmental authorities, and
(F) to fulfill all conditions to this Agreement. In addition, Seller will
commence all action required under this Section 6.1 by a date which is
reasonably foreseeable to be early enough to allow the transactions contemplated
hereunder to be consummated by the Closing Date.
(b) If any "fair price," "moratorium," "control share," "business
combination," "shareholder protection" or similar or other anti-takeover statute
or regulation enacted under any state or federal law is or shall become
applicable to this Agreement, the Ancillary Agreements or any of the
transactions contemplated hereby or thereby, subject to the fiduciary duties of
the Board of Directors of Parent, Parent and the Board of Directors of Parent
shall grant such approvals and take all such actions as are within its authority
so that the transactions contemplated hereby and thereby may be consummated as
promptly as practicable on the terms contemplated hereby and thereby and
otherwise use its commercially reasonable efforts to eliminate the effects of
such statute or regulation on the transactions contemplated hereby or thereby.
Parent shall take all commercially reasonable action necessary to ensure that
Parent's Rights Plan will not apply to this Agreement, the Ancillary Agreements
or any of the transactions contemplated hereby or thereby. Except for Parent's
Rights Plan, Parent has not and, during the term of this Agreement shall not,
adopt, effect or implement any "shareholders' rights plan," "poison pill" or
similar arrangement.
6.2 NO SOLICITATION.
(a) From and after the date of this Agreement until the Closing or
termination of this Agreement pursuant to Section 11.1, Parent and BBI Biotech
will not, nor will they authorize or permit any of their respective
Representatives to, directly or indirectly (i) solicit, initiate, encourage or
induce the making, submission or announcement of any Acquisition Proposal (as
defined below), (ii) participate in any discussions or negotiations regarding,
or furnish to any person any non-public information with respect to, or take any
other action to facilitate any inquiries or the making of any proposal that
constitutes or may reasonably be expected to lead to, any Acquisition Proposal,
(iii) engage in discussions with any person with respect to any
43
Acquisition Proposal, (iv) approve, endorse or recommend any Acquisition
Proposal, or (v) enter into any letter of intent or similar document or any
contract, agreement or commitment contemplating or otherwise relating to any
Acquisition Transaction (as defined below); provided, however, this Section
6.2(a) shall not prohibit Parent, prior to approval of this Agreement by
Parent's stockholders, from (A) furnishing information regarding Seller to,
entering into a confidentiality agreement with or entering into discussions
with, any person or group in response to a Superior Offer submitted by such
person or group (and not withdrawn) if (1) neither Seller nor any Representative
of Seller shall have violated any of the restrictions set forth in this Section
6.2, (2) the Board of Directors of Parent concludes in good faith, after
consultation with its outside legal counsel, that the failure to take such
action would be a violation of its fiduciary duties under applicable law, (3)
(x) at least three (3) business days prior to furnishing any such nonpublic
information to, or entering into discussions or negotiations with, such person
or group, Parent gives Buyer written notice of the identity of such person or
group and of Parent's intention to furnish nonpublic information to, or enter
into discussions or negotiations with, such person or group and (y) Parent
receives from such person or group an executed confidentiality agreement with
terms at least as restrictive to such person or group as the terms contained in
the Confidentiality Agreement are to Buyer, and (4) contemporaneously with
furnishing such information to any such person or group, Parent furnishes such
information to Buyer (to the extent such information has not been previously
furnished by Parent to Buyer), or (B) complying with Rules 14d-9 or 14e-2
promulgated under the Exchange Act with regard to an Acquisition Proposal with
respect to which no violation of this Section 6.2 shall have occurred. Parent
and BBI Biotech will immediately (and will cause their respective
Representatives to immediately) cease any and all existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any Acquisition Proposal. Without limiting the foregoing, it is understood
that any violation of the restrictions set forth in this Section 6.2(a) by any
Representative of Seller shall be deemed to be a violation of this Section 6.2
by Seller. In addition to the foregoing, Parent shall (i) provide Buyer with at
least three (3) business days prior written notice of any meeting of Parent's
Board of Directors at which Parent's Board of Directors is reasonably expected
to consider a Superior Offer together with the material terms of such Superior
Offer (including the identity of the offeror) and (ii) provide Buyer with at
least five (5) business days prior written notice of a meeting of Parent's Board
of Directors at which Parent's Board of Directors is reasonably expected to
recommend a Superior Offer to its stockholders and together with such notice a
copy of the definitive documentation relating to such Superior Offer.
(b) For purposes of this Agreement, "Superior Offer" shall mean an
unsolicited, bona fide written offer made by a third party to consummate any of
the following transactions: (i) a merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
Parent pursuant to which the stockholders of Parent immediately preceding such
transaction hold less than 51% of the equity interest in the surviving or
resulting entity of such transaction; (ii) a sale or other disposition by Seller
of all or substantially all of the Purchased Assets, or (iii) the acquisition by
any person or group (including by way of a tender offer or an exchange offer or
issuance by Parent or BBI Biotech), directly or indirectly, of beneficial
ownership or a right to acquire beneficial ownership of shares representing in
excess of 51% of the voting power of the then outstanding shares of capital
stock of Parent or BBI Biotech, in each case on terms that the Board of
Directors of Parent determines, in its reasonable judgment (based on advice of
its outside financial advisor and after considering all terms and conditions of
such written offer, including the likelihood and timing of its consummation) to
be more favorable to Parent or its stockholders from a financial point of view
than the terms of this Agreement; provided, however, that any such offer shall
not be deemed to be a "Superior Offer" if any financing required to consummate
the transaction contemplated by such
44
offer is less committed than the financing of Buyer contemplated by the
Commitment Letters or is not likely in the good faith judgment of Parent's Board
of Directors (after consultation with its outside financial advisor) to be
obtained by such third party on a timely basis.
(c) For purposes of this Agreement, "Acquisition Proposal" shall
mean any offer or proposal (other than an offer or proposal by Buyer) relating
to any Acquisition Transaction. For the purposes of this Agreement, "Acquisition
Transaction" shall mean any transaction or series of related transactions other
than the transactions contemplated by this Agreement involving: (A) any
acquisition or purchase from Parent or BBI Biotech by any person or "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) of more than a 15% interest in the total outstanding voting
securities of Parent or BBI Biotech (excluding acquisitions or purchases from
Parent through existing employee stock option and employee stock purchase plans
approved by Parent's shareholders, if such approval was required, and in effect
prior to the date hereof) or any tender offer or exchange offer that if
consummated would result in any person or "group" (as defined under Section
13(d) of the Exchange Act and the rules and regulations thereunder) beneficially
owning 15% or more of the total outstanding voting securities of Parent or BBI
Biotech or any merger, consolidation, business combination or similar
transaction involving Parent pursuant to which the stockholders of Parent
immediately preceding such transaction hold less than 85% of the equity
interests in the surviving or resulting entity of such transaction; (B) any
sale, lease, exchange, transfer, license, acquisition or disposition of more
than 15% of the Purchased Assets; or (C) any liquidation or dissolution of
Parent or BBI Biotech.
(d) In addition to the obligations of Seller set forth in
paragraph (a) of this Section 6.2, Parent shall advise Buyer orally and in
writing within 24 hours of the receipt thereof, of any request received by
Seller or any of Seller's Representatives for nonpublic information which Parent
reasonably believes would lead to an Acquisition Proposal or of any Acquisition
Proposal, or any inquiry received by Seller or any of Seller's Representatives
with respect to, or which Parent reasonably believes would lead to any
Acquisition Proposal, the material terms and conditions of such request,
Acquisition Proposal or inquiry, and the identity of the person or group making
any such request, Acquisition Proposal or inquiry. Parent will keep Buyer
informed (orally and in writing) on a current basis and in all material respects
of the status and details (including material amendments or proposed amendments)
of any such request, Acquisition Proposal or inquiry.
6.3 NOTIFICATION OF CERTAIN MATTERS. From the date hereof through the
Closing, Seller shall give prompt notice to Buyer of (a) the occurrence, or
failure to occur, of any event which occurrence or failure would be reasonably
likely to cause any representation or warranty contained in this Agreement or in
any exhibit or schedule hereto to be untrue or inaccurate in any material
respect and (b) any failure of the Parent, or BBI Biotech, or any of their
respective affiliates, or of any of their respective Representatives, to comply
with or satisfy any material covenant, condition or agreement to be complied
with or satisfied by it under this Agreement or any exhibit or schedule hereto;
PROVIDED, HOWEVER, that such disclosure shall not be deemed to cure any breach
of a representation, warranty, covenant or agreement or to satisfy any
condition. Seller shall promptly notify Buyer of any Default, the threat or
commencement of any Action, or any development that occurs before the Closing
that could reasonably be anticipated to have a Material Adverse Effect on the
Purchased Assets or the Business. Buyer shall promptly notify Seller if it shall
become aware that any representation, warranty, covenant or agreement of Seller
is or shall become untrue or inaccurate in any material respect from the date
hereof until the Closing.
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6.4 INVESTIGATION BY BUYER.
From the date hereof through the Closing Date:
(a) Seller shall, and shall cause its officers, directors,
employees and agents to, afford the Representatives of Buyer and its Affiliates
full access at all reasonable times upon reasonable notice to the Purchased
Assets for the purpose of inspecting the same, and to the officers, employees,
agents, attorneys, and accountants for the Business, and shall furnish Buyer and
its Representatives all financial, operating and other data and information
relating to the Business and the Purchased Assets as Buyer or its Affiliates,
through their respective Representatives, may reasonably request, provided,
however, in any such case such access shall not unreasonably disrupt the
operation of the Business or of Seller's other businesses or activities;
(b) Buyer shall have the right, at its sole cost and expense to,
(A) conduct a Phase I environmental study with respect to the Leased Property
and Owned Real Property listed on SCHEDULE 6.4, (B) inspect records, reports,
permits, applications, monitoring results, studies, correspondence, data and any
other information or documents relevant to environmental conditions or
environmental noncompliance, and (C) inspect all buildings and equipment at the
Owned Real Property and the Leased Real Property, including without limitation
the visual inspection of the Facilities for asbestos-containing construction
materials; PROVIDED, in each case, such inspections shall be conducted only (1)
during regular business hours; and (2) in a manner which will not unduly
interfere with the operation of the Business or Seller's other businesses or
activities and/or the use of, access to or egress from the Owned Real Property
and the Leased Property.
6.5 CONDUCT OF BUSINESS. From the date hereof through the Closing,
Seller shall, except as contemplated by this Agreement, or as consented to by
Buyer in writing, operate the Business in the ordinary course of business and
substantially in accordance with past practice and in substantial compliance
with all applicable laws and regulations the failure to comply with which would
not have a Material Adverse Effect, pay and cause its Subsidiaries to pay
material debts and Taxes when due unless, solely with respect to Taxes, Seller
is contesting such Taxes in good faith, to pay or perform other material
obligations when due, and use its commercially reasonable efforts consistent
with past practice to preserve intact the Business and the Purchased Assets, use
its commercially reasonable efforts consistent with past practice to keep
available the services of its and its Subsidiaries' present officers and key
employees and use its commercially reasonable efforts consistent with past
practice to preserve its and its Subsidiaries' relationships with customers,
suppliers, distributors, licensors, licensees, and others having business
dealings with it or its Subsidiaries, and Seller will not take any action
inconsistent with this Agreement or with the consummation of the Closing.
Without limiting the generality of the foregoing, Seller shall not, as it
relates to the Business except as specifically contemplated by this Agreement or
as consented to by Buyer in writing:
(a) change or amend the Restated Articles of Incorporation or
Amended and Restated Bylaws, as amended, of Parent or any of the charter
documents of BBI Biotech;
(b) enter into, extend, materially modify, terminate or renew any
Contract or Lease relating to the Business, except in the ordinary course of
business;
(c) sell, assign, transfer, dividend, convey, lease, mortgage,
pledge or otherwise dispose of or encumber any of the Purchased Assets, or any
interests therein, except in
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the ordinary course of business and, without limiting the generality of the
foregoing, Seller will produce, maintain and sell Inventory relating to the
Business consistent with its past practices;
(d) excluding the Liabilities under the Revolving Credit and
Security Agreement, incur any Liability relating to the Business for interest
bearing indebtedness other than Excluded Liabilities, guarantee the obligations
of others, indemnify others or, except in the ordinary course of business, incur
any other Liability relating to the Business;
(e) (i) grant any bonus, severance or termination pay
(otherwise than pursuant to policies or agreements of Seller in effect on the
date hereof that are described on the Disclosure Schedule) or materially
increase any benefits payable under its severance or termination pay policies or
agreements in effect on the date hereof or increase in any material respect the
compensation or fringe benefits of any employee of the Business with an annual
salary of $50,000 or pay any benefit not required by any existing Employee Plan
or policy to or for any employees of the Business;
(ii) make any change in the key management structure of the
Business, including without limitation the hiring of additional officers or the
termination of existing officers for the Business, except for terminations for
cause and replacements for such terminated employees following consultation with
Buyer;
(iii) adopt, enter into or amend in any material respect any
Employee Plan covering employees of the Business, except for any such amendment
as may be required to comply with applicable Regulations; or
(iv) fail to maintain in all material respects all Employee
Plans covering employees of the Business in accordance with applicable
Regulations;
(f) willingly allow or permit to be done, any act by which any of
the Insurance Policies may be suspended, impaired or canceled;
(g) (i) fail to pay or discharge when due any material
Liabilities of the Business, in the ordinary course of business and consistent
with past practice;
(ii) fail to pay or discharge when due any non-material
Liabilities of the Business, in the ordinary course of business and consistent
with past practice unless and to the extent such Liabilities are being contested
by Seller in good faith;
(iii) fail to collect the Accounts Receivable for the
Business in the ordinary course of business and consistent with past practice;
(h) enter into, renew, modify or revise any agreement or
transaction with any of its Affiliates;
(i) fail to maintain the Purchased Assets in substantially their
current state of repair, excepting normal wear and tear or fail to replace
consistent with Seller's past practices inoperable, worn-out or obsolete or
destroyed Purchased Assets that are used in the ordinary course of the Business;
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(j) make any loans or advances to any partnership, firm or
corporation, except for advances consistent with Seller's past practice to any
of the Seller's businesses including the Business (including intercompany loans
to such businesses), or, except for expenses incurred in the ordinary course of
business and consistent with past practice, to any individual;
(k) fail to comply with all Regulations applicable to the
Purchased Assets and the Business, the failure to comply with which would have a
Material Adverse Affect on the Business or the Purchased Assets;
(l) do any other act, or omit to take any action, which would
cause any representation or warranty of the Parent or BBI Biotech in this
Agreement to be or become untrue in any material respect;
(m) fail to use its commercially reasonable efforts and consistent
with past practice to (i) retain the Seller's employees for the Business, (ii)
maintain the Business so that such employees will remain available to Seller on
and after the Closing Date, (iii) maintain existing relationships with
suppliers, customers and others having business dealings relating to the
Business and (iv) otherwise to preserve the goodwill of the Business so that
such relationships and goodwill will be preserved on and after the Closing Date;
(n) make any payment of any kind whatsoever to or on behalf of the
Seller or any officer or director of Seller pursuant to any agreement between
Parent and Seller, other than ordinary compensation to employees, directors and
consultants in the regular course of business;
(o) terminate or fail to renew any Permits;
(p) revalue any of its Purchased Assets, including without
limitation writing down the value of Inventory or writing off notes or accounts
receivable other than in the ordinary course of business and consistent with
past practices;
(q) engage in any sale or discount of accounts receivable (whether
by discount to the debtors or by sale to any third party);
(r) make any change to its Tax or accounting methods, principles,
policies, procedures or practices, except as may be required by GAAP;
(s) dispose of or permit to lapse any material Proprietary Rights;
and
(t) enter into any agreement, or otherwise become obligated, to do
any action prohibited hereunder.
6.6 EMPLOYEE MATTERS.
(a) Buyer shall extend offers of employment to substantially all
of Seller's employees in the Business (such employees are hereinafter referred
to as the "Rehired Employees"), such employment to be for substantially
equivalent positions and on substantially equivalent wage rates as such Rehired
Employees currently have with the Seller and such employment to be at Seller's
existing facilities; provided, however, that Buyer, in its sole discretion, may
elect to provide that any or all such employment relationships shall be
terminable "at-will" by the Buyer or the applicable Rehired Employee. Seller
shall terminate the employment
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of all Rehired Employees immediately prior to the Closing in accordance with all
applicable laws and, prior to the Closing, shall provide any required notices in
a timely manner in connection therewith. Seller shall cooperate with and use its
commercially reasonable efforts to assist Buyer in its efforts to secure
satisfactory employment arrangements with those employees of Seller to whom
Buyer makes offers of employment.
(b) Each Rehired Employee shall - following the Closing Date, to
the extent permitted by law and applicable Tax qualification requirements, and
subject to any generally applicable break in service or similar rule, and the
approval of any insurance carrier, third party provider or the like - be
eligible to participate in the various retirement, health, disability, vacation,
401(k), dental and life insurance plans maintained by or on behalf of Buyer.
With respect to such benefit plans, Buyer shall, so long as permitted by such
benefit plans, (i) credit such employee's period of service with Seller for the
purpose of determining eligibility and vesting under such benefit plans, (ii)
waive all limitations as to preexisting condition exclusions, evidence of
insurability provisions, waiting periods or similar limitations, and (iii) for
purposes of computing deductible amounts, expenses and claims incurred prior to
the Closing Date under Seller's group medical plans shall be credited and
recognized. Buyer shall be responsible for providing all COBRA continuation
coverage (but shall not be responsible for the applicable premiums, and may
charge such premiums to the recipients of the COBRA continuation coverage as
allowed by applicable law), in accordance with Code Section 4980B in Sections
601 through 608 of ERISA, to each Rehired Employee and his or her Qualified
Beneficiaries (within the meaning of Code Section 4980B(g)(1) and Treasury
Regulation 54.4980(B)(9) thereof) which incurs a qualifying event after the
Closing Date. Buyer agrees to act as the successor employer, as defined in the
alternate procedure under IRS Revenue Procedure 96-60, with respect to Rehired
Employees but solely for the purpose of FICA, FUTA and federal income tax
reporting and withholding. The parties agree that the foregoing sentence shall
in no way allocate any liability to Buyer for obligations of Seller to any
Rehired Employees arising out of actions or omissions on or before the Closing.
Notwithstanding any of the foregoing to the contrary, none of the provisions
contained herein shall operate to duplicate any benefit provided to any Rehired
Employee or the funding of any such benefit, or obligate Buyer to employ, or
offer continuing employment to, any individual. After the Closing, the accrued
vacation of the Rehired Employees will be assumed by the Buyer such that each
Rehired Employee shall have the option to (i) use such accrued vacation in
accordance with Buyer's policies or (ii) receive a payout of the then
outstanding balance of such accrued vacation from Buyer upon termination of such
Rehired Employee's employment with Buyer.
(c) Except as specifically otherwise provided herein, nothing
contained in this Agreement shall confer upon any Rehired Employee any right
with respect to continuance of employment by Buyer, nor shall anything herein
interfere with the right of Buyer to terminate the employment of any of the
Rehired Employees at any time, with or without cause, or restrict Buyer in the
exercise of its independent business judgment in modifying any of the terms and
conditions of the employment of the Rehired Employees following the Closing.
(d) No provision of this Agreement shall create any third party
beneficiary rights in any Rehired Employee, any beneficiary or dependents
thereof, or any collective bargaining representative thereof, with respect to
the compensation, terms and conditions of employment and benefits that may be
provided to any Rehired Employee by Buyer or under any benefit plan which Buyer
may maintain, or otherwise.
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(e) None of Parent, BBI Biotech or the Subsidiaries shall directly
or indirectly, hire or offer employment to any Rehired Employee whose employment
is continued by Buyer after the Closing Date or any employee of Buyer or any
successor or affiliate of Buyer which is engaged in the Business, unless,
subject to the limitations of Section 6.12(b), Buyer first terminates the
employment of such employee or such employee gives his or her notice of
termination of employment.
(f) Buyer agrees to indemnify and hold harmless Seller from any
claims, fines, penalties or other losses, including but not limited to
attorneys' fees arising from Buyer's failure to provide notice to Rehired
Employees under the WARN Act as a result of a plant closing or mass layoff (as
defined in the WARN Act) that occurs after the Closing Date.
(g) Buyer shall allocate up to $100,000 (in the aggregate) for
outplacement and related benefits with respect to all Rehired Employees
terminated by the Buyer without cause within 180 days after the Closing. Such
amounts shall be allocated by Buyer in consultation with Seller.
6.7 PROXY STATEMENT; SPECIAL MEETING.
(a) As promptly as reasonably practicable after the execution and
delivery of this Agreement by the parties hereto, Parent shall prepare and file
with the SEC under the Exchange Act, proxy materials for the purpose of
soliciting proxies from the stockholders of Parent (the "Parent Stockholders")
to vote in favor of the approval of this Agreement and the approval of the
transactions contemplated by this Agreement (collectively, the "Stockholder
Approval Matters") at a special meeting of Parent Stockholders to be called and
held for such purpose (and for such other purposes as may be necessary to effect
the transactions contemplated herein) (the "Special Meeting"). Such proxy
materials shall be in the form of a proxy statement to be used for the purpose
of soliciting such proxies from Parent Stockholders (such proxy statement,
together with any accompanying letter to stockholders, notice of meeting and
form of proxy, shall be referred to herein as the "Proxy Statement"). Buyer
shall make reasonable efforts to respond to reasonable requests in preparation
of the Proxy Statement and shall promptly upon the request of Seller, provide
any information regarding Buyer which is required to be included in the Proxy
Statement. Buyer and its counsel shall be given an opportunity to review and
comment on the Proxy Statement prior to its filing with the SEC. Parent shall
promptly respond to any SEC comments on the Proxy Statement and shall otherwise
use commercially reasonable efforts to resolve as promptly as reasonably
practicable all SEC comments thereon. Buyer shall use its commercially
reasonable efforts to promptly respond to any reasonable requests from Seller to
assist Seller in the preparation of, and responding to SEC comments on,
information regarding the Buyer included or to be included in the Proxy
Statement.
(b) Promptly following the resolution of all SEC comments on the
Proxy Statement, Parent shall mail the Proxy Statement to Parent stockholders
and, pursuant thereto, shall call the Special Meeting in accordance with Chapter
156B of the Massachusetts General Laws (such meeting to be held within forty
five (45) days of the date the Proxy Statement is first mailed to Parent
Stockholders) and solicit proxies from Parent Stockholders to vote in favor of
the Stockholder Approval Matters at the Special Meeting.
(c) Parent shall comply with all applicable provisions of and
rules and regulations under the Exchange Act and all applicable provisions of
Chapter 156B of the Massachusetts General Laws in the preparation, filing and
distribution of the Proxy Statement, the
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solicitation of proxies thereunder, and the calling and holding of the Special
Meeting. Without limiting the foregoing, Parent shall ensure that the Proxy
Statement (or any amendment or supplement thereto) does not, as of the date on
which it is mailed to Parent Stockholders, and as of the date of the Special
Meeting, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made, in light of the circumstances in which they were made, not
false or misleading (provided that the Parent shall not be responsible for the
accuracy or completeness of any information relating to the Buyer or any other
information furnished by the Buyer in writing for inclusion in the Proxy
Statement).
(d) Buyer shall promptly inform Parent if any of the information
supplied by Buyer in writing for inclusion in the Proxy Statement to be mailed
to the stockholders of the Parent in connection with the Special Meeting will,
on the date the Proxy Statement (or any amendment or supplement thereto) is
first mailed to Parent Stockholders or at the time of the Special Meeting,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made,
in light of the circumstances in which they were made, not false or misleading.
(e) Parent shall consult with Buyer regarding the date of the
Special Meeting and shall not postpone or adjourn (other than for the absence of
a quorum) the Special Meeting without the consent of Buyer. Parent shall use its
commercially reasonable efforts to solicit from its stockholders proxies in
favor of the approval of the Stockholder Approval Matters and shall take all
other commercially reasonable action necessary or advisable to secure the vote
or consent of stockholders required to effect the transactions contemplated by
this Agreement. Parent's obligation to call, give notice of, convene and hold
the Special Meeting in accordance with this Section 6.7 shall not be limited to
or otherwise affected by the commencement, disclosure, announcement or
submission to Seller of any Acquisition Proposal or any change in the Board of
Directors recommendation regarding any of the Stockholder Approval Matters,
except in the case of a Superior Offer or for Parent's Board of Directors to
comply with its fiduciary duties.
(f) Subject to Section 6.7(g): (i) the Board of Directors of
Parent shall recommend that Parent's stockholders vote in favor of and approve
the Stockholder Approval Matters at the Special Meeting; (ii) the Proxy
Statement shall include a statement to the effect that the Board of Directors of
Parent has recommended that Parent's stockholders vote in favor of and approve
the Stockholder Approval Matters at the Special Meeting; and (iii) neither the
Board of Directors of Parent nor any committee thereof shall withdraw, amend or
modify, or propose or resolve to withdraw, amend or modify in a manner adverse
to Buyer, the recommendation of the Board of Directors of Parent that Parent's
stockholders vote in favor of and approve the Stockholder Approval Matters.
(g) Nothing in this Agreement shall prevent the Board of Directors
of Parent from withholding, withdrawing, amending or modifying its
recommendation in favor of the Stockholder Approval Matters if the Board of
Directors of Parent reasonably concludes in good faith, after consultation with
its outside counsel, that the failure to withhold, withdraw, amend or modify
such recommendation would violate its fiduciary obligations under applicable law
or in the event of a Superior Offer; provided that Parent shall have delivered
to Buyer a prior written notice advising Buyer that it intends to take such
action and describing its reasons for taking such action (such notice to be
delivered not less than three (3) business days prior to the time such action is
taken).
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6.8 FINANCING. Buyer shall use its commercially reasonable efforts to
obtain the financing contemplated by the Commitment Letters, or if such
financing is not available, replacement financing in an amount and on terms and
conditions not materially less favorable than set forth in the Commitment
Letters (such financing or any such replacement financing to be referred to
herein at the "Financing"). Buyer shall provide Seller with such information as
Seller may reasonably request to monitor Buyer's progress in obtaining the
Financing.
6.9 NOTICES. Parent shall give all notices and other information
required by applicable law to be given through the Closing Date (or after the
Closing Date with respect to those employees of Seller who are not hired by
Buyer after the Closing) to the employees of Seller, any collective bargaining
unit representing any group of employees of Seller, and any applicable
government authority as to the obligations of Seller under the WARN Act, the
National Labor Relations Act, the Internal Revenue Code, COBRA, and other
applicable law in connection with the transactions contemplated by this
Agreement.
6.10 FINANCIAL REPORTING COOPERATION. After the Closing, Seller shall,
and shall cause its Affiliates and Representatives to, cooperate with all
reasonable requests in the preparation of all financial statements determined by
Buyer to be necessary to meet its reporting obligations in connection with the
consummation of the transactions contemplated by this Agreement. Seller shall
provide, or cause to be provided to Buyer reasonable access to any records and
other information in Seller's possession and control and requested by Buyer in
connection therewith as well as access to, and the reasonable cooperation of,
Seller's current and former accountants.
6.11 COMPLIANCE WITH BULK SALES LAWS REQUIREMENTS. Buyer has agreed to
waive compliance with all applicable bulk sale transfer laws in connection with
the consummation of the transactions contemplated by this Agreement, including
the bulk transfer provisions of the Uniform Commercial Code, and as a condition
to such waiver by Buyer, Seller will indemnify, defend and hold harmless Buyer
from any Damages as a result of non-compliance with such applicable bulk sale
transfer laws.
6.12 SELLER'S COVENANT NOT TO COMPETE.
(a) RESTRICTIONS ON COMPETITIVE ACTIVITIES. Seller agrees that,
after the Closing, Buyer shall be entitled to the goodwill and going concern
value of the Business and to protect and preserve the same to the maximum extent
permitted by law. Seller also acknowledges that its and the Subsidiaries
respective contributions to the Business have been uniquely valuable and involve
proprietary information that would be competitively unfair to make available to
any competitor of the Business. For these and other reasons and as an inducement
to Buyer to enter into this Agreement, Seller, on behalf of itself and the
Subsidiaries, agrees that for a period of 5 years following the Closing Date
neither Seller nor the Subsidiaries will, directly or indirectly, for its own
benefit or as agent for another, carry on or participate in the ownership,
management or control of, or the financing of, or be employed by, or consult for
or otherwise render services to, or allow its name or reputation to be used in
or by any other present or future business enterprise that competes with Buyer
in the Business for so long as Buyer or any person entitled to or acquiring
ownership of the goodwill of the Business or the Purchased Assets through Buyer
carries on a like business therein, but in no event more than the said 5-year
period; provided however that the foregoing covenants shall not prohibit, or be
interpreted as prohibiting, Seller nor the Subsidiaries from: (i) continuing
anywhere in the world in any type of business conducted by the Seller or the
Subsidiaries on the date hereof, which is not part of the Business, including,
but not limited to, Seller's and the Subsidiaries right to sell pressure cycling
technology products or services to any
52
Person; (ii) entering into any relationship with a Person not owned, managed,
operated or controlled by Seller or the Subsidiaries for purposes unrelated to
the Business; and (iii) making equity investments in publicly owned companies
which may compete with the Business, provided such investments do not exceed 5%
of the voting securities or otherwise confer control of any such competitive
business upon the Seller or the Subsidiaries.
(b) RESTRICTIONS ON SOLICITING EMPLOYEES. In addition, to protect
Buyer against any efforts by Seller or the Subsidiaries to cause the Rehired
Employees to terminate their employment, Seller, on behalf of itself and the
Subsidiaries, agrees that for a period of 1.5 years following the Closing Date,
such Person will not directly or indirectly (i) induce any Rehired Employee to
leave Buyer or to accept any other employment or position (including with Seller
or any of the Subsidiaries), or (ii) assist any other entity in hiring any
Rehired Employee.
(c) SPECIAL REMEDIES AND ENFORCEMENT. The parties agree that a
breach by Seller or any of the Subsidiaries of any of the covenants set forth in
this Section 6.12 could cause irreparable harm to Buyer, that Buyer's remedies
at law in the event of such breach would be inadequate, and that, accordingly,
in the event of such breach, a restraining order or injunction or both may be
issued against any Seller and/or any of the Subsidiaries, in addition to any
other rights and remedies that are available to Buyer. In connection with any
such action or proceeding for injunctive relief, Seller, on behalf of itself and
each of the Subsidiaries, hereby waives the claim or defense that a remedy at
law alone is adequate and agrees, to the maximum extent permitted by law, to
have each provision of this Section 6.12 specifically enforced against such
Person and consents to the entry of injunctive relief against such Person
enforcing or restraining any breach or threatened breach of this Section 6.12.
(d) SEVERABILITY. If this Section 6.12 is more restrictive than
permitted by the laws of any jurisdiction in which Buyer seeks enforcement
hereof, this Section 6.12 shall be limited to the extent required to permit
enforcement under such laws. In particular, the parties intend that the
covenants contained in Section 6.12(a) shall be construed as a series of
separate covenants, one for each county and city in which the Business has been
carried on and in which Buyer conducts a similar business after the Closing
Date. Except for geographic coverage, each such separate covenant shall be
deemed identical in terms. If, in any proceeding, a court or arbitrator shall
refuse to enforce any of the separate covenants, then such unenforceable
covenant shall be deemed eliminated from this Section 6.12 for the purpose of
those proceedings to the extent necessary to permit the remaining separate
covenants to be enforced. If the provisions of this Section 6.12 shall ever be
deemed to exceed the duration or geographic limitations or scope permitted by
applicable law, then such provisions shall be reformed to the maximum time or
geographic limitations in scope, as the case may be, permitted by applicable
Regulations.
6.13 RETENTION PROGRAM. Seller shall implement and fully fund a
retention program on terms reasonably satisfactory to Buyer for the period from
the date of this Agreement until the Closing.
6.14 ASSUMPTION OF MORTGAGE. Seller shall use its commercially
reasonable efforts to obtain the consent of the mortgagee and lender of the
Mortgage to permit the assumption of the Mortgage and related indebtedness by
Buyer at the Closing.
6.15 XXXXXXXXX LEASE. Seller shall use its commercially reasonable
efforts to obtain all consents and approvals necessary to be obtained for Seller
(and after the Closing, Buyer) to occupy, and operate the Purchased Assets and
the Business at, the property to be leased pursuant
53
to the Xxxxxxxxx Lease. In the event that all such consents and approvals are
not obtained prior to the Closing, Buyer may at its option (exercisable by it in
its sole discretion) elect to include the Xxxxxxxxx Lease on the Schedule
1.1E(vi) list of excluded Contracts, in which case Buyer shall have no
obligation to assume the Xxxxxxxxx Lease.
6.16 INCOMPLETE CONTRACTS. Certain of the Contracts referenced on the
Disclosure Schedule are incomplete, either because they are missing one or more
signatures or because they are missing one or more parts to the Contract. Each
such Contract is denoted with an asterisk on the Disclosure Schedule (the
"Incomplete Contracts"). Seller shall provide fully executed copies of each
Incomplete Contract as soon as practicable. Notwithstanding anything in this
Agreement to the contrary, Buyer may elect, in its sole discretion to assume
(and accordingly treat as a Purchased Asset) or reject (and accordingly treat as
an Excluded Asset) any Incomplete Contract unless (i) Seller provides Buyer with
a complete, fully signed version (except for Contracts that are not material,
and with respect to which it is not customary for one of the parties to sign) of
the applicable Incomplete Contract, and (ii) such fully signed version does not
differ in any material respect from the Incomplete Contract provided by Seller
to Buyer prior to the date of this Agreement. Buyer's election to assume any
Incomplete Contract shall in no way limit any of Buyer's rights under Section
10.4. Seller's obligations pursuant to this Section 6.16 shall terminate on the
Closing Date.
ARTICLE VII
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to consummate the transactions provided
for hereby are subject, in the discretion of Seller, to the satisfaction, on or
prior to the Closing Date, of each of the following conditions, any of which may
be waived by Seller:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Buyer contained herein shall be true and accurate in all respects as of
the date of this Agreement and as of the Closing Date as if made on the Closing
Date except where the failure of such representations and warranties to be true
and accurate (individually or in the aggregate) as of the Closing Date would not
have a material adverse effect on the Buyer; and Parent shall have received at
the Closing a certificate, signed by the president or chief financial officer of
the Buyer to such effect. For purposes of determining whether a material adverse
effect on the Buyer has occurred, all qualifications based on the word
"material" contained in such representations and warranties shall be
disregarded.
7.2 AGREEMENTS AND COVENANTS. Buyer shall have performed or complied
with, in all material respects, all agreements and covenants required by this
Agreement to be performed or complied with by them on or prior to the Closing
Date, and Parent shall have received at the Closing a certificate, signed by the
president or chief financial officer of the Buyer to such effect.
7.3 CONSENTS; REGULATORY COMPLIANCE AND APPROVAL. Each of the consents
set forth on Schedule 7.3 shall have been obtained.
7.4 NO ACTIONS OR COURT ORDERS. No action shall have been taken, and
no statute, rule or regulation shall have been enacted, by any state or federal
government, other governmental or regulatory agency or authority which would
prevent the consummation of the transactions contemplated hereby. There shall
not be any Regulation or Court Order that makes the purchase
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and sale of the Business or the Purchased Assets contemplated hereby illegal or
otherwise prohibited.
7.5 OPINION OF COUNSEL. Buyer shall have delivered to Seller an
opinion of O'Melveny & Xxxxx LLP, legal counsel to Buyer, dated as of the
Closing Date, in substantially the form of EXHIBIT M.
7.6 CORPORATE DOCUMENTS. Seller shall have received from Buyer
resolutions adopted by the board of directors of Buyer approving this Agreement,
the Ancillary Agreements and the transactions contemplated hereby or thereby,
certified by Buyer's corporate secretary.
7.7 ASSUMPTION DOCUMENT. Buyer shall have executed and delivered the
Assumption Document.
7.8 ANCILLARY AGREEMENTS. Buyer shall have executed and delivered the
Ancillary Agreements to which Buyer is a party.
7.9 STOCKHOLDER APPROVAL. This Agreement and the transactions
contemplated hereby shall have been approved by the holders of two-thirds of the
outstanding shares of Parent and entitled to vote at the Special Meeting, in
accordance with applicable law and Parent's Restated Articles of Organization,
as amended, and the Amended and Restated Bylaws, as amended.
7.10 401(k). Prior to the Closing Date, the plan administrator of
Buyer's Code Section 401(k) plan shall not have unreasonably withheld its
approval of a rollover of assets (including, if applicable, any participant
promissory notes) from the Seller's Code Section 401(k) plan related to the
accounts of Rehired Employees should such Rehired Employees choose to rollover
such assets. Seller shall provide the Buyer with copies of the Code Section
401(k) plan documents, Forms 5500 for the prior three (3) years, discrimination
testing for prior three (3) years and a copy of the IRS determination letter.
7.11 MORTGAGE. As of the Closing, Buyer shall have paid off or assumed
the Mortgage.
7.12 EMPLOYEES. Buyer shall have offered employment to the Rehired
Employees on terms consistent with Section 6.6 hereof.
ARTICLE VIII
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer to consummate the transactions provided
for hereby are subject, in the discretion of Buyer, to the satisfaction, on or
prior to the Closing Date, of each of the following conditions, any of which may
be waived by Buyer:
8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations and
warranties of the Seller contained herein shall be true and accurate in all
respects as of the date of this Agreement and as of the Closing Date as if made
on the Closing Date except where the failure of such representations and
warranties to be true and accurate (individually or in the aggregate) as of the
Closing Date would not have a Material Adverse Effect; and Buyer shall have
received at the Closing a certificate, signed by the president or chief
financial officer of each of Parent and BBI Biotech to such effect. For purposes
of determining whether a Material Adverse Effect has
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occurred (i) all qualifications based on the word "material" or "Material
Adverse Effect" contained in such representations and warranties shall be
disregarded and (ii) any disclosures made pursuant to Section 6.3 shall be
disregarded.
8.2 AGREEMENTS AND COVENANTS. Parent and BBI Biotech shall have
performed or complied with, in all material respects, all agreements and
covenants required by this Agreement to be performed or complied with by them on
or prior to the Closing Date, and Buyer shall have received at the Closing a
certificate, signed by the president or chief financial officer of each of
Parent and BBI Biotech to such effect.
8.3 CONSENTS; REGULATORY COMPLIANCE AND APPROVAL. Each of the consents
set forth on Schedule 8.3 shall have been obtained.
8.4 NO ACTIONS OR COURT ORDERS. No action shall have been taken, and
no statute, rule or regulation shall have been enacted, by any state or federal
government, other governmental or regulatory agency or authority which would
prevent the consummation of the transactions contemplated hereby. There shall
not be any Regulation or Court Order that makes the purchase and sale of the
Business or the Purchased Assets contemplated hereby illegal or otherwise
prohibited.
8.5 OPINION OF COUNSEL. Parent and BBI Biotech shall have delivered to
Buyer an opinion of Xxxxx Xxxxxxx Berlack Israels LLP, legal counsel to the
Parent and BBI Biotech, dated as of the Closing Date, in substantially the form
of EXHIBIT N.
8.6 MATERIAL CHANGES. Since the Balance Sheet Date, there shall not
have been any Material Adverse Change.
8.7 CORPORATE DOCUMENTS. Buyer shall have received from Seller (i)
resolutions adopted by the board of directors of Seller, approving this
Agreement and the Ancillary Agreements and the transactions contemplated hereby
and thereby, certified by Seller's corporate clerk; and (ii) a certificate of
Parent's corporate clerk as to the vote adopted by the Parent's stockholders
approving the Stockholder Approval Matters, and (iii) a unanimous written
consent of BBI Biotech's shareholder, approving, to the extent required, the
Agreement and the Ancillary Agreements and the transactions contemplated hereby
and thereby.
8.8 CONVEYANCING DOCUMENTS; RELEASE OF ENCUMBRANCES. Seller shall have
executed and delivered each of documents described in Section 3.2 hereof so as
to effect the transfer and assignment to Buyer of all right, title and interest
in and to the Purchased Assets and Seller shall have filed (where necessary) and
delivered to Buyer all documents necessary to release the Purchased Assets from
all Encumbrances, which documents shall be in a form reasonably satisfactory to
Buyer's counsel.
8.9 ANCILLARY AGREEMENTS. Parent, BBI Biotech, Xx. Xxxxxxx Xxxxxxxxxx
and the other parties (other than the Buyer) named therein, shall have executed
and delivered the Ancillary Agreements in the forms attached as exhibits hereto.
8.10 FINANCING. Buyer shall have received the proceeds of the
Financing.
8.11 STOCKHOLDER APPROVAL. This Agreement and the transactions
contemplated hereby shall have been approved by the holders of two-thirds of the
outstanding shares of Parent and
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entitled to vote at the Special Meeting, in accordance with applicable law and
Parent's Restated Articles of Organization, as amended, and the Amended and
Restated Bylaws, as amended.
8.12 TITLE INSURANCE. Buyer shall have been able to obtain insurable
title to the Owned Real Property at standard rates by a nationally recognized
title insurance company, as evidenced by a commitment for title insurance issued
to Buyer immediately prior to the Closing and committing to insure that Buyer
will hold fee title to the Owned Real Property as of the Closing Date, subject
only to the Permitted Encumbrances. Seller shall have provided a gap indemnity
to the title insurance company insuring the title commitment as required for the
issuance of the commitment.
8.13 KNOW-HOW. On or before the date that is two weeks prior to the
Closing Date, Seller shall reduce all of Seller's standard operating procedures
("SOPs") to writing to the extent that such SOPs are not already in writing.
Such writings shall sufficiently describe the SOPs so that Buyer could rely
solely on such writings in the maintenance and operation of the Business as it
was operated by Seller prior to the Closing Date. Seller agrees to provide such
writings to Buyer on or before the date that is two weeks prior to the Closing
Date.
ARTICLE IX
CONSENTS TO ASSIGNMENT
9.1 CONSENTS TO ASSIGNMENT. Anything in this Agreement to the contrary
notwithstanding, this Agreement shall not constitute an agreement to assign any
Contract, Assumed Lease, Permit or any claim or right or any benefit arising
thereunder or resulting therefrom if an attempted assignment thereof, without
the consent of a third party thereto, would constitute a Default thereof or in
any material way adversely affect the rights of Buyer thereunder. If such
consent is not obtained, or if an attempted assignment thereof would be
ineffective or would adversely affect the rights thereunder so that Buyer would
not receive all such rights, Seller will cooperate with Buyer, in all reasonable
respects, to provide to Buyer the benefits under any such Contract, Assumed
Lease, Permit or any claim or right, including without limitation enforcement
for the benefit of Buyer of any and all rights of Seller against a third party
thereto arising out of the Default or cancellation by such third party or
otherwise.
ARTICLE X
ACTIONS BY SELLER AND BUYER
AFTER THE CLOSING
10.1 COLLECTION OF ACCOUNTS RECEIVABLE AND LETTERS OF CREDIT. At the
Closing, Buyer will acquire hereunder, and thereafter Buyer or its designee
shall have the right and authority to collect for Buyer's or its designee's
account, all receivables, letters of credit and other items which constitute a
part of the Purchased Assets, and Seller shall within five (5) days after
receipt of any payment in respect of any of the foregoing, properly endorse and
deliver to Buyer any letters of credit, documents, cash or checks received on
account of or otherwise relating to any such receivables, letters of credit or
other items. Seller shall promptly transfer or deliver to Buyer or its designee
any cash or other property that Seller may receive in respect of any deposit,
prepaid expense, claim, contract, license, lease, commitment, sales order,
purchase order, letter of credit or receivable of any character, or any other
item, constituting a part of the Purchased Assets.
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10.2 BOOKS AND RECORDS; TAX MATTERS.
(a) BOOKS AND RECORDS. Each party agrees that it will cooperate
with and make available to the other party, during normal business hours, all
Books and Records, information and employees (without substantial disruption of
employment) retained and remaining in existence after the Closing which are
necessary or useful in connection with any Tax inquiry, audit, investigation or
dispute, any litigation or investigation or any other matter requiring any such
Books and Records, information or employees for any reasonable business purpose.
The party requesting any such Books and Records, information or employees shall
bear all of the out-of-pocket costs and expenses (including without limitation
reasonable attorneys' fees, but excluding reimbursement for salaries and
employee benefits) reasonably incurred in connection with providing such Books
and Records, information or employees. All information received pursuant to this
Section 10.2(a) shall be subject to the terms of Section 12.10.
(b) COOPERATION AND RECORDS RETENTION. Seller and Buyer shall (i)
each provide the other with such assistance as may reasonably be requested by
any of them in connection with the preparation of any return, audit, or other
examination by any Taxing authority or judicial or administrative proceedings
relating to Liability for Taxes, (ii) each retain until the applicable statute
of limitations (including any extensions) have expired and provide the other
with any records or other information then in the possession of such party that
may be relevant to such return, audit or examination, proceeding or
determination, and (iii) each provide the other with any final determination of
any such audit or examination, proceeding, or determination that affects any
amount required to be shown on any Tax return of the other for any period.
Without limiting the generality of the foregoing, Buyer and Seller shall each
retain, until the applicable statutes of limitations (including any extensions)
have expired, copies of all Tax returns, supporting work schedules, and other
records or information used in the preparation of such returns for all Tax
periods or portions thereof ending on or before the Closing Date and shall not
destroy or otherwise dispose of any such records without first providing the
other party with a reasonable opportunity to review and copy the same.
(c) PAYMENT OF LIABILITIES. Following the Closing Date, Seller
shall pay promptly when due all of the debts and Liabilities of Seller relating
to the Business, including the Excluded Liabilities and any Liability for Taxes
relating to the Business, other than Assumed Liabilities; provided, however,
this covenant shall not apply to that portion (or all) of any debt or Liability
that Seller is contesting in good faith. Following the Closing Date, Buyer shall
pay promptly when due all Assumed Liabilities.
10.3 SURVIVAL OF REPRESENTATIONS, ETC. All of the representations and
warranties made by each party in this Agreement shall survive the Closing for a
period of (and claims based upon or arising out of such representations and
warranties may be asserted at any time before the date which shall be) twenty
one (21) months following the Closing, except that (i) the representations and
warrants contained in Sections 4.1 [Organization of Seller], 4.2 [Subsidiaries],
4.3 [Authorization], 4.16 [No Brokers], 5.1 [Organization of Buyer], 5.2
[Authorization], and 5.5 [No Brokers] shall survive the Closing and remain in
full force and effect indefinitely, (ii) the representations and warranties
contained in Section 4.28 [Compliance with Environmental Laws] shall survive the
Closing for a period of five years following the Closing, and (iii) the
representations and warranties contained in Section 4.21 [Tax Matters] shall
survive the Closing until the termination of the applicable statute of
limitations (including all extensions or tolling of such statute by Seller).
Each party hereto shall be entitled to rely upon the representations and
warranties of the other party set forth in this Agreement. The termination of
the representations
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and warranties provided herein shall not affect the rights of a party in respect
of any Claim made by such party in a writing received by the other party prior
to the expiration of the applicable survival period provided herein.
10.4 INDEMNIFICATIONS.
(a) BY PARENT AND BBI BIOTECH. Parent and BBI Biotech, jointly and
severally, shall indemnify, save and hold harmless Buyer, its affiliates and
subsidiaries, and its and their respective Representatives, from and against any
and all costs, losses, Taxes, Liabilities, damages, lawsuits, claims and demands
(whether or not arising out of third-party claims), including without
limitation, interest, penalties, costs of mitigation, losses in connection with
any Environmental Law, and other losses resulting from any shutdown or
curtailment of operations, damages to the environment, reasonable attorneys'
fees and all amounts paid in investigation, defense or settlement of any of the
foregoing (collectively referred to herein as "Damages"), incurred in connection
with, arising out of, or resulting from (i) any breach of any representation or
warranty made by Parent or BBI Biotech in or pursuant to this Agreement
excluding the representations of Parent and BBI Biotech made in Section 4.21(i);
(ii) any breach of any covenant or agreement made by Seller in or pursuant to
this Agreement or any breach of the representations of Parent and BBI Biotech
made in Section 4.21(i); (iii) any Excluded Liability; (iv) any Liability
imposed upon Buyer by reason of Buyer's status as transferee of the Business or
the Purchased Assets, other than the Assumed Liabilities; and (v) any Liability
arising out of the Omega Chemical Superfund Site.
The term "Damages" as used in this Section 10.4 is not limited to
matters asserted by third parties against Seller or Buyer, but includes Damages
incurred or sustained by Seller or Buyer in the absence of third party claims.
Payments by Buyer of amounts for which Buyer is indemnified hereunder, and
payments by Seller of amounts for which Seller is indemnified hereunder, shall
not be a condition precedent to recovery. Seller's obligation to indemnify
Buyer, and Buyer's obligation to indemnify Seller, shall not limit any other
rights, including without limitation, rights of contribution which either party
may have under statute or common law.
Indemnification for Damages under Section 10.4(a)(i) shall be
payable by Parent or BBI Biotech hereunder only if and to the extent that the
aggregate amount of all Damages hereunder of the Buyer with respect to such
Damages shall exceed three hundred thousand dollars ($300,000), and thereafter,
Buyer shall be entitled to make a claim for indemnification for all Damages
except for the first one hundred fifty thousand dollars ($150,000) of such
threshold amount. The maximum aggregate liability of the Seller and Parent for
indemnification claims for Damages under Section 10.4(a) above shall be an
amount equal to the Purchase Price.
(b) BY BUYER. Buyer shall indemnify and save and hold harmless
Parent, BBI Biotech their respective affiliates and subsidiaries, and their
respective Representatives from and against any and all Damages incurred in
connection with, arising out of, resulting from or incident to (i) any breach of
any representation or warranty made by Buyer in or pursuant to this Agreement;
(ii) any breach of any covenant or agreement (including but not limited to
Section 2.9(i)) made by Buyer in or pursuant to this Agreement; (iii) from and
after the Closing, any of the Assumed Liabilities; or (iv) except to the extent
allocated to Seller under Sections 2.3, 2.7 and 2.8, and without limiting
Buyer's indemnification rights under this Section 10.4, any expense, debts,
Taxes and Liabilities arising from the operation of the Business after the
Closing Date.
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(c) COOPERATION. The indemnified party shall cooperate in all
reasonable respects with the indemnifying party and such attorneys in the
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom; PROVIDED, HOWEVER, that the indemnified party may, at its own
cost, participate in the investigation, trial and defense of such lawsuit or
action and any appeal arising therefrom. The parties shall cooperate with each
other in any notifications to insurers.
(d) DEFENSE OF CLAIMS. If a claim for Damages (a "Claim") is to be
made by a party entitled to indemnification hereunder against the indemnifying
party, the party claiming such indemnification shall give written notice (a
"Claim Notice") to the indemnifying party as soon as practicable after the party
claiming to be entitled to indemnification becomes aware of any fact, condition
or event which may give rise to Damages for which indemnification may be sought
under this Section 10.4. Such Claim Notice shall include a reasonable
description of the nature and amount of the Damages suffered and the basis
therefore. If any lawsuit or enforcement action is filed against any party
entitled to the benefit of indemnity hereunder, written notice thereof shall be
given to the indemnifying party as promptly as practicable (and in any event
within fifteen (15) calendar days after the service of the citation or summons).
The failure of any indemnified party to give timely notice hereunder shall not
affect rights to indemnification hereunder, except to the extent that the
indemnifying party demonstrates actual damage or prejudice caused by such
failure. After such notice, if the indemnifying party shall notify in writing
the indemnified party that the indemnifying party so elects, then the
indemnifying party shall be entitled, at its own cost, risk and expense, (i) to
take control of the defense and investigation of such lawsuit or action, (ii) to
employ and engage attorneys reasonably acceptable to the indemnified party to
handle and defend the same unless the named parties to such action or proceeding
include both the indemnifying party and the indemnified party and the
indemnified party has been advised in writing by counsel that in the opinion of
such counsel there is an actual or potential conflict of interest in
representing both such indemnified party and the indemnifying party, then the
indemnified party shall be entitled, at the indemnifying party's cost, risk and
expense, to separate counsel of its own choosing, and (iii) to compromise or
settle such claim, which compromise or settlement shall be made only with the
written consent of the indemnified party, such consent not to be unreasonably
withheld. If the indemnifying party fails to assume the defense of such claim
within fifteen (15) calendar days after receipt of the Claim Notice, the
indemnified party against which such Claim has been asserted will (upon
delivering notice to such effect to the indemnifying party) have the right to
undertake, at the indemnifying party's cost and expense, the defense, compromise
or settlement of such claim on behalf of and for the account and risk of the
indemnifying party; PROVIDED, HOWEVER, that such Claim shall not be compromised
or settled without the written consent of the indemnifying party, which consent
shall not be unreasonably withheld. In the event the indemnified party assumes
the defense of the claim, the indemnified party will keep the indemnifying party
reasonably informed of the progress of any such defense, compromise or
settlement. In addition, upon assumption of control of the defense, the
indemnifying party will not be liable to the indemnified party hereunder for any
legal or other expenses subsequently incurred in connection with the defense of
the action. Any party who has not assumed control of the defense of any action
shall have the duty to cooperate with the party which assumed such defense. The
indemnifying party shall be liable for any settlement of any action effected
pursuant to and in accordance with this Section 10.4 and for any final judgment
(subject to any right of appeal), and the indemnifying party agrees to indemnify
and hold harmless an indemnified party from and against any Damages by reason of
such settlement or judgment, subject to the terms of this Section 10.4. The
indemnifying party shall have fifteen days to provide the indemnified party with
written notice of the indemnifying party's objection to the claims set forth in
a Claim Notice or the indemnifying party will be deemed to have agreed that it
is obligated to indemnify the indemnified
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party for the full amount of the Damages specified in the Claim Notice. Any such
objections that cannot be resolved by the parties within fifteen days of the
receipt by the indemnified party of such objection notice may be submitted by
any party to arbitration pursuant in accordance with Section 12.13.
(e) PAYMENT FROM ESCROW. Notwithstanding anything herein to the
contrary, any indemnification for Damages required to be paid by Seller to Buyer
pursuant to Section 10.4(a), shall be funded first from the Escrowed Amount in
accordance with the Escrow Agreement.
(f) BROKERS AND FINDERS. Pursuant to the provisions of this
Section 10.4, each of Buyer and Seller shall indemnify, hold harmless and defend
the other party from the payment of any and all broker's and finder's expenses,
commissions, fees or other forms of compensation which may be due or payable
from or by the indemnifying party, or may have been earned by any third party
acting on behalf of the indemnifying party in connection with the negotiation
and execution hereof and the consummation of the transactions contemplated
hereby.
(g) REPRESENTATIVES. No individual Representative of any party
shall be personally liable for any Damages under the provisions contained in
this Section 10.4. Nothing herein shall relieve either party of any Liability to
make any payment expressly required to be made by such party pursuant to this
Agreement.
(h) SURVIVAL. Except for indemnification obligations pursuant to
Section 10.4(a)(i) and Section 10.4(b)(i), which shall survive for the time
periods set forth in Section 10.3 hereof, the indemnification obligations set
forth in this Section 10.4 shall survive the Closing indefinitely. Any matter as
to which an indemnifiable claim has been asserted by notice to the other party
that is pending or unresolved at the end of any limitation period shall continue
to be covered by this Section 10.4 until such matter is finally terminated or
otherwise resolved by the parties and settled under this Agreement or by a court
of competent jurisdiction and any amounts payable hereunder are finally
determined and paid.
ARTICLE XI
TERMINATION
11.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing, whether before or after the requisite approval of the stockholders
of Parent:
(a) by mutual written consent of Parent and Buyer;
(b) by either Parent or Buyer if the Closing shall not have been
consummated by August 15, 2004 (such date, or such other date that may be agreed
by mutual written consent, being the "Outside Date") for any reason; provided,
however, that the right to terminate this Agreement under this Section 11.1(b)
shall not be available to any party whose action or failure to act has been a
principal cause of or resulted in the failure of the Closing to occur on or
before such date if such action or failure to act constitutes a breach of this
Agreement;
(c) by either Buyer or Parent if a governmental entity or court of
competent jurisdiction shall have issued an order, decree or ruling or taken any
other action, in any case having the effect of permanently restraining,
enjoining or otherwise prohibiting the consummation
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of the transactions contemplated by this Agreement, which order, decree, ruling
or other action shall have become final and nonappealable;
(d) by either Buyer or Parent if the Special Meeting (including
any adjournments thereof) shall have been held and completed and the
stockholders of Parent shall have taken a vote on the Stockholder Approval
Matters and the required approval of the stockholders of Parent contemplated by
this Agreement shall not have been obtained; provided, however, that the right
to terminate this Agreement under this Section 11.1(d) shall not be available to
Parent where the failure to obtain such stockholder approval shall have been
principally caused by the action or failure to act of Seller, and such action or
failure to act constitutes a breach by Seller of a covenant under Article VI of
this Agreement;
(e) by Parent, upon a breach of any covenant or agreement on the
part of Buyer set forth in this Agreement, or if any representation or warranty
of Buyer shall have been untrue when made or shall have become untrue, in either
case such that the conditions set forth in Section 7.1 or Section 7.2 would not
be satisfied as of the time of such breach or as of the time such representation
or warranty shall have become untrue, provided, that if such inaccuracy in
Buyer's representations and warranties or breach by Buyer is curable by Buyer
through exercise of its commercially reasonable efforts, then Parent may not
terminate this Agreement pursuant to this Section 11.1(e) for ten (10) days
after delivery of written notice from Parent to Buyer of such breach, provided
that Buyer continues to exercise commercially reasonable efforts to cure such
breach (it being understood that Parent may not terminate this Agreement
pursuant to this Section 11.1(e) if such breach by Buyer is cured during such
ten-day period);
(f) by Buyer, upon a breach of any covenant or agreement on the
part of Seller set forth in this Agreement, or if any representation or warranty
of Seller shall have been untrue when made or shall have become untrue, in
either case such that the conditions set forth in Section 8.1 or Section 8.2
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, provided, that if such
inaccuracy in Seller's representations and warranties or breach by Seller is
curable by Seller through exercise of its commercially reasonable efforts, then
Buyer may not terminate this Agreement pursuant to this Section 11.1(f) for ten
(10) days after delivery of written notice from Buyer to Parent of such breach,
provided that Seller continues to exercise commercially reasonable efforts to
cure such breach (it being understood that Buyer may not terminate this
Agreement pursuant to this Section 11.1(f) if such breach by Seller is cured
during such ten-day period);
(g) Reserved;
(h) by Seller in the event that Buyer has not obtained the
Financing to consummate the transactions contemplated hereby on or before August
15, 2004 and all of the conditions set forth in Article VIII (excluding the
condition set forth in Section 8.10) have been satisfied; or
(i) by Buyer if a Triggering Event (as defined below) shall have
occurred.
For the purposes of this Agreement, a "Triggering Event" shall be deemed to have
occurred if: (A) the Board of Directors of Parent or any committee thereof shall
for any reason have withheld, withdrawn or refrained from making or shall have
modified, amended or changed in a manner adverse to Buyer its recommendation in
favor of the approval of the Stockholder Approval Matters; (B) Parent shall have
failed to include in the Proxy Statement the recommendation of the
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Board of Directors of Parent in favor of the approval of the Stockholder
Approval Matters; (C) the Board of Directors of Parent fails to reaffirm its
recommendation in favor of the approval of the Stockholder Approval Matters
within ten (10) business days after Parent requests in writing that such
recommendation be reaffirmed at any time following the announcement and during
the pendency of an Acquisition Proposal; (D) the Board of Directors of Parent or
any committee thereof shall have approved, endorsed or recommended any
Acquisition Proposal; (E) Parent shall have entered into any letter of intent or
similar document or any agreement, contract or commitment accepting any
Acquisition Proposal; (F) Parent shall have breached any of the provisions of
Section 6.2 of this Agreement, or (G) a tender or exchange offer relating to not
less than 15% of the then outstanding shares of capital stock of Parent shall
have been commenced by a person unaffiliated with Buyer and Parent shall not
have sent to its securityholders pursuant to Rule 14d-9 or 14e-2, as the case
may be, promulgated under the Securities Act, within ten (10) business days
after such tender or exchange offer is first published sent or given, a
statement disclosing that Parent recommends rejection of such tender or exchange
offer.
11.2 NOTICE OF TERMINATION; EFFECT OF TERMINATION. Any termination of
this Agreement under Section 11.1 will be effective immediately upon (or if the
termination is pursuant to Section 11.1(e) or 11.1(f) and the proviso therein is
applicable, ten (10) days after) the delivery of written notice thereof by the
terminating party to the other parties hereto. In the event of the termination
of this Agreement as provided in Section 11.1, this Agreement shall be of no
further force or effect, except (i) as set forth in this Section 11.2, Section
11.3 and Article XII (Miscellaneous), each of which shall survive the
termination of this Agreement, and (ii) nothing herein shall relieve any party
from liability for any intentional or willful breach of this Agreement.
11.3 FEES AND EXPENSES.
(a) Parent Payments.
(i) If this Agreement is terminated by Buyer pursuant to
Section 11.1(i) (or terminated by Parent at a time when terminable by Buyer
pursuant to Section 11.1(i)), then Parent shall pay to Buyer in immediately
available funds, within two (2) business days after demand by Buyer, $600,000
(the "Termination Fee"); provided however, that if (A), prior to such
termination a third party shall have delivered an Acquisition Proposal, (B)
within one year following the termination of this Agreement an Acquisition
Transaction is consummated or Parent or BBI Biotech enters into an agreement or
letter of intent providing for an Acquisition Transaction, and (C), the
aggregate purchase price for such Acquisition Transaction is greater than or
equal to $35 million, then the Termination Fee to be paid pursuant to this
Section 11.3(a)(i) shall be increased to an amount equal to 3% of the aggregate
purchase price in the Acquisition Transaction, with such increase in the
Termination Fee to be paid by Parent to Buyer at or prior to consummating such
Acquisition Transaction.
(ii) If (A) this Agreement is terminated by Buyer or Parent,
as applicable, pursuant to any of Sections 11.1(b), (d) or (f) (or terminated by
Parent at a time when terminable by Buyer pursuant to Section 11.1(b), (d) or
(f) but not Section 11.1(i)), (B) prior to such termination a third party shall
have delivered an Acquisition Proposal and (C) within one year following the
termination of this Agreement an Acquisition Transaction is consummated or
Parent or BBI Biotech enters into an agreement or letter of intent providing for
an Acquisition Transaction, then Parent shall pay Buyer in immediately available
funds at or prior to consummating such Acquisition Transaction an amount equal
to the Termination Fee; provided however, that the Termination Fee shall be
increased to an amount equal to 3% of the aggregate
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purchase price in the Acquisition Transaction if such aggregate purchase price
is greater than or equal to $35 million.
(b) BUYER PAYMENT. Buyer shall pay to Parent in immediately
available funds, within two (2) business days after demand by Parent, a
termination fee in the amount of $600,000 if this Agreement is terminated by
Seller pursuant to Section 11.1(h) at a time when this Agreement is not
terminable by Buyer pursuant to any other clause of Section 11.1.
(c) ACKNOWLEDGEMENT. The parties acknowledge that the agreements
contained in this Article XI are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, the parties
would not enter into this Agreement; accordingly, if a party (the "Defaulting
Party") fails to pay in a timely manner the amounts due pursuant to this Section
11.3 and, in order to obtain such payment, the non-Defaulting Party, makes a
claim that results in a judgment against the Defaulting Party, the Defaulting
Party shall pay to the non-Defaulting Party its reasonable costs and expenses
(including reasonable attorneys' fees and expenses) in connection with such
suit, together with interest on the amounts set forth in this Section 11.3 at
the prime rate of Bank of America (or any successor thereto) in effect on the
date such payment was required to be made. Payment of the fees described in this
Section 11.3 shall not be in lieu of damages incurred in the event of breach of
this Agreement. The foregoing provisions shall not limit or restrict the
availability of specific performance or other injunctive relief to the extent
that specific performance or such other relief would otherwise be available to a
party hereunder.
ARTICLE XII
MISCELLANEOUS
12.1 ASSIGNMENT. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by any party without the prior written
consent of the other parties; except that Buyer may, without such consent,
assign all such rights to any lender as collateral security or to a majority
owned subsidiary so long as Buyer remains obligated to the full extent
hereunder. Subject to the foregoing, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, and no other person shall have any right, benefit or
obligation under this Agreement as a third party beneficiary or otherwise.
12.2 NOTICES. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given when received if personally delivered;
when transmitted if transmitted by telecopy, electronic or digital transmission
method; the day after it is sent, if sent for next day delivery to a domestic
address by recognized overnight delivery service (E.G., Federal Express); and
upon receipt, if sent by certified or registered mail, return receipt requested.
In each case notice shall be sent to:
If to Parent or Seller, addressed to:
Boston Biomedica, Inc.
000 Xxxx Xxxxxx
Xxxx Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxxx
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Facsimile: (000) 000-0000
With a copy to:
Xxxxx Xxxxxxx Berlack Israels LLP
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. London
Facsimile: (000) 000-0000
If to Buyer, addressed to:
SeraCare Life Science, Inc.
0000 Xxxxxxx xxx Xxx, Xxxxx X
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
With a copy to:
O'Melveny & Xxxxx LLP
000 Xxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
12.3 CHOICE OF LAW. This Agreement shall be construed, interpreted and
the rights of the parties determined in accordance with the laws of the State of
Delaware.
12.4 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement, the
Ancillary Agreements, together with all exhibits and schedules hereto and
thereto (including the Disclosure Schedule) constitutes the entire agreement
among the parties pertaining to the subject matter hereof and supersedes all
prior agreements, understandings, negotiations and discussions, whether oral or
written, of the parties, including, but not limited to (i) the Confidentiality
Agreement and (ii) that certain letter of intent, dated January 30, 2004,
between Buyer and Parent. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto. No
amendment, supplement, modification or waiver of this Agreement shall be binding
unless executed in writing by the party to be bound thereby. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
12.5 MULTIPLE COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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12.6 EXPENSES. Except as otherwise specified in this Agreement, each
party hereto shall pay its own legal, accounting, out-of-pocket and other
expenses incident to this Agreement and to any action taken by such party in
preparation for carrying this Agreement into effect.
12.7 INVALIDITY. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
12.8 TITLES; GENDER. The titles, captions or headings of the Articles
and Sections herein, and the use of a particular gender, are for convenience of
reference only and are not intended to be a part of or to affect or restrict the
meaning or interpretation of this Agreement.
12.9 PUBLICITY. Parent and Buyer will consult with each other, and to
the extent practicable, agree, before issuing any press release or otherwise
making any public statement with respect to this Agreement or the transactions
contemplated hereby, or an Acquisition Proposal and will not issue any such
press release or make any such public statement prior to such consultation,
except as otherwise advisable or as may be required by applicable law, rule or
regulation, including but not limited to the rules of the Nasdaq, in which case
reasonable efforts to consult with the other party will be made prior to such
release or public statement. The parties have agreed to the text of the joint
press release announcing the signing of this Agreement.
12.10 CONFIDENTIAL INFORMATION.
(a) PRESERVATION OF CONFIDENTIALITY. In connection with the
negotiation of this Agreement, the preparation for the consummation of the
transactions contemplated hereby, and the performance of obligations hereunder,
each party acknowledges that it will have access to confidential information
relating to the other party and its business, including but not limited to
technical, manufacturing or sales and marketing information, ideas, methods,
developments, inventions, improvements, business plans, trade secrets,
scientific or statistical data, diagrams, drawings, specifications or other
proprietary information relating thereto, ("Confidential Information"). The term
"Confidential Information" does not include information received by the
receiving party in connection with the transactions contemplated hereby which
(i) is or becomes generally available to the public other than as a result of a
disclosure by receiving party or its Representatives, (ii) was within receiving
party's possession as evidenced by pre-existing documentation prior to its being
furnished to receiving party by or on behalf of the disclosing party in
connection with the transactions contemplated hereby, provided that the source
of such information was not known by the receiving party to be bound by a
confidentiality agreement with or other contractual, legal or fiduciary
obligation of confidentiality to the disclosing party with respect to such
information, or (iii) becomes available to the receiving party on a
non-confidential basis from a source other than disclosing party or any of its
Representatives, provided that such source was not known by the receiving party
to be bound by a confidentiality agreement with or other contractual, legal or
fiduciary obligation of confidentiality to disclosing party with respect to such
information, or (iv) is independently developed without use of or reference to
the Confidential Information as evidenced by pre-existing documentation, or (v)
is required by law to be disclosed.
(c) The receiving party shall treat all Confidential Information
as confidential, preserve the confidentiality thereof and not disclose any
Confidential Information, except to its
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Representatives and Affiliates who have a need to know such Confidential
Information in connection with the transactions contemplated hereby and not use
such Confidential Information for any purposes other than an evaluation of the
transactions contemplated by this Agreement. The receiving party shall use
reasonable efforts to cause its Representatives to treat all Confidential
Information as confidential, preserve the confidentiality thereof and not
disclose any Confidential Information.
(d) Until the Closing or the termination of this Agreement, all
Confidential Information shall remain the property of the party who originally
possessed such information. In the event of the termination of this Agreement
for any reason whatsoever, each receiving party shall, and shall cause its
Representatives to, return to disclosing party all Confidential Information
(including all copies, summaries and extracts thereof) furnished to receiving
party by disclosing party in connection with the transactions contemplated
hereby and neither party shall use any Confidential Information of the other
party for any purpose whatsoever.
(e) The provisions of this Section 12.10 shall terminate and be of
no further force or effect upon the Closing.
12.11 CUMULATIVE REMEDIES. All rights and remedies of either party
hereto are cumulative of each other and of every other right or remedy such
party may otherwise have at law or in equity, and the exercise of one or more
rights or remedies shall not prejudice or impair the concurrent or subsequent
exercise of other rights or remedies.
12.12 SPECIFIC PERFORMANCE. The parties each acknowledge that, in view
of the uniqueness of the Business, the Purchased Assets and the transactions
contemplated by this Agreement and the Ancillary Agreements, each party would
not have an adequate remedy at law for money damages in the event that this
Agreement has not been performed in accordance with its terms, and therefore
agrees that the other party shall be entitled to specific enforcement of the
terms hereof in addition to any other remedy to which it may be entitled, at law
or in equity.
12.13 ARBITRATION. All claims, disputes and other matters in question
arising out of, or relating to, this Agreement or the performance hereof,
including, without limitation, indemnifiable claims pursuant to Section 10.4,
shall be submitted to, and determined by, arbitration if good faith negotiations
among the parties hereto, if any, does not resolve such claim, dispute or other
matter. Such arbitration shall proceed in accordance with the then-current rules
for arbitration established by Judicial Arbitration Mediation Services,
Inc./ENDISPUTE ("JAMS"), unless the parties hereto mutually agree otherwise, and
pursuant to the following procedures:
(a) Buyer on the one hand and Seller on the other hand shall each
appoint an arbitrator from the JAMS panel of retired judges, and those
party-appointed arbitrators shall appoint a third arbitrator from the JAMS panel
of retired judges within ten (10) days. If the party-appointed arbitrators fail
to appoint a third arbitrator within the ten (10) days, such third arbitrator
shall be appointed by JAMS in accordance with its rules. Notwithstanding the
foregoing, if Buyer and Seller are able to agree upon the choice of one
arbitrator, such proposed arbitration shall be decided by such arbitrator and
all references in this Section 12.13 to "arbitrators" shall be replaced with the
term "arbitrator" (as a reference to such single arbitrator).
(b) Reasonable discovery shall be allowed in arbitration.
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(c) All proceedings before the arbitrators shall be held in
Chicago, Illinois. The governing law shall be as specified in Section 12.3.
(d) The award rendered by the arbitrators shall be final and
binding, and judgment may be entered in accordance with applicable law and in
any court having jurisdiction thereof.
(e) The award rendered by the arbitrators shall include (i) a
provision that the prevailing party in such arbitration recover its costs
relating to the arbitration and reasonable attorneys' fees from the other party,
(ii) the amount of such costs and fees, and (iii) an order that the losing party
pay the fees and expenses of the arbitrators.
(f) The arbitrator shall by the agreement of the parties expressly
be prohibited from awarding punitive damages in connection with any claim being
resolved by arbitration hereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed on their respective behalf, by their respective officers
thereunto duly authorized, all as of the day and year first above written.
BOSTON BIOMEDICA, INC.
By: /s/ Xxxxx X. Xxxxxxx
---------------------
Name: Xxxxx X. Xxxxxxx
Its: President
BBI BIOTECH RESEARCH LABORATORIES, INC.
By: /s/ Xxxxx X. Xxxxxxx
---------------------
Name: Xxxxx X. Xxxxxxx
Its: President
SERACARE LIFE SCIENCES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx XX
--------------------------
Name: Xxxxxxx X. Xxxxxxx XX
Its: CEO
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